IT OUTSOURCING STUDY 2016 NORDICS - Version2 · PDF fileIT OUTSOURCING STUDY 2016 NORDICS ......
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IT OUTSOURCING STUDY 2016 NORDICS
Whitelane Research & PA Consulting Group
Press Presentation
14 April 2016
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© 2016 Nordic IT Outsourcing Study
I. Introduction and research methodology
II. IT outsourcing trends
III. Service provider performance
- General satisfaction and Key Performance Indicators
- Satisfaction by IT domain
IV. Additional sourcing/governance trends
- Sole sourcing and nearshore/offshore experience
- Governance capabilities
- Cloud computing satisfaction
Agenda
Agenda
I. Introduction and research methodology
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© 2016 Nordic IT Outsourcing Study
Whitelane Research
About Whitelane Research and PA Consulting Group
Introduction and research methodology
PA Consulting Group
PA is a leading independent sourcing advisor.
Management Consulting firm operating worldwide with
over 2,500 employees
Broad set of business consulting, technology and innovation services
330 consultants in the Nordics
Nordic IT sourcing
presence
In PA Nordic, we have a team of more than 40
consultants focused primarily on sourcing.
IT sourcing
PA has advised on more than 700 sourcing
engagements for more than 600 clients world-wide, with
sourcing representing 20% of PA’s revenue.
Independent
PA is independent from service providers, technology
and solutions and assist our clients evaluate the most
suitable options and opportunities.
An independent organisation
uniquely focused on and
dedicated to (out)sourcing
research and events.
IT Outsourcing Studies
conducted in 13 European
countries
Best Practices Groups for
End-Users
End-User/Service
Provider events
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© 2016 Nordic IT Outsourcing Study
More than 300 participants of the top IT spending organisations in
Denmark, Finland, Norway and Sweden that have evaluated close to 1,000
unique IT outsourcing contracts
29 IT service providers have been evaluated and ranked based on the opinion
of their clients (not on the opinion of Whitelane Research or PA Consulting)
In order to be ranked in this report, service providers must have at least 8
client evaluations for general satisfaction
In order to be ranked in the application, infrastructure and end-user rankings,
service providers must have at least 7 client evaluations for these
respective IT areas
Whitelane Research has been responsible for the data collection via an online
survey questionnaire. Participants are CIOs, CFOs or their direct reports
Both Whitelane Research and PA Consulting Group are completely
independent organisations.
Research methodology
Introduction and research methodology
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© 2016 Nordic IT Outsourcing Study
19%
17%
11%
11%
9%
8%
7%
6%
3% 3%
2% 2% 2%
The survey covers all top spending organisations across all sectors
Introduction and research methodology
N = 317
Financial services
Telecommunications
Other
Public Sector
Energy/Utilities, Oil & Gas
Entertainment/Media
Retail, Wholesale
Consumer Packaged Goods
Foods/Beverages
Healthcare
Pharmaceutical
Manufacturing
Transportation & Logistics
Professional Services
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Other; 200
CGI; 68
Tieto; 60
EVRY; 54
ATEA; 48
Capgemini; 44 TeliaSonera; 43 IBM; 42
TCS; 41
Accenture; 40
Fujitsu; 34
Telenor; 30
HP; 29
TDC; 27
Elisa; 24
Atos; 21
CSC; 21
HCL; 19
Wipro; 15
Cognizant; 14
Infosys; 14
KMD; 13
AT&T; 12
BT; 11
L&T Infotech; 11
Verizon; 11 Volvo IT; 10 NNIT; 9 Basefarm; 8
Tech Mahindra; 8
Close to 1,000 outsourcing contracts have been evaluated, enabling us to rank the top 29 IT outsourcing providers
in the Nordics
Introduction and research methodology
N=981
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© 2016 Nordic IT Outsourcing Study
I. Introduction and research methodology
II. IT outsourcing trends
III. Service provider performance
- General satisfaction and Key Performance Indicators
- Satisfaction by IT domain
IV. Additional sourcing/governance trends
- Sole sourcing and nearshore/offshore experience
- Governance capabilities
- Cloud computing satisfaction
Agenda
Agenda
II. IT outsourcing trends
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© 2016 Nordic IT Outsourcing Study
Even more sourcing is still on the agenda in the Nordics
IT Outsourcing trends
We don’t know yet
There will be no change
We will outsource less
We will outsource more
46%
39%
8%
7%
47%
26%
15%
11%
DENMARK
27%
53%
10%
10%
FINLAND
54% 33%
6% 7%
NORWAY
45%
43%
6% 6%
SWEDEN
N = 317
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With higher satisfaction levels the focus of
improvement of service quality is dropping
The need for scalability, flexibility and lack of
talent drives the need for access to resources
Organisations do not have flexible capacity and
capabilities to drive major business transformation
2%
21%
36%
21%
43%
51%
54%
67%
4%
14%
33%
29%
50%
60%
54%
63%
7%
17%
25%
29%
46%
50%
53%
62%
5%
15%
24%
34%
38%
57%
62%
67%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other
More transparency on costs
More financial flexibility
Business transformation
Improvement of service quality
Focus on core business
Access to resources
Cost reduction
Access to resources is becoming a prime reason for outsourcing in the Nordics
IT outsourcing trends
N = 146
2015
2014
2016
2013
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MACRO-ECONOMIC FACTORS AS A
FACTOR FOR OUTSOURCING
The oil and gas industry is the largest
sector in Norway in terms of value. In 2015,
due to the sharp and continuous decline in
the oil price, there was a 27% drop in
revenue from NOK 312 billion in 20141.
The Norwegian organisations have the
most appetite for outsourcing more and
81% defined cost reduction as a reason for,
up from 73% in 2015 and , indicating a
desire to reduce or control overall costs
with the means of outsourcing2.
1 www.norskpetroleum.no, retrieved 28-02-2016. 2 2015 Nordic IT Outsourcing Study,
Whitelane and PA Consulting
The reason to outsource varies across borders, while cost reduction is still a high priority in Norway due to macro-economic
factors
IT outsourcing trends
12%
12%
16%
28%
28%
52%
68%
72%
More financial flexibility
Other
More transparency on costs
Improvement of service quality
Business transformation
Cost reduction
Focus on core business
Access to resources
Denmark
0%
14%
21%
29%
43%
50%
57%
64%
Other
More transparency on costs
Improvement of service quality
More financial flexibility
Focus on core business
Business transformation
Cost reduction
Access to resources
Finland
3%
11%
22%
31%
47%
53%
53%
81%
Other
More transparency on costs
More financial flexibility
Business transformation
Improvement of service quality
Focus on core business
Access to resources
Cost reduction
Norway
3%
18%
34%
37%
39%
55%
61%
61%
Other
More transparency on costs
More financial flexibility
Business transformation
Improvement of service quality
Focus on core business
Cost reduction
Access to resources
Sweden
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© 2016 Nordic IT Outsourcing Study
I. Introduction and research methodology
II. IT outsourcing trends
III. Service provider performance
- General satisfaction and Key Performance Indicators
- Satisfaction by IT domain
IV. Additional sourcing/governance trends
- Sole sourcing and nearshore/offshore experience
- Governance capabilities
- Cloud computing satisfaction
Agenda
Agenda
III. Service provider performance
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© 2016 Nordic IT Outsourcing Study
1% 3% 6%
29%
50%
11%
General high satisfaction among clients in the Nordics
Service provider performance
Very unsatisfied Unsatisfied Somewhat unsatisfied
Somewhat satisfied Satisfied Very satisfied
DENMARK FINLAND
NORWAY SWEDEN
1% 2% 4%
29%
52%
12% 2% 1% 6%
30%
51%
9%
1% 5% 9%
30% 44%
11% 1% 3% 5%
27%
50%
14%
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How satisfied are you in general with your service provider(s)?
Service provider performance
62%
64%
64%
65%
67%
67%
68%
69%
69%
69%
70%
71%
71%
71%
72%
72%
73%
73%
73%
73%
74%
75%
75%
76%
76%
78%
80%
80%
81%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
BT
Verizon
EVRY
Atos
AT&T
TDC
Tieto
IBM
KMD
Fujitsu
HP
CGI
ATEA
CSC
TeliaSonera
Capgemini
HCL
Cognizant
Wipro
Elisa
Volvo IT
L&T Infotech
Telenor
NNIT
Infosys
Basefarm
Tech Mahindra
Accenture
TCS
Average = 72%
# of contracts
41
40
8
8
14
9
30
11
10
24
15
14
19
44
43
21
48
68
29
34
13
42
60
27
12
21
54
11
11
Key to scores
Very satisfied 100%
Satisfied 80%
Somewhat satisfied 60%
Somewhat unsatisfied 40%
Unsatisfied 20%
Very unsatisfied 0%
Larsen & Toubro Infotech
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How satisfied are you in general with your service provider(s)? (Comparison with last year)
Service provider performance
CHANGES FROM 2015 to 2016
• TCS tops the list as last two years,
however their satisfaction has
dropped from 87% to 81%
• HCL and Cognizant have dropped
significantly on their customer
satisfaction score (from 82% to 73%
and 81% to 73%)
• The Indian heritage providers are
not as dominate in the ranking as
previous years! However in general
they score high due to their
continuously strong focus on building
trust-based relationships
• Accenture has strengthened its
performance since last year by
continuing to score above average on
the majority of the KPIs
• Regional players like Evry, Tieto,
KMD and ATEA are struggling to
satisfy their customers at same levels
as other competitors.
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© 2016 Nordic IT Outsourcing Study
General Satisfaction by Country: Denmark
Service provider performance
Denmark
• 15% planning to in-source
• Access to resources the key driver and
focus on business
• General satisfaction is highest in the Nordic
region
65%
70%
70%
71%
74%
76%
76%
76%
76%
77%
77%
78%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
TDC
KMD
ATEA
CGI
Telenor
NNIT
IBM
Accenture
CSC
HP
HCL
TCS
Average = 74%
Key to scores
Very satisfied 100%
Satisfied 80%
Somewhat satisfied 60%
Somewhat unsatisfied 40%
Unsatisfied 20%
Very unsatisfied 0%
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62%
62%
63%
67%
68%
69%
70%
72%
73%
75%
75%
80%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Capgemini
Atos
IBM
CGI
HP
Tieto
Wipro
Fujitsu
TeliaSonera
TCS
Elisa
Accenture
General Satisfaction by Country: Finland
Finland
• 10% planning to in-source
• Access to resources the key driver and
Cost reduction
• General satisfaction is lower than the rest
of the Nordic region
Service provider performance
Average = 70%
Key to scores
Very satisfied 100%
Satisfied 80%
Somewhat satisfied 60%
Somewhat unsatisfied 40%
Unsatisfied 20%
Very unsatisfied 0%
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59%
63%
68%
75%
75%
76%
80%
85%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
EVRY
CSC
ATEA
Cognizant
Capgemini
Telenor
TCS
Accenture
General Satisfaction by Country: Norway
Norway
• 54% are looking to outsource more
• Only 6% plan to outsource less
• Cost reduction is by far the key driver and
Access to resources
• General satisfaction is high
Service provider performance
Average = 73%
Key to scores
Very satisfied 100%
Satisfied 80%
Somewhat satisfied 60%
Somewhat unsatisfied 40%
Unsatisfied 20%
Very unsatisfied 0%
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60%
63%
65%
67%
68%
68%
70%
70%
71%
73%
74%
75%
76%
76%
77%
80%
80%
86%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Fujitsu
HP
IBM
Atos
Tieto
EVRY
TDC
Infosys
TeliaSonera
Volvo IT
ATEA
CGI
Telenor
Capgemini
Wipro
HCL
Accenture
TCS
General Satisfaction by Country: Sweden
Sweden
• Only 6% plan to outsource less
• Access to resources the key driver and
cost reduction
• General satisfaction is high, however lower
than Denmark and Norway
Service provider performance
Average = 72%
Key to scores
Very satisfied 100%
Satisfied 80%
Somewhat satisfied 60%
Somewhat unsatisfied 40%
Unsatisfied 20%
Very unsatisfied 0%
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© 2016 Nordic IT Outsourcing Study
General satisfaction in Sweden – 4 year comparison (2/2)
Service provider performance
Sweden
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Fujitsu
HP
IBM
Atos
Tieto
EVRY
TDC
Infosys
TeliaSonera
2015
2014
2016
2013
20
62%
63%
66%
67%
68%
68%
68%
69%
70%
70%
70%
70%
71%
71%
71%
71%
71%
72%
72%
74%
75%
77%
78%
82%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
AT&T
BT
T-Systems
Verizon
CSC
Orange Business Services
IBM
Fujitsu
Telefónica
Vodafone
CGI
Atos
Wipro
Sopra Steria
Unisys
Capgemini
HP
HCL
Infosys
Tech Mahindra
Accenture
Computacenter
Cognizant
TCS
Average = 71%
# of contracts
157
92
82
192
35
86
73
179
229
34
66
83
224
164
58
63
124
246
74
82
68
98
130
61
Europe
General Satisfaction by Country: Europe (2015/2016)
Key to scores
Very satisfied 100%
Satisfied 80%
Somewhat satisfied 60%
Somewhat unsatisfied 40%
Unsatisfied 20%
Very unsatisfied 0%
Service provider performance
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Key Performance Indicators (KPI) model
Service provider performance
Transformation
Dimension
Service Delivery
Dimension
Relationship
Dimension
General
satisfaction
Account management quality
Escalation
effectiveness
Service delivery quality
Reporting
quality
Innovation
Transformation quality
Pro-activity
Commercial
Dimension
Contractual flexibility
Price level
The service provider has a good and effective escalation process?
The account management is of good satisfactory quality?
The service provider provides deliver us with all required
information in a timely and accurate way?
The service provider is proactive in coming up with new
ideas to make the relationship more successful?
The service provider has the ability to drive change and successful
transformation?
Business
Value
Trustworthiness
The service provider drives innovation e.g. new innovative
technologies and services?
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48%
31%
21%
Majority of private sector negotiate with the existing vendor first, but 1 in 3 will go directly for a competitive process.
Additional sourcing/governance trends
First negotiate with the existing vendor
Directly run a competitive process
N/A – I don’t know
If you are working in the private sector, will you
first try to negotiate the renewal process with
the existing vendor or directly run a
competitive process?
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Clients expect to utilize Nearshoring and Offshoring more in the future
Additional sourcing/governance trends
Decrease Remain the same Increase N/A / I don’t know
Nearshoring Offshoring
7%
42%
29%
22%
7%
34%
40%
19%
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Clients and Service Providers agree that IT should be responsible for managing the governance, but Service Providers believe
that the Business should be much more involved or even sit in the driving seat during the selection process
Additional sourcing/governance trends
IT department
Procurement
Business
N/A – I don’t know yet
82%
62%
9%
19%
5%
16%
3%
3%
0% 20% 40% 60% 80% 100%
At th
e g
ove
rnance
pro
cess (
man
agin
g the
vend
ors
)D
uring t
he s
ele
ction
pro
cess
Clients:
Who should sit in the driving seat?
81%
33%
10%
19%
10%
48%
0% 20% 40% 60% 80% 100%
At th
e g
ove
rnance
pro
cess (
man
agin
g the
vend
ors
)D
uring t
he s
ele
ction
pro
cess
Service Providers:
Who should sit in the driving seat?
25
© 2016 Nordic IT Outsourcing Study
Conflicting realities of clients sourcing capabilities – own perception is far from Service Providers
Vendor Survey
Viewpoints on Sourcing capabilities
• Transition is still an area where both clients
and suppliers see a need to improve client
capabilities
• In Governance and supplier management
suppliers have a more negative view on
client capabilities than the clients
Very unsatisfied
Unsatisfied
Somewhat unsatisfied
Somewhat satisfied
Satisfied
Very satisfied
Clients:
With regard to your own organisation, how satisfied are
you with the following governance capability areas?
1%
1%
4%
7%
2%
5%
13%
14%
12%
11%
35%
36%
27%
28%
40%
36%
49%
42%
8%
6%
10%
13%
0% 20% 40% 60% 80% 100%
Governance and suppliermanagement
Transition management
Supplier selection andcontracting
Sourcing strategy
Service providers:
How mature do you consider your clients in general with
their capabilities in the following areas?
10%
19%
29%
33%
24%
14%
29%
24%
19%
38%
33%
24%
48%
38%
10%
10%
0% 20% 40% 60% 80% 100%
Governance and suppliermanagement
Transition and changemanagement
Supplier selection andcontracting
Sourcing strategy
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© 2016 Nordic IT Outsourcing Study
57% 29%
14%
Service providers: How would you recommend clients to
integrate multiple service provider contracts into one seamless service?
71%
2%
11%
16%
Clients: How do you integrate multiple service provider contracts into one seamless
service?
Conflicting realities of service integration – clients maintain it in-house, whereas service providers prefer an external provider
Vendor Survey
Internally
Via an external independent provider (not a tower provider)
Via an external service provider that also delivers another tower
I’m not sure – N/A
Viewpoints on service integration
- Currently, clients keep service integration in-house whereas service
providers prefer that an external, primarily a service tower provider, is
responsible for SIAM
27
© 2016 Nordic IT Outsourcing Study
The majority of organisations plans to increase their usage of public clouds
Additional sourcing/governance trends
Decrease
Remain the same
Increase
N/A / I don’t know
1% 12%
67%
20%
65%
65%
65%
69%
73%
74%
80%
0% 20% 40% 60% 80% 100%
Oracle
SAP
Citrix systems
Microsoft
Salesforce.com
Amazon
Are you planning to decrease/increase the
usage of public cloud?
How satisfied are you in general with these
public cloud vendors?
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CONTACTS
Vendor Survey
Jef Loos
Head Sourcing Research Europe
Whitelane Research
Email: [email protected]
Mobile: +32 (0) 475 23 08 52
whitelane.com
Søren Knudsen
Partner
PA Consulting Group
Email: [email protected]
Mobile: +45 27 88 36 14
paconsulting.com
APPENDIX IT OUTSOURCING STUDY 2016 NORDICS
Whitelane Research & PA Consulting Group
March 2016
30
© 2016 Nordic IT Outsourcing Study
Agile methods are widely adopted in Service Providers service delivery models
Additional sourcing/governance trends
Do you or your IT suppliers use agile
methods?
No I’m not sure – N/A Yes
77%
13%
10%