Outsourcing & IT Services in Financial Services Infrastructure outsourcing (Review Report)

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
METHODOLOGY 2
EXECUTIVE SUMMARY 3
Introduction 3
Infrastructure outsourcing opportunities in Western European and North American financial services (Market Focus) 3
ABN AMRO: a turn-around story (Strategy Focus) 3
End-user trends in financial services outsourcing (Customer Focus) 4
Infrastructure Outsourcing in Financial Services (Databook) 4
Summary 7
Despite relative maturity, infrastructure outsourcing in FS continues to grow 8
The desktop services market is likely to experience a single digit growth 10
Desktop services are increasingly getting commoditized 11
The move to mobile working will drive the growth 11
Networking and Communications growth will be driven by the move to IP 12
WAN solutions revenues have traditionally been greater than LAN solutions though the balance is changing 13
Mobility and IP convergence are part of a new wave of revenue growth 13
Managed data center services will continue to see strong growth to 2008 15
Managed services are driving the growth in the market 16
Regulation drives the need to replicate data around the globe in the financial services industry 16
Storage services are growing as a result of growth in outsourcing 17
Space is at premium in data centers 17
Mainframe management services are back in favor 17
Security managed services will be the fastest growing market 18
ABN AMRO: A TURN-AROUND STORY (STRATEGY FOCUS) 20
Summary 20
Corporate restructuring: realigning the organization with the corporate strategy 20
Group shared services initiative aims to generate efficiencies across geographies and lines of business 22
Cost discipline is reaping significant benefits... 23
...but at the group level profitability remained a concern in 2005 23
Can the wholesale business be key to both past problems and future growth? 24
IT outsourcing: the enabler of corporate change 26
Key contract details of ABN AMRO's main outsourcing relationships 27
ABN AMRO's strategy and guiding principles for successful IT outsourcing 27
Success of outsourcing focused IT strategy will be judged on bottom line impact! 28
END-USER TRENDS IN FINANCIAL SERVICES OUTSOURCING (CUSTOMER FOCUS) 29
Summary 29
Outsourcing is a major enabler of change in the financial services sector 30
Outsourcing is intrinsic to meeting corporate objectives 30
``Variabilization`` of costs and overall IT rationalization are the primary motivators for outsourcing 33
Outsourcing is a major vendor opportunity despite high take-up levels 34
Increased outsourcing by current customers will fuel IT domains outsourcing market growth 34
Applications development is touted as the most outsourced area in the financial services sector 36
The use of infrastructure outsourcing in the financial services continues to increase 37
Internal servicing remains the default situation with many FSIs apprehensive of outsourcing 39
INFRASTRUCTURE OUTSOURCING IN FINANCIAL SERVICES (DATABOOK) 41
What is this report about? 41
Catalyst 41
Methodology 41
Definitions 41
Infrastructure outsourcing in financial services 42
Desktop Outsourcing 47
Network & Communications Outsourcing 51
Hosting and Managed Services 55
APPENDIX 59
Extended Methodology 59
Further reading 59
Ask the analyst 59
List of Tables
Table 1: Infrastructure services spend in North America by BPO service area, $m 9
Table 2: Infrastructure Services spend in Western Europe by BPO service area, $m 9
Table 3: Network and communications services revenues in North America, $m 12
Table 4: Network and communications services revenues in Western Europe, $m 13
Table 5: Data center services spend in North America, $m 15
Table 6: Data centers spend in Western Europe, $m 16
Table 7: ABN AMRO has experienced far better profitability in the mid-market than in the mass-retail segment 26
Table 8: The financial services main IT business objectives highly likely to be achieved through outsourcing 32
Table 9: The financial services institutions infrastructure and applications outsourcing 36
Table 10: The financial services overall outsourcing strategy by line of business 40
Table 11: Global infrastructure outsourcing by service type, 2002-2008, $m 42
Table 12: Infrastructure outsourcing by line of business, 2002-2008, $m 43
Table 13: Infrastructure outsourcing by region, 2006, $m 44
Table 14: Infrastructure outsourcing revenues and growth prospects by country, $m 45
Table 15: Desktop outsourcing by lines of business, 2002-2008, $m 47
Table 16: Desktop outsourcing by region, 2006, $m 48
Table 17: Desktop outsourcing revenues and growth prospects by country, $m 49
Table 18: Network & Communications outsourcing by lines of business, 2002-2008, $m 51
Table 19: Network & Communications outsourcing by region, 2006, $m 52
Table 20: Network & Communications outsourcing revenues and growth prospects by country, $m 53
Table 21: Hosting and Managed Services outsourcing by lines of business, 2002-2008, $m 55
Table 22: Hosting and Managed Services outsourcing by region, 2006, $m 56
Table 23: Hosting and Managed Services outsourcing revenues and growth prospects by country, $m 57
List of Figures
Figure 1: Financial services infrastructure outsourcing spending by market segment, 2006-2008 8
Figure 2: Desktop services spend in North America and Western Europe, $m 10
Figure 3: Network and communications services revenues in North America and Western Europe, $m 12
Figure 4: Data center services North American and Western European revenues, $m 15
Figure 5: The demand for security management services is growing 18
Figure 6: Market capitalization (March 2006)- revenue (FY 2005) ratio 21
Figure 7: ABN AMRO's new corporate structure 22
Figure 8: ABN AMRO's operating result is still not as strong as it should be 24
Figure 9: The group restructuring effort aligns business structure more closely with corporate strategy 25
Figure 10: The financial services primary IT and business objectives / objectives highly likely to be achieved through outsourcing 30
Figure 11: The financial services top five IT business objectives highly likely to be achieved through outsourcing, by line of business 31
Figure 12: The main drivers for outsourcing in the financial services 33
Figure 13: Infrastructure / applications domains currently outsourced 34
Figure 14: The financial services infrastructure / applications outsourcing (at least one function) 35
Figure 15: The financial services applications outsourcing 37
Figure 16: The financial services infrastructure outsourcing 38
Figure 17: The financial services overall outsourcing strategy 39
Figure 18: Global infrastructure outsourcing by service type, 2002-2008, $m 42
Figure 19: Infrastructure outsourcing by line of business, 2002-2008, $m 43
Figure 20: Infrastructure outsourcing by region, 2006, $m 44
Figure 21: Infrastructure outsourcing revenues and growth prospects by biggest 10 countries, $m 45
Figure 22: Desktop outsourcing by lines of business, 2002-2008, $m 47
Figure 23: Desktop outsourcing by region, 2006 48
Figure 24: Desktop outsourcing revenues and growth prospects by biggest 10 countries 49
Figure 25: Network & Communications outsourcing by lines of business, 2002-2008, $m 51
Figure 26: Network & Communications outsourcing by region, 2006 52
Figure 27: Network & Communications outsourcing revenues and growth prospects by biggest 10 countries 53
Figure 28: Hosting and Managed Services outsourcing by lines of business, 2002-2008, $m 55
Figure 29: Hosting and Managed Services outsourcing by region, 2006 56
Figure 30: Hosting and Managed Services outsourcing revenues and growth prospects by biggest 10 countries 57