New Frontier of Managed Services Innovation

Peter Lacoste

Recently I was asked to deliver a keynote at the 2014 TSW Services Transformation conference and I wanted to share my experience and keep the discussion going by providing a short recap here.  My keynote was well received with the most common comment being that EMC has really diagnosed exactly what is happening in the market. I hope you find this recap valuable as well.

As I look across the world today, I continue to see validation of four mega technology trends that are refining the enterprise agenda.  For example, according to IDC, mobile is now a $41B industry and the preferred method of accessing the internet. Big data is maturing as executives seek greater revenue from the vast arrays of information in their business and social networking now a mainstream business and personal. But the trend that I see having the most impact on my business is as cloud adoption provides an efficient platform to run ITaaS, it is fueling a reversal in the outsourcing & managed services markets. In the later years of the first decade of the century we saw a reduction in the use of managed services and smaller total contract sizes.  Now, as indicated in several recent studies, CIO’s are expecting to increase the outsourcing of workloads to the hybrid cloud.

Why is this happening?  I believe it is because IT organizations are being asked to deliver on three key business challenges. First, IT is being asked to react faster to help the business find tomorrow’s growth. There is an opportunity and real need for IT to understand these new web and mobile platforms and partner with the business to build new capabilities so that your company can be the disruptor, not the disrupted. Secondly, IT is being asked to cut costs to free up resources that can fund innovation and tomorrow’s growth initiatives. We are dealing with the perpetual need to cut costs in our existing IT environment.  Spending less on capital equipment and finding efficiencies in our staffing models. Last but not least, IT must balance the risks of these competing interests.

In a recent IDC study,  71% of CIOs want to focus the IT Organization on Business Strategy and Innovation, not on IT Technology Strategy.  Meeting these challenges requires IT to be the agile, innovative, cost effective provider of services to the business user. Because of this, I believe we are facing a new frontier in managed services, where IT leaders will look to managed services providers as more than a way to reduce TCO. I believe and I am seeing proved out that customers want to use skilled managed services providers to deliver capabilities that enable IT to transform to a center of innovation based on the principles of ITaaS and hybrid cloud.

So what does this mean to the managed services provider, particularly ones domiciled in technology vendors?  A couple of things. We must continue to be on the leading edge in up-skilling our delivery professionals on the latest technologies like hybrid cloud and big data.  We also need to continue to understand how to justify our value to customers who are now looking for us to not only shift cost but also to innovate faster than internal IT can.  Click here to view my keynote on TSW’s website. Thanks again!

New Frontier of Managed Services Innovation
Peter Lacoste