Strategies for Growth in 2011

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1 Strategies for Growth in 2011 Based on market research surveys conducted in Q with outsourcing solutions providers (50% of survey respondents), software and technology firms (25% of survey respondents), business services (7%), and a scattering of a few other industries including: hospitality, real estate and property management, telecommunications, distribution, manufacturing and professional services, the majority of companies have reengineered their models (8 in 10) and/or portfolio (6 in 10) and are looking to expand with the majority of companies testing new revenue strategies and tactics to grow in 2011 and beyond. Business Performance in 2010 Against Goals Revenue Growth Strategies & Spending Budget Research Survey Findings Half planning on expansion into new markets Half launching additional products and/or solutions; 2 out 3 added recurring solutions 1 in 5 have added channel partnerships 1 in 10 looking at global expansion Less than 10% using primary Intelligence (market, competitive) as most favor leaning on industry data Key Takeaway: Spending to date and forecasted for 2011 reliant on either: i. Expansion Plans ii. The concept of spend now to save resources in the long-run (i.e. via either a TCO or ROI model).

2 Top Drivers for Technology Spending in 2011 The market is buzzing about cloud and enablement solutions such as productivity software or UCC (Unified Collaboration Communications), but decision makers have budgeted for more core infrastructure and asset upgrades/improvements and are focusing on virtualization, data consolidation, and asset management. The chart below highlights where the budget is being allocated for The findings reveal that spending will be driven to support revenue growth initiatives as well as for specific company initiatives.

3 Outsourcing Adoption The following chart highlights the market adoption and utilization among small to medium enterprises regarding outsourcing by functional area. Findings: Nearly 80% outsourcing at least one function. The big bang approach has given way to a focused by function and/or deliverable scope as opposed to a lift and shift. o IT Outsourcing up from 1 in 4 in 2007 to nearly 40% in Approximately 10% of the market evaluating outsourcing a new/additional function. While buyers continue to be cautious, 40% believe in the value-proposition of outsourcing is achievable or attained for their company.

4 Market Pricing Benchmarking and Pricing Intelligence Findings Managing price to increase profits and profitability best practices and findings are outlined below: Adoption Findings: Less than 10% have Intelligence Routines. 2/3 interested in additional information. Market Pricing Intelligence focused almost exclusively on pre-deal transaction and not utilized to manage performance, costs, or SLAs. Utilization Findings: Most common source of intelligence is trusted advisors and Gartner or industry reports. There is not a most common pricing model (FTE equivalent pricing is still the largest) today as numerous models and numerous hybrid models are being used. The most common pricing models today rely on ROI or TCO methodology. Overwhelmingly service Levels tied to results and not efforts. (Security, Performance, Manageability). Hybrid models gaining ground. Spending Findings: Companies spending $500 to $1,500 for SMBs and up to $5k for mid-market enterprises per month on average depending on size.

5 Outsourcing Benchmarks, Practices, and Findings Overall, still regional leaders with highly fragmented SMB and SME providers. While competition is prevalent, regional leaders continue to strengthen their standing in their local markets. BestInClass have Gross Margins 50% but Net Income (EBITDA) is single digits or zero (< 10% have multiyear contracts). The majority have started bundling and continue to progress: o Bundling of products and services o Bundling of services and management o Bundling of technology and services < 10 % using offshore. Percentage with Defined Industry Focus Industry Distribution, Transportation & 41% Logistics 35% Manufacturing 29% Energy 24% Professional Services 18% Healthcare 18% Technology 12% Utilities 12% Government 5% Financial Services 5% Consumer Services 5% Construction 5% Retail 0% Nonprofit 0% Education 0% Hospitality

6 Technology Outsourcing Provider Benchmarks, Practices, and Findings Bundling of hardware/software and solutions such as , security, continuity are all prevalent. Less than 20% bundling HW/SW for a leasing offer (these programs are readily available) assume equipment worth nothing after three years moves cost from capital expense to operating expense and refresh technology every three years. Sales consultation scope of services: Review of vendors and contracts and relationship diagnostic and remediation as needed. TCO and ROI analysis Reporting & Dashboards Ongoing services typically include: IT Network and Infrastructure Management Data Center Security Storage Disaster Recovery Add on solutions typically rely on Microsoft or industry specific point solutions based on current priority industry trends and drivers.