Harvey Gluckman, ISG Partner, presented at the 2012, Hospitality Upgrade magazine's CIO Summit. Harvey’s presentation, "Sourcing Industry Trends and BYOD,” examined how outsourcing and managed services has become a dominant service delivery strategy within in the hospitality industry during the past two years. He explored the current state of industry sourcing trends, market trends affecting the CIO agenda, and the ever-changing service provider landscape. Harvey also examined how “bring your own device” (BYOD) is affecting enterprise adoption practices, information technology (IT) support decisions and the end-user services outsourcing model.

1. Sourcing Industry Briefing & BYOD Trends
Hotel, Restaurants & Leisure Industries
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2. Busiest Year Ever in the Broader Outsourcing Market
TCV ($B)* Trends ↑ Number of Contracts
Total TCV Restructured TCV ↑ EMEA – record year
↓ Americas & Asia-Pacific
99.4
85.0 90.0 93.5 93.1 ↓ Mega Relationships
$92.2B
5 yr avg
↑ Restructurings
→ Pace of Annualized Rev.
30.6 32.4 Growth ─ Flat to 1%
21.1 20.2
14.8 → BPO up 49%, ITO down 6%
→ Leading IT Providers
2007 2008 2009 2010 2011 Consistent across Top 20
* Managed Services Contracts with TCV > $25M
→ Contract Durations
2

3. Major Developments in the U.S. Sourcing Market
1 2
U.S. Companies ranked in G-500
U.S. TCV ($B) Continues Contribute Less to US Awards
Significant Downward Trend
7 Yrs Ago
7 yrs Today
↓~30%
$
Ago
Today
$
$41
$28
↓25%
58% of TCV 33% of TCV
3 U.S. Market Saturation for G-100
4 Pool of U.S. Companies Ranked
in G-100 is Down
Today
↓40%
47
55% 7 Yr Ago
28
7 Yrs Ago
Today
3

4. Changing Outsourcing Market Dynamics
1 More Transactions Include
Offshore Delivery Than Ever 2 Large Companies Leveraging
Multi-sourcing More Than Ever
% G2000
7 Yrs Ago 33% 2x
33% 53%
Today 69%
10 Yrs Ago Today
3 4
37
Continued Growth in Savings Number of Service Providers Making
Realized through Outsourcing Up 75% Share of TCV
15
Today
7
7 Yrs Ago
10 Yrs Ago Today
4

5. Key Long-term Trends in Sourcing Structure & Solutions
1 Shift in Enterprise Decision
Maker’s Solution Requirements
Longevity Disposability
2 Shift in ITO Enterprise Pricing
Strategies
Pricing Bands Utility Pricing
3 Shift in BPO Enterprise
Purpose, Spurring Activity
Traditional Industry
4 Global Service Provider
Community Changing Shape
Back-office Specific
$
5

6. Service Provider Diversity Creates Price Pressure
India-heritage Provider
growth
In Mid-Market Space
% New Contracts
Market Share
in TCV Bands
MNCs India-heritage
$25-199M $200-999M $1B+
2000
87% Today 2000 68%
58% 2005 77%
20% 2010 87%
1%
6

7. Industry and Technology Trends Affecting the CIO Agenda
► Margin Pressure ► Shift to Standardized Solutions
Cost / Capacity ► Efficient Use of Capital ► Global Service Delivery
► Responsive Capacity
► Transformation ► Data Analytics / BI► Cloud: As-A- Service
► Social Platforms ► Unified Communications Solutions
Capability
Upending Customer ► Next-Gen Systems ► Mobility eEnablement
Centricity of back-end systems
► Multi-sourcing ► Data Privacy & Security
► Service Integration ► Global Service Delivery
Challenges
► Governance ► Business Resiliency
7

8. Hotels, Restaurants & Leisure − Market Overview
23 Public Companies
Market Size (ACV) - Hotels, Restaurants & Leisure
In G2000
$404
$309 $319
$291
US$ Millions
$227
$140 $155
11 12 $58
$22
Outsourcing Growth: 159% 141% 11% 47% 36% -6% 9% 27%
69%
Not Outsourcing
2003 2004 2005 2006 2007 2008 2009 2010 2011
8

9. Hotels, Restaurants & Leisure − Functional Areas
Hotels, Restaurants & Leisure companies tend to have high levels of adoption for
many ITO towers, indicating a tendency to bundle ITO services
2011 IT Functional Areas Under Managed Service Contracts > $25M TCV
100%
82% 85%
80%
61% 64% 64%
60% 55% 55% 55%
47% 48% 47%
40% 27%
20%
0%
Any ITO ADM Data Center Mid-Range Network EUC / SD
Hospitality & Leisure Market Avg
Source: ISG Note: Excludes Private Companies Prevalence
9

10. Hotels, Restaurants & Leisure − Functional Areas
Hotels, Restaurants & Leisure companies tend to have high levels of adoption for
HRO service offerings
2011 BPO Functional Areas Under Managed Service Contracts > $25M TCV
70% 64%
60% 47% 45%
50%
40% 29%
30% 19% 15%
20% 9% 9% 12% 9% 10% 9%
10%
0%
Hospitality & Leisure Market Avg
Source: ISG Note: Excludes Private Companies Prevalence
10

11. Bring Your Own Device
(BYOD)

12. BYOD: An IT Mega-trend Enabled by Three Trends in Technology
► Every conceivable software offering is now available via the
“Personal”
Cloud
public internet; enterprise-class technology now available
to the SMB customer.
Enterprise ► Consumer technology is driving changing expectations in
Consumer enterprise technology; employees grow accustomed to app-
Expectations store like features that are often free, and updated often.
► Mobile platforms (smartphones and tablets) are now nearly
Mobile
as powerful as the PC; smartphone + tablet shipments
Technology
outpace PC shipments in 2010 and 2011
12

13. BYOD Taking Two Paths of Adoption
IT Policy,
“Personal”
Security &
Cloud Results Compliance
G1000:
awareness and
limited recognition;
Enterprise very little adoption.
Consumer Unclear
Expectations ROI
Midmarket &
Selected Technolgoy
Firms:
recognition &
Mobile adoption
Technology Legacy Apps
13

14. BYOD Significant Challenges & Hurdles to Overcome
► IT Policy, Security & Compliance
 IT policies and processes need to be re-worked from the ground-up to accommodate
 Without control of assets, IT cannot guarantee security & integrity of data; CIO exposed
 IT builds apps for standardized platforms; BYOD is inherently non-standardized
 Legal implications around device ownership in a reimbursement model
► Unclear ROI
 Device maintenance better supported by employee vs. corporate; less expensive
 Reimbursement vs. procurement may actually cost more
 IT says it will not support; but ends up supporting a non-standardized environment
 Significant new unplanned technologies may be required (e.g. VDI, MDM, client-side
virtualization, etc.)
 Unplanned downtime for information workers (e.g., go to Apple store for new HDD)
► Legacy Applications & Connectivity
 Large enterprises have built client-server apps to work on specific OS builds; refactoring
 Limited connectivity for mobile workers means information is stored locally or VPN required
 Web-based, app-store like portfolio and infrastructure may needed to fully take advantage
 ….BUT employees still want those corporate apps on their phone!!
14

15. Results
These dramatic market changes across cloud & mobile are driving employees to
BYOD models, but enterprises are only slowly supporting this shift.
► Creating a significant demand for BYOD approaches:
 52% of all info workers use 3+ devices for work and growing PLUS ONE annually
 25% of devices used for work are not PCs
 71% of companies want to implement app-stores internally
► However, enterprises are not responding
 Less than 10% of companies are planning or have implemented BYOD programs
 Over 70% of employees will continue to be provided and supported by a
corporate smartphone policy
 Only 11% have set up internal app stores
 Only about a third of organizations surveyed say that usage of consumer
technologies in the workplace are key to employee retention and productivity
Sources:
Forrester: Info Workers Using Mobile & Devices For Work Will Transform Markets,
IDC: Top 10 2012 Predictions
Symantec: State of Mobility Survey
Unisys: Consumerization of IT Benchmark Study
15

16. BYOD Opportunities: Market
To date, only a small handful of large companies have moved to BYOD, most being
technology companies. However, these companies generally report:
► Information workers are happier and may be more productive
 Intel reports that they gained 1.6MM hours of productivity from their BYOD shift.
► IT is freed-up to work on more important projects
 In theory, IT no longer needs to spend time building, testing and deploying PCs and
mobile phones, and can instead work on projects to help growth or improve
productivity.
► BYOD creates a progressive image for the company
 Nearly all major technology magazines and blogs are looking for real-world examples
of BYOD; when they find it, it is highly publicized and is excellent case-study fodder.
Sources:
Intel: Improving Security and Mobility for Personally Owned Devices
16

17. BYOD: Outsourcing Trends
To date, only a small handful of large companies have moved to BYOD, most being
technology companies. A few have outsourced BYOD services support:
► The key additional End User Services to support a BYOD environment are:
 Mobile Device Management (MDM) and
 Mobile Applications Management (MAM)
► The two services overlap and appear to be merging into:
 Asset Management, Software Distribution, Security Management
 Current trends see a consolidation in the software vendor space and potential
integration with enterprise scale master console or management systems
► Open issues: Market alignment on pricing and SLAs; multiple class of users
Sources:
Intel: Improving Security and Mobility for Personally Owned Devices
17

18. harvey.gluckman@isg-one.com
www.isg-one.com