BRENNAN MID-MARKET INSIGHT SERIES Spotlight: Infrastructure & Outsourcing. April 2007 l Research and Content Contributed by IDC Australia

Transcription

1 BRENNAN MID-MARKET INSIGHT SERIES Spotlight: Infrastructure & Outsourcing April 2007 l Research and Content Contributed by IDC Australia

2 Table of Contents Introduction 3 Key Findings 4 Mid Market: State-of-Play 5 Perceptions of IT, Priorities and Challenges 8 Outsourcing in the Mid-Market 16 Attitudes towards Outsourcers 22 Research Methodology 24 Glossary 25 About Us 26 The content and graphs contained within this report may be cited in media and communications provided that all portions of text and graphics are referenced: "Source: Brennan Mid-Market Insight Series Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 2

3 Introduction Welcome to the first edition of the 2007 Brennan Mid-Market Insight Series - a unique bi-annual report into the technology state-of-play of the Australian Mid-Market, with content contributed by IDC Australia. The Mid-Market sector, which refers to companies employing between 50 and 499 staff, is a substantial segment of the Australian economy, representing more than 26,000 businesses across the country. Mid-Market companies are a link between small businesses and the corporate sector and often have to deal with constraints from both sides. Their IT&T needs are not very different from enterprises but often their budgets look more like those of small businesses. The first report in the Brennan Mid-Market Insight Series looks at the challenges and priorities of the Mid-Market and how the use of outsourcing can help address these challenges. The report also tracks the strategic impact of IT on business and looks at the changing role of the CIO, IT&T spending patterns and other strategic insights relevant to the Mid-Market. The second report to be released later this year will spotlight the Mid-Market s adoption of Business Applications and explore the impact that these have on operations and performance. About this report The 2007 Brennan Mid Market Insight Series is based on seven market surveys conducted by IDC Australia in Respondents employing between 50 and 499 staff have been selected for the results, and this range will define the Mid- Market for the purposes of this report. About Brennan Brennan is a leading provider of IT services and Telecommunications to the Mid- Market. Since 1997 we have been partnering with our clients to deliver a range of IT&T solutions to improve productivity, enhance performance and achieve organisational transformation. Our solutions include technology sourcing, infrastructure integration, software development, fully managed and secure IT&T solutions and consulting services. For more information: About IDC IDC is the premier global market intelligence and advisory firm in both the information technology and telecommunications industries. IDC analyse and predict technology trends so decision makers can make strategic, fact-based decisions on IT purchases and business strategy. For more information: Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 3

4 Key Findings Highlights: According to the Australian Bureau of Statistics, there are approximately 26,200 Mid-Market companies in Australia. These companies will spend on average A$196,000 in IT and A$102,000 in fixed data telecommunications per year, equating to around 2.5% of their revenue. Mid-Market companies have their business priorities focused on two themes: increase operational capabilities through greater customer service and more efficient infrastructure, and improve go to market strategies through faster product development, better market coverage and expansion in new markets. The role of CIO is changing: 55% of Mid-Market IT Managers/CIOs are reporting to the CEO in 2006 against only 34% in 2003, illustrating the increase of IT in the business strategy. The IT Information Library (ITIL) is the most widely accepted approach to IT service management in the world. However this impressive framework of best practices is not strongly recognised in the Australian Mid-Market as 60% of IT managers are not aware of, or have no plans to implement ITIL, and only 18% have already implemented ITIL in their company. The coming years will see strong activity from IT vendors. The problem for most IT managers will be not to decide if they will outsource but when and to whom? Selecting an outsourcer for the long term will be high on the agenda. The majority of Mid-Market businesses associate outsourcing with cost reduction. These savings are usually achieved through the higher productivity of skilled staff working for the outsourcer, more efficient IT management processes, economies of scale resulting from shared use of systems management tools and the lower cost of sourcing equipment through bargaining power. When it comes to selecting an IT services provider, Mid-Market companies rank quality of professional staff the highest. They are also looking for a provider who is financially sound and who will be able to understand their industry. The majority of Mid-Market companies are interested in using a one stop shop for their IT products and services. Often a single provider will also be used as a trusted advisor when it comes to making major investment decisions. Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 4

5 Mid-Market: State-of-Play Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 5

6 Mid-Market: State of Play Spending on IT and fixed data Telecommunications by Australian Mid-Market companies (A$ million) 9,000 Mid-Market companies spend almost $300,000 per year on IT&T 8,000 7,000 In 2006, Mid-Market companies spent on average A$196,000 on IT and A$102,000 on fixed data telecommunications, representing around 2.5% of their annual revenue. (A$ million) 6,000 5,000 4,000 Fixed Telecom. Software Services Hardware Hardware represents one third of ICT spending and this amount is set to decrease on average by 2.5% every year until 2010 due to the constant decline of hardware prices and the end of the post Y2K refresh cycle that was completed in Hardware investments will essentially be driven by replacement of desktop PCs by laptop computers. The release of Microsoft Vista will also drive the adoption of more powerful computers. 3,000 2,000 Services represent a quarter of the ICT spending and will grow at a solid 5.8% per year, essentially driven by outsourcing and systems integration. 1,000 Software represents only 10% of ICT spending, but will experience the strongest growth of 11% due to the accelerating adoption of ERP, CRM and SCM solutions Fixed data telecommunications represent one third of ICT spending and will remain flat due to the decrease in traditional dedicated fixed line products in favour of cheaper Internet alternative such as ADSL. Source: IDC, IT Market Model, 2Q06 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 6

7 Mid-Market: State of Play Business outlook now and in 6 months Outlook is positive for three quarters of businesses 80% 70% 60% 50% 40% 30% 20% Today 6 Months Economic performance in Australia over the past five years has been strong and has put Mid-Market companies in a solid financial position to prepare for the future. The business outlook continues to be favourable. Three quarters of Mid-Market companies have a positive to very positive view of their business outlook now and in the six months time. The current favourable economic conditions constitute an ideal time for cashed up Mid-Market companies to seriously consider investing in modern information systems and services that will help them run their business more efficiently by increasing productivity, lowering costs, and deploying ecommerce oriented solutions. 10% 0% Very Positive Positive Somewhat Positive Neutral The long-term outlook remains quite positive: unemployment is at an all time low, inflation remains under control despite massive increases in fuel prices, while domestic demand has remained surprisingly resilient to three interest rate rises in Source: IDC, Market Sentiment Monitor Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 7

8 Perceptions of IT, Priorities and Challenges Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 8

9 Perceptions of IT, Priorities and Challenges Impact of IT on business in Mid-Market 90% A quarter of businesses see IT as strategic 80% 70% 60% 50% 40% 30% 20% 10% 0% IT is contributing to operational capability IT is a source of competitive advantage Mid-Market companies clearly see IT primarily as a factor of operational capability, as stated by three quarters of IT managers. Yet, IT as a strategic tool also remains on the radar. The focus on the role of IT in the business depends on where the company is located on the maturity curve: the large majority of Mid-Market companies are still using IT purely for an operational purpose and thus have not reached the point where they need to radically change the way they do business in order to gain a competitive advantage. Once they reach this point, management s perception of IT starts to change as they realise that IT has to be a central component in the business transformation process. Mid-Market companies should start thinking about where they are located on the maturity curve: how long have they been in business? Can the business grow substantially in its current model? What adjacent markets could be entered and how could technology help penetrate these new markets? Source: IDC, Forecast for Management Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 9

10 Perceptions of IT, Priorities and Challenges Role of the CIO/IT Manager in Mid-Market: who does he or she report to? 70% The role of the CIO/IT manager is again becoming strategic 60% 50% Chief Executive Officer Chief Financial Officer The trend towards a more strategic role of IT in Mid-Market companies is better illustrated by the change in the role of the CIO in the recent past. 40% 30% The late nineties saw the rise of the CIO in the boardroom as IT was supposed to revolutionise the way business was done. Then followed the dot com crash of and CIOs were relegated to the cost centre and more of them reported to the CFO. 20% 10% This trend started to reverse from 2004 and the last three years have seen the status of CIOs increase sharply. In 2006, more CIOs were in the management team than ever before, obviously at the expense of the CFO who is losing some control of IT budgets. 0% Source: IDC, Forecast for Management Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 10

11 Perceptions of IT, Priorities and Challenges Top Business Priorities in Mid-Market Productivity gain is a high business priority objective Improve customer service Improve infrastructure Introduce new products & services at a faster rate Gain a better understanding of our customers' requirements Expand into new industry sectors Exploit our existing markets more efficiently Move into new regions and /or countries Support competitive opportunities Integrate more closely with business partners 0% 5% 10% 15% 20% 25% 30% Mid-Market companies have their business priorities centred around two themes: Increase operational capabilities: this is achieved by delivering more efficient customer service and improving the infrastructure (as defined by hardware and infrastructure related software). This is where technology can directly help raise the ratio of capital to labour. A stark example of this is from the banking industry: 6,600 bank branches in 1995 reduced to 4,900 in 2005, in the same period the number of bank tellers was halved, but the credit mass more than tripled. The challenge for IT managers is to determine which IT investments will impact most favourably on the productivity of the business. Improving customer service is a very efficient way of increasing productivity: not only are customers serviced faster with less staff, but their satisfaction also increases and with it their loyalty. Improve go to market strategies: this involves faster product development, better market coverage and expansion into new markets. E-commerce is obviously a central element in this strategy, but technology can also allow the development of completely new products. For example, vendors of traditional paper street directories are now involved in the creation of electronic maps incorporated into GPS devices and Web sites. Source: IDC, Market Sentiment Monitor Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 11

12 Perceptions of IT, Priorities and Challenges Top IT Priorities in Mid-Market Productivity gains are achieved through targeted IT investments Systems Infrastructure Customer Relationship Management Enterprise Resource Management Supply Chain Management ebusiness Collaboration and Knowledge Management Business Intelligence IT managers are very focused on improving the infrastructure to support the business more efficiently as well as deploying enterprise applications aiming at improving customer service (CRM) and business processes (ERM, SCM). The importance of CRM applications extends well beyond customer service as they are also an essential component in business development, they can be linked to business intelligence tools in order to identify prospects more easily, and can be integrated into a complete ebusiness strategy. Components such as customer profiles can be used to tailor product offerings to customers visiting an ecommerce web site or to prepare sales and marketing campaigns. Wireless and Mobility Service-Oriented Architecture IP Telephony 0% 5% 10% 15% 20% 25% 30% 35% Source: IDC, Market Sentiment Monitor Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 12

13 Perceptions of IT, Priorities and Challenges Major IT Challenges in Mid-Market Operational issues top the list of IT challenges Migrating to new hardware/software platforms Reducing costs / lack of resources Aligning IT/IS with the business direction Meeting users expectations Keeping abreast of technology Management of change/migration Information security Managing the network/data communications Developing effective business cases for IT investment Organising and utilizing data Integrating multiple systems/networks Telecommunications and IT convergence Recruiting and retaining skilled staff Migrating to new hardware and software platforms is a necessary requirement of business to keep up with technology and allow the deployment of new solutions. However, migration is often a complex operation that must be carefully prepared and tested because of its potential to disrupt the business. IT managers are expected to align IT with the business direction and meet users expectations. To do so they must find the best trade-off between ensuring systems stability by using proven solutions and help business expansion and rationalisation through innovation. Reducing costs and the lack of resources at an affordable price is an ongoing headache for IT managers: they must provide improvements in performance and functionality while keeping costs low. This can be very challenging in the current context of the skills shortage, which is driving IT salaries up. The challenges experienced by IT managers are multiple and sometimes irresolvable without external help. Often, solutions that could improve business processes while increasing security and data management are identified but then implementation cannot go ahead due to lack of in-house expertise. The best approach in this situation is to use the services of an IT company familiar not only with the solution selected but also with the specific customer s business and technical requirements. Connecting to customers / suppliers / partners 0% 5% 10% 15% 20% 25% 30% 35% 40% Source: IDC, Forecast for Management 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 13

14 Perceptions of IT, Priorities and Challenges Type of financing in Mid-Market A large proportion of businesses lease or rent their equipment Although Mid-Market companies still show a preference for owning their IT equipment, a large proportion of businesses are now preferring to lease or rent their equipment. The implications of leasing or renting are complex and usually provide a number of benefits to the business: 39% Different accounting of cost. Lease or renting is an operational expense as opposed to a capital expenditure. This has benefits from a tax perspective as OPEX are deductible in the year of purchase whereas CAPEX must be amortised. 61% Purchase outright Source: IDC, Forecast for Management 2006 Lease or rent Greater flexibility for hardware upgrades. Not owning the equipment makes it easier to move to the most recent equipment at the end of the lease period, as it is only a matter of returning the old devices and renting new ones. There is no need to write off assets and to physically dispose of them as this is taken care of by the rental company. Potential savings while combined with a managed services contract. Using the services of an outsourcing company to manage infrastructure can present substantial savings if the outsourcer can also take care of the asset management, specifically the sourcing of new rented equipment and the negotiation of volume discounts with the hardware vendor. Need for risk mitigation. Obviously not owning the equipment presents the risk of losing control of this equipment. This is why is it essential to have a risk mitigation strategy in place: What should be rented and what should not? What is the contingency plan if the rental company goes into receivership? Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 14

15 Perceptions of IT, Priorities and Challenges Awareness and adoption of ITIL in Mid-Market 60% 50% 40% 30% 60% of companies are not aware of, or have no plans to implement ITIL The IT Information Library (ITIL) is the most widely accepted approach to IT service management in the world. ITIL provides a cohesive set of best practices, drawn from public and private sectors internationally. It is supported by a comprehensive qualifications scheme, accredited training organisations, and implementation and assessment tools. However, this impressive framework of best practices is not strongly recognised in the Australian Mid-Market 60% of IT managers are not aware of ITIL, or have no plan to implement it, and only 18% have implemented ITIL in their company. 20% 10% 0% Already Dec-06 Dec-07 Don't know IT services companies should educate the Mid-Market on the advantages of ITIL so it can be of benefit to a larger part of the business community. It is the role of the vendor community to include in their marketing strategy a strong emphasis on ITIL and allocate the necessary budgets to fund this effort. On the other side of the fence, IT managers should keep in mind that the implementation of ITIL is a very complex task and the safest way is to use the services of a company that has extensive ITIL experience. Source: IDC, Forecast for Management 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 15

16 Outsourcing in the Mid-Market Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 16

17 Outsourcing in Mid-Market Usage of outsourcing in Mid-Market Outsourcing: it s a matter of when, not if More than one third of Australian Mid-Market companies are using some sort of outsourcing in This includes elements such as end-user computers, servers, network devices, web hosting and application management. 35% Outsourcing has come a long way in the recent years. Large services companies have focused first on the enterprise space and have gained significant experience in managing IT systems on behalf of their customers. They are now looking at the Mid-Market as the next segment to enter but they will need to learn how to design products and services adapted to the Mid-Market with a reasonable price tag. 65% No Yes In the meantime, mid-size IT services companies have taken the time to study the needs of Mid-Market businesses and have designed their services around these specific requirements. Large services companies will have to compete with these well established smaller players and it will take some time and effort before they will be able to do so efficiently. The convergence of IT services and Telecom is the third variable to consider in this equation: the mergers of Telstra and KAZ, Optus and Alphawest, and a few others, are symptomatic of the changes happening in the market. The end result for the Mid-Market is strong activity from more IT vendors. The problem for most IT managers will be not to decide if they will outsource, but when and to whom? Selecting an outsourcer for the long term will be high on the agenda. Source: IDC, Outsourcing Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 17

18 Outsourcing in Mid-Market IT areas outsourced in Mid-Market System integration Security management Application maintenance Application development System design Network management Storage management Disaster recovery Desktop management Systems integration and network management are the most outsourced Amongst those Mid-Market businesses who are using outsourcing, system design/integration and network management are the areas that are likely to be outsourced entirely, or at least for the most part. This highlights the need for Mid-Market businesses to rely on a highly competent systems integrator who will be able to design new systems and implement them into the customer s existing infrastructure. On the other hand, in the areas of security, storage and applications, businesses tend to keep a certain level of control and outsource only some of the functions to external parties. This is where IT services companies need to work in close collaboration with their customers to provide as much help as possible while respecting the level of control that these customers wish to retain on their operations. Data centre operations Helpdesk/technical support 0% 10% 20% 30% 40% 50% 60% 70% Some Most All Source: IDC, Outsourcing Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 18

19 Outsourcing in Mid-Market Top perceived benefits of outsourcing in Mid-Market Cost savings is the prime expected benefit from outsourcing Cost savings Access to skills/resources Reduced risk Focus on core business Strategic IT direction Enhanced business model Access to state of the art technology Other 0% 10% 20% 30% 40% 50% 60% When it comes to perceived benefits from outsourcing, Mid- Market businesses clearly associate outsourcing with cost reduction. These savings are usually achieved through the higher productivity of skilled staff working for the outsourcer, more efficient IT management processes, economies of scale resulting from the shared use of systems management tools and a lower cost of sourcing equipment through bargaining power. The full realisation of the cost savings can only occur if they can be measured. Many Mid-Market companies are in the uncomfortable position of not being able to estimate accurately the cost of their IT for multiple reasons, the main one being a lack of a central IT sourcing function associated with inadequate accounting practices. IT companies looking at providing outsourcing services should be in a position to help IT managers determine the cost of their IT before potential savings can be estimated. In the current shortage of IT skills, using an outsourcer allows access to qualified personnel that Mid-Market businesses would not be able to afford otherwise. Using these skills as well as sound management processes reduces overall risk and generates higher system uptime. While systems are better taken care of for a lower cost, IT managers can concentrate more on the core business and start thinking about using IT strategically and prepare long term plans that will enhance the way the business operates. Source: IDC, Outsourcing Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 19

20 Outsourcing in Mid-Market Realisation of benefits from outsourcing in Mid-Market It does pay to use outsourcing Cost savings Relationship Flexibility Value-add components Technical input/direction For those Mid-Market companies who have chosen to use outsourcing, expectations are usually met with a high degree of satisfaction. The highly expected cost savings of outsourcing are generally realised. This is now a common and widely accepted fact: outsourcing does deliver cost reduction. The perceived risks of loss of control, security of processes and relationship are alleviated by the fact that a large proportion of IT managers have benefited from a strong relationship with their outsourcer that has allowed their IT to be more flexible and more aligned to the business by taking advantage of the value-add brought by the outsourcer. Implementation success SLAs Governance 0% 10% 20% 30% 40% 50% 60% 70% Source: IDC, Outsourcing Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 20

21 Outsourcing in Mid-Market Top perceived risks of outsourcing in Mid-Market Loss of control is the main concern associated with outsourcing Loss of control Security issues with revealing internal processes Maintenance of third party relationships Lack of intellectual property Potential loss or reduction of service levels Unrealised cost savings Organisational deskilling Other 0% 10% 20% 30% 40% 50% 60% Deciding to outsource part or all of a business s IT is not exempt from risk. The majority of Mid-Market businesses associate outsourcing with a loss of control, and many IT managers are deterred from using outsourcing in fear that the outsourcer will take over systems while internal IT staff and managers who have had a long experience in running these systems will not be able to have their say. To overcome this perception, outsourcing companies should place an emphasis on partnering with the customer above all else. IT managers remain the final decision maker and it is essential that the outsourcer acts as a trusted advisor to the IT manager. The notion of trust is paramount to the success of this partnership, and most of the effort should come from the outsourcer who must demonstrate that all decisions and plans will benefit the customer first. Once this trust is established and maintained, issues around security of internal processes and third party relationships will simply be resolved. IT managers are clearly more concerned with the quality of the relationship with the outsourcer than the degradation in service level or unrealised cost savings which are perceived as low risk thanks to the progress in the outsourcing industry in recent years. Source: IDC, Outsourcing Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 21

22 Attitudes towards Outsourcers Criteria for selection of an IT services provider in Mid-Market Looking for: professional, financially independent, and hands-on Skills of professional staff Financial stability Industry knowledge Infrastructure strength Service Level Agreements Relationship When it comes to selecting an IT services provider, Mid- Market companies rank the skills of professional staff the highest. They are also looking for a provider who is financially sound and who will be able to understand their industry and thus design and deliver solutions well suited to the requirements of the customer s business. Industry knowledge is particularly important as businesses need to be sure that the investment recommendations from the IT company will fit not only their needs but also the constraints of the particular industry they operate in. Mid-Market IT managers are more interested in quantifiable criteria that can be demonstrated early in the sales cycle than in elements such as service level agreements, relationship and cultural fit that are usually delivered and managed during the execution of the contract. Cultural Fit (Scale = 1: Not important at all, 5: Very important) Source: IDC, Outsourcing Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 22

23 Attitudes towards Outsourcers Sourcing of technology products and services in Mid-Market We prefer to use a single source for IT products and services. We stay with the ones familiar to our needs. We prefer to pay for outside advice when making a major IT investment. 0% 20% 40% 60% 80% 100% Strongly Agree Agree Neutral Disagree Strongly Disagree One stop shop is the way to go, someone who does it all, and advises me Mid-Market companies are in majority interested in using a one stop shop for their IT products and services. Using a single provider presents multiple advantages. The main benefit is being able to use someone who has a sound understanding of the customer s business and requirements. Thus, well suited solutions can be designed and delivered with a minimum of lead time. Cost savings are also an important benefit as the customer is in a position to negotiate lower prices based on the volume of business with the single provider. Often, the single provider will also be used as a trusted advisor when it comes to making major investment decisions the customer can rely on the technical and industry knowledge of its provider to formulate long term investment plans. Establishing this trust between customer and provider is a long process and should be seen as a long term engagement. Most of the responsibility lies with the provider as trust can easily be damaged. The IT company will not only need to meet expectations every single time but also be responsive to its customer s queries while acting behind the scenes to ensure that technical and industry knowledge is maintained and updated. Source: IDC, SMB Survey 2006 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 23

24 Research Methodology IDC surveys Mid-Market employee size segmentation (N = 26,200, source ABS) The research findings of this report were based on seven market surveys conducted by IDC Australia in Respondents employing between 50 and 499 staff have been selected for the results, and this range defines the Mid-Market for the purposes of this report These surveys were: Market Sentiment Monitor Survey 2006, N = 151 Forecast for Management 2006, N = 144 Outsourcing Survey 2006, N = 105 Small and Medium Survey 2006, N = 85 Enterprise Applications Survey 2006, N = 121 Security Survey 2006, N = 124 Telecommunications Survey 2006, N = 70 As an example, a sample size of N=105 provides overall results with a confidence interval of +/-9.6% at 95% confidence level, which IDC considers robust. 12% 32% 56% Mid-Market employee size segmentation (N = 26,200, source ABS) Business Services Retail and Wholesale Manufacturing Resource Industries Construction Transportation Banking, Finance and Insurance Health Telecommunication and Media Government Education Utilities 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 24

25 Glossary This page describes a selection of terms used throughout the document. Systems infrastructure: this term covers all the hardware composing an IT system (PCs, Laptops, printers, servers, backup devices, network devices) and also the associated software that is typically deployed company wide (operating systems, system management software, software, database software, office applications). Customer Relationship Management Applications: CRM enterprise applications automate the customer-facing business processes within an organisation irrespective of industry specificity (i.e., sales, marketing, customer support, and contact centre). Collectively, these applications serve to manage the entire life cycle of a customer, including the conversion of a prospect to a customer and help an organisation build and maintain successful relationships. The CRM applications classified as collaborative provide functionality to enable two or more individuals to share content to achieve a common goal. Enterprise Resource Management Applications: Enterprise resource management applications are designed to automate and optimise business processes related to resources required to meet business or organisational objectives but are not customer or prospect facing or specialised to various types of engineering. The resources automated include people, finances, capital, materials, and facilities. The resulting applications track, route, analyse, and report on these resources. The market includes software that is specific to certain industries as well as software that can handle requirements for multiple industries. Supply Chain Management Applications: Supply chain management application software automates supply and demand-side business processes that bring a product or service to market, including multi-site organisations involved in a complex supply chain process, ranging from raw materials suppliers to contract manufacturers, to third-party logistics providers to individual transportation and warehousing organisations. ITIL: The Information Technology Infrastructure Library (ITIL ) is a framework of best practice approaches intended to facilitate the delivery of high quality information technology (IT) services. ITIL outlines an extensive set of management procedures that are intended to support businesses in achieving both quality and value for money in IT operations. These procedures are supplier independent and have been developed to provide guidance across the breadth of IT infrastructure, development, and operations. Systems Integration: systems integration (SI) is a process that includes the planning, design, implementation, and project management of a solution that addresses a customer s specific technical or business needs. It involves systems and custom application development as well as implementation and integration of enterprise packaged software. Network management services. Network management services are the activities, skills, facilities, and network infrastructure captured within a contract associated with outsourcing the operations of a specific segment or entire network communication system of a company. The scope of work includes the installation and management of network tools that automatically monitor active nodes, traffic, revision management, and security. Service Oriented Architecture. Service oriented architecture (SOA) is a technology architecture based on desegregation. It promotes the utilisation of autonomous application and system "services" abstracted from one another, independent of implementation. Web services are the most common example of SOA. Business Intelligence. Business Intelligence software includes end-user query, reporting, and analysis tools such as Business Objects and advanced analytics software such as SPSS. Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 25

26 About Us About Brennan Brennan is a leading national IT services and Telecommunication (IT&T) company focused on building, operating and maintaining all aspects of IT&T infrastructure for mid-sized organisations. We're one of the largest privately owned companies of our kind in Australia and pride ourselves on delivering fit for purpose business and IT solutions to our customers. We strategically partner with our clients to deliver a complete range of fully managed and secure IT&T solutions so you can take advantage of new technologies and industry leading services that help your reduce cost, improve productivity and enhance business performance. While we also sell computer hardware and software, our greatest expertise lies in the design and implementation of IT&T solutions. Once we've completed the implementation phase, we focus on maintaining and administering the solution to ensure maximum efficiencies for your company. About. IDC IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. IDC analyses and predict technology trends so decision makers can make strategic, factbased decisions on IT purchases and business strategy. Over 775 IDC analysts in 50 countries worldwide provide local expertise and insights on technology markets. For over 40 years, business executives and IT managers have relied on IDC to make decisions that contribute to the success of their organisations. In the Asia Pacific region, IDC maintains a local presence across 14 major markets, with over 200 analysts providing support and local knowledge, combined with the worldwide focus that is necessary to completely understand the market. IDC s multinational, multilingual and multicultural team brings a deep understanding of industry and national issues that affect IT markets. Learn more about IDC by visiting With industry certification from every major vendor of IT equipment, we're also extremely flexible; and with no specific vendor bias, you can always trust our advice. Learn more about Brennan by visiting Contact details Brennan Stephen Sims Level 14, 45 Clarence Street Media enquiries Melissa Shawyer The PR Group Sydney NSW 2000 T: (03) T: M: E: melissa@prgroup.com.au Brennan Mid-Market Insight Series: Infrastructure & Outsourcing April 2007 Brennan Pty Ltd IDC Australia 26