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IDC's IT Services Predictions for 2016 and beyond for Asia Pacific region highlight the impact cloud-first and digital transformation over the next three years.

Global IT market research firm IDC says that 33 percent of organizations in Asia Pacific have adopted a  'cloud first' strategy, with important implications for IT suppliers.

IDC predicts that IT budgets dedicated to cloud services will increase to 26 percent by 2016, and 50-55 percent of traditional outsourcing managed services will have a cloud delivery model.

The concept of a 'cloud-first' strategy began in the US Federal Government and has since spread into the commercial sector, according to Larry Freeman, NetApp. It was a mandate issued to all federal agencies by the chief information officer of the United States in December 2010. By 2012, a subsequent report to Congress showed that more than half of all federal agencies had adopted cloud computing or at least one application. It has since moved into the commercial arena.

Full cloud migration can deliver impressive results, such as reduction in hosting costs and reduced equipment, licensing and labor costs - all with a substantial capacity increase.

Cathy Huang, Research Manager, Services and Cloud Research Group at IDC says: ""This year's services predictions highlights 'cloud-first', suggesting 33 percent of Asia/Pacific enterprises will pursue a 'cloud-first' strategy. The switch to cloud-first/cloud-only points to two opportunities in the APeJ services market. Enterprises are looking to differentiated capabilities or cost competitiveness based on cloud-based offerings. In addition, it also means sourcing strategies in the past may be incompatible as organizations leverage a cloud-first strategy.""

Multiple transformative technologies
IDC has identified digital transformation as the biggest influence to organizations throughout the Asia/Pacific region in 2016 and beyond. It expects innovation accelerators like the Internet of Things (IoT), cognitive computing, robotics and 3D printing to drive forward this transformation. With 5G on the horizon, drone technology and the development of personalized artificial intelligence robots, IDC says the pace of digital transformation will accelerate.

Digital transformation is essentially the process of understanding where an organization currently stands, and then determining where there is need to use technology in order to achieve business objectives. Digital transformation is becoming a competitive requirement and the source of a massive wave of new investments in services to support changes to business operations and customer services, IDC says.

A recent survey by IDC found that a majority of Asia Pacific excluding Japan (APeJ) enterprises have digital transformation projects underway in some form or another. ""Getting on board the digital transformation train is going to be fraught with challenges, starting with the ability to define digital transformation,"" says Linus Lai, Research Director with IDC's Asia/Pacific Services Research Group. ""Most early stage projects involve experience transformation but little attention is being paid on the other dimensions like information governance and worksource, which often leads to disillusionment on the benefits of digital transformation.""

Lai adds: ""As part of enabling enterprises on their digital transformation journey, service providers need to emphasize their ability to bring a full suite of services capabilities that includes integration of cloud, cognitive, mobile and analytics delivered 'as a service'. In addition, industry expertise can offer functional insights which are also needed.""

IDC has coined the term 'Third Platform Technologies' embracing mobile, social, cloud and big data to distinguish the current IT environment of from earlier eras of computing. It says this is driving demand for related services and fundamentally changing the way organizations interact with their ecosystem.

IT and line of business must get closer
IDC says 65 percent of APeJ enterprise strategies will include a significant Digital Transformation component; and by 2018, 80 percent of major IT decisions will involve a partnership between the IT organization and LOBs. Furthermore, by 2016, 30 percent of enterprises are predicted to implement software-defined infra in their datacenter; and by 2018, 20 percent of all enterprises will be leveraging digital platforms from such firms as WeChat, Uber, GE/Predix and PTC to achieve DX goals.

IDC says the impact of third platform technology accelerators such as IoT and next-gen security will demand an increased focus on governance between the IT organization and the lines of business (LOB) to ensure risk, supplier choices, failover, innovation and agile development are understood between both parties, and the value of integration, management and security is brought to the front.

IDC predicts that, by 2020, in excess of 75 percent of ideas, talent and innovation will be sourced through ecosystems of engagement, and by the end of 2017, 55 percent of enterprises will rely on third-party management of their security infrastructure.

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