Asian Companies Will Give Outsourcing A Fresh Look In 2013

Fred Giron

Forrester’s team of Asia Pacific (AP) analysts has just published its 2013 IT industry predictions in the IT Industry Disruptions Fuel Renewed Asia Pacific Market Growth report, which covers general IT spending and technology adoption trends. I’d like to call out the key 2013 IT services predictions in this post.

We expect more AP organizations to embrace outsourcing services in 2013 to help them leapfrog the traditional IT skills, process, and technology learning curves necessary to support their business objectives. Our recent Forrsights Budget & Priorities survey in AP shows a high interest for outsourcing services in countries like Indonesia, Malaysia, Singapore, and Japan (see figure below). As AP companies try to manage rapidly rising complexity in both their business strategies and their application and infrastructure environments, they are facing a growing disconnect between business expectations and internal IT capabilities. Senior decision-makers have begun taking a fresh look at outsourcing as a way to bridge this gap.

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New Year’s Resolution: Sharpen Your Skills To Keep SVM Relevant

Mark Grannan

 I needed to order a tool from recently, and I was greeted with a “New Year, New You” panel linking me to whole host of exercise equipment targeted to my lifestyle. Same old New Year’s resolution song-n-dance, right? Well, the idea of self-improvement in 2013 got me thinking:  We keep telling the SVM world that they need to stay relevant in a Business Technology world, so we’re now showcasing specific self-improvement tools to help you feel empowered stepping into 2013. In our recent “SVM Activities, Roles, And Skills Are Evolving” report, we have outlined the root rationale for SVM’s evolution and our prescription on how to move forward: 

  • Roles are becoming more complex. As technology spending habits change, and spending  ripples outward from IT to the business, classic SVM roles (e.g., sourcing; contracts; vendor management) are broadening and deepening to include skills related to strategy, governance, and business value (see top column labels). 
  • These roles require new skill sets and certifications. In order to fill out these new roles, SVM managers should encourage staff to grow their skill set with training and certifications in emerging categories including innovation, diversity, eco-friendly/green, globalization, and strategy (see left-hand row labels). There are a host of organizations and authoring bodies that can help you demonstrate credibility in SVM emerging impact areas.
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Microsoft Public Cloud Services Land In Mainland China

Gene Cao

with Rita Xia

On November 2 in Shanghai, Microsoft announced the availability of Office 365 and Windows Azure services for customers in mainland China; both have been available in Hong Kong for several years. Through its collaboration with 21Vianet Group and HiSoft (now part of PactEra, a merger of HiSoft and VanceInfo), Microsoft is the first multinational vendor to provide public cloud services in mainland China delivered through onshore cloud infrastructure.

Under the agreement, Microsoft has authorized 21Vianet Group, which has a “value-added telecommunications service” license, to operate Office 365 and Windows Azure in China. This is critical to Microsoft’s overall strategy in China, as only Chinese companies qualify for this government license, which is normally issued by ministry or provincial bureaus of MIIT (the Ministry of Industry and Information Technology). Under the terms of the agreement, Microsoft is sharing cloud services revenue with 21Vianet Group and in exchange is able to leverage 21Vianet Group’s license to operate cloud data centers in China.

Microsoft’s entrance into the public cloud services market in China will affect both local and multinational cloud services/technology vendors in a number of ways:

  • Government regulations restricting multinational companies from offering public cloud services in China are gradually loosening. We expect other multinational cloud providers to follow Microsoft’s approach of partnering with a local service provider that has the “value-added telecommunications services” license. The government’s primary objective with this license is to protect local providers and stimulate onshore cloud infrastructure investments, and this goal is met through partnerships like this.
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Unisys Targets Changing End User Demographics Across Asia Pacific With Its Outsourcing Offerings

Fred Giron

Launched earlier this year, Unisys’ People Computing initiative focuses on bringing a “people perspective” to its end user support and outsourcing service offerings. I recently attended Unisys’ Asia Pacific (AP) analyst event in Sydney and this initiative was presented as a key success factor in several infrastructure outsourcing wins in AP in 2011-2012. Case in point: we were given the opportunity to meet Henry Shiner, VP and CIO of McDonald’s Australia/New Zealand. McDonald’s signed an end user computing services contract in 2011 for the management of 43,000 end user devices in Australia and New Zealand. These devices include point-of-sale systems, back-office PC equipment, peripherals, wireless networks, customer order display units, and cameras. Unisys was selected to support the 125,000 people working at 1,060 McDonald’s restaurants. According to Shiner, Unisys’ end user-centric approach was one of the reasons McDonald’s selected Unisys:

  • Unisys approached service-level definitions from the end user point of view. While the right set of tools and processes are key to efficiently managing more than 60,000 support calls per annum, Unisys approached McDonald’s requirements by working directly with end users — store operators in franchised restaurants — by organizing focus groups to better define end user requirements.
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IBM Global Business Services Refines Its Business Technology Value Proposition

Christopher Andrews

I spent two days last week at an IBM Global Business Services (GBS) analyst event titled “Transforming the Front Office.” The event was designed for IBM to share its view of the future of the technology marketplace with industry analysts — and of course speak about how IBM fits into that role.

What’s clear is that IBM believes in the power of big data. Ok, so this may be obvious to the IBM watchers in the marketplace, but it’s interesting to see IBM bring to the table better marketing messages, case studies, and examples — all focused on how the GBS organization can apply that data to help clients stay competitive.

Throughout the two days with GBS, it was clear that this is more than just good marketing from IBM, it’s the core of its strategy. And that’s a fairly healthy place to be right now: Many firms tell Forrester that analytics is at the top of their list of emerging technology efforts. 58% of firms Forrester surveyed recently indicated that they’ve either implemented or are planning to implement, expand, or upgrade their BI tools over the next 12 months.

Some observations about GBS from this event: 

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SingTel Makes Good Progress, But Questions Over IT Services Capabilities Remain

Fred Giron

Clement Teo, Dane Anderson, Frederic Giron

At an analyst briefing in Singapore on November 7, newly minted SingTel Group Enterprise CEO, Bill Chang, laid out his vision on how the group’s reorganization aims to build the foundation for SingTel to become the largest ICT services provider in Asia Pacific in an ambitious five years.

For Sourcing and Vendor Management professionals, here’s a quick summary:

  • SingTel Group Enterprise: SingTel Business Group, NCS, Enterprise Data and Managed Services (EDMS) and Optus Business (including Alphawest) are now one entity as of 1 Nov 2012.
  • Converged capabilities: This organizational transformation converges SingTel’s Telco and IT service competencies for a one-stop ICT experience, and simplifies delivery capabilities to enable large scale global deployments. In a nutshell:  SingTel is aiming to create a repeatable and more scalable product set.
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Microsoft’s Tablet And Smartphone Licensing: Still Counting Devices When The World Only Wants To Count Users

Mark Bartrick

Over the last few years, there have been fantastic advances in technology that have brought us almost a billion smartphones and tablets. These handy mobile computers give us access to our Microsoft Windows and Office products anytime and from anywhere. No longer are we tied to the old clunky desktop device in the office. This is good stuff: It lifts the age-old location-dependent restrictions that meant nothing got done unless you were physically in the office.

There’s only one hitch: Microsoft continues to apply licensing models that count physical devices. Device counting is fine if I have multiple access devices each with their own Windows and Office software versions installed. But when I only have one version of Windows and Office but wish to access that version remotely or virtually via multiple access devices, why should I have to pay more for the privilege? In today’s increasingly cloud-delivered software world that simply counts users not devices, that’s the question more and more people are asking.

Some details: With Windows 8, users that have a "primary device" licensed under a volume agreement with Software Assurance (SA) for Windows can access Windows on- or off-premise on up to 4 devices by buying the new Companion Subscription License (CSL). Prior to the advent of the CSL, each extra device required a Virtual Desktop Access (VDA) subscription in order to provide virtual access to their Windows desktop.

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Profit Warning! A Software Asset Sprawl Will Weaken IT Service Providers' Financials

Fred Giron

I recently reviewed a portfolio of about 600 software artifacts from 16 large IT service providers. This daunting exercise complements a research stream I have been working on since the beginning of the year on the future of the IT services industry. While I believe the move to software asset (SA)-based IT services will drive maturation of the services industry and help IT service providers remain relevant to their clients, the analysis of this SA inventory raises a few significant challenges:

  • Most software assets face scalability issues. Traditional sales and marketing organizations within IT service providers fail to sufficiently scale up the number of clients for their SA-based offerings. Case in point: 68% of the software assets analyzed in this inventory have fewer than five clients. This low number raises concerns on the financial viability of these offerings for service providers.
  • Service providers will face a SA sprawl over the next couple of years. On average, service providers currently have about 20 SAs in their SA portfolio. The analysis shows that this number is growing exponentially (see below). The number of SAs created has increased by an average of 26% each year since 2009 and is accelerating. More assets were created in the first six months of 2012 than in any previous entire year; SA-related investments are following a similar trajectory.
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Upsell Versus Downbuy – Purchasing Meets Sales At IBM’s Smarter Commerce Event

Duncan Jones

Last week I was a guest at IBM’s Smarter Commerce event, mainly to see what it has been doing with Emptoris, which it acquired seven months ago. You may recall that I blogged certain misgivings when IBM announced the takeover (IBM's Acquisition Of Emptoris Further Reduces IT Sourcing Professionals' Options), and, though I still have concerns, I’m very encouraged by what I saw at the event:

·         Firstly, there was still a good focus on sourcing and procurement in the Empower event-within-an-event. IBM has preserved Empower’s best quality (and that of Ariba Live and Zycus Horizon, btw), which is that there is always lots of trends and best practices content, and not too much product plugging. Most of the event was aimed at marketing, selling, and servicing, but there was plenty for sourcing attendees too. For example, there were keynotes from the CPOs of AB InBev, Conoco Philips, and IBM itself about their priorities and how they are addressing them.

·         IBM leaders, including Craig Hayman, General Manager Industry Solutions, gave a clear and credible vision of Smarter Commerce. Hayman portrayed his Buy, Market, Sell, and Service quadrants as discrete offerings sharing common principles and technology, rather than an engineered stack that only works properly if you buy it all — best-of-breed complements to ERP, not a rival suite.

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Microsoft — Innovator Or Aggregator?

Mark Bartrick

Vanity Fair ran a terrific article in its recent August issue, entitled "Microsoft’s Lost Decade." The gist of the article is that since 2000, Microsoft, under the guidance of CEO Steve Ballmer, has fallen flat and failed in most new arenas it’s tried to enter: e-books, music, search, social networking, etc. It also highlights that in recent years, Microsoft has been much more of a follower than an innovator. So it should be no surprise then that at our recent Forrester Research sourcing and vendor management Forums, I found that the one vendor that inspired most discussion, disagreements, and polarized opinion amongst the attendees was Microsoft.

Why? The theme of our Forums was "innovation," and this question repeatedly arose: Is Microsoft ready to take back a position as a leading innovator? It certainly dominates the market, and its huge revenues always cause mutterings of discontent (or is it jealousy?) from others in the market, but when it comes down to innovation — and to paraphrase Monty Python — just what has Microsoft ever given us?

Let me give you a straw poll of comments overheard at our recent Forums:

·         Various operating systems for the fledgling PC market had been around before IBM handed the golden goose to Microsoft to deliver an operating system for its entry into the PC market place.

·         On the desktop, Lotus 123 was the first good spreadsheet and WordPerfect was the first good word processing program. Both were crushed when MS Office came along offering what many at the time thought were inferior products in Excel and Word, but which enjoyed the benefits of being bundled into one integrated suite.

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