End-user organizations are changing their approach to optimizing their internal operations, and are changing their delivery of internal support using a combination of external providers and internal staff, says new research released from KPMG, the audit, tax and advisory firms network.
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Respondents predict that the globalization of business and IT services will continue. Among the advisers surveyed, 59 percent indicated they anticipate greater demand from clients for shared services delivery models, and 51 percent saw more demand for internal process improvement.
The study found that banking, financial services, and insurance was clearly the top industry group requesting services, cited by 82 percent of service providers. Energy/utilities, oil and gas and manufacturing were tied for second at a lower 32 percent.
“A ‘new normal’ in third-party service usage has emerged that is more pragmatic, measured, cautious and realistic,” said Stan Lepeak, research director in KPMG's Shared Services and Outsourcing Advisory group.
Beyond cutting costs, Lepeak says, buyers want improved global service delivery capabilities, greater financial and business process flexibility, and improved process performance.
Improvement in shared services and outsourcing governance processes and capabilities was the most common approach taken to improve service delivery capabilities, cited by 66 percent of advisers across all geographic areas. The next most commonly cited approach was the use or expansion of information technology outsourcing, reported by 43 percent.
The growth of global sourcing will outpace most buyers’ ability to manage these increasingly complex efforts, says Lepeak, leading to “underachievement of potential benefits and an occasional failed effort.”
In addition, the survey found that cloud computing adoption is becoming a dominant service market trend. Forty-two percent of service providers polled indicate that their clients have one or more live cloud services deployments in the field and that this would increase to 66 percent in 12 months.
Notably, service providers and sourcing advisers were asked to assess the skills of typical end-user organizations around various cloud computing capabilities using a five point scale, where one represents "very unskilled" and five represents "very skilled.” Client skill levels were consistently rated below 3 in basic areas of how cloud computing works.
Lepeak says the immature and fast-moving market makes it unsurprising that buyers have limited cloud computing skills. "However, it is critical for buyers to ramp up cloud skills and expertise,” he advised, which allows for new business models to emerge.
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