I am not a big believer in the annual analyst prediction obsession. Most predictions lump firms as all acting in the same speed in the same direction, e.g. companies will adopt X and Y in 2012. Or predictions are so vague that they are nonsensical. One leading analyst firm had analytics predictions for 2012, that had none “coming true” until 2013, and most in 2015. It seems with few exceptions the most noise in predictions are made by those who are most disconnected from CIO’s and buyers of IT. Remember folks, people still use Windows XP and Internet Explorer 6, and some are content, or at least realistic about doing so.
So the following is not a prediction. Rather, it is a list of what I believe to be the key issues for some of the leading IT services vendors in 2012. Let’s see in a year how they were resolved.
- Can IBM maintain the rage under a new CEO? IBM handle leadership transitions like a duck paddling, calm above, rapid below. How much could HP learn? The shift from Sam Palmisano to Ginni Rometty appears to have passed without more than a ripple. The choice was clear; the market supported it and the good ship IBM continued on. However, changing CEO at a firm the size of IBM even if the underlying strategy stays the same is disruptive. Any internal dynamics that impact the customer will have a multiplier effect at IBM, so this is something to watch closely, particularly in areas under current pressure.
- Can HP get a winning strategy? I have decided to forget HP’s revolving CEO door, that was 2011. What I need to see is the strategy that will inevitably be released in 2012. How is it going to get the confidence of the market, their customers, partners, cynical analysts, but most importantly their employees confident back. This will take some doing, but if successful, the market will move onto someone else to be a whipping boy. If it is unsuccessful, then life will get a lot harder.
- Will Fujitsu become global? Fujitsu is clearly the number one provider in Japan and has a significant business in Australia, the UK and China. However, the culture has not allowed it to globalise and be a truly integrated firm. The “hub and spoke” model and business deference to Japan still dominates. In 2011 it changed management putting a new leader, Rod Vawdrey in place to run non Japan. However integrated solutions, knowledge distribution and capability are still undeveloped. Time is running out for it to become more globally integrated, one more year without significant progress will make life very difficult for it to compete on global deals against IBM, Accenture et al.
- Can Indian Providers Evolve beyond Labour Arbitrage? In late 2010, I wrote about the challenges for Indian based providers (TCS, Wipro et al), shifting towards higher end services, customer transformation and consulting. Progress as of January 2012 has been slow. This lack of speed in evolution is going to present significant challenges for it as the market shifts towards transformation around SaaS and cloud. Furthermore, the large providers have a very diversified portfolio across industries, geography and service lines. Wipro’s most recent results highlight how difficult it is to juggle all the balls at once. It will not get any easier as the competition increases, and Indian firms look towards higher end services that require new relationships inside their customer base.
- Can Telco’s get services right? In 2011 we saw some significant moves by NTT in acquiring Dimension Data, and Telstra investing in Network based services, as a market differentiator. This is just two examples of the shift of Telco’s towards traditional IT Services, done their way. History has not being kind, and it is really the last chance for the network based providers to really change IT services and provide customer excellence. I am sitting on the fence here, I really am unsure if they can do it, so I may be surprised in 12 months.
- I now I said five BUT. Clearly in 2012, we will see the growth in the like of AWS, Chinese based services providers, and other emerging market players. It is going to be very exciting to see how they disrupt the incumbent providers and slowly change the markets.