Service providers must rethink how they approach digital transformation

Service providers are ill-equipped to support the growing demand from businesses for digital transformation projects.

Service providers are ill-equipped to support the growing demands from businesses for digital transformation projects.

As the economy recovers, business leaders are looking at the opportunities offered by digitalisation to create fuel growth.

But analyst Gartner believes those businesses that opted for service providers to support such initiatives may run into difficulties.

According to Gartner, service providers are not ready because their existing delivery models will not effectively address new demands for exploratory digital pursuits.

Gartner predicted buyers would look for business outcomes that complement the decisions they make.

Gartner also believed that businesses will look for what it describes as "sub-vertical and market-specific" services, which are more information-driven rather than process-driven alignment, and often associated with traditional services contracts.

Instead of simply selling more services, Gartner said service providers need to position their services in a digital business context aligned to IT spending priorities.

Speaking to Computer Weekly earlier this month, Gartner research fellow Richard Gordon said IT services and outsourcing had evolved to automate traditional back-office functions: "Digital business is a very different way of thinking. It involves technology being utilised across business."

Gartner believes IT departments will have to operate in two modes, one for fast agile projects, and one to support architecture and infrastructure. Service providers will need to support this so-called bimodal IT operation. Just as client organisations will require two modes of operation to optimise IT and capture digital opportunities, service providers will also need to adopt a more flexible business model to effectively compete, according to Gartner.

Susan Tan, research vice president at Gartner, said: "Service providers have announced new digital leaders and investments to organically build or acquire digital skills/assets and many have launched innovation centres to serve as client development labs. The restructuring and new digital business units and leadership are needed to focus investment and develop resources for applying digital technologies to realise business value."

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