The analysts at research firm Ovum have a new report out, “2013 Trends to Watch: Bundled Outsourcing,” that looks at the phenomenon of IT services bundling and how it will influence the IT market in 2013.
And its main conclusion is that based on five-year planning cycles, what buyers want most is stability.
Jens Butler, Principal Analyst, IT Services at Ovum, said, “The fact that we live in very uncertain times makes investment decision-making even more difficult. With continuing instability across the global markets and even in locations with historically robust growth such as China and India, the outlook for IT services in 2013 is unpredictable… Enterprises will be looking for greater reliability in their IT usage and, as a consequence, seeking stability, capability and accessibility among their external service providers.”
As part of the report, the author highlights that these observations are in line with recent trends in Ovum’s Bundling Index, which suggests buyers have an increased desire for longer term commitments and extended-scope outsourcing engagements.
Ovum believes that as a result in 2013, the push to fill out portfolios, especially across some of the newer technology arenas such as mobility, analytics, social and cloud, will continue to grow and a multitude of vendors will look to take advantage of this desired technology adoption. What it may mean to the market is that buyers based on the desire of having a trusted throat to choke in managing their way forward may increasingly turn to a single supplier to deliver these services.
That said, Butler provides a cautionary note that buyers need to make sure that the decision to put most if not all of their eggs in a single vendor basket, particularly as it relates to the increased use of outsourcing need to be wary. He says that the goal is that such relationships do not become yet another “black box’ style engagement, and recommends they invest in governance experience and solid vendor management models.
On the flip side, he is also recommending that vendors broaden their existing portfolios to prepare for the potential upswing in late 2013.
The report highlights an interesting conundrum for IT professionals along with those looking for their business. The so-called “new normal” has one major characteristic, and that is that the only thing that is certain is that unpredictability regarding “E”verything will be the order of the day, and that the speed at which change takes place/unpredictability occurs will only accelerate.
This relates not just to the speed at which new technologies will appear vying for attention, but also the speed at which customer requirements will change with the possibility because of better information and more options that disloyalty will increase.
It is this acceleration of everything that appears to make the word “stability” more aspirational than realistic in the Ovum formulation. It does, however, accentuate the need for “capabilities” that can be validated, monitored and measured.
And, the term “accessibility” probably should be considered a proxy for the word “trust.”
Is Ovum correct? Is stability really a deal breaker when it comes to purchasing decisions? It can be an invitation to not evaluate new approaches as well as get tied down by that black box. How will vendors react to providing the proof cases in portfolio expansion and commitments to being adaptable themselves to changing circumstances in terms of forging longer-term relationships in a world where viable alternatives are only a click away?
These are imponderables as we start the year. It’ll be interesting to see at the end of the year if there is market confirmation of where Ovum thinks things are heading.
My own suspicion is that they may have missed an important word in their list, “accountability.” IT professionals have enormous risk mitigation obligations and liability exposures. It’s hard to imagine that the assurance of having contracts that are clear about expectations and responsibilities are not at the top of the list when they are looking at whom they can trust as long-term partners.
It will be interesting to see how all of this shakes out by the end of the year.