Vendor perceptions: IBM is a consistent brand recall leader across key digital product/service segments when enterprises were asked to name the vendors that are likely to be most relevant to their digital strategy
I’ve been blogging about why certain companies such as Accenture, ADP, and TCS are such successful service providers. In contrast, let’s look at HP and examine why it’s breaking up.
I’ve explained in prior blogs that the most successful companies have six operational elements aligned, as shown in the Everest Group assessment framework below.
In successful companies, their promise is consistent with their business model, their talent model is consistent with their promise and model. Their investments align with the talent and business models, and the portfolio they end up with aligns with the other components. In addition, they tune their go-to-market approach to maximize their advantages in these components.
HP, as much talked about, is breaking up, separating its printers and PCs division from software and services. Printers and PCs are late-stage, mature devices and represent a market that is commoditized, mature, and saddled with slow growth. Software and services give the promise of growth.
HP is taking the first steps to create better alignment in both their businesses between the functions of brand, go-to-market, investments, and the other components of the framework illustrated above.
HP’s printers and PCs business is well aligned in terms of its brand promise of high-quality, cost-effective end-user devices. Its go-to-market approach is consistent for both printers and PCs, and the portfolio is rationalized around those devices and the warranty services that support them. Its investments can focus on maintaining market share. The firm can harmonize talent to ensure it’s appropriate for a mature business. And its business model and supply chain are consistent across their offers and can be further refined and focused. So I see the break-away from software and services as a no-brainer.
HP’s software and services area is a more complicated story; here, I think they have further to go. A smaller, more focused organization will allow HP over time to refine its brand to focus on large enterprises. Its go-to-market approach can be more easily integrated. Its portfolio, which is still very diverse, will probably need further refinement over time.
Although they clearly don’t have all six components harmonized for the software and services business, the break-up gives HP a much better fighting chance to work through that. They have further work to do across all these areas – particularly in brand and portfolio. As they get a crisper brand promise into the market and a portfolio aligned with that brand, the firm’s business model, go-to-market approach, and investment choices will become clearer.
HP is still early in this reformatting of the company. But history tells us that, as they succeed in getting these aspects clarified and aligned, the firm’s performance will improve.
Photo credit: Flickr
“In its latest report, released last week, Everest Group reported that in 2014 the number of new, large application outsourcing (AO) deals in capital markets dropped 58 percent, while the average total contract value (TCV) dropped 28 percent.” Read More.
“Clients are looking to DevOps in software development, but they are not necessarily looking at service providers to help them make that move. Everest Group noted recently that fewer than 10 percent of application services agreements in 2014 required DevOps-based delivery, suggesting that enterprises do not yet believe that service providers can play a meaningful role in their Agile to DevOps journey.” Read More.
Although global outsourcing market remains sluggish, enterprises, GICs and service providers increase investment in digital
DALLAS, September 1, 2015 — North America witnessed significant increase in both volume and relative share of global outsourcing contracts in Q2, driven by growing demand from public sector, healthcare, and mid-sized banking and financial services organizations. The global outsourcing industry in Q2 witnessed multiple instances of M&A, restructuring, and partnerships, as service providers looked to revamp their business model.
New GIC set-ups continued to grow—particularly in manufacturing, technology and telecom—with GICs playing a key role in enterprise digital transformation efforts. GICs and service providers alike are increasing leverage of start-ups to drive disruptive innovation in data integration, mobility solutions, big data analytics, and cyber security, as well as customer service improvement initiatives, marketing solutions, and efficiency improvement measures.
These results and other findings are explored in a recently published Everest Group report: “Market Vista™ Q2 2015.”
The report includes data, analysis and insights on transaction trends, major outsourcing deals, global in-house center market dynamics, trends in emerging offshore destinations, and service provider developments. The report also includes Standard Locations Database, which tracks 23 leading offshore locations
Other Key Findings:
“Amid overall sluggish growth in the outsourcing market, we see some interesting shifts in the industry, particularly with respect to locations,” said Salil Dani, vice president at Everest Group. “New center set-ups are shifting towards tier-1 cities, Europe has overtaken Asia in set-up activity, and North America’s share of outsourcing transactions is growing, reversing a previous downward trend.
Among key trends to watch in the second half of the year are increasing investments in digital by all industry players and a surge in onshore locations for voice services. Among GICs, we’ll see an increasing emphasizing on top-line growth initiatives and the exploration of partnerships with start-ups to drive innovation.”
***Download the Complimentary 12-page Select Findings Here*** (Registration required.) This summary highlights key findings through text and graphics, with details provided on focus topics and selective themes.
***Webinar Replay***
Sign up here to download the presentation or listen to a recording of the Everest Group webinar “Global Services Development in H1 2015 and Key Trends to Watch: Market Vista Briefing.” The webinar features Everest Group experts discussing key market developments in H1 2015 and four key trends to watch.
***Additional Resources*** (Registration required to download complimentary content.)
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