Is your Service Provider genuinely investing in As-a-Service Capabilities?

November 09, 2014 | Phil Fersht

Yes, we've bemoaned the stubbornness of some service providers, which are protecting the profitability and predictability of their labor arbitrage businesses, and laid out the key tenets of the emerging As-a-Service Economy.  So what steps can we now take to figure out who's on the As-a-Service train, and who's just pretending to be?

Click here to access the new POV "Does Your Service Provider Have A Winning Investment Strategy for the As-A-Service Economy?" by analysts Charles Sutherland, Barbra Sheridan McGann and Phil Fersht

In the As-a-Service Economy, the service provider will not be a stand-alone entity; the cost of doing business this way is simply too high. The partnership ecosystem of how technology vendors and service providers forge workable alliances over the long term, with effective investment practices and product management, will be a key factor in having a portfolio of As-a-Service options that are flexible, scalable, and in tune with these evolving times.

But how can buyers really see past the pretty PowerPoint and claims of future value?  

Simple: Here are nine key questions that can quickly clarity what's really going on behind the scenes, when it comes to service providers making the financial commitments needed to be effective in the emerging As-a-Service Economy.  Find answers to these and you'll have a much more realistic picture of where a service provider's future direction is heading:

1) Is this As-a-Service platform, or new capability, funded year-to-year, or with a multi-year commitment, including CAPEX?

2) How is the first (or first few) client(s) of your As-a-Service platform being charged - and do they bear an excessive level of initial investment?

3) Are you defining and measuring the success of this new As-a-Service capability against clear quantitative metrics, or is this more of a  “fast and loose” gut-feel?

4) Are you really making big bets for investment, or just parceling out small bits here are there for Proof of Concepts?

5) Are you getting input from younger talent in your organization, and not just with the submission of ideas, but also with the evaluation of the decisions?

6) Has the level and focus of investment kept pace with the number of emerging  areas that need further investment and attention?

7) Is there an investment ‘bank’ of some kind for quick response to industry changes and challenges?

8') How effectively do you partner with technology vendors to weave their services, namely wrapping the product management, support and innovation over time?

9) Do you have a focused talent development plan to provide analytical, consultative and value-add skills to  customers beyond transactional support functions?  And how will this talent plan be funded without passing on major incremental fees into the clients?

The Bottom Line: Service providers must find their balance between growing their legacy revenues and investing in next-generation of As-a-Service solutions

In the subscription-based, plug and play, collaborative As-a-Service Economy, service providers are touting their toolsets, their industry and functional expertise, and their alliances - and all of this requires investment over the long-term to maintain progress and drive ongoing innovation. To achieve a true one-to-many approach, it also means increased internal collaboration and transparency, with some give-and-take on priorities near - which is a major challenge for a service provider seeking to protect and grow its legacy cash-cow business, while growing its next-generation capabilities.

In addition, there needs to be flexibility with funds to address the unexpected and provide fast and furious value to address the issues of the day. Xerox for example, responded quickly to the need for tracking and reporting on people exposed to and having contracted the Ebola virus, by releasing an update of their disease surveillance and outbreak management software, Maven®. With greater investment comes greater value. Transparency into the investment decision 3Ps of processes, priorities, and partners can help services providers and buyers take full advantage of the As-a-Service Economy.

Click here to access a copy of the POV "Does Your Service Provider Have A Winning Investment Strategy for the As-A-Service Economy?" by analysts Charles Sutherland, Barbra Sheridan McGann and Phil Fersht.

Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCloud Computing

Never Miss A Story

Sign up for the HfS Research newsletter and get the best research delivered to your inbox weekly.

4

1 Comments

4 Comments

  1. Heather Knight
    Posted Nov 09, 2014 09:44 PM | Permalink Reply

    Phil and team,

    This is a very useful series of questions to ask. We've been plagued by provider overpromises for many years now and need a better way to hold their feet to the fire,

    Heather

  2. Chris Thompson
    Posted Nov 09, 2014 11:37 PM | Permalink Reply

    The talent point (#9) is especially relevant. That's where most services firms are falling short in my experiences.

  3. Durgesh
    Posted Nov 12, 2014 11:22 AM | Permalink Reply

    Good one Phil, My 2 cents

    Along with this question “Is your Service Provider genuinely investing in As-a-Service Capabilities?”, another question that needs to be presented to buyers is “Are you prepared to buy Business Process as a Service ?”

    Are clients ready to embrace the new paradigm, where no doubt they’ll get benefits of efficiency and more effective processes but at the same time, they’ll have to let go the tight controls and allow the service provider to be the expert and decide what’s best for the process.

    Clients should also be ready to co-invest in the solution (if they are hell bent on customization) otherwise be ready for a standard - off the shelf - product and have a robust change management program to have it accepted in the organisation.

    Last but not the least, they have to come out from a ‘typical-analyst led-weighted scoring dependent-RFQ program’ and be smart to pick up the right service provider – especially when service provider is a new player with no past experience and/or influence over analysts.

  4. James Samuels
    Posted Nov 19, 2014 01:51 AM | Permalink Reply

    Great comments. Its interesting to see the difference between service providers who really understand and invest in "as-a-service" to get ahead of the competition and deliver great value to clients and those who 'nickel & dime' things just to avoid getting left behind.

    We work with some forward thinking procurement service providers who are growing their businesses profitably - they 'get it'!

    @ Durgesh - agree with your comments. Clients stuck in the world of 'on premise / customised' solutions often find it difficult to challenge to migrate to the AAS approach - but see significant benefits when they do.

Post a Comment

Your email is never published nor shared.