Defining Service-led Transformation – Part 1. Third Platform

In this, the first of a two part series, Mark Rogers, President and COO of Logicalis Group, examines the impact of the “Third Platform” on enterprise IT  - what‘s driving it, how it will affect IT procurement and what it means for the shape of businesses in the future.  What changes need to be made before arriving safely on the “Third Platform”?

Keeping up with the pace of change in technology and services is a challenge for many businesses today.  Core trends often start in the consumer space before jumping to the enterprise, something of a turnaround in recent years.

My colleague Oliver Descoudres discussed this shift in a recent post about IDC's stated “Third Platform”. It’s a solutions-focused world of cloud, mobility, big data analytics and social business, disrupting the current status quo of LAN/internet and client/server.

Crucially it’s a shift from infrastructure to services. Value is migrating up the “stack”, from infrastructure to platforms, from applications to data, to industry-specific solutions and communities.

Cloud is a huge driver and enabler of this. Cloud spending is predicted to grow 25% in 2014, reaching over $100 billion, with public clouds winning 75% more deals than private.

Shifts in service procurement

End-user demands and expectations are also changing, presenting a challenge for IT departments. Executives in other areas, such as marketing or sales, are increasingly identifying and procuring services that were once the domain of the IT department.

Just as these executives are accustomed to trying and buying apps for their personal smartphones, so they now buy tools for business productivity such as CRM, file sharing, social business and collaboration tools. They can compare and contrast the different services on offer, and mix and match them to arrive at the experience that best meets their needs.

Indeed, it’s projected that between 2014 and 2017, IT spending by groups outside of IT departments will grow at over 6% a year, nearly 2.5 times the rate that IT department spend will grow. According to IDC, 60% of CIOs believe their line-of-business colleagues will have more influence over IT spending in the next three years.

The result? IT departments will likely find themselves managing service providers rather than managing infrastructure or procuring hardware.  And that signposts a fundamental transformation in the way enterprises procure IT and, more importantly, how they deliver the service innovation that will be increasingly vital to growth.

In short, those businesses that respond effectively will transform themselves into “Service Defined Enterprises” – a concept I will address in detail in part 2 of this series of posts.

Tags Service Defined Enterprise, Outsourcing Services, IT Trends, ITSM, Business Strategy