ISG Provider Lens™ SIAM/ITSM - U.S. 2020 - Service Design & Transition

SIAM/ITSM 2020

Digitalization is omnipresent and all-pervasive in the service integration and management (SIAM)/IT service management (ITSM) market. A shift from information technology (IT) to business technology (BT) is occurring across markets and with this the predicted extension of the IT value chain has become a reality. The customers of a company have direct access to business warehouse (BW) information or enterprise resource planning tools (ERPs) or even business applications for details about product design, availability or delivery dates. Commercial ERP is connected with smart factory systems to offer build-to-order services to customers and a smart factory can reach out to suppliers to ensure “just-in-time” delivery. In the healthcare industry, information can be shared easily. For instance, clinical data easily gathered through electronic health records can encourage R&D departments of pharmaceutical companies to undertake research to manage chronic conditions such as diabetes. Customers can use virtual reality (VR) and augmented reality (AR) to design a kitchen or select curtains for the living room using the smartphone camera. And extension at the other end of the IT value chain happens in B2B relations and in shop floor integration with the same pace.

The ITSM/SIAM market has been impacted twofold by digitalization. At the outset, IT4IT™ is a reality. Emerging technologies are available and systems of engagement together with the systems of record act as platforms for enterprise management systems (EMS). We, at ISG, are of the opinion that we need to talk about the extended enterprise system management (xESM) market as the one responsible for operating BT, and the need to secure business process operations beyond the boundaries of a company’s BT environment.

Secondly, the market for service integration (SI) and managed services for Extended Enterprise Management Systems (EESM) is growing rapidly. SI is important as the BT management systems are driven by three forces: they need to support business process, the need to combine emerging technologies with legacy systems and user satisfaction. In this scenario, managed service providers (MSPs) are more in demand as there is a paucity of skilled resources to operate the complex solutions.

The SIAM/ITSM market is undergoing a fundamental change ― moving from laborintensive implementations to highly automated functions. Vendors are investing heavily in automation capabilities and using available/emerging modern technologies to unlock new value for their services. While the IT environment has been producing data since technology was invented, analytical tools are now being used to transform correlated data into information. With this intelligent automation (IA), IT can deliver incremental value by integrating the systems of record with the systems of engagement, even within IT itself. This integration is being used to make decisions or to automatically trigger activities based on extensive solution catalogs. User experience is improved by using highly sophisticated natural language processing (NLP) techniques across a large variety of input channels, resulting in a seamless and personalized human-machine experience. Early use cases are being built using machine learning (ML) capabilities to act faster and to prevent incidents.

As mentioned earlier, IT4IT™ is reality and emerging technologies are available and in use. In this respect, “in use” has to be understood as technologies being used by vendors to offer enhancements in the automation of processes. In some cases, for example in sourcing information management, such technologies allow better integration by helping to format unstructured data or by automatically sending an alert during pattern recognition in mass event data. In use does not necessarily mean that SIAM customers are extensively using this already operational technology. We have observed that even though such technologies are available only few, very experienced or mature clients, often working in close relationship with the vendor or system integrator, are using the available solutions. For the majority of IT organizations, the lack of internal readiness prevents them from fully utilizing them.

However, compared with last year’s study, the functionalities in the product offerings have increased dramatically. We, at ISG, had to take that into account while comparing the different offers; to plot the results in the charts for this report, we had to adjust the scaling heavily to ensure that the charts were not top heavy. Hence, it is necessary to understand the position of a provider in comparison with the other providers and not in comparison with its last year’s position. In some cases, it may appear that a vendor has lost ground but, in reality, it has gained ground with respect to the functionality but has lost ground relative to other offerings as they simply developed faster.

Business units need to constantly improve customer experience to win and retain customers, hence, the number of IT services underpinning business solutions is constantly growing, raising the importance of structured SIAM rapidly. Most of the business-related services need to come from a large group of outside vendors to meet the requirements of companies in the ever-increasing competitive business environment. More companies understand that running and managing the IT environment today requires a two-pronged approach. First, operational IT service management activities must evolve from peopledriven actions to automated, self-managed and machine-performed executions, and second, professional orchestration of the IT supply is needed, through a large number of suppliers, to build a robust service ecosystem that can deliver end-to-end business services. IT operations management is evolving into a complex environment of service elements and providers and is changing rapidly.

Traditionally, IT organizations kept core infrastructure and application management in-house. With the increasing demand for more agility, a growing number of companies are realizing that they cannot keep pace with this evolution. Labor shortages, along with the need for deep knowledge about a variety of new and complex technologies, is compelling IT departments to re-think their management approaches. The demand for managed services is growing, and vendors are developing high-tech solutions with focus on the zerotouch operating model to guarantee a sustainable business IT environment.

Vendors in this market can be separated into three groups. One group comprises the classic vendors that focus on developing feature-rich tool sets that are easy to implement, easy to enrich and can be leveraged by IT department, MSPs or system integrators. Even though the IT market is moving toward anything-as-a-service (XaaS) delivery models, the market is still favorable for on-premise installations. Local legal requirements and legacy installations are the driving forces here. This market segment is mainly split between ServiceNow, BMC Software, Cherwell, Microfocus, Broadcom/CA Technologies, Atlassian, and Ivanti. However, there are some smaller players that offer feature-rich products that have gained a certain market share, such as 4me, Matrix42 or Mphasis.

The second group comprises consulting and IT service companies that use the platforms of the first group and enhance the base functionality with specific features based on their industry-specific or other specialized knowledge. These vendors range from global IT services companies such as Accenture, Deloitte or EY to focused local players such Plat4mation, Trianz, Fusion GBS, FlyCast Partners and RightStar. These companies offer a variety of services, including implementation consultancy and managed services.

The third group comprises IT service companies that have, over time, developed featurerich, proprietary tool sets normally used only in a managed service environment. Some of the companies in this group are Capgemini, HCL, Infosys, LTI, Orange and TechM. This study looks at all of these product solutions independent from the delivery model and provisioning.

Given the high variances in client maturity regarding SIAM, the success of vendors in the market depends on their ability to demonstrate extensive knowledge of ITSM, SIAM and governance, risk and compliance (GRC) processes. This knowledge needs to feed an internal reference model used to define a robust, agile and secure SIAM framework that combines people, processes and tools seamlessly. In some cases, the reference model is being supplemented with some already established models in the market such as IT4IT™, defined by The Open Group. Proprietary assessment and coaching methodologies, together with high transformation skills and a flexible pricing model, are additional and important success factors in this market.

Even though this market is not large, it is one of the fundamental pillars of every digital transformation strategy. With IT operational budgets still tight, and margins somewhat skinny, this market is clearly a very attractive one for vendors; given their strategic position inside client organizations, SIAM/ITSM vendors are playing a key role and are about to get a seat at the internal IT and business-decision table. Achieving such a position requires a great deal of trust. This is either being gained through long-term, trusted relationships or through high delivery quality, resulting in better user experience or a high customer satisfaction (CSat) or net promoter score.