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IDC: Outsourcing analytics is levelling the playing field

By Shannon Williams
Wed 18 Dec 2019
FYI, this story is more than a year old

Analytics is critical in enabling access to business and market insights that assist in making effective business decisions, according to IDC New Zealand, who says it has become one of the top components of New Zealand organisations' digital strategy.

The analyst firm says the ability to outsource analytics-related IT services is levelling the playing field between organisations with the capabilities to perform analytics in-house and those that do not. 

Particularly, smaller organisations constrained by budgets, or larger organisations constrained by on-premise infrastructure, are overcoming these constraints through utilising external providers.

"New Zealand organisations that have not adopted analytics are finding themselves increasingly disadvantaged compared to peers who do utilise the technologies to improve operational efficiency, increase agility, manage costs, and comply with regulations," explains Chayse Gorton, A/NZ market analyst for IT services.

In the IDC Australia/New Zealand's 1H 2019 IT services tracker, IDC is forecasting that spending on analytics-related IT services will reach NZ$261 million, climbing to NZ$468 million in 2023. 

Overall, analytics-related IT services revenue share will increase from 7% in 2019 to 12% in 2023.

This represents a five-year compound annual growth rate (CAGR) of 15.9% between 2019 and 2023. In contrast, the revenue for New Zealand non-analytics services is forecast to grow at a CAGR of only 1.7% to 2023.

Meanwhile, IDC's 2019 NZ IT Services Ecosystem study identified that 46% of New Zealand organisations plan to invest in analytics or big data solutions in 2020 and most of this investment will be directed at external analytics service providers. 

In 2019, 79% of New Zealand organisations used analytics services up from 65% in the 2017 IT Services Ecosystem survey. These trends demonstrate how analytics is rapidly shifting from a nice-to-have function to one of strategic importance.

IDC research has also shown that customers often prefer consuming the full life cycle of business analytics services, from assessment to process outsourcing, when they utilise a third-party for their analytics needs. 

"Analytics providers that hold the capability to deliver across the value chain of business analytics services, from information management and analysis, to business inference, will stand to gain a larger market share in 2020," says Gorton. 

"Organisations are already moving beyond viewing analytics as a traditional metric system, towards viewing analytics as an enabler of competitive differentiation, in comparison to their peers and competitors," he says.

"Therefore, analytics providers who communicate their differentiating capabilities, particularly industry specialisation, will become highly valued."

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