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Cost Takeout and IT Availability Remain Top Priorities for U.S. IT Services Buyers

Posted Friday, July 02, 2010 By ITVARNews Network
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According to a survey by Gartner, even though buyers in the U.S. are one of the most mature and aggressive users of IT services from external services providers (ESPs), service providers must understand some unique and differentiating behavior to be successful in the U.S. market.

Recession has made U.S buyers of services more cost-conscious. \\\"Compared to global averages, buyers in the U.S. show a slightly more-conservative approach to IT adoption, and a high focus on IT cost as they approach external services contracting. They also will focus on practical IT operations (\\\"keep the lights on\\\") and will pay less attention to business innovation in IT as a driver for using IT services,\\\" said Allie Young, vice president and distinguished analyst at Gartner.

\\\"To capitalize on U.S. IT services opportunities, service providers must have current insights into buyers\\\' \\\'pain points,\\\' intentions and their expectations from service providers, Young added.

Gartner surveyed 213 U.S. organizations between November and December 2009 to better understand how and in what ways organizations utilizing externally provisioned IT services have been affected by economic changes and what their plans are for using ESPs.

According to the survey 48 percent of U.S. organizations expect to increase their spending with ESPs in 2010. The U.S. buyers are looking to adopt mature technologies with manageable risk, the survey highlighted. The survey indicated that the economic crisis has brought more conservatism to technology adoption.

Given the impact of the economic crisis and strong discipline on cost controls among U.S. buyers, providers must heed how critical it is to accentuate your practical skills to run the business. These basic messages of cost takeout and IT availability must be prioritized, even for higher-value solutions, commented Young.

The survey believes that 60 percent of U.S. buyers have renegotiated service contracts in the past two years, while 47 percent have used offshore services delivery, and 40 percent have used technology as a service.

\\\"The overall positive picture of the market willingness of U.S. buyers to use ESPs in support of IT and increased spending supports Gartner forecasts for a return to growth in 2010,\\\" said. Young.

\\\"However, service providers will face a U.S. buyer with cost-focused priorities and a multiprovider strategy, which means many of the competitive dynamics of 2009 will continue. It is also likely that the influence of high levels of contract renegotiations and the strengthening influence of the CFO and procurement in many U.S. organizations seen in the past two years will continue to have an impact, thus keeping pressure on IT budgets and cost control but also opening up some issues of service quality, she added.
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