Understanding today’s outsourcing market
During a client visit, I was asked if traditional outsourcing had lost it strategic relevance. The question was based on the business world’s current enthusiasm over digital transformation and the shifting focus of the C-Suite in today’s digital economy. Sourcing is far from dead. According to industry reports, the market generates more than $100 billion of total contract value a year. Surely a business that generates this much money should be considered strategic. It certainly is for those faced with the challenge of delivering services to the thousands of enterprise clients that still depend on the sourcing industry every year. Money has shifted around too, from west to east and north to south, largely driven by labour demand, moving work to places with lower labour costs. Now, a new shift is occurring and it has nothing to do with workforce bodies. Today, the market is being completely transformed by the ‘as-a-service’ phenomenon. The as-as-service market, which includes infrastructure-as-a-service (IaaS) and software-as-a-service (SaaS), now makes up more than 40% of those dollars. Imagine that…a market that we thought was dominated by IBM, DXC Technologies (formerly HP & CSC), Capgemini, Accenture & Infosys, actually now is being taken over by Microsoft Azure, Amazon Web Services (AWS), Google Cloud and Salesforce.com.
Looking at some data for last year as a whole, provides a glimpse into this profound change. In the first half of 2017, signed sourcing contracts were worth a total of $19.8 billion. But in this same period, contract value for IT and business outsourcing was down 2% while the as-a-service cloud-based service platforms market was up a whopping 36%. In particular, contract values for IaaS solutions were up 62%, a number that clearly illustrates buyer enthusiasm for the public cloud. These metrics point to the changes in the sourcing market and give us insight into the C-Suite’s agenda: to adopt the public cloud, transform the enterprise landscape with software services and rapidly implement automation to drive further operational efficiencies. These are the mega-trends in IT – the “digital backbone” that’s required to be a 21st century enterprise. Sourcing today is no longer just about cost. Over the years, outsourcing has resulted in highly efficient, process-driven organisations. Now it’s time to harness that energy to reach the next level of growth and performance.
In its simplest terms, the digital backbone is a suite of technologies and processes that include the following five components: 1) Public cloud adoption – Public cloud provides the platform to accelerate development and automation. An IaaS or cloud-first strategy is at the heart of digital transformation 2) Application modernisation – Most enterprises have twice as many apps as they need and now are working to deliver custom apps in a SaaS model. The business already buys this way. It’s time for IT to get on board. Organisations should adopt a product mentality toward their portfolio by building only those applications that are truly market differentiators 3) Platform-as-a-service (PaaS) strategy – This helps simplify existing architecture and provides a common strategy for building new services 4) Automation – Whether an enterprise is automating the build cycle or auto-resolving tickets, automation is a must-have for maintaining the velocity of the digital age 5) Internet of Things (IoT) strategy – The IoT is creating a vast API community. To participate in it, an IoT strategy that is part of your “digital backbone” is absolutely necessary.
There’s no question: Traditional outsourcing will continue to decline. As enterprises join the digital revolution, they require new skills, tools, processes and ways of thinking. Service providers, like Storm IT Financial, that understand this need, and can support a digital backbone, are the ones that will ultimately succeed.
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Storm IT Financial FinTech News & Trends picks: Week 30th April – 4th May2018
Saxo Bank to run banking platforms on Microsoft Cloud
Danish investment bank Saxo Bank has struck up a partnership with Microsoft Cloud and will run its services on the tech giant’s cloud service:
Asset managers need to be ‘ahead of the curve’ amid transformational digital environment
Legacy technology remains primary obstacle:
What is a bank, today?
Exploring where the lines blur, where data will make a difference:
Goldman Sachs to Open a Bitcoin Trading Operation
Goldman Sachs will begin using its own money to trade with clients in a variety of contracts linked to the price of Bitcoin:
After Nasdaq CEO Blesses Cryptocurrency, Investors See Bigger FutureFor Bitcoin, Others
Nasdaq CEO Adena Friedman says that they are open to considering trading in cryptocurrencies once regulated by the SEC…:
Clouds don’t always bring rain
Cloud computing solutions redefine disaster recovery:
Schroders: Blockchain could be to industry as the internet is to society
Schroders’ US head of credit research believes the banking and brokerage sectors could be revolutionised by blockchain to the extent society has been transformed by the internet:
Ready for Regtech?
Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it:
Big four consulting firms dip a toe in ICO’S (initial coin offering)
The young market may get some help in cleaning up ICO’s from the Big Four consulting firms:
AI set for mass adoption by financial services sector
Over the next few years, AI will bring about game-changing developments for the banking sector:
How Five Robots Replaced Seven Employees at a Swiss Bank
To have seven employees work for three days or use software robots instead? :
Rushed testing, poor communication played role in British TSB outage – contractors
A TSB Bank computer systems migration was hindered by rushed, inadequate testing & poor communication: