According to Gartner, 70% of chief information officers (CIOs) will change their technology and sourcing relationships in the next two to three years.
The global research firm says torrential changes will reshape the service provider landscape over the next several years as organisations struggle to adjust to a digital future. A recent global survey of CIOs by Gartner's Executive Programs found that 70% of CIOs will change their technology and sourcing relationships in the next two to three years, for a variety of reasons.
"The picture is clear for service providers as clients are struggling to keep up with change," says Eric Rocco, managing VP at Gartner, who adds that clients are strongly considering changing the providers they work with as part of responding to this change.
Rocco notes that the market share will shift to service providers able to help clients respond to the business and IT opportunities and challenges that overwhelm more than half of organisations today. Service providers need to convert this picture into an opportunity rather than a threat.
"Digital business is an unstoppable and irresistible catalyst for change - change that will affect the fundamental foundations and baseline assumptions of every business," states Rocco. "The digital business revolution is underpinned and enabled by the macro technology forces of cloud, social, analytics, mobility and the Internet of Things. Not every business fundamental will need to change to the same degree, nor will every technology driver have a role to play in every business scenario; however, businesses that decide to 'wait and see' are likely to become irrelevant."
Technology and service providers, according to Gartner, need to determine and demonstrate how their offerings can underpin, support, enable and accelerate the digital business revolution to remain relevant to their customers. Digital business requires providers to totally change the way they do things while helping their customers to do the same thing at the same time.
Gartner believes that assisting clients in digital business transformation will be a driving factor in the majority of IT services opportunities.
Also highlighted by the firm is that consumerisation and its impact on buyer expectations for consumer quality service experiences will reshape provider evaluation and selection criteria. Consequently, finding and capitalising on unexpected sources of growth is the strategic issue facing all service providers, reports the firm.
"IT spending buying centres across industries have steadily shifted away from the central IT function and to business buying centres," remarks Rocco. "Service providers of the future will articulate value in business terms such as key process outcomes and impact to key performance indicators (KPIs). Doing so requires deep vertical industry knowledge, and new go-to-market models."
The IT services market will not grow uniformly, it notes, the overall market is forecast to grow 4.6% in 2014. Hardware support is among the lower-growth opportunities in the IT services market. Through proactive and multivendor support models, these services will increasingly collide with outsourcing services.
"The strategic challenge facing service providers is to better understand client value drivers, and to more effectively articulate their own value propositions," said Rocco.
He concludes that key recommendations, regardless of business model or service segments of focus, for IT services providers are to target new buying centres through the audacity of visionary thinking; articulate value in terms of business outcomes and KPI attainment; and to industrialise and productise, without losing sight of service value.
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