by Jeffrey Bannister

How to build value into sourcing deals

Apr 24, 2018
EnterpriseIT LeadershipTechnology Industry

A conversation about enterprise trends, service provider capabilities and bridging the two.

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Credit: Thinkstock

The sourcing advisor community has a unique vantage point. On the one hand, it represents a wide range of enterprise clients with pressing business, operations and technology challenges. On the other, it cultivates leading-edge technology providers that are positioned to help meet those needs. In this interview with Anupam Govil, a partner at management consulting firm Avasant, we hear from an expert sourcing advisor about the enterprise focus on cloud transformation and automation, the need for customized, flexible solutions and the importance of quick demonstrations of value.

Jeffrey Bannister: Sourcing advisors work with a lot of enterprise customers. What technology trends are your enterprise customers adopting and what solutions offerings do you find are most in-line with those trends?

Anupam Govil: Over the last five years, cloud services have moved from being perceived as a risky solution suited for non-critical systems to an essential component of technology modernization. Over 90 percent of North American enterprises are already leveraging cloud services in some form or the other and this penetration is expected to reach almost 100 percent by 2020. Cloud services spanning IaaS, PaaS and SaaS are enabling the agile enterprise and have become the essential pre-requisite for digital transformation.

As IT workloads get virtualized, it’s important to minimize the overhead of managing IT ops while delivering a consistently high quality of service and enabling innovation. Enterprises are leveraging the combined power of automation, analytics and AI to enable autonomous systems and self-remediating processes, thereby reducing costs and allowing IT leaders to focus on innovation and transformation.

Blockchain is still in its early stages of evolution with very few enterprise-wide use cases and high cost of implementation. But the foundational nature of this technology and its potential impact across supply chain, finance and commerce functions makes it a trend that cannot be ignored. Many clients are running pilots and developing business case for Blockchain, but the technology is still maturing, so it’s still too early to predict which platforms and business models will prevail.

For enterprises to drive maximum business value they need to focus on driving automation across the service delivery value chain and integrate and orchestrate disparate cloud and traditional workloads into a seamless end- to-end delivery of business services. It is also imperative that they structure strategic partnerships with forward- thinking technology vendors based on business outcomes and co-investment in transformation.

Bannister: What unique capabilities does a sourcing advisor look for in a service provider? Are there any service providers currently leading the industry in terms of driving enterprise business outcomes?

Govil: One of the primary capabilities that sourcing advisors look for in a service provider is their ability to better understand the business requirements of the client and tailor their solution based on that, rather than providing off-the-shelf solutions. Therefore, providers who are constantly looking to expand their capabilities, in terms of development of new platforms, skillsets, transformation methodologies and adoption of newer technologies will have an edge over others in meeting the changing business needs of enterprises. Besides, sourcing advisors also favorably look at providers who are willing to explore newer service delivery and pricing models with an objective of maximizing business value and customer experience. As IT organizations move towards containerization and micro-services, they are preferring to work with service providers who enable this dynamic and componentized architecture.

Bannister: How can a service provider attract the attention of the sourcing advisor community? How do they get invited to participate in an enterprise customer engagement?

Govil: The way enterprises and advisors interact with the service provider community is constantly evolving. Service providers who are flexible with their approach to customer engagements and are willing to adapt their solution based on the customer’s needs are likely to find more favor both with the sourcing advisors and end clients. Moreover, consistently achieving service outcomes and going beyond the contract to deliver value are important factors to consider. The provider’s ability to offer a transformational solution and engagement from senior management are other critical decision factors.

With the continuous adoption of newer technologies and service delivery models, it is imperative for service providers to engage with others in the ecosystem (sourcing advisors, enterprises and other providers/partners) to address how to take advantage of these technologies by weaving together the right solution. Therefore, thought leadership in terms of driving conversations around industry developments, technology leverage and business model shifts can definitely attract the attention of the sourcing advisor community. This is an important predictor of a provider’s capabilities, leading to more invitations from advisors and buyers for their business engagements. Additionally, sharing client case studies and examples of how the provider addressed key customer challenges validates their approach and acceptance in the market.

Bannister: What is one of the challenges for service providers when working with sourcing advisors?

Govil: When working on a deal for a client, sourcing advisors often engage with multiple providers at the same time. There is usually a limited window of time available to the providers to make their case for being the best solution for the client’s requirements. And sometimes it becomes challenging for providers to communicate effectively to the sourcing advisors the value they can offer the client within this window. This problem is even more acute in cases where a sourcing advisor is not familiar with a provider’s capabilities specific to the engagement. Therefore, it’s important for providers to constantly engage with the advisor community and brief them on their capabilities and highlight their previous experience of how they addressed specific client needs. As deals become more complex and domain dependent, often times the provider may have the right technical capabilities, but might not bring the vertical expertise. In such situations the advisor should openly communicate with the provider and guide them on either partnering or bringing a domain expert into the proposed solution. Understanding the synergies between the provider’s horizontal, geographic and industry capabilities is key to assessing the right fit.

Bannister: What would you say is the one project in highest demand by your enterprise customers right now?

Govil: Migrating and scaling to private and hybrid cloud platforms continues to be one of the major areas of focus for enterprises. However, they are increasingly considering other technologies that can support their digital transformation journey, including automation and artificial intelligence. And these digital transformation initiatives are being pursued in rapid release cycles to explore and deliver viable solutions to business in an accelerated time frame of ideally three months and no longer than six months. Hence partnering with a service provider that is able to co-relate the technology investments to business outcomes is key. Clients want the flexibility and scalability of cloud without the hassle of managing the associated security and workload distribution. The trend is to go with managed service providers who can take these functions off the client’s plate, thereby allowing them to focus on more strategic and business driven needs.