Organizations Will Look To Source Business Capabilities, Not Technology

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!


I think this is a very

I think this is a very relevant study as most clients are starting to think on these lines.. Trouble is.. and hopefully the research will probably bring out the solution to this... that almost all of these point require a pretty seamless integration between business & IT and while it works in smaller units/pockets... a larger integration is what is potentially the bigger challenge. The more this happens seamlessly, the more likely is it for clients to achieve these objectives on their own.

SI's are also faced with a similar challenge -- of integrating their internal setup to become more business focused from predominantly being used to talking more technology.

Thanks Vikas and I agree with

Thanks Vikas and I agree with your comments:
- Demand side: Yes and so far, I have seen business services mostly on "micro" business processes in the banking sector like trading services or data management services. As the model matures, I expect we will see larger processes.
- Supply side: Yes and I expect only a limited number of service providers to be ready and offer these services to their clients in 2014. That's the #1 challenge SIs will face in 2014 still!

Happy New Year!

Agree, With SaaS and BpSaaS

Agree, With SaaS and BpSaaS gaining momentum , customers will start looking to source specific functionalities with out much consideration of technology behind it

Despite ETK is normally

Despite ETK is normally installed on a desktop platform (only Windows OS are supported at the moment), BMW has recently allowed to its customers to use an online version of this catalog.