Recent high-profile outsourcing wins have highlighted the fact that
this is still a growth area for services. If anything the deals are
getting bigger, which probably means the big boys are getting
richer.
However, this begs the question as to where other service providers
should focus their energy.
One option is managed services. Despite the trend towards
outsourcing, other indications are that not every customer is happy
with their outsourcing arrangements. Outsourcing can mean the
customer loses control over their destiny and as a contract matures
the outsourcer may focus more on containing its own costs to
maximise margins, and less on deploying IT solutions as a business
enabler for its customers.
Outsourcing may be an option for larger enterprises that can
exercise some control over their outsourcer, but will be less
attractive to smaller companies that do not have such power.
Managed services differ from outsourcing in that the customer
retains overall ownership of the end-to-end IT service and his
assets. Managed service providers have to be more flexible in
response to changing business demands and are often able to offer
service improvements over the period of the contract.
In a multi-supplier environment, they may engage partners to offer
an end-to-end service. In many cases, a managed service from a
smaller, more focused provider will appeal to the smaller, more
focused businesses that do not want to be swallowed whole by an
outsourcer.
This leads to another key differentiator between service companies.
Today's IT infrastructures are becoming increasingly complex.
Customers no longer source their IT from a single supplier. IT
service companies need to understand multiple supplier
architectures and the options for interoperability between diverse
technologies.
They have to be able to demonstrate the value of their service to
their customers' business and to relate technical architectures to
the business requirement. A service company that focuses on one
particular supplier technology will find opportunities becoming
increasingly limited. If they do not understand the bigger picture
they need to find a company that does.
Service companies that have embraced alternative technologies but
can also leverage their heritage skills around a particular
technology could find that they have a value proposition that
appeals to customers. They may be ahead of the customer in terms of
embracing these newer technologies and be able to offer experience
in any transition.
Knowledge of multiple architectures can lead to services around
technology migration or consolidation of diverse technologies onto
a single architecture.
Regardless of the service offering, let us not lose sight of the
fact that there is no substitute for proven processes.
A service company that has adopted recognised best practice will
stand a better chance of success than one that has not. Also, to
win business it must be able to demonstrate that it has a proven
service delivery methodology that offers delivery assurance, risk
reduction and cost efficiency.
However, the bottom line is that in order to present a
comprehensive offering, service companies will need to partner for
those areas outside their core competency.
From a customer perspective, this presents some challenges. On the
one hand customers like to deal with just one company but do not
want to get locked into one technology. To deal with and manage
multiple suppliers is time consuming. The company that manages the
total solution delivery for the customer, who is prepared to accept
some risk and problems regardless of supplier, and that will manage
supplier relationships and demonstrate customer care, will win the
day.
To be successful, an IT service company must understand the
customers' business, be able to articulate value, offer services
based on proven methods and techniques and be prepared to entertain
partnering to offer total solutions.
Can one service company understand all technologies and options?
No. Even the big boys do not know everything.
Derek Cambray is senior business development manager at Amdahl
IT Services