Webinar Digital Market Index - Market Size, Forecast and Key Happenings December 2017 Jamie Snowdon Phil Fersht Ollie O’Donoghue Chief Data Officer, HfS Research Chief Executive Officer & Chief Analyst Research Director [email protected] [email protected] [email protected] © 2017 HfS Research Proprietary │Page 1 Agenda • The emergence of digital • The financial health of the IT Services industry • How and why providers are embracing digital • Is the decline in headcount levelling off? • Wrap-up and questions © 2017 HfS Research Proprietary │Page 2 Today’s Speakers Phil Fersht Jamie Snowdon Ollie O’Donoghue CEO and Chief Analyst Chief Data Officer Senior Research Analyst HfS Research HfS Research HfS Research [email protected] [email protected] [email protected] © 2017 HfS Research Proprietary │Page 3 © 2017 HfS Research Ltd. HfS – The Evolution FORA Leadership Council Launched 40 1400000 Cambridge UK 35 HQ Opens 1200000 30 HfS India 1000000 HfS Blueprint Opens 25 is Launched Introduces RPA to 800000 20 Boston US Industry HQ Opens 600000 15 400000 Annual Site Visits Number of Employees 10 5 200000 0 0 2010 2011 2012 2013 2014 2015 2016 2017 Employees Site Visitors © 2017 HfS Research Ltd. © 2017 HfS Research Ltd. FORA Summits in 2018 New York – March 7-8 2018 Cambridge UK – July 3 2018 Bangalore – September 18 2018 Boston – November 2018 For more info about HfS FORA Summmits, please email [email protected] © 2017 HfS Research Ltd. It’s all about data now… Which of the following business drivers will have a major impact on your business? Rank (Showing Top 2) The shift toward digital/online/virtual experiences and away from physical/face-face engagements 15% 12% 27% Making more predictive decisions based on rapidly Data explosion, digital 15% 11% 26% accessible real-time data across the organization disruption and increasing consumerism are the three Combating the threat of potentially disruptive digital main challenges that competitors 13% 12% 25% enterprise face in today’s business environment Micro targeting customers / hyper personalization and customization of products to customer requirements 14% 10% 24% Building relationships with external ecosystem and industry partners to drive innovation and growth 7% 11% 18% Driving out costs through process automation 8% 8% 16% Rank 1 Rank 2 Source: HfS Research, November, 2017 Sample: Enterprise Buyers = 460 Source: HfS Research “Real Time Enterprise 2017” Sample: Enterprise © 2017 HfS Research Ltd. Buyers = 460 Proprietary │Page 8 Unstructured data plagues enterprises Can you estimate the proportion of structured v unstructured data in your organization? Only 22% of 40% organizations have more than half their data structured 29% 20% 9% 0% 2% 0% / 100% 10% / 90% 25% / 75% 50% / 50% 75% / 25% 100% / 0% Source: HfS Research, November, 2017 © 2017 HfS Research Ltd. Proprietary │Page 9 Sample: Enterprise Buyers = 460 Two-thirds of enterprises now view “Digital” as driving new revenue streams and customer experiences Which of the following statements most closely resembles your current organizational leadership’s view on your 'Digital Transformation' strategy? a) “It’s about INVESTING IN "NEW IT" (e.g., get technologies deployed like mobile platform, a cloud platform, infrastructure, etc.) “It’s about INVESTING IN "NEW IT" 35% b) “It’s about CREATING NEW CUSTOMER EXPERIENCES” (e.g., having the coolest use of innovative new technologies like social, “It’s about CREATING NEW CUSTOMER mobile, interactive, etc.) EXPERIENCES” 32% c) “It’s about CREATING NEW REVENUE STREAMS” (e.g., commercial leverage of “It’s about ALIGNING / HARMONIZING BUSINESS OPERATIONS to customer needs” 20% digital channels, such as mobile, interactive tech, social media, etc.) “It’s about CREATING NEW REVENUE d) “It’s about ALIGNING / HARMONIZING STREAMS” 13% BUSINESS OPERATIONS to customer needs” (i.e., all organizational touchpoints, processes, systems and technologies are We don't have a vision for digital transformation 1% driven by the customer experience strategy, from front office to back office) e) “We don’t have a digital vision” Source: HfS Research, “Journey to the OneOffice, November 2017” © 2017 HfS Research Ltd. Proprietary │Page 10 Sample: n=395 Enterprise Buyers Digital disruption is rampant: 29% have already seen their top 2 competitors change in just past three years Are your top 2 competitors the same now as in 2014? Do you believe that they (your competitors) will be the same in 2020? No 29% No 37% Yes Yes 63% 71% Source: HfS Research, “Journey to the OneOffice 2017” Sample: n=395 Enterprise Buyers © 2017 HfS Research Ltd. Proprietary │Page 11 Enterprises see more opportunities than threats © 2017 HfS Research Ltd. Proprietary │Page 12 Majority of enterprises are deer in headlights waiting to get flattened by digitally-savvy competitors How much damage (revenue loss, customer churn, higher customer acquisition costs, lower margins) are digitally native competitors inflicting on your business? Only 22% fear In the next 2-3 years Now notable damage to their business in the next 2-3 years 35% 31% 29% 22% 20% 15% 15% 16% 7% 8% Existential damage Significant damage Some damage Limited damage No damage Damage Declines Source: HfS Research, “Journey to the OneOffice, November 2017” © 2017 HfS Research Ltd. Proprietary │Page 13 Sample: n=395 Enterprise Buyers Organizational culture holds back half of enterprises in achieving progress with digital business models How significantly is your firm’s culture holding back progress when it comes to making real investments in digital business models? Recognition of organizational challenges helps to conquer the challenges. 51% of the highest 35% performing enterprises see their cultures as holding them back in the digital transformation journey 21% 15% 15% 14% Promotes and fosters Does not hold back Neutral Somewhat Highly significantly digital significantly Source: HfS Research, “Journey to the OneOffice, November 2017” © 2017 HfS Research Ltd. Proprietary │Page 14 Sample: n=395 Enterprise Buyers “Traditional Outsourcing” is a commodity. Partnerships are the new norm for services How would you best describe your current primary service provider in relation to your digital transformation journey? Source: HfS Research, “Journey to the OneOffice, November 2017” Sample: n=395 Enterprise Buyers © 2017 HfS Research Proprietary │Page 15 Jamie Snowdon Jamie Snowdon has primary responsibility for overseeing the development of HfS’ Quarterly Market Index, in addition to managing and developing the firm’s data-centric products and services. He works across the HfS analyst teams to define evolving services markets and create market size estimates and forecasts. He also manages HfS’ quantitative survey and benchmark data. Jamie has over seventeen years experience in the IT and Business Services industry. In that time he has worked in a variety of roles including sales, marketing, consulting and as an industry analyst. Jamie’s analyst career has largely been spent conducting data analysis including market size/forecast models, quantitative/qualitative survey analysis and competitive analysis. Prior to HfS, Jamie worked for UK-based analyst firm Nelson-Hall as a Research Director, conducting vendor and market analysis within the IT and Business Services community. Prior to Nelson-Hall, Jamie spent seven years at IDC, where he was the European consulting director for IDC’s services group, managing all of their bespoke research. Jamie specialised in delivering custom market forecast models and forecasting tools tailored to his client’s individual needs. In addition, Jamie ran IDC’s European outsourcing research, covering both IT and business process outsourcing. Jamie has wide industry knowledge covering IT consulting, enterprise applications, IT & business process outsourcing, desktop & network services, equipment maintenance, and business continuity. Earlier in his analyst career, Jamie spent four and a half years at the IT services research specialist INPUT in a mixture of marketing and analysis roles. He left as the UK operations manager having spent two years as a customer services industry analyst. Jamie completed his graduate training at one of the UK’s leading electronic and IT distribution companies. Jamie’s passion is learning; he holds university degrees in general science (computing), law and has a post graduate diploma in legal practice. He lives in Twickenham, London, with his wife and two daughters. His other loves include cycling, reading trashy sci-fi, cool technology, and the perfect pint. © 2017 HfS Research Proprietary │Page 16 Ollie O’Donoghue Ollie O’Donoghue is Research Director, IT Services. With over five years experience in the IT services industry – as both a practitioner and a research analyst – Ollie understands the impact IT services have in the modern business environment. Before joining HfS, Ollie was the Head of Research and an Industry Analyst for an ITSM Practice committed to providing IT Service and Support Organisations with the resources to deliver greater business value. There he developed a comprehensive research portfolio for the industry. He has researched and presented on a multitude of topics including automation, innovative support models, and real-time analytics. In 2017, Ollie was named second on a list of IT and ITSM experts to watch. Before becoming an analyst, Ollie worked as an IT service professional in a large public sector organization. It was here