NILF 2014: RIMO is Dead, Long Live RIMO: Peter Bendor Samuel, Everest Group

RIMO is Dead, Long Live RIMO

February 2014

Proprietary & Confidential. © 2013, Everest Global, Inc. 2

The King is Dead

Long Live the King!


RIMO is disrupting the infrastructure market and redistributing the profit pool

IBM

Dell

HP

CSC

TCS

Wipro

HCL

Cognizant

13.3

7.1

8.7

0.4

23.7

19.5

18.2

18.8

Asset-light players more profitable2012; Operating margin in percentage


RIMO’s impact is far from over, having only captured a small part of the market to date

Source: Everest Group estimates

Asset-heavy players losing share2010-2012; CAGR in percentage

Annual IT outsourcing revenueUS $000

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

$20,000

2010

2011

2012

IBM Dell HP CSC TCS Wipro HCL Cognizant

0.03

0.7

-1.3

-1.4

31.9

15.8

28.3

42.8

As

se

t-H

ea

vy

As

se

t-L

igh

t

IBM

Dell

HP

CSC

TCS

Wipro

HCL

Cognizant

Avg. = -0.6%

Avg. = 27%


However, Cloud is growing at a rate that is disruptive

41.9%

19.3%

5.9%

3.1%

1 On-demand, shared IT infrastructure architecture 2 Includes Network and desktop outsourcing, help desk outsourcing, data center outsourcing, storage as a service, and end user compute3 Engagements with infrastructure service in scopeSource: Gartner; Everest Group analysis

2011 2012 2013

404328 307

2011 2012 2013

26

6270

Decrease in traditional ITO deal signings3

Number3

Increase in Cloud-related deal signings3

Number

5

ITO market segment 2012-2016 projected CAGR2012; Percentage

Cloud compute

Infrastructure utility1

ITO market

Traditional ITO segments2

Revenue inUS$ billion

16

250

190


New Business Capabilities

ImprovedEfficiencies/

Utilization

50% of all data center workloads are advantaged through cloud delivery

“Big Data”/

Analytics

Wave I Low Risk Extensions

Wave III Attacking the Core

AdoptionDriver

HCM

CRM

Collab.Marketing

Apps

WebSites

Test/Dev

DR/BCP

Backup/ Archive

“Spiky”LOB apps

Email

SCM

VirtualDesktop

ERP

TxnlApps Wave II

Driving Value

ILLUSTRATIVE


An example of the nature of Cloud advantage

1 Assumes average workload mix and profile; 15% of total peak workload hours shifted to public Cloud in an on-demand model; does not include application migration costsSource: Everest Group Cloud Value Assessment Model

Relative enterprise workload cost1

US$/GHz hrs

100%

60%

Public cloudVirtualized / Private cloud

Dedicated

60-65%

Hybrid cloud

25%

Peak load - Public cloud

Base load - Private cloud


Long term contracts are no defense against cloud

YR0 YR1 YR2 YR3 YR4 YR540

50

60

70

80

90

100

110

120

Cost index

Baseline

Traditional outsourcing procurement

Contracted floor

Next-Generation IT services solution

Solution differences

Structure Services Pricing

Long term commitment for defined service portfolio

Custom services and service level agreements (SLAs)

Resource unit pricing linked to assets

Hybrid roadmap of diverse IT service models

Standard services and SLAs

Pricing linked to model, including consumption-based

Alternative IT infrastructure solutions

Note 1: Baseline and Traditional Outsourcing Procurement based on actual client projections and executed service provider contract, includingtransition costsNote 2: Next Generation IT Services Solution estimates potential from executing roadmap of Next Generation IT initiatives to implement private Cloudand hybrid private/public Cloud solution over 4 years, including projected migration costs

CLIENT EXAMPLE


RIMO players are extending the arbitrage model to embrace new models

Provider DescriptionBuyer

Manage and transform the infrastructure landscape – 20 countries,19,000 employees, 80 locations

Management Tools as a Service platform – Transform IT operations desktops, storage,

compute, telecom, security, and databases

Manage SAP environment via a private cloud.– With client, consolidated 9 datacenters into 2,

eliminated over 1,000 servers– 35 locations more than 50% consumers

hosted on it

Source: Publicly available information


RIMO players are being out spent

CLIENT EXAMPLE

Approach: Full service public cloud

Softlayer (2013) - US$2 billion – Global Cloud infrastructure

UrbanCode (2013) – Software delivery automation

Green Hat (2012) – Software quality and testing for Cloud environments

Big Fix (2010) – Management and automation for security and compliance software updates

Approach: Management solutions on top of any next generation platform

Plain text Enstratius (2013) – Consolidated

management across multiple Cloud platforms

Multiple acquisitions (2012) - US$5 billion– Credant Software – Data protection– Gale Technologies – Infrastructure

automation– Quest Software – Value-added software

solutions/virtualization Boomi (2010) – SaaS integration


To recap

More remote management, fewer FTE’s

New skills set

Automated bursting

Self healing systems

Self-provisioning

SaaS…as a delivery model

Public cloud

Private cloud

Automation

Arbitrage

Delivery


The innovator’s dilemma

Traditional IT Infrastructure

RIMO

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New [email protected]+1-646-805-4000

[email protected]+1-647-557-3475



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NILF 2014: RIMO is Dead, Long Live RIMO: Peter Bendor Samuel, Everest Group

Technology

Transcript of NILF 2014: RIMO is Dead, Long Live RIMO: Peter Bendor Samuel, Everest Group