TECH SUPPLIER Jul 2020 - Market Presentation - Doc # AP46288120
2H19 Country Report on IT Services — Australia
By: Chayse Gorton
Late in 2H19, the first wave of COVID-19 infections was reported in China. On March 11, 2020, the World Health Organization (WHO) declared COVID-19 a global pandemic. However, unlike New Zealand, which entered a lockdown status two weeks later, Australia's approach has been focused on mitigation, with Australia currently at a stage 2 lockdown. Australia organisations have already felt COVID-19's impact, and its immediate reaction was minimising the financial impact by rationalising services, reducing service delivery costs, and diverting spending to tools and services to enable rapid change.
In 2H19, IDC observed that a growing portion of the custom application development (CAD) and systems integration (SI) market is related to the development and integration of standalone applications running in multicloud environments. Design thinking workshops facilitated by IT SPs also witnessed significant growth in 2H19. These workshops act as a way for consultants to establish relationships with clients and build understanding of their business and challenges. Although this is positive for IT SPs, IDC expects that many nonessential projects will be postponed.
IDC continues to observe a shift away from traditional application management toward off-premises management. In many cases, applications are shifting to public cloud environments, placing pressure on vendors in the private cloud market. Outsourcing IT services to multiple providers continues to be the preferred IT services sourcing strategy. However, organisations are increasingly considering providers that bundle a range of services from various providers and deliver it as a cohesive IT outsourcing agreement. Because of COVID-19, IDC expects that managed services contracts to be renewed in 2020 will undergo scrutiny, simplification, and testing for resiliency.
Competition is also intensifying as more organisations turn to cloud, especially hybrid cloud. Hence, hyperscale cloud providers are looking to take share in the hybrid cloud market. For example, Amazon Web Services (AWS) launched AWS Outposts, its on-premises hybrid cloud solution, in Australia. This provides a new opportunity for IT SPs to sell. Moreover, the cloud market's competition is set to further increase as the government announced that it will launch a new governmentwide cloud marketplace. One goal of the new marketplace is to add vendors, including small and medium-sized enterprises (SMEs) more easily. This will provide government agencies with more choice and place additional pressure on vendors on the existing cloud services panel.
The government announced that it will work to develop a new cybersecurity strategy, helping keep Australia up to date with the latest cyberthreats. This strategy replaces the existing cybersecurity strategy set in 2016, which was backed by a funding of AUD230 million. This will ensure that security stays in the spotlight. Because of security issues in working remotely, security stands out as a key market driver set to benefit from COVID-19. The shift to working at home in a short amount of time has exposed several security weaknesses that will need to be addressed. Security solutions will be sought to overcome security issues related to mobility, including mobile device management, collaborations tools and data, VPNs, and endpoint encryption.
Oracle Corporation, Tata Consultancy Services Limited, Cognizant Technology Solutions Corporation, Accenture plc, Hewlett Packard Enterprise, Dell Inc., ASG Group Ltd., Telstra Corporation Limited, DXC Technology Co., Capgemini Services SAS, IBM, Cisco Systems, Inc., NTT, Fujitsu Limited, Empired Ltd
Application development services, Application management, Hosted application management, Hosting infrastructure services, IT consulting services, IT education and training, IT maintenance and support, Network and desktop outsourcing services, Systems integration services