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JUNE 1994 



Desktop Services 
Outsourcing 

Europe, 1994 




INPUT 



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DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



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Abstract 



Many organisations have already outsourced their mainframe . 
operations. These organisations, and others, are now evaluating how 
best to manage their emerging client/server and desktop IT 
infrastructures. Many options are open to these organisations since 
desktop services consists of a large range of service elements, any 
combination of which could potentially be outsourced. 

This report endeavours to identify the combinations of services that 
organisations are likely to outsource. In particular, it analyses 
current satisfaction with desktop service components, attitudes 
towards outsourcing, the nature of the buying process and attitudes 
towards potential vendors. 



© 1994 by INPUT. Reproduction Prohibited 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



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Research by 

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Outsourcing Information Systems 
Programme — Europe 

Desktop Services Outsourcing— Europe, 1994 

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OSPR • 566 • 1994 



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Table of Contents 



Introduction I- 1 

A Scope and Objectives I-l 

B. Methodology 1-2 

C. Report Structure 1-2 

D. Related Reports . 1-3 



II 



Executive Overview 

A. Users BeHeve Outsourcing Desktop Services 
Improves Service Responsiveness 

B. Organisations Need Breadth of Support 

C. Spreading the Cost of Technological Refreshment 

D. Estabhshing the Importance of Pro-Active Help- 
Desk Services 

E. Increasing Awareness of Vendors' Capabilities 



II- 1 

n-1 
n-2 
n-3 

n-5 
n-7 



III 



Users Require Assistance in Utilising the 

Potential of the Desktop III- 1 

A. Third-Parties Used for LAN Installation HI- 1 

B. Users Need Improved Access to Information DI-G 

C. Update Management and Asset Management are 
Inadequately Performed m-lO 

D. Services Need to be More Pro-Active and Cost- 

Effective m-15 



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IV IT Managers Remain Reluctant to Outsource 

Operational Management IV- 1 

A. Cost Reduction Remains A Key Benefit IV- 1 

B. Users Believe Outsourcing will Improve the Focus of 

the IT Department IV-4 

C. IT Managers Want Second-Line Technical Support IV- 10 

D. Users Are More Prepared to Outsource Operational 
Management IV- 15 



V 



Vendors Need to Market Services at Board-Level 



V-1 



A. IT Managers Are Major Influence on Desktop 
Services Expenditure 

B. Cost and Breadth of Technical Skills are Key 
Selection Criteria 

C. EDS Has Comparatively High Profile 



V-1 

V-4 
V-11 



VI 



Vendors Announce Desktop Services Offerings VI- 1 

A. Hewlett-Packard introduces Selective Outsourcing VI- 1 

1. Focusing on Chent/Server Computing VI- 1 

2. Targeting CIO's and CFO's VI-3 

3. Supported by Other HP Divisions VI-5 

B. ITnet — ^Targeting Distributed Systems Outsourcing 

in Local Government VI -6 

1. Developing Distributed Systems Outsourcing 

Services VI- 7 

2. Targeting Managed Services in Local 

Government VI - 1 1 

3. Developing International Partnerships VI- 12 

C. SHL Systemhouse Aims to be Global Leader in 
Transformational Outsourcing VI- 13 

1. Establishing Transformational Outsourcing 

Services VI- 13 

2. Focusing on Postal Authorities and Banking & 

Finance Sectors VI- 16 

3. Growth by Acquisition VI- 17 



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Table of Contents 



Appendixes 



A. User Questionnaire 



A-1 



/ 



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DESKTOP SERVICES OUTSOURCING— EUROPE. 1994 INPUT 



Exhibits 



II 



-1 Desktop Support Challenges 11-2 

-2 Areas of Low Satisfaction: User Perspective ' 11-4 

-3 Scope for Service Improvement: User Perspective 11-6 

-4 Purchasing Control: Desktop Services 11-7 

-5 Perceived Benefits of Desktop Services Outsourcing 

Users and IT Managers 11-9 



III 



-1 


Third-Party Service Delivery: Europe 


in-2 


-2 


Third-Party Service Delivery France, Germany, and 
U.K 


in-4 


-3 


IT Department Service Dehvery: Europe 


m-5 


-4 


IT Department Service Dehvery by Country 


in-5 


-5 


Principal Challenges: Support of Desktop 
Infrastructure 


ni-7 


-6 


Service Quahty by Country 


in-9 


-7 


Overall Service Quahty User vs. IT Manager 
Perspective 


III-9 


-8 


Best Supported Functions: Desktop Services- 
Europe 


m-10 


-9 


Ratings of Best Supported Functions by Country 


m-ii 


-10 


Best Supported Functions: User vs. IT Manager 
Perspective 


in-12 


-11 


Worst Supported Functions: Desktop Services — 
Europe 


m-13 


-12 


Ratings of Worst Supported Desktop Functions 
France, Germany, and U.K. 


m-14 


-13 


Worst Supported Functions User vs. IT Manager 
Perspective 


m-15 



iv 



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Exhibits 



III 



-14 Service Attribute Ratings: Europe 

-15 Service Attribute Ratings: France, Germany, and 
U.K 

-16 Service Attribute Ratings User vs. IT Manager 
Perspective 



m-16 
in-17 
m-18 



IV 



-1 Principal Benefits from Desktop Services 

Outsourcing IT Manager Perspective IV- 1 

-2 Principal Benefits fi*om Desktop Services 

Outsourdng User Perspective IV-2 

-3 Enthusiasm for Potential Outsovircing Benefits: 

Europe IV-4 

-4 Enthusiasm for Potential Outsourciag Benefits: 

France, Germany, and U.K. IV- 5 

-5 Enthusiasm for Potential Outsourcing Benefits 

User vs. IT Manager Perspective IV-6 

-6 Services to be Contracted Out Next Year IV- 7 

-7 Services Best Performed In -house: IT Manager 

Perspective IV-8 

-8 Services Best Performed In-house: User Perspective IV-9 

-9 Perceived Contribution of Outsourcing to Improving 

Quahty of Service IV- 10 

-10 Perceived Contribution of Outsourdng to Improving 

Quality of Service: France IV- 1 1 

-1 1 Perceived Contribution of Outsourcing to Improving 

Quality of Service: Germany IV- 1 1 

-12 Perceived Contribution of Outsourcing to Improving 

Quahty of Service: U.K. IV- 12 

-1 3 Perceived Contribution of Outsourcing to Improving 

Quahty of Service: IT Managers IV- 1 3 

-14 Incremental Desktop Services Outsourcing Pattern 

IT Managers IV- 14 

-15 Perceived Contribution of Outsourcing to Improving 

Quahty of Service: Users IV- 15 

-16 Incremental Desktop Services Outsourcing Pattern: 

Users IV- 16 



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Exhibits 



-1 


Control of External Expenditure: Desktop Services 


V-1 


-2 


Importance of Reducing Number of External 
venaors r ranee, ijrermany, ana u.xv. 


V - o 


-3 


Importance of Reducing Number of External 

\7^£iTi rtrkvo TTctivo \Ta TT^ AAon oorov Mover* or''h\70 
VentlOxb UotJxo Vo. ±1 iVicLllclgtJl x cXbptJCtiVc 


V-4 

V 


-4 


Key Vendor Selection Criteria: IT Managers 


V-5 


-5 


Key Vendor Selection Criteria: Users 


V-6 


-6 


Key Vendor Characteristics: Europe 


' V-8 


-7 


Secondary Vendor Characteristics: Europe 


V-8 


-8 


Key Vendor Characteristics User vs. IT Manager 
Perspective 


V-9 


-9 


Secondary Vendor Characteristics User vs. IT 
ivianager x^erspective 


V 1 n 

V - ± u 


-10 


Vendor Attributes: Rankings by Country 


V-11 


-11 


Perceived Vendor Suitability: Europe 


V-12 


-12 


Perceived Vendor Suitability User vs. IT Manager 
Perspective 


V-13 


-13 


Perceived Vendor Suitability: France 


V-14 


-14 


Perceived Vendor Suitabihty: Germany 


V-15 


-15 


Perceived Vendor Suitability: U.K. 


V-16 



VI 



-1 


Examples of System Management Contracts 


VI-4 


-2 


Examples of Desktop Management Contracts 


VI-5 


-3 


ITnet Revenues, 1988-1993 


VI-7 


-4 


ITnet Outsourcing Revenue Breakdown by Service 
Type, 1993 


VI-8 


-5 


Number of Customers by Service Type ITnet, 
January 1994 


VI-8 


-6 


ITnet Organisation Structure, 1994 


VI-10 


-7 


ITnet Outsourcing Revenues by Sector, 1993 


VI-11 


-8 


Revenue Breakdown by Line of Business, Europe 


VI-15 


-9 


SHL Systemhouse Europe 


VI-16 


-10 


Examples of Outsourcing Contacts 


VI-17 


-11 


SHL Systemhouse Organisational Structure 


VI-18 



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Introduction 



A 

Scope and Objectives 

Outsourcing of mainframe datacentres is now well-established in 
Europe and many organisations are turning their attention to 
their desktop IT infrastructures. However, desktop services 
outsourcing covers a range of service options, each of which can 
be outsourced either individually or in combination with others. 
The possible service options include: 

• Equipment maintenance 

• LAN installation 

• Ongoing LAN management 

• First- and second-level help-desk services 

• Version control and update management 

• Asset management 

The objectives of this report are as follows to identify: 

• Users' level of satisfaction with their current desktop support 

• The combinations of services that organisations are likely to 
purchase 

• Users' and IT managers' attitudes to desktop services 
outsourcing 

• The nature of the purchasing process and attitudes towards 
individual vendors 



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Methodology 

The research is primarily based on interviews with 90 
respondents: 51 IT managers and 39 users. Twenty respondents 
were interviewed in each of France, Germany, and the UK„ 

In addition, eight vendors who are particularly active in the 
desktop services outsourcing market were interviewed. 



c 

Report Structure 

Chapter II consists of the Executive Overview which is a 
simmaary of the key conclusions of the study. 

Chapter III analyses satisfaction with the current delivery of 
desktop services. In particular, it identifies the challenges 
organisations face in supporting the desktop IT infi'astructure, 
and their relative levels of satisfaction with the various service 
components. 

Chapter IV smalyses users and IT managers attitudes towards 
outsourcing their desktop services, including identifying the 
areas they perceive to be most appropriate for outsourcing, and 
the principal benefits they would expect from outsourcing these 
aspects of their IT infrastructure. 

Chapter V analyses the relative importance of senior executives, 
departmental managers and IT managers in the purchasing 
process and identifies the perceived suitability of named vendors 
in each of France, Germany, and the UK. 

Chapter VI provides profiles of the desktop services capabilities of 
a niunber of leading vendors. 



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D 

Related Reports 

Outsourcing Opportunities in Government — Europe, 1993-1998 
Information Systems Outsourcing Market — Europe, 1993-1998 
Client Satisfaction with IT Outsourcing Services — Europe, 1993 
Business Operations Outsourcing, Europe — 1993 



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(Blank) 



1-4 



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Executive Overview 



A 

Users Believe Outsourcing Desktop Services Improves Service 
Responsiveness 

Users are much more convinced than their colleagues in IT • 
management that outsourcing their desktop services would 
generate significant benefits. In particular, approximately 60% of 
users strongly believe that outsourcing desktop services would 
improve the focus of their in-house IT department, while 40% of 
users strongly believe that outsourcing would lead to improved 
responsiveness, improved cost-effectiveness, and improved user 
productivity. However, IT managers are less favourably 
impressed by the concept of outsourcing, and remain more 
resistant to outsourcing their organisation's desktop services. 

This is unfortunate for vendors since IT managers remain the 
major influence in the control of external expenditure on desktop 
services. Some of the keys to overcoming their resistance lie in 
vendors: 

• Offering breadth of support 

• Assisting organisations in spreading the cost of technology 
refreshment 

• Demonstrating their ability to provide pro-active help-desk 
services 

• Increasing awareness of their specific desktop services 
outsourcing capability 



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B 

Organisations Need Breadth of Support 

Exhibit II- 1 indicates the major support challenges facing 
organisations trying to deliver desktop services in-house. 



Exhibit 11-1 

Desktop Support Challenges 



Cost/Resource 




Need for Increased 


Control 




Support Coverage 




In-House Support 




Growing Technological 


Multi-Vendor 


Complexity 


Environment 



Source: INPUT 



Many IT departments are facing severe headcoimt and/or budget 
constraints which limit their capability to meet the growing 
demand for desktop services. These constraints hinder the IT 
department from recruiting personnel with the necessary skills to 
support the changing nature of user support. In addition, they 
may prevent the in-house IT department from retraining 
personnel as rapidly and as thoroughly as is required. 

At the same time, the support role is increasing in technologicsil 
complexity. Technological complexity is being increased both by 
the transition from stand-alone systems to interlinked 
client/server architectxires, and also by the range of architectures 
and systems software that is being connected into this framework. 
It may be necessary for service providers to support a range of 
equipment and operating systems for many years to come. 

Accordingly, organisations expect desktop services vendors to 
offer a complete portfolio of desktop services and to have a depth of 
capability within each service element. It is difficult for many in- 
house organisations to be able to afford to support this depth and 



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breadth of capability. Indeed as LANs become increasingly 
connected as part of an enterprise- wide, multi-vendor IT 
infrastructure, so there is a growing need for vendors to combine 
WAN management with their desktop services to provide total 
operational management of the emerging client/server IT 
infrastructure. 

The other major challenge for in-house service providers is 
developing adequate geographic coverage. Users perceive that 
they require a more comprehensive support service than they 
currently receive. In many organisations, the nimiber of desktop 
users, and LAN's to which they are connected, is still growing 
rapidly. All of these users need to receive a comparable standard 
of support. Organisations expect their desktop service provider to 
be able to achieve this by matching their own geographic coverage. 
In some instances, this means global or European coverage, but, 
more typically, it translates into national coverage with an 
element of on-site support expected regardless of location. This 
can be one of the most difficult challenges for an in-house support 
organisation. 

Users are also seeking more knowledgeable support. In addition 
to the rapid growth in the user population with access to desktop 
services, users are becoming more sophisticated and placing 
greater demands on the service provider. For example, the need to 
link applications and share data across both platforms and the 
user base is becoming paramount. 



Spreading the Cost of Technological Refreshment 

In order for users to be able to freely share information, there 
must be a compatible desktop architecture throughout the 
organisation. This compatibility is easily destroyed if the 
numerous departments or business imits within the organisation 
each have differing upgrade policies, resulting in incompatible 
software products, or versions, throughout the organisation. 

This potential problem is compounded by the the rapid rate of 
change in desktop technology. Two common complaints from 
users are: 



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• Inadequate hardware performEince as their equipment 
becomes obsolete approximately every three years 

• Frequent changes in the versions of operating systems and 
application software products. 

Many users are finding that their hardware is inadequate to run 
the latest software or data sharing becomes difficult as new 
versions of software products are introduced. 

This situation creates a demand for two important components of 
desktop services namely update/version management and 
providing product financing/leasing services. 

Users' current levels of satisfaction with update and asset 
management are shown in Exhibit II-2. 



Exhibit 11-2 

Areas of Low Satisfaction: User Perspective 



Update 
management 

Configuration 
management 

Networi< tuning 

Asset 
management 












y///////////M^ 


W////////M^ 


0 10 20 30 40 50 
Proportion of dissatisfied users (%) 
Sample of 39 users. Standard error = 7% 



Source: INPUT 



IT managers tend to be more concerned with access to 
implementation skills and technical support. On the other hand, 
users are more concerned with the operational management of 
their desktop systems. There is a danger that IT managers 
currently imder-estimate the value of these operational practices. 
In practice, update management is typically inadequately 



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performed by in-house support functions much to the frustration 
of desktop users. 

However the difficulties of achieving a satisfactory standard of 
update management, and certainly consistent versions of 
operating systems and application products across the entire 
organisation, are frequently compounded by the high level of 
autonomy user departments have in determining the timing and 
extent of purchasing on standard equipment and software 
products. 

It is virtually impossible for an in-house IT department to 
combine products and service into a fee-based service. However, 
this approach may be the only way of satisfactorily spreading the 
high cost of technology refreshment every two to three years. 
Periodic high investment can be a major barrier to maintaining 
consistency of desktop applications and tools throughout an 
organisation. The provision of financing/leasing services may be 
the only way for some organisations to overcome their lack of 
willingness to make the continuing investments necessary to 
maintain a consistent, up-to-date desktop environment. 

However, there are also signs that update management and asset 
management are given comparatively low levels of priority by the 
in-house service provider. IT departments appear to focus their 
attention on areas such as LAN implementation and technical 
support, with asset and update mainagement sometimes 
remaining the responsibility of the user department. Inadequate 
version control can generate considerable day-to-day difficulties 
for users. , 



D 

Establishing the Importance of Pro-Active Help-Desk Services 

Users are currently receiving a basic, reactive technical support 
service that addresses their immediate technical queries 
reasonably satisfactorily. However, users do not perceive this 
service to be particularly cost-effective nor to be sufficiently pro- 
active. Exhibit II-3 identifies some of the areas where users 
perceive there to be scope for improvement. 



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Exhibit 11-3 

Scope for Service Improvement: User Perspective 



Pro-active assistance 
Business knowledge 

Cost-effectiveness 




///////////////////// 




^////////////////// 

0////////////^ 33 




^///////////// 

OyOyC^^ 24 
^///////////// 




0 10 20 30 40 50 
Proportion of dissatisfed users (%) 

Sample of 39 users. Standard error = 7% 



Source: INPUT 

One reason often given for not outsourcing is the in-house service 
provider's detailed knowledge of the organisation's business 
environment and practices. In practice, this argument does not 
appear to be valid for desktop services, since approximately a third 
of users are dissatisfied with the business knowledge exhibited, 
and level of pro-active support provided, by the in-house support 
organisation. 

Ideally users require a support service that is forward looking and 
assists them in achieving greater productivity and fully utilising 
the potential of their desktop IT infrastructure. The help-desk 
service should enable the vendor to identify emerging problem 
areas and address them pro-actively. For example, the vendor 
needs to ensure that data sharing is facilitated between 
workgroups and departments and that incompatibility problems 
do not arise due to poor choice of software product or lack of 
version control. In addition, vendors should build into their 
desktop service offerings a consultancy element that assists users 
in identifying their future requirements so that these can be 
addressed. 

Outsourcing of the first-line help-desk is an important component 
of desktop services outsourcing but potentially an area of 
considerable resistance to outsourcing. IT managers typically 
wish to maintain control of the direct interface to user personnel. 



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though they are enthusiastic about subcontracting second-line 
technical support. In addition, users perceive that the first-line 
help-desk is one of the areas where external vendors can make 
least contribution. The major reason for this view is the extensive 
use of bespoke applications on proprietary equipment that are still 
being accessed from the desktop. Both users and IT managers 
perceive that outsourcing vendors are ill-equipped to support these 
applications, which have often been written or tailored in-house. 

However, this is a potential opportimity for vendors to consider 
offering application madntenance management as part of their 
desktop services portfolio. This could overcome one of the biggest 
obstacles to selling a more complete range of desktop outsourcing 
services to organisations which have retained a major element of 
their legacy systems. 



Exhibit II-4 shows respondents' views on the major influence on 
desktop services expenditure. 



E 



Increasing Awareness of Vendors' Capabilities 



Exhibit 11-4 



Purchasing Control: Desktop Services 



IT Department 




Board 






User department or 
sulDsidiary 



0 



5 



10 



15 



20 



25 



Number of mentions 



Sample of 46 respondents. 



Source: INPUT 



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The in-house IT department is still seen to be the major influence 
in authorising external expenditure on desktop services, and most 
vendors active in this market state that their leads are primarily 
originating from in-house IT departments. However the company 
board, CEO, or CFO are likely to be important decision-makers in 
deciding whether or not to adopt a high level of desktop service 
outsourcing. 

User departments still have only low levels of direct influence, 
though their dissatisfaction with current services may prompt 
either senior executives or the IT manager to investigate 
outsourcing. There were no instsmces in this survey in which end 
users were considered to be in control of purchasing decisions for 
arguably the most important element of operational management 
namely LAN management. 

OveraJl, there is low awareness of vendors' desktop outsourcing 
capabilities and hence an opportimity for vendors to establish high 
profiles as desktop services outsourcing specialists. 

Respondents tended to rate vendors' desktop services outsourcing 
capabilities in line the vendor's standing in the overall 
outsourcing market. As a result, EDS and IBM are regarded as 
having comparatively high levels of desktop services capability 
while Digitsd and Hewlett-Packard are regarded as having 
relatively low levels of capability. 

Users and IT managers differ in their views on the perceived 
benefits of desktop services outsourcing. These differences are 
sxmimarised in Exhibit II-5. 



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Exhibit 11-5 

Perceived Benefits of Desktop Services Outsourcing 
Users and IT Managers 



Benefit 


Level of 
IT Manager 


Importance 
Users 


Cost reduction 


Very high 


High 


Improved/additional technical skills 


Medium 


High 


Increased emphasis on commercial obje< 


:tives Low 


Medium-High 


Protection against equipment obsolesce 


mce Low 


Medium 


Consistency of support 


Medium 


Low 



Source: INPUT 



While cost reduction is important to both IT managers and users, 
it is of particular importance to IT managers who strongly 
emphasise this facet of outsourcing. In addition, IT managers 
expect outsourcers to provide consistency of support in terms of 
wide geographic coverage and additional technical skills to those 
available in-house. This perspective is reflected in IT managers' 
vendor selection criteria where cost and breadth of desktop 
technical skiUs receive the highest number of mentions. 

On the other hand, users place more emphasis on the 
contribution the vendor can make in assisting them to meet their 
business objectives £ind the need for operational management 
services. Selection criteria that are important to users include the 
vendor's level of understanding of their business and a capability 
to provide them with higher service levels than they have 
historically received. Some users also stress the importance of 
flexible contracts that do not lock them in to a particular vendor or 
to particular products. 



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Users Require Assistance in 
Utilising the Potential of the 
Desktop 



A 

Third-Parties Used for LAN Installation 

The outsourcing of desktop services can arise via two routes 
namely by: 

• Transferring complete responsibility for all desktop service 
functions £ind support to a third-party 

• Incrementally subcontracting desktop support fimctions to a 
third-party imtil these have built up sufficient mass to be 
considered outsourcing. 

The number of organisations that have transferred complete 
responsibility for their desktop IT infrastructure to third-parties 
in Europe is currently very small. Much of the desktop 
outsourcing installed base is presently accounted for by 
organisations that have decided to outsource the management 
and operation of their entire IT infrastructure to a third-party. 
Examples of this t3^e include BhS and British Aerospace. 

Other organisations such as TSB, Unilever, and ICI have 
separately outsourced their entire desktop services to a third- 
party. 

However many organisations are going to approach desktop 
services outsourcing by seeking selective assistance in designing, 
nmning, and supporting their desktop IT infrastructures. 
Accordingly, it is appropriate to identify organisations' current 
usage of desktop support services, and to identify their current 
satisfaction with the services they receive. 



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Exhibit III-l shows the extent to which organisations currently 
use third-parties to support key elements of their desktop IT 
infrastructure. 



Exhibit III-l 

Third-Party Service Delivery: Europe 



Equipment maintenance 
LAN installation 
User Help-desk services 

l_AN management 

Version control & 
update management 

Asset management 




y//////////////////. 74 




'////////////////, 61 




Y////////////,^^ 










■ Dill 


0 20 40 60 80 100 
Proportion of organizations supported (%) 

Sample of 90 respondents. Standard error = 5% 


Source: INPUT 



One observation sometimes made about IT managers is that they 
view desktop outsourcing largely in terms of equipment 
maintenance. There may be some truth in this observation since 
the majority of organisations do use third-parties for maintenance 
of desktop equipment. However, there are signs that use of 
maintenance for personal computers on the desktop may decline 
over the next few years. Overall, respondents to this survey were 
impressed by the high level of reliability of current desktop 
equipment and by the warranty terms available. Accordingly 
some organisations are beginning to perceive that equipment 
maintenance contracts may be an imnecessary luxury. 

The majority of organisations still appear to need assistamce in 
installing and implementing LANs. However most organisations 
at present appear to believe that implementation assistance is 
sufficient. Only a minor proportion of the organisation's that seek 
assistance in implementing LANs continue to use a third-party 
for ongoing support in the forms of: 



III-2 



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• LAN management 

• Version control and update management 

• Asset management 

Indeed the proportions shown for third-party usage of LAN 
management and user help-desk services in Exhibit IILl may be 
overestimated. IT managers would estimate significantly lower 
figures for use of LAN management, and it is probable that some 
users are confusing LAN management with help-desk services. 
Similarly, the level of user help-desk support shown in Exhibit 
III-l should not be taken to imply the provision of a co-ordinated 
help-desk service by a third-party. Instead it tends to represent 
user access to general purpose hotlines such as those provided by 
most producers of personal computer application software 
products. 

A breakdown of third-party usage by country is provided in Exhibit 
III-2. 



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Exhibit III-2 



Third-Party Service Delivery France, Germany, and U.K. 



Equipment 
maintenance 

LAN installation 

User help-desk 
services 

LAN management 



h 



64 



ZZ]85 

Its 

77 



J 44 



61 



^/////////////A 45 



51 

Z|55 



Y/./J./././Z^ 31 
25 
26 



y/////////////A 



Version control & '///////^ 26 



update management 

Asset 
management 



mmm' 



26 



2ZZZZ3 21 



Q France 
0 Germany 
□ U.K. 



13 



20 40 60 80 

Proportion of organisations supported (%) 



100 



Sample of 90 respondents. Standard error = 5%. 



Source: INPUT 

Overall, there is a reasonable level of consistency between the 
three countries. The main differences are: 

• The declining use of equipment maintenance in the U.K. 

• The large variation in use of third-parties for LAN installation 
between the three countries with organisations in France 
apparently showing a much higher propensity to subcontract 
installation than those in the U.K. 

• The variation in use of third-parties for asset management 
between France and Germany with comparatively high usage 
of third-parties in France and low usage in Germany 

Exhibit III-3 shows the extent to which organisations use their 
in-house IT departments for each of these desktop service 
elements. 



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IT Department Service Delivery: Europe 



Assetmanagemen. ^^^^^^^71 



Ve^on controls y/////////////////^ ^ 



Equipment 
maintenance 



74 



update management 

user helMes. VZV//////////A 48 



LAN Installation 38 
^15 



0 20 40 60 80 

Proportion of organizations supported (%) 

Sample of 90 respondents. Standard error = 5%. 



•100 



Source: INPUT 

Similarly, Exhibit III-4 provides a breakdown of IT department 
usage by country. 



IT Dep'^rtment Service Delivery by Country 



LAN management KSzaSaSS^SsSz^^ 75 



Asset 
management 



71 



Version control & E 
update management 



User help-desk 
services 

LAN installation 



83 




W///////M/////////^^^^^ 



J 45 



52 
49 



//////A 23 



39 



YA France 
8883 Germany 
□ U.K. 



56 
i_ 



20 40 60 80 

Proportion of organizations supported (%) 



100 



Sample of 90 respondents. Standard error = 5%. 



Source: INPUT 



© 1994 by INPUT. Reproduction Prohibited. 



111-5 



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INPUT 



Organisations' IT departments are typically responsible for the 
delivery of LAN management, asset management, version control 
and update management. However, asset management, version 
control and update management appear to be often viewed as 
peripheral activities by the IT department. Consequently users 
were often reported to be responsible for these activities. Overall, 
users were reported to be responsible for: 

• Asset management within 18% of organisations 

• Version control and update management within 13% of 
organisations 

Users in organisations in France and Germany were more likely 
to be responsible for these functions than their coimterparts in the 
U.K.. 

In conclusion, organisations show a high propensity to use third- 
parties for LAN implementation and installation, but are much 
less-inclined to subsequently transfer the ongoing management of 
the desktop infrastructure to a third-party. 



Users Need Improved Access to Information 

Exhibit III-5 identifies the principal challenges organisations face 
in supporting their desktop IT infrastructures. 



III-6 



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Principal Cliallenges: Support of Desktop infrastructure 



Moving,oc,len.server y/////////^^^^^ 



desktop 

Need for increased V 
support coverage 



Inadequate support ^/ZZZZ/ ^ 
Cost control ZZ/9Z^/ ^ 



architecture 



4 6 8 

Number of mentions 



10 



Sample of 90 unprompted respondents. 



Source: INPUT 

Many organisations, partictilarly in France, face a considerable 
challenge in implementing a client/server architecture within 
their organisations. The key need is to create an infrastructure 
that gives users access to all the information they require 
regardless of whether the information is located locally or 
remotely. At present, much of the data that users require is 
located on proprietary systems, and these systems need to be made 
more accessible to desktop users. Organisations are also finding 
that the number of LANs is expanding and that existing networks 
may need to be restructured or re-implemented. 

Providing users with personal computers is just the first step. 
Users need considerable assistance if they are to utilise the full 
potential of their desktop equipment. Many users perceive that 
they have been given products but need assistance in establishing 
the connectivity they require and in ensuring the compatibility of 
applications across the organisation. 

The increasing desktop user base is also putting pressure on 
desktop support organisations. IT departments are finding that 
the requirements placed upon them are growing. They are now 
expected to provide comprehensive support to an increasing 
number of interlinked users covering a wide geographic area. It 
is no longer acceptable not to support minor departments or those 



e 1994 by INPUT. Reproduction Prohbited. 



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based in comparatively inaccessible locations. Increasingly, all 
users expect to have access to the corporate network and to the 
information and tools they require. At the same time, users are 
growing in sophistication and are becoming more demanding 
clients. 

In the face of these demands, some organisations are finding that 
their own in-house support is inadequate. Many in-house support 
organisations are having difficulty in refocusing their personnel 
away from proprietary systems to support client/server 
architectures. In particular, it is difficult to assemble the tools to 
manage this environment and to keep staff up-to-date with rapidly 
changing technologies. 

A further complicating factor is the pressure being placed on IT 
departments to control their costs even though the demands being 
placed on them are increasing. One respondent commented that 
the IT department had been forced to reduce its costs to ensure 
that it was cost competitive compared to outsourcing vendors. 
Consequently, the service levels to users had declined 
significantly in this case. 

These cost pressures are particularly evident in the U.K. and 
France, £ind may be less significant in Germany at present. 

Exhibit III-6 shows respondents' ratings of the overall quality of 
their current desktop support. 



111-8 



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Exhibit III-6 

Service Quality by Country 



France 



Germany 



U.K. 



1 2 3 4 5 

Low High 

Quality of Support 

Sample of 90 respondents. Standard error = 0.15 

Source: INPUT 

The overall ratings of service quality are very similar across each 
of France, Germany, and the U.K.. These ratings are lower than 
is desirable. A satisfactory level would be a score of approximately 
3.8. 

Not surprisingly, IT managers exhibited a higher level of 
satisfaction with current service quality than did users. The 
difference between these two groups is shown in Exhibit III-7. 




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INPUT 



Exhibit III-7 



Overall Service Quality User vs. IT Manager Perspective 




IT manager 



1 

Low 



2 3 4 

Quality of support 



Sample of 90 respondents. Standard error = 0.1 



5 
High 



Source: INPUT 



However the gap between the satisfaction levels of these two 
groups is less than might be expected. If scores of 4 or 5 are taken 
as indicating a high level of satisfaction, while scores of 1 or 2 are 
taken as indicating dissatisfaction, then: 

• 31% of users and 43% of IT managers are highly satisfied with 
the current service quality 

• 21% of users and 12% of IT managers are dissatisfied with the 
current service quality 

It is worth noting that not a single user gave the current service a 
top rating of five. 



Update Management and Asset Management are Inadequately 
Performed 

The quality of support attributed to each of the principal service 
functions within the scope of desktop services varies widely, 
however. In addition, there is a high level of agreement across 
coimtries and across respondent types on which desktop functions 
are supported well and which are inadequately supported. 



111-10 



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Exhibit III-8 lists those desktop functions that received the highest 
ratings from respondents. 



Exhibit III-8 

Best Supported Functions: Desktop Services-Europe 



Equipment 
maintenance 

Help-desk 
services 

LAN Installation 
LAN management 




















1 2 3 4 5 
Quality of support High 

Sample of 90 respondents. Standard error = 0.1 



Source: INPUT 



Exhibit III-9 provides a breakdown of these ratings by country. 
The scores achieved in France and Germany show a high level of 
similarity. However, those for the U.K. are significantly lower, 
particularly in the areas of help-desk services and LAN 
installation. 



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111-11 



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INPUT 



Ratings of Best Supported Functions by Country 



Equipment 
maintenance 



Help-desk services 



LAN installation 



LAN management 




3.4 
J 3.4 



2 3.8 yy\ France 
Germany 
□ U.K. 



1 

Low 



2 3 4 

Quality of support 

Sample of 90 respondents. Standard error = 0.2. 



5 
High' 



Source: INPUT 



Exhibit III- 10 provides a breakdov^n by respondent type. 



Best Supported Functions: 
User vs. IT Manager Perspective 



Eq^iP^nt V/////////////////////////A 4-3 



maintenance 



Help-desk services 



LAN installation 



LAN management 




17^ IT managers 
Users 



1 

Low 



2 3 4 

Quality of support 



5 
High 



Sample of 90 respondents. Standard error = 0.15 



Source: INPUT 

Overall the majority of IT managers show an adequate level of 
satisfaction with the current quality of support for these four 



© 1994 by INPUT. Reproduction Prohbited. 



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INPUT 



functions. Consequently they are unlikely to be predisposed 
towards outsourcing them, if they have the decision-making 
authority. 

The critical function amongst these, if desktop services 
outsourcing is to become widely adopted, is LAN management. In 
this area, only 6% of IT managers showed signs of dissatisfaction 
with the current service quality. On the other hand, 21% of users 
indicated a degree of dissatisfaction. 

Surprisingly, users rated the qusJity of help-desk service more 
highly than did IT managers. However, it is probable that a 
number of the IT managers were rating the second-line support 
they receive from vendors rather than their own provision of first- 
line support. Approximately 13% of users expressed 
dissatisfaction with their current help-desk support. 

Exhibit III- 11 lists the worst supported desktop functions. 



Worst Supported Functions: Desktop Services— Europe 



Update 
management 

Asset 
management 

Configuration 
management 



Network tuning 





21 



2.8 




'A 



2.9 



2.9 




3.1 



1 2 3 

Quality of support 

Sample of 90 respondents. Standard error = 0.1 



5 
High 



Source: INPUT 

At present, organisations appear to be neglecting configuration 
management, asset management, and update and version 
control. These functions may appear initially to be of secondary 
importance, but are actually critical to successfiil desktop 
support. 



© 1994 by INPUT. Reproduction Prohblted. 



111-13 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Firstly users' equipment must be suitable for running the latest 
versions of personal computer application software products. 
These products are placing growing demands on the hardware 
and many users are finding that their current equipment is 
obsolete and incapable of performing adequately with the latest 
software. 

Secondly if users wish to share documents and data across a 
corporate network, then version control can be critical in 
ensuring that this is possible. 

In practice, all of these functions need to centrally co-ordinated, 
rather than carried out at the whim of each individual 
department. However, these areas can be difficult for an in-house 
IT department to control if spending is totally under the control of 
individual departments. 

Exhibit III- 12 lists the ratings for the worst supported functions by 
country. 



Ratings of Worst Supported Desktop Functions 
France, Germany, and U.K. 



Update 
management 

Asset 
management 

Configuration 
management 

Networking tuning 



\////////////////A 3.1 

_ 2.9 

] 2.4 



w///////////mw//^^^^^ 



V////////////////A 3.2 
3.2 

]2.1 



V//////////////A 3 



w//mmy/////////y///^^^^^^ 



2.9 
2.9 



IZ3 France 

Germany 
□ U.K. 



V//////////////////7\ 3.5 



W//MmWMW///////A 



J 2.8 



1 

Low 



Quality of Support 



5 
High 



Sample of 90 respondents. Standard error = 0.2 



Source: INPUT 

The ratings from organisations in France and Germany show a 
high level of similarity with update management and asset 
management receiving particularly low ratings in the U.K.. 



© 1994 by INPUT. Reproduction Prohiaited. 



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DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 INPUT 



Exhibit 111-13 



Exhibit III- 13 provides a breakdown of the ratings given to the 
worst supported desktop functions by respondent type. 



Worst Supported Functions 
User vs. IT Manager Perspective 



Update 

management W^^^^^^^^mi^ 2.8 
7} 



Asset 
management 

Configuration 
management 

Network tuning 




X7X IT managers 
Users 



1 

Low 



2 3 

Quality of Support 

Sample of 90 respondents. Standard error = 0.15 



5 
High 



Source: INPUT 

Surprisingly, there is considerable similarity between the views of 
users and IT managers. The main divergence is in the area of 
asset management where IT managers rate the quality of asset 
management even lower than users do. Overall 46% of IT 
managers are dissatisfied with the present quality of asset 
management compared to 23% of users. 

This may be because IT managers recognise the importance of 
asset management in supporting the desktop environment, and, 
in many cases, feel frustrated because it is outside their control. 
On the other hand, over 70% of respondents reported that asset 
management was the responsibility of the IT department. 
Another possibility is that responsibility for asset management is 
unclear in many instances with responsibility falling between 
users and IT management. 



Services Need to be More Pro-Active and Cost-Effective 

Exhibit III- 14 indicates respondents' ratings of their current 
desktop support in terms of a number of attributes. 



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Exhibit 111-14 



Service Attribute Ratings: Europe 



Responsiveness 

Technical 
i^nowledge 



7 




Cost- K 
effectiveness 



Business [7 
knowledge 



Pro-active k 
assistance 




3.7 

3.7 




2 



3.1 





'A 



2.7 



1 2 3 

Low ^ ,x. X 

Quality of support 

Sample of 90 respondents. Standard error =0.1 



5 

High 



Source: INPUT 

Overall desktop services provision appears to reach a satisfactory 
level in terms of responsiveness and technical knowledge. The 
emphasis of current services is obviously on providing a 
technically based, reactive service that can address technical 
queries once these have been identified. 

However, current desktop service provision lacks adequate levels 
of business knowledge. Accordingly the current services probably 
have difficulty in assisting users in appl5dng technology to their 
business requirement. Current services also appear to be 
insufficiently pro-active, both to assist users in applying 
technology and also in identifying possible problem areas before 
they occur. 

In addition, respondents question the cost-effectiveness of the 
services provided. 

Exhibit III- 15 provides a breakdown of these service attribute 
ratings by coimtry. 



IIM6 



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Exhibit 111-15 



Service Attribute Ratings: France, Germany, and U.K. 



Responsiveness 



\////////////////////////\ 3.8 

3.6 
I 3.5 



Technical ////////////////////////\ 3.8 



knowledge 
Cost-effectiveness 
Business knowledge 
Proactive assistance 



w///z^y/////////y//^7/^^^^ 



3.6 
D3.7 



\///////////////A 2.9 

2.9 



]3.4 



\/////////////////A 3.1 

3.1 

J 2.9 



XZl France 
Germany 



1.6 



1 2 3 

Low 

Quality of support 
Sample of 90 respondents. Standard error = 0.2 



5 

High 



Source: INPUT 

Once again, there is a high level of similarity between countries. 
The principal exception is the U.K., which seems to have gained a 
relative increase in cost-effectiveness at the expense of a decrease 
in the level of pro-active assistance provided to users. This is 
certainly consistent with reports of in-house support 
organisations reducing costs in order to protect their continued 
existence while reducing service levels to their clients. 

Exhibit III- 16 provides a breakdown of the service attribute 
ratings by respondent type. 



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INPUT 



Exhibit 111-16 



Service Attribute Ratings 
User vs. IT Manager Perspective 



Responsiveness 

Technical 
knowledge 

Cost-effectiveness 



W/////////////////A 3.4 



3.8 



V/////////////M 3 



y//////////m^^^ 



3.1 



Business Vj 
knowledge 



Pro-active 
assistance 




Users 
IT manager 



1 2 3 

Low Quality of support 

Sample of 90 respondents. Standard error = 0.15 



5 
High 



Source: INPUT 

Both users and IT managers give current desktop services low 
ratings in terms of cost-effectiveness, business knowledge, and 
pro-active assistance. However, while IT managers seem to be 
largely satisfied with current service provision in terms of its 
responsiveness and depth of technical knowledge, users seem to 
largely imconvinced of the presence of these virtues also. Overall: 

• 16% of users are dissatisfied with the responsiveness of 
current services 



• 13% of users are dissatisfied with the level of technical 
knowledge exhibited by the service providers 

The overall result is a high level of dissatisfaction with existing 
services provision which must create significant opportunities for 
outsourcing vendors. 



111-18 



© 1994 by INPUT. Reproduction Prohibited. 



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IT Managers Remain 
Reluctant to Outsource 
Operational Management 



A . 

Cost Reduction Remains A Key Benefit 

Exhibit IV-1 lists the principal benefits mentioned by IT 
managers questioned about the benefits that they would expect to 
achieve by outsourcing their organisation's desktop services. 



Exhibit IV-1 

Principal Benefits from Desktop Services Outsourcing 
IT Manager Perspective 



Cost reduction 
Headcount reduction 

Increased efficiency 

Access to additional 
technical skills 
Single source of 
accountability 
Consistency across 
organization 




y/////////////////////////////A 2^ 


y///////////. 10 

'//////////A 9 


0 5 10 15 20 25 

Number of mentions 

Sample of 51 IT managers 



Source: INPUT 



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DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



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IT managers still view outsourcing predominantly in terms of 
cost reduction and improved efficiency. This attitude is prevalent 
throughout Europe, but is strongly emphasised in the U.K., where 
cost reduction, personnel reductions, and increased efficiency 
dominate the responses from IT managers. Organisations in the 
U.K. appear to be uniquely concerned with reducing their number 
of in-house IT support staff, in a bid to reduce overall support 
costs. 

Elsewhere in Europe, IT managers are more likely to view 
outsourcing in terms other than cost reduction, such as the ability 
of outsourcing to deliver improved consistency of support and a 
single source of accountability. 

Exhibit IV-2 shows the profile of benefits that users would expect 
to derive from outsourcing their desktop services. 



Principal Benefits from Desktop Services Outsourcing 

User Perspective 



Cost reduction 



technical skills 



Emphasis on commercial /////////// 
objectives ]/////////// 



Fixed price 



Protection against ^/y^y^^/y^^ 



equipment obsolescence 



5 10 

Number of mentions 



Sample of 39 users. 



Source: INPUT 



Again, cost reduction was the major potential benefit cited by 
users. It was the leading benefit mentioned by users in each of the 
three countries. It was again accompanied by mention of 
manpower reductions in the U.K., but not in France and 
Germany. 



© 1994 by INPUT. Reproduction Prohibited. 



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Users expect vendors to exhibit greater depth of technical 
expertise than their in-house support units. Many organisations 
are having difficulty in retraining in-house personnel to support 
their emerging client/server architectures. At the same time, 
vendors are believed to have the scale of operation required to 
support a greater breadth of technical capabilities. 

The emphases of IT managers are primarily on achieving greater 
efficiency and access to technical skills. While users expect 
outsourcing to assist them in achieving these same benefits, they 
also expect vendors to assist them in achieving commercial 
benefits. 

Users expect outsourcing vendors to assist them by helping them 
to understand how technology can be applied to their business 
processes. One reason often given for not outsourcing is the level 
of understanding of the client's business possessed by in-house 
support groups. However, in practice, in-house support groups 
are reported to have low levels of business process knowledge. 
Users have significantly higher expectations that outsourcing 
vendors will have relevant knowledge of their industry sector. In 
addition, users expect to be able to focus on their core business, 
since the outsourcing vendor will relieve them of the burden of 
managing their current technology. 

Another perceived benefit of desktop services outsourcing is that it 
will enable users to spread the cost of their desktop investment. At 
present, users believe that they will be faced with a major 
financial outlay every two to three years to maintain their desktop 
environment. Users that are reluctant to make this investment, or 
are faced with lengthy approval processes, can find that their 
personal computers are no longer capable of running up-to-date 
versions of the leading application software products. 
Outsourcing is viewed as one mechanism by which an 
organisation can incorporate technology refreshment into its 
budgets while avoiding periodic, large capital outlays. It is 
difficult for an in-house service provider to deliver this type of 
service. 



© 1994 by INPUT. Reproduction Prohibited. 



IV-3 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



B 

Users Believe Outsourcing will Improve the Focus of the IT 
Department 

Respondents were also asked to rate the extent to which they 
beheved outsourcing their desktop services would deliver each of a 
number of potential benefits. The proportion of respondents that 
could be considered enthusiastic about each of the benefits - based 
on a rating of 4 or 5 - is shown in Exhibit IV-3. 



Exhibit IV-3 



Enthusiasm for Potential Outsourcing Benefits: Europe 



Improved focus for ^ 
IT department 




Improved end-user 
productivity 




Improved 
cost-effectiveness 



7 



Improved 
responsiveness 



Improved user f7 
relationships 



A 



42 



38 




A 



33 




27 




A 



24 



10 20 30 40 

Proportion of respondents (%) 



Sample of 90 respondents. Standard error = 5% 



50 



Source: INPUT 



Previous studies have indicated an oft;en poor quality of 
relationship between in-house IT service providers and their 
clients. Surprisingly only a minority of respondents expected 
outsourcing to improve the quality of relationship between service 
provider and user. 

Exhibit IV-4 shows the same ratings analysed by country. 



IV-4 



© 1994 by INPUT. Fteproduction Prohbited. 



OSFQ 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Enthusiasm for Potential Outsourcing Benefits: 
France, Germany, and U.K. 



Improved focus for l^^:^^:^:^^^^^ 



IT department 

Improved end-user 
productivity 



57 



54 



improved cost- iiiiiiiiiiiiiiiiiiiij^ ^ 



effectiveness 

Improved 
responsiveness 

Improved user 
relationships 



8 



41 



France 

4 ^ Germany 



WZ/MW/////////////^^^^^^ 



]8 



30 



□ U.K.- 



10 



20 30 40 50 60 
Proportionof respondents (%) 

Sample of 90 respondents. Standard error = 9% 



70 



Source: INPUT 



The most noticeable feature of this chart is the very low 
expectations of outsourcing recorded by respondents in the U.K.. 
To a certain extent, this feature can be explained in terms of the 
relative bias of the U.K. sample in terms of IT msinagers. 
However, this only serves to explain approximately half of the 
variance between the U.K. and France and Germany. It appears 
as though U.K. organisations do have lower expectations of 
desktop services outsourcing than their counterparts in France 
and Germany. Possibly IT managers in the U.K. feel more 
threatened by outsourcing than those elsewhere in Europe, and 
view outsourcing being imposed on their organisations solely to 
achieve short-term cost reductions regardless of whether service 
quality improvements can be achieved or not. 

Exhibit IV-5 shows the proportion of respondents that could be 
considered enthusiastic about each of the potential benefits by 
respondent type. 



© 1994 by INPUT. Reproduction Prohtoited. 



iV-5 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Enthusiasm for Potential Outsourcing Benefits 
User vs. IT Manager Perspective 



Improved focus for p7 
IT department 



Improved user 
productivity 




V////////////A 57 



^40 



Improved cost- y/////zyZ'^/y//y/yyy/yyyM ^ 

effectiveness ^^^^^^^^^^^^| pR 



Irrpoved ////////////////////////A 43 



responsiveness 



w/////////M/m 



18 



Improved user //////////////////A 32 
relationships ^^^^^^^^^^ 25 



H Users 

IT managers 



0 20 40 

Proportion of respondents (%) 
Sample of 90 respondents. Standard error = 7% 



60 



Source: INPUT 



Overall, users show a much more pronounced enthusiasm than 
IT managers for the potential benefits of desktop services 
outsourcing. On average, over 40% of users are enthusiastic about 
each of the potential benefits listed above, compared to roughly 
25% of IT managers. The largest differences in opinion between 
users and IT managers relate to improved focus for the IT 
department and improved responsiveness. 

Many users believe that the in-house IT department should not be 
involved in labour-intensive tasks such as management of the 
desktop infi'astructure, but should concentrate on more strategic 
issues such as assisting users in addressing their business 
problems. Secondly IT managers are much less prepared than 
users to admit that outsourcing would improve the 
responsiveness of the service. 

Exhibit IV-6 lists the services that respondents expect to contract 
out during the next year. 



© 1994 by INPUT. Reproduction Prohbited. 



OSFQ 



DESKTOP SERVICES OUTSOURCING-EUROPE, 1994 



INPUT 



Exhibit IV-6 

Services to be Contracted Out Next Year 



Moving applications 
to Unix 

LAN management 
All desktop services 

LAN integration 

Platform 
interconnectivity 












w///////mm,' 










0 1 2 3 4,5 

Number of mentions 

Sample of 90 respondents. 



Source: INPUT 



Overall, three per cent of respondents expect their organisations 
to outsource their entire desktop services within twelve months. 
In addition, four per cent of respondents expect to outsource LAN 
management. If these levels of activity materialise then it wdll 
lead to substantial growth in the desktop services outsourcing 
market. 

However, there is also a high level of activity in the project 
services market centred on the desktop, with many organisations 
seeking assistance in moving to an open systems environment 
and implementing a client/server based infrastructure. 

One way of analysing areas of client resistance to desktop services 
is to identify those fimctions that IT managers and users perceive 
to be best performed in-house. In practice, there is a significant 
variation between the views of IT managers and those of users. 

Exhibit IV-7 shows the profile of services that IT managers 
regard as best-performed in-house. 



OSFQ 



© 1994 by INPUT. Reproduction Prohibiled. 



IV-7 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Exhibit IV-7 

Services Best Performed In-house: IT Manager Perspective 



Application System 
devetopment 

Purchasing 
All (excl. maintenance) 

None 

Operational 
management 

Training 
First-line help desk 




''/////////////////////////////A 11 


y////////////////////A 8 


'//////////////////////. 8 


^////////////////. 6 




y//////y^ 


1 1 1 1 ■ .1 


0 2 4 6 8 10 12 
Number of mentions 

Sample of 51 IT managers. 



Source: INPUT 



Many IT managers perceive that all desktop services, with the 
exceptions of equipment maintenance and standard application 
software support, should be performed in-house. However, some 
of these managers are frustrated at the apparent unwillingness of 
senior executives within their organisations to permit them the 
funding and number of personnel that they perceive to be 
necessary to provide a high-quality desktop support service. 

More encouragingly for outsourcing vendors, over 25% of IT 
managers perceive that it is inappropriate for them to provide 
desktop services, and favour using an outside vendor. The 
majority of this group, however, favour retaining control of 
purchasing in-house. This may extend to control of equipment 
and software product purchasing as well as services. 

In terms of individual services, many IT managers favour 
retaining system development in-house at the expense of 
operational management services. However, there remains some 
resistance to outsourcing operational management and first-line 
help-desks. 

Exhibit IV-8 indicates the profile of services that users believe 
should be retained in-house. 



IV-8 



© 1994 by INPUT. Reprodudion Prohtoited. 



OSFQ 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Services Best Performed In-house: User Perspective 



FirsMinehelp-des. y///////////////////////////A 3 

""'"rr:::^ '/////////////////^ « 



management 

Asset [7 
management 



4 6 8 

Number of mentions 



10 



Sample of 39 users. 



Sourcer INPUT 

Perhaps surprisingly, a considerable body of users strongly 
believe that first-line help-desk support should be performed in- 
house. The principal reason for this is that the desktop is one 
element in a larger client/server IT infrastructure. Within this 
overall architecture, many organisations still possess key 
applications that were written in-house and which still reside on 
mainframe or proprietary equipment. Many users perceive that 
desktop services vendors would be unable to support these 
applications. 

This is potentially a major impediment to growth in the desktop 
services outsourcing market, since first-line help-desk services 
are a key component in desktop outsourcing. 

One possible solution to this problem would be for vendors to offer 
application maintenance management services alongside their 
desktop services outsourcing service portfolios. Vendors would 
then be in a position to offer a complete help-desk service 
including support for all applications accessed by users 
regardless of whether they are standard personal computer based 
applications or applications written in-house. 



© 1994 by INPUT. Reproduction Prohibited. 



IV-9 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Many users also favour new system development remaining in- 
house, and believe that administrative tasks such as update 
management and asset management can be per formed in-house. 
This view probably underestimates both the importance of these 
administrative functions and their strong interrelationship with 
other desktop support functions. 



IT Managers Want Second-Line Technical Support 

Exhibit IV-9 shows the proportion of respondents that strongly 
believe outsourcing would improve the quality of service for each 
of the service elements listed. 



Exhibit IV-9 

Perceived Contribution of Outsourcing 
to Improving Quality of Service 



LAN installation 
WAN management 

Equipment maintenance 

LAN management 

Second-line help-desk 
support 

Update management 
Datacentre management 
First-line help-desk support 
Asset management 




y//////////////////////////A 63 


V//////////////////////, 53 


V////////////////////A^^ 


V////////////////////. 48 


'////////////////////, 46 




y///////////////M^^ 


V//////////, 27 
26 


0 10 20 30 40 50 60 70 
Proportion of respondents (%) 
Sample of 90 respondents. Standard error = 5% 


Source: INPUT 



However, these figures are an European average, and it may be 
more useful to evaluate this chart analysed by country and by t3rpe 
of respondent. 

Exhibits IV-10, IV-11, and IV-12 provide breakdowns for each of 
France, Germany, and the U.K.. 



IV-10 



1994 by INPUT. Raproductiofi Prohibited. 



OSFQ 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Perceived Contribution of Outsourcing to 
Improving Quality of Service: France 



LAN installation V////////////////////////////7A l^ 
WAN management W////////////////////////A 69 
LANmanagemen, V///////////////////////A 



help-desk support 
Update management 



63 



Equipment maintenance y////////////////////7//;\ 62 
^""'""^ y//////////////7777A 52 



Datacentre management '^/////////////A 37 
Asset management 



First-line help-desk 25 
support — — 



0 20 40 60 

Proportion of respondents (%) 
Sample of 30 respondents. Standard error = 8% 



80 



Source: INPUT 



Perceived Contribution of Outsourcing 
to Improving Quality of Service: Germany 



. LAN installation 
WAN management 

Equipment maintenance 
LAN management 

Update management 

Second-line help-desk 
support 

Datacentre management 
First-line help-desk support 
Asset management 




//////////////////////////////Ae9 


'////////////////////////////. 64 


y////////////////////////A 60 


V/////////////////////// 55 


49 


V///////////////////. 45 


'//////////////A 35 
V///////////. 28 


0 10 20 30 40 50 60 70 

Proportion of respondents (%) 
Sample of 30 respondents. Standard en-or = 8% 



Source: INPUT 



© 1994 by INPUT. Reproduction Prohibited. 



IV-11 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Exhibit IV-12 

Perceived Contribution of Outsourcing 
to Improving Quality of Service: U.K. 



LAN installation 

Second-line 
help-desk support 
First-line help-desk 
support 

Equipment maintenance 
LAN management 

Update management 
Asset management 
Datacentre management 
WAN management 






'/////////////////////////////yzi 


y//////////////////////. 29 


V/////////////////A 25 


/////////////////d 21 


///////////////, 19 

'/////////////Ui 

0 

■ III 


0 10 20 30 40 
Proportion of respondents (%) 
Sample of 30 respondents. Standard error = 7% 


Source: INPUT 



Once again, there is a substantial difference in the proportion of 
respondents that strongly believe outsourcing could improve the 
quality of desktop service between France and Germany, and the 
U.K.. In the U.K., a much smaller proportion of respondents are 
enthusiastic about the ability of outsourcing to improve the quality 
of desktop service. 

There are also significant differences in the areas where 
respondents believe outsourcing could contribute. In France and 
Germany, the majority of respondents perceive that outsourcing 
would significantly improve the quality of their wide-area network 
management. No respondents in the U.K. believed this to be 
applicable. 

Exhibit IV- 13 shows the proportions of IT managers who strongly 
believe that outsourcing could improve the quality of service for 
each of these service elements. 



IV-12 



© 1994 by INPUT. Fteproduction Prohtoited. 



OSFQ 



DESKTOP SERVICES OUTSOURCING— EUROPE. 1994 



INPUT 



Exhibit IV-13 



Perceived Contribution of Outsourcing 
to improving Quality of Service: IT IVIanagers 



LAN installation 

Second-line help-desk 
support 

Equipment maintenance 
WAN management 

Update management 

LAN management 

First-line help-desk 
support 
Asset management 

Datacentre management 




y///////////////////////////// 55 

^///////////////////////////// 


'//////////////////////////A 51 




///XX///////////////// ^ ' 


^///////////////////A 39 




V//////////////////. 36 


V/////////////A 28 
<////////. 17 


0 10 20 30 40 50 60 
Proportion of respondents (%) 

Sample of 51 IT managers. Standard error = 6% 


Source: INPUT 



One observation sometimes made about IT managers is that they 
view desktop outsourcing largely in terms of equipment 
maintenance. However, it appears that the majority of IT 
managers perceive that outsourcing would only improve the 
quality of service in two areas : 



• LAN installation 

• Second-line help-desk support. 



input's previous study into desktop services outsourcing in 1992 
indicated a similar attitude. 

Despite these preferences, there are encouraging signs for 
outsourcing vendors, particularly outside the U.K., with over a 
third of European IT managers believing that outsourcing could 
make a significant contribution to their organisation's network - 
both WAN and LAN - management. 



OSFQ 



© 1994 by INPUT. Repfoductkxi Prohibited. 



IV-13 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Surprisingly, despite their criticism of the current caHbre of asset 
management, only a comparatively minor proportion of IT 
managers perceive that outsourcing this service would improve 
service quality. 

Exhibit IV- 14 shows the pattern of services that IT managers 
would outsource, if they were to incrementally outsource 
elements of their desktop support services. 

Incremental Desktop Services Outsourcing Pattern 

IT Managers 



Maintenance 

LAN installation 

Software development & 
inplementation 

Software support 
LAN management 






y///////////////////A^ 






y//////////////y.s 


C 

Sample of 51 IT managers. 


1 1 — I 1 « 

) 2 4 6 8 10 
Number of mentions 



source; INPUT 



The pattern of service outsourcing shown is consistent with the 
earlier findings that IT managers exhibit the strongest propensity 
to outsource LAN installation, second-line software support, and 
equipment maintenance. In addition, IT managers perceive a 
need for assistance in software development and implementation, 
despite their preference for retaining these activities in-house 
whenever possible. 

Finally, there is a significant opportunity for operational service 
outsourcing, since at least ten per cent of IT managers would be 
prepared to outsource LAN management. 



O 1994 by INPUT. Reprodtx:tlon Prohibited. 



OSFQ 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Users Are More Prepared to Outsource Operational Management 

Exhibit IV- 15 shows the proportions of users who strongly beHeve 
that outsourcing could improve the quality of service for each of 
the service elements listed. 



Exhibit IV-15 



Perceived Contribution of Outsourcing 
to Improving Quality of Service: Users 



LAN installation 



WAN management y/////////////////////////77A 71 
LAN management 



Equipment maintenance '///////////////////Z^ 54 



V///////////////////////////^^ 75 



y////////////////////////A 64 



Update management y////////////////A ^^ 
Datacentre management y////////////////\ 44 



Asset management y//////////////A 38 
Second-line help-desk 



y////////////A z^ 



First-line help-desk y////////A 25 
support y^^^^^^^^^ ^ 



20 40 60 

Proportion ot respondents (%) 



80 



Sample of 39 users. Standard error = 8% 



Source: INPUT 

Overall, users appear to be strongly supportive of desktop services 
outsourcing. Approximately 50% of users in Europe strongly 
believe that outsourcing would improve the quality of each of the 
services shown. Like their counterparts in IT management, users 
perceive that outsourcing would improve the quality of LAN 
installation services within their organisation. However, unlike 
IT managers, the majority of users perceive that outsourcing 
would strongly improve the quality of operational management 
services such as LAN and WAN management. 

As mentioned earlier, users perceive external vendors as being 
comparatively ill-equipped to provide help-desk services because of 
the need to be able to support all of their organisation's existing 



OSFQ 



© 1994 by INPUT. Fleproduction Prohbited. 



IV-15 



DESKTOP SERVICES OUTSOURCING— EUROPE. 1994 



INPUT 



applications, many of which have been designed and written in- 
house. 

Exhibit IV- 16 shows the pattern of services that users would 
outsource, if they were in a position to incrementally outsource 
elements of their desktop support services. 



Exhibit IV-16 



Incremental Desktop Services Outsourcing Pattern: Users 



Asset & config. 
management 

LAN management 
Version control 



W//////////////////A 


y/////////////////^^^^ 


w////////m 


5 
5 
5 

• 




m///////m 

« 1 — 



4 6 
Number of mentions 



Sample of 39 users. 



8 



10 



Source: INPUT 



Again there is a much stronger emphasis from users on 
outsourcing operational management services than is the case 
with IT managers. In addition to LAN management, users show 
a comparatively strong inclination to outsource asset and 
configuration management and version control. 

While IT managers tend to be most concerned with access to 
implementation skills and technical support, users are more 
concerned with the operational management of their desktop 
systems. Asset and configuration management are often badly 
performed in-house much to the frustration of desktop users. 
Similarly, inadequate version control can generate considerable 
day-to-day difficulties for users. Currently, there is a danger that 
IT managers under-estimate the value of these operational 
practices. 



IV-16 



© 1994 by INPUT. Reproduction Prohibited. 



OSFQ 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Indeed as LANs become increasingly connected as part of an 
enterprise-wide, multi-vendor IT infrastructure, so users indicate 
the growing need for vendors to combine WAN management with 
their desktop services to provide total operational management of 
the emerging client/server IT infrastructure. Both users and IT 
managers believe that outsourcing could make a major 
contribution to improving the quality of their organisation's WAN 
services. 



OSFQ 



© 1994 by INPUT. Reproduction Prohibited. 



IV-17 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



(Blank) 



© 1994 by INPUT. Repfoduction Prohibited. 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 




Vendors Need to Market 
Services at Board-Level 



IT Managers Are Major Influence on Desktop Services Expenditure 

Exhibit V-1 shows respondents' views of the major influence on 
desktop services expenditure by service type. 



Exhibit V-1 



Control of External Expenditure: Desktop Services 



KMmD^ of m^Rlton^ 



nr 



rr 

apartment & 
CFO/CEO 



Finance 



User Dept/ 
Subsidiary 



Total 



Equipment maintenance 

LAN installation 

LAN management 

User help-desk services 

Version control & update 
management 

Asset management 

Overall 



38 
40 
40 
35 
41 

26 
24 



a 

4 
4 
4 

3 

5 

6 



2 
1 
3 
1 
1 

3 
7 



2 
2 
2 
4 
2 

9 
5 



8 
11 

10 



50 
47 
49 
52 
58 

53 
46 



Source: INPUT 



As indicated in earHer INPUT studies, control of IT 
infrastructure policy and expenditure tends to remain centralised 

OSFQ ©1994 by INPUT. Reproduction Prohibited. V-1 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



within the organisation. Similarly, control of expenditure on 
desktop services tends to be dominated by the IT department. 
Respondents estimated that, overall, IT meinagers controlled over 
70% of purchasing decisions related to individual desktop 
services. 

On the other hand, msmagers in charge of individual 
departments or subsidiaries are perceived to have a comparatively 
low level of influence over the purchase of desktop services. These 
users are estimated to control roughly 10% of individual desktop 
service purchase decisions. 

Indeed, users level of influence was seen to be negligible in the 
case of the key service - LAN management. This suggests that 
individual user departments do not currently have a mandate to 
authorise widespread outsourcing of their desktop services. 

This leaves vendors with the options of targeting either IT 
managers, who are often comparatively reluctant to outsource 
significant elements of their desktop services, or board level 
personnel such as the CFO or CEO. In the majority of outsourcing 
contracts, the major purchasing influence is the CFO. It appears 
that the desktop services outsourcing market will share this 
characteristic with the broader outsourcing market. 

Board personnel, such as the CFO and CEO, are estimated to be 
influential in the purchase of individual desktop services in 
approximately 18% of organisations. When purchasing decisions 
are being taken for outsourcing a wide combination of desktop 
services, then the CFO and CEO become more influential, and are 
estimated to be among the key decision-makers in 40% of 
organisations. 

However, the IT department retains an advisory role alongside 
board-level personnel in many of these purchase decisions, and 
will remain a significant influence on the vendor selection 
criteria used. 

Organisations' desire to reduce the number of external vendors is 
one factor in favour of outsourcing vendors. Even where 
organisations are contracting out a nimiber of minor service 
elements, rather than adopting ftdl desktop services outsourcing, 
there is a high level of enthusiasm for consolidating the number 



V-2 



ei994 by INPUT. Reproduction Prohibited. 



OSFO 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



of service providers. This trend will assist vendors in developing 
their clients towards a complete outsourcing service. 

Exhibit V-2 shows the importance respondents attached to 
reducing the number of external desktop service suppliers by 
country. 



Importance of Reducing Number of External Vendors 
France, Germany, and U.K. 



France 



Gemriany 



U.K. 




1 2 3 

Not at all 

important , , ^ . 

Level of importance 

Sample of 77 respondents. Standard error = 0.2 



5 

Very 
important 



Source: INPUT 



For once, there is a very high level of similarity between attitudes 
in each of Frsmce, Germany and the U.K., with broad agreement 
on the need to reduce the number of vendors. 

Exhibit V-3 shows the importance respondents attach to this issue 
by respondent type. 



01994 by INPUT. Reproduction Prohibited. 



V-3 



DESKTOP SERVICES OUTSOURCING— EUROPE. 1994 



INPUT 



Exhibit V-3 



B 



Importance of Reducing Number of External Vendors 
User vs. IT Manager Perspective 



Users 




IT managers 




1 2 3 

Not at alt 

Important Level of importance 

Sample of 77 respondents. Standard error = 0.2 



5 

Very 
important 



Source: INPUT 

Even though users appear to exhibit sHghtly more enthusiasm for 
this concept than IT managers, there is broad agreement by the 
majority of users and IT managers that reducing the number of 
external service providers is desirable. Indeed, this is an 
encouraging sign for outsourcing vendors since it suggests that 
key decision-makers such as the CFO and CEO are likely to favour 
using a single vendor to supply all of the desktop services 
required, rather than subcontract these to a range of vendors in 
an endeavour to optimise delivery of individu£d service 
components. 



Cost and Breadth of Technical Skills are Key Selection Criteria 

Users and IT managers tend to identify significantly different 
selection criteria in choosing a supplier of desktop services. Since 
the selection criteria used in any individual purchase of desktop 
outsourcing services will tend to be influenced by both the CFO 
and the IT manager, it is important that vendors take both sets of 
selection criteria into account when marketing their services. 



V-4 



©1994 by INPUT. Reproduction Prohibited. OSFQ 



DESKTOP SERVICES OUTSOURCING-EUROPE, 1994 



INPUT 



Exhibit V-4 identifies the key selection criteria nominated by IT 
managers. 



Exhibit V-4 

Key Vendor Selection Criteria: IT Managers 



Cost 

Breadth of desktop skills 
Financial size 
. Industry knowledge 
Track record 
Full service capability 
National coverage 
.Company stability 

On-site support capability 
European/global coverage 
Co-operative partner 






^/////////////////////////////////////A 10 


V/////////////////////////////////X 9 






//////////////A 4 

^ ////// A 2 

V/////A 2 


C 

Sample of 51 IT Managers 


) 2 4 6 8 10 

Number of mentions 


Source: INPUT 



The selection criteria favoured by IT managers for purchasing 
desktop services can be broadly classified into four groups: 

• Cost 

• Technical skills 

• Vendor stability 

• Geographic coverage. 

The cost-competitiveness of the vendor received the highest 
nimiber of mentions from IT managers. IT managers perceive 
that desktop services outsourcing is primarily concerned with cost 
reduction, in a similar way to other forms of outsourcing. While 
organisations often seek improved user productivity as a key 
benefit of desktop services outsourcing, they remain imlikely to 
raise their support costs to attain this goal. 



OSFQ 



ei994 by INPUT. Reproduction Prohibited. 



V-5 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



The vendor's comparative level of technical skills is another 
critical criterion for IT managers. Ideally, IT managers are 
seeking a vendor with an extensive desktop services portfolio, 
together with an extensive range of technical skills within each of 
these service areas. 

The vendor's geographic coverage is also an important factor in 
choice of vendor for desktop services, since clients often require an 
on-site element of support. IT managers are seeking vendors that 
can at least match the existing, and projected, geographic spread 
of their own organisations. In many cases, this implies extensive 
national coverage by the vendor. However, in other instainces, 
vendors are beginning to seek vendors that can offer European, or 
even global, support coverage. 

While users seek many of the same characteristics in vendors, 
they also differ significantly in the emphasis placed on a number 
of criteria. Exhibit V-5 lists the key vendor selection criteria 
adopted by users. 

Exhibit V-5 

Key Vendor Selection Criteria: Users 



Business understanding/ 
contributbn 
High service level capability 

Reputation 

Financial size 



V////////////////////A 6 



//////////////////////X 6 



TZZZZZZZZZZZZZZZZZA^ 



V////////////777m 5 



ZZZZZZZZZZZZZZA^ 



V////////////77\ 4 



Networking skills 
Data communications skills 
Full service capability 
Flexible contracts 
National coverage 
lultivendor platform expertise ^//////////A 3 
Vendor independence '//////////A 3 



TZZZZZZZZZZZZZA^ 



zzzzzzzzzzzzzm^ 



0 2 4 6 8 10 

Number of mentions 

Sample of 39 users. 



source; IHPUT 



V-6 



©1994 by INPUT. Reproduction Prohibited. OSFQ 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



The key differences between the selection criteria adopted by IT 
managers and those adopted by users are as follows: 

• Users appear to place much less emphasis on cost. 

• Users place considerable emphasis on business understanding 
and the contribution that the vendor can make to meeting the 
organisation's business objectives. IT managers tend to be 
more concerned with technical competence. 

• Many users require a vendor that can offer higher service 
levels than those they have been accustomed to receive in the 
past. 

• Users place an emphasis on multi- vendor platform expertise, 
and sometimes stress independence from an individual 
equipment vendor. 

• Users sometimes stress the importance of flexible contracts. By 
flexible y users mean short-term contracts which do not lock 
them in to a particular vendor or equipment base. 

In addition to the criteria identified by the respondents 
themselves, which were discussed above, respondents were also 
asked to rate the importance of a nimaber of potential vendor 
selection criteria. The characteristics that were rated most highly 
are hsted in Exhibit V-6. 



OSFQ 



ei994 by INPUT. Reproduction Prohibited. 



V-7 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Exhibit V-6 



Key Vendor Characteristics: Europe 



Ability to support 
wide-range of application 
software products 

WAN skills 









3.5 




;3.5 
3.4 

• 


J 1 1 — 



0 12 3 

Not at all 

important Importance of characteristic 



5 
Very 

important 



Sample of 90 respondents. Standard error = 0.15 



Exhibit V-7 



Source: INPUT 

Those characteristics that were rated as relatively unimportant 
overall are listed in Exhibit V-7. 



Secondary Vendor Characteristics: Europe 



System design & 
implementation skills 

Ability to manage whole 
IT infrastructure 



Ability to manage 
data centres 



Ability to manage 
voice networks 




1 

Not at all 
important 

Sample of 90 respondents. Standard error = 0.5 



2 3 4 

Importance of charcteristic 



5 

Very 
important 



Source: INPUT 



V-8 



01994 by INPUT. Reproduction Prohibited. 



OSFQ 



DESKTOP SERVICES OUTSOURCING— EUROPE, 1994 



INPUT 



Overall respondents are seeking a vendor that has impressive 
LAN skills and can provide an extensive distributed systems 
management service including wide area network data 
communications skills. However, respondents do not typically 
appear to be seeking a single vendor who can manage their entire 
IT infrastructure including mainframe data centres and voice 
networks. In addition, systems design and development skills also 
appear to be a low priority for the majority of respondents. 

Surprisingly perhaps, users and IT managers are in broad 
agreement on which vendor characteristics are important and 
which are relatively unimportant. However, they differ 
appreciably on the ratings given to individual characteristics. 

The attitudes of IT managers and users towards the relatively 
important vendor characteristics are shown in Exhibit V-8 and 
their ratings of the less important characteristics are listed in 
Exhibit V-9. 



Key Vendor Characteristics 
User vs. IT Manager Perspective 



LAN skills 



V/////////////////////////////A 4.7 

4.0 



^4.3 




Ability to support wide 
range of application 
software products 



WAN skills 




1 



Not at all 
important 

Sample of 90 respondents. Standard error = 0.2 



2 3 4 

Importance of characteristic 



5 

Very 
imoortant 



Source: INPUT 



©1994 by INPUT. Reproduction Prohbited. 



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Exhibit V-9 



Secondary Vendor Characteristics 
User vs. IT Manager Perspective 



System design & y/ 
implementation skills 




2.8 
2.9 



Ability to manage whole 
IT infrastructure 




Ability to manage y////////////^^ H Users 

data centres mzM^^ 2.^ ^ IT managers 



Ability to manage 
voice networks 




2.0 



1 



2 3 4 

Importance of characteristic 
Sample of 90 respondents. Standard error = 0.2 



Not at all 
important 



5 
Very 
Important 



Source: INPUT 



IT managers are essentially seeking a single vendor who can 
manage the v^hole of the organisation's desktop infrastructure. 
They tjrpically lack enthusiasm for finding a vendor with the 
capability to manage the organisation's complete IT 
infrastructure, including wide area networks, data centres, and 
voice networks. 

Users, on the other hand, exhibit a significantly higher interest in 
desktop services vendors ability to manage their complete 
infrastructure. Approximately 75% of users strongly believe that 
desktop services vendors should possess wide area network skills, 
and approximately 50% believe the desktop services vendor 
should have the capability to manage the organisation's entire IT 
infrastructure., a view shared by less than 20% of IT managers. 

Exhibit V-10 lists the ratings given to each vendor characteristic 
by country. 



V-10 



©1994 by INPUT. Reproduction Prohibited. 



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Exhibit V-10 

Vendor Attributes: Rankings by Country 





' importance Ranking 


LAN skills 


1* 


Germany 
1* 


2=* 


One-stop shopping capability 


2* 


2* 


1* 


Ability to support wide range of applicatio 
products 


n software 4 


4 


2=* 


WAN skills 


3* 


3* 


5= 


Multi-vendor capability 


5 


5 


4* 


System design & implementation skills 


7 


6 


5= 


Ability to mange whole IT infrastructure 


6 


7= 


7= 


Ability to manage data centres 


8 


' 9 


7= 


Ability to mange voice networks 


9 


7= 


9 



Note: * = Scores of 3.7 or higher Source: INPUT 

Sample of 90 respondents. 



Overall, there is a high level of consistency between the rankings 
awarded in each coiintry, particularly between those in France 
and Germany. Respondents in the U.K. attached less importance 
to wide area network skills, but exhibited a higher level of interest 
in a vendor's multi-vendor support capability and ability to 
support a wide range of application software products. The key 
criteria in each coimtry are marked with an asterisk. 

c 

EDS Has Comparatively High Profile 

In addition to identifying key vendor selection criteria, 
respondents were asked to rate the suitability of each of a number 
of named vendors as potential suppliers of desktop services. 

Differing lists of vendors were used in coimtry. However four 
vendors were common to each list. The overall ratings these 
vendors received from respondents across Europe are listed in 
Exhibit V-11. 



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Exhibit V-1 1 

Perceived Vendor Suitability: Europe 



EDS 



IBM 



Digital 



HP 



1 2 3 4 5 

Not at all Extremely 
suitable Perceived suitability suitable 

Sample of 75 respondents. Standard error = 0.15 

Source: INPUT 

The ratings shown above appear to reflect vendors overall level of 
awareness in the outsourcing market, rather than being a 
specific judgement on the vendor's desktop services outsourcing 
capability. While no individual vendor receives a particularly high 
rating, vendors with a wider outsourcing capability including 
data centre management, such as EDS and IBM, currently 
receive higher ratings than Digital and Hewlett-Packard. Digital 
and Hewlett-Packard lack mainframe datacentre outsourcing 
capability and are strongly targeting the management of 
client/server infrastructures, including a major emphasis on 
LAN management and desktop services outsourcing. 

These scores are a reflection of the immaturity of the desktop 
services outsourcing market. At present, no vendor is strongly 
recognised as a desktop services specialist. This creates an 
opportunity for individual vendors to establish themselves as 
leading players in this market. 

Exhibit V-12 analyses perceived vendor suitabiHty by respondent 
type. 




V-12 



©1994 by INPUT. Reproduction Prohibited. 



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Exhibit V-12 



EDS 



IBM 



Digital 



HP 



1 

Not at all 
suitable 



Perceived Vendor Suitability 
User vs. IT Manager Perspective 



^^3.6 




V/\ Users 

IT Managers 



2 3 

Perceived suitability 



Extremely 
suitable 



Sample of 75 respondents. Standard error = 0.2 



Source: INPUT 



Users and IT managers rank these four vendors identically in 
terms of their suitability as desktop services suppliers. However, 
there are differences in their ratings, with users showing 
comparatively higher levels of enthusiasm than IT managers for 
EDS' and IBM's capabilities. Overall, over 50% of users exhibit 
strong enthusiasm for EDS' desktop service capabilities compared 
to 20% of IT managers. The corresponding proportions for IBM 
are 35% and 25%. 

Similarly, IT managers give higher ratings to Digital and 
Hewlett-Packard than do users, possibly reflecting these vendors 
more technical image in the IT services marketplace. In 
particular, there appears to be low awareness of Hewlett- 
Packard's recent positioning as a supplier of desktop outsourcing 
services. Only 4% of users and 8% of IT managers regarded HP as 
a credible supplier of desktop services. 

Exhibits V-13, V-14, and V-15 indicate the perceived suitability of 
each of a number of potential outsourced desktop services vendors 
for France, Germany, and the U.K.. 



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Exhibit V-13 



Perceived Vendor Suitability: France 



GSI 
EDS 
Axone 



Digital 



■^zzsy/////////////A 3.4 

V////////////////777\ 3.3 
YZW////////////A 3.2 

GroupeBull '^ZZZZZZZZZZZZZk'^^ 
Telesystemes '^///////TA 2.1 
Thomainfor ///////A 1-9 



HP y/////A^-^ 



1 

Not at all 
suitable 



3 



Perceived suitability 
Sample of 26 respondents. Standard error = 0.25 



Extremely 
suitable 



Source: INPUT 



In France, the rankings once again appear to reflect the 
approximate level of activity, and hence awareness, of each 
vendor in the overall outsourcing market, though GSI, EDS, and 
Axone £J1 have offerings for the desktop services market. The 
vendors who specialise in the client/server and LAN management 
outsourcing markets such as Digital and HP have very low levels 
of awareness of their capabilities. 



V-14 



©1994 by INPUT. Reproduction Prohibited. 



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Exhibit V-1 4 

Perceived Vendor Suitability: Germany 



IBM 
EDS 

Computer 2000 
Digital 
SNI 
HP 
debis 
tds 






'///////////, 2.4 

y///////// 2.2 

///////I 1.8 
/////// 1.8 

'/////y 1.7 


1 2 3 4 5 
Not at all Extremely 
suitable Perceived suitability suitable 

Sample of 28 respondents. Standard error = 0.25 



Source: INPUT 



In Germany the leading outsourcing vendors - IBM and EDS - 
exhibit the highest levels of awareness of their capabilities. 
Surprisingly, debis Systemhaus, an organisation that was one of 
the early market leaders in the German outsourcing market is 
regarded as having a very low level of desktop services 
outsourcing capability. 

Overall, the services capability of the leading personal computer 
dealers tends to be regarded with suspicion in Europe. However, 
Computer 2000, while not receiving a high rating from 
respondents was ranked third in Germany behind IBM and EDS, 
and ahead of vendors such as Digital and HP. At present, Digital 
is maintaining a consistent lead in awareness over HP across 
each of France, Germany, and the U.K.. 



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Exhibit V-15 

Perceived Vendor Suitability: U.K. 



EDS 
Hoskyns 
Digital 

IRM 
HP 
ICL 

Sema Group 
P&P 




////////////////// 


////////////////// 3 0 
^//// ////////// ///, ^-^ 




///////////// 
V//////////// 


V////////X 2 1 
///////// A ^- ' 


y///////A 2.1 


W//////A^^ 


//////////1 2.1 


//////// 1.9 


1 2 3 4 5 ' 

Not at all Extremelv 
suitable Perceived suitability ™,7 

Sample of 21 respondents. Standard error = 0.2 


Source: INPUT 



In the U.K., the two vendors perceived to be most suitable are EDS 
and Hoskyns. Both of these organisations currently have very 
high profiles in the outsourcing market in the U.K., and have 
announced desktop services offerings in the last year. IBM and 
Sema Group appear to have much lower levels of awareness of 
their capabilities. 

The lowest rating in the U.K. was awarded to P&P. P&P was one 
of the early leaders in the desktop services market in the U.K. and 
has, in the past, won a number of major desktop services 
contracts, such as those with ICI and Unilever. However, while 
the major personal computer dealers have won many of the 
desktop services outsourcing contracts awarded in the U.K., they 
continue to be regarded with suspicion by IT managers who view 
them primarily suppliers of products rather than suppliers of 
services. 



V-16 



©1994 by INPUT. Reprodudlon Prohlbitod. 



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Vendors Announce Desktop 
Services Offerings 



A 

Hewlett-Packard introduces Selective Outsourcing 

In 1986, Hewlett-Packard(HP) created Customer Network Centres 
in Atleinta, Singapore and Bristol, and in the following year, 
introduced Network Monitoring Services. However, it was not 
until 1993 that HP formed a division — Operations Services 
Division — dedicated to outsourcing solutions. This year (1994), HP 
has formally annoimced its outsourcing services portfolio in 
Europe. . 

HP calls its approach to outsourcing: Selective Outsourcing and 
defines it as "HP's approach to helping customers balance 
internal and external resources and expertise to optimise the 
management of client/server environments." 

HP's Operations Services Division is a global business unit that is: 

• Focusing on client/server outsourcing 

• Targeting Chief Financial Officers (CFOs) and Chief 
Information Officers (CIOs) 

• Supported by services from other divisions within HP. 

1. Focusmg on Client/Server Computing 

Traditionally, the mainframe datacentre environment has 
dominated the outsourcing market. However, many 
organisations that have begim to adopt client/server based 
infrastructure are discovering that in many respects this is a 
more demanding environment in terms of day-to-day 
management, because of: 



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• Multi-vendor equipment, software products £ind 
communications devices 

• Extensive geographic spread of equipment and users 

• Need to facilitate users' IT usage while maintaining high 
levels of interpretability 

• Lack of a coherent set of systems management tools for this 
environment. 

In response to these issues, HP has developed operational support 
services for: 

• HP and multi-vendor open systems environments 

• Organisations transitioning to open systems 

• HP 3000 MPE systems 

• Distributed PC environments 

HP is not positioned to target large outsourcing contracts where 
the primary emphasis is the management of mainframe 
datacentres. However, HP will work with partners with 
mainframe outsourcing capability to assist orgsmisations seeking 
to make the transition from a mainframe environment to a 
client/server environment. 

HP's own Operations Support Services portfolio consists of the 
following components: 

• Systems management • 

• Network management 

• Desktop management 

• Business Protection Services 

HP's systems management services are aimed at the HP installed 
base and also at multi-vendor UNIX environments. For example, 
HP has experience in managing UNIX equipment from Sun, IBM 
and Digital. 



VI-2 



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HP's desktop management service consists of the following 
optional service elements: 

• Help-desk 

• Education services 

• Procurement/needs analysis 

• Asset management 

• LAN and server management 

• Change management 

• Data protection 

• Technical Support. 

2. Targeting CIOs and CFOs 

One of the major issues for vendors such as HP is that 
outsourcing is frequently viewed as a hostile activity by CIOs in 
Europe. Some vendors can afford to risk alienation of CIOs by 
bypassing them and targeting senior board members. 

However, this is not an approach that HP considers it can afford to 
take. Accordingly HP is endeavouring to persuade CIOs, in 
conjunction with CFOs where necessary, that they need to 
selectively balance their use of internal and external resources. 
This approach enables the client to select a sub-set of outsourcing 
services that address their immediate concerns without feeling 
threatened by a take-over bid from the outsourcing vendor. 

In practice, many of the existing clients of HP's systems 
management services appear to have been motivated by a need to 
reduce operational costs. On the other hamd, clients of HP's 
desktop msinagement services appear to be typically motivated by 
the desire to ensure consistent user desktop support levels. 

Examples of HP's Europesm systems management contracts are 
Hsted in Exhibit VI-1. 



O 1994 by INPUT. Reproduction prohbited. 



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Exhibit VI-1 

Examples of System Management Contracts 















U.K 

Peti 
Eun 


. Insurance Company IT 

'Oleum Company Lo 

inf 

Dpean Airline Cc 


under cost pressure 

ng-term support for ageing applicatio 
rastmcture 

)st-effective 24-hour system 
anagement for key application 


Systems management 
(24 hour X 7 day) 

some systems moved to HP sites 
n & Systems management Help desk 

Overnight(only) systems 
management 



Source: HP 



In addition, HP has assisted a multinational ceramics company 
in making the transition from its previous batch systems to SAP 
R/3. HP assisted in the development and implementation of the 
new client/server environment, and now provides systems 
management and network management of the client/server 
infrastructure. 

Examples of HP's desktop management contracts are listed in 
Exhibit VI-2. 

HP's European outsourcing contracts typically average three 
years in duration, and have an average value of approximately 
$500K 

The pricing mechanism used by HP varies from contract to 
contract. At present, the majority of deals are conducted on a cost 
plus basis, but HP expects value-based pricing to grow in 
importance. 



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Exhibit VI-2 

Examples of Desktop Management Contracts 



Client 


Problem 






Pharmaceutical Company In 

H 

U.K. Investment Bank In 

cr 

Telecommunications C< 
manufacturer 


consistent desktop service levels, 
eadcount restraints on IT departmen 

consistent desktop service levels in 
itical user environment 

ash flow and service levels 


Help-desk services. Service level 
t metrics implemented. On- site 
installations. 

On-site help-desk. Off-site 2nd line 
support. Service level management 

Desktop management services 
Application help-desk 
Finance for LAN environment 
Equipment procurement 
Managed service levels 



Source: HP 



3. Supported by Other HP Divisioris 

HP's Operations Services Division reports into HP's World-wide 
Customer Support Operations organisation. How^ever, the 
Operations Services Division utilises support from elsewhere 
within HP. The principal organisational units involved in HP's 
selective outsourcing services are: 

• Corporate Network Services 

• Information Technology centres 

• Operations Services Centres 

• World-wide Response Centre Network 

• Systems Support Organisation 

• Professional Services Organisation 

• Finance and Remarketing Organisation 

The HP Response Centre and Operations Centre Network employs 
approximately 2,300 personnel world-wide, across 32 locations. 
Four of the network's ten hubs are sited in Europe at: 

• Ratigen, Germany 

• Bracknell, U.K. 



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• Les Ulis, France 

• Milan, Italy 

The Information Technology Centres are responsible for the 
operation and management of HP's internal IT services. 

Access to HP's Finance and Remarketing Organisation is 
important since many organisations want to avoid the purchase of 
assets. In addition, introducing technology refreshment into the 
outsourcing contract assists in ensuring version control and in 
preventing technology obsolescence occurring at the desktop. 

World-wide, HP estimates that its financing division is involved in 
approximately fifty per cent of outsourcing contracts. However 
this proportion may be lower for the European contract base. 

Personnel from the Profession£il Services Organisation assist in 
providing technical consultancy skills such as the design of 
client/server infrastructures and in delivering technical training. 



ITnet — Targeting Distributed Systems Outsourcing in Local 
Government 

In the recent past, a nimiber of large company IS departments 
have begim to offer their services externally. Many of these 
organizations have viewed the outsourcing market as a major 
new opportimity. 

Not all of these organizations have achieved the success they 
sought. Even though the European outsourcing market is 
growing rapidly, it remains very competitive. 

ITnet, however, has achieved an average annual growth rate of 
28% since its formation in 1987. Much of this growth has been 
derived from the organization's outsourcing activities. ITnet's 
revenue growth over the last six years is shown in Exhibit VI-3. 

Only £1 m of the company's 1993 revenues were derived from the 
project service sector, the remainder coming from outsourcing 
services. 



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ITnet Revenues, 1988-1993 



Y^ar Revenues 

(£m) 

1988 13 


Growth 
{%) 

18 


1989 19.5 


50 


1990 26.6 


36 


1991 30.3 


14 


1992 34.3 


13 


1993 44 


28 



Source: ITnet 



The bulk of ITnet's outsourcing revenues in 1993 were derived 
from platform operations. 



However ITnet is developing its services to target major new 
growth opportunities including: 

• Distributed systems outsourcing 

• Managed services in U.K. local government. 

In addition, ITnet may develop partnerships with other 
outsourcing vendors to increase its ability to meet client need for 
international outsourcing services. 



1 . Developing Distributed Systems Outsoureiiig Services 

A breakdown of ITnet's outsourcing revenues by service tjrpe is 
provided in Exhibit VI-4, and a breakdown of number of 
customers by service type in Exhibit VI-5 



© 1994 by INPUT. Reproduction prohbited. 



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ITnet Outsourcing Revenue Breakdown by Service Type, 1993 



;:;X::vrv:;Xv>>:;:;>:\;:;:v:vXv:;X;X;:v:;;;X;X;X;:v:v;;X 'J -i^": :-X;X;>X;X;:;>X;X;X;Xv;>X;Xv.;Xv. 


Revenues 
tm 


Platform Operations 


28 


Desktop Services 


3.5 


Application management 


9 


Business Operations (Managed Services) 


2.5 


Total 


43 



Source: ITnet 



Number of Customers by Service Type ITnet, 

January 1994 



Service Type 

Datacentre services Applications management 

Distributed systems services 
Managed services 


Huinbers of Ctienfs 

21 
5 
17 


Total 


29 



Source: ITnet 



The majority of ITnet's outsourcing clients use the company's 
platform operations and application management services. New 
platform operations contracts were signed with the following 
clients in 1993: 

• The Cheese Company (formerly Express Foods Ltd) 

• Hertfordshire Coimty Coimcil 

• Prudential Assurance Co. Ltd 

• Premier Brands 



© 1994 by INPUT. Reproduction prohibited. 



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• Sterling Health 

• Westminster City Council 

ITnet has a well-established application management capability 
and lies in fifth place in the U.K. application management market 
behind Hoskyns, FI Group, Sema Group, and Andersen 
Consulting. Overgdl ITnet is finding that application 
management is becoming an increasingly important component 
of outsourcing contracts, as organizations focus on migrating 
firom their legacy systems to client/server architectures. 

ITnet has had an embryonic desktop services capability for a 
nmnber of years. However, the company is now placing much 
more emphasis on the need to migrate clients between IT 
architectures and is strengthening its distributed systems 
outsourcing capability by creating an organizational structure 
that places greater emphasis on distributed systems services. The 
new structure is shown in Exhibit VI-6. 



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Exhibit VI-6 



ITnet Organization Structure, 1994 



Datacentre 
Services 



Customer Services 
(iielp-desk) 



MD 



Technical 
Functions 

• Operations 

• Operations 
Support 

• WAN Management 



Distributed 
Systems Services 



IVIanaged 
Services 



Outsourcing 

• Infrastructure 
Management 

• Applications 
Management 



Project 
Services 



. Source: INPUT 



This re-organization will divide ITnet' s operational capabilities 
into three principal areas: datacentre services, distributed 
systems services, and managed services. 



Initially, ITnet may develop separate help-desks for each of 
datacentre and distributed systems support, though these help- 
desks are likely to merge in the long-term. ITnet is currently 
enhancing its ability to remotely manage equipment connected to 
LANs through its three regional support centres based in 
Birmingham, Hertfordshire, and Westminster (London). 

Examples of clients for whom ITnet manages distributed systems 
environments include Hertfordshire County Council and 
Westminster City Coimcil. 



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2. Targeting Managed Services in Local Goverriinent 

Exhibit VI-7 provides a breakdown of ITnet's revenues by industry- 
sector. At present, if ITnet's revenues from its parent Cadbury 
Schweppes are excluded approximately 75% of the company's 
outsourcing revenues are derived from the public sector. 



ITnet Revenues by Sector, 1993 



Sector 



Local Government 

Commercial 

• Cadbury Schweppes 
•aher 



22.5 

21.5 

(15.0) 
(6.5) 



Total 



44 



Source: INPUT 



ITnet does not have a background in sales to central government 
and so is tending to focus on local government and former local 
government entities such as schools and colleges that now need to 
manage their own budgets. ITnet has a number of specialist 
applications designed for use by these institutions. 

Itnet perceives that in order to maintain its market share in local 
government, the company will need to maintain growth of 25% 
per annum. 

While much of ITnet's growth is expected to come from increased 
IT outsourcing activity as a result of the implementation of 
Compulsory Competitive Tendering, ITnet is also developing its 
capability to provide managed services to local government. 
Managed Services is the term used within U.K. local government 
for business operations. ITnet already has a number of managed 
services clients including Hertfordshire County Council, 
Westminster City Coimcil, and the London Borough of Brent. In 
addition, ITnet has a number of schools and colleges that utilise 
its payroll managed service. 

At present, ITnet is concentrating on managed financial services 
covering areas such as payroll, pensions administration. 



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exchequer services. ITnet has recently introduced revenue 
collection services. 

At present ITnet does not offer business operations services to the 
commercial sector but may enter this market when once business 
operations becomes well-established there. 

However, ITnet is aiming to increase its revenues in the 
commercial sector substantisJly. ITnet doubled its non-Cadbury 
Schweppes revenues in 1993, and intends to grow its commercial 
sector revenues significantly in 1994. ITnet will be principally 
targeting migration services for medium to large organizations 
i.e., those orgginizations which will yield contracts worth £1 - 10 
million per annum. 

While recognizing the importance of price in the decision process, 
ITnet perceives that its culture will assist it in winning new 
business. 

Cadbury Schweppes has a phil£inthropic tradition, and ITnet' s 
culture makes it comparatively sensitive to hvmaan resources 
issues. This is a desirable attribute in negotiating contracts with 
the public sector, but maybe viewed as less important by some 
organizations in the commercial sector. 

In addition, ITnet' s customer service organization has achieved 
BS5750/TickIT certification and, in 1993, the company won 
Computing magazine's "Best Outsourcing Company Award for 
Excellence". 

3. Developing International Partnerships 

ITnet does not have any operations capability outside the U.K.. 
However, the company is potentially interested in establishing 
partnerships with culturally compatible outsourcing vendors to 
facilitate access to multinational outsourcing contracts. 

For example in 1993, Comdisco was awarded a world-wide 
outsourcing contract by Sterling Health. Lacking any U.K. 
operations capability, Comdisco subcontracted the U.K. operations 
to ITnet. 

As organizations increasingly outsource on a multinational basis, 
ITnet would like to participate in this market by establishing 
suitable partnerships. 



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c ^ 

SHL Systemhouse Aims to be Global Leader in Transformational 
Outsourcing 

During the last two years, EDS and CSC have considerably 
increased their presence in the European outsourcing market. 
Other North Americain professional services vendors are now 
aiming to increase their penetration in the outsourcing market 
here. 

For example, although SHL Systemhouse is an organization with 
annual revenues exceeding $1 billion, it has a relatively low 
profile in Europe. SHL Systemhouse now intends to increase its 
presence in Europe. 

The company will aim to grow by: 

• Establishing its transformational outsourcing services 

• Focusing on certain strategic market sectors. 

• Acquisition 

1. Establishing Transfonnational Outsourcing 

Prior to 1993, SHL Systemhouse's outsourcing contracts were 
predominantly mainframe-based platform operations contracts. 
However in recent contracts, there has been increasing emphasis 
on distributed systems outsourcing. SHL Systemhouse's current 
focus is to take advantage of this trend and become "the global 
leader in the transformational outsourcing market". 

SHL defines transformational outsourcing as assisting clients in 
migrating their appHcations to the more flexible and cost-effective 
client/server architecture. The service encompasses the operation 
of a client's mainframe applications, migration to a client/server 
platform and the operation of that distributed environment. To 
avoid cHents becoming locked-in to paying for services on their 
existing mainframes, SHL offers a guaranteed decline in charges 
for mainframe use as applications are migrated onto client/server 
architecture. SHL Systemhouse offers a complete transformation 
service including: 

• Datacentre operations 



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• Legacy system application support 

• Client/server architecture planning 

• Systems integration services 

• Application development and implementation 

• Help desk 

• Telecommunications services 

• Business recovery services 

• Networked systems management 

SHL Systemhouse will either provide networked systems 
management or assist clients in establishing their own network 
operations centre to provide in-house distributed systems 
management. SHL Systemhouse currently has seven Computing 
and Network Services centres. Six of these are based in North 
America and one in London. The company has assembled its own 
unique set of systems management tools for the management of 
distributed systems, based aroimd Hewlett Packard's OpenView. 

Within its distributed systems management service, SHL offers 
six core service components £ind three optional service 
components. The core service components are: 

• Help desk 

• Fault management 

• Asset and configuration management 

• Accoiinting management 

• Performance management 

• Security management. 

The optionaJ service components are: 

• Software distribution 

• Data recovery 



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• Business recovery. 

SHL Systerohouse believes that the help desk should be a single 
point of contact to all support services covering: 

• Call logging 

• Remote LAN Management 

• Field engineering 

• On-site support 

• Client-specific help desks. 

SHL Systemhouse is targeting organizations with more than 500 
personal computers attached to LANs, that are implementing 
LAN-based mission critical applications. 

SHL Systemhouse intends to ofifer end-to end service delivery. The 
company provides technology deplojrment, education and 
training, systems integration, and consultancy services in 
addition to its systems mgmagement services. A breakdown of the 
company's European revenues by line of business is provided in 
Exhibit VI-8. 



Exhibit VI-8 

Revenue Breakdown by Line of Business, Europe 





1993 


tine of Business 


Revenaes 


Technology Development 


100 


Training & Education 


25 


Systems Management 


25 


Systems Integration & Consultancy 


15 


Total 


165 



Source: SHL Systemhouse 
The organisation of these service lines in Europe is shown in 
Exhibit VI-9. 



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In addition, the company's European operations have access to 
the global Strategic Technology Units. These units specialize in 
client technology, server technology, communications, and 
systems development environments. SHL Systemhouse has 
developed its own client/server development methodology called 
SHL Transform. SHL Transform is workstation-based and object- 
oriented, using hypertext, hjrpermedia and video. SHL 
Systemhouse also has expertise in full text searching and 
imaging technology. 

In the future, SHL Systemhouse expects the basis of pricing for its 
services to change from cost-based pricing to a fee per workstation 
which includes all aspects of application provision and support 
services. In other instances, clients will pay not for the cost of 
system implementation and support, but per business transaction 
as the system is used. 

2. Focusing on Postal Authorities and Banking & Finance Sectors 

Worldwide, SHL Systemhouse focuses on three key sectors: postal 
authorities, telecommimications, and oil and gas. The oil and gas 
sector is particularly important to SHL Systemhouse in Latin 
America. 

In Europe, SHL Systemhouse also emphasises its experience in 
the postal services sector. The compgmy played a major role in 
assisting the U.S. postal service to establish and manage its 
client/server architecture. 



Exhibit VI-9 



SHL Systemhouse Europe 




President 



Computing & 
Network Services 
(North America) 



Continental 
Europe 



Education 
& Training 



Systems 
Integration 
& Consultancy 



Technology 
Deployment 



Computing 
& Network 
Services 



Source: INPUT 



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Exhibit VI-10 

Examples of Outsourcing Contacts 



Client 
Royal Bank of Canada 


1 

\ Scope of Service 

Platform Operations Applications maintenance & 
development 


Value (£) 
15 


Westpac Banking Corporation 


Platform Operations Technical Support 


3.5 


RAC 


Outsourcing 


3 


CIBC Mortgages 


Platform Operations Technical Support 


2 


ABN Amro Bank N.V. 


Platform Operations Technical Support 


1.2 


European Postal Organization 


Networked Systems Management 





SourcerlNPUT 



SHL Systemhouse already has a major contract with one 
European postal authority to assist them in managing their 
distributed environment. This infrastructure consists of 
approximately 800 Novell servers, 200 UNIX servers, and 3,500 
workstations spread over 700 locations. 

In the U.K., SHL Systemhouse also has expertise in the banking & 
finance sector following its acquisition of AST. Exaimples of SHL 
Systemhouse's European outsourcing contracts are listed in 
Exhibit 3. 

In the U.K., SHL Systemhouse also offers business recovery 
services to the financial services community. In particular, the 
company has established two dealing room contingency facilities. 

3. Growth by Acquisition 

SHL Systemhouse's current organization structure is shown in 
Exhibit VI-11. 



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Exhibit VI-1 1 



SHL Systemhouse Organizational Structure 



SHL 



Systemhouse 



SHL Canada 
& Asia 



SHL U.S. & 
Latin America 



Strategic 
Market Units 



Strategic 
Technology Units 



SHL Europe 
& Africa 



Computing 
& Network 
Services 



Source: INPUT 



The company is organized into three geographic regions and 
three global entities, through which the company aims to offer a 
seamless globsd service. If the company's revenues are 
apportioned solely on a regional basis, then in 1993, Europe 
achieved revenues of $165 million, with the other two regions each 
achieving revenues in excess of $400 million. 

In Europe, SHL Systemhouse employs approximately 600 
personnel, 500 of whom are employed in the U.K. Systemhouse 
International U.K. was established in 1989 offering systems 
integration and consultancy services. Since then the company has 
made a number of U.K. acquisitions, including: 

• Computer Group - in 1989, as a basis for the company's 
technology deployment services 

• Computer Marketing - in 1991, to enhance Systemhouse's 
network integration capabilities 

• AST Trans-Act - in 1993, to add major datacentre capability. 



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The acquisition of AST Trans-Act enables SHL Systemhouse to 
deliver a complete range of transformational outsourcing services 
to its U.K. customer base. AST Trans-Act was formally owned by 
the Royal Bank of Canada and offered outsourcing services 
principally for the banking and finance sector. Elsewhere in 
Europe, SHL Systemhouse's presence is comparatively limited 
and the company will need to make additional acquisitions to 
build its business in continental Europe. 



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User Questionnaire 



A . Current Service Delivery 

1. What are the principal chsdlenges in supporting your organization's desktop 
IT infrastructure? 



2. Who deHvers each of the following components of your organization's desktop 
support at present? 

Equipment maintenance 

LAN installation 

Ongoing LAN management 

End-user help-desk services 

Version control and update management 

Asset management 

Other (please specify) 

Choose from; 

• Central IS team 

• Local IS team 

• End users 

• Third parties (who?) 



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B. Current Satis£action 

3. Which aspects of your organisation's desktop services are you particularly 
pleased with? 



4. Which aspects of your desktop service delivery do you think could be improved? 
Why? 



5. How well do you perceive each of the following aspects of the desktop 
environment to be supported at present? Please rate on a scale of 1-5 where 
1 = not at all well, and 5 = extremely well. 

Equipment maintenance 

LAN installation 

LAN management 

Help-desk services ^ " 

Update management „„_ 

Asset management 

Network timing 

Configuration management 

Overall 

6. Please rate the quahty of your current desktop support in terms of each of the 
following (please rate on a scale of 1-5 where 1 = imsatisfactory and 5 = very 
satisfactory): 

Responsiveness 

Cost-effectiveness 

Pro-active assistance 

Business knowledge 

Technical knowledge 

Overall 



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C. Attitudes to Outsourcing 

7. Which services do you expect to begin contracting out over the next year? 



8. Please rate the level of contribution you feel contracting out could make to 
improving the quality of each of the following service functions, where 1 = none 
and 5 = very considerable. 

Equipment maintenance 

LAN installation 

LAN management 

Help-desk services 

- First-line end user support 

- Second-line support 

Update management 

Asset management 

Wide area network management 

Datacentre management . 

9. What are the principal benefits you would expect to achieve through 
outsourcing? 



10. To what extent do you think that outsourcing your desktop services would 
deliver each of the following benefits? Please rate an a scale of 1-5, where 
1 = not at all and 5 = very considerably? 

Improved responsiveness 

Improved cost-effectiveness 

Improved end-user relationships 

Improved end-user productivity 

Improved focus for IT department 

11. If you were to incrementally outsource elements of your desktop support 
services, which would you outsource? 



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12. Which aspects of desktop support do you think are best carried out in-house 
and which externally? 



D. Purchasing Process 

13. Who currently within your organization controls external expenditure 
decisions for each of the following areas? 

Equipment maintenance 

LAN installation 

Ongoing LAN management 

End-user help desk services 

Version control and update management ' 

Asset management 

Overall 



14. What are the key criteria you would look for in a supplier of desktop services? 



15. How desirable are each of the following? Please rate on a scale of 1-5 
where 1 = not at all desirable and 5 = very desirable. 

One-stop shopping capability 

Ability to support wide range of appHcation 

software products 

Multivendor capability 

LAN skills _____ 

WAN skills 

AbiHty to manage data centres 

Ability to manage voice networks 

System design and implementation skills 

Ability to manage whole of 

IT infrastructure 



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E. Vendor Image 

16. Who do you think is most appropriate to supply desktop services support? 



Why? 



17. How suitable do you perceive each of the following vendors to be as potential 
suppliers of desktop services? Please rate on a scale of 1-5 where 1 = not at all 
suitable and 5 = extremely suitable. 



U.K. France Germany 

IBM Axone IBM 

Digital Digital Digital 

HP HP HP 

ICL ICL ICL 

P&P GSI tds 

SemaGroup Telesystems debis 

Hoskyns Thomainfor Computer 2000 

EDS EDS EDS 



18. How important is it for your organisation to reduce/simplify the number of 

external vendors involved in providing desktop support services? Please rate on 
a scale of 1-5 where 1 = not at all important and 5 = very important. 



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F. Cost Reduction 

19. For which elements of desktop support do you beHeve cost savings could be 
achieved by using an external vendor? 



20. How much do you believe it costs your organization to support your desktop 
environment at present? 

Overall 

Per PC 

Per User 

21. How do you feel these costs are broken down by element? 

Proportion (%) 

Equipment and software purchase costs 

Equipment maintenance 

Installation 

End-user help desk support 

Other (please specify) ^ 

G. Background 

22. Number of people in enterprise 

23. Turnover of enterprise 

24. Nimaber of PCs in enterprise 

25. Number of LANs in enterprise 

26. Proportion of PCs connected to LANs 

27. Industry sector 

28. Respondent type 



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