Predictions 2013: Infrastructure Services

Next year is going to be “Make or Break” for many infrastructure services (IS) companies. The continuing economic downturn will of course loom large in the decision making process for buyers - but so too will the challenges of trying to navigate a disruptive and changing technology scene. A prime challenge for suppliers of IS will be ensuring their own businesses are fit for purpose to support and guide buyers through transition periods towards Bring Your Own Technology (BYOT), mobile computing, and more efficient and effective consumption models. Leadership teams in firms delivering infrastructure services will need to pull all the levers they can (e.g. investment, partnerships, portfolio development) to ensure successful execution in this environment. Here are our key predictions for 2013:

Underinvestment will be punished
Firms who cannot afford to - or opt not to - invest in further standardisation and automation of infrastructure management services will increasingly be swapped out by buyers looking for more reliable and cost-effective services. A vicious cycle of low revenue growth/low margins - and therefore little cash for investment - will mean that underperforming infrastructure services firms will become less attractive. Increased standardisation and automation will enable more infrastructure support services to be moved from the deskside into the data centre, helping to reduce delivery costs. However, innovative suppliers will find compelling and cost-sensitive ways to ensure the quality of end user services is sustained – for example, through social media support communities.

Economic climate will accelerate the need to innovate
The dire situation in which many IT departments find themselves is not set to change in 2013. Those that have no more ‘fat to cut’ will start to run out of options to further reduce the cost of maintaining legacy systems. And those in fast-moving industries that do have cash to invest will continue to expect their tech suppliers to provide the type of solutions that give them the competitive edge. In either case, alternative and innovative infrastructure services and commercial approaches will figure highly on CIO agendas next year.

Judgement day for M&A strategies
Infrastructure Services firms that have raced to build-out Big Data and Cloud capabilities via aggressive acquisition strategies will be under pressure to deliver a return on these. Leadership teams will have to demonstrate exactly how these purchases will add value for customers and investors alike. The spotlight will be on just how these new capabilities - which could well be outside of the normal scope of the business - are blended with existing offerings and/or cross-sold into existing customers. Start-up and mid-sized infrastructure services firms will continue to be hot targets for acquisition, putting their management teams in an unenviable “make or break” position to choose their new owners wisely.

The market will reward ‘early mover’ virtual desktop suppliers
Demand for virtual desktops (VD) in 2013 will gather pace as confidence amongst buyers grows and as CIOs share success stories amongst peers. This will start to create a highly-contested battleground where the main benefactors are likely to be those who already have good customer reference points. Buyers will be driven not only by the need to reduce the cost of desktop services, but by the requirement to improve the quality of service delivered to end users. IT services providers who are able to guide buyers through VD roll outs in the context of a broader strategy to improve the end user experience will be the real winners. 2013 will be a “make or break” year for infrastructure services providers to become established in the corporate VD market.

Infrastructure as a Service supplier landscape will shape-up
In 2013, more suppliers than ever will have Infrastructure-as-a-Service offerings ready for the market; the competitive landscape for IaaS will therefore broaden and toughen. Traditional incumbent infrastructure services suppliers will see competition increase from all angles as IaaS offerings evolve and suppliers better understand the very distinct target markets for these services. Against this backdrop, suppliers will have to craft winning pitches that demonstrate their differentiation. It will be “make or break” for incumbent suppliers who are not able to convert their own customers to an as-a-service model before the competition swoops in.

Subscribers to InfrastructureViews can read more on our predictions for 2013 in the new year. To subscribe, email Deb Seth (dseth@techmarketview.com).

Posted by: Kate Hanaghan at 06:00

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