Forrester Research Outsourcing Trends—How Service Providers Can Capitalize

By Brett Norgaard

The other day, I had the chance to listen in on Forrester Research Service Provider Analyst Pascal Matzke’s observations on the outsourcing market. He outlined trends that are leading service providers to change their business models.

Here are the key trends:

• The traditional outsourcing market has slowed, is not efficient and is very competitive – outsourcers often “build a new factory for every new client.”
• Consumerization is affecting enterprise IT.
• Business units are more involved and focused on business results.
• Cloud computing is driving new dynamics toward re-use and on-demand offerings.

The traditional outsourcing model aimed toward IT operations with a “Plan, Build, Run” model was focused on lowering costs.

There are new models with embedded portfolio management practices emerging:

• A focus on recurring client needs and scalability
• Streamlined solutions built with modules—repeatability and re-use
• Venture Capital mindset to manage the portfolio

The New Model focuses on Executive Management and Lines of Business in the Assessment and Solution phases. IT Operations works closely with Lines of Business in Service Integration. Everything is offered “as a Service” – Infrastructure, Security, Platform, Software, Analytics, and Business Process. IT Operations and Lines of Business work together to orchestrate service delivery. New model is Assess, Compose, and Orchestrate – a more fluid model than the traditional Plan, Build, and Run model.

Business benefits of new model:

• 25-30% Improvement in Implementation Time
• Better Project Predictability
• Cost Savings of up to 15%

Matzke offered up a Portfolio Opportunity Scorecard—a Boston Consulting style two dimensional analysis using Portfolio Maturity and Market Readiness to gauge where to invest in service offerings.

He wrapped up with some advice for service providers to get busy exploring cloud offerings, review existing client relationships, conduct vision planning, get better at competitive intelligence, work on improved leadership, build portfolio management and get good at partnering.

How Kinetic Data enables capitalizing on these trends:

Kinetic Data’s configurable, multi-tenant, secure, web accessible, experience shaping, integration ready applications are particularly well-suited for the move beyond IT into the Lines of Business areas of your clients. Cloning and service item portability make re-use a great option at the design and delivery phases, too. Re-use is a great way to innovate not only within a single client’s portfolio, but across the service provider’s portfolio. Constructing a well thought Master Library of service catalogs and service items, along with a sound methodology for roll-out can dramatically decrease the time to transition to a new service platform. Sense and respond style innovation can let you experiment without risk and then see which innovations clients select. You can also leverage investments in the BMC Remedy ITSM tool set to extend directly to end users via web accessible service catalogs, self service portals and go beyond IT to realize true business value—anytime, anywhere, and on the client’s terms.