The largest remaining independent IT consultant/systems integrators — Accenture, CSC, Deloitte, and a few others — are seeing the same thing EMC Chairman and CEO Joe Tucci remarked on last week at EMC World: the IT infrastructure, application and end-user layers all change at the same time.
Not surprisingly, they are responding to this new landscape with offerings that reflect what their large corporate customers want: cloud-related IT services; business process outsourcing (BPO) engagements that reward the servicer based on business outcomes; smaller, more vertically focused IT outsourcing deals; and data analytics offerings, among others. None of these services is actually new to the marketplace, but the emphasis has shifted away from what used to be the SI’s bread-and-butter: the long-term, consultant-heavy IT transformation engagements, and massive, multi-year outsourcing deals priced at a $1B or more.
“There’s a shift in delivery models. Clients want to move assets off the books and do everything as a service,” said David Parsons, CSC’s VP-Global Alliances and CMO, at EMC World last week. “This is an opportunity for us to change the game for our clients and for us to change our business model.”
The old outsourcing model, he noted, was “your mess for less,” while today customers are demanding that capital risk be minimized, both on the application side and on the infrastructure side. “We’re trying to apply our outsourcing experience to these new delivery models, and focus on advising clients on which workloads are cloud-ready,” Parsons said. He talked about this at EMC World 2011 on the Cube with David Vellante:
CSC, Accenture and Deloitte have seen two of their key competitors, EDS and Perot Systems, acquired by HP and Dell, respectively, over the past two years. They have already been competing heavily with IBM Global Services for many years, and have to keep close watch on newer, smaller firms that pop up around specific technologies such as Cloud, Big Data, mobility, social media and other hot-button areas. The remaining SIs risk becoming irrelevant when customers seek out the full, pre-integrated IT stack from a single provider, partly to avoid the kinds of consulting and integration the SIs are set up to deliver.
“We get paid by the business outcome on the BPO side,” said Parsons. “We think that’s the future of cloud, the shared-risk model.” The big software companies haven’t adjusted their licensing schemes to adjust to a service-provider model, he noted, putting the burden of capitalizing software costs squarely on the provider at this point.
His advice for customers? “Work with companies who have been there and done it. Partner eco-systems are key as well – find the ones aligned to your needs and who will share risk with you. Make sure your business needs are addressed.” He commented on the experience that CSC brings to the market with John Furrier on the Cube at EMC World 2011: