Embrace new technologies or lose out

Recent high-profile outsourcing wins have highlighted the fact that this is still a growth area for services. If anything the...

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

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