Irene Pimentel

Irene Pimentel

Irene Pimentel is an IBRS analyst who focuses on news and information on the global IT Outsourcing market. Irene provides IBRS clients with up to date information on all outsourcing deals that are taking place helping our clients understand who is winning business in what markets. With over 10 years experience as a management consultant, Irene has worked with some of Australia's largest blue chip companies and public sector organisations. Irene has also worked as a research manager for an IT sourcing consultancy, providing clients with targeted intelligence and advice for their specific IT sourcing transactions.

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This month, the Lufthansa/IBM infrastructure outsourcing agreement, valued at $1.25B was particularly significant. These “big bang” outsourcing agreements have pared back the past few years because of difficulties associated with long-term contracts, such as vendor lock-in and expense, especially when project objectives are not met and client/vendor disagreements arise. 


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October has been a great month for ICT outsourcing contracts, with a wide range of agreement types, vendors and buyers representing different industries.  Particularly interesting is the high number of smaller providers establishing a real presence in the market.


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New service contract agreements have been prominent the past month, particularly with the Department of Defence. The Department of Defence has traditionally engaged in high volume, high value, complex projects and does invest a lot in IT to support its critical functions.


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This month there has been a significant increase in senior appointments, restructures, collaboration and purchases in the ICT industry. In particular, service providers are acquiring or partnering with technology vendors to integrate specialised and high quality products with their services. This highlights the demand in the market for access to new and developing technologies and associated services to take advantage of them. In order to stay competitive, service providers have been forced to move beyond basic service provision and include technologies as part of their service offerings.


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Discussions regarding unknowns that arise from multi-layered, hybrid and increasingly complex ICT environments have been prevalent this month. There is a recognition that, because of these variables, traditional tools and delivery models are often insufficient to ensure ICT environments function efficiently. Reviews indicate that difficulties can arise because of failures in the implementation of management and operational protocols as well as the critical tools needed to bind the many facets of an ICT environment together, to ensure operational effectiveness which all users can access and understand. For instance, user authentication systems that now require careful consideration and planning are often not feasible as they can require very specific expertise for just one small aspect of a large environment. IBRS Analyst James Turner will be discussing this particular issue in relation to authentication solutions, as well as potential response measures in a webinar to be held on July 31st.


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This month’s outsourcing deals were especially interesting, showing that the range of services available to outsource and the ways customers are using them has broadened and borders for providers are being eliminated. Vendors are becoming more specialised, as the trend to target outsourced services at particular business functions or objectives, to satisfy customer needs, has emerged. This has resulted in vendors adopting more flexible products, services and delivery models to accommodate a wider range of customers and their varied requirements. This is becoming clearer with potential customers, such as the Department of Health specifically stating it wishes to explore different service models, technologies, IT practices and market capabilities when searching for a new service provider.


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Particularly prominent this month was the high level of new senior appointments and employee rationalisation in the IT industry. This highlights the critical nature of taking into account practical, business issues as well as technological developments to maintain efficiency, competitiveness and targeted service provision for a company’s internal ICT customers, as well as for service providers catering to external clients.


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April has been an incredibly strong month for outsourcing engagements. Most interesting is the variety of deals in size and nature as well as the vendor and customer size. It is clear that the momentum in outsourcing is steady accelerating as new technologies are accepted and the skills required to support them evolve and become more readily available. A proliferation of smaller and specialist service providers, new service models, efficiencies and affordable technologies have also resulted in increasing the availability of outsourcing to small-to-medium enterprises wishing to take advantage of new developments.


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Security continued to be a major concern during March, with particular focus on new privacy regulations (Privacy Amendment Act) that came into effect on March 12th. A lot of interest was generated because of the extensive measures and associated fines for breaching the new Australian Privacy Principles (APPs). The APPs focuses on protection of sensitive information and integrates information security policies which are already in place. Of most interest were the significant changes, the fact that many companies were not sufficiently prepared and the high fines for breaching the APPs. It displays an increased concern and focus on establishing security solutions and a requirement to engage external providers to assist with response measures as well as illustrating the need for strong government regulations to prevent misuse, loss or inappropriate access to sensitive data, facilitate breach detection and to establish responses for security breaches.


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February saw a continued emphasis on security threats and response measures, as well as practical issues that may impact on IT investment. Particularly interesting was a write-down of Tower’s new core IT systems after the sale of some of its business units. This highlights the need for careful planning and extensive consideration of real world issues in an environment where fluid and complex IT and business structures exist. The desire to exploit the benefits of new technologies requires changes to both IT and business foundations which can pose challenges when technologies and business processes need to be integrated. A combination of evolving solutions and limited support can be problematic when business-oriented decisions are made which could have flow-on or unpredictable effects on IT infrastructure and strategies.


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This month has seen a lot of discussion regarding security failures, sparking debate in relation to the adequacy of the solutions and response capabilities for such incidents. Concerns raised because of these failures, emerging technologies and uncertainties regarding security arrangements have forced both vendors and specialist security providers to investigate ways of alleviating customer concerns through integrating solutions and assurances when establishing outsourcing arrangements. While security has always been an issue for customers recent failures are driving more collaborative, open and prospectively sturdier security arrangements for the future.


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Especially noticeable in December was the large number of purchases and collaborative agreements in the IT service provider sector. Vendors aiming to expand their customer base and service offerings, reach and scale as well as exploiting new technologies they have no access to are adopting alternative approaches to business growth and sustainability. This underscores the need for the industry to remain flexible and be aware of industry changes, demands and evolving areas that can benefit their customers


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There has been much discussion this month with regard to IT in the Banking and Financial Services sector. Projects and plans to expand internal IT structures have largely been in response to increased and changing customer needs and demands. The high level of activity and discussion regarding IT in this sector illustrates how evolving technologies and customer awareness and desire to access these new technologies can transform internal infrastructures and how IT service providers must respond positively to these demands. IT service providers catering to these new needs need to address issues such as internal support systems, protocols and IT decision-making and make significant increases in IT investment. This is particularly evident as service providers restructure, extend capacities and begin to offer new services in respect of cloud and security.


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This month there has been a lot of discussion regarding the importance of innovation, in the approach to both technology and business strategies. While this has been flagged previously it is even clearer when examining the IT industry activity this month, in particular company buy-outs, new product and service offerings, investments in development and company growth. Collaboration between companies in the provision of specialised service offerings and in discussions about new standards and protocols for evolving technologies and solutions were also noticeable. These activities are both driven by, and drive, the need to innovate in the current climate, the need to address user concerns in the uptake of new solutions and a desire to maximise the benefits of using new solutions.


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