Organizations Will Look To Source Business Capabilities, Not Technology

Frederic Giron
Vice President, Research Director
December 26, 2013

Following my research on software asset enabled services, I will start a new research stream in 2014 focused on business services: a new breed of managed services leveraging software assets, BPM and analytics focused on delivering business outcomes to clients. This post introduces this research and summarizes the drivers and enablers of such business services.

As organizations enter the age of the customer we see business leaders controlling more of the technology purchases. But as their business processes become more technology dependent I believe they will move away from technology sourcing to pursue business capabilities such as digital customer engagement. For example, Forrester recently learned of a vice president of online channels at a luxury brand who decided to leverage a mobile center of excellence from an external managed service provider to help the brand accelerate its revenue growth in a multichannel environment. As business decision-makers look to build capabilities that help improve business outcomes, I believe that they will move away from procuring technology to sourcing a new breed of managed services to complement their strategic capabilities. This new breed of services will combine:

  • Strong business process expertise to help businesses be disruptors. In the age of the customer, businesses are looking for service providers that can help them harvest the power of mobile, social, and analytics to transform their customer experiences. However, they're looking for disruptive business models, not just technology. Successful service providers will be the ones that bring strong business transformation capabilities along with a repository of best practices and benchmark performance indicators.
  • Analytics to monitor and optimize business process performance. These services aim to deliver incremental business value to clients throughout the duration of the engagement. A strong analytical capability that is directly linked to the business process is crucial to being able to monitor and optimize the outcomes of the business service. For example, a luxury cosmetics brand in the region was able to significantly increase its revenue growth in the mobile channel by understanding what time of day it needed to launch campaigns to maximize their effectiveness.
  • Software assets that automate business processes. The speed of change in the age of the customer means that businesses will not have the time or risk appetite to develop custom applications. Software assets enable them to significantly reduce risk, accelerate time-to-value, and benefit from the service provider's intellectual capital. Built on modular, multitenant software architectures, these assets bring benefits to multiple customers while allowing for differentiation at the business process layer.
  • Flexible engagement models that align with business value. Business stakeholders value business outcomes, not the number of developers working on a project or the number of mobile applications delivered. Forrester believes that pure value-based pricing models will remain few and far between in 2014. However, as service providers overcome their traditional challenges with and concerns about managed services, a growing number of clients will ask their providers to put at least part of their remuneration at risk and align it to business outcomes like revenue growth, or business process performance improvements.

For this research I will interview early adopters of such business services, focusing specifically on business processes in the banking and insurance sectors like data management services, origination services and trading services. I look forward to sharing my findings with you in late Q1! Till then, I wish you a wonderful New Year 2014!

Categories

Related Posts