IT Industrialization & Revolution in the Cloud

September 16th, 2016

Recent reports from Gartner identify the industrialization of IT services as the major factor driving change in the service market into the next five years and beyond. Gartner has tracked (and forecast) the evolution toward one-to-many, industrialized services over the past decade, in a study that began in 2001.The current overall position reflects the impact of cloud-based services on the IT service sector.

The impact of cloud-based services, which are by definition one-to-many industrialized services, has only just started; the high growth rate associated with infrastructure utility services(IUS), business process utility(BPU) and software as a service(SaaS) illustrates this trend.

Back in 2001, Gartner predicted that access services based on one-to-many service delivery models in shared environments would account for 40% of the IT services market. The newer access and creation services are in contrast to more traditional IT management and optimization services in enterprise environments. The recent report indicates that the market shift associated with industrialized and globally delivered models has involved approximately $170 billion in services. This represents more than 20% of the current IT services market, which is worth $810 billion. Although only a limited part of globally delivered services qualify as industrialized, based on today’s definition, offshore providers are increasingly investing to augment the proportion of their revenue that is based on industrialized services.

By 2015, Gartner analysts expect revenue from both public and private cloud-based services alone to be in the range of more than $150 billion. The migration to cloud services, and the growing role of cloud services brokerage(CSB)/aggregation will strongly affect the IT services market. But the Gartner report suggests that these aren’t the only services that will play a significant role in the market. Industrialized one-to-many services — not necessarily the services that fit the cloud computing definition — are expected to have an even larger impact on IT and business process outsourcing(BPO). These services will progressively replace traditional service models, leading to major shifts in both market share growth and leadership.

Given these studies and predictions, Gartner analysts suggest that enterprises should be mindful of how a chain of economic and business events could disrupt the IT services market and stall its growth by 2013. Strategy rooted in awareness of these trends will help businesses increase opportunities and limit threats through economic volatility and aggressive commercial practices.

Gartner also urges an effort to understand specific cloud computing services, such as SaaS, and what these could mean for your business, in assessing whether to adopt these services or remain with traditional IT offerings.

In line with the journey to cloud-based offerings, Gartner predicts that industrialized infrastructure outsourcing shall be imminently mainstream. Thus, the forces of IT industrialization and cloud computing will bring about new infrastructure outsourcing services. Enterprises are encouraged to better understand the shift toward industrialized services, such as infrastructure utility and cloud computing, in data center managed services markets, and how these trends differ regionally across the globe.

Companies should also endeavor to understand the range of hybrid options between traditional IT outsourcing (ITO) at one end and cloud computing at the other. This will help ITO providers to better identify opportunities when revising their ITO strategy for the coming decade.

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