idc nordics directions 2016 - nordic digital transformation for services vendors

Johan HallbergResearch Manager

Nordic Digital Transformation and the impact for Services Vendors

January 28h 2016

© IDC Visit us at IDC.com and follow us on Twitter: @IDC 2

Automation is changing way of work, fast!

Changes in business models

– demand for services instead

of products


Nordic Digital Transformation and the impact for Services Vendors Nordics organizations will change with the future

needs of Digital products and services. How will that affect you?

Digital changes the vendors’ offerings as its buyer’s demands lower Time To Market. Why do sourcing activates changing too?

How will the Nordic Services market look like moving forward?


Digital or dead!?

5© IDC Visit us at IDC.com and follow us on Twitter: @IDC

The five seconds test: A digital organization is one that can in five seconds or less assemble all the relevant information to take smart decisions and actions.

6

The Hyperconnected Consumer

The connected and educated customer

mobileSpeed

Apps

Convenience

Privacy

Insight

Freemium

Social

© IDC Visit us at IDC.com and follow us on Twitter: @IDC

and Enterprise IT

7

Disrupted business modelsThese organization are natively digital…


Most are not!

Digital Maturity Benchmark 2015

Source: IDC, Digital Transformation Maturity Benchmark, 2015

20.4%

34.1%

28.2%

12.2%

5.1%

14.2%

31.8% 32.4%

13.6%7.9%

Digital Resister Digital Explorer Digital Player Digital Transformer Digital DisruptorBusiness is a laggard, providing weak customer experiences and using digital technology only to counter threats

Digitally enabled customer experiences and products are inconsistent and poorly integrated

Business provides consistent, but not truly innovative products, services and experiences

Business is a leader in its markets, providing world-class digital products, services and experiences

Business remakes existing markets and creates new ones to its own advantage and is a fast-moving target for the competition

US benchmark

European benchmark

9

Use case: Volvo Car – LoB’s know new products are needed

IT-enabled Services

Transforming Business Processes

IT-enabled Products

Creating IT-enabled Products

IT-enabled Business Processes

Automating Business Processes

But, this is just the beginning… © IDC Visit us at IDC.com and follow us on Twitter: @IDC

10

What’s on the Mind of CIO’s and IT Managers in 2016?


Maintaining relevance

Learning the business

Applying relevant technologies to make a difference

Security and Governance

Focus on the real customer

11

Risk Management Contracts Run

BuildBuy

Short TermTransactional Model

2nd Platform Vendor Sourcing Models

Trusted Relationship Contracts Data Driven Management

IntegrateAcquire Capability

Long TermRelationship Model

3rd Platform Vendor Sourcing Models

3rd Platform Requires a Different Sourcing Model



http://uk.businessinsider.com/netflix-intuit-juniper-go-all-in-on-amazon-cloud-2016-1





Is Amazon eating the IT outsourcing Industry?


The cloud has changed the IT outsourcing industry forever!

GE is to become the leading digital industrial company in the world. General Electric CIO Jim Fowler predicts that by 2020 GE will generate $15B in revenue from software.

Key factors1. The people – investing $1B in developers and insourcing!2. Technology – Build vs Buy, differing software and algorithms that allows us

and our customers to run the business differently. 3. Leading partners – Migrating 9000 apps (including 300 ERPs) all into AWS

into 4000 apps. Going from 34 to 4 data centres, keeping only mission critical data (the “Secret Sauce”).

For GE – “the Cloud has gone from probable to inevitable”

Global-Regional Outsourcers

Caught in A Competitive Vise

16

Wipro

InfosysTech

Mahindra

TCS

HCLAmazon

Concur,SuccessFactors

(SAP)

Salesforce.com

Google

Taleo(Oracle)

NetSuite

India-based Outsourcers

Cloud Service Providers

IBM

CSC HP

EVRY Fujitsu

Capgemini

Global-regional IS outsourcers are being “squeezed” by India-based outsourcers and “pure-play” cloud service providers.


Increase spending significantly9%

Increase spending somewhat

33%Keep spending on cur-rent level

41%

Reduce spending somewhat

10%

Reduce spending significantly4% Don't know

4%

To what extent do you expect to change your total IT spend-ing in the next 12-18 months?

Source: IDC 2016 - Nordic CxO Study


European ICT Market & GDP Expectations in 2016

-4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0%

-1.5%

-0.5%

0.5%

1.5%

2.5%

3.5%

AustriaBelgium

Denmark FinlandFrance

Germany

Greece

Ireland

Italy

NetherlandsNorway

Portugal

SpainSweden

Switzerland

United Kingdom

ICT Forecast 2016

GD

P Fo

reca

st 2

016

Size of bubble: ICT Spend-ing in 2015

Source: IDC European Black Book v3, 2015; Economist Intelligence Unit, October 2015

ICT Opportunity equals US$ 780 billion which is basically flat compared to 2015(-0.8% YoY).

IT spending is somewhat higher at just under 1% growth; Communication industry is suffering

The upturn for the European economy in 2016 remains fragile, since it is basically driven by exports. In purely domestic terms, the euro zone economy is actually still shrinking.

#IDCFutureScape


Digitalization Implications for ICTICT suppliers• Contextualization of tech

products and solutions for tech buyers (think use cases)

• Growing tech CxO buying centers and the new CIO leadership model

• 3rd Platform competition and fragmentation

• Services will have to be more business outcome focused

Tech buyers• Contextualization of new tech

capabilities to digitally-enabled processes and new revenue streams (“digital twins”)

• LOB’s increasing demandsand influence

• Sourcing, PMO transformation,and governance


How To Get There?Why IDC Nordic Services & Sourcing?


IDC Nordic Service & Sourcing

IDC Nordic Services and Sourcing research analyzes the services sector and how companies purchase and consume IT as well as the use of IT from a business perspective — i.e., the transformation of IT and business due to the 3rd Platform and its innovation accelerators towards a digital society.


Swedish Services 2014 - 2019

CAGR

+3.0%

Services overall growth

Market size 2016 81.7B SEK

IS Outsourcing WILL decline – but offers still good revenue

CAGR~3.3%


Business Services grows faster then IT Services Sweden Services 2014-2019

2014 2015 2016 2017 2018 20190.00.51.01.52.02.53.03.54.04.55.0

Business services IT Services Swedish Services market

(%)

18.8B SEK

62.9B SEK

Source: IDC Dec 2015

Markets & Subjects

Nordic services markets (Business and IT)Current and future trends Sourcing and vendor managementDigital TransformationBusiness services and BPOVertical market adoption of servicesAnalysis of deals wonImpact of Digital for services vendors

IDC Nordic Service & Sourcing 2016


Think innovatively; Enable 3rd Platform Excellence.

IT ServicesTalentPartnerships BusinessTransformation

WorkforceTransformation

Customer Relationship

Transformation

What can you change?


Advice for Services Vendors

Capture efficiency gains from Cloud as new sources of revenue

Redefine your sales strategy for smaller and short-term contracting

Become a Digital Advisor