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Industrialized, Low Cost IT Services The New Norm

Gartner this week touted the adoption of industrialized, low-cost IT services (ILCS) as one of the best ways CIOs can reduce the cost of keeping the lights on in the coming years. A subset of both managed services and cloud services–certainly leveraging the benefits of cloud architecture–ILCS is best seen in the burgeoning infrastructure utility […]

Written By: Ericka Chickowski

Sep 28, 2011

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Gartner this week touted the adoption of industrialized,
low-cost IT services (ILCS) as one of the best ways CIOs can reduce the cost of
keeping the lights on in the coming years. A subset of both managed services and
cloud services–certainly leveraging the benefits of cloud architecture–ILCS
is best seen in the burgeoning infrastructure utility services market that has
started gaining steam recently.

ILCS services offer managed, multitenant, ready-to-use IT
services. Unlike many customizable cloud choices that may deliver only one
pocket of IT or offer tons of different add-ons and price tiers, ILCS services
are, automated and scalable, with a very low price per user per month (PUPM). Gartner
says the classification guidelines for the category require the service to be
outsourced, industrialized by standardizing design, implementation and options,
and then promoted and delivered through a low-cost business model.

“While there are multiple ways to reduce the cost of IT
delivery, as well as to increase the value of IT, the trend towards ILCS will
become paramount for end users to trade nonessential customization for better
and less expensive services,” said Claudio Da Rold, vice president and
distinguished analyst at Gartner.

Gartner predicts by 2015, ILCS will represent more than 30
percent of the IT services market with raking in $177 billion by then. The firm
predicts that infrastructure utility services in particular will increase at a
30 percent compound growth rate for the next three years. Analysts with the
firm predict that in two years, low-cost IT services will ‘accelerate
innovation, hinder market growth and depress traditional vendors’
capitalization. ‘

Gartner believes that the biggest driver of the ILCS trend
will be the two competing priorities in IT today to deliver differentiation
while reducing the cost of IT. ILCS services allow CIOs to spend less on the
day-to-day operations that can be standardized and delivered at low cost while
spending more on high-value projects.

"ILCS will force providers and recipients to redefine
the way they use, pay for and access services similar to how customers buy and
consume utilities; cost and rationalization will be key drivers," wrote Da
Rold in a recent report. "This is just the beginning of what will be a
much larger transition from traditional professional services toward
industrialized, one-to-many services and differentiating business value
services."

Industrialized, Low Cost IT Services The New Norm

Ericka Chickowski

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