7 of 10 CIOs to change tech, service providers in 3 years

The service provider landscape is set for an upheaval over the next several years as organizations struggle to adjust to a digital future, according to Gartner.

Results from a survey by Gartner's Executive Programs found that 70% of CIOs will change their technology and sourcing relationships in the next two to three years for a variety of reasons.

"They are strongly considering changing the providers they work with as part of responding to this change," said Eric Rocco, managing VP at Gartner. "Market share will shift to service providers able to help clients respond to the business and IT opportunities and challenges that are overwhelming more than half of organizations today.”

Rocco said that the digital business revolution is underpinned and enabled by the macro technology forces of cloud, social, analytics, mobility and the Internet of Things.

Gartner believes that assisting clients in digital business transformation will be a driving factor in the majority of IT services opportunities. Consequently, finding and capitalizing on unexpected sources of growth is the strategic issue facing all service providers.

Also, Gartner sees the Nexus of Forces forming the very fiber that defines next-generation services. Services of tomorrow will lean on scaled and industrialized delivery models that provide clients access to services that are consumed to drive specific business outcomes.

The IT services market will not grow uniformly. The overall market is forecast to grow 4.6% in 2014. Hardware support is among the lower-growth opportunities and, through proactive and multivendor support models, these services will increasingly collide with outsourcing services.

Cloud-based infrastructure as a service (IaaS) and business process as a service (BPaaS) are the two fastest-growing segments, expanding 44.9% and 12.4%, respectively. Agility, not cost, will be the primary reason that many organizations adopt cloud computing. Cloud-based services are cannibalizing more traditional models.

"The strategic challenge facing service providers is to better understand client value drivers, and to more effectively articulate their own value propositions," said Rocco.

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