Survey/Overview: Australian IT Service Provider Market

Transcription

1 Markets, J. Longwood, M. Chon, R. Jester Research Note 15 April 2003 Survey/Overview: Australian IT Service Provider Market Market scans are used in sourcing strategy development and fast-track processes to speed up identification of candidate service providers. Australian service providers can be categorized to fit specific enterprise needs. Core Topic Sourcing: Sourcing ESP Evaluation and Selection Key Issue How are individual ESPs positioned in the competitive landscape? Note 1 IT Service Categories IT management services provide day-today management and operation of IT assets and processes. As such, they represent the core value components of IT outsourcing. Management services include three subsegments: applications management services, help desk management services and operations services. Consulting services are advisory services that help companies analyze and improve the efficacy of business operations and technology strategies. Consulting services include two subsegments: business and IT consulting. Development and integration services customize or develop IT solutions, assets and processes and then integrate these solutions, assets and processes with established infrastructure and processes. Development and integration services implement designs conceived by consultants. They include three subsegments: application development services, deployment services and integration services. To assist enterprises in identifying candidate external service providers (ESPs) in the Australian marketplace as part of a market scan, we summarize the 25 largest Australian ESPs by IT service category. Market scans are an integral process for sourcing strategy development and fast-tracking evaluation and selection processes (see "Gartner's Fast Track Accelerates the ESP Selection Process"). In mature marketplaces, a market scan is a viable and quicker alternative to traditional expressions of interest or request for information processes. Service providers are ranked by estimated revenue and segmented according to their respective local market size for each service category (IT management services, consulting or development and integration; see Note 1) in Australia. This segmentation is aimed at assisting enterprises in focusing on "like-sized" ESPs with potentially similar cultures. This is pertinent at a preliminary analysis level; for a detailed analysis, a more-comprehensive "compatibility" assessment needs to be undertaken (see "Public Sector: Beware of Incompatible Partners" and "Trust and Control: The Key to Optimal Outsourcing Relationships"). The analysis also specifically ranks service providers within each service category, rather than ranking at an overall total of IT services, as this tends to favor ESPs with established hardwareor software-based service offerings. It also serves to highlight the relative size of global and local service providers in each service category, allowing enterprises to more effectively position the local presence of each. How are the top 25 service providers identified and ranked? Gartner does an annual worldwide revenue survey of IT ESPs on a global and a country basis. Based on responses to this survey, Gartner Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.

2 Gartner analysts estimated each ESP's revenue for 2001 in Australia by IT service category. This is the basis for ranking service providers according to the resulting estimated revenue and segmentation (large, medium, small, niche) according to the scale of their respective local market presence. It should be noted that there have been various mergers, acquisitions and divestitures since the survey. For the purposes of estimating revenue of affected ESPs, revenue has been combined for the larger service providers (such as IBM and PwC Consulting). Revenue from Syntegra, now owned by Hansen Technologies, has been excluded, as it was apparent that subsequent revenue was substantially diminished. DMR's revenue is included with Fujitsu, and A.T. Kearney's revenue is included with EDS. Solution 6 has divested Alphawest, and this affects some service categories. How should the revenue rankings be interpreted? Although ESPs are listed in order of their estimated 2001 revenue, this should not be taken as a direct indication of their current respective service capabilities or recent track records. The rankings provide a macro basis for identifying and shortlisting candidate ESPs to potentially meet an enterprise's service requirement according to scale of presence. The usual detailed evaluation of service providers according to best practices should follow (see "Selecting an ESP: Using a Vendor Evaluation Model"). Which were the top 25 IT outsourcing ESPs in Australia in 2001? Table 1 summarizes IT outsourcing ESPs that provide IT management (ITM) services, which includes infrastructure and network management outsourcing and application management/maintenance services. 15 April

3 Table 1 Top 25 IT Outsourcing ESPs in Australia in 2001 Estimated Rank by IT Outsourcing Service Providers in Australia 2001 Revenue Large Size Presence (Revenue > A$400 million and < A$675 million) 1 EDS 2 IBM (includes PwC Consulting) 3 Computer Sciences Corporation (CSC) Midsize Presence (Revenue > A$120 million and < A$160 million) 4 Hewlett-Packard (includes Compaq Computer) 5 Fujitsu (includes DMR) 6 Telstra Small Size Presence (Revenue > A$20 million and < A$50 million) 7 Kaz Computer Services (includes Aspect) 8 Unisys 9 Dimension Data 10 Citec 11 Logica 12 Accenture 13 SMS Management & Technology 14 Cap Gemini Ernst & Young Niche Presence (Revenue > A$10 million and < A$20 million) 15 Solution 6 Holdings/Alphawest 16 Deloitte Consulting 17 Siemens Business Services 18 SchlumbergerSema 19 Protech 20 Nortel Networks 21 Atos Origin 22 CPT Global 23 Hansen Technologies (not including Syntegra) 24 Alcatel 25 Spherion Pacific Enterprises Source: Gartner Dataquest (April 2003) Overall in 2001, there was a healthy growth in IT management service revenue. However, with the downturn in the global economy and, to a lesser extent, in the local information and communication technology (ICT) economy, growth rates in 2002 were low to neutral. 15 April

4 EDS retained its No. 1 ranking, and IBM is very close behind. Both are well clear of Computer Sciences Corporation (CSC). Although the service providers are a mix of full- and selectiveservice providers, it is interesting to see the significant positioning of noninfrastructure service providers such as Accenture, SMS, Cap Gemini Ernst & Young, and Deloitte Consulting that have sizable application management service revenue, primarily for packaged-based applications. The acquisitions of Compaq Computer by Hewlett-Packard, Logica of MITS, and Kaz Computer Services of Fundi and AAS has seen them ranked significantly higher than in previous years. Note: British Telecom's outsourcing revenue was understood to come primarily from its Syntegra subsidiary, the IT service side of which was sold to Hansen Technologies, and it has thus been excluded from this ranking. Which were the top 25 consulting ESPs in Australia in 2001? Table 2 summarizes revenue rankings of consulting ESPs in April

5 Table 2 Top 25 IT Consulting ESPs in Australia in 2001 Estimated Rank by IT Consulting Service Providers in Australia 2001 Revenue Large Size Presence (Revenue > A$110 million and < A$325 million) 1 IBM (includes PwC Consulting) 2 Accenture 3 EDS (includes A.T. Kearney) Midsize Presence (Revenue > A$20 million and < A$75 million) 4 Computer Sciences Corporation (CSC) 5 Hewlett-Packard (includes Compaq Computer) 6 Logica 7 Deloitte Consulting 8 Cap Gemini Ernst & Young 9 BearingPoint (formerly KPMG Consulting) 10 Unisys 11 SMS Management and Technology 12 Solution 6 Holdings 13 Mincom 14 Oracle 15 Fujitsu (includes DMR) 16 Microsoft 17 PeopleSoft Small Size Presence (Revenue > A$10 million and < A$20 million) 18 Avanade 19 SAP 20 Booz Allen & Hamilton 21 Kaz Computer Services (includes Aspect) 22 Cisco Systems 23 Spherion Pacific Enterprises 24 Dimension Data 25 McKinsey & Company Source: Gartner Dataquest (April 2003) The consulting market shows a wide variation in growth of service revenue and the incursion of application software providers into this market. Part of this is reflective of the negative impact of Sept. 11 on worldwide consulting revenue, as well as the downturn in the global and local ICT economy. IBM and Accenture retain their dominance of this market in terms of revenue. 15 April

6 Which were the top 25 systems integration ESPs in Australia in 2001? Table 3 summarizes systems integration ESPs, and includes application/package development, integration and implementation services. Table 3 Top 25 Systems Integration ESPs in Australia in 2001 Estimated Rank by 2001 Revenue Systems Integration Service Providers in Australia Large Size Presence (Revenue > A$250 million and < A$750 million) 1 IBM (includes PwC Consulting) 2 EDS 3 Accenture 4 Computer Sciences Corporation (CSC) Midsize Presence (Revenue > A$75 million and < A$135 million) 5 Kaz Computer Services (includes Aspect) 6 Hewlett-Packard (includes Compaq Computer) 7 Powerlan 8 Unisys 9 Fujitsu (includes DMR) 10 Logica 11 Deloitte Consulting Small Size Presence (Revenue > A$20 million and < A$45 million) 12 Telstra 13 Cap Gemini Ernst & Young 14 BearingPoint (formerly KPMG Consulting) 15 SMS Management & Technology 16 Dimension Data 17 SAP 18 PeopleSoft 19 Spherion Pacific Enterprises 20 Cisco Systems 21 HCL Technologies 22 Nokia Telecommunications 23 Oracle 24 Lockheed Martin 25 Getronics Source: Gartner Dataquest (April 2003) Overall in 2001, there was healthy growth in IT development and integration service revenue. With the downturn in the global 15 April

7 economy and, to a lesser extent in the local ICT economy, growth rates in 2002 were neutral to negative for many ESPs. This market continues to be dominated by the top three IT outsourcing ESPs and Accenture. Recommended Reading and Related Research "Top 10 ICT Trends in Australasia and Their Service Implications" "Network Services: Australia" "Trends, Accelerators and Inhibitors in the Asia/Pacific BPO Market" Acronym Key ESP External service provider ICT Information and communication technology ITM IT management Application software companies such as SAP, PeopleSoft and Oracle are making strong inroads into this market, while HCL Technologies' positioning reflects the recent entry of offshore outsourcing ESPs from India. It should be noted that Powerlan has since exited this market. Bottom Line: Market scans for information and communication technology service providers should be undertaken in developing sourcing strategies and identifying candidates for a shortlisted or fast-tracked external service provider evaluation and selection process. In mature ICT service markets, such as Australia, market scans are less-expensive and quicker alternatives to traditional expressions of interest and request for information processes. 15 April