IT OUTSOURCING STUDY 2016 NORDICS - Version2 · PDF fileIT OUTSOURCING STUDY 2016 NORDICS ......

IT OUTSOURCING STUDY 2016 NORDICS

Whitelane Research & PA Consulting Group

Press Presentation

14 April 2016

2

© 2016 Nordic IT Outsourcing Study

I. Introduction and research methodology

II. IT outsourcing trends

III. Service provider performance

- General satisfaction and Key Performance Indicators

- Satisfaction by IT domain

IV. Additional sourcing/governance trends

- Sole sourcing and nearshore/offshore experience

- Governance capabilities

- Cloud computing satisfaction

Agenda

Agenda


3


Whitelane Research

About Whitelane Research and PA Consulting Group

Introduction and research methodology

PA Consulting Group

PA is a leading independent sourcing advisor.

Management Consulting firm operating worldwide with

over 2,500 employees

Broad set of business consulting, technology and innovation services

330 consultants in the Nordics

Nordic IT sourcing

presence

In PA Nordic, we have a team of more than 40

consultants focused primarily on sourcing.

IT sourcing

PA has advised on more than 700 sourcing

engagements for more than 600 clients world-wide, with

sourcing representing 20% of PA’s revenue.

Independent

PA is independent from service providers, technology

and solutions and assist our clients evaluate the most

suitable options and opportunities.

An independent organisation

uniquely focused on and

dedicated to (out)sourcing

research and events.

IT Outsourcing Studies

conducted in 13 European

countries

Best Practices Groups for

End-Users

End-User/Service

Provider events

4


More than 300 participants of the top IT spending organisations in

Denmark, Finland, Norway and Sweden that have evaluated close to 1,000

unique IT outsourcing contracts

29 IT service providers have been evaluated and ranked based on the opinion

of their clients (not on the opinion of Whitelane Research or PA Consulting)

In order to be ranked in this report, service providers must have at least 8

client evaluations for general satisfaction

In order to be ranked in the application, infrastructure and end-user rankings,

service providers must have at least 7 client evaluations for these

respective IT areas

Whitelane Research has been responsible for the data collection via an online

survey questionnaire. Participants are CIOs, CFOs or their direct reports

Both Whitelane Research and PA Consulting Group are completely

independent organisations.

Research methodology


5


19%

17%

11%

11%

9%

8%

7%

6%

3% 3%

2% 2% 2%

The survey covers all top spending organisations across all sectors


N = 317

Financial services

Telecommunications

Other

Public Sector

Energy/Utilities, Oil & Gas

Entertainment/Media

Retail, Wholesale

Consumer Packaged Goods

Foods/Beverages

Healthcare

Pharmaceutical

Manufacturing

Transportation & Logistics

Professional Services

6


Other; 200

CGI; 68

Tieto; 60

EVRY; 54

ATEA; 48

Capgemini; 44 TeliaSonera; 43 IBM; 42

TCS; 41

Accenture; 40

Fujitsu; 34

Telenor; 30

HP; 29

TDC; 27

Elisa; 24

Atos; 21

CSC; 21

HCL; 19

Wipro; 15

Cognizant; 14

Infosys; 14

KMD; 13

AT&T; 12

BT; 11

L&T Infotech; 11

Verizon; 11 Volvo IT; 10 NNIT; 9 Basefarm; 8

Tech Mahindra; 8

Close to 1,000 outsourcing contracts have been evaluated, enabling us to rank the top 29 IT outsourcing providers

in the Nordics


N=981

7











Agenda

Agenda


8


Even more sourcing is still on the agenda in the Nordics

IT Outsourcing trends

We don’t know yet

There will be no change

We will outsource less

We will outsource more

46%

39%

8%

7%

47%

26%

15%

11%

DENMARK

27%

53%

10%

10%

FINLAND

54% 33%

6% 7%

NORWAY

45%

43%

6% 6%

SWEDEN

N = 317

9


With higher satisfaction levels the focus of

improvement of service quality is dropping

The need for scalability, flexibility and lack of

talent drives the need for access to resources

Organisations do not have flexible capacity and

capabilities to drive major business transformation

2%

21%

36%

21%

43%

51%

54%

67%

4%

14%

33%

29%

50%

60%

54%

63%

7%

17%

25%

29%

46%

50%

53%

62%

5%

15%

24%

34%

38%

57%

62%

67%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other

More transparency on costs

More financial flexibility

Business transformation

Improvement of service quality

Focus on core business

Access to resources

Cost reduction

Access to resources is becoming a prime reason for outsourcing in the Nordics

IT outsourcing trends

N = 146

2015

2014

2016

2013

10


MACRO-ECONOMIC FACTORS AS A

FACTOR FOR OUTSOURCING

The oil and gas industry is the largest

sector in Norway in terms of value. In 2015,

due to the sharp and continuous decline in

the oil price, there was a 27% drop in

revenue from NOK 312 billion in 20141.

The Norwegian organisations have the

most appetite for outsourcing more and

81% defined cost reduction as a reason for,

up from 73% in 2015 and , indicating a

desire to reduce or control overall costs

with the means of outsourcing2.

1 www.norskpetroleum.no, retrieved 28-02-2016. 2 2015 Nordic IT Outsourcing Study,

Whitelane and PA Consulting

The reason to outsource varies across borders, while cost reduction is still a high priority in Norway due to macro-economic

factors

IT outsourcing trends

12%

12%

16%

28%

28%

52%

68%

72%


Other




Cost reduction


Access to resources

Denmark

0%

14%

21%

29%

43%

50%

57%

64%

Other






Cost reduction

Access to resources

Finland

3%

11%

22%

31%

47%

53%

53%

81%

Other






Access to resources

Cost reduction

Norway

3%

18%

34%

37%

39%

55%

61%

61%

Other






Cost reduction

Access to resources

Sweden

http://www.norskpetroleum.no/

11











Agenda

Agenda


12


1% 3% 6%

29%

50%

11%

General high satisfaction among clients in the Nordics

Service provider performance

Very unsatisfied Unsatisfied Somewhat unsatisfied

Somewhat satisfied Satisfied Very satisfied

DENMARK FINLAND

NORWAY SWEDEN

1% 2% 4%

29%

52%

12% 2% 1% 6%

30%

51%

9%

1% 5% 9%

30% 44%

11% 1% 3% 5%

27%

50%

14%

13


How satisfied are you in general with your service provider(s)?


62%

64%

64%

65%

67%

67%

68%

69%

69%

69%

70%

71%

71%

71%

72%

72%

73%

73%

73%

73%

74%

75%

75%

76%

76%

78%

80%

80%

81%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

BT

Verizon

EVRY

Atos

AT&T

TDC

Tieto

IBM

KMD

Fujitsu

HP

CGI

ATEA

CSC

TeliaSonera

Capgemini

HCL

Cognizant

Wipro

Elisa

Volvo IT

L&T Infotech

Telenor

NNIT

Infosys

Basefarm

Tech Mahindra

Accenture

TCS

Average = 72%

# of contracts

41

40

8

8

14

9

30

11

10

24

15

14

19

44

43

21

48

68

29

34

13

42

60

27

12

21

54

11

11

Key to scores

Very satisfied 100%

Satisfied 80%

Somewhat satisfied 60%

Somewhat unsatisfied 40%

Unsatisfied 20%

Very unsatisfied 0%

Larsen & Toubro Infotech

14


How satisfied are you in general with your service provider(s)? (Comparison with last year)


CHANGES FROM 2015 to 2016

• TCS tops the list as last two years,

however their satisfaction has

dropped from 87% to 81%

• HCL and Cognizant have dropped

significantly on their customer

satisfaction score (from 82% to 73%

and 81% to 73%)

• The Indian heritage providers are

not as dominate in the ranking as

previous years! However in general

they score high due to their

continuously strong focus on building

trust-based relationships

• Accenture has strengthened its

performance since last year by

continuing to score above average on

the majority of the KPIs

• Regional players like Evry, Tieto,

KMD and ATEA are struggling to

satisfy their customers at same levels

as other competitors.

15


General Satisfaction by Country: Denmark


Denmark

• 15% planning to in-source

• Access to resources the key driver and

focus on business

• General satisfaction is highest in the Nordic

region

65%

70%

70%

71%

74%

76%

76%

76%

76%

77%

77%

78%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

TDC

KMD

ATEA

CGI

Telenor

NNIT

IBM

Accenture

CSC

HP

HCL

TCS

Average = 74%

Key to scores

Very satisfied 100%

Satisfied 80%



Unsatisfied 20%

Very unsatisfied 0%

16


62%

62%

63%

67%

68%

69%

70%

72%

73%

75%

75%

80%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Capgemini

Atos

IBM

CGI

HP

Tieto

Wipro

Fujitsu

TeliaSonera

TCS

Elisa

Accenture

General Satisfaction by Country: Finland

Finland

• 10% planning to in-source


Cost reduction

• General satisfaction is lower than the rest

of the Nordic region


Average = 70%

Key to scores

Very satisfied 100%

Satisfied 80%



Unsatisfied 20%

Very unsatisfied 0%

17


59%

63%

68%

75%

75%

76%

80%

85%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

EVRY

CSC

ATEA

Cognizant

Capgemini

Telenor

TCS

Accenture

General Satisfaction by Country: Norway

Norway

• 54% are looking to outsource more

• Only 6% plan to outsource less

• Cost reduction is by far the key driver and

Access to resources

• General satisfaction is high


Average = 73%

Key to scores

Very satisfied 100%

Satisfied 80%



Unsatisfied 20%

Very unsatisfied 0%

18


60%

63%

65%

67%

68%

68%

70%

70%

71%

73%

74%

75%

76%

76%

77%

80%

80%

86%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Fujitsu

HP

IBM

Atos

Tieto

EVRY

TDC

Infosys

TeliaSonera

Volvo IT

ATEA

CGI

Telenor

Capgemini

Wipro

HCL

Accenture

TCS

General Satisfaction by Country: Sweden

Sweden

• Only 6% plan to outsource less


cost reduction

• General satisfaction is high, however lower

than Denmark and Norway


Average = 72%

Key to scores

Very satisfied 100%

Satisfied 80%



Unsatisfied 20%

Very unsatisfied 0%

19


General satisfaction in Sweden – 4 year comparison (2/2)


Sweden

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Fujitsu

HP

IBM

Atos

Tieto

EVRY

TDC

Infosys

TeliaSonera

2015

2014

2016

2013

20

62%

63%

66%

67%

68%

68%

68%

69%

70%

70%

70%

70%

71%

71%

71%

71%

71%

72%

72%

74%

75%

77%

78%

82%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

AT&T

BT

T-Systems

Verizon

CSC

Orange Business Services

IBM

Fujitsu

Telefónica

Vodafone

CGI

Atos

Wipro

Sopra Steria

Unisys

Capgemini

HP

HCL

Infosys

Tech Mahindra

Accenture

Computacenter

Cognizant

TCS

Average = 71%

# of contracts

157

92

82

192

35

86

73

179

229

34

66

83

224

164

58

63

124

246

74

82

68

98

130

61

Europe

General Satisfaction by Country: Europe (2015/2016)

Key to scores

Very satisfied 100%

Satisfied 80%



Unsatisfied 20%

Very unsatisfied 0%


21


Key Performance Indicators (KPI) model


Transformation

Dimension

Service Delivery

Dimension

Relationship

Dimension

General

satisfaction

Account management quality

Escalation

effectiveness

Service delivery quality

Reporting

quality

Innovation

Transformation quality

Pro-activity

Commercial

Dimension

Contractual flexibility

Price level

The service provider has a good and effective escalation process?

The account management is of good satisfactory quality?

The service provider provides deliver us with all required

information in a timely and accurate way?

The service provider is proactive in coming up with new

ideas to make the relationship more successful?

The service provider has the ability to drive change and successful

transformation?

Business

Value

Trustworthiness

The service provider drives innovation e.g. new innovative

technologies and services?

22


48%

31%

21%

Majority of private sector negotiate with the existing vendor first, but 1 in 3 will go directly for a competitive process.

Additional sourcing/governance trends

First negotiate with the existing vendor

Directly run a competitive process

N/A – I don’t know

If you are working in the private sector, will you

first try to negotiate the renewal process with

the existing vendor or directly run a

competitive process?

23


Clients expect to utilize Nearshoring and Offshoring more in the future


Decrease Remain the same Increase N/A / I don’t know

Nearshoring Offshoring

7%

42%

29%

22%

7%

34%

40%

19%

24


Clients and Service Providers agree that IT should be responsible for managing the governance, but Service Providers believe

that the Business should be much more involved or even sit in the driving seat during the selection process


IT department

Procurement

Business

N/A – I don’t know yet

82%

62%

9%

19%

5%

16%

3%

3%

0% 20% 40% 60% 80% 100%

At th

e g

ove

rnance

pro

cess (

man

agin

g the

vend

ors

)D

uring t

he s

ele

ction

pro

cess

Clients:

Who should sit in the driving seat?

81%

33%

10%

19%

10%

48%

0% 20% 40% 60% 80% 100%

At th

e g

ove

rnance

pro

cess (

man

agin

g the

vend

ors

)D

uring t

he s

ele

ction

pro

cess

Service Providers:

Who should sit in the driving seat?

25


Conflicting realities of clients sourcing capabilities – own perception is far from Service Providers

Vendor Survey

Viewpoints on Sourcing capabilities

• Transition is still an area where both clients

and suppliers see a need to improve client

capabilities

• In Governance and supplier management

suppliers have a more negative view on

client capabilities than the clients

Very unsatisfied

Unsatisfied

Somewhat unsatisfied

Somewhat satisfied

Satisfied

Very satisfied

Clients:

With regard to your own organisation, how satisfied are

you with the following governance capability areas?

1%

1%

4%

7%

2%

5%

13%

14%

12%

11%

35%

36%

27%

28%

40%

36%

49%

42%

8%

6%

10%

13%

0% 20% 40% 60% 80% 100%

Governance and suppliermanagement

Transition management

Supplier selection andcontracting

Sourcing strategy

Service providers:

How mature do you consider your clients in general with

their capabilities in the following areas?

10%

19%

29%

33%

24%

14%

29%

24%

19%

38%

33%

24%

48%

38%

10%

10%

0% 20% 40% 60% 80% 100%

Governance and suppliermanagement

Transition and changemanagement

Supplier selection andcontracting

Sourcing strategy

26


57% 29%

14%

Service providers: How would you recommend clients to

integrate multiple service provider contracts into one seamless service?

71%

2%

11%

16%

Clients: How do you integrate multiple service provider contracts into one seamless

service?

Conflicting realities of service integration – clients maintain it in-house, whereas service providers prefer an external provider

Vendor Survey

Internally

Via an external independent provider (not a tower provider)

Via an external service provider that also delivers another tower

I’m not sure – N/A

Viewpoints on service integration

- Currently, clients keep service integration in-house whereas service

providers prefer that an external, primarily a service tower provider, is

responsible for SIAM

27


The majority of organisations plans to increase their usage of public clouds


Decrease

Remain the same

Increase

N/A / I don’t know

1% 12%

67%

20%

65%

65%

65%

69%

73%

74%

80%

0% 20% 40% 60% 80% 100%

Oracle

SAP

Citrix systems

Microsoft

Salesforce.com

Amazon

Google

Are you planning to decrease/increase the

usage of public cloud?

How satisfied are you in general with these

public cloud vendors?

28


CONTACTS

Vendor Survey

Jef Loos

Head Sourcing Research Europe

Whitelane Research

Email: [email protected]

Mobile: +32 (0) 475 23 08 52

whitelane.com

Søren Knudsen

Partner

PA Consulting Group

Email: [email protected]

Mobile: +45 27 88 36 14

paconsulting.com

APPENDIX IT OUTSOURCING STUDY 2016 NORDICS

Whitelane Research & PA Consulting Group

March 2016

30


Agile methods are widely adopted in Service Providers service delivery models


Do you or your IT suppliers use agile

methods?

No I’m not sure – N/A Yes

77%

13%

10%

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