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Business-Oriented Trends in IT Outsourcing

Alan McSweeney

Business-Oriented Trends in IT Outsourcing Alan McSweeney
Business-Oriented Trends in IT Outsourcing Alan McSweeney
Objectives • To identify business-oriented trends in Information Technology outsourcing January 30, 2012 2
Objectives • To identify business-oriented trends in Information Technology outsourcing January 30, 2012 2

Objectives

To identify business-oriented trends in Information Technology outsourcing

January 30, 2012

2

Topics • Outsourcing Trends • Business-Oriented General IT Trends • Transition and Transformation Within
Topics • Outsourcing Trends • Business-Oriented General IT Trends • Transition and Transformation Within

Topics

Outsourcing Trends

Business-Oriented General IT Trends

Transition and Transformation Within Outsourcing

Outsourcing and Innovation

A (Financial) Tale of Three Outsourcing Vendors

January 30, 2012

3

ITO Trends January 30, 2012 4
ITO Trends January 30, 2012 4

ITO Trends

January 30, 2012

4

State of Outsourcing in 2011 • Survey conducted by the London School of Economics Outsourcing
State of Outsourcing in 2011 • Survey conducted by the London School of Economics Outsourcing

State of Outsourcing in 2011

Survey conducted by the London School of Economics Outsourcing Unit

1,209 Buyers, Providers and Advisors of Outsourcing Services

Large study across spectrum of outsourcing industry

Provides insight into market trends and therefore should be part of any organisation’s strategy

January 30, 2012

5

State of Outsourcing in 2011 • Key points − Outsourcing increasing across all organisation sizes
State of Outsourcing in 2011 • Key points − Outsourcing increasing across all organisation sizes

State of Outsourcing in 2011

Key points

Outsourcing increasing across all organisation sizes and organisations that do not currently outsource

Cost an important factor

After cost, track record, culture, global scale and knowledge are important

Advisors playing an increasingly important role

Outsourcing providers not aware of how they are perceived

Focus is on business benefits rather than technology

January 30, 2012

6

State of Outsourcing in 2011 – Some Results • Nearly three quarters or organisations plan
State of Outsourcing in 2011 – Some Results • Nearly three quarters or organisations plan

State of Outsourcing in 2011 – Some Results

Nearly three quarters or organisations plan to increase outsourcing activities

59% of organisations with a shared services function and planning to increase outsourcing significantly

Shared services function is an organisational infrastructural stepping stone to outsourcing

Key reasons for outsourcing are

Cost reduction - 60-76% view as very important, depending on organisation size

More effective operations - 50-64% view as very important, depending on organisation size

46% have found outsourcing very effective in reducing costs

35% have found outsourcing ineffective in innovation

31% have found outsourcing ineffective in proving access to new technology

31% have found outsourcing ineffective in proving access to business process knowledge and experience

In-house delivery of IT and Business Processes still dominates with outsourcing limited to Help Desk and application development and support

Factors rated as very important such as not being convinced of service providers’ capabilities (39%), not being convinced of long-term business benefits (30%), insufficient short-term cost savings (37%) and fear of disruption limiting (31%) decisions to outsource

29% of outsourcing suppliers view buyers not being convinced of their capabilities as being very important - gulf between buyer and provider

IT infrastructure and application development and maintenance outsourcing are seen as the core outsourcing areas by buyers

68% already outsource infrastructure and will increase or plan to outsource

62% already outsource application development and maintenance outsourcing and will increase or plan to outsource

63% of medium-sized companies and 44% of large companies say outsourcing has been very effective in reducing costs

Buyers rate financial stability, track record and change management/governance process delivery, scale, industry specific knowledge and culture as the most critically important skills of outsourcing suppliers

The role of advisor in working with buyers on outsourcing is increasing

January 30, 2012

7

Study Respondents’ Profile January 30, 2012 8
Study Respondents’ Profile January 30, 2012 8

Study Respondents’ Profile

Study Respondents’ Profile January 30, 2012 8

January 30, 2012

8

Buyers’ Organisation Size by Revenue January 30, 2012 9
Buyers’ Organisation Size by Revenue January 30, 2012 9

Buyers’ Organisation Size by Revenue

Buyers’ Organisation Size by Revenue January 30, 2012 9

January 30, 2012

9

Buyers’ Industries January 30, 2012 10
Buyers’ Industries January 30, 2012 10

Buyers’ Industries

Buyers’ Industries January 30, 2012 10

January 30, 2012

10

Outsourcing And Shared Services Delivery Dominate Global Service Models Over Next 3 Years • Emerging
Outsourcing And Shared Services Delivery Dominate Global Service Models Over Next 3 Years • Emerging

Outsourcing And Shared Services Delivery Dominate Global Service Models Over Next 3 Years

Emerging from the recession, will your company increase / reduce its reliance on the following operating models for general and administrative functions, over the next three years?

on the following operating models for general and administrative functions, over the next three years? January

January 30, 2012

11

Most Organisations With Shared Services Are Increasing Outsourcing • Emerging from the recession, will your
Most Organisations With Shared Services Are Increasing Outsourcing • Emerging from the recession, will your

Most Organisations With Shared Services Are Increasing Outsourcing

Emerging from the recession, will your company increase / reduce its reliance on the following operating models for your general and administrative functions, over the next 3 years?

January 30, 2012

the following operating models for your general and administrative functions, over the next 3 years? January
the following operating models for your general and administrative functions, over the next 3 years? January
the following operating models for your general and administrative functions, over the next 3 years? January
the following operating models for your general and administrative functions, over the next 3 years? January
the following operating models for your general and administrative functions, over the next 3 years? January

12

Business Challenges Driving Outsourcing In 2011 • How Important Are The Following Business Drivers Behind
Business Challenges Driving Outsourcing In 2011 • How Important Are The Following Business Drivers Behind

Business Challenges Driving Outsourcing In 2011

How Important Are The Following Business Drivers Behind Your Company's IT Outsourcing And BPO Decision-Making This Year?

Answer = Very Important

Your Company's IT Outsourcing And BPO Decision-Making This Year? − Answer = Very Important January 30,

January 30, 2012

13

Europeans Want To Drive Out Cost And Globalise – Without Changing Their Processes • How
Europeans Want To Drive Out Cost And Globalise – Without Changing Their Processes • How

Europeans Want To Drive Out Cost And Globalise – Without Changing Their Processes

How Important Are The Following Business Drivers Behind Your Company's IT Outsourcing And BPO Decision-Making This Year?

Answer = Very Important

Your Company's IT Outsourcing And BPO Decision-Making This Year? − Answer = Very Important January 30,

January 30, 2012

14

Buyers Achieving Modest Business Results Beyond Cost-Reduction With Their Outsourcing Initiatives • How Effective Have
Buyers Achieving Modest Business Results Beyond Cost-Reduction With Their Outsourcing Initiatives • How Effective Have

Buyers Achieving Modest Business Results Beyond Cost-Reduction With Their Outsourcing Initiatives

How Effective Have Your Current Outsourcing Initiatives Been At Achieving The Following Business Benefits To-Date?

Have Your Current Outsourcing Initiatives Been At Achieving The Following Business Benefits To-Date? January 30, 2012

January 30, 2012

15

What Is Your Primary Sourcing Model For Managing The Following IT and Business Processes? •
What Is Your Primary Sourcing Model For Managing The Following IT and Business Processes? •

What Is Your Primary Sourcing Model For Managing The Following IT and Business Processes?

Untapped sourcing potential

In-house delivery of IT and Business Processes still dominant in 2011

Untapped sourcing potential • In-house delivery of IT and Business Processes still dominant in 2011 January
Untapped sourcing potential • In-house delivery of IT and Business Processes still dominant in 2011 January
Untapped sourcing potential • In-house delivery of IT and Business Processes still dominant in 2011 January
Untapped sourcing potential • In-house delivery of IT and Business Processes still dominant in 2011 January
Untapped sourcing potential • In-house delivery of IT and Business Processes still dominant in 2011 January

January 30, 2012

16

Concerns Holding Back Outsourcing In 2011 • How Important Are The Following Factors Preventing Your
Concerns Holding Back Outsourcing In 2011 • How Important Are The Following Factors Preventing Your

Concerns Holding Back Outsourcing In 2011

How Important Are The Following Factors Preventing Your Organisation From IT Outsourcing Or Business Processes Over The Next 12 Months?

Preventing Your Organisation From IT Outsourcing Or Business Processes Over The Next 12 Months? January 30,
Preventing Your Organisation From IT Outsourcing Or Business Processes Over The Next 12 Months? January 30,
Preventing Your Organisation From IT Outsourcing Or Business Processes Over The Next 12 Months? January 30,
Preventing Your Organisation From IT Outsourcing Or Business Processes Over The Next 12 Months? January 30,

January 30, 2012

17

Providers Oblivious To Buyers’ Perception Of Them • How Important Are The Following Factors In
Providers Oblivious To Buyers’ Perception Of Them • How Important Are The Following Factors In

Providers Oblivious To Buyers’ Perception Of Them

How Important Are The Following Factors In Preventing Your Clients From Outsourcing IT Or Business Processes Over The Next 12 Months? (Outsourcing Providers)

Clients From Outsourcing IT Or Business Processes Over The Next 12 Months? (Outsourcing Providers) January 30,
Clients From Outsourcing IT Or Business Processes Over The Next 12 Months? (Outsourcing Providers) January 30,
Clients From Outsourcing IT Or Business Processes Over The Next 12 Months? (Outsourcing Providers) January 30,
Clients From Outsourcing IT Or Business Processes Over The Next 12 Months? (Outsourcing Providers) January 30,

January 30, 2012

18

Demand For Core General And Administrative Outsourcing Reaches Unprecedented Levels January 30, 2012 19
Demand For Core General And Administrative Outsourcing Reaches Unprecedented Levels January 30, 2012 19

Demand For Core General And Administrative Outsourcing Reaches Unprecedented Levels

Demand For Core General And Administrative Outsourcing Reaches Unprecedented Levels January 30, 2012 19

January 30, 2012

19

First-Time Enterprise Buyers Look To Jump Into BPO • % Buy-side organizations looking to outsource
First-Time Enterprise Buyers Look To Jump Into BPO • % Buy-side organizations looking to outsource

First-Time Enterprise Buyers Look To Jump Into BPO

% Buy-side organizations looking to outsource for the first time over the next 12 months

Into BPO • % Buy-side organizations looking to outsource for the first time over the next
Into BPO • % Buy-side organizations looking to outsource for the first time over the next
Into BPO • % Buy-side organizations looking to outsource for the first time over the next

January 30, 2012

20

Effectiveness Of Current Outsourcing Engagements: Mid-Market Organisations Benefitting The Most • How Effective Have
Effectiveness Of Current Outsourcing Engagements: Mid-Market Organisations Benefitting The Most • How Effective Have

Effectiveness Of Current Outsourcing Engagements:

Mid-Market Organisations Benefitting The Most

How Effective Have Your Current Outsourcing Initiatives Been For Achieving The Following Business Benefits To-Date?

Answer = Very Effective

Initiatives Been For Achieving The Following Business Benefits To-Date? − Answer = Very Effective January 30,
Initiatives Been For Achieving The Following Business Benefits To-Date? − Answer = Very Effective January 30,
Initiatives Been For Achieving The Following Business Benefits To-Date? − Answer = Very Effective January 30,

January 30, 2012

21

The Enterprise Market Gears Up For An Aggressive Spike In Scope-Expansion Across Maturing Functions •
The Enterprise Market Gears Up For An Aggressive Spike In Scope-Expansion Across Maturing Functions •

The Enterprise Market Gears Up For An Aggressive Spike In Scope-Expansion Across Maturing Functions

% Buy-Side Organisations Already Outsourcing And Intending To Increase Scope Over The Next 12 Months

% Buy-Side Organisations Already Outsourcing And Intending To Increase Scope Over The Next 12 Months January
% Buy-Side Organisations Already Outsourcing And Intending To Increase Scope Over The Next 12 Months January
% Buy-Side Organisations Already Outsourcing And Intending To Increase Scope Over The Next 12 Months January

January 30, 2012

22

After Financial Considerations, Buyers Care (Or Say They Care) About The Governance, Industry Acumen And
After Financial Considerations, Buyers Care (Or Say They Care) About The Governance, Industry Acumen And

After Financial Considerations, Buyers Care (Or Say They Care) About The Governance, Industry Acumen And Cultural Attributes Of Providers

How Important Are The Following Attributes To Your Clients Today, When Considering A Service Provider Relationship For IT/BPO Services?

To Your Clients Today, When Considering A Service Provider Relationship For IT/BPO Services? January 30, 2012
To Your Clients Today, When Considering A Service Provider Relationship For IT/BPO Services? January 30, 2012
To Your Clients Today, When Considering A Service Provider Relationship For IT/BPO Services? January 30, 2012
To Your Clients Today, When Considering A Service Provider Relationship For IT/BPO Services? January 30, 2012
To Your Clients Today, When Considering A Service Provider Relationship For IT/BPO Services? January 30, 2012

January 30, 2012

23

Providers Underestimate Importance Buyers Place On Change Management, Governance And Culture January 30, 2012 24
Providers Underestimate Importance Buyers Place On Change Management, Governance And Culture January 30, 2012 24

Providers Underestimate Importance Buyers Place On Change Management, Governance And Culture

Providers Underestimate Importance Buyers Place On Change Management, Governance And Culture January 30, 2012 24
Providers Underestimate Importance Buyers Place On Change Management, Governance And Culture January 30, 2012 24
Providers Underestimate Importance Buyers Place On Change Management, Governance And Culture January 30, 2012 24

January 30, 2012

24

Advisors Are Buoyant About It When Looking At Future Outsourcing Plans • Do You Expect
Advisors Are Buoyant About It When Looking At Future Outsourcing Plans • Do You Expect

Advisors Are Buoyant About It When Looking At Future Outsourcing Plans

Do You Expect Your Clients To Increase Or Reduce Their Activity Across The Following Areas, Over The Next 18 Months?

Outsourcing Advisers And Suppliers

Activity Across The Following Areas, Over The Next 18 Months? − Outsourcing Advisers And Suppliers January
Activity Across The Following Areas, Over The Next 18 Months? − Outsourcing Advisers And Suppliers January
Activity Across The Following Areas, Over The Next 18 Months? − Outsourcing Advisers And Suppliers January
Activity Across The Following Areas, Over The Next 18 Months? − Outsourcing Advisers And Suppliers January

January 30, 2012

25

Management Consultants Increasingly Influencing Outsourcing • Extent By Which Providers Have Been Seeing The Following
Management Consultants Increasingly Influencing Outsourcing • Extent By Which Providers Have Been Seeing The Following

Management Consultants Increasingly Influencing Outsourcing

Extent By Which Providers Have Been Seeing The Following Advisors Influence Their Clients' Outsourcing Decision-Making Over The Last Six Months

Following Advisors Influence Their Clients' Outsourcing Decision-Making Over The Last Six Months January 30, 2012 26
Following Advisors Influence Their Clients' Outsourcing Decision-Making Over The Last Six Months January 30, 2012 26
Following Advisors Influence Their Clients' Outsourcing Decision-Making Over The Last Six Months January 30, 2012 26
Following Advisors Influence Their Clients' Outsourcing Decision-Making Over The Last Six Months January 30, 2012 26

January 30, 2012

26

ITO Concerns • Transition takes too long • Not integrated • Business disruptions • Increased
ITO Concerns • Transition takes too long • Not integrated • Business disruptions • Increased

ITO Concerns

Transition takes too long

Not integrated

Business disruptions

Increased business risk

Lower service quality

Treatment of acquired employees

Does not deliver value

High cost of operation

Confusion over what is being sold

January 30, 2012

27

Analysis of Some Information Technology Trends • AICPA – Survey of members from 2001 to
Analysis of Some Information Technology Trends • AICPA – Survey of members from 2001 to

Analysis of Some Information Technology Trends

AICPA – Survey of members from 2001 to 2011 on initiatives in IT that are of concern to their 370,000 members

http://www.aicpa.org/INTERESTAREAS/INFORMATIONTECHNOLOGY/RESOURC

ES/TOPTECHNOLOGYINITIATIVES/Pages/2011TopTechInitiatives.aspx

Gartner – well known analyst company

Two very different views of information technology trends

Business-oriented

Technology-oriented

IT tends to be concerned with technology trends for themselves rather than their application to business

IT outsourcing needs to concern itself with business needs rather than just pure IT

January 30, 2012

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Gartner – Key IT Trends 2008 - 2011 How relevant are these trends to the
Gartner – Key IT Trends 2008 - 2011 How relevant are these trends to the

Gartner – Key IT Trends 2008 - 2011

How relevant are these trends to the business and to end-user organisations?

Where have the old trends gone to – lack of continuity between years?

Are they fads more than trends?

 
   

2011

2010

2009

2008

 

1

Cloud Computing

Cloud Computing

Virtualisation

Green IT

 

2

Mobile Applications and Media Tablets

Advanced Analytics

Cloud Computing

Unified Communications

 

3

Social Communications and Collaboration

Client Computing

Servers - Beyond Blades

Business Process Modelling

 

4

Video

IT for Green

Web-Oriented

Metadata Management

Architectures

 

5

Next Generation Analytics

Reshaping the Data Centre

Enterprise Mashups

Virtualisation 2.0

 

6

Social Analytics

Social Computing

Specialised Systems

Mashup and Composite Applications

 

7

Context-Aware Computing

Security – Activity Monitoring

Social Software and Social Networking

Web Platform and Web- Oriented Architectures

 

8

Storage Class Memory

Flash Memory

Unified Communications

Computing Fabric

 

9

Ubiquitous Computing

Virtualisation for Availability

Business Intelligence

Real World Web

 

10

Fabric-Based Infrastructure and Computers

Mobile Applications

Green IT

Social Software

January 30, 2012

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AICPA Top 10 IT Initiatives 2001-2011   2011 2010 2009 2008 2007 2006 2005 2004
AICPA Top 10 IT Initiatives 2001-2011   2011 2010 2009 2008 2007 2006 2005 2004

AICPA Top 10 IT Initiatives 2001-2011

 

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

 

1 Security Of Data, Code & Communications / Data Security & Document Retention / Security Threats

Control and Use of Mobile Devices

Information

Information

Information

Information

Information

Information

Information

Business And

Information

Security

Security

Security

Security

Security

Security

Security

Financial Reporting

Security And

 

Management

Management

Management

Applications

Controls

 

2 Connectivity / Wireless Access / High Speed Internet Connections / Voice And Data

Information

Privacy

IT Governance

Identity And Access Management

Assurance And

Electronic

Spam Technology

Business

Training And

E-Business

Security

Management

Compliance

Document

Information

Technology

 

Applications

Management

Management

Competency

 

3 Backup Solutions/

Disaster Recovery/

Data Retention

Secure Data File Storage, Transmission And Exchange

Business Continuity

Conforming To

Disaster And

Data Integration

 

Digital OptimisationApplication Integration

Information

Electronically-

Policies and

Management And

Assurance And

Business Continuity

Security and

based Business and Financial Reporting

 

Business Continuity

Structure

Disaster Recovery

Compliance

Planning

   

Controls

Planning

Standards

 
 

4 Secure Electronic Collaboration With Clients – Client Portals

Remote Access

Business Process Improvement, Work Flow and Process Exception Alerts

Privacy

Privacy

IT Governance

Spam Technology

Database and

Web Services

Quality of Service

Privacy

Management

Management

Application

Integration

 

5 Paperless Workflow/

Paperless Technology

Staff and

Mobile and Remote Computing

Business Process

Disaster Recovery

Privacy

Disaster Recovery

Wireless

Disaster Recovery

Disaster Recovery

Training and

Management

Improvement,

Planning and

Management

Technologies

Planning and

Technology

   

Training

 

Workflow and

Business Continuity

Business Continuity

competency

Process Exception

Management

Management

Alerts

 

6 Laptop Security / Encryption

Process

Training and

Identity and Access Management

IT Governance

Digital Identity and Authentication Technologies

Collaboration and

Disaster Recovery

Wireless

Communication

Disaster Recovery

Documentation and

Competency

Messaging

Technologies

Technologies

   

improvements

 

Technologies

Bandwidth

 

7 Small Business Software / Office 2010 / Windows 7

Saving and Making Money w/Technology

Identity and Access Management

Conforming to

Securing and

Wireless

Wireless

Data Mining

Intrusion Detection

Remote

Qualified IT

Assurance and

Controlling

Technologies

Technologies

Connectivity Tools

Personnel

 

Compliance

Information

     

Standards

Distribution

 

8 User Mobility/ Mobile Computing/ Mobile Devices

Technology Cost

Improved

Business

Mobile and Remote Computing

Application and

Authentication

Virtual Office

Intrusion Detection

Web-Based and

Quality of Service

Controls

Application and

Intelligence

Data Integration

Technologies

Web-Enabled

Data Integration

 

Applications

 

9 Tax Software/ Electronic Transmittals Of Tax Forms

Budget Processes

Document, Forms,

Mobile and Remote Computing

Electronic Archiving and Data Retention

Paperless Digital

Storage

Business Exchange

Customer

Qualified IT

Electronic Audit

Content and

Technologies

Technologies

Technology

Relationship

personnel

Trail

Knowledge

   

Management

   

Management

 

Server Virtualization

10 And Consolidation

Project

Electronic Data

Document, Forms,

Document, Content

Spyware Detection

Learning and

Messaging

Privacy

Messaging

Application Service

Management &

Retention Strategy

Content and

and Knowledge

and Removal

Training

Applications

Applications (e-

Provider

   

Deployment of

Knowledge

Management

Competency

mail, faxing,

New Systems

Management

voicemail, instant

messaging)

January 30, 2012

30

AICPA Top 10 IT Initiatives 2005-2011   2011 2010 2009 2008 2007 2006 2005 1
AICPA Top 10 IT Initiatives 2005-2011   2011 2010 2009 2008 2007 2006 2005 1

AICPA Top 10 IT Initiatives 2005-2011

 

2011

2010

2009

2008

2007

2006

2005

1

Security Of Data, Code & Communications / Data Security & Document Retention / Security Threats

Control and Use of Mobile Devices

Information Security Management

Information Security Management

Information Security Management

Information Security

Information Security

2

Connectivity / Wireless Access / High Speed Internet Connections / Voice And Data

Information Security

Privacy Management

IT Governance

Identity And Access Management

Assurance And Compliance Applications

Electronic Document Management

3

Backup Solutions/ Disaster Recovery/ Business Continuity

Data Retention Policies and Structure

Secure Data File Storage, Transmission And Exchange

Business Continuity

Conforming To Assurance And Compliance Standards

Disaster And Business Continuity Planning

Data Integration

Management And

 

Disaster Recovery

 
   

Planning

 

4

Secure Electronic Collaboration With Clients – Client Portals

Remote Access

Business Process Improvement, Work Flow and Process Exception Alerts

Privacy Management

Privacy Management

IT Governance

Spam Technology

5

Paperless Workflow/ Paperless Technology

Staff and Management Training

Mobile and Remote Computing

Business Process Improvement, Workflow and Process Exception Alerts

Disaster Recovery Planning and Business Continuity Management

Privacy Management

Disaster Recovery

6

 

Laptop Security / EncryptionProcess Documentation and improvements

Training and

Identity and Access Management

IT Governance

Digital Identity and Authentication Technologies

Collaboration and Messaging Technologies

Competency

7

Small Business Software / Office 2010 / Windows 7

Saving and Making Money w/Technology

Identity and Access Management

Conforming to Assurance and Compliance Standards

Securing and Controlling Information Distribution

Wireless Technologies

Wireless Technologies

8

User Mobility/ Mobile Computing/ Mobile Devices

Technology Cost

Improved Application and Data Integration

Business Intelligence

Mobile and Remote Computing

Application and Data Integration

Authentication

Controls

Technologies

9

Tax Software/ Electronic Transmittals Of Tax Forms

Budget Processes

Document, Forms, Content and Knowledge Management

Mobile and Remote Computing

Electronic Archiving and Data Retention

Paperless Digital

Storage Technologies

Technologies

10

Server Virtualization And Consolidation

Project Management & Deployment of New Systems

Electronic Data

Document, Forms,

Document, Content and Knowledge Management

Spyware Detection and Removal

Learning and Training Competency

Retention Strategy

Content and

 

Knowledge

     
 

Management

January 30, 2012

31

Security, Privacy, Governance, Disaster Recovery 2011 2010 2009 2008 2007 2006 2005 1 Security Of
Security, Privacy, Governance, Disaster Recovery 2011 2010 2009 2008 2007 2006 2005 1 Security Of

Security, Privacy, Governance, Disaster Recovery

2011 2010 2009 2008 2007 2006 2005 1 Security Of Data, Code & Communications /
2011
2010
2009
2008
2007
2006
2005
1
Security Of Data, Code &
Communications / Data
Security & Document
Retention / Security Threats
Control and Use of
Mobile Devices
Information Security
Management
Information Security
Management
Information Security
Management
Information Security
Information Security
2
Connectivity / Wireless
Access / High Speed Internet
Connections / Voice And Data
Information Security
Privacy Management
IT Governance
Identity And Access
Management
Assurance And
Compliance Applications
Electronic Document
Management
3
Backup Solutions/ Disaster
Recovery/ Business
Continuity
Data Retention
Policies and Structure
Secure Data File
Storage, Transmission
And Exchange
Business Continuity
Management And
Disaster Recovery
Planning
Conforming To Assurance
And Compliance
Standards
Disaster And Business
Continuity Planning
Data Integration
4
Secure Electronic
Collaboration With Clients –
Client Portals
Remote Access
Business Process
Improvement, Work
Flow and Process
Exception Alerts
Privacy Management
Privacy Management
IT Governance
Spam Technology
5
Paperless Workflow/
Paperless Technology
Staff and Management
Training
Mobile and Remote
Computing
Business Process
Improvement,
Workflow and Process
Exception Alerts
Disaster Recovery
Planning and Business
Continuity Management
Privacy Management
Disaster Recovery
6
Laptop Security / Encryption
Process
Training and
Identity and Access
Management
IT Governance
Documentation and
Competency
Digital Identity and
Authentication
Technologies
Collaboration and
Messaging Technologies
improvements
7
Small Business Software /
Office 2010 / Windows 7
Saving and Making
Money w/Technology
Identity and Access
Management
Conforming to
Assurance and
Compliance Standards
Securing and Controlling
Information Distribution
Wireless Technologies
Wireless Technologies
8
User Mobility/ Mobile
Computing/ Mobile Devices
Technology Cost
Improved Application
and Data Integration
Business Intelligence
Controls
Mobile and Remote
Computing
Application and Data
Integration
Authentication
Technologies
9
Tax Software/ Electronic
Transmittals Of Tax Forms
Budget Processes
Document, Forms,
Content and Knowledge
Management
Mobile and Remote
Computing
Electronic Archiving and
Data Retention
Paperless Digital
Storage Technologies
Technologies
10
Server Virtualization And
Consolidation
Project Management
& Deployment of New
Systems
Electronic Data
Document, Forms,
Retention Strategy
Content and
Document, Content and
Knowledge Management
Spyware Detection and
Removal
Learning and Training
Competency
Knowledge
Management

January 30, 2012

32

Data, Information and Document Management/ Integration and Analysis and Related Initiatives 2011 2010 2009 2008
Data, Information and Document Management/ Integration and Analysis and Related Initiatives 2011 2010 2009 2008

Data, Information and Document Management/ Integration and Analysis and Related Initiatives

2011 2010 2009 2008 2007 2006 2005 1 Security Of Data, Code & Communications /
2011
2010
2009
2008
2007
2006
2005
1
Security Of Data, Code &
Communications / Data
Security & Document
Retention / Security Threats
Control and Use of
Mobile Devices
Information Security
Management
Information Security
Management
Information Security
Management
Information Security
Information Security
2
Connectivity / Wireless
Access / High Speed Internet
Connections / Voice And Data
Information Security
Privacy Management
IT Governance
Identity And Access
Management
Assurance And
Compliance Applications
Electronic Document
Management
3
Backup Solutions/ Disaster
Recovery/ Business
Continuity
Data Retention Policies
and Structure
Secure Data File
Storage, Transmission
And Exchange
Business Continuity
Disaster And Business
Continuity Planning
Data Integration
Management And
Disaster Recovery
Conforming To Assurance
And Compliance
Standards
Planning
4
Secure Electronic
Collaboration With Clients –
Client Portals
Remote Access
Business Process
Improvement, Work
Flow and Process
Exception Alerts
Privacy Management
Privacy Management
IT Governance
Spam Technology
5
Paperless Workflow/
Paperless Technology
Staff and Management
Training
Mobile and Remote
Computing
Business Process
Improvement,
Workflow and Process
Exception Alerts
Disaster Recovery
Planning and Business
Continuity Management
Privacy Management
Disaster Recovery
6
Laptop Security / Encryption
Process
Training and
Documentation and
Competency
Identity and Access
Management
IT Governance
improvements
Digital Identity and
Authentication
Technologies
Collaboration and
Messaging Technologies
7
Small Business Software /
Office 2010 / Windows 7
Saving and Making
Money w/Technology
Identity and Access
Management
Conforming to
Assurance and
Compliance Standards
Securing and Controlling
Information Distribution
Wireless Technologies
Wireless Technologies
8
User Mobility/ Mobile
Computing/ Mobile Devices
Technology Cost
Improved Application
and Data Integration
Business Intelligence
Mobile and Remote
Computing
Application and Data
Integration
Authentication
Controls
Technologies
9
Tax Software/ Electronic
Transmittals Of Tax Forms
Budget Processes
Document, Forms,
Mobile and Remote
Computing
Electronic Archiving and
Data Retention
Paperless Digital
Storage Technologies
Content and
Technologies
Knowledge
Management
10
Server Virtualization And
Consolidation
Project Management
& Deployment of New
Systems
Electronic Data
Document, Forms,
Retention Strategy
Content and
Document, Content and
Knowledge
Management
Spyware Detection and
Removal
Learning and Training
Competency
Knowledge
Management

January 30, 2012

33

AICPA Top IT Initiatives • Notice any differences? • Business-oriented focus of IT initiatives −
AICPA Top IT Initiatives • Notice any differences? • Business-oriented focus of IT initiatives −

AICPA Top IT Initiatives

Notice any differences?

Business-oriented focus of IT initiatives

Not concerned with IT plumbing and infrastructure (such as cloud) but on business concerns - running the business - and business- related IT concerns – potential impact of IT systems on the wider business Security, privacy, disaster recovery/business continuity and governance concerns dominate

How will pure technology trends assist in delivering these initiatives?

Effective IT outsourcing assist with addressing these concerns

January 30, 2012

34

Transition and Transformation Within Outsourcing • Transition is the entire process for assuming operational
Transition and Transformation Within Outsourcing • Transition is the entire process for assuming operational

Transition and Transformation Within Outsourcing

Transition is the entire process for assuming operational responsibility for the acquired entity

Transition moves the acquired entity organization from its current mode of operation to an integrated managed mode of operation

Transition includes the takeover of the “as-is” business and operating environment as well as contractual requirements necessary to facilitate the transfer.

Transformation is the implementation of completed integrated solution within a specified time, that lead to entirely integrated operation, service enhancements and/or quality, productivity, technology improvements and cost savings/reductions

An approach to transformation is very important for successful outsourcing

Transformation is the basis for greater cost savings and innovation

Outsourcing without transformation is a risk as what is outsourced can stagnate over time

January 30, 2012

35

Transition and Transformation       Steady State Operation     Transition    
Transition and Transformation       Steady State Operation     Transition    

Transition and Transformation

     
      Steady State Operation
Steady State Operation
Steady State
Operation
Steady State Operation
   

Transition

   

Transformation

Transformation
    Transition     Transformation
 

Customer

 

Customer

Standardised

Primary

Infrastructure

Infrastructure

Infrastructure

Support

and

 

and

 

Through

Transferred to

Applications,

 

Applications,

Refresh,

Appropriate

Staff, Support

Transferred

Customer

Cost Location

Processes and

and Being

Support

Tools

 

Supported by

Processes and

 

Supplier

 

Tools

Replaced by

Supplier

Standards

Transition and transformation is a process that must be articulated effectively to customers

Customer must understand the implications and must accept the process

Delays or stoppages affect supplier’s costs

January 30, 2012

36

Outsourcing Process Evaluation and Decision January 30, 2012 Contract Effective Date Service Commencement Date
Outsourcing Process Evaluation and Decision January 30, 2012 Contract Effective Date Service Commencement Date

Outsourcing Process

Evaluation and

Decision

January 30, 2012

Contract

Effective Date

Service Commencement Date

30, 2012 Contract Effective Date Service Commencement Date Pre-Operation and Pre-Integration Start Negotiation and
Pre-Operation and Pre-Integration Start
Pre-Operation and
Pre-Integration
Start
Commencement Date Pre-Operation and Pre-Integration Start Negotiation and Contract Signing Transition Transformation
Negotiation and Contract Signing
Negotiation and
Contract Signing
Transition
Transition
Start Negotiation and Contract Signing Transition Transformation Steady State Operation of Integrated Entity
Transformation
Transformation
Negotiation and Contract Signing Transition Transformation Steady State Operation of Integrated Entity Preliminary
Steady State Operation of Integrated Entity
Steady State
Operation of
Integrated Entity
Preliminary Transition Plan
Preliminary
Transition Plan
Due Diligence
Due Diligence
Final Transition Plan
Final Transition Plan
Integration Preparation
Integration
Preparation
Transition Initiation
Transition Initiation
Finalise Integration Solution Architecture
Finalise Integration
Solution
Architecture

Due Diligence

Review and

Confirmation

Contract Review

Transition

Completed

Transformation

Planning

Transformation

Delivery

Transformation

Completed

37

Transition and Transformation Management Integration Start Transition Transformation Transformation Signed Contract
Transition and Transformation Management Integration Start Transition Transformation Transformation Signed Contract

Transition and Transformation Management

Integration Start Transition Transformation Transformation Signed Contract Review Criteria Achieved Review
Integration Start
Transition
Transformation
Transformation
Signed Contract
Review
Criteria Achieved
Review
Criteria Achieved
Transformation
Terms and
Transition to
to Delivery
Conditions
Delivery Handoff
Handoff
Propose, Negotiate and Close
Delivery
Ongoing
Planning
Transition
Transformation
Operation
Research, Analysis, Identification
Transition Initiation/Kick-off
Transformation Initiation/Kick-off
Preliminary Transition and
Transformation Plans
Post Contract Verification
Stabilisation
Due Diligence
Solution Handoff
Standardisation
Transformation Close
Final Integrated Transition Plan
Acquisition Management Office
Transfer
Quality Review
Acquisition
Milestone
Engagement Stage
Operation Commencement
Preparation
Key Reporting
Events
Transition and
Transformation Phase
Final Integrated Transition Plan
Handoff Events
Activity

January 30, 2012

38

Types of Outsourcing Arrangement • Efficiency/Utility (Make it Cheaper) arrangement outsourcing focuses primarily on
Types of Outsourcing Arrangement • Efficiency/Utility (Make it Cheaper) arrangement outsourcing focuses primarily on

Types of Outsourcing Arrangement

Efficiency/Utility (Make it Cheaper) arrangement outsourcing focuses primarily on cost control and, over time, cost reduction, with the goal of maintaining consistency in the delivery of services

Business Enhancement (Make it Better) arrangement is about business productivity. The organisation’s performance, as compared with their competitors, will improve, resulting in movement toward defined business goals

Transformational (Make me Money) arrangement is characterised by a partnership between the service provider and service recipient that is focused on innovation and new business, changing the very basis on which an organisation competes

Which arrangement are you looking for?

Clearly understand what your expectations are

January 30, 2012

39

Problems With Outsourcing • Many organisations take a “fire and forget” approach to outsourcing •
Problems With Outsourcing • Many organisations take a “fire and forget” approach to outsourcing •

Problems With Outsourcing

Many organisations take a “fire and forget” approach to outsourcing

Problems with outsourcing are as much the fault of the outsourcing organisation as they are of the supplier

Outsourcing organisation need to define an operating model and be engaged with the outsourcing relationship

You can outsource anything except the management of the outsourcing relationship

January 30, 2012

40

Outsourcing and Innovation • Outsourcing is not viewed by buyers or suppliers as a source
Outsourcing and Innovation • Outsourcing is not viewed by buyers or suppliers as a source

Outsourcing and Innovation

Outsourcing is not viewed by buyers or suppliers as a source of innovation

Not seen as an agent of change, innovation, transformation, access to new technology

Outsourcing is seen as “your mess for less”

Buyers neglect the value of transformation and how it can contribute to innovation and generate real business benefits

Providers do not sell transformation as a pre-requisite for innovation as well as further cost savings

Companies looking to outsource should look for a transformation and innovation vision from their supplier

January 30, 2012

41

Business Challenges Driving Outsourcing In 2011 • How Important Are The Following Business Drivers Behind
Business Challenges Driving Outsourcing In 2011 • How Important Are The Following Business Drivers Behind

Business Challenges Driving Outsourcing In 2011

How Important Are The Following Business Drivers Behind Your Company's IT Outsourcing And BPO Decision-Making This Year?

Answer = Very Important

Innovation, Change, Access to New Technology, Transformation seen as relatively unimportant

• Innovation, Change, Access to New Technology, Transformation seen as relatively unimportant January 30, 2012 42

January 30, 2012

42

Europeans Want To Drive Out Cost And Globalise – Without Changing Their Processes • How
Europeans Want To Drive Out Cost And Globalise – Without Changing Their Processes • How

Europeans Want To Drive Out Cost And Globalise – Without Changing Their Processes

How Important Are The Following Business Drivers Behind Your Company's IT Outsourcing And BPO Decision-Making This Year?

Answer = Very Important

Innovation, Change, Access to New Technology, Transformation seen as relatively unimportant outside Asia

Change, Access to New Technology, Transformation seen as relatively unimportant outside Asia January 30, 2012 43

January 30, 2012

43

Buyers Achieving Modest Business Results Beyond Cost-Reduction With Their Outsourcing Initiatives • How Effective Have
Buyers Achieving Modest Business Results Beyond Cost-Reduction With Their Outsourcing Initiatives • How Effective Have

Buyers Achieving Modest Business Results Beyond Cost-Reduction With Their Outsourcing Initiatives

How Effective Have Your Current Outsourcing Initiatives Been At Achieving The Following Business Benefits To-Date?

Existing outsourcing suppliers not seen as effective in delivering Innovation, Change, Access to New Technology, Transformation

not seen as effective in delivering Innovation, Change, Access to New Technology, Transformation January 30, 2012

January 30, 2012

44

Effectiveness Of Current Outsourcing Engagements: Mid-Market Organisations Benefitting The Most • How Effective Have
Effectiveness Of Current Outsourcing Engagements: Mid-Market Organisations Benefitting The Most • How Effective Have

Effectiveness Of Current Outsourcing Engagements:

Mid-Market Organisations Benefitting The Most

How Effective Have Your Current Outsourcing Initiatives Been For Achieving The Following Business Benefits To-Date?

Answer = Very Effective

Existing outsourcing initiatives not seen as effective in delivering Innovation, Change, Access to New Technology, Transformation

not seen as effective in delivering Innovation, Change, Access to New Technology, Transformation January 30, 2012
not seen as effective in delivering Innovation, Change, Access to New Technology, Transformation January 30, 2012
not seen as effective in delivering Innovation, Change, Access to New Technology, Transformation January 30, 2012

January 30, 2012

45

After Financial Considerations, Buyers Care (Or Say They Care) About The Governance, Industry Acumen And
After Financial Considerations, Buyers Care (Or Say They Care) About The Governance, Industry Acumen And

After Financial Considerations, Buyers Care (Or Say They Care) About The Governance, Industry Acumen And Cultural Attributes Of Providers

How Important Are The Following Attributes To Your Clients Today, When Considering A Service Provider Relationship For IT/BPO Services?

Buyers of outsourcing services do not rate Innovation and Transformation as important supplier attributes

of outsourcing services do not rate Innovation and Transformation as important supplier attributes January 30, 2012
of outsourcing services do not rate Innovation and Transformation as important supplier attributes January 30, 2012
of outsourcing services do not rate Innovation and Transformation as important supplier attributes January 30, 2012
of outsourcing services do not rate Innovation and Transformation as important supplier attributes January 30, 2012
of outsourcing services do not rate Innovation and Transformation as important supplier attributes January 30, 2012

January 30, 2012

46

Providers Underestimate Importance Buyers Place On Change Management, Governance And Culture • Buyers of outsourcing
Providers Underestimate Importance Buyers Place On Change Management, Governance And Culture • Buyers of outsourcing

Providers Underestimate Importance Buyers Place On Change Management, Governance And Culture

Buyers of outsourcing services do not rate Innovation and Transformation as important supplier attributes but suppliers still underestimate the important of Innovation

as important supplier attributes but suppliers still underestimate the important of Innovation January 30, 2012 47
as important supplier attributes but suppliers still underestimate the important of Innovation January 30, 2012 47
as important supplier attributes but suppliers still underestimate the important of Innovation January 30, 2012 47

January 30, 2012

47

Transformation Process Introduces Standardisation and Enables Innovation From … January 30, 2012 To … •
Transformation Process Introduces Standardisation and Enables Innovation From … January 30, 2012 To … •

Transformation Process Introduces Standardisation and Enables Innovation

From …

Introduces Standardisation and Enables Innovation From … January 30, 2012 To … • Takes disparate set

January 30, 2012

To …

and Enables Innovation From … January 30, 2012 To … • Takes disparate set of sources

Takes disparate set of sources and creates standard model

Effective transformation is an enabler of innovation with IT function

On-demand self- service

Elastic

Measured and metered usage and pricing

Scale

Resilience

Available

Secure

48

A (Financial) Tale of Three Outsourcing Vendors • Sample analysis of three vendors involved in
A (Financial) Tale of Three Outsourcing Vendors • Sample analysis of three vendors involved in

A (Financial) Tale of Three Outsourcing Vendors

Sample analysis of three vendors involved in outsourcing

Dell – small outsourcing practice based on acquisition of Perot Systems and legacy outsourcing business

HP – large outsourcing vendor with expanded practice since the acquisition of EDS

IBM – large outsourcing vendor

By no means exhaustive – there are many outsourcing service providers

January 30, 2012

49

Vendor Comparison Summary     2010   2009   2008   Dell HP IBM Dell
Vendor Comparison Summary     2010   2009   2008   Dell HP IBM Dell

Vendor Comparison Summary

   

2010

 

2009

 

2008

 

Dell

HP

IBM

Dell

HP

IBM

Dell

HP

IBM

Revenue

52,902

126,033

99,870

61,101

114,552

95,758

61,133

118,364

103,630

Gross Margin

9,261

29,996

46,040

10,957

27,034

43,761

11,671

28,644

45,701

Gross Margin %

17.5%

23.8%

46.1%

17.9%

23.6%

45.7%

19.1%

24.2%

44.1%

Net Income

1,433

8,761

14,833

2,478

7,660

13,425

2,947

8,329

12,334

Net Income %

2.7%

7.0%

14.9%

4.1%

6.7%

14.0%

4.8%

7.0%

11.9%

Outsourcing Revenue

5,622

18,835

22,241

5,351

18,692

21,620

4,980

8,211

22,733

Outsourcing Revenue %

10.60%

14.90%

22.30%

8.80%

16.30%

22.60%

8.10%

6.90%

21.90%

Outsourcing Revenue for Dell includes all services including outsourcing

Dell performing poorly relative to its competitors:

Lower margins Lower proportion of service and outsourcing revenues

January 30, 2012

50

Vendor Comparison • Compare Dell, HP and IBM • Comparisons taken from 10-K filings •
Vendor Comparison • Compare Dell, HP and IBM • Comparisons taken from 10-K filings •

Vendor Comparison

Compare Dell, HP and IBM

Comparisons taken from 10-K filings

Difficult to make exact comparison

Major service-related takeovers

Dell acquire Perot in Nov 2009

HP acquire EDS in Aug 2008

Classification of revenues not consistent between years

Restatement of revenues

Dell 2010 10 K

Services revenue for 2009 = 5,351

Services revenue for 2008 = 4,980

Dell 2009 10 K

Services revenue for 2009 = 5,715

Services revenue for 2008 = 5,320

January 30, 2012

51

Vendor Comparison • Which vendor can articulate a transformation vision for your organisation? January 30,
Vendor Comparison • Which vendor can articulate a transformation vision for your organisation? January 30,

Vendor Comparison

Which vendor can articulate a transformation vision for your organisation?

January 30, 2012

52

IBM • Revenue from − Hardware – classified as Systems and Technology − Software −
IBM • Revenue from − Hardware – classified as Systems and Technology − Software −

IBM

Revenue from

Hardware – classified as Systems and Technology

Software

Services – divided into:

Global Technology Services - provides IT infrastructure services and business process services, including outsourcing and other services

Global Business Services - provides professional services and application management services

Outsourcing classified as:

Strategic Outsourcing Services - existing infrastructure

Global Process Services - standardised processing platforms and business process outsourcing

Gross margins not reported down to outsourcing business area

January 30, 2012

53

IBM – Financial Summary 2010 2009 2008 2007 2006 Revenue 99,870 95,758 103,630 98,786 91,424
IBM – Financial Summary 2010 2009 2008 2007 2006 Revenue 99,870 95,758 103,630 98,786 91,424

IBM – Financial Summary

2010 2009 2008 2007 2006 Revenue 99,870 95,758 103,630 98,786 91,424 Gross Margin 46,040 43,761
2010
2009
2008
2007
2006
Revenue
99,870
95,758
103,630
98,786
91,424
Gross Margin
46,040
43,761
45,701
41,688
38,307
Gross Margin %
46.1%
45.7%
44.1%
42.2%
41.9%
Net Income
14,833
13,425
12,334
10,418
9,492
Net Income %
14.9%
14.0%
11.9%
10.5%
10.4%
Global Technology Services Revenue Total
38,201
37,347
39,264
36,103
32,322
Global Technology Services Total Gross Margin
34.7%
35.0%
32.60%
29.90%
29.80%
Global Technology Services Revenue (Excluding Outsourcing)
15,960
15,727
16,531
15,108
13,433
Outsourcing Revenue
22,241
21,620
22,733
20,995
18,889
Outsourcing Revenue %
22.3%
22.6%
21.9%
21.3%
20.7%
Global Business Services
18,223
17,653
19,628
18,041
15,969
Global Business Services Gross Margin %
46.1%
45.7%
26.70%
23.50%
23.10%
Software
22,485
21,396
22,089
19,982
18,161
Software Gross Margin %
86.9%
86.0%
85.40%
85.20%
85.20%
Systems and Technology
17,973
16,190
19,287
21,317
21,970
Systems and Technology Gross Margin %
46.1%
45.7%
38.10%
39.70%
37.70%
Global Financing
2,238
2,302
2,559
2,502
2,365
Global Financing Gross Margin %
51.3%
47.5%
51.30%
46.70%
50.30%

January 30, 2012

54

IBM – Financial Summary January 30, 2012 55
IBM – Financial Summary January 30, 2012 55

IBM – Financial Summary

January 30, 2012
January 30, 2012
IBM – Financial Summary January 30, 2012 55
IBM – Financial Summary January 30, 2012 55

55

IBM – Financial Summary January 30, 2012 56
IBM – Financial Summary January 30, 2012 56

IBM – Financial Summary

IBM – Financial Summary January 30, 2012 56
IBM – Financial Summary January 30, 2012 56

January 30, 2012

IBM – Financial Summary January 30, 2012 56

56

IBM – Financial Summary • Consistent performance • Balanced across product and service areas •
IBM – Financial Summary • Consistent performance • Balanced across product and service areas •

IBM – Financial Summary

Consistent performance

Balanced across product and service areas

C. 22% revenue from outsourcing

January 30, 2012

57

HP • Revenue from − Services – classified under: • Infrastructure Technology Outsourcing • Business
HP • Revenue from − Services – classified under: • Infrastructure Technology Outsourcing • Business

HP

Revenue from

Services – classified under:

Infrastructure Technology Outsourcing

Business Process Outsourcing

Technology Services

Application Services

ESS – Enterprise Systems, Storage and Networking

Software

Personal Systems

Imaging and Printing

Financing

Does not report Net Income for individual business lines

Earning from Operations rather than Net Income – includes acquired intangible assets, pension settlements, etc.

Earning from Operations greater than Net Income by c 30%

January 30, 2012

58

HP – Financial Summary 2010 2009 2008 Revenue 126,033 114,552 118,364 Gross Margin 29,996 27,034
HP – Financial Summary 2010 2009 2008 Revenue 126,033 114,552 118,364 Gross Margin 29,996 27,034

HP – Financial Summary

2010 2009 2008 Revenue 126,033 114,552 118,364 Gross Margin 29,996 27,034 28,644 Gross Margin %
2010
2009
2008
Revenue
126,033
114,552
118,364
Gross Margin
29,996
27,034
28,644
Gross Margin %
23.8%
23.6%
24.2%
Earnings from Operations
11,479
10,136
10,473
Earnings from Operations %
9.1%
8.8%
8.8%
Net Income
8,761
7,660
8,329
Net Income %
7.0%
6.7%
7.0%
Total Services (Including Outsourcing) Revenue
34,935
34,693
20,977
Total Services (Including Outsourcing) Earning from Operations
5,609
5,044
2,518
Total Services (Including Outsourcing) Earning from Operations %
16.1%
14.5%
12.0%
Infrastructure Technology Outsourcing
15,963
15,751
7,488
Business Process Outsourcing
2,872
2,941
723
Total Outsourcing
18,835
18,692
8,211
Total Outsourcing %
14.9%
16.3%
6.9%
ESS Revenue
18,651
15,359
19,400
ESS Earnings from Operations
2,402
1,518
2,577
ESS Earnings from Operations %
12.9%
9.9%
13.3%
Software Revenue
3,586
3,572
4,220
Software Earnings from Operations
759
684
499
Software Earnings from Operations %
21.2%
19.1%
11.8%
Personal Systems Revenue
40,741
35,305
42,295
Personal Systems Earnings from Operations
2,032
1,661
2,375
Personal Systems Earnings from Operations %
5.0%
4.7%
5.6%
Imaging and Printing Revenue
25,764
24,011
29,614
Imaging and Printing Earnings from Operations
4,412
4,310
4,559
Imaging and Printing Earnings from Operations %
17.1%
18.0%
15.4%
Financing Revenue
3,047
2,673
2,698
Financing Earnings from Operations
281
206
192
Financing Earnings from Operations %
9.2%
7.7%
7.1%

January 30, 2012

59

HP – Financial Summary January 30, 2012 60
HP – Financial Summary January 30, 2012 60

HP – Financial Summary

HP – Financial Summary January 30, 2012 60
HP – Financial Summary January 30, 2012 60

January 30, 2012

HP – Financial Summary January 30, 2012 60

60

HP – Financial Summary January 30, 2012 61
HP – Financial Summary January 30, 2012 61

HP – Financial Summary

HP – Financial Summary January 30, 2012 61

January 30, 2012

61

HP – Financial Summary • Substantial increase in outsourcing revenue after EDS acquisition • Services
HP – Financial Summary • Substantial increase in outsourcing revenue after EDS acquisition • Services

HP – Financial Summary

Substantial increase in outsourcing revenue after EDS acquisition

Services Earning from Operations % substantially greater than average Earning from Operations % across all business areas

Services including outsourcing more profitable

January 30, 2012

62

Dell – Financial Summary 2010 2009 2008 Revenue 52,902 61,101 61,133 Gross Margin 9,261 10,957
Dell – Financial Summary 2010 2009 2008 Revenue 52,902 61,101 61,133 Gross Margin 9,261 10,957

Dell – Financial Summary

2010 2009 2008 Revenue 52,902 61,101 61,133 Gross Margin 9,261 10,957 11,671 Gross Margin %
2010
2009
2008
Revenue
52,902
61,101
61,133
Gross Margin
9,261
10,957
11,671
Gross Margin %
17.5%
17.9%
19.1%
Net Income
1,433
2,478
2,947
Net Income %
2.7%
4.1%
4.8%
Product Revenue
43,697
52,337
53,728
Product Revenue %
82.6%
85.7%
87.9%
Product Revenue Gross Margin
6,163
7,667
8,579
Product Revenue Gross Margin %
14.1%
14.6%
16.0%
Service Revenue Including Software
9,205
8,764
7,405
Service Revenue Including Software %
17.4%
14.3%
12.1%
Service Revenue Gross Margin
3,098
3,290
3,290
Service Revenue Gross Margin %
33.7%
37.5%
44.4%
Service Revenue Excluding Software
5,622
5,351
4,980
Service Revenue Excluding Software %
10.6%
8.8%
8.1%

January 30, 2012

63

Dell – Product/Software/Services Breakdown January 30, 2012 64
Dell – Product/Software/Services Breakdown January 30, 2012 64

Dell – Product/Software/Services Breakdown

Dell – Product/Software/Services Breakdown January 30, 2012 64
Dell – Product/Software/Services Breakdown January 30, 2012 64

January 30, 2012

Dell – Product/Software/Services Breakdown January 30, 2012 64

64

Dell – Product/Software/Services Breakdown January 30, 2012 65
Dell – Product/Software/Services Breakdown January 30, 2012 65

Dell – Product/Software/Services Breakdown

Dell – Product/Software/Services Breakdown January 30, 2012 65

January 30, 2012

65