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IT inIT in
Market Transitions 2008
Michael O’Neil
CEO and CCO, IT in Canada
www.itincanada.ca
The IT/Business Landscape, and its Impact on Your Business Success
IT inIT in
Agenda
• Technology
• Landscape
• Opportunity
• IT/business landscape• IT business landscape• Business landscape
• What distinguishes “free is fine” from “it’s okay to pay”?
• What the non-technical senior manager needs to see• What this means for CRM/”xRM”
IT inIT in
How the Market is Changing
“The most powerful force in the universe is compound interest”
IT inIT in
Demographic Milestones
6010 20 30 40 50
IT inIT in
Incoming and Outgoing CEOs: Fortune 500 Organizations, 2005
6010 20 30 40 50
Average AgeAge at Time of PC Introduction
25% of incoming
CEOs
8% of outgoing
CEOs
Total Change: 12% of organizations
IT inIT in
Other Management Data Points: Average Age at Time of PC Introduction
10
Spe
ncer
Stu
art
CE
O s
urve
y 6020 30 40 50U
K s
urve
y of
chi
ef e
xecs
Spe
ncer
Stu
art
New
CE
OF
orbe
s C
-leve
l exe
c su
rvey
TD
Mad
ison
VP
pla
cem
ents
TD
Mad
ison
dire
ctor
s/m
grs
Exe
c M
BA
stu
dent
s
New executives are much more likely to be “tech savvy”
than their predecessors
IT inIT in
What Does This Mean to You? (1)
• More non-IT executive involvement in IT purchasing likely results in:– Larger decision making groups
– Longer sales cycles
– More need to describe technology benefits in non-technical terms
– More emphasis on products focused on addressing identifiable business issues – less on infrastructure for infrastructure’s sake
IT inIT in
The Way of All Solutions(or, what happens when you go looking for a silver bullet)
Alignment with Business Requirements
Cap
abili
ty o
f U
nder
lyin
g T
echn
olog
y
Field of Dreams
Madly off in all directions
IT inIT in
How the IT Business Landscape is Changing
“Give me a place to stand and I will move the earth”
IT inIT in
Leverage Through Partnerships
Product VendorSolution
ImplementationPartner
IT inIT in
Leverage Through Partnerships
Vendor
Resale partners
Implementation partners
ISV partners
IT inIT in
Leverage Through Partnerships
IT inIT in
Another Source of Leverage
IT inIT in
Another Source of Leverage
• Cloud-delivered services are changing the definition of leverage for IT suppliers of all sizes and business models– Remote provision of applications, remote user support, remote
infrastructure management, remote processing and data storage…
• No longer a “specialist” offering – important to all suppliers
• Organizations that do not currentlyhave a cloud offering will need tobuild one – or more likely, partner to acquire one
IT inIT in
Recent SP Survey Results
0% 10% 20% 30% 40% 50%
Resell hostingand/or
communicationsservices
Provide first-party hosting
Services-centric (27)
VARs (23)
All SPs (68)
Source: Amazon Consulting/Ziff Davis “Who Owns the Customer?” survey, May 2008
IT inIT in
What Does This Mean to You? (2)
• More non-IT executive involvement in IT purchasing• More breadth of opportunity for firms who…
– Are effective at establishing and managing partnerships
– Are effective in using the web to establish leverage for their businesses
IT inIT in
The Broader Economic Environment
"I don't think we're headed into a recession, but there is no question we are in a slowdown."
IT inIT in
Key Industry Markets: 2007 and 2008
Source: IT in Canada study of SPs; n=56
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Sharply decreased spending
Eroding spending, following a downward trend
Stable spending, mostly focused on existingproducts/projects
Selective new spending on high-priority businessapplications projects
Selective new spending on high-priority infrastructureprojects
Strong spending increases
2007 2008
IT inIT in
Another View of 2008
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Substantial decline Slight decline Slight growth Substantial growth
Most Important Customer Size Segment
Source: IT in Canada study of SPs; n=56
IT inIT in
Another View of 2008
0%5%
10%15%20%25%30%35%40%45%
Customers arepulling back
from thissolution
There ismaintenancespending inthis solution,
but no/few newopportunities
Currentcustomers areexpanding, butthere are few
newopportunities
Newopportunities
are notplentiful, but wehave a steady
stream ofprospects
We are seeingstrong growthin this area
Most Important Solution Area
Source: IT in Canada study of SPs; n=56
IT inIT in
What Does This Mean to You? (3)
• More non-IT executive involvement in IT purchasing• More breadth of opportunity for firms who…
– Are effective at establishing and managing partnerships
– Are effective in using the web to establish leverage for their businesses
• The current market environment is difficult…– Key industries, geographies, and size-defined target segments are more
likely to show contraction than expansion in 2008. However…
• Solution-defined segments show continued opportunity for growth– Consistent with increased involvement of non-IT executive buyers
– But – what about the “madly off in all directions” issue?
IT inIT in
The Current Technology Environment
• The architectural inconsistency that underlies the “madly off in all directions” syndrome is becoming less likely – because there is less scope for architectural inconsistency in the current technology environment
• From a software perspective, 4-5 ecosystems dominate the market
IT inIT in
What Separates Free from Okay to Pay?
• The sense that the data is privileged and important– Helps define some application areas as “likely to gravitate to freeware”
and others as “likely to be in the paid application domain”
• The value of the business process attached to the application– Defining “payback”: the benefit of application vs. cost
• More revenue• Increased employee productivity
– In a services environment, this latter factor is especially important – and services environments account for roughly 70% of Canadian GDP
IT inIT in
What Does the Non-Technical Executive Need to See?• Solutions focused on tangible, immediate business
issues– References that demonstrate the ability to solve my problem, not a
problem
• Sales/marketing language that provides clear links to business objectives– Benefits defined in terms of business problems rather than technological
issues
• Evolutionary capabilities as a primary function of the ongoing relationship– Calls are triggered by business events, not technological domains– Customer is more interested in “your ability to solve this problem” than
how you solve it• A partner-driven approach is far better than no approach!
IT inIT in
What Does this Mean for CRM/”xRM”?
• The sales function – and its associated cost – is an enormous issue in services-oriented environments– Customer value is seen in terms of ongoing interaction, not individual
transactions– Differentiation and positioning is often based as much on relationship as
offering attributes– “Corporate memory” and a thorough understanding of the “whole
customer” are crucial to successful interactions/relationships
• Front office functions have historically been poorly automated
• Therefore…– There is relatively more scope for new technology approaches– There is a real opportunity to “connect the dots” of business benefit
addressing high-priority management issues for the non-IT executive buyer
IT inIT in
What Does This Mean to You? (4)
• More non-IT executive involvement in IT purchasing• More breadth of opportunity for firms who…
– Are effective at establishing and managing partnerships
– Are effective in using the web to establish leverage for their businesses
• Solution-defined segments show continued opportunity for growth
• Applications that address high-priority management objectives – increasing revenue, and/or increasing the benefit derived from high-cost resources – are most likely to resonate with non-IT executives