Australia's IT services market transitions: IDC

Australia's IT services market transitions: IDC

Moves towards a utility-based consumption model

Information technology is growing exponentially and the combined potential of mobile broadband, mobile smart devices, Cloud, social media and big data are drastically disrupting the IT services industry, according to analyst firm, IDC.

In its Australia IT Services 2012-2017 Forecast and Analysis study, it showed that the Australian services market is forecast to grow from $15 billion in 2012 to $17.6 billion in 2017 at a compounded annual growth rate of 3.2 per cent for the five year period 2013-2017.

But it identified that traditional services, which were characterised by the utilisation of a considerable amount of labour to support provisioning of IT and/or business process services with little automation, are undergoing significant amounts of change.

IDC Australia IT services research group senior market analyst, Raj Mudaliar, said the top change that organisations are looking to make when their current outsourcing or managed services contract expires is to move to a utility-based model.

In its Australia Managed Services Study ,which polled 100 IT managed services businesses, it claimed that more than 40 per cent of organisations will be shifting a portion of their outsourcing or managed services activity and spending to Cloud services in the next 12 to 24 months.

"Responding to these changes, over the course of the next five years, IT services providers will increasingly change their business models to mimic those of pure play Cloud providers by making strategic investments," Mudaliar said.

He mentioned that buyers need not just lower costs but services that meet more stringent requirements, such as always-on, rapid provisioning, and the ability to adjust service requirements more quickly, resulting in providers of application and infrastructure outsourcing needing to help buyers optimise their IT investments.

Mudaliar suggested they also use more industrialised and agile processes for application outsourcing to incorporating much greater levels of automation and self-service capabilities across the full stack of IT from infrastructure through applications as these services are increasingly often delivered via a Cloud model.

IDC expects the combined growth for revenue from applications, system integration and network consulting for Cloud services in 2013 to be 27 per cent more than that of 2012.

Mudaliar added that the goal for buyers is to optimise sourcing of services and knowing when to use which type of service – traditional versus Cloud, as well as how this shift will impact their organisations and their sourcing strategies.

"These investments will incorporate the different elements of a digital services supply chain that includes a larger footprint of Cloud datacentre infrastructure; an app store for services; an integrated, policy-based management system for services procurement, a Cloud factory; an 'independent' testing service; and/or sense-predict-respond capabilities, to name a few," he said.

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