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Technology / Software

ILCS is the destiny of IT services industry: Gartner

Chief information officers (CIOs) should consider adopting industrialised, low-cost IT services (ILCS) to reduce the cost, while controlling the risk, integration and customisation issues, according to IT market research firm Gartner.

Gartner’s Executive Program (EXP) 2011 CIO agenda survey found that CIOs have reduction of the cost of IT as a business and IT priorities in 2011.

Gartner vice-president and analyst Claudio Da Rold said while there are multiple ways to reduce the cost of IT delivery, as well as to increase the value of IT, the trend towards ILCS will become paramount for end users to trade nonessential customisation for better and less expensive services.

Gartner predicts that by 2015 industrialised services will represent over 30% of the IT services market. The company also expects cloud services to become a $177bn market by 2015, of which $77bn is based on advertising business models.

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Gartner found that an email configured as ILCS should realistically be about $6 PUPM and is today approximately $8 to $10 PUPM, and entry-level offerings are advertised today at $3 to $4. The company said that Infrastructure utility services (IUS) are one aspect of the evolution toward industrialized services as well, which is expected to have a compound growth rate of over 30% for the next three years.

Gartner research vice-president Frank Ridder said though not all corporate IT will be delivered through ILCS and many "good-enough" services will remain in-house, ILCS is the way forward.

Ridder said, "However, industrialized services represent the destiny of the IT services industry. They are, in fact, the next step in outsourcing and managed-service provision, and they span all layers of the IT services value chain: infrastructure, applications and business processes. Overall, we believe that, from a pricing perspective, the IT services industry is where the airline industry was in 2000. It is ready to be transformed — and disrupted — by an ILCS model."

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CBR Staff Writer

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