Innovation key for 2012

Reduced IT spend look set to become the new norm in 2012, forcing CIOs to 'just get on with it' according to industry analysts IDC, who also predict changes ahead for service providers. Rasika Versleijen-Pradhan, IDC senior IT services analyst, New Zealand IT services market, says organisations and service providers alike will have to 'seek opportunities that not only make business sense but also capture the innovative element that will make organisations stand out in the competitive ecosystem'. She says 2012 looks set to be another economically uncertain year. "Ultimately it will require service providers to rethink their aspirations and capabilities in the market, forcing some organisations to move out of their comfort zones." But while spending will be restrained, IDC says the impact will be less dramatic than the last two years as many organisations created leaner operations and improved decision making capabilities during the last recession. As a result, spending constraints on IT are expected to be perceived as less of a shock or restriction. The research company says while many CIOs are reviewing all their IT spending, many will continue to spend on strategic areas of investment, particularly on mobile devices, virtualisation and security, 'lifting the opportunity for service providers (SPs) in 2012. IDC forecasts the overall IT services market to grow 3.8% to $3.08 billion in 2012. Market pressures are also expected to reshape and restructure existing outsourcing contracts, with customers continuing to challenge incumbent SPs to match the services and benefits offered by competitors, sometimes insisting on renegotiating an existing contract. IDC says service providers will be forced to create disruptive business units. "If traditional SPs are to really compete in the cloud space, they will need to make some radical changes to their business model. Subsequently this will lead to the creation of a disruptive business unit." The channel is also predicted to make bigger strides in delivering higher-value add services, with IDC predicting the services component of partner businesses will be lead by managed and cloud-oriented services, as opposed to legacy maintenance and support services. The research company is also predicting data center services will experience high growth, with 40% of organisations surveyed planning to utilise third-party data centers by the end of 2012, and that business continuity and disaster recovery will remain a key component of the executive agenda.