Worldwide Information Services Market Customer and Market Trends, 1990-1995 forIBMCorporation Armonk,NY PresentedbyINPUT April23,1991 INPUT 1280VillaSt.,MountainView,CA94041-1194 Telephone:415-961-3300 WORLDWTOEINFORMATIONSERVICESINDUSTRY FORIBMCORPORATION TableofContents CustomerTrends Overview DrivingForces InformationSystemsTechnology InformationServicesMarketModesandSubmodes Conclusions InformationServicesMarketModesandSubmodes Worldwide UnitedStates WesternEurope Japan Other InformationServicesVendorProfiles AndersenConsulting AutomaticDataProcessing CAPGeminiSogeti ComputerSciencesCorporation CSKCorporation DigitalEquipmentCorporation ElectronicDataSystems Finsiel Logica Reuters SD-Scicon Appendixes INPUTtoIBMModesandSubmodeClassification INPUTtoIBMIndustrySectorClassification mm,IBM,CustomerTrendsbyINPUT WORLDWIDEINFORMATIONSERVICESINDUSTRY FORIBMCORPORATION InformationServicesMarket CustomerTrends 1990-1995 Thisbriefingprovidesasynopsisofthefundamentalcustomer(user)andmarkettrends drivingtheinformationservicesindustry. ItdrawsonINPUT'Sresearchintoeachofthe primarydeliverymodesoftheindustryasdefinedbyIBMandINPUT,andontheuserand vendorresearchperformedbyINPUTintheUnitedstates,Europeandtherestoftheworld. ThedatapresentedinthisbriefingisbasedontheWorldwideInformationServicesIndustry ModeandSubmodetablesprovidedaspartofthisproject. Overview Neartheendofthe1980stheinformationservicesindustrybeganasignificantevolutionary step. Firstidentifiedbytheupsurgeincommercialsystemsintegrationandfollowedby majorinformationsystemsoutsourcingdecisionsbywellrespectedFortune500corporation theshapeoftheinformationsystemsplayingfieldbegansignificantchange. • Exhibit1providesahistoricalperspectiveonoutsourcing. Ithasalwaysbeenapartof theinformationsystemsprocessinthemarketsstudiedbyINPUT. Whathaschanged overtimeisthebreadthoftheoutsourcingdecision. Thesechangesreflect: - Thecomplexityoftheinformationsystemsprocess - Thematurityoftheinformationservicesindustry — - Thecharacteristicsofbusinessingeneralinthe1990s concentrationontheessen- tials — - Thebeginningofashiftintheroleofinformationsystems fromproviderto consultant Exhibit1 EvolutionofOutsourcing TypeofProduct 1960s 1970s 1980s 1990s orService Applications Applications Turnkey Applications Software Packages Systems Management Professional Consulting Applications Systems Services ContractProg. Development Integration Processing Specific Facilities Systems Services Proc.Serv. Management Operations mill,IBM,CustomerTrendsbyINPUT Pag • Exhibit2projectstheoutsourcingevolutionforwardintothe1990s,definingnewopportu- nitiesandservicesthatwillbeofferedbyinformationservicesvendorsandboughtby generalmanagementaswellasinformationsystemsmanagement. Theyallincludethe followingcharacteristics: - Managementresponsibilitybythevendor - Partnership,aswellasobjective-based,vendor/buyerrelationships - Multi-year,multi-function,multi-riskrelationships - Sharingoftheupsanddowns Exhibit2 Outsourcing DevelopingMarkWetOpportunities ^SystemsManagementFunctions Transition Applications Applications Management Maintenance Management Systems ^ ^ Systems I/ntegiratiXon"^ Op/erAatiXons Applications ProfessionaP^ Network Software Services Services Turnkey Processing Sys1ems Services DeliveryModes • Exhibit3classifiesthevendor/userrelationshipsthatwilldevelopunderthismarket evolution. — - Parmershiprelationships characterizedbyamanagementorientation,withbroad scope,open-endedtimingand—aflexiblecontractualagreement - Objective-basedrelationships characterizedbyaprojectorientation,withwell definedscope,specifictimingandafairlyspecificcontractualagreement YWIll.IBM,CustomerTrendsbyINPUT Page2 Exhibit3 OutsourcingRelationshipClassification Relationship Outsourcing Relationship Type category unaracrensTics rartnersnip- Appiicaiions MariayyiiiyiU'Uiibiucu Managemeni DiUctUouUpt^ upen-enoeaTiming isysiems DlUdUCApmilbc WpcidllUIlo P<sr<5nnnpltran^fpr Flexibleagreement Servicelevels Objective- Transition Project-oriented Based Management Specificscope Specifictiming Applications Specificexpertise Maintenance Focusedagreement Targetdates Systems Integration • Exhibit4providesonefurtherinsightintotheinformationservicesmarketevolutionofthe early1990s. Itisprovingtobeamarketdrivenbythelargervendors,eachofwhich bringsadistinctheritageorhistoricalorientationtotheservicesitoffers. - Thehardwarevendor(e.g.,IBMorDigital)movesforwardfromtheorientationofits installedbase - Theprofessionalservi—cesvendor(e.g.,AndersenConsulting)mustaddmanagement andriskontwolevels systemsintegrationandsystemsoperations - Theprocessingservicesvendor(e.g.,LittonComputerServices)mustaddapplications supportorformallianceswithprofessionalservicesfirms - Theapplicationsmanagementvendor(e.g.,Systematics)typifiesastrategythatwill becomecommonasthe1990sevolve TNIU,IBM.CustomerTrendsbyINPUT Page3