IDC: IT Outsourcing Will Pick Up, But Available Resources Are Going To Be Strained
As Merger and Acquisition activity is picking up speed again, analysts at IDC report that enterprises are likely going to focus on reducing overall network costs whilst adapting their systems to become more flexible.
Sep 27, 2006
The demands that this entails will lead to a rise in outsourcing to external IT specialists, IDC analysts believe. They say that the telecommunications industry is most likely to pick up the tab, but that this industry itself needs to establish credibility first.
"With increasing merger and acquisition activity and rapidly changing business models, enterprises are looking for ways to reduce overall network costs, cope with increasing complexity, and become increasingly adaptable", IDC reports in a study entitled Enterprise Network Outsourcing: Big Challenges Lie Ahead.
The road ahead is not without its complications, IDC analysts warn. They believe that the pent up demand might strain the available network outsourcing services. Citing its WAN Manager Survey, the analysts say that Banking/Finance and Insurance and Education verticals are likely going to be producing most of the action for network outsourcing services.
The demand for adaptive IT service delivery will accelerate the demand for new on-demand utility-like platforms. Unlike the traditional systems architectures of today, IDC says the utility-like model will increase a company's flexibility by turning traditionally fixed costs into variable costs.
Delivering outsourced network-IT services will prove increasingly challenging for all service
providers, IDC says. "As the service delivery architectures standardize service providers will have to adapt their service delivery models to compete. [...] The strategic issues of this shift are more than just technical in nature, as they will alter the competitive landscape, in some cases changing the buyer profile and altering the company's mix of partners and suppliers," says Sean Hackett, research manager for IDC's Business Network Services. He adds that the telecommunications carriers have a new advantage in this market primarily because of the cost advantages of scale and their deep understanding of the network. However, he says, the carriers first have to raise their credibility in the marketplace as IT service providers.
"With increasing merger and acquisition activity and rapidly changing business models, enterprises are looking for ways to reduce overall network costs, cope with increasing complexity, and become increasingly adaptable", IDC reports in a study entitled Enterprise Network Outsourcing: Big Challenges Lie Ahead.
The road ahead is not without its complications, IDC analysts warn. They believe that the pent up demand might strain the available network outsourcing services. Citing its WAN Manager Survey, the analysts say that Banking/Finance and Insurance and Education verticals are likely going to be producing most of the action for network outsourcing services.
The demand for adaptive IT service delivery will accelerate the demand for new on-demand utility-like platforms. Unlike the traditional systems architectures of today, IDC says the utility-like model will increase a company's flexibility by turning traditionally fixed costs into variable costs.
Delivering outsourced network-IT services will prove increasingly challenging for all service
providers, IDC says. "As the service delivery architectures standardize service providers will have to adapt their service delivery models to compete. [...] The strategic issues of this shift are more than just technical in nature, as they will alter the competitive landscape, in some cases changing the buyer profile and altering the company's mix of partners and suppliers," says Sean Hackett, research manager for IDC's Business Network Services. He adds that the telecommunications carriers have a new advantage in this market primarily because of the cost advantages of scale and their deep understanding of the network. However, he says, the carriers first have to raise their credibility in the marketplace as IT service providers.