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Asia’s CIOs Craft New Strategies to Manage Growing IT Complexity

Digital transformation is changing the way companies operate, embedding digital technologies in every aspect of a business and making it clear that a change of thinking is needed in the C-suite. For many companies, this has meant a new role for the CIO – more involvement in strategy – and a reimagining of IT’s role.

 

With its intimate knowledge of the business, it can be argued that the IT function should focus on developing services and applications that drive revenue. To enable that, it makes sense to work with a managed service provider (MSP) to manage day-to-day requirements on a predictable IT budget. This often provides additional value by leveraging the MSP’s seasoned consultants who not only understand your business, but can also see over the horizon to advise on next steps with new technologies.

 

Companies across Asia are keenly aware of how digital transformation is changing global business and making well considered choices about new roles for the CIO and IT organizations. A multi-market survey by NTT Communications now aims to shed some light on how the IT world is dealing with digital transformation, specifically the paradigm-shift now underway in IT outsourcing across six Asian markets: Hong Kong, Indonesia, Malaysia, the Philippines, Singapore and Thailand. Today, some 90% of the Asian companies we surveyed expect to use managed services at some point in the next 18 months to address their IT challenges.

 

Cybersecurity haunts in-house IT

Security is top of mind in every industry worldwide today. In Asia, cyberattacks and data breaches are on the rise. It’s not only global tech giants like Yahoo! and Uber that fall foul of cyberattacks; local organizations in Asia such as four Singapore universities and a broadband service provider in Hong Kong have added their names to the growing list of victims over the past 12 months. The rise of cyberattacks partly explains why 59% of businesses in Asia rate security as the biggest challenge for managing IT in-house.

 

No companies are immune. It’s not easy for organizations to acquire and retain the advanced cybersecurity skills necessary to build and maintain resilient defenses. This is due in part to a lack of IT security talent and skills, but also due to the complexity of the hybrid IT environment. This goes a long way to explain why IT managers report that finding and retaining the right people (51%) and a lack of IT skills (50%) are two other major challenges facing IT in Asia.

 

Respondents at mid-sized enterprises in the region say training is expensive (12%) and organizations are resistant to change (10%), compared to large organizations with over 5,000 staff where infrastructure complexity (cited by 18%) is viewed as the biggest challenge. When you consider the six Asian markets, you find polarized opinion on what the biggest challenges are for managing IT in-house. For mature markets such as Hong Kong, Singapore and Malaysia, infrastructure complexity also received relatively higher responses, whereas emerging markets like Indonesia, the Philippines and Thailand point to high training costs as their big challenge.

 

Is the value of multiple-vendor strategy diminishing?

IT has traditionally been a cost center that has inherited a lean staffing structure. In the face of an increasingly demanding environment for managing IT in-house, pragmatic CIOs are likely to employ the expertise of multiple IT vendors. Over 60% of businesses manage more than six IT vendors to keep their IT operations up and running while realizing their digital transformation agenda. This explains why most respondents cited complexity leading to performance issues (56%), interoperability issues between vendors (54%), and the prohibitive cost of using multiple vendors (53%) as major concerns in managing multiple vendors for IT departments.

 

The conventional wisdom on outsourcing to multiple IT vendors has been that it keeps costs down. But over half of respondents said this is not always the case. Survey respondents said managing complex SLAs (50%) and the need to hire for multiple skillsets (49%) are growing concerns with multiple-vendor relationships.

 

Cost also remains a big issue in IT. Budgets for IT in the region are notoriously limited, for example in Hong Kong one out of three respondents cited cost as their IT challenge. In emerging markets such as Indonesia, the Philippines and Thailand, cost stood out as the top challenge when managing multiple vendors. For small businesses of around 150 people-plus in Asia, cost is paramount. Even for the largest businesses, multiple licenses are typically seen as a headache.

 

Smooth sailing with global managed services

The reality is that digital transformation is never smooth sailing – seven out of 10 large-scale transformations fail according to McKinsey and Co. Increasingly, CIOs are considering end-to-end managed services providers (MSP) with global resources and capabilities to help strategize and manage digital transformation. As one survey respondent, a bank consortium’s business director noted, his organization uses MSP services as and when they need them as it is not realistic for them to have a fixed, in-house resource for many services. While his group works with MSPs for projects such as ERP, cloud migration, SD-WAN and infrastructure, he also relies on MSPs for guidance on new technologies.

 

One further aspect of managed services that should be considered is the MSP’s ability to continuously align IT with evolving business strategy to optimize the efficiency of internal processes. It’s not difficult to understand why businesses view global managed services partnerships as a strategy that supports the overall success of their operation - addressing opportunities and obstacles in technology integration, talent scarcity, skills shortages, and operations efficiency.

 

img_Dave

NTT Communications Managed Services

Dave Scott

Solutions Director

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