Table of Contents IDC Opinion In This Study Executive SummaryBuilding an Adaptable Business Model of ServicesDetermining Optimal Business Structure Based on End-State RequirementsSituation Overview Enterprise Customer NeedsOutsourcer Needing a Five-Year Strategy — Or More?Concern over the Communications Network and the Last MileConsistency in Quality of Service Delivered GloballyEnabling a Business to Change More QuicklyMeeting Key RegulationsNext-Generation Enterprise: Today's Start-UpsFuture Outlook The Case of Netflix: Trying to Move from Old to New Models of DeliveryThe Need for Metamorphosis: Strategic End-State ConsiderationsQuestion of Provider Structure: Vertically Integrated or SpecializedStructure of Utility Provider: Key Factors for Vertically Integrated Versus Specialized ApproachesPros and Cons of Utility ProviderRisk and LitigationEcosystem of "Specialization"Stakeholder Factors and Scenarios in Providing Cloud-Based Outsourced ServicesKey Business and Service FactorsScenario Impacts Resulting from Contractual "Ownership" of Service DeliveryThe Journey and Long-Term Impacts: Key Drivers and Building Blocks for Building an Adaptable Business ModelMarket PenetrationInternal Enterprise TransformationEvolution of Provider CommunityKey Factors and EventsCore Competency, Capital, and CultureMove to a Cloud Services Supply Chain: Cloud FactoryLink Between Traditionally Based Services Versus Cloud-Based ServicesEssential Guidance Finding the Optimal Intersection: Ecosystem Position and 3CsDetermining Optimal Business Structure Based on End-State RequirementsDeveloping an Adaptive Business Structure That Evolves Toward the End StateCreating New Revenue Streams Via New MarketsChannels (Indirect)DirectNew Ecosystem of PartnersNew Means of Segmenting the MarketThinking Out of the BoxUnderstanding the Evolution of Different Services MarketsIdentifying the Optimal Touch Point Between Customers and ProvidersProviding "On-Ramps" with No "Off-Ramp" StrategyGetting Caught in the "Middle" — Disintermediation by PartnersLearn More Related ResearchSynopsisTable: Pros and Cons of Owning Versus Partnering for a Communications Network Table: Key Drivers and Building Blocks of Shift from Traditional to Cloud-Based Services Figure: Next-Generation "Services Supply Chain" Delivery System Figure: Ecosystem and Value Chain of Cloud-Based Services: From "IT" to "Business Process" Figure: U.S. Customer Rating of Investment Capabilities in Ensuring Quality of Service by Company Size Figure: U.S. Application Services Provisioning Times: Traditional Outsourcing Versus Cloud-Based Outsourcing Services Figure: Business Systems for Cloud-Based Services Figure: Provider Business Model: Vertically Integrated Versus Specialized Ecosystems Figure: Pros and Cons of the Ecosystems of Vertically Integrated Versus Specialized Providers: Innovation, Lock-In, and Integration and Peering Figure: Pros and Cons of the Ecosystems of Vertically Integrated Versus Specialized Providers: Financial, Cultural, and Quality-of-Service Factors Figure: Pros and Cons of the Ecosystems of Vertically Integrated Versus Specialized Providers: Scalability and Speed Figure: Stakeholder Ecosystem Elements and Dependencies Figure: Role of Supplier Stakeholders in an Ecosystem of Specialization Figure: Services Scenarios in an Ecosystem of Specialization Figure: ISV-Centric Outsourced Cloud Services Ecosystem of Specialization Figure: Platform-Centric Outsourced Cloud Services Ecosystem of Specialization Figure: Operator-Centric Outsourced Cloud Services Ecosystem of Specialization Figure: Suppliers and Customers: Business Factors of an Ecosystem of Specialization by Ownership of Contracted Services Figure: Evolution of Traditional Versus Cloud-Based Services, 2010–2020 Figure: Evolution of Cloud-Based Services, 2010–2020: Long-Term Market Dynamics Figure: Market Penetration of Cloud-Based Services, 2010–2020 Figure: Enterprise Internal Transformation Maturity Curve, 2010–2020 Figure: Enterprise Dynamics Driving Need to Outsource Figure: Potential Evolution of Provider Community, 2010–2020 Figure: Provider Convergence, 1950–2020 Figure: Provider Evolution: Key Factors and Events, 2010–2020 Figure: Maturity of the Cloud-Based Services Supply Chain (Cloud Factory), 2010–2020 Figure: Cloud Factory Figure: Service Delivery Maturity: Optimization and Transformation, 2010–2020 Figure: Evolution of Traditional Versus Cloud-Based Services Delivery and Consumption, 2010–2020 Figure: The Optimal Intersection Between Ecosystem Positions and Strategic Business Building Blocks in a World of Cloud Services Figure: Methods of Penetrating the SMB Figure: Evolving Ecosystems: Increasing "Coopetition"
Message from Large Enterprises and Start-Ups to Providers: Helping Customers in a "Cloudy" World Will Require a Long-Term Strategy, Making Fundamental Changes, and Building an Adaptive Business Model
This IDC study uses feedback from buyers of outsourced services to provide a view of how their expectations have changed dramatically over the recent years. These expectations involve looking for providers that have a long-term strategy (e.g., five years) for their outsourcing business, that can enable changes in business requirements more quickly, and that can ensure service delivery involving consistency across all global locations including SLAs through the entire stack and assurance of delivery to the "last mile" (the network). Combining this feedback with existing IDC research, this study examines the impact of these changing expectations on outsourcers and the need for service providers to determine factors such as breadth of control and ownership across the stack of technology and across the life cycle of services and "functional" capabilities (e.g., CRM, SFA, ERP), the structure of their business model based on the future "end state" of outsourcing, and the impacts of these changes on partnership ecosystems, particularly technology suppliers, as well as the financial structure required to provision cloud-based services.
"Success for vendors looking to compete as providers of cloud-based services requires that they need to not only understand the end-state model of a cloud service business but also build a long-term strategy and business model that can adapt through evolutionary stages as services shift from traditional delivery models (e.g., more labor oriented) to cloud-based services involving more automated provisioning of services," said David Tapper, VP, Outsourcing and Offshore Services at IDC. "As part of building this long-term strategy, outsourcers and service providers need to address a broad range of factors such as the potential changing structure of the business model of cloud services (e.g., vertically integrated versus specialized), the increasing need for creating a cloud factory and an integrated digital services supply chain, moving to a sense and respond set of capabilities, and aligning with the customer need to outsource as they increasingly transform their internal environments to cloud-based capabilities."