Cloud services now account for a third of IT outsourcing market

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Cloud services now account for a third of IT outsourcing market

By Stephanie Overby as written on cio.com
In the latest reflection of cloud computing’s impact on the IT services market, outsourcing consultancy Information Services Group (ISG) for the first time expanded its quarterly market index to look specifically at the as-a-service segment of IT and business process services industry.
The as-a-service market, which includes Infrastructure- and Software-as-a-Service (IaaS and SaaS) activity, now represents more than one third of the combined global market for sourcing services — nearly double its share from early 2014, according to ISG. And the firm predicts accelerated growth in the cloud computing segment longer term—both in absolute terms and relative to traditional sourcing activity—as more and more work is automated and moved to the cloud.
CIO.com talked John Keppel, President EMEA and Asia for ISG, about the rapid rise of cloud offerings, the especially sharp increase in IaaS deals, cloud’s new role in digital transformation, and the future prospects for traditional IT outsourcing market
CIO.com: It was already clear that the uptake of as-a-service offerings was rising rapidly. Were you surprised at how big a chunk of the business services market they had consumed?
John Keppel, President EMEA and Asia, ISG:I don’t think ‘surprised’ is exactly the right word.  We’ve known for some time now that the as-a-service sector has been eating into the market share of traditional service providers. How else to explain that contract counts are soaring, but contract values are remaining relatively stagnant in the traditional market? We knew anecdotally that a lot of client work was moving to the public cloud infrastructure and cloud software markets, and we also knew it was time to begin an empirical measurement of that growing shift. That’s why we decided to move beyond our initial examinations of this phenomenon and officially expand the coverage of our [index].
The drivers for cloud have changed noticeably over the past three years. Initially, cloud interest and adoption was concentrated primarily on cost reduction, in line with what we traditionally have seen as a driver for outsourcing. It was an evolutionary process up until about 18 months ago, when we began to see the real cloud revolution: using public cloud infrastructure and software to dramatically boost agility and grow the business.  More clients are taking the savings from deals created a few years ago and re-investing them into their digital transformation initiatives; indeed, the public cloud usually serves as the foundation for many of these emerging services.
CIO.com: Your report looks at all business services. What was traditional and as-a-service IT activity like in the second quarter?
Keppel: Taking a look at the combined market—that is, traditional sourcing and as-a-service activity—we saw overall market value decline 2 percent to $7.9 billion in the second quarter. Compared to the first quarter of 2016, the market was down 9 percent, but still within the healthy range of around $8 billion it has averaged over the last five quarters.

 

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Sustainable success: zero-waste manufacturer grows business with Windows 10

Sustainable success: zero-waste manufacturer grows business with Windows 10

When Megan and Marshall Dostal started making glycerin-based soap from recycled cooking oil, they thought they might have a niche business. By believing in their product and playing to each other’s strengths, they built a successful and sustainable company called Further Products. Now, Further Products uses Windows 10 and Surface Pro 4 devices to help it stay connected, impress customers, grow the business—and make the world a little healthier.

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Megan and Marshall Dostal want to live their lives more or less like everybody else. They just want to use fewer natural resources and generate less waste. An earnest and dynamic couple from South Pasadena, California, the Dostals have turned that perfectly healthy impulse into a successful, innovative business they call Further Products. The company recycles used cooking oil to make sustainable glycerin-based personal care and cleaning products.
In 2008, to run their used Mercedes-Benz, Marshall Dostal started making biofuel in the couple’s garage from waste cooking oil. The process produces glycerin as a byproduct, so Marshall learned how to make it into soap. When they sold some at a trade show, the Dostals thought they might have a promising niche product. “Like something you might sell in the parking lot at a Grateful Dead show,” Marshall jokes.
But the Dostals believed in their idea and worked hard to create a great product that’s time may have come. Today, Further Products recycles waste oil from restaurants all over southern California to make biodiesel and glycerin. It uses the fuel in the company vehicles and purifies the glycerin to manufacture a full line of hand soap, lotion, fragrance oil, candles, and cleaning products that it sells to some of the best retailers, top restaurants, nicest hotels, and biggest property management firms in the country.
The Dostals use Windows 10 and Microsoft Surface Pro 4 devices to stay connected, impress customers, and grow their business. “When I show up for a sales call at a new restaurant, I’m that woman who makes soap from grease,” says Megan Dostal. “Then I bring out my Surface Pro to show them how Further Products will work for them, answer their questions on the spot, and prove to them that we are for real.”

Two people and a lot of moving parts

The Dostals did not know much about starting a business, so they just split the work according to each other’s strengths. Marshall manages production, supply chain, vendors, inventory, distribution, and billing. Megan works on product development, marketing, social media, and communication with customers.
“I'm either working at home or on the go, and Marshall is at the warehouse,” says Megan. “We need high-level technology that is simple to use and helps us stay connected with each other all day.”
In 2015, the Dostals began working with two Surface Pro 4 devices running Windows 10 and two subscriptions for Microsoft Office 365. They both use the tools in Windows 10 and Office 365 to schedule meetings and tasks, create presentations, keep notes, manage business processes, and touch base with each other from anywhere on almost any device. They both like the versatility of the Surface Pro device with detachable keyboard, touchscreen, and Surface Pen.

The best world

Marshall had always used Macs, but he made a seamless transition to Surface Pro 4 and Windows 10. “In laptop mode, Surface Pro has the power and the programs I need, and in tablet mode, I can take it into the warehouse and start counting inventory,” says Marshall. “It’s the best of both worlds, and I’m not tied to my desk.”
If Megan is giving a presentation and doesn’t have a ready answer, she will often send Marshall a quick email or instant message. “He usually responds with a PowerPoint slide or an Excel spreadsheet that I can add quickly to the presentation,” she says. “I love it.”
Megan and Marshall use the Microsoft Edge web browser to research online, download information, or access social media. With just a touch, Megan sets Sticky Note reminders to stay on top of calls and meetings, and the Cortana digital assistant talks her through her busy day. She can use the Surface Pen to write on the tablet screen or actually mark webpages with the inking feature. She also likes Windows Hello facial recognition because it makes signing in to her device fast and easy, and it impresses customers.
“Windows 10 saves me time all day,” she says. “I can toggle between the four different things that I'm constantly doing at the same time, and I like to know that only I can open it.”

How to fuel success and support growth

When Megan and Marshall chose Windows 10 and Surface devices, they introduced portability, mobility, and easy remote collaboration to their already effective working relationship,
“Windows 10 helps us combine our different skill sets and streamline everything we do,” says Marshall.
With the mobility and versatility of their Surface devices, Megan and Marshall can work with and build relationships with a network of vendors, restaurants, and other local businesses. That helps Further Products maintain quality and consistency and helps the Dostals keep up with their growing business.
“I just grab my Surface and I’m on my way with everything I need for that next meeting,” says Megan.
The Dostals like to say that biodiesel fuels their vehicles, glycerin fuels their product line, and Windows 10 fuels their business. “Further Products offers a beautiful personal care experience that people can feel good about,” says Megan. “With Windows 10, we can be authentic, and still responsive enough that our customers know we don’t cut corners to run our business.”
As Further Products has grown from small eco stores to fashionable boutiques, famous restaurants, hotels, and major office buildings, the Dostals have noticed that sustainability is no longer on the fringe. “People almost expect sustainability now, and the more awareness grows, the bigger Further Products gets,” says Megan. “And when a restaurant, hotel, or other business puts a Further Products sign in its bathrooms, our zero-waste story becomes their story.”
“We are proof that you can turn any idea into a big idea,” adds Marshall, “if you don’t compromise on your product—or your technology. As Further Products continues to grow, Windows 10 will be with us every step of the way.”
Read the full case study here.

Korean and Indian companies leverage Microsoft Azure for digital transformation

Digital transformation is being driven by Indian companies such as Flipkart (the country’s leading marketplace) and Tata Motors, as well as Korean companies such as LG Electronics, Samsung Electronics and Asan Medical Center, through the leveraging of Microsoft cloud.

Azure is available from two new cloud regions in Korea, part of 38 Azure regions around the globe which is more regions than any other cloud provider. 13 of those regions are in Asia which gives customers across the region the opportunity to leverage the Azure cloud platform’s ability.

Across industries, including finance and health care, Korean companies are putting local Azure services to use in their organizations. LG Electronics is sending real-time data and using the scalability of virtual machines in order to better serve their customers and Asan Medical Center is able to collaborate with the industry & academia in order to supply anonymous clinical notes through Microsoft's hybrid cloud.

Other Korean companies, such as Samsung Electronics, are leveraging the Internet of Things (IoT). Using its remote energy reduction solutions (S-Net Cloud), Samsung is able to monitor energy use and deliver efficiencies to customers in order to save them money on energy costs.

Data center regions in India opened in September 2015 have provided the immense computing power of Microsoft cloud for the purposes of growth and innovation. Flipkart has adopted Azure as its exclusive public cloud platform to do just this, grow and innovate. The collaboration between Microsoft and Flipkart has marked the process towards providing customers with the best online shopping experience possible, aided in addition by Flipkart's use of Azure Artificial Intelligence (AI) and analytics to optimize the areas of merchandising, marketing, and customer service. This partnership comes on the heels of Microsoft's cloud collaboration with Tata Motors – India’s leading auto manufacturer – to provide connected driving experiences with Azure.

People and organizations across the globe are embracing the cloud to solve unique challenges. You can follow these links to learn more about the new regions in Korea, how Flipkart is using Azure, case studies of how people and organizations are using the cloud for innovation, and to learn more about Azure services and solutions.