Galit Fein Office of The CIO Presentation Full Version v5

Office of the CIO Office of the CMO Market Trends 2012
Tell me and Ill forget Show me and I may remember Involve me and Ill understand
STKI Summit 2012

Galit Fein VP & Senior Analyst
Agenda
MEGA Trends
Office of the CIO

IT Services and Chargeback
Office of the CMO

Mobility
2012
QA,
Service Desk
Sourcing Social Media
Galit Feins work Copyright 2012 @STKI Do not remove source or attribution from any graphic or portion of graphic
Israeli Enterprise 2012: Under Pressure
COM PETI TION
Global Economy
Enterprise
2012
Innovation
1980s - IT Department
Operations
DRP Back Office Infrastructure Security
MIS
BO
1990s - IT Department
Transactions
DRP
IT manager
BO
CFO
Back Office ERP

Infrastructure Security
2000s - IT Organization
Processes
Back CRM Office DRP ERP Infrastructure
Security Web site
CIO
BO
CFO Sales
2005 - IT Organization
HR
Processes
Security HR
CIO
BO
CFO Sales
2008 - IT Organization
OCIO HR
Processes
Security HR PPM
CIO
BO
CFO Sales
2010s Technology & Information Systems

CEO OCIO
HR
CMO
Business Products
Analytics BI OR
Technology & IT VP

Security
HR PPM
Mobile
Social media
BO
CFO Sales
Capex increasing, Opex not decreasing
Capex:
New business demand for IT services
$$
Opex1: Opex2:
Time
Last year capex x 15%
5-10% decrease on existed

10
How Can We Fill The Gap?
Business demand for IT services
$$
IT Budget
Time
11
IT Budget Trends
Modest increase in IT budget -average rise of 3.7% IT Capex flattens at beginning of year due to uncertainty Despite continued volatility, IT staffing remains constant
12
Meeting business expectations

IT has to: Create new platforms to support business innovation and growth To be competitive to new IT service models or be open to use them
Creating new products
ITs ideal priorities
48%
Reducing IT costs
17%
Satisfaction with ITs effectiveness
IT basic services New ideas 26%
61%
Source: McKinsey 2012
13
Capital Organizational Spending
Other 53%
Technology Investments 47%
Source: IDC 2012
14
The Majority of IT total spending goes to Maintenance

Breakdown of Total IT Expenditure 2009-2012
Innovation
Business opportunity
Maintenance
Mandatory
Source: CIO Executive Board 2012
15
If you cant beat them

What are the main reasons for SW project overruns?
Changing requirements
Poor estimation Pressure from management to accept unreasonable schedules 17% 15%
Resource: Cutter
56%
IT Portfolio is changing quickly due to changes in competitive conditions
Agile world ability to respond on the fly to constant changes in business requests Small, cost-sensitive, more likely to be "disposable"
16
Changing Requirements AND Deliverables All the Time

Sprint B
P R I O R I T I Z A T I O N
Previous requests AND New business demands

A2
Sprint A
A7
Business requests
P R I O R I T I Z A T I O N
A1
A3
Detailed Planning
A1
A2
B1
A13
B2
A79
A80
17
Consumer Power End of IT monarchy:

IT will be one of possible sources of development that departments can use, and in many cases internal IT will compete with outside contractors for specific jobs
IT spending is gradually changing its guards - from ITO to business departments Different areas such as: risk, mobile, HR, IT purchase leaks to business departments
18
Radical Change of IT - Efficiency and Agility

IT can find itself nearly irrelevant, unless it becomes efficient , agile, and competitive with other market offerings
IT should embrace the new models offered by cloud or service providers, otherwise it will be replaced by them Lean IT
19
What is Lean?
Japanese automotive Industry developed Lean manufacturing with a lead from Toyota and utilising the Toyota Production System (TPS) factory. Maximize customer value by eliminating waste and optimizing the existing processes in all aspects of a firms production activities: HR, vendor relations , technology, and the mngt of materials and inventory Doing more with less effort. Focus on your key processes in meeting customer needs with all muscles without any fat or waste.
Source: http://www.hydspin.org/files/conf09/g_appa_rao.ppt STKI modifications
20
Customer VALUE and WASTE

The purpose is to deliver VALUE that the customer needs and is willing to pay for If it aint value, its WASTE Extra (unused) features Handoffs Task switching Delays Defects / REWORK Partially done work / work in process
Source: AgileSparks
21
Lean Benefits
Wait Time (non value add) Work Time (value add)
Cycle Time
Before After
Same work completed in less time
Requirements
FLOW Avg time 3 weeks
Design
Development
Cost/ Chaos
Waiting
Waiting
Defect Fixing
Cycle time
Relentlessly focus on reducing non-value adding activities

22
Anything that slows down development

Inefficient manual steps to build/ install/ test/ release Not fixing broken build/tests Code Complexity (skipping refactoring, duplicate code, coupling and spaghetti code, etc.) Code that not executed (but supported) No documentation and leveraging of knowledge
Source: AgileSparks
23
Office of the CIO
24
Office of the CIO penetration in Israel 2012

OCIO Banking Insurance Health Credit Cards 8% 8% 27% 8% 8% 73% 92% 43% 57% 80% 80%
20%
20%
92%
92%
Telecom Industry
Goverment IDF
92%
25
MEGA IT Trends 2012

Real Time Predictive Analytics
and Mobility Consumerization
IT Services
social Context based
26
IT services and cost transparency

By implementing OCIO tools and methodologies , ITOs achieved greater business satisfaction with IT BUs received greater visibility and control over their technology budgets NOW, encouraged by better visibility and cloud models alternatives, business managers do not want the technology cost to become overhead cost or annual tax IT must sell and deliver cost based services
We deliver IT
27
From unresponsive corporate overhead to an agile business partner
All-you-can-eat buffet
Fast-food restaurant
VS
Everyone pays the same price Food selections are driven by the chefs priorities
Price is affordable Choices driven by market demand Customers pay only for what they consume
28
The new IT
Client/user
Packaged Application
29
Why do we need IT Chargeback

It helps organizations understand that IT is not free It gives BUs greater visibility and control over their technology budgets It demonstrates the cost savings from shared services
Demand for visibility in IT costs comes from outside the ITO
30
IT Chargeback Recommendations 1. Well-defined portfolio of IT activities along with output in terms which are coherent to the customer
Server DRP
Upgrade
2. Start mapping types of requirements which repeat themselves: BI reports Changes in GUI (field, color, etc.) Client differentiation
When we are no longer able to change a situation, we are challenged to change ourselves.
Victor Frankl
31
Put It All Together: The IT Service Portfolio and Service Catalog

Bundling: A clear definition of what the service entails, and how it relates and integrates with others as a service package Value proposition: Why should the business buy it? Competitive advantage: Why should the service be bought from internal IT? SLAs/reporting/performance data Pricing and chargeback Exceptions and escalations Internal and external benchmark data
32
Differentiation: Multiple offerings at different prices for different parameter values, for items such as service hours, availability and response time
Ascertain IT Service Costs
COULD BE:
Capex
Hardware
Software Installation costs Customization costs

One-time expenses
Training costs
Source: Galit Feins work Copyright ITSM
2012 @STKI Do not remove source or attribution from any graphic or portion of graphic
33
Cost Model with Variable Pricing - Examples

High-level Availability description of what the service provides Performance guarantees Provisioning Security guarantees Standard service definitions
E-mail delivery
24 x 7 with 4/9 uptime

10 x 5 with 3/9
mission critical
business critical business operational administration
Help desk support
34
Cost Model with Variable Pricing - Examples

High-level Costs description of what the service provides
Help desk support Cost of tech Labor Equipment Software Manager 1st level support
2nd level support

Facilities 3rd party services Direct costs Email server
Indirect costs
Fixed Variable costs
Per-foot operating cost of a DC

Permanent IT staff Temps 35
IT Chargeback
Consumption
Transactions: Units or headcount
$X per month per gigabyte of network storage $Y per new PC set up and configuration $Z per phone number or network port
A base fee for IT overhead allocated, according to a BUs percentage of total revenue or total employees
Allocation
36
OCIO comprises of Business-IT relationship managers All these ITG methodologies and new defined processes, SLAs, IT chargebacks and service catalogs could be very confusing
OCIO has important role in the communication with and the

support of BU Effective BRM must be a true hybrid of business
and technical orientation

More than audit & reporting role - guidance to BU heads on ways to improve efficiency
37
Office of the CIO

As decentralized as IT gets, one person should have the visibility on the total spend, because there are a lot of places where effort and resources can get duplicated and wasted if no one has the big picture
Greater business partner responsibility - more business leaders are willing to take primary responsibility for managing delivery. BRMs consistently underestimate business partners' willingness to lead
Engage business leaders in advance, to ensure effective technology delivery that doesn't introduce inefficiency and unnecessary complexity or undermine IT strategy
38
OCIO is Very Busy

BRM (Key Users) Budget plan IT HR IT Operations Project mng/ Development QA/ Testing Vendors mng Legal/ Compliance Remote sites - DR/BCP Critical Success Factors Key Process Indicators Controls in general
EA

Procurement plan Change mng

ITIL-related Project-related
Risk/ security mng
Configuration Items:
New ones that will be installed Existing ones that will be change
Roll Out -
Does not end after project goes live! OCIO must maintain charge of employees knowledge and Galit Feins work Copyright 2012 @STKI usage of new system/ features Do not remove source or attribution from any graphic or portion of graphic
OCIO Responsibilities in Israel 2012
Strategic IT Plan Selection, control and evaluation of IT

75%
85%
PMO
IT budget mng Methodologies, processes & tools Risk mng Enterprise architecture HR
14%
13% 6% 29%
Source: STKI 2012
82% 65% 62% 38% 26%
QA
HD Other: App mng, training, config. Mng
40
OCIO helps IT be Competitive Service Provider

Optimum portfolio mix and project evaluation
Investment decisions translation into IT architecture and infra.
Service Level Agreements
Chargeback
Resource mng
Project Tracking
Formal Tracking of Business Value
Roll out
41
IT Project Rollout Plan - Actual project mngt

Detailed Work Breakdown Structure with dates - milestones,
control gates, etc.

GANTT charts showing dependencies and progress Human Resource Plan (Internal, Vendors, Customers) Configuration Items:
New ones that will be installed Existing ones that will be changed
Purchase/procurement plan for required CIs Budget Plan

42
Employees knowledge and usage of new system/ features

Communication Plan (Awareness, Meeting schedules)
Project Change mngt Plan

Security Plan
Other aspects of project mngt based on your organizations needs

What controls are needed to create a reasonable assurance of outcomes?
Roll Out
Does not end after project goes live! OCIO must maintain charge of employees knowledge and usage of new system/ features
43
PPM Tools Positioning of the Israeli Market

Clarity (CA)
Microsoft
Worldwide Leader
Local Support
MSP
Enterprise SaaS Player New Player
Sciforma
HP ITCC
Clarizen
Market Presence
Primavera
44
PPM Tools & Integrators in Israel

Clients
Clarity (CA)
Ministry of Tourism, Clalit, SanDisk, Leumi Card, Harel, Jewish Agency, Strauss, Bank Leumi Teva, Bank Hapoalim
New Clients 11
Orange, Pelephone
Integrators
Proceed
CA, Orantech
Min.of the Environment ONE1 Visa CAL, BDO
MSP
Menora, IAI, Tel-Aviv Munic. Ayalonins, Cellcom, Phoenix, Leumit, Justice Department, Clal Bit, Bank Igud, Delek, Paz, YES, CIO Dashboard: Random Logic, IDF, Elbit. iTeam (budget planning)
Sciforma
Bank Discount, Menora, Teva, Visa HOT, ZIM, Isracard, Cal, BVR, Nova, Evogene, Leadcom Machteshim agan eng. Hazera Genetics, Bid Band Networks, Given Imaging IDE, Veraz, Opgal, Teva Tech
Xioma Signifer, Aman
PPM (HP)
Mataf, Motorola(Global), LivePerson
HP, BDA
45
PPM Tools & Integrators in Israel

Clients
EPM (Microsoft)
M-system, Leumit, IAI, IAA, Lotem, Bezeq, Mekorot, Orbotech, Bank Leumi, CocaCola, Nice, Matan: Machteshim Agan, Prime Minister, Maccabi, Alvarion, IAA, Better Place, Tnuva, Random Logic; Orantech: Netafim, ECI, Ceragon, Logic, AD Gency ,Sol gel ,Rocar ,Playtech, Sandisk; KAKAL, MODU, Kodak, RAD; PZ Projects: Min. of Foreign Affers; Proceed: Malam
New Clients 11
MS 2010
Amdocs, Defense Matan: Strauss, Tel-Aviv Municip. Elta, Marvell Orantech: Navy, Shabas, Teva R&D, Sorek, Leumi LeMashcantaot PZ Projects: Justice Department, Elisra
Integrators
Matan, Orantech, Neway, PZ Projects
Approach PPM on Force.com Clarizen Primavera (Oracle) Compuware Changepoint ITCC
Netafim
Tnuva Mercava, IDF, Intel
Approach, SalesForce.com Clarizen Aviv Matrix ECI, Tama, Metro Motor that's IT 46
Jacada (Global), Retalix (Global)
Learning, Training and Implementation
47
Learning, Training and Implementation Trends

As a result of: Too many new systems IT requirements flood Employment high turnover Generation gap Lack of control of new systems implementation
Training and implementation are under HUGE focus

48
Does your organization measure the ROI generated by the new system?
Yes 42%
No 58%
Source: STKI 2012
49
Learning, Training and Implementation - Major Trends
Gamification
Video
50
Video e-Learning Next Generation Customer Care

Subject covered in Shahar Maors presentation
Choose your next choice on-the-fly
Video evolves according to choices made
http://blogs.wsj.com/speakeasy/2010/10/25/andy-grammers-keep-your-head-up-applies-choose-yourGalit Feins work Copyright 2012 @STKI own-adventure-logic-to-music-videos/ Do not remove source or attribution from any graphic or portion of graphic
51
Recommendations
Look for innovative ways to make SW training less boring
Clue: American test is BORING

Gamification and Video trends serve as perfect training and
implementation tool
If you invest massively in purchasing new SW invest a little more
to make sure your employees use it to the max

Subject covered in Liza Bodogins presentation
52
Agenda
MEGA Trends
Office of the CIO

IT Services and Chargeback
Office of the CMO

Mobility
2012
QA,
Service Desk
Sourcing Social Media
53
QA and Testing
54
QA & Testing Services - Trends

Becoming more important as a result of new regulations and security requirements Major priority to cost reduction: by using Nearshore model Due to high competition - use of variety of tools and methods:
Crowd testing, KDTpro, Practitest, Experitest, Perfecto Mobile
In spite of clients' preferences for in-house QA, theyre more willing to give vendor some scopes of work
55
QA & Testing Services - Israeli Market

We can honestly say goodbye to independent testing companies! Weve tried, but we failed Majority of IT projects are using the same vendor for both development and QA Clients consider using different vendors as a waste of time and money Increasing interest in Cyber, mobile and cloud testing
56
Because of the scope and complexity of IT most ITOs often fail to define useful performance metrics
Source: Gartner
57
Resource mng, Talent mng & Capacity planning
~44% of IT budget goes to manpower
58
Capacity Planning
After considering maintenance and HD commitment how available are your resources? What are your bottlenecks? What skills do we lack? Its not just a matter of matching project to the available employee Its about matching skills, experience & employee availability to project requirements
59
Watch Out!
The share of employees and contractors reporting to IT leaders has dropped more than 15% in 2011 At the same time, more than a 1/3 of larger orgs report increase in social media specialists, service architects, technology brokers, and other new-to-world roles Use strategic plans, labor market analysis, an org. review, and forecasting to create an action plan which include a talent mng. strategy, outsourcing plan, and organizational/ job redesign plan
60
Resource Management
OCIO gains the momentum, but real skills, capacity and training are not treated well IT Talent and capacity mng - Identify emerging skills gaps and role changes in traditional IT roles in order to prepare for changes by strategic workforce planning
Prepare internal resources to become brokers, not providers, as the cloud enables externalization of many current IT functions
61
IT Service Desk
HELP!!!!
62
IT Service Desk - Trends

Service desk is the first to be cut down
SPOC HR, facilities, procurement request

Standardization of products & services (ITIL)
Proactive problem management

SLA externalization
Knowledge mng make your tool work for you

Self-Service is the KING!
63
Total Cost of Ownership
As the Level 1 resolution rate increases, the cost per call for Level 1 increases But the total cost per call, including Level 2 costs, declines
The cost of resolution at level 2 is typically 5X to 10X greater than at level 1

64
Over Time
Clients become more savvy (Gen-Y)
Users prefer using blogs, vendor and user online support sites, and social networks to find answers instead of using service desk portal
Incidents complexity increase Total cost per HD call increase
65
Growing Call Volume

Rapid increase in call volume stretches already limited resources, impacting customer satisfaction Changes are main reason for call-volume increase: new HW, new app, new mobile device, etc
Mobile devices need attention: most orgs dont support personal mobile devices neither company-owned mobile devices
66
Reasons for Decrease in Support Incidents
Infrastructure changes Self-Service
49%
33%
32% 30%
IT HD staff competency
Customer competency Knowledge mng
27%
26% 22% 9%
Source: InformationWeek Analytics 2o11
Nu of customers
Remote tools Outsourcing support
67
Self-Service Personal attention VS prompt answer
User friendly systems YouTube How to examples

IT HD phone call twice as expensive as Self-Service SW distribution Online catalog Higher Clients satisfaction
68
Measuring the Right KPIs

On hold times (contributes to customer satisfaction) Number of calls received (trend analysis and problem identification) Call duration (knowledge deficiencies)
Help desk metrics still relevant
Customer satisfaction is KEY Metric focus is Meeting service level targets on the customer:
69
Top Metrics for Service Desk
70
Cost per Incident

71
IT Service Desk Positioning of the Israeli Market
CA Microsoft
Worldwide BSM Leader Enterprise
Local Support
IBM
HP
BMC
IT Help Desk Modules from CRM packages
SAP
Siebel
Pivotal
PeopleSoft Altiris
Market Presence
SysAid
72
IT Service Desk Tools & Integrators in Israel

Clients
New Clients 11
Integrators
CA, Ness, Malam Team, Techmind
CA
Comverse, IAI, Discount, Elta, ECI, HOT, Motorola, Teva, Elbit, Mekorot, Osem, Phoenix, DSW, Bezeq Int, Beit Berl, Israel Police, Tnuva, Central Bureau of Statistics, EL-AL, Tamas, TASE, Ministry of Health, Tel-Aviv Municipality, Herzelia Munic. Clalbit, Shabas, Rafael, Isracard, 888, 9900, Bank Hapoalim, Mifal Hapais, Ministry of Justice, Ministry of Defense, Yediot, Petah-Tikva Munic, Bank Israel, Ministry of Immigration, RASHAT, Teva (Bar), Brom, Lotem Zim, Malan, IGS, MED Nautilus, Malam, Kneset, NDS, Social Insurance, Uniliver, Creo, Intel, Motorola, Summit Design, Polycom, Cellcom- eng. HOT-eng. Partner eng, Sandisk, Comverse, Nice, IAI, Better Place HPOV:IDF, Netafim, Shaam, Open University, Orbotech, Tower Semiconductors, Haaretz; Service Manager: NDS, PlayTech, Shupersal Tefensoft: Clalit Health, Menora, Migdal, Prime Minister, Hadasa, Machteshim, Maman, AudioCodes Galit Feins work Copyright 2012 @STKI
Do not remove source or attribution from any graphic or portion of graphic
Ness (SaaS), Haartz, Phoenix, Bank Yahav, MOD
BMC
Migdal, SCD, Matrix 012 - eng., Texas Instrum , Netvision eng. Aman, HP
HP
73

Clients
New Clients 11 Bahai World Center, Edgar Real-estate, Natgaz Ormat
Integrators
IBM, Addon, Ludan
Aman, Bynet, Netcom, GlassHouse
IBM
TSRM
Harel, Menora
Altiris
Symantec
Callmobile, IDF
74

Clients
New Clients 11
(300 Israeli clients) Opgal Madanes Insu Shlomo Sixt Caesar stone Magic Cal auto West galilee collage Lageen Logic Motorola Safe city Gitam BBDO Danya-cebus Tower Semiconductor Tcpoit Keshe TV FedEX WIX - Fibernet Sapir collage Albar Intel Labs Dash El-Al Sec Div Diplomat Holon Muni Rokar Tiny love IDC NOVA IMDsoft Tmura The Council for Higher Education Imperva Netformx Ashot Ashkelon Eged Tour Environmental Services Company Ltd. (ESC) Shirbit
Integrators
Consist
SysAid
Jonson & Jonson, Highway 6, Omrix, Wintegra, Sami Shimon College, Africa Israel, Mei-Eden, AIG, Electra, McCann Erickson, Diesenhaus unitours, Opal , Flash Networsks, Liveperson, Hertz, Psagot Ofek, Coca Cola, Beit Barel College, Ashdod Port, Technion, Shila, Sugat, Gadot, Bezeq Int. AeroScout, Strauss, IKEA, Delek, Tempo, 013 Netvision, Tami4 ,Bank of Jerusalem Leumi Mortgage , Bituach Yeshir, Holmes Place, Ashot Ashkelon, Netformx, Fishman, HospitalNahariya, halman aldubi, Eged Tour, Zoglobek, Madanes, Tempo, Beeri print, Lubensky, Shlomo Sixt, Excellence, Elul, Ophir optronics, Realcommerce, Nextcom, Fritz, LR Group, Israel Ports, Magicsoftware, Cal auto, West galilee collage, Maabarot Products, Haifa Port, PharmUp, Lageen, ICQ, Logic, Tambur, Kamada, The Nation Traffic, Elcam, Carmel container systems, Brightsourceenergy, Kavim, Gitam BBDO, Rishon Lezion Muni, Dania sibos, Baran group, Tower Semiconductors, Bee Group, Betterplace, Keshet TV, Leumi Card, FedEX, WIX, Optier, Tahal, TGS, Palram, Sapience, Orca, UPS, Beeper, Intel labs, Mivtach Saimon, Albar, EMC, Tel-o-Fun, Dash, EL-AL Sec, Sapir collage, Diplomat, Hulon Muni, Shlomo Insu, conduit, Hadssa hospital , Tradenetworks, Ceragon, Rokar, Celtro, National library, IDC, Nova, Ambar, Mediamind, UTI, Barzilay Hospital, Afimilk, David Intercontinental, Hertz, Isrotel, IKEA, IMsoft, Tmura, polymerlogistics, shastovich, , Imperva, Haifa university, mashcal, Tel-hai collage, IBI, D&B, and many more
75
IT Help Desk Modules from CRM packages

Clients
Microsoft CRM
Ministry of Finance, Israeli Navy, Intel, Prime Minister, Eldan Advantech: Eged, Shikunbinui, Amidar, Volcani Center, Lavi EL AD: Judicial Authority, Ministry of Transport, Court Malam-Team: TAU Guardian: Baad15, Jewish agency Matrix-Effect: Igud, Malan, Superpharm, Cellcom, Visa Cal, Machteshim-Agan, Marlboro, Ministry of Education Almog: Telmap Bat-Yam Municipality, Exlibris, Systematics, Panorama, Telmap, Ericom,FGG Radvision, Gilat, Shahal, Ritalix, Globs, Tadiran, Orad, Maccabi, Negev Ceramics Paz, Isr. Government, Bazan, Bank Hapoalim (modul) _ _
New Clients 11
Ministry of Health, Shikun & Binui, TOTO, Osem, College of Management
Integrators
20 Partners, including: Matrix-Effect, SIT, Advantech, Malam-Team, Netwise, Bynet SW, Yael, El-AD.
Pivotal SAP PeopleSoft Siebel

(Siebel CRM onDemand)
ONE1
Ness, Taldor, Advantech, Value plus Matrix Taldor, IBM
Ministry of Foreign Affairs, Mamram, Bezeq
Tnuva, Golden Pages, Bank Leumi
SalesForce
Yad Hanadiv
Service Wise
76
Outsourcing Trends
77
Outsourcing
In recent years the number of comprehensive and infra outsourcing new deals significantly decreased , except for public sector, SMB and some niche areas
On the other hand - successful examples of existing clients,

who recently had revaluated and renewed their outsourcing contracts (with a lot changes)
Disappointment from conventional outsourcing for failing to meet client expectations

78
State of World Wide Outsourcing is NOT better

35%
Applications Outsourcing Infrastructure Outsourcing
25%
Source: CIO Executive Board 2012
2010
2011
2012
Percentage of Org. Allocating More than 20% of Total IT Spending to Outsourcing 2011
36% 25%
39%
40%
41%
47%
47%
52%
PMO
DB admin.
Voice Galit Feins work Copyright commun. 2012 @STKI
Testing/QA
Network
Help Desk
App Mainten.
App Develop. 79
Products and Services in IT

Traditional Outsourcing
Bought Services Owned Products
80
Outsourcing transforms into Cloud Computing
Traditional Outsourcing
Your own assets
Cloudy Sourcing
Multi-tenant, shared resources Outcome focused Usage-based pricing
Resources control
Fix price Location does matter
Cloud computing
Vendor monitoring SLA based

Minimal ability to change the terms of the contract
Location-agnostic
Automated provisioning, self-service requesting
81
Three Approaches to Cloud Deployments
Private
Designed for, and access restricted to, a single enterprise (or extended enterprise) An internal shared resource, not a commercial offering IT Org is the vendor of the shared/std service to its users
Hybrid
Enterprises cloud services portfolio includes both private and public cloud services Some specific services are delivered in a combination of public and private models (e.g., private cloud bursting to a public cloud service)
Public
Designed for a market, not a single enterprise Open to a largely unrestricted universe of potential users Customers buy at specific level of abstraction (server, application, platform) Single-vendor or multi-vendor
Resource Isolation
Single enterprise/ extended enterprise (dedicated)
Virtual and physical (noncloud) resources and applications
Multiple unrelated enterprises (shared)
Control | SLA |
Specialization
Security
Agility | Price Advantage
| Access | Elasticity
D.I.Y.
Source: IDC
82
5 types: Enterprise Clouds
83
Change is Coming
Please estimate how much of your company's IT budget (inc. server, storage, network infrastructure, desktops and devices, IT staff, infra. middleware, and applications), will be allocated to buying and managing these different types of IT products and services.
50.0
Source: IDC's North American Cloud Survey, 2011
45.0
40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0
-14%
Today 24 Months out
Anticipated budget dedicated to OUTSOURCED IT cloud by 2013 = 52%
+2%
+3%
+4%
+3%
n = 603 (Dir IT and above) Totals sum to 100%
0.0
Traditional IT (Internal) we own and manage the hardware, software and IT staff
Outsourced IT/ASP 3rd party owns hardware, runs IT staff, software ownership is mixed
Enterprise Private Cloud (Internal) virtualized, dynamic resource pools deployed and managed in house)
Hosted Private cloud (External) Hosted/managed by 3rd party, dedicated to the use of my company
Public cloud (External) subscription software services delivered over internet
True multi-sourcing is becoming a reality at many firms Galit Feins work Copyright 2012 @STKI
84
Utility Computing at Predictable Price

CIOs are willing to make sizable bets, but they need guidance:
Utility/cloud computing assets Firms who want some benefits of SaaS (reduced fixed IT costs)
which workloads are most SaaS ready
how they should best prioritize their spending and IT resources to take advantage of cloud
rentable infrastructure for on-premises applications
but need to maintain their own apps ecosystem for business performance needs
85
Cloud Benefits and Challenges
Source: IDC 2011

86
People Outsourcing
87
Staff Augmentation
IT will always use some Staff Augmentation for flexibility and scalability Private sector reduce Staff Augmentation but the trend still exists especially in public sector, in ITOs with strong trade unions and Short term professionals
Hashkalizazia of Staff Augmentation market
88
NearShore - Trends in 2012

Majority of ITOs will at least consider NearShore (NearSite) model to reduce costs in 2012 NearSite model invention for better control Few clients complain re high turnover and knowledge preserving in orthodox nearshore Work tariff rates are slowly on the rise Existing clients usually expand their scope of work Hot topics: BI, Web and mobile development and testing, cloud and automation testing
89
X-Shore
Scope
Quality
Time
Cost
Near-site
90
Caution! Fix Price Ahead!

"
108 162 324 28.5 42.75 85.5 29.5 44.25 88.5 108 216 432
Price reduction race
"
'
1M
"
What is missing? Evaluating the risk

91
Client / Vendor tug of rope

Vendor
Client
Chooses service provider by lowest price Doesnt take the risk element into account Gets use to receive free requirements Ready to pay for additional work to a certain limit
Takes the project in spite of losing prices Hopes to get new business Wants the client to be happy Moves to other pricing models
92
Chronicle of a IT project foretold
Underpriced High profit
Temps
93
New type of client/ vendor relationship

Service provider has to make money
Sometimes you cant avoid the conflict choose an arbitrator

agreed on both sides
Relationship between the parties is more important to the

projects success than price, performance and the terms
Less profit, less home vendors, more work
94
Vendor/Client revenue asymmetry

Expenditure
Investment
Time & Materials

License
Fix Price
Development
Testing
SOW RFP SLA Fix

Testing
Hatmaa
Delivery Day 1
Maintenance
Rollout
Vendor/Client revenue asymmetry

95
Staff Augmentation Pros and Cons
Source: TheMarker and STKI

96
Thank You And Hope You Enjoyed!
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Office of the CIO Office of the CMO Market Trends 2012

STKI Summit 2012

Office of the CIO

Office of the CMO

Israeli Enterprise 2012: Under Pressure

COM PETI TION

Back Office ERP

2010s Technology & Information Systems

Back CRM Office DRP ERP Infrastructure

Capex increasing, Opex not decreasing

Last year capex x 15%

5-10% decrease on existed

How Can We Fill The Gap?

Business demand for IT services

Meeting business expectations

ITs ideal priorities

Satisfaction with ITs effectiveness

IT basic services New ideas 26%

Source: McKinsey 2012

Capital Organizational Spending

Technology Investments 47%

Source: IDC 2012

The Majority of IT total spending goes to Maintenance

Source: CIO Executive Board 2012

If you cant beat them

IT Portfolio is changing quickly due to changes in competitive conditions

Changing Requirements AND Deliverables All the Time

Previous requests AND New business demands

Consumer Power End of IT monarchy:

Radical Change of IT - Efficiency and Agility

Customer VALUE and WASTE

Relentlessly focus on reducing non-value adding activities

Anything that slows down development

Office of the CIO

Office of the CIO penetration in Israel 2012

MEGA IT Trends 2012

and Mobility Consumerization

IT services and cost transparency

From unresponsive corporate overhead to an agile business partner

Why do we need IT Chargeback

Demand for visibility in IT costs comes from outside the ITO

Put It All Together: The IT Service Portfolio and Service Catalog

Ascertain IT Service Costs

Software Installation costs Customization costs

Source: Galit Feins work Copyright ITSM

Cost Model with Variable Pricing - Examples

24 x 7 with 4/9 uptime

Help desk support

Cost Model with Variable Pricing - Examples

2nd level support

Per-foot operating cost of a DC

OCIO has important role in the communication with and the

and technical orientation

Office of the CIO

OCIO is Very Busy

Procurement plan Change mng

Risk/ security mng

OCIO Responsibilities in Israel 2012

Strategic IT Plan Selection, control and evaluation of IT

82% 65% 62% 38% 26%

OCIO helps IT be Competitive Service Provider

Service Level Agreements