Conclusion: This month has seen an increase in executive appointments in ICT companies, as well as 2015 industry forecasts. Most interesting is an expected rise in outsourcing contract renegotiation to $100B, driven in part by a preference for multi-sourced contracts, as it becomes easier to respond to vendor management and governance issues, as well as obtain more stable contractual models. These improvements are expected to reduce difficulties and complexities associated with establishing and maintaining a number of agreements at once while retaining cost benefits multi-sourcing can provide.
Sourcing & Staffing
Discussions regarding emerging trends in 2014 and forecasts for 2015 were prominent this month. The need for improved security solutions and cloud offerings have been identified as critical issues that emerged in 2014, with 2015 forecasts focused on increased third-party vendor engagements and expansion of product offerings, delivery models and contractual structures. With large financial investments in outsourcing and the greater demand for business outcome-based contracts it is expected vendors will be altering current approaches to service provision.
Conclusion: To provide easy to use online client services, organisations must create cross functional teams with people who can work together to implement solutions which can be tightly integrated with back office systems, and work first time. Failure to assign the right people first time will, until it is fixed, cause tension and stifle innovation.
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.
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.
Conclusion: Virtual teams continue to be an accepted organisation mode as a means of grouping specialist and project resources together to achieve high quality outcomes. Recent research1 identifies that more than 40% or Fortune 500 companies currently utilise virtual teaming. Smaller organisations have found that technology tools provide the mechanisms to collaborative cost effectively. A key activity of virtual teams is collaborating on research, projects and reports. Understanding the purpose of the collaborative authoring activity, the personality preferences of the authors and the relationship of the authors can enable organisations to increase the quality of the output with less effort and in less elapsed time.
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.
Conclusion: In most vendor-client relationships power shifts from the client to the vendor as soon as the deal is signed. As the SMACC (Social, Mobile, Analytics, Cloud and Consumerisation) ecosystem evolves, strategies are emerging that enable power to remain with the client for the duration of the vendor-client relationship. However, this shift in power will only happen if the client actively works to eliminate vendor lock-in strategies.
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.
Conclusion: Unless the IT and HR management work together to implement information systems to enable them to hire, develop and record the skills of IT professionals, the organisation will probably not have the right people to meet the looming challenges of the digital age.