NTT 2020 Global Managed Services Report
If there is one constant in life – it's change. Change is inevitable; it’s how we adapt, develop and move forward. Nowhere has this been more apparent...
2020 Global Managed Services Report
How organizations are adopting smart sourcing to navigate with confidence
If there is one constant in life – it's change. Change is inevitable; it’s how we adapt, develop and move forward. Nowhere has this been more apparent than in recent events surrounding COVID-19. The impacts have been dramatic and life changing. It’s changed the way businesses operate, how we view the world, and how we work. This has fundamentally altered and driven the need to rethink strategies and redeploy workforces. Remote working is the new normal.
The role of the CIO is also constantly changing. Previously responsible for controlling end-to-end decision making around the IT estate, CIO’s have evolved into business enablers. And now in these unprecedented times, the entire organization turns to them and their teams to lean in and deliver the seemingly impossible - to keep the business running.
Business continuity and security are front and center of the enterprise, working to survive. Yet, as we venture forward, the coming together of people from across the organization, partners and service providers, determines the recovery success.
While siloes will always exist, the bigger picture is more important. The relationships with those outside our normal scope will deliver far reaching outcomes to help restore organizations, albeit in a different, but equally effective state. Now more than ever is the time to leverage the trusted, flexible partnerships you’ve built, turning to those partners who have prepared for such events so that your operations can continue uninterrupted. Those flexible and agile enough to provide the services you need, and who can protect you from threat actors taking unspeakable advantage of dire circumstances.
All of these trends and more have come to light in our 2020 Global Managed Services Report. Conducted by IDG Research (and supplemented with other Global NTT Ltd. Reports), we’ve lifted the lid on the importance of smart sourcing for organizations and the service providers they partner with. All seen through the light of security, transformation reimagined and technical expertise.
Afterall, tough times will pass. But it’s the leaders focused on recovery and restoration, as well as ensuring any future disruptions have minimal impact, who will make certain their teams and organizations come through in the best possible shape.
Damian currently has a dual role covering the Go-to-market organization for NTT Ltd.'s Transformation and Platform Services Business, as well as CEO of NTT Com Managed Services. He is responsible for transforming our global managed services capabilities and go-to-market to drive customer satisfaction and growth, responding to client’s changing business requirements. Damian's career spans over 25 years in IT, 20 years in IT Services, 14 of those within NTT Ltd. He holds several board positions including NTT Europe Ltd., Gyron Internet, NTT Com Managed Services, Secure-24 and Capside.
Follow Damian on LinkedIn.
Key Findings
The rise of smart sourcing
NTT Ltd.’s 2020 Global Managed Services Report, conducted by IDG Research, covers the challenges and opportunities felt by over 1,250 business and IT leaders across the world. And from that, a move from what has historically been termed outsourcing, to smart sourcing.
At its simplest, smart sourcing is an approach to the selection and prioritization of those service providers that go above and beyond the delivery of tactical IT solutions. It’s about nurturing long-lasting relationships with providers who can deliver business outcomes aligned to the goals of the entire organization.
Expanding further, it’s about the following:
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Having the relevant expertise to augment the gaps in your own in-house IT team.
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Providing the widest services portfolio enabling you to consolidate the number of partners you need to manage on a daily basis.
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Not only running your daily business, but also taking you forward on your IT transformation journey to deliver business agility.
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Financial stability, plus a global footprint of ICT infrastructure and being secure by design.
Organizations need to be selective about the service providers they work with and the relationships they build and rely on.
Our study uncovered three core insights:
Insight #1
Identify and secure your assets
‘Reducing security risks is the top reason for considering a managed service provider.’
Security is a prime factor in the value service providers bring. As organizations adjust to new ways of working and IT teams restore operations in new environments, both security and governance play a vital role in the ability of service providers to meet client requirements.
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Insight #2
Transformation reimagined
‘48% of business leaders acknowledge a need to optimize the workplace environment to meet the demands of an evolving workforce.’
Organizations should reconsider what IT transformation currently is. While they get to grips with a new look business, there’s also a need to redevelop and have one eye on the future too.
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Insight #3
Technical expertise and strong service provision builds trust and strong relationships
‘Organizations feel MSPs will provide the most value over the next 3-5 years through their security capabilities (44%), financial stability, trust and reputation (43%), and automation (43%).’
Now more than ever is IT’s time to demonstrate value. IT keeps core business applications, processes and the network not just alive and well, but dynamic to shift under the new ways.
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1*NTT Ltd. CX Benchmarking Report 2020
Research introduction and themes
NTT Ltd.’s 2020 Global Managed Services Report is a comprehensive, in-depth view of managed services. Conducted by IDG Research on behalf of NTT Ltd., respondents came from a cross-section of IT and business leadership positions, totaling over 1,250 people in 29 countries across the USA, Europe, MEA, APAC and Australia, and in a range of sectors.
As the relevance of a smart sourcing service model increases, it’s important to outline the challenges currently experienced by business and IT leaders as we enter a new phase of continuity and restoration:
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The way in which we work has shifted - in most cases - forever. Remote working and the rise of bring your own device (BYOD) has hastened the need for proactive security alerts and fixes before issues even arise. With rapidly changing situations, organizations expect partners to quickly provide new services to enable them to cope with, or fast track, additional requirements.
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Previously, organizations sought to quickly scale to meet increased customer demand. Now, scale is focused on secure networks and remote workers, digital platforms and collaboration tools.
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Solutions need to be delivered with continuity, agility and scalability. And it needs to be done almost instantly. Speed of execution is critical and even more so in current times. The ability to simplify and automate the organization through platform-based services remains an ongoing focus, regardless of macroeconomic forces.
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Growth aspirations have been completely challenged. Transformation was for the most part, focused on customer experience and new revenue streams. Now, end-user transformation sits front and center on the CIO agenda.
All of this points to greater demand in how service providers can play a larger, more intelligent role in enterprise development. Large global organizations with centralized, standardized and automated systems and processes are now fundamental to continued business operations. Organizations need to know their service partner will support them to pivot their focus onto business continuity, processes and tools to keep their employees safe and productive. All while still managing their fundamental IT ecosystems.
In the following sections we analyse the core components of those relationships in more detail, based on the findings of the IDG study. Additionally, it will draw insights from a number of other studies conducted by NTT Ltd.
The themes covered in detail are:
1. Identify and secure your assets.
2. Transformation reimagined.
3. Expertise and service provision.
Theme 1
Identify and secure your assets
Security is a global necessity, pervasive throughout every aspect of organizations and escalates with technological advances. As enterprises restore their operations, in what for some are unfamiliar operating environments, increased security is essential.
There are also implications around the potential lack of sufficiently resourced IT teams to meet the challenge of integrating legacy and new technologies securely; a necessity given the need to enable workforces and ensure their productivity with the right tools, regardless of location.
If not, organizations tend to see a rise in shadow IT. That is, the line of business stakeholders (and their end-users) taking matters into their own hands to implement technology to better perform their roles. And, while that may benefit them in one sense, the lack of consistent security protocols and tools, via the vital missing input from IT, could have disastrous impacts on the security of the entire organization.
But while continuity currently headlines conversations, IT leaders should consider flexibility, agility and user experience as part of their overall security posture; positioning themselves positively when uneasy times pass.
Evaluating security postures and dealing with security risks is a perennial challenge.
The IDG study found 57% cited ‘reducing security risks’ as a common challenge, rating the highest among all factors considered. This trend continues to show that organizations struggle to defend themselves against a complex and worsening threat landscape; mirroring findings from NTT’s Risk: Value 2019 report.
It’s no surprise therefore to see a majority of organizations (55%) turn to service providers for their ability to help ‘reduce security risks’, as the most popular value-added service they offer.
Recent events have resulted in a dramatic increase in remote working, which in turn, has placed even greater demands on IT and security teams. They must have visibility across all endpoints and are tasked with keeping the corporate network, information assets, data and devices both operational and secure to ensure business continuity. And, looking ahead, need to update and patch critical systems where required. Endpoint detection, web content filters, and VPN clients for example, all require careful planning too.
For those who already have a remote working or BYOD program and respective policies in place, the focus is likely on how to quickly scale and shift security operations from on-premises activities to remote support – and how to do so with limited resources. User security profiles would have changed, and the cybersecurity posture would need to shift to address that with the introduction of, for example, remote vulnerability management, end-point protection and incident response services to ensure the security of people working from home.
Fig. 1: Are you using or would you consider using a Managed Service Provider (MSP) to help your IT department and if so for which particular challenge?
Source: IDG Research for NTT Ltd on managed services
Top challenges areas supported by service providers
Security is the most commonly cited IT challenge; it’s also the top area IT departments call upon service providers to support.
For those without a remote working or BYOD security program, the challenge is amplified. There are a wide variety of issues to consider, including whether the employee has an internet connection capable of supporting access. And subsequently, how to manage, engage and properly enable employees who have not previously worked from home let alone how the organization supports and secures that remote workstation with, for example, VPN, encryption and privacy. In this case, security teams are fundamentally rethinking their security posture and operations, and requiring a drastic culture change in order to enable business resiliency.
Further to this, threat actors are exploiting the fact that more people are working from home, potentially, on inadequately secured devices and networks. NTT Ltd.’s April 2020 Monthly Threat Report noted an increase in spam, phishing and malware campaigns specifically taking advantage of the COVID-19 crisis.
Outcomes drive the business case
Managed services will be measured by their ability to drive outcomes related to cost, performance, agility; the most important business factors include security improvements (32%), improved operational efficiency (30%) and better performance/availability (29%).
Fig 2: Which of the following factors are most important in supporting the business case for your organization's use of managed IT services?
Source: 451 Research for NTT Ltd on Managed Services
Matt Gyde, President and Chief Executive Officer, Security division at NTT Ltd. comments, ‘Organization’s digital journey has fundamentally changed how security is deployed, configured and managed. The traditional perimeter security model is being questioned as we see the proliferation of end point devices. The rapidly growing digital footprint needs to be secured and is protected from a rise in malicious activity targeting the remote worker. Our Managed Security Services can be deployed rapidly. It can flex and scale to support already stretched security teams, enabling employees to work securely from anywhere and on any device, to ensure business continuity.’
Security was also rated the important factor for supporting the business case for using a service provider. Thirty-two percent of respondents rated it as the most important factor, compared to 30% for improved operational efficiency and 29% for better performance / availability. And, the trend for utilizing the skills of service providers for security looks set to grow over the coming 18 months. Sixty-four percent said they expected to outsource their security needs over the coming year and a half, compared to 53% who do so currently.
The ability to flex, scale and turn data into knowledge is one of the core benefits of a platform-based approach to delivering security services. Instead of merely seeing isolated events, a service provider focused on smart sourcing will provide you with your entire security picture. Feeding threat intelligence and advanced analytics into the platform delivery, ensures not only consistent, repeatable services, but capabilities to prevent advanced threats, and at speed. It also provides insight and metrics into future trends and methods to remain one step ahead of attackers, giving your organization the balance you need in your security posture.
Lack of security skills and resources
The array of change and pressures placed on IT and security teams through the coming months is further compounded by a lack of resources and skills.
An average of 42% of organizations to NTT Ltd.'s 2019 Risk:Value Report state they did not have adequate resources or skills in-house to cope with the number of security threats they face. Additionally, a high proportion of organizations in the technology, finance and public sector industries expect a skills impact – and are among the top five sectors globally to face cyberattacks.
The impact of skills and security skills shortages
An average of 42% of organizations do not have adequate resources/skills in-house to cope with the number of security threats; an average of 46% indicate a more general IT skills shortage.
Fig. 3: What are the changes you envisage impacting your IT decision making in the next 18 months? Answers provided for 'Skills shortages'
Source: 2019 Risk:Value Report, NTT Ltd
There’s no easy answer to filling the skills and resources gap. Yet, it does highlight the large reliance organizations place on using managed service providers to guide them through challenging situations; particularly those related to security. Technical expertise was rated the most important feature by 44% of respondents when considering a managed services provider, according to research conducted 451 Research for NTT Ltd. in 2019.
Supporting this, NTT Ltd.’s Global Customer Experience Benchmarking Report 2020 uncovered that 62% of organizations said they expected an increased need for cybersecurity/IT support skills over the next two years.
Skills shortages will worsen
The current skills shortage situation paints a concerning picture for organizations – and the challenge is set to increase.
Fig 4: How will advancing digital transformation (incl. robotics) impact your resource skill needs in the next two years?
Source: 2020 Global Customer Experience Benchmarking Report, NTT Ltd.
Organizations are caught in a quandary over skills and resources. While the need to rely on specialist partners becomes even greater post a major event, pressures from the business can dictate cost reduction. As such, a broad range of capabilities from a service provider with platform-delivered services pays huge dividends.
Platform-delivered services allow organizations to collect and analyse data based on new behaviours. This assists with making better and more informed decision-making for the future. It also decreases the burden on IT staff, freeing them up to focus more on the overall security strategy and posture of the organization.
Three steps to rescue,
recover and redevelop
1. Rescue
In the immediate aftermath of a major event, nearly all organizations are in react and rescue mode. That is, the enactment of continuity plans to place the business into survival mode. Focus on the most important things, freeze everything else not related to the survival of the business. Defensive strategies are required to retain and maintain your two most important assets, your employees and your customers.
2. Recover
On the recovery side, now is the time to fix the things that, during the immediate aftermath of the crisis, had merely ‘band aids’ applied – ensuring a repeat attack or event does not take place. For example, employees may have had to use their own devices to access the corporate network from home. As remote working continues to progress, the scaling of corporate approved devices will take place and security policies updated in line with the new way of working. However, new learnings can be derived when analysing data collected during a massive shift in behaviour, such as entire workforces operating from their homes. Data collection needs to be done in a systematic way that’s searchable; which is where platform-delivered services become vital in the recovery process. If you’re going to reach the suggested third step of ‘redevelop’, it’s crucial you have a knowledge store, a repository of information you can farm, helping to inform how you approach redevelopment.
While some organizations are in better positions to recover and restore their operations than others; for all, there’s a simple three step process to ensure that while you focus on the here and now, you can keep future ambitions in sight too.
3. Redevelop
Having been through a major event and adapted the organization considerably, there now sits a wealth of platform-enabled data to enable and drive new efficiencies. For example, changing the business model from the front end of the go-to-market to the back end of the supply chains. Consider the remote working example during the outbreak of COVID-19 and the considerable changes and impact this had. Being forced into changing models and then having the ability to understand its impact through the collection of data will have huge implications for the way in which business operates.
Theme 2
Transformation reimagined
Resilience is vital throughout the entire journey of an organization. Major disruptions can occur at any point in time. But while the temptation is to focus on the here and now, objectivity is also required. Having one eye on the future is important.
Organizations are still transforming – daily. Yet, transformation shifts and pivots, dependent upon the internal or external forces being applied.
When organizational workforce patterns shift, a new set of structures, processes and technologies comes into play. Keeping people secure, engaged and productive is paramount to ensuring business outcomes are still met. That is, having the right tools, delivered through the right digital platforms to deliver customer experience capabilities.
Refocus on end-user transformation
During disruptive periods, organizations will take stock and pull back on innovative customer experience projects. However, transformation aspirations shift to the end user.
NTT Ltd.’s Global Customer Experience Benchmarking Report 2020 found most organizations failed to be proactive around employee engagement. Forty-eight percent acknowledged a need to optimize the workplace environment to meet the demands of an evolving workforce. Recent events have highlighted how macro-economic forces have necessitated the acceleration of any plans regarding employee engagement. Ensuring employees can remain connected securely and productively is surely top of the leadership agenda.
For example, the growth in employees forced to work from home due to the COVID-19 outbreak has led to a huge rise in people using business virtual private networks (VPN) to secure their remote working. In March 2020, global use of NordVPN increased by 165%. Additionally, the increased adoption of collaboration tools has put immense pressure on networks too. A one-hour Skype meeting for seven people will use 3.6GB of bandwidth.
Looking closely at technology projects organizations are currently considering, SD WAN was the most popular from a raft of options that included cloud migration, ERP deployment and managed infrastructure.
Technology projects, by stage
SD-WAN was the most popular technology project under consideration.
Fig 5: Which technology projects are you undergoing, considering, have completed, or are not interested in pursuing?
Source: IDG Research for NTT Ltd on managed services
SD-WAN allows organizations to push WAN services to remote workers and seamlessly extend policy changes, security updates and other centralized activity directly to them. This ultimately helps improve performance and user experience by gaining visibility of corporate assets and data across the network.
Which of the following owns delivery and execution of your digital workplace (work from home) strategy?
- Business-led
- HR-led
- IT-led
- Facility/property management led
- Collaborative effort from all (i.e. IT, HR and Business teams)
- No set rule, varies by project
Percentage of IT outsourced
In 18 months, nearly half of organizations globally (45%) say they will outsource more than they insource; 61% currently outsource 25% or more of their existing IT.
Fig. 6: How much do you currently outsource your existing IT today? How much do you expect to outsource IT projects over the next 18 months? Source: IDG Research for NTT Ltd on managed services
Smart sourcing helping end-user transformation
Respondents to the IDG research acknowledged the need for more help from service providers. Over the course of the next 18 months, 45% will outsource more than they insource.
'Develop outsourcing relationships if you do not have any. You may decide not to outsource, but having contacts on standby and understanding their capabilities will prove helpful.'
Gartner, Coronavirus Impact on Service Delivery Continuity, Employees and Customers, March 2020
With more workloads due to be handled by service providers over the coming years, there’s a prime opportunity for providers to focus on the development of further end user transformation. Not only must service providers be utterly reliable and steadfast in their ability to deliver against the IT strategy, but business outcomes too, and at speed.
CIOs and their teams can work with service providers to be the enablers the business wants. The ability of IT and the business to act as one is upmost on the minds of respondents to NTT Ltd.’s Digital Means Business Benchmarking Report. ‘Clearly identifying both short-term and long-term business / operational benefits’ rated as the most important factor for organizations to get the most out of their digital transformation efforts. This is particularly crucial as organizations manage their operations through times of major disruption.
Most important factors for digital transformation success
The triumvirate of benefits, business case, and metrics show strongly as among the most important factors to address.
Fig 7: How important is it to address each of the following factors in your organization to get the most out of your digital transformation effort?
Source: 2019 Digital Means Business Benchmarking Report, NTT Ltd.
While non-critical growth projects maybe on hold for now, transformation continues across a number of important support and operational areas. For example, service providers can help organizations with remote infrastructure management, which is crucial in saving cost across the enterprise.
They can also assist with the acceleration of working from anywhere. This means the rise of unified collaboration tools and a stronger telecommunications backbone will become even more critical as organizations transform their networks to cope with the shifting parameters. As such, a partner with strong heritage in cloud migration is important as organizations seek to automate workloads.
Crucial to that automation is platform-based managed services across an array of solutions that span beyond simply cloud and network infrastructure, such as SD WAN. The ability to deliver across the whole stack, including applications, collaboration and productivity, data center and security, in addition to the above is what sets a smart sourcing relationship apart from providing point IT solutions. And importantly, the ability to deliver at speed and provide genuine business value.
Four considerations for transformation reimagined through smart sourcing
In line with business expectations of IT to deliver against their outcomes for end user transformation, so too are those expectations on the service provider. Smart sourcing helps IT teams pinpoint the most effective transformation projects that in turn, add the maximum amount of value to the organization.
Here are four considerations towards building that relationship:
1. Evaluate your current service provider relationships
Evolving to a smart sourcing model requires time and dedication from both parties. First, understand your partner’s competencies and the ability to deliver against initiatives that deliver strong end user transformation e.g. SD WAN and cloud migration.
2. Understand your own transformation motivations
What are the core challenges you’re going to tackle and embrace? End user security is paramount right now, as is agility and scalability to increase availability and to automate various components of the IT environment. Organizations increasingly rely on these important capabilities from service providers; who also act as a bridge to your business leaders. Whatever your motivation, your service provider should be able to listen and help with a broad range of capability.
3. Transformation approach and project focus
Understand your service provider’s ability to help you deliver outcomes related to both the business and IT. True smart sourcing is about prioritizing service providers who can deliver to the needs of the business. Delivering to the IT strategy is just one part of the equation. Ensure your service provider can hold court with senior members of your organization to communicate the business benefits technology can bring to any transformation initiative.
4. Keep it simple
Technology is notorious for its complexity. Not to mention stipulations around contracts and SLAs. A smart sourcing relationship keeps these elements as simple as possible. And, not just for IT teams, but for the entire business to understand through the transformation process.
Theme 3
Expertise and service provision
Nowhere is smart sourcing more relevant than in the relationship between the organization and service provider. They support the shift from a focus on technology outcomes to business goals. Forming a ‘smart’ relationship will rapidly accelerate the standing of IT within the organization.
Organizations crave technical expertise and flexibility, helping to scale up or down dependent upon the enterprise needs. Above all, service continuity is critical, along with security, governance and compliance.
From an internal perspective, now more than ever is IT’s time to forge stronger relationships with the business. Like many things we expect to simply just ‘be there and work’, IT can be taken for granted, but is essential to our working existence.
Expertise and service continuity
Technical expertise has long been one of the most important criteria organizations consider when selecting a service provider. The ability to tap into skilled resources at will when they’re lacking internally, is just one of the many benefits. And, it still rings true based on the responses to a 451 Research study conducted on behalf of NTT Ltd. Organizations primarily look for technical (and industry) expertise when selecting an MSP (44% and 30% respectively).
Skillsets and specialization drive service provider selection
Organizations are primarily looking for technical (and industry) expertise when selecting an MSP (44% and 30% respectively).
Fig 8: Which of the following features are most important to you when selecting a managed IT services provider?
Source: 451 Research for NTT Ltd on Managed Services
For IT teams, while they’re responsible for a broad cross section of technology functions e.g. security, cloud and business continuity - hiring and keeping the expertise in house is expensive and potentially duplicates effort. Particularly when experts are available to provide best of breed systems and technology capabilities; based on deep experience of doing the same across a range of industry sectors.
As organizations consider their transformation priorities, the future looks strong for service providers across a number of core technology capabilities. As the IDG study shows, expertise in cloud infrastructure (73%) and security (53%) currently leads the way in terms of technologies currently outsourced to service providers. Those numbers look set to increase in 18 months to 77% and 64% respectively.
As we see an increased usage of networks and systems due to factors such as remote working, business continuity will become even more important in terms of service delivery and the ability to troubleshoot if platforms go down.
Technology outsourced to service provider
Organizations foresee a growing need to outsource; every technology area is expected to increase.
Fig 9: Which technologies do you currently outsource to an MSP? Which technologies do you expect to outsource to an MSP in the next 18 months?
Source: IDG Research for NTT Ltd. on managed services
Given the dominance of cloud infrastructure as a core reason for using and considering a service provider, it’s no surprise to see outcomes such as greater automation listed as areas of value service providers deliver.
This is particularly relevant in light of how organizations view their long-term continuity and future prevention, post a major disruption.
Stability, security and skillset are top vendor traits
Organizations feel that service providers will offer extreme value through their security capabilities (44%), financial stability, trust and reputation (43%), and automation (43%) in the next 3-5 years.
Fig 10: For each of the following service provider characteristics, please indicate the degree of value you expect it to deliver to your business over the next 3-5 years in the context of a managed IT service provider relationship.
Source: 451 Research for NTT Ltd. on Managed Services
The strength of the smart sourcing relationship is brought home when the depth and breadth of automation is considered. Service providers with a huge spectrum of data sitting across an intelligent platform provide not only pin-point focus and speed of execution, but make life simpler. The ability to utilize vast amounts of data, and subsequently analyse and act upon it through analytics, has a drastic impact on the improvement of business processes. Even more so when viewed in the context of learning how to minimize the impact of future disruption.
In addition to the insights that automation brings to organizations are the capabilities around remote monitoring too. Again, in a post COVID-19 world, where there are strict guidelines around physical attendance in the workplace, the ability to perform many functions off-site also provides many benefits.
Simplicity is a goal almost all organizations aspire to. Cashflows need to be protected and costs minimized. And, while best of breed technology is nice to have, service providers with an array of platform-enabled services will stand tall in helping to reduce complexity – and drive consolidation benefits.
Forty-seven percent of respondents to the IDG study said they managed between six and 10 core vendor relationships – not even counting the likely tens or even hundreds of sub-contractor relationships also in place.
Number of vendors managed
Nearly three quarters (72%) of organizations manage 6 or more partners;almost half (47%) manage 6 to 10 technology vendor partners.
Fig 11: How many vendor relationships do you manage?
Source: IDG Research for NTT Ltd. on managed services
And, it’s taking its toll, with a number of challenges arising:
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Complexity around SLA and contractual terms and conditions.
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Performance issues that arise because of complexity.
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Struggle to make vendors work together.
For all the good service providers bring in terms of skilled resource and technical expertise, there are times when many consider if the challenges outweigh the benefits. If there’s ever a positive to arise from working through uncertain times, it’s the focus service providers need to apply when managing their relationships.
Now is the time to consider simplification of SLAs and contracts. While governance and regulation may dictate a level of complexity that’s unavoidable, as much as possible the interaction and associated outputs needs to be smooth and simple – this will lead to better performance.
Reducing complexity continued...
Outcomes drive the business case
Managed services will be measured by their ability to drive outcomes related to cost, performance and agility; the most important business factors include security improvements (32%), improved operational efficiency (30%) and better performance/availability (29%).
Fig 12: Which of the following factors are most important in supporting the business case for your organization's use of managed IT services?
Source: 451 Research for NTT Ltd on Managed Services
Reducing complexity continued...
More and more, organizations seek business outcomes such as user adoption, rather than typical IT related measures as part of their SLAs. As insights from 451 Research show, the top drivers of engagement with managed service providers are the same as the intended outcomes for engagement with new technologies.
Further to the complexity discussion is the ability to deliver against SLAs in a post COVID-19 world. Insights from TSIA research outline that almost half of service providers (48%) have, or are considering renegotiating SLAs based on their actual ability to respond. While on the flipside, organizations are likely to want to add to their SLAs for disruptions around major events such as pandemics. This is where the benefits of platform /remotely delivered services can pay huge dividends to both client and service provider to ensure continuation of services, despite major disruptions.
SLA re-assessment
Almost half of service providers (48%) have, or are considering renegotiating SLAs based on their actual ability to respond.
Fig 13: IT service providers re-assessment of service level agreements
Source: TSIA – Pandemic Handbook, March 2020
While there are always exceptions to the rule, most organizations will have an obvious gap between the business and IT – they operate as two distinct entities. In an ideal world, the business requirements drive the IT strategic plans. IT strategy is, or rather should be, a result of business strategy. But, very often it is not.
The separation of IT and the business was uncovered in NTT Ltd.’s Digital Means Business Benchmarking Report. When it comes to delivering a digital transformation strategy, just over a fifth (22%) of organizations operate in individual business functions. The same report also highlighted the predominance for IT-led delivery models, highlighting shortcomings in collaboration between business and IT teams; just 29% of IT and business teams collaborate consistently on digital transformation.
Delivery model collaboration between business and IT
Predominance for IT-led delivery models highlights shortcomings in collaboration between businessand IT teams.
Fig 14: Which of the following would you categorize as your current primary digital transformation delivery model?
Source: 2019 Digital Means Business Benchmarking Report, NTT Ltd.
Operational focus continues...
Quite often, tactical IT solutions are developed and driven by the IT strategic plan, yet not necessarily driven by business requirements. While IT has its own set of criteria for value, the business has others. They should be related.
Research from the IDG study shows just 21% of respondents said aligning with business objectives by exploring new technologies and workflows is a major workload. Lack of alignment with the business could make the successful outcome of IT projects more difficult to achieve.
Alignment with business objectives is a low workload
Just 21% say that aligning with business objectives by exploring new technologies and workflows is a major workload; lack of alignment with the business could make the successful outcome of IT projects more difficult to achieve.
Fig. 15: What are the major workloads of your in-house IT team (top two)?
Source: IDG Research for NTT Ltd. on managed services
How converged is your IT team with the rest of the business?
- IT and the business operate in separate silos.
- There's some discussion / alignment with projects / initiatives but there could be more.
- We're pretty connected and both are moving closer together.
- There is a ‘good to strong’ alignment between IT and the business.
- IT and the business are fully converged and operate as a single unit, business wide.
Business
and IT convergence
Convergence is king. Showing, and acting, in unity with the business. Roles traditionally embedded within the confines of IT should be embedded across the enterprise. Convergence talks to a move to become one unit.
And it takes certain events to make the possibility of convergence a reality. Perhaps the single biggest ‘event’ was the consumerization of IT. That is the digitization of services, which created new engagement channels to both the end-user and the organization.
The IDG study highlights how business change impacts IT decision-making, such as new product development, geographic expansion, regulation and skills. New product development is expected to be the most common impact on IT decision making in the next 12 months (54%). Regulatory changes (51%), growing into new territories (48%) and skills shortages (47%) are the second, third and fourth most common impacts.
Business
and IT convergence continued...
Business changes impacting IT decision-making
New product development is expected to be the most common impact on IT decision making in the next 12 months (54%).IT decisions are also heavily impacted by regulatory change (51%). Growing into new territories and new productdevelopment are cited by most organizations as the biggest impact areas (16%).
Fig. 16: What are the changes you envisage impacting your IT decision making in the next 18 months? And which of these is the biggest change?
Source: IDG Research for NTT Ltd on managed services
Cloud computing for example gave business leaders the opportunity to deploy technology in line with their desired outcomes; cost-effectively, and with little to no input from IT. And, while IT was focused on pushing cost out of the business, the business moved ahead with transformation, albeit with increased security risk when IT retains little control.
Business
and IT convergence continued...
Delivering the digital transformation strategy
Integrated strategies and centralized teams are at their most prevalent when organizations start out andare in early stages of their digital transformation journey; collaborations diminish as projects progress.
Fig 17: How is your organization's digital transformation strategy delivered?
Source: 2019 Digital Means Business Benchmarking Report, NTT Ltd.
As a result, IT had to get closer to the business. But there’s still a long way to go for most. Business users are more sophisticated and more knowledgeable around what they need and how technology can help. IT has to converge with the business, as business units to some extent control much of the transformational IT spend.
On a positive note, NTT Ltd.’s Digital Means Business Benchmarking Report highlights the gradual coming together of all business units across the organization. Overall, 64% of enterprises in the study said they were delivering through a centralized model and/or via an integrated organization-wide transformation strategy. This bodes well for greater convergence.
Be present, be personal and trust
Three ways to create greater convergence
Service providers can act as an important bridge between the capabilities of technology, and the outcomes a business requires. Yet, it’s also incumbent on IT teams to deliver this too.
For convergence to work, there has to be demonstrable value for both parties, along with compromises. When it works well, the value to the business of cooperating closely with IT will outweigh the necessary compromises. The current COVID-19 situation demonstrates the importance of such convergence – ensuring business-led IT transformation activity is properly secured, scalable and complies with company-wide business continuity plans. In short, it’s ‘better together’.
Here are three simple steps for greater convergence:
1. Be present
All too often, it’s easy to remain siloed. Physical separation truly is a barrier to greater convergence. If anything, the events of the last few months have ensured we drastically reconsider how and where we work – hopefully with long lasting effects. You can only truly get to know someone and their daily lives by actually being present with them; be that physically, or virtually.
2. Be personal
The only way to establish strong relationships is to get personal and that requires being genuine and, of course, having patience to build that relationship. The understanding of what one another wants to achieve is crucial - and so too is the development of a plan to deliver it.
3. Trust
Evaluate your current situation and determine how trustworthy you are to others. Are you and your fellow IT team aligned? Is everyone holding themselves to a high standard in the delivery of services? Make the time to give and receive feedback, learn and fix any weak spots.
Conclusion
Building a better business
The Managed Services testimonial video
Who we partner with and how we work together will be crucial to the long term viability of our organizations. Service providers are at a pivotal moment too where they must show their value, stability and confidence in being able to deliver core business values with both an IT and line of business audience in mind.
Strong security capabilities are no longer an option; everything must be secure by design – not merely bolted on after the fact. The ability to help organizations to pivot and refocus on end-user transformation must be backed up by deep technical expertise and strong service provision; which in turn delivers outcomes around stability, value and confidence.
As the world of service provision moves on from simply outsourcing to smart sourcing, the ability to help IT move up the value chain is a core component of that. While there’s a gradual trend for IT to be far closer to the line of business leaders, there’s still some way to go for many.
To find out how your current service provider relationship is progressing, we’ve developed the smart sourcing self-assessment tool. By taking just two minutes of your time to answer a few simple questions, you can get a sense of where you and your provider currently stand.
Assessment tool
About NTT Ltd.
NTT Ltd. is a global technology services company. We believe that together we do great things. We partner with organizations around the world to shape and achieve outcomes through intelligent technology solutions. For us, intelligent means data driven, connected, digital, and secure. As a global technology services provider, we employ more than 40,000 people in a diverse and dynamic workplace, and deliver services in over 200 countries and regions. Working together, we deliver sustainable outcomes to your business and the world. Innovation is part of our DNA. So, we strive to move forward, challenge the status quo, and drive excellence through the technologies we integrate and the services we deliver around the world. Together we enable the connected future.
