Posted by Christopher Andrews on July 20, 2012
Services budgets represent 10% of annual IT operating and capital budgets[i], but Forrester sees considerable evidence that the influence of these IT Services vendors is proportionally higher — and growing dramatically. While there are several reasons for the rising importance of your services partners, at the most fundamental level Forrester sees that:
- Business professionals need immediate access to tech-enabled innovation. Most strategic business initiatives now have an underlying technology component. Service providers come to the table with the tech savvy, vertical market expertise, and best practices to make these initiatives work.
- IT professionals can’t keep pace with business demand. The volume and complexity of technology demands from business professionals means that traditional IT organizations have difficulty keeping pace. They too need to work with the best mix of IT service providers to meet the demands of their business. Effective supplier management is quickly becoming the most essential skill in IT organizations.
The demand for great services partners will be filled by a variety of providers, from traditional IT services incumbents to upstarts with cloud- and software-as-a-service (SaaS)-based business models. This changes the scope of your services initiatives, but also creates a tremendous opportunity for Sourcing and Vendor Management professionals.
To succeed, you’ll need new market knowledge, great supplier portfolio management skills, and new governance capabilities. This starts with a strategy for understanding key services market trends, but also involves creating a cohesive sourcing strategy, engaging with the right vendors, and managing those vendors over time. All the while you must balance key sourcing decisions related to cost-cutting, innovation, self-provisioning, multisourcing, and governance.
Forrester’s Services Sourcing Playbook supplies the appropriate market context, business rationale, negotiation tactics, and value measurement of IT services sourcing. The playbook is built from the ground-up around a 1.) discover, 2.) plan, 3.) act, and 4.) optimize framework to help you execute on key initiatives — and close the gap between business demand and IT supply. Download the executive overview for the services sourcing playbook for SVM pros.
[i] Forrester surveyed over 3,500 global IT budget and decision makers on the breakdown of their IT budgets in Q4 2011. Survey respondents told Forrester 10% go to third-party IT services. See Figure 2: Forrsights: Cautious Optimism In 2012 IT Spending Plans. http://www.forrester.com//search?N=10001+5001+200519&access=1&range=504001&sort=3&searchRefinement=reports#/Forrsights+Cautious+Optimism+In+2012+IT+Spending+Plans/fulltext/-/E-RES71882
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