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Irene Pimentel

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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.

Conclusion: This month, IT Outsourcing (ITO) industry analyses for the Asia Pacific region were released. Whilst figures show a decline in ITO spend in the region, the trend towards Cloud adoption and new service models that result in cost savings has driven this decline, not the demand for external services. As vendors shift to cater to this new market and provide more specialist services, ITO sector growth is expected. These types of changes in the ITO industry have been seen in the past, as service providers adapt to accommodate customer demands and new services and technologies. These market shifts are typically beneficial for customers, vendors and business operations providing a greater range of services, higher quality service delivery and cost savings.


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Conclusion: This month has seen a high level of activity in tender issues, funding allocations and new ICT projects by government agencies seeking to reap the benefits offered by emerging technologies, ongoing innovation and digital transformation. This follows general trends in outsourcing because of the advent of new technologies, contract structures and solutions that can be tied directly to fulfilling business objectives. Whilst the technologies exist, a report issued this month regarding CIO concerns has flagged difficulties still prevalent when attempting to take advantage of innovations, attributed to outdated existing technologies, policy and budgetary constraints. As the ICT outsourcing industry continues to evolve at a fast pace, organisations must adapt their inner workings to suit new technologies and business structures before they can take advantage of benefits, and avoid project failures because contracts and businesses are misaligned.


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Conclusion: This month there have been a high number of new senior appointments and workforce expansions in the IT service industry, flagging the need to monitor and change resources which support businesses if required. Whilst strategic planning and initiatives are central to business development, the need for an effective skills base to successfully implement plans in increasingly complex and unique environments, which change quickly, is clear. Both the skills base and the framework to maximise benefits are required. Regular assessments of a company’s human resources, and structures in place to utilise them to achieve business objectives, have also become crucial. Structures need to be sufficiently flexible to accommodate new and targeted skills required to support both business and fluid IT environments.


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Conclusion: This month there has been a focus on supplier governance models based on the service integration and management (SIAM) approach which can improve the effectiveness and efficiency of IT environments. By establishing converged and hybrid technical foundations and utilising multiple suppliers significant benefits can be achieved. However such an approach may be problematic if disparate arrangements and processes for contract execution are employed. The SIAM approach provides a single and end-to-end user experience, despite multiple suppliers’ underlying IT functions. This type of model allows for greater efficiency and cost benefits, as well as faster IT overhauls for companies needing to increase capacity, upgrade, or wishing to access new technologies and solutions. However, the model also requires strong implementation partners for analysis and a strict system definition combined with strong management capabilities, to support a very tightly integrated environment where many components can operate as one entity.


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Conclusion: This month, discussions regarding a number of failed public sector outsourcing projects, which resulted in significant cost overruns have been prominent. Weaknesses were identified in a range of areas, from inappropriate vendor engagement processes to insufficient monitoring and response measures to problems that were identified during the course of a contract. It is critical for clients to establish protocols for contract management as well as frameworks to ensure these protocols can be followed.


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Conclusion: This month, there has been a particular focus on service-based Cloud offerings. As this market matures, there are increased concerns regarding vulnerabilities that arise when using evolving environments without adopting new enabling tools and processes to support a shift. Approaches, such as retaining legacy applications in a new technological space can cause difficulties in areas such as security, which require more high-level data collection and analysis for success, rather than basic functions offered in legacy systems. With a dramatic increase in vendors offering service-based solutions, it is important for customers to ensure solutions have underlying systems that can support businesses and strategic objectives prior to establishing agreements. It is critical for customers to alter their perspective of service-based Cloud offerings from an alternative hosting platform to an IT toolset that can alter business processes and efficiency, with adequate foundations to achieve business objectives.


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Conclusion: This month, the Queensland government’s action against IBM for the failed Health payroll system was dismissed, with the liability waiver upheld despite assertions the government was misled by IBM regarding its capabilities during the tender. The Australian Federal Police also announced it has cancelled two five-year outsourcing contracts with Eldbit Systems because of project failure. This underscores the need for clarity during the negotiation phases and establishing clear contract terms such as liability waivers and exit clauses to cater to project failures and disagreements, as well as fostering an environment for positive client/supplier relationships even when projects fail.


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Conclusion: This month, discussions regarding analytics and data-driven innovation have been prominent. As the role of IT changes from providing technology solutions to driving business outcomes and strategy through the use of technology agile services to support business processes and targets are required. Companies have recognised that data handling and having the capacity to absorb, use and deliver data are becoming core competencies. This has prompted the growth of service providers that manage and analyse data, as well as providing associated services such as security and storage.


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Conclusion: This month, Fujitsu and Link Group announced a five year extension to their current ten year managed services agreement, which is founded on a combined on-site, on-shore and offshore delivery model for the provision of a variety of services. This is indicative of an increase in further alignment between IT spending and business strategic priorities utilising complex and evolving delivery models. The agreement highlights the need to provide a wide range of resources which cater to business needs, whilst managing them as one. In order to do this, a cohesive management strategy and the capacity to accommodate increased IT proliferation, new technologies, and associated security risks, must be carefully integrated into outsourcing plans during vendor engagement and contract performance.


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Conclusion: This month there has been an especially visible increase in managed service provider offerings and expansion globally. With the wide range and increased release speed of new technologies in the market, greater emphasis has been placed on adopting new technologies in business to support evolution and cost reduction. Approximately 70% of business leaders involved in company digital business transformation ranked new technology adoption as the top priority in a survey this month, resulting in an increased demand for tailored solutions with effective implementations in complex ICT environments.


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