- Forrester Councils
- Councils Overview
- log in
Posted by Fred Giron on September 1, 2011
Mobility, cloud, and smart computing will drive tremendous growth and significant changes in the IT industry over the next few years. My fellow analysts have brilliantly covered these topics in the past few months.
I would like to build on these views and focus more specifically on the productivity race that the IT services industry and its clients have been in during the past 10 years or so. While IT services vendors have managed to improve their output levels in order to protect margins in a market of severely eroding price points, I believe they will rapidly reach a plateau if they continue to use traditional methods. Instead, the most successful IT services firms of tomorrow will increasingly leverage disruptive methods in order to fulfill the client expectations to always “do more with less.”
Ever since the Internet bubble burst a decade ago, clients have pushed their providers to find ways to provide them with continued price decreases for similar or greater output levels. This was achieved thanks to two main levers to decrease the amount of resources required to run IT systems by end user firms:
While these models have served the industry well, they are starting to run out of steam. In order to develop more sustainable models for the years to come, IT services firms will need to leverage the following approaches better:
In the IT services industry, traditional outsourcing models have relied heavily on the first two routes. In general, the mutualization and automation paths have returned lower performance, mostly because traditional outsourcing models have followed a one-to-one delivery approach and are therefore failing to deliver sufficient economies of scale.
However, this will change dramatically over the next few years as IT services companies reinvent their outsourcing models in order to continue to deliver increased output levels at similar or lower costs for their clients. In particular, IT services providers will now focus more on leveraging the last three routes (shared resources, automation and self-service) and deliver their service around their own “business platforms.”
I will be working on this research topic over the next few months and I would love to hear what you think!
Save Money On Your Next Software Negotiation
Work with our software negotiation experts to save 10–20% on your next contract »
Lead BT Transformation
Develop customer-obsessed strategies to drive growth »
Forrester's CX Index
Predict how actions to improve CX will affect revenue performance.
Measure the customer experiences that matter most »