PAC Buyer s Guide. The new Fujitsu - Innovative Sourcing Models. for Flexible and Efficient IT Operation

Transcription

1 PAC Buyer s Guide The new Fujitsu - Innovative Sourcing Models for Flexible and Efficient IT Operation September 2009

2 PAC BUYER s GUIDE Innovative Sourcing Models September 2009 Table of Contents 1. Preface Fujitsu - Synergies from the Integration of Fujitsu Siemens Computers A Current Market Dilemma Increasing IT Requirements and Decreasing IT Budgets Four Main Action Areas for Optimizing the Provision of IT Conclusion & Outlook...12 Table of Figures Figure 1 Fujitsu s Global IT Portfolio Map...4 Figure 2 Fujitsu s Dynamic Infrastructure Offering...5 Figure 3 Evolution of Outsourcing and Managed Services (Total Growth)...7 Figure 4 Sourcing Options from an Economic Standpoint...9 Figure 5 Sourcing Options by IT Function...11 Figure 6 Innovative Sourcing Options through Utility Computing...12 Figure 7 Innovative Pricing Models...13

3 3 1. PREFACE In April 2009, Fujitsu took over Siemens half of the formerly commonly managed European joint venture, Fujitsu Siemens Computers, and integrated it into Fujitsu Group. This has resulted in a globally oriented IT group, which, mainly in Europe, profits from new synergies of Fujitsu Services, the IT services arm of Fujitsu group in Europe, and Fujitsu Technology Solutions (former Fujitsu Siemens Computers), one of the leading suppliers of hardware and related solutions and services across Europe. The PAC Buyer s Guide at hand aims at revealing the advantages of the integration and the resulting opportunities for the new Fujitsu, with a special focus on IT services. It shows how the internal vertical range of IT manufacture can be reduced successively in order to unburden IT organizations from purely operational IT services and create opportunities for business-oriented and IT-supported innovation with clear added value. For the influence of IT on the value chain in companies is growing steadily. The success or failure of an IT department is assessed largely by a verifiable increase of the business benefit (value contribution). At the same time, the available IT budgets are rarely sufficient to meet the increasingly complex IT requirements. It is all the more important to orient the individual sourcing strategy (make or buy) towards the overall IT goals (value contribution) and to provide the basic IT requirements primarily under the cost factor. Particularly the ongoing trend towards managed services and new concepts such as infrastructure as a service show the increasing industrialization of all available IT services. The in-house operation of IT infrastructures and non-company-specific applications will be outsourced to external providers in the long term.

4 4 2. FUJITSU - SYNERGIES FROM THE INTEGRATION OF FUJITSU SIEMENS COMPUTERS After the complete integration in the Fujitsu Group, the global portfolio of IT-related core services encompasses the following elements: a consolidated infrastructure portfolio (Dynamic Infrastructures), IT services around business applications (Application Services) and business process-oriented IT services (Business Services). Source: Fujitsu Figure 1 Fujitsu s Global IT Portfolio Map This has resulted in a portfolio that covers all essential elements of a modern IT architecture with products and services, and has worldwide delivery capacities. Fujitsu s new service offer Dynamic Infrastructures shows the newly created synergies particularly well. It combines know-how around their own hardware products from desktop environment to mainframe systems and the related maintenance services with high-quality IT services and far-reaching competencies and capacities in the design, implementation and operation of IT infrastructures. The resulting modular product range reaches from a single hardware

5 5 acquisition via pre-configured solution components to managed services and infrastructure as a service. The portfolio map of Fujitsu s Dynamic Infrastructures exemplifies very well the variety of selection options for the customer. Source: Fujitsu Figure 2 Fujitsu s Dynamic Infrastructure Offering Offering Dynamic Infrastructures : Infrastructure Products and Services, which are developed for virtualized and automated environments. Pre-tested Infrastructure Solutions, which contain the know-how and experience from hundreds of customer projects. Managed Infrastructures Partial or complete outtasking solutions for IT infrastructures; the customer retains control of the infrastructure and profits from expert support. Infrastructure-as-a-Service enables the customer to share infrastructure solutions and pay only for what is used. The Dynamic Infrastructures portfolio can be fully adapted to the customer s requirements and offers the following advantages: Offerings for Every Maturity Degree of an IT Organization: Fujitsu s Dynamic Infrastructures portfolio has the right solution for every individual level of maturity of an IT organization and is designed to grow in line with every evolution phase.

6 One-Stop Shopping: 6 Fujitsu is positioned as a complete provider of dynamic IT infrastructures and offers an adequate infrastructure service for every sourcing strategy especially the portfolio elements Managed Services and Infrastructure-asa-Service shown in figure 2 reflect flexible services concepts. Moreover, Fujitsu Services outsourcing competence will leverage significantly the available sourcing options for Fujitsu s customers across Europe. Global Delivery Combined with Customer Proximity: Thanks to the integration of Fujitsu Siemens Computers, Fujitsu has become an IT company with global delivery, which can best support European companies in the allocation and operation of IT infrastructures worldwide. This is made possible with standardized data processing centers, methods, tools and processes. Nevertheless, Fujitsu combines global delivery with local proximity through a network of onsite subsidiaries in almost all European markets to provide client interfaces and individual solutions locally. Own Hardware Development as Basis for Innovative Solutions around Utility Computing Thanks to the combination of own hardware development and manufacturing, the Fujitsu laboratories develop holistic IT infrastructure solutions that, in a very early development phase, consider the complexity requirements for the operation of this hardware under strong efficiency aspects. This inter-disciplinary approach leads to innovative solutions combining highly virtualized hard- and software platforms (e.g. Flexframe or CentricStore) with innovative IT services concepts to maximize customer benefits.

7 7 3. A CURRENT MARKET DILEMMA INCREASING IT REQUIREMENTS AND DECREASING IT BUDGETS In times of tight IT budgets and increasing requirements on IT, the question is still how can IT operation costs be lowered in the long term and internal resources be allocated to more important (strategic) IT tasks. European companies today spend approx. 480 billion annually on IT, about 9% more than ten years ago. Be it in company management, production or the interaction with customers and partners, most business processes are no longer possible without IT support. More and more workplaces are equipped with increasingly sophisticated IT, both in offices and mobile. However, the volume of IT expenditure in Europe has practically stagnated since The ongoing IT penetration within companies of almost all economic sectors and sizes was compensated for by the significant price drop for IT products and services. The big difference between now and then is therefore the way budgets are used. The objective but also the structure of IT investment has changed considerably. Source: PAC Figure 3 Evolution of Outsourcing and Managed Services (Total Growth)

8 8 Back in 2001, the share of IT expenses on external operation services (managed services and outsourcing) in total IT expenditure ( 441 billion) across Europe was below 9% ( 39 billion), but has grown to over 13% today. This means that the own vertical range of manufacture within IT in Europe has shrunk significantly, thus generating a total outsourcing market of roughly 65 billion in And the trend towards managed services and outsourcing is still strong. PAC expects the outsourcing market to grow until 2013 by an additional 32% to nearly 90 billion, whereas total IT expenditure will grow by only 7% to approximately 515 billion during the same period. There are two main reasons for this overall IT market development: Globalization of Markets The overall objective of a company is profitable growth. Particularly European companies, whose domestic markets are often characterized by slackening demand and high competitive pressure, can achieve this objective, for example, by entering new, international markets. This geographical expansion strategy requires a wide range of investments when setting up new production or sales locations, e.g. in a well-functioning IT. An international IT supplier can then provide a globally available and flexible IT infrastructure, with lower initial investments than in an own operation. Ongoing IT Industrialization Due to the consistent standardization and automation of IT processes, an ever broader offering of external IT operation models has evolved during the last decade. Companies can economize significantly, in particular in the provision and operation of IT infrastructures, and determine themselves the degree of standardized IT provision. The more standardized and homogeneous the internal IT, the more opportunities exist to outsource the end-to-end responsibility for selected IT processes. Especially the combination of new technologies, such as cloud services and the ensuing possibility to offer performance and pricing models adapted to the actual requirement offer significant further industrialization potential.

9 9 4. FOUR MAIN ACTION AREAS FOR OPTIMIZING THE PROVISION OF IT In general, PAC currently sees 4 major courses of action, which an internal IT organization should examine closely: a) Reliable IT b) Efficient IT c) Variable IT d) Business-oriented IT In PAC s opinion, the future value contribution of an IT organization lies in a consequent alignment of business and IT. Successful CIOs are those who develop their role and organization into a business-impacting one by defining concrete business value metrics to show how much IT has helped improve the overall business development. Therefore, operational IT functions will limit the opportunities to constantly develop these business IT functions. This means that a decision in the direction of managed services or outsourcing should help allocate more resources for the business-driving part of IT. Source: PAC Figure 4 Sourcing Options from an Economic Standpoint

10 Focus on Business IT: 10 Even though, for many companies, certain internally provided IT services have become an integral part of IT production, they are still far from being core competencies that give a distinct competitive advantage. The operation of IT infrastructure in particular is a meanwhile largely and highly standardized IT service. However, major parts of the available IT budget are still allocated for these purely operational IT services. PAC estimates that approx % of the internal IT budget are spent for running the IT instead of innovating it. The flexibilization and progressive standardization of these commodity services can bring significant cost savings through externally provided managed services, outsourcing or infrastructure as a service offerings. This can disburden the available IT budget and create room for higher value-added IT activities which support the business value of IT. Variabilization of IT Fixed Costs: The high capital costs of an own IT operation are under close scrutiny, especially during an economic recession. Particularly the new price and calculation models in so-called distributed IT environments (cf. chapter 5) enable the variabilization of fixed costs inherent in an own operation, and allow for cost reduction. In times of strong price pressure, this improves the liquidity and cash-flow situation of a company in the long term. These economies of scale enable flexible price and calculation models on the basis of the IT quantity actually required. Efficient IT: Company IT has meanwhile become a highly complex structure. Having to remain up-to-date with the latest technology and all related IT services often ties up resources that would bring more value elsewhere. Moreover, it is the core competency of an IT supplier to provide and operate pre-configured IT infrastructure that is adapted to the customer s IT architecture. Managed services and outsourcing enable clients to profit from an optimized external provision of services in areas that are not directly connected to the general company strategy. Global IT services providers such as Fujitsu have invested significantly in modern service delivery architectures. Reliable IT: Reliable IT operation is becoming a critical success factor. Due to the close integration of IT and business processes, IT downtime can quickly lead to

11 11 high monetary loss and paralyze entire value chains, e.g. in automotive production or the processing of credit card transactions. Actively managed service level agreements with an IT provider exactly define the on-site or remote service and entail high quality standards in IT provision. The consistent application of lean management methods by the IT provider generally leads to efficient service delivery and management processes. Availability agreements can then be completely adapted to the individual requirements. However, not every IT function is outsourceable from a functional standpoint. Business-critical core applications, for example, which have been often further developed individually with much internal effort cannot easily be operated externally. In such cases, the danger of losing irretrievable know-how could be too high. Figure 5 shows which IT functions fit in best with which sourcing strategies in a more or less classic IT environment. Source: Fujitsu Figure 5 Sourcing Options by IT Function In the central area of the chart, we find IT functions that are appropriate for internal or external operation depending on the organization s maturity degree. After a certain degree of IT standardization has been reached the cost saving leverage of external IT operation can take hold. However, generally spoken, most IT infrastructures and the corresponding service desk beyond the business application and business process layer are appropriate for external operation.

12 12 5. CONCLUSION & OUTLOOK The variabilization of IT costs is becoming a fundamental success factor within IT on the basis of flexible contract durations and billing models (pay-as-you-use). This gives the customer higher cost transparency and an altogether efficient IT cost structure. In this context, How? (delivery) is playing a less important role than When? (availability) and How much at which flexible cost? (utility-based IT provisioning and billing). Generally, there are more and more hybrids in external services. Be it traditional hardware resources or application software ever more products can be purchased alternatively as a service from the own data processing center, the provider or even entirely from the cloud. Source: Fujitsu Figure 6 Innovative Sourcing Options through Utility Computing From computing power via various business applications to desktop virtualization, i.e. the relocation of entire desktop software environments to a data processing center, the return to centralization in IT is omnipresent. This is not so much the often mentioned mega trend, but rather a consistent, largely pragmatic evolution of IT provision which, without any doubt, will alter the IT landscape considerably. Taking as an example the impact of new technologies on billing models,

13 13 figure 7 shows that flexible billing for actual usage offers large potential for further IT cost saving. Source: Fujitsu Figure 7 Innovative Pricing Models The Infrastructure-as-a-Service concept combines many technological innovations and trends from the past few years, including industrialization, automation, standardization, virtualization, service-oriented architectures, shared services, Internet and network technologies and outsourcing in general. Management, monitoring and billing tools bring these concepts together and make them manageable and priceable. Particularly the public cloud, or at least its partial usage, offers high scalability. This is all the more important when peak loads in fluctuating capacity requirements need to be offset or generally when resources are difficult to plan. Usage-based billing promises lower prime and fix costs and prevents the oversizing of one s own infrastructure. Contrary to the traditional outsourcing model, there is no long-term commitment between customer and provider. Economic advantages: - Pay-as-you-grow models for sharing business risks - IT managers are supported in operating their IT organization according to economic criteria - Faster time-to-market of new products and services, higher flexibility Operational advantages: - Faster provision of services - Economies of scale - Safe basis for calculation, standardized processes

14 - Latest technology can soon be used in business operations 14 The PAC Buyer s Guide at hand reveals that innovative companies have a multitude of sourcing options at their disposal. In particular new business models such as Infrastructure-as-a-Service hold potential for the next level in standardized and cost-efficient IT operation.

15 15 CONTACT Author: Stephan Kaiser Director +49 (0) Editor: Pierre Audoin Consultants (PAC) GmbH ABOUT PAC is a global market research and strategic consulting firm for the Software and IT Services Industry (SITSI). PAC helps IT vendors, CIOs, consultancies and investment firms by delivering analysis and advice to address a range of growth, technology, financial and operational issues. Our 30+-year heritage in Europe combined with our US presence and worldwide resources forms the foundation of our ability to deliver in-depth knowledge of local IT markets, anywhere. We employ structured methodologies undertaking thousands of annual face-toface interviews on both the buy and sell side of the market, as well as a bottom-up, top-down approach to leverage our research effectively. PAC publishes a wide range of off-the-shelf and customized market reports including our best-selling SITSI program in addition to our suite of strategic consulting and market planning services. Our Offices PARIS Pierre Audoin Consultants (PAC) 23, rue de Cronstadt F Paris, France Tel: +33(0) Fax: +33(0) mailto:info-france@pac-online.com MUNICH Pierre Audoin Consultants (PAC) Holzstrasse 26 D Munich, Germany Tel: +49(0) Fax: +49(0) mailto:info-germany@pac-online.com LONDON Pierre Audoin Consultants (PAC) 2nd Floor 15 Bowling Green Lane London EC1R 0BD, UK Tel.: +44 (0) Fax: +44 (0) mailto:info-uk@pac-online.com BUCHAREST Pierre Audoin Consultants (PAC) Louis Pasteur Bucharest - 5, Romania Tel.: +40 (0) Fax: +40 (0) mailto:info-romania@pac-online.com NEW YORK CITY Pierre Audoin Consultants (PAC) 231 W. 29 th St. Suite 502 New York, NY 10001, USA Tel: +1(646) Fax: +1(212) mailto:info-us@pac-online.com Over 160 professionals in 16 offices across all continents are delivering the insight that can make a difference to your business. For more information on our company, please visit our website at: