IT Outsourcing Flattens But Enterprise Mobility Poised to Grow

During the recession, spending on outsourcing as a percentage of total IT spending rose as IT executives wrestled with hiring freezes and the need for flexibility. This year, the data suggests the rise in outsourcing is taking a break as IT budgets regain their equilibrium.

The Computer Economics IT Outsourcing Statistics 2011/2012 study found that among organizations that outsource IT work, the percentage of their total IT spending going to service providers rose from 6.1% in 2009 to 7.1% in 2010 and then leveled out, showing no year-over-year growth in 2011 While a robust recovery might prompt organizations to seek outside help, at least on a temporary basis, the recovery in IT spending is not yet strong enough to accelerate spending on outsourcing services. It is also no longer weak enough to prompt companies to slash internal expenses in favor of external service providers.

In short, IT executives are maintaining the status quo, awaiting evidence that the tenuous economic recovery will progress before engaging in more strategic outsourcing initiatives

Other key findings in the study:

The use of software-as-a-service continues to gain strength, making application hosting one of the fastest-growing areas for outsourcing. While the amount of the typical portfolio being hosted by outside parties remains low, application hosting is the most frequently outsourced service in the study.

The three most strongly adopted outsourcing services are web/e-commerce systems, application development, and application maintenance. These functions rank high in both the number of organizations that outsource them and the amount of work typically outsourced.

The IT function with the greatest potential for reducing costs through outsourcing is help desk. Fifty-one percent of organizations that outsource this function find that they have lower costs than when they performed the function in-house.

The function that holds the greatest potential for improving service through outsourcing is IT security, followed by disaster recovery. Only 6% and 8% of IT organizations, respectively, find outsourcing these functions makes service worse.

When considering the potential for successful service and cost experiences with outsourcing, four IT functions stand out: application maintenance, application hosting, data center operations, and network operations.

In addition to consumer-oriented mobile applications, more than one-third of enterprises today are developing mobile applications for use by employees and other users of their business systems. The development of enterprise mobile applications is not quite mainstream, but activity is on an upward curve.

According to the report entitled: Mobile Business Application Adoption and Economic Experience), finds that 34% of organizations are investing in mobile applications and 26% have mobile business applications in place. The investment rate exceeds the current adoption rate, which is a strong indicator that adoption is on an upward trajectory.

Enterprises today are poised to increase investment in applications that support an increasingly mobile workforce. This trend is being propelled by the realization that the use of enterprise mobile applications can bolster worker productivity by enabling remote access to the corporate network from nearly anywhere at anytime. Organizations are automating nearly every business function, ranging from custom support to production, sales, and management. The proliferation of smartphones and tablet computers in the consumer market is also spurring increased use of these devices in the workplace.

As a result, standardized platforms for mobile enterprise applications are emerging from various vendors such as Microsoft, Sybase, and Research In Motion. Though targeted at consumers, Apple’s mobile platform also has a strong and growing presence in enterprise applications. Mobile applications pose significant challenges, however, not the least of which is security.

Enterprises of all sizes are being pressured to develop internal policies that are flexible enough to embrace the growing number of mobile devices in use, yet protect the corporate IT network from intrusion. Customizing internal data for mobile applications is another key challenge. Moreover, integrating new platforms and applications with existing infrastructure is always a critical task.

Source: Global Services
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