Global IT Supply Chain
Bryan Cruickshank
NASSCOM 2012
February 2012
The ITO businessEvolution of ITOResulting challenges
Emerging trendsThe CIO collaborating with CxOsGlobalization
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
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The ITO business
Evolution of ITO
2010 onwards
Transformational solutioning
■ Integrated and collaborated global delivery of services
■ Leverage expertise from centers of excellence, alliance partners and member firms globally
■ Use of global partnerships to redefine business offerings and co-create new products
2000-09
Strategic offshoring
■ Companies focus on core activities and source non-core activities
■ Long term sourcing relationships
■ Long term view of sourcing
1990-99
Tactical outsourcing
■ Cost reductions obtained
through labor rate arbitrage
■ Short term vendor-supplier
relationships with partner firms
■ Immediate noticeable gains to
the organizations
Increased business value
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
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Evolution of technology is driving changes in the ITO models
■ Start of the Automation phase
■ Localized infrastructure
■ Expensive
Mainframes
Automation
Pre 1970s
■ Emphasis on networking
■ Demand for bandwidth began to rise
■ Rise in operational expenditure
■ Introduction of ASP technology
■ Dot Com revolution
Client Server Architecture
1990s
■ IT infrastructure management services provided by third party providers
■ Birth of the infrastructure outsourcing
■ Used for reducing costs and increasing focus on core activities
■ Resulted in the creation of large data centers
■ Increased use of Virtualization
Hosted/Co-located environment
2000s
■ Rise in demand and penetration of the personal desktop
■ Decentralized computing
■ Birth of the IT services Industry
Rise of the PC
1980s
■ Emergence of the ‘as a service’ paradigm
■ Delivery of IaaS, PaaS, and SaaS
■ A move from CAPEX to OPEX
■ Collaborative solutions that cater to real time information management
■ Utility computing model
■ High bandwidth requirements
Beyond 2010
The ITO business
Evolution of ITO – technology drivers
Source: KPMG’s The Cloud: Changing the Business Ecosystem, 2011
Cloud computing
Borderless technologies & the virtual worldDecision support/virtual interfaces
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
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The ITO business
Evolution of ITO – customer requirements
Analysts value global capabilitiesAble to adapt to the customer’s local environments
Large IT player are establishing capabilities across the globe
Key advantages customers are seeking
■Flexibility, up and down
■Talent Management
■Proven solutions
■Global reach
■Cost competitive
■Standardization of delivery
Australia
“Accenture continues to deliver solid double-digit revenue growth and record bookings due to strength in management consulting, end-to-end and integrated business and technology offerings, vendor independence, thought leadership, deep domain expertise, and a 141k-strong low-cost Global Delivery Network (60% of Accenture employees).”
Analyst report by Deutsche Bank, December 2011
“HP Enterprise Services has announced the expansion of Best Shore – its global services delivery model – by designating six countries as global delivery hubs that will grow to support increasing client demand for cost-efficient, scalable services that effectively meet business needs.”
News reports, November 2010
Nokia Siemens sets up third global centre at Noida. The new centre complements the company’s two GNSCs (Global Network Solutions Centre) in Lisbon (Portugal) and Chennai. “We are pioneering a unique, centralized, global delivery model through our integrated, multi-technology, multi-vendor central delivery hubs – what we call the GNSCs – which provide global scale and drive the world’s most efficient networks.”
News reports, 2009
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
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Challenges facing the industry
The ITO business
Resulting challenges
■ Local regulators
■ Local taxation
■ Intellectual Property protection
■ Transfer pricing
Regulation
■ Increased competition among vendors
■ Industry insight
■ Customer centricity
Competing globally
■ Dispersed employee base
■ Visa constraints
■ Complex reporting structures and business processes
Resourcing globally
■ Functioning across time zones
■ Collating/consolidating information
■ Tracking performance
■ Local autonomy v global consistency
Operating globally
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
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Emerging Trends
The CIO collaborating with CxOs
CxO’s challenges driven by globalization
How CIOs can help mitigate the challenge
Increased regulatory and financial risk
■ Capture, summarize and share risk information enterprise-wide
■ Automation of risk and remediation processes
Moving into new markets and
services
■ Leveraging local capabilities into a global delivery model
■ Speed and agility in integrating acquisitions to fuel inorganic growth
Improving business efficiency
■ Automate existing manual processes to drive operational efficiencies
■ Performance management tools that transform enterprise data into business intelligence
Data quality
■ Consolidating infrastructure elements and providing a platform for data standardization
■ Supporting data management and governance
Redundant processes across
geographies
■ Technology enabled shared services and centers of excellence
■ Platform consolidation
CxOs’ reliance on CIOs is expected to increase in order to deal with the emerging challenges
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
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ITO Factors
Increasing focus on industry specific solutions
Greater levels of technology and business integration
Increasing use of core global capabilities for local delivery
Globalisation driving extended footprint in new markets
Increasing ITO delivery
from an India hub
Global ITO helping
customers to meet global
challenges
Emerging Trends
Globalization of ITO
Customer Factors
Technology assets/IP speeds business transformation
New & emerging technologies blurring business and technology distinction
Innovative pricing models and ways to access consumers
Business looking at ITO to drive and enable business
Prospering in a more complex global ecosystemwill require new approaches and new collaboration
Thank you
© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.
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