Services -> Outsourcing
Released: 17th December 2012
Research commissioned by Savvis (www.savvis.co.uk), a global leader in cloud infrastructure and managed virtual hosting solutions, has revealed a dramatic rise in CIOs planning to put the majority of their infrastructure in the cloud over the next ten years. Still in its relative infancy, Europe has the chance to be at the forefront of cloud computing adoption and development.
In Europe, the UK is set to lead Germany in this trend, with rises over the decade from 2 to 45 per cent rise in the UK compared with 4 to 33 per cent in Germany. In 2012, cloud computing is currently being utilised by a higher percentage of IT decision makers in German organisations (86 per cent) than in their UK counterparts (80 per cent). IT decision makers in Germany are more likely to be using a hybrid cloud whereas public cloud is most popular amongst UK organisations.
The study also revealed that 45 per cent of IT leaders in the UK believe that they will have to do more with a reduced budget over the next twelve months. This was cited as their highest constraint and was well above the global average (28 per cent). The number one constraint cited by CIOs in Germany for the next year is a shortage of IT staff (31 per cent).
One of the most interesting findings from the research is that at least one third of organisations worldwide are not outsourcing applications that they feel should be outsourced. IT leaders believe savings can be made by reducing owned infrastructure and outsourcing to professional services.
CIOs that are currently outsourcing around a quarter of their IT infrastructure anticipate saving 24 per cent (UK) and 25 per cent (Germany). The key reason German IT leaders believe they need to increase outsourced infrastructure is to deal with their shortage of IT human resources.
Adopting a ‘pay as you go’ model of outsourcing is seen as a significant cost saving by a high proportion of UK (39 per cent) and German (32 per cent) adopters. Known as a “utility-based model”, the use of IT services flexes and adapts to business needs. Rather than paying a fixed upfront CapEx (capital expenditure) or long term contract fee, the cost varies with the amount of services used.
CIOs in more mature markets also expect outsourcing to help them differentiate their organisation. UK IT leaders are much more likely to be driven by the need to increase IT agility to address changing business needs, than their counterparts in Germany (50 per cent versus 34 per cent). Access to specialist skills scored highly, suggesting a desire for flexibility to focus on core company work and specialist projects.
As is typical in technology adoption, where larger organisations lead smaller organisations, the rate of outsourcing going into 2013 has slowed down for those companies with a global turnover of $50-$100billion. Mid-market European companies seeking agility are now driving the outsourcing trend. CIOs from the largest organisations in Germany predicted an increase of six per cent in outsourcing over the next five years, compared to 13 per cent among those with lower revenues. The UK forecasted a similar trend, with the largest organisations predicting an additional 11 per cent of infrastructure will be outsourced in five years’ time, compared to 14 per cent among smaller organisations.
Alarmingly, just under half of European IT execs regret IT purchases when spending their IT Pounds and Euros in the last year, at a rate of 47 per cent in the UK and 48 per cent in Germany. 44 per cent of IT leaders in the UK said they would consider an outsourced infrastructure for new products or services they deploy, compared to 53 per cent in Germany.
The findings suggest that recently purchased IT infrastructure on large scales is a key reason why bigger companies holding on to their personal IT assets. CIOs confirmed that contractual obligations are the main barrier to outsourcing, whereas in previous years, company culture was the most common inhibitor. The exception is the UK, where company culture has been the number one barrier to outsourcing for the past three years, combined with an unwillingness to relinquish control.
In conclusion, both the UK and Germany are well positioned to lead Enterprise IT in 2013. As new technologies are introduced on a global playing field, it will be the individual companies that deliver operational efficiencies who make the most progression in the next 12 months. Through the advice and feedback of IT decision makers surveyed in this report, the best approach needs to be tailored to the individual needs of your organisation, identifying the required bespoke levels of cloud adoption and outsourced infrastructure models to increase your competitive advantage.
About the Research
To download a copy of the full research, please visit: http://www.savvis.co.uk/en-gb/solutions/it-outsourcing/pages/2012-global-it-leadership-report.aspx
This independent survey was commissioned by Savvis and conducted with 550 leaders of global large enterprises based in six leading IT enterprise countries. The research was conducted by Vanson Bourne, a research based technology marketing consultancy offering clients analysis and advice based on incisive, rigorous research into their market environment. The research used a combination of online fieldwork methodology and telephone interviewing. All research carried out by Vanson Bourne adheres to the latest MRS Code of Conduct. Demographic detailing respondent communities include industry sector, country in which the respondents were based, and size of business.
Savvis, a CenturyLink company, is a global leader in cloud infrastructure and hosted IT solutions for enterprises. Nearly 2,500 unique clients, including more than 30 of the top 100 companies in the Fortune 500, use Savvis to reduce capital expense, improve service levels and harness the latest advances in cloud computing.
Follow @SavvisEMEA on Twitter for the latest company news, blogs and industry opinions.
Published by: electronicdawn Ltd.