TECH SUPPLIER Jun 2020 - Market Presentation - Doc # AP46288720
2H19 Country Report on IT Services — New Zealand
By: Chayse Gorton
Late in 2H19, the first waves of the COVID-19 infections were reported in China. On March 11, 2020, the World Health Organization declared COVID-19 as a global pandemic. The New Zealand government declared a state of national emergency on March 25, 2020. On March 26, New Zealand went to level 4 lockdown. New Zealand organisations have already felt the impact of COVID-19, and the immediate reaction has been to minimise the financial impact of the crisis by rationalising services, reducing delivery of service costs, and diverting spending to tools and services to enable rapid change.
In 2H19, IDC observed that a smaller scale line-of-business (LOB) procurement is causing consistency issues across the range of technologies deployed. In addition, although some custom application development has moved in-house, many of these projects are returning to an outsource model as organisations identify execution issues. Although this is positive for IT services providers, IDC expects that many nonessential projects will be put on hold.
The ongoing skills shortage has resulted in some staff seeking to jump ship for higher wages. This is creating internal staffing challenges, resulting in some organisations looking to consume managed services from the market to fill in these gaps. In the managed services market, IDC has also observed a willingness to consume services from a centralised touch point. The challenge for IT services providers that pursue this strategy is ensuring that the customer receives a cohesive experience. Because of COVID-19, IDC expects that managed services contracts coming up for renewal in 2020 will undergo scrutiny, simplification, and testing for resiliency.
IDC has observed that IT services providers are successful in highlighting their hardware capabilities and using this as a gateway to offer more services. As this trend generally relates to devices at the edge, IDC expects this trend to continue. However, the hardware market will be significantly impacted in the short term as the hardware manufacturing process is disrupted. This will positively impact the public cloud market as organisations move quickly to ensure that they can operate and deliver from anywhere at any time while reducing business risks.
Although organisations are turning to the cloud, New Zealand–based cloud providers will need to work hard to win opportunities in the cloud services space. Local cloud providers are increasingly coming under competition from hyperscale cloud providers, which, despite hosting data overseas, are often an attractive option. This is contributing to local providers seeking to differentiate themselves. For example, Catalyst Cloud became the first cloud provider in New Zealand to become a Kubernetes-certified service provider.
The government released an updated cybersecurity strategy on July 2, 2019 with the intention of reducing the risk associated with cyberthreats. This is in combination with COVID-19, which will ensure that security stays in the spotlight. Because of security issues aligned with 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 span of time has exposed several security weaknesses for organisations that need to be addressed. Security solutions will be sought to overcome security issues related to mobility, including mobile device management, collaboration tools and data, VPNs, and endpoint encryption.
Asia/Pacific Services Opportunities in the Digital Economy: Transformation and Acceleration , Australia and New Zealand IT Services and Industry Insights , New Zealand ICT Market and Competitive Intelligence
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