Top 10 Forces to Impact Outsourcing and IT Services Industry

Gartner, Inc. has identified 10 major forces that are actively reshaping the future of IT services and the outsourcing market, listed below, (in no particular order):

Hyperdigitization

Hyperdigitization is the accelerating manifestation of the impact of IT. Digitization describes the parts of the economy in which the "product" or "service" is content that is entirely, or almost entirely, digital. This proportion of the economy is growing significantly faster than the "physical" aspects of the economy and as such, this force describes an essential part of the global economy. The impact is pervasive, influencing personal and social lives -- but increasingly accelerates economic, commercial and political activity. It is estimated that by 2020, roughly one-quarter of the global gross domestic product (GDP) will be generated by the force of digital activity.

Globalization

Globalization is the fundamental force changing IT service delivery and business's competitive activities in almost every vertical market -- and thus economies -- in some way, shape or form. Globalization alters the perspective of all aspects of businesses, from partners, to suppliers, to clients, to supply chains, to technology and labor. Every business must embrace the notion of being global. Similarly, an IT strategy must be global, which means taking advantage of IT to break down physical limitations, and, at the same time, tapping into a global labor pool that brings new energy and innovation at scale.

Consumerization

Consumerization refers not only to the acceleration of consumer-oriented technology and behaviors into people's lives, but also to the introduction and expansion of these consumer-oriented technologies into enterprise IT strategies. Consumer behaviors will have the power to reshape how enterprise IT works; they will bring new and varied expectations for IT, which, at an enterprise IT level, must be recognized and developed. Growing consumer-buying power and the use of IT (and information access to the buyer) will force vertical sectors to adopt new technologies and create new products that better match consumer needs.

The Cloud

Gartner defines cloud computing as "a style of computing where scalable and elastic IT-enabled capabilities are provided 'as a service' to external customers using Internet technologies." Because of the interaction of the commoditization and standardization of technologies, virtualization and the rise of service-oriented software architectures, and (most importantly) the dramatic growth in popularity/use of the Internet and the Web, a discontinuity has arisen that amounts to a new opportunity to shape the relationship between those who use IT services and those who sell them. The discontinuity implies that the ability to deliver specialized services in IT can now be paired with the ability to deliver those services in an industrialized and pervasive way. The reality of this implication is that users of IT-related services can focus on what the services provide them, rather than how the services are implemented or hosted.

Intelligence Technology

After decades of investments in IT, many organizations still feel that its ability to generate true business insight that can elevate that organization's capability to compete in its chosen market(s) is not as effective as it could and should be. Business intelligence, analytics, pattern recognition, and "smart" solutions are the new vocabulary of IT's value; new IT-related initiatives that don't fit within this framework will be increasingly less attractive to enterprises that are not interested in more "IT for IT's sake," but are laser-focused on "IT for the business' sake."

Security and Privacy

As activity migrates to the Internet and the cloud, and the hyperdigitization trend accelerates, the need to upgrade the security of the experience and the clarification of rights to privacy of the individual/corporate user increases in tandem. The breaches of security and privacy that occur have enormous ramifications -- financially and in terms of buyer confidence. Although some people argue that high profile incidents of identity theft and credit card hacks haven't stopped the growth of the Internet over the last 15 years, it is also hard to argue against the notion that more investment and more regulation is needed to ensure that the next wave of migration to the cloud has net/net positive outcomes.

Componentization

More elements of IT can be regarded as a component (definition: a constituent part; element; ingredient) of a larger, or broader IT application or system. The notion of reusable "objects" is becoming more of a reality as the Internet creates a "platform" on which users can configure prebuilt IT components rather than constantly starting from scratch for each new IT project.

Hypercompetition

Hypercompetition essentially refers to a buyer's market in IT services, where a combination of factors coexist that drive widespread, cost-based decision making. Hypercompetition drives lowest-cost deals --but the real threat is the sustainability of those deals. The economic realities create a short-term buyers' market, but a long-term problem for buyers-- and providers.

Value Chain

Service value chains will redefine competition and how IT services are consumed and paid for. A new maxim for the future regarding service provisioning is that "the whole is greater than the sum of the parts." Organizations must become more proficient their ability to examine their providers' partners — and their value chains. In the cloud, the value chain is not one-dimensional; a network of providers will be evaluated for their specialization. Service value chains will emulate visionary practices from other industries.

Hyperverticalization

Deep specialization into subvertical processes will be an imperative for commercial success in the new arena of alternative services delivery. Deep process knowledge and industry IP will be applied to subverticals. The formula for future success -- microverticalized solutions -- will indeed lead to market fragmentation. However, that fragmentation will spawn vendor-led innovation, increased choice to the buyer and differentiated value in prebuilt solutions.

More information on the IT Services industry can be found at www.CRMindustry.com.

Survey Reveals Product Innovations Don't Include Customer Ideas

Accept Corporation, a leader in product innovation management, announced survey results from two polls. The findings indicate a general inability of companies to translate customer ideas into product enhancements and innovation. This represents a significant lost opportunity for companies to develop and market products based on features that customers actually need and will pay for.

The first survey measured the ability within companies to translate customer ideas into strategically important products and features. The second survey measured the extent to which product ideas are collected from customers, partners and suppliers to determine how well the voice of the customer is being integrated within their products and features today.

Survey highlights:

-- 83 percent of respondents said fewer than 25% of customer ideas are translated into new products. This finding suggests that most companies today not only lack a consistent way to capture and prioritize strategically important ideas but are also unable to translate those ideas into requirements, resulting in better, more profitable products.

-- 41 percent of total respondents, and 45 percent of large organizations, said less than 50 percent of product ideas come from customers, partners and suppliers. This suggests that companies are still struggling when it comes to ensuring that their products and features are firmly based on the voice of the customer. Most product decisions today are made based on someone's favorite features, political arm-wrestling, or HIPPO (Highest Paid Person's Opinion).

More information can be found at www.CRMindustry.com

Yankee Group Survey Finds Infrastructure-as-a-Service Adoption Growing

SaaS' younger sibling just got an ego boost. According to Yankee Group, 24 percent of large enterprises with cloud experience are already using IaaS, and an additional 37 percent expect to adopt IaaS during the next 24 months. While adoption is still much slower than that of SaaS solutions, the market is gaining traction.

A new report from the Yankee uncovers adoption trends for this pay-as-you-go infrastructure solution, including:

-- Expedited adoption. Sixty percent of enterprises considering IaaS in the next 24 months are actually planning to implement it in the next 12 months.

-- Barriers to IaaS. The No. 1 barrier for enterprises considering IaaS adoption is virtualization security, but those that have already deployed IaaS rank regulatory compliance, data migration, reliability, employee use and quantitative benefits higher.

-- Preferred partners. Though the majority of all cloud adopters view systems integrators as their most trusted partners for cloud computing (29 percent), IaaS early adopters say telecom companies are best positioned for cloud services (33 percent).

More information on SaaS can be found at www.CRMindustry.com

More Than One-Third of Employers Use Social Media to Promote Their Organizations

As companies emerge from one of the steepest economic downturns in history, they understand the significant reach and importance of using social media to promote and rebuild their organizations. A new CareerBuilder survey reports that 35 percent of employers use social media to promote their company. One-quarter (25 percent) of these employers said that they are using social media to connect with clients and find new business, while others are using it to recruit and research potential employees (21 percent), or strengthen their employment brands (13 percent). The survey was conducted among more than 2,500 employers between May 18 and June 3, 2010.

Businesses of all sizes and industries report using social media to promote their companies. Twenty-nine percent of organizations with 500 or fewer employees said they do so, followed by 38 percent of companies with 501 to 1,000 employees and 44 percent of companies with more than 1,000 workers. Comparing industries, leisure and hospitality topped those surveyed with 57 percent saying the use social media to promote their business, followed by IT, (48 percent), retail (43 percent) and sales (41 percent).

When it comes to managing social media strategy, 43 percent of employers report that their marketing department handles social media outreach, followed by public relations (26 percent) and human resources (19 percent). One-quarter (25 percent) of employers have 1-3 people communicating on behalf of their organization, while 7 percent report that 4-5 people handle the work. Eleven percent said that more than six people communicate for their company via social media. Fifty-seven percent said they didn't know.

Workers report that they are turning to social media sites for more than connecting with friends. They're also using social media to research companies and jobs. Workers who come across company pages on social media sites shared what they would most like to see, including:

-- Job listings - 35 percent

-- Q&A or fast facts about the organization - 26 percent

-- Information about career paths within the organization - 23 percent

-- Evidence that working at the company is fun - 16 percent

-- Employee testimonials - 16 percent

-- Pictures of company events - 12 percent

-- Video of new products/services - 10 percent

-- Company awards - 9 percent

-- Research or studies that the company has conducted - 9 percent

-- Videos of a day on the job - 8 percent

On the flip side, workers also shared the biggest turnoffs when encountering a company via social media, including the company's communication reading like an ad (38 percent), failure to reply to questions (30 percent), failure to regularly post information (22 percent) and removing or filtering public comments (22 percent).

More information on social media can be found at www.CRMindustry.com

The Perfect Marriage of Content and Technology: Is Social Media the New CRM?

A new study by King Fish Media reveals that despite the clear reliance on specific technological platforms, marketers who have made content king are seeing the best results. That said, showing positive results for social media initiatives are not yet a requirement for funding at many organizations.

Among the key findings of the survey:

-- 85% of survey respondents say that original content is critical to the success of their social media campaign.

-- Branded original and expert content is used more often than any other type of content. And development of an audience for content is one of the top objectives of marketers.

-- 43% of respondents revealed that they don't need to show positive ROI to get social media funding from their organization.

-- Nearly three quarters of all companies (72%) currently have a social media strategy, and of those that don't, the vast majority (80%) will within the next year.

-- Only 9% of surveyed organizations have full-time positions dedicated to managing social media responsibilities, while 90% include those as part of someone's overall responsibilities.

-- 85% of companies are handling their social media efforts internally.

-- Two thirds of the company's surveyed (67%) focus their social media efforts on their company as a whole, while 41% promote individuals within the company and 24% promote a specific brand.

-- Original content, both branded and expert, is by far the most used tactic for social media (73% and 72%, respectively). Video content (51%), user case studies (45%), and reviews (41%) are also used by roughly half of all respondents.

More information on Social Media can be found at www.CRMindustry.com

Insufficient Budgets, Shortage of Skills and Inadequate Tools Hinder Marketing Efforts

Marketing executives responsible for driving corporate growth are being hampered in their efforts by insufficient budgets, skills shortages and inadequate tools, according to a new study by Accenture. The study also found that marketers today are increasingly challenged by their companies’ customers who demand greater value, quality and service.

The 400 senior marketing executives surveyed for the study across Asia Pacific, Europe and North America said their top strategic objectives include improving operational efficiency, increasing profitability and responding effectively to change. However, the barriers they said they must overcome to achieve those objectives, include: inefficient business practices (cited by 21 percent of marketers), inadequate funding or other resources (17 percent), insufficient integration with other business functions (15 percent), a lack of required skills (13 percent) and lack of access to the customer data they need (6 percent).

Additionally, only 23 percent of the marketers said their organizations excelled in customer analytics, innovation, customer engagement and marketing operations at the same time and 33 percent said they did not perform well in any of those areas.

To achieve their growth objectives, marketers most frequently said they must master customer analytics (cited by 65 percent of the marketers), offer innovation (64 percent) and improve customer engagement and marketing operations (57 percent each).

However, marketers most frequently said they did not make effective use of online communities (cited by 43 percent of marketers), direct mail and telemarketing (37 percent); new digital marketing (34 percent); and online advertising (31 percent).

The three business issues the marketers most frequently said they want to address are customer retention and loyalty, new customer acquisition and sales numbers among existing customers. But they reported that changes in customer expectations are impacting their marketing strategies. For instance:

-- 72 percent of them said that “most or all” of their customers expect more value for money.

-- 71 percent said customers have higher product quality expectations.

-- 69 percent said customers are increasingly price sensitive.

-- 68 percent said customers have higher customer service expectations.

-- 66 percent said customers expect businesses to have greater respect for their time. 

More information on CRM can be found at www.CRMindustry.com

Enterprise Workforce Management High on the Agenda for Top Performing Retailers

In the face of slow consumer spend and the rise of competitive cross-channel shopping alternatives, retailers are under pressure to increase labor management visibility and effectiveness on an organization-wide basis. Forty five percent (45%) of top performing retailers are using an organization-wide workforce management approach to formulate strategic long-term workforce management decision-making. The impetus for this centralization comes directly from the desire to enhance the customer shopping experience in the face of increased competition (55%), according to the Aberdeen Group report, Enterprise Workforce Management for Retailers: Enhanced Customer and Operational Productivity. The research from Aberdeen Group, a Harte-Hanks Company, details the business benefits derived from upgraded enterprise workforce management-based internal process optimization.

According to Aberdeen data, as a means to increase margins and customer retention, as well as decrease labor turnover rate, core workforce management functions are being driven from the HQ level. In fact, 82% of top retailers are working to make time and attendance a multi-departmental initiative, compared to 58% of average, and 17% of lagging organizations. Additionally, 64% of these same out-performing organizations are making scheduling a multi-initiative compared to 46% of average, and 16% of lagging organizations.

Aberdeen data also shows that more than two thirds of top performing retailers are sharing store-level demand data with the entire enterprise (70%). Additionally, 60% of these same top retailers are reversing this process to provide the store-level with access to important fulfillment data, such as product date of delivery and shipment order status. 

More information on CRM can be found at www.CRMindustry.com.