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Nov 2017 - Market Presentation - Doc # AP43211217

1H17 Country Report on IT Services — New Zealand

On-line Presentation

Abstract

This IDC Presentation provides a detailed analysis of the market and competitive landscape in IT services in New Zealand from January to June 2017 (1H17). It covers the market size movements and growth trends in each of the macromarkets (i.e., project-oriented, outsourcing, and support and training services) as well as the key industries, such as finance, manufacturing and resources, public sector, distribution and services, and infrastructure. The report also provides a market and vendor analysis of 3rd Platform technologies as the key market drivers. The competitive analysis section includes key strategies and activities of large global and local IT services providers in the market.

The data and insights within this presentation are a part of the "Asia/Pacific Semiannual Services Tracker" research, which covers 14 foundation markets across 14 Asia/Pacific countries.

When investing in IT, New Zealand organisations have started shifting from technology-focused outcomes to business ones. It is now a crucial task for CIOs to ensure that the IT culture is focused on business goals. The most common approach is to include the business in technology decisions and implementations as early in the process as possible.

However, with new demands come new challenges. Firstly, the key barrier to achieving business goals when using managed services is the lack of investment, driven by a disconnect between IT and business. New Zealand firms are still learning how to effectively interconnect IT initiatives with both the needs of IT departments and strategy-driven executives. Inevitably, organisations are moving toward a wider inclusion of C-suite stakeholders into IT decisions, ensuring that the interests of lines of business are accounted for.

Secondly, the most desired outcome of managed services adoption still revolves around controlling costs and achieving internal efficiencies. Nearly half of New Zealand organisations consider lowering operational expenses as the top priority, thus adding extra pressure on SPs. At times, this results in dissatisfaction in the IT partnership because of a mismatch between enterprise expectations and the actual savings achieved by the use of managed services. It can take up to 24 months for organisations to start realising expected savings.

New Zealand businesses are now entering a critical phase of reevaluating relationships with IT partners and redefining managed services contracts. An increasing number of organisations are planning to move managed services in-house, shorten service contract periods, and either adopt a multivendor approach or break contracts up completely. Nevertheless, the managed services market will continue to represent a significant opportunity because of the deficiency of the necessary skills and the rising complexity of enterprise IT.

Competition in this market remains high as the changing patterns of IT procurement and rapidly evolving new service delivery models create a level playing field for IT SPs. Core to success in infrastructure outsourcing will be implementation of new business models that incorporate significant levels of system integration, automation, support for traditional and cloud-based service consumption, and delivery requirements.

IDC's surveys indicate that New Zealand organisations at large are keen to continue IT spending, with roughly 70% planning to maintain and 20% to increase their ICT budgets. The use of external IT SPs is seen as a favourable model of IT sourcing alongside a hybrid model of having a mix of both internal and external providers. Pure in-house is not actively used among end users. There will continue to be an increase in overall spending trend. Loosened IT budgets and commoditisation create opportunities for IT vendors that articulate new scope of requirements and new business objectives as demanded by the end-user community.

Coverage