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The Future of IT Services
Bryan Britz
Managing Vice President
June 2014
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Torrential Changes and a Confidence Crisis
will Reshape Service Provider Landscape
"My business and its IT organization are
being engulfed by a torrent of digital
opportunities. We cannot respond in a
timely fashion, and this threatens the
success of the business and the credibility
of the IT organization."
70%
CIOs will change their
technology and sourcing
relationships in the next 2 to
3 years for a variety of
reasons.
46%
Need to work with new
categories of partners, e.g.:
Source: Gartner December 2013)
n = 2,339
Taming the Digital Dragon: The 2014 CIO Agenda (G2643926)
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Mobility Cloud
Digital Agency
Big Data Analytics Social
The 3rd Era of Enterprise IT
IT Craftsmanship
IT Industrialization
Digitalization
Technology
Processes
Business Models
Capabilities
Programming, system
management
IT management, service
management
Digital leadership
Engagement
Isolated, disengaged
internally and externally
Treat colleagues as
customers, unengaged with
external customers
Treat colleagues as partners,
engage external customers
Sporadic automation and
innovation, frequent issues
Services & solutions,
efficiency & effectiveness
Digital business innovation,
new types of value
Focus
Outputs &
Outcomes
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Top Trends
Privacy and Security
Awareness
Cloud
Cognitive Automation
Anti-Globalization
Policies and
Protectionism
Internet of Things
Gen Y Leaders
Analytics
Economic
Fluctuations and
Rise of Emerged
Emerging Markets
Mobile
Social
Portfolio
Rationalization
Business Buying
Center Shift
Just-In-Time Service Supply
Chain Ecosystems
Crowd Sourcing
Consumerization
Digital Business
Transformation
Reducing Labor
Arbitrage Advantage
Magnitude of impact
Business OutcomeBased Value and
Pricing Models
Disruptive New
Competitor Types
Re-Insourcing
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
3
New World Providers will Win
Industrialized
Capabilities
Access
New
World
Social
Mobile
Information
Cloud
Contracted for
Effort
Old
World
Labor-Based
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Dedicated
Assets
Outcome-based
Consumption
CIO’s Top Technology Priorities in 2014
Continue to Bridge Old and New Worlds
Ranking Based on How Many CIOs Cited Each as
a Top-Three New Spending Priority for 2014
Source: Gartner December 2013)
n = 2,339
Taming the Digital Dragon: The 2014 CIO Agenda (G2643926)
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
15
Bi-Modal IT Emerges
Agile
development
Waterfall
development
Known vendors
Innovative partners
Stuck in the middle
Strong governance
Lightweight "Just good
enough" governance
Minimized risk
Managed risk
"Fit for no one"
Technology teams
Traditional Mode
Multidisciplinary teams
Nonlinear Mode
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
27
Service Providers Must Expand their
Sphere of Influence and Impact
38% of IT Spending is Decentralized; 62% is Centralized
Other, 8%
Legal/Regulatory/C
ompliance, 1%
Customer Service
and Experience, 3%
Human Resources,
3%
Supply
Chain/Logistics, 3%
Sales, 3%
Marketing and
Communications,
4%
Centrally Managed
IT Spending, 62%
CFO/Finance, 4%
Chief Operating
Officer/Operations,
8%
Source: Gartner (June 2013)
n = 1,523
IT Metrics: A Critical Evaluation of Decentralized IT Spending and Digital Enterprise Readiness (G2529215)
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
7
Physical “things” exploding growth into
2020
Installed “things” by 2020
Internet of Things
30B
Personal Devices
7.3B
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Assumption: The component cost of
IoT-enabling consumer things will
approach $1, and "ghost" devices with
unused connectivity will be common.
Digital Business Scenario: The Car Crash
1.Smart Phone
detects sudden
deceleration.
6. Estimates for repairs sent
to smart phone from
different companies.
Negotiations ensue to get
best price and delivery.
8. Smart phone notifies
next of kin via text
messages and Facebook.
2. Smart phone
interrogates
passenger clothing
for vital signs.
7. Meanwhile, smartphone
interrogates nearby video
cameras to collect digital
evidence of the car crash as
it occurred.
9. Smart phone sends
information portfolio to
law firms for assessment.
3. Smart phone sends
information to medical
emergency first responders and
opens up communications lines
for survivors..
4. Smart phone
interrogates vehicle
systems for damage
report.
5. Damage report sent
to fire, police, towing,
and insurance
companies.
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Service Provider Approaches to Digital
Business
• Digitization through technology
- Nexus of forces applied to add value
- Evolution of “Renovate the Core” from a technology perspective
• Run to Digital Transformation
- Evolutionary approach to business transformation
- Renovate the core to achieve business operational improvement
to improve profitability of business operations
• Advise to Digital Transformation
- Business strategy transformational approach to Digital Business
- Top down redesign of entire functional areas to achieve
competitive business differentiation and grow revenue
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
10
Digital Use of "Crowds" as an
"Accessory"
• Consumer goods
companies in touch
with customers
• Better
crowdsourcing
technology
• Affinity for culture
and style of the
consumer
Flags
Why?
By 2017, over half of consumer goods manufacturers will employ
crowdsourcing to achieve fully 75% of their consumer innovation
and R&D capabilities.
• Increase in
crowdsourcing
applications in
online consumer
goods platforms in
2014
• Crowdsourced
revenue boost
What to do?
CIOs must focus on building the right culture to support bottom-up contribution. Without
it — and without employees who care — these initiatives are likely to fail.
Authors: Don Scheibenreif and Michael Shanler
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Digitalization's Effect on Labor Grows
• Digitization <>
more jobs
• Kodak's 130,000
people versus
Instagram's 13
• Lower labor
Content
• Lower pay per hour
Flags
Why?
By 2020, the labor reduction effect of digitalization will cause
social unrest and a quest for new economic models in several
mature economies.
• Another "Occupy
Wall Street" type of
movement by the
end of 2014
• Bartering-based
systems and
voluntary roles rise
by 2015 in areas
such as patient
care.
What to do?
CEOs and boards must avoid using old economic models in the new digital reality.
Authors: Gregor Petri
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Service Industrialization Meets
Consumerization
Added Benefits Enablement
2
3
5
7
Pm
Au
Ai
Pe
Process Maturity
Automation
Advanced Insights
Personalization
Cost Reduction Enablement
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
Prevention-Based Mass Configurability
Your
Needs
?
?
??
?? ?
?
?
Others
Like You
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
2
3
Pm
Process Maturity
? ?
? ??
?
?
?
Au
Automation
5
7
Ai
Advanced Insights
Pe
Personalization
May We
Suggest
The Next “Next Gen” of Managed and Professional
Services
Next Generation Industrialization
2
3
Future Advancements in the Next, Next Gen
11
17
Pm
Au
Dp
Sb
Process Maturity
Automation
Dynamic Pricing
Sub-branding
5
7
13
19
Ai
Pe
Jt
Mt
Advanced
Insights
2008
Personalization
Just in Time Supply
Micro-transactions
2013
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.
2018
2025
© 2013 Gartner, Inc. and/or its affiliates. All rights reserved.