March 6, 2013
Much has been made over the past few years about the “new” digital technology imperatives – social, mobile, analytics and cloud (collectively referred to as “SMAC”). Though the IT industry is flush with reports about SMAC, lumping these technology capabilities together is both helpful — because they do represent a collective “what’s hot” in IT — and misleading, because each technology has a different level of maturity, complexity, and business impact.
I often say that that sourcing professionals are “where the rubber hits the road” with new technologies. That is, the technology industry can hype a new technology all it wants. But until someone makes a strategic sourcing decision — one that carefully examines costs, risks, and benefits of these offerings for enterprises, it’s mostly just hype.
And when you peel back the layers of the SMAC acronym, what you see are four unique solutions, each with different levels of complexity which are highlighted in the sourcing process:
- Sourcing “social” typically involves a major software purchase. While “social” was a mystery to many companies five years ago, leading “social” providers such as Jive, Telligent, IBM and NewsGator, have established leading enterprise social software offerings. Today, purchasing social software is not necessarily complex, as long as you can clarify the focus of your social efforts, put the right providers on your shortlist, and get a reasonable understanding of software costs. Sourcing expertise is important, but the market has evolved significantly. The strategic complexities for an enterprise social strategy lie in how social software is integrated and adopted.
- Sourcing “analytics” requires detailed market knowledge. Like social, analytics initiatives depend greatly on software, but the market is at a different stage of evolution. Analytics is nothing new, but we are seeing an “analytics boom”, driven primarily by the proliferation of data. It’s no surprise that a host of traditional software and services players like IBM, Deloitte, Accenture, SAP Business Objects, and SAS are ready for the opportunity. Sourcing professionals can their business help by keeping pace with the range of new offerings/capabilities from these providers, but also weighing these offerings against the new solutions from the more specialized players entering the market.
- Sourcing “Mobile” requires clarity on solutions…and foresight. “Mobile” is the most nascent and confusing of the four SMAC offerings, because it’s is an adjective describing a form of engagement, not a technology. It can describe anything from mobile app design, to mobile hardware purchases, to mobile integration work. A central challenge in any mobile strategy is connecting these mobile dots – across geographic silos, existing contracts, and new partners. Sourcing will not lead most mobile efforts (that’s better left to architecture teams), but can play a valuable role in identifying the capabilities of existing solution providers – and mitigating downstream challenges related to redundancy and integration.
- Sourcing “Cloud” is a governance challenge…and sourcing’s greatest opportunity. Sourcing professionals are now playing an active role in sourcing cloud services from companies such as Amazon.com, Google, Rackspace, and Salesforce.com. In cloud solutions, the role of the sourcing professional is of utmost importance, since sourcing already plays a key role in evaluating the security, risk, and governance terms within contracts — and these are paramount to a good cloud strategy. If your company is pursuing major cloud purchases without a cohesive sourcing strategy, it’s putting itself at significant risk.
At Forrester, our goal is to help you make smart sourcing decisions. While sourcing these new “digital” offerings may not occupy the majority of your budget, it’s important to be connected to the SMAC offerings because:
- They are strategic to your business.Will you be informed when your CEO asks for your view on the best strategic partners for these “SMAC” solutions?
- They bring new risks to your organization. Are you ready to make the call on your company’s risk tolerance for adopting these technologies?
- They change the role of sourcing. Have you been clear about the role of sourcing should play in purchasing these technologies?
We’re going to be addressing these questions at Forrester’s upcoming Sourcing Forum in Washington DC (May 6-7) and in London (June 10-11). At the forum, we'll dig into the convergence of the SMAC offerings, as well as other important sourcing topics: negotiating business outcomes, strategic sofware sourcing, and transforming your IT services strategy. We hope to see you there.
And if you'd like to comment on the aggregation or disaggregation of SMAC solutions, please drop me a note.