This edition is the second part in the series on Transformation of IT Services Companies and their relevance to customers globally. In the previous edition, we skimmed the surface on the Maturity versus Value curve without really going deep into the characteristics of TransValuation (The Transfer of a higher degree of Value to Customer as a consequence of creating a higher threshold of capability at the Vendor’s end). In doing so, we can eliminate the subjectivity of the debate and look at the transformation objectively; thereby providing the opportunity for those who choose to renew the model as needed.
The following table provides an overview of the Strategic Framework of the transitions that IT Services Companies and their Vendors would have experience as they moved from 1.0 to 3.0 Versions of their business.
It is not difficult to notice from the above table that the IT Services businesses as they matured from Version 1 to Version 3 would have ideally emerged more and more stronger at their core. What this means in the real world is:
- In the earlier versions, their sales people powered the business from the periphery and moved work inwards for execution. In the current Version 3.0 a complete flip would occur where the business will need to be driven from the core to the periphery for sales to occur.
- The earlier relationship matrix from a one to one would have progressed to one to many. However, Version 3.0, the mandate would be for many to many.
- Measures of Delivery would move away from transactional delivery Process (Quality, Cost, Delivery, Service and Flexibility) to Value Chain Business Processes in the form of Mind & Time to Market (Innovation Index).
- From Customers choosing Vendors, the model would be flipped to IT Services companies partnering with those that create Annuity Relationships and mutually guarantee growth and progress.
- Intellectual Property (IP) and definitely not size and scale will be a criteria in an open world where the former is unique and the latter a commodity.
This is a fundamental and foundational shift in the way the business is organized and delivered. There is a huge requirement of the Change Management process; Education, Ownership and Commitment from the Customer as well as the IT Services companies’ side. Has this happened is the trillion dollar question? There appears hardly any evidence on either side of the fence, anywhere in the world.
- There is evidence in the form of IBM’s Smarter Planet Campaign being Visible and having allocations of teams, budget and resources. But there is hardly any evidence at the execution end or an impact on Customers.
- The emphasis in sales has hardly shifted from announcing dollar based contracts to IP based Valuation.
- The majority of the Indian enterprises are busy catching up with last quarter shortfalls as opposed to dedicated product development. Lean and Agile are still discussed either as a concept or at a software implementation level (read as in Scrum, etc) as opposed to a business implementation level.
- Most or all of the companies at a very foundational level have to figure out how the customer will see their BPO, IT Services and Infrastructure offerings from a common framework perspective rather than being confounded with making multi vendor / party decisions. Cosmetic interface level changes will not cut ice.
- The integration and cross-pollination between acquisitions and organic organization has not seen tangible benefits for the IT Service providers or their customers as it is hardly anything to write home about (geography, cultures, functional mindsets and turf wars still at large) another than a concocted sales approach.
The American, UK and the European economy is still on the verge of doubt and despair. The businesses in these developed nations where the incumbent Customers reside for the IT Services companies require growth on a global basis to survive and sustain their business for the future. At the same time, new emerging markets such as China, India, Sub-Saharan Africa and Asia Pacific (to a lesser extent) require Innovation to take global center stage. The opportunity is clearly going unattended when the pace and demand of Change / Transformation is met with advertising campaigns and constipated response with respect to the new mental and business model.