Ecosystem companies growing in importance in IT
Booz & Co study shows systems integration and services companies losing share
Telcos and regionally-oriented service providers are losing their strategic position in ICT to hardware, and internet companies, according to a new report from Booz & Company.
The Global ICT 50 study, which ranks the leading companies in the ICT space, suggests that as boundaries blur between traditional roles in the sector, companies that offer integrated solutions and a customer eco-system, combining hardware, software and services, such as Microsoft and Oracle, have the best prospects for future success,
The study showed that only a few companies are realising annual turnover growth of over 10% per annum, with comfortable earnings margins of over 25%, mainly those companies operating in software, some global offshore and services providers like TCS, Infosys and Wipro, and a few hardware and infrastructure providers like HP and Cisco.
Regionally oriented services companies and telcos are struggling to stay relevant as they compete for market share and face issues around structural growth, innovation and revenue.
"In our view, providers have particularly good prospects where they are able to provide an integrated solutions eco-system around a strong hardware or software core offering that comes with tailored services and content," said Ramez Shehadi, partner with Booz & Company.
The Global ICT 50 study ranks companies on financial health; portfolio offering and structure; innovation and quantitative and qualitative analysis of sales orientation. Microsoft and Oracle ranked highest, with an aggregated score of 2.9 out of 4, followed by IBM (2.8). HP (2.6), Cisco (2.5) Apple (2.4) and SAP (2.4).
"In the current ICT environment, everything is up for grabs. Particularly aggressive competition is coming from Over-The-Top (OTT) providers such as Apple and Google. They are generating value-add across and beyond conventional sectoral boundaries, chipping away at the hold of the established players on market positions and market shares via new business models and offers such as cloud services, tablet PCs and digital content and services," said Olaf Acker, partner and ICT expert at Booz & Company.