Nilf2012_Global IT Supply Chain Bryan Cruickshank- KPMG

Global IT Supply Chain

Bryan Cruickshank

NASSCOM 2012

February 2012

The ITO businessEvolution of ITOResulting challenges

Emerging trendsThe CIO collaborating with CxOsGlobalization

© 2012 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

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The ITO business

Evolution of ITO

2010 onwards

Transformational solutioning

■ Integrated and collaborated global delivery of services

■ Leverage expertise from centers of excellence, alliance partners and member firms globally

■ Use of global partnerships to redefine business offerings and co-create new products

2000-09

Strategic offshoring

■ Companies focus on core activities and source non-core activities

■ Long term sourcing relationships

■ Long term view of sourcing

1990-99

Tactical outsourcing

■ Cost reductions obtained

through labor rate arbitrage

■ Short term vendor-supplier

relationships with partner firms

■ Immediate noticeable gains to

the organizations

Increased business value


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Evolution of technology is driving changes in the ITO models

■ Start of the Automation phase

■ Localized infrastructure

■ Expensive

Mainframes

Automation

Pre 1970s

■ Emphasis on networking

■ Demand for bandwidth began to rise

■ Rise in operational expenditure

■ Introduction of ASP technology

■ Dot Com revolution

Client Server Architecture

1990s

■ IT infrastructure management services provided by third party providers

■ Birth of the infrastructure outsourcing

■ Used for reducing costs and increasing focus on core activities

■ Resulted in the creation of large data centers

■ Increased use of Virtualization

Hosted/Co-located environment

2000s

■ Rise in demand and penetration of the personal desktop

■ Decentralized computing

■ Birth of the IT services Industry

Rise of the PC

1980s

■ Emergence of the ‘as a service’ paradigm

■ Delivery of IaaS, PaaS, and SaaS

■ A move from CAPEX to OPEX

■ Collaborative solutions that cater to real time information management

■ Utility computing model

■ High bandwidth requirements

Beyond 2010

The ITO business

Evolution of ITO – technology drivers

Source: KPMG’s The Cloud: Changing the Business Ecosystem, 2011

Cloud computing

Borderless technologies & the virtual worldDecision support/virtual interfaces


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The ITO business

Evolution of ITO – customer requirements

Analysts value global capabilitiesAble to adapt to the customer’s local environments

Large IT player are establishing capabilities across the globe

Key advantages customers are seeking

■Flexibility, up and down

■Talent Management

■Proven solutions

■Global reach

■Cost competitive

■Standardization of delivery

Australia

“Accenture continues to deliver solid double-digit revenue growth and record bookings due to strength in management consulting, end-to-end and integrated business and technology offerings, vendor independence, thought leadership, deep domain expertise, and a 141k-strong low-cost Global Delivery Network (60% of Accenture employees).”

Analyst report by Deutsche Bank, December 2011

“HP Enterprise Services has announced the expansion of Best Shore – its global services delivery model – by designating six countries as global delivery hubs that will grow to support increasing client demand for cost-efficient, scalable services that effectively meet business needs.”

News reports, November 2010

Nokia Siemens sets up third global centre at Noida. The new centre complements the company’s two GNSCs (Global Network Solutions Centre) in Lisbon (Portugal) and Chennai. “We are pioneering a unique, centralized, global delivery model through our integrated, multi-technology, multi-vendor central delivery hubs – what we call the GNSCs – which provide global scale and drive the world’s most efficient networks.”

News reports, 2009


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Challenges facing the industry

The ITO business

Resulting challenges

■ Local regulators

■ Local taxation

■ Intellectual Property protection

■ Transfer pricing

Regulation

■ Increased competition among vendors

■ Industry insight

■ Customer centricity

Competing globally

■ Dispersed employee base

■ Visa constraints

■ Complex reporting structures and business processes

Resourcing globally

■ Functioning across time zones

■ Collating/consolidating information

■ Tracking performance

■ Local autonomy v global consistency

Operating globally


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Emerging Trends

The CIO collaborating with CxOs

CxO’s challenges driven by globalization

How CIOs can help mitigate the challenge

Increased regulatory and financial risk

■ Capture, summarize and share risk information enterprise-wide

■ Automation of risk and remediation processes

Moving into new markets and

services

■ Leveraging local capabilities into a global delivery model

■ Speed and agility in integrating acquisitions to fuel inorganic growth

Improving business efficiency

■ Automate existing manual processes to drive operational efficiencies

■ Performance management tools that transform enterprise data into business intelligence

Data quality

■ Consolidating infrastructure elements and providing a platform for data standardization

■ Supporting data management and governance

Redundant processes across

geographies

■ Technology enabled shared services and centers of excellence

■ Platform consolidation

CxOs’ reliance on CIOs is expected to increase in order to deal with the emerging challenges


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ITO Factors

Increasing focus on industry specific solutions

Greater levels of technology and business integration

Increasing use of core global capabilities for local delivery

Globalisation driving extended footprint in new markets

Increasing ITO delivery

from an India hub

Global ITO helping

customers to meet global

challenges

Emerging Trends

Globalization of ITO

Customer Factors

Technology assets/IP speeds business transformation

New & emerging technologies blurring business and technology distinction

Innovative pricing models and ways to access consumers

Business looking at ITO to drive and enable business

Prospering in a more complex global ecosystemwill require new approaches and new collaboration

Thank you


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