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Firms sceptical about outsourcing ‘innovation’

Antony Savvas

After years of disappointment, organisations are sceptical about outsourcing companies’ pitches that are concerned with innovation, says analyst Ovum.

The use of the word innovation has grown dramatically among IT services suppliers in the last six months, said Ovum. However it seems that both clients and the players within IT services have different ideas as to what innovation is, and what it should deliver, said the analyst.

“The challenge is in the mismatch of vendor/client expectations and in the limitations of the contractual arrangements. This often means that the clients can be unhappy even when vendors deliver on all of the agreed metrics,” said Angel Dobardziev, an Ovum analyst.

Discussions between Ovum and 11 major western and Indian IT players around innovation revealed that the majority of suppliers have different and often conflicting ideas as to how they think clients define innovation. The clients involved also seemed to have different expectations from suppliers in terms of innovation.

“Clients will talk about, and demand, innovation but what they are really after are outcomes,” explained Dobardziev.

“Vendors should focus on these desired outcomes and take time to understand the different and often conflicting needs of various clients.”

Both sides must work closely together every step of the way, from defining innovation expectations to agreeing the measures to track progress, said Ovum.
This will mean ensuring an equitable approach to the sometimes tricky issues of risk/reward and intellectual property in innovative engagements, said the analyst.

“If you really want valuable innovation to be delivered as everyone expects, the deal should be treated as a partnership. It’s not enough just to say that a vendor/client relationship is strategic, you have to be prepared to invest in the relationship - if you don’t, then you’ll have an old-style customer/supplier relationship on your hands,” said Dobardziev.

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