Several times in recent weeks I have been asked about where I think our market is heading for IT Services in the ANZ region. We have a mature market here with many customers now well into their 3rd or even 4th decade of interaction with IT outsourcers. Conferring with other HCL colleagues in the US, there are many parallels that can be drawn between Australia/New Zealand and the US market. In this blog, I am not going to comment on how HCL sits in comparison to its competitors, but instead have a look at the likely changes in buying trend over the next three or four years.
There is currently a lot of activity in the market with traditional style RFP work and we have had a very busy run up into the Christmas & New Year period (much busier than last year according to local HCLites). The present RFPs span all business verticals and delivery horizontals and are both small and large in their contract value. There are a growing number of them that are niche XaaS (X as a Service) areas, but these tend to be small in contract value size, and usually parcels of work that reflect the plan, build, and run cycle. The most common are in the HCM area. We also have a few proposal requests for projects to convert legacy platform systems to cloud based systems – however at this stage it is a platform change and not a full applications modernization effort.
So taking what we are seeing - and building on where I think things are headed, I believe we are currently on the front edge of an exciting transition period, that will affect both how our customers buy – and how we sell and deliver. I believe the next few years will pan out as follows:
Calendar year 2015 and running into 2016: A flurry of traditional style RFPs from all industry sectors for IT Outsourcing services, both Apps and Infra. Perhaps for the last time in this format. And at the same time we are likely to see an increase in the XaaS apps requests, but still in the niche areas.
Calendar Year 2016 & 2017: Requests for full platform changes and applications modernization, with customizations done away with where ever possible will become more common.
Calendar Year 2018 onwards: The first real shift away from the traditional RFP driven outsourcing – to true XaaS… enabled by the apps modernization work and de-customization that we will have undertaken in the previous year or two.
Why will this occur? What are the drivers? Three simple factors: Cost, Flexibility and Increased speed to deploy (Speed to market). As soon as one organization in a particular market segment makes this shift, all their competitors will have to follow in order to remain competitive.
If this is true, and all the indicators are there for us, there are obviously some fantastic opportunities for HCL. However we need to mobilize now - in the way we sell, the way we advise and consul to our customers – and how we skill up and organize ourselves to build and support these platforms that will require each and every delivery line to work on concert to deliver successfully in the new XaaS world.
In my next blog, I’ll speak about how we go about this preparation.
To finish up, I’d like to take this opportunity to wish all readers the very best in the New Year.