Johan HallbergResearch Manager
Nordic Digital Transformation and the impact for Services Vendors
January 28h 2016
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Automation is changing way of work, fast!
Changes in business models
– demand for services instead
of products
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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?
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Digital or dead!?
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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
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and Enterprise IT
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Disrupted business modelsThese organization are natively digital…
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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
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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?
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Maintaining relevance
Learning the business
Applying relevant technologies to make a difference
Security and Governance
Focus on the real customer
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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
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http://uk.businessinsider.com/netflix-intuit-juniper-go-all-in-on-amazon-cloud-2016-1
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Is Amazon eating the IT outsourcing Industry?
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Is Amazon eating the IT outsourcing Industry?
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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 $1B in developers and insourcing!2. Technology – Build vs Buy, differing software and algorithms that allows us
and our customers to run the business differently. 3. Leading partners – Migrating 9000 apps (including 300 ERPs) all into AWS
into 4000 apps. Going from 34 to 4 data centres, keeping only mission critical data (the “Secret Sauce”).
For GE – “the Cloud has gone from probable to inevitable”
Global-Regional Outsourcers
Caught in A Competitive Vise
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Wipro
InfosysTech
Mahindra
TCS
HCLAmazon
Concur,SuccessFactors
(SAP)
Salesforce.com
Taleo(Oracle)
NetSuite
India-based Outsourcers
Cloud Service Providers
IBM
CSC HP
EVRY Fujitsu
Capgemini
Global-regional IS outsourcers are being “squeezed” by India-based outsourcers and “pure-play” cloud service providers.
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Increase spending significantly9%
Increase spending somewhat
33%Keep spending on cur-rent level
41%
Reduce spending somewhat
10%
Reduce spending significantly4% Don't know
4%
To what extent do you expect to change your total IT spend-ing in the next 12-18 months?
Source: IDC 2016 - Nordic CxO Study
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European ICT Market & GDP Expectations in 2016
-4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0%
-1.5%
-0.5%
0.5%
1.5%
2.5%
3.5%
AustriaBelgium
Denmark FinlandFrance
Germany
Greece
Ireland
Italy
NetherlandsNorway
Portugal
SpainSweden
Switzerland
United Kingdom
ICT Forecast 2016
GD
P Fo
reca
st 2
016
Size of bubble: ICT Spend-ing in 2015
Source: IDC European Black Book v3, 2015; Economist Intelligence Unit, October 2015
ICT Opportunity equals US$ 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
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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
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How To Get There?Why IDC Nordic Services & Sourcing?
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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.
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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%
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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
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Think innovatively; Enable 3rd Platform Excellence.
IT ServicesTalentPartnerships BusinessTransformation
WorkforceTransformation
Customer Relationship
Transformation
What can you change?
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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
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