70pc of CIOs to change tech-sourcing relationships in next three years

19 Mar 2014

Seismic changes are afoot in the tech buying space with 70pc of CIOs expected to change their technology and sourcing relationships in the next two to three years, according to a global survey by Gartner.

“The picture is clear for service providers as clients are struggling to keep up with change,” said Eric Rocco, managing vice president at Gartner.

“They are strongly considering changing the providers they work with as part of responding to this change. Market share will shift to service providers able to help clients respond to the business and IT opportunities and challenges that are overwhelming 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,” Rocco said.

Gartner believes that assisting clients in digital business transformation will be a driving factor in the majority of IT services opportunities.

Agility, not cost, will be a deal-clincher

Cloud-based infrastructure as a service (IaaS) and business process as a service (BPaaS) are the two fastest-growing segments, expanding 44.9pc and 12.4pc, respectively, in 2014. Agility, not cost, will be the primary reason that many organizations adopt cloud computing.

Cloud-based services are cannibalizing more traditional models. This is most apparent in infrastructure outsourcing where infrastructure utility services (IUS), managed services based on IaaS technology, and cloud IaaS growth include workloads moving from more traditional data center managed services to IUS and IaaS, respectively.

Hybrid IT environments will dominate client IT architectures over the next several years. This underscores the importance of skills in the old-world legacy environments, as well as the new-world as-a-service operating models. 

“The strategic challenge facing service providers is to better understand client value drivers, and to more effectively articulate their own value propositions,” Rocco said.

“Our key recommendations, regardless of business model or service segments of focus, for IT services providers are to target new buying centers 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.”

CIO image via Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years