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What Exactly Does Digital Business Mean for IT Service Providers?

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by Dinesh Goel

Organizations know the journey to becoming a digital enterprise is not made alone. As technology continues to advance and the market grows increasingly diverse with niche offerings and evermore sophisticated solutions, enterprise CIOs find themselves acting more as business integrators than as managers of IT cost centers. Both organizationally and professionally, they need to travel with service providers that can help smooth the road. This means many large outsourcing firms must quickly—and wisely—reinvent themselves and reorient their value proposition to point toward digital business services.

Indeed, the long-standing appeal of labor arbitrage is growing more and more irrelevant. It is no longer enough for a service provider to merely deliver services per an organization’s instructions and training at a reduced cost. Enterprises are looking for greater gains: the ability to transform their business models with the use of digital technologies, the ability to create new revenue streams and innovative ways to connect with consumers.

Service providers that meet the following Top 5 expectations will be the ones able to help their enterprise customers thrive in the new digital future, and secure their own success as well.

1. Be prepared to transform the business. Enterprises are looking for service providers that can leverage domain and technology capabilities with digital solutions, including mobility and analytics. They need partners that can provide data-driven insights so they can make better, more accurate and more proactive business decisions.

2. Impact the consumer experience. Customer-centricity is high on the list of enterprise priorities, and technology is the enabler of an unprecedented level of customer engagement. Service providers that are paving the way in this area will be in a strong position to help enterprises get ahead of the competition in delivering a holistic consumer experience.

3. Apply automation platforms. Enterprises around the world are looking eagerly at advanced automation and cognitive computing to help them conduct business at a radically increased level of productivity and efficiency. These gains are documented and growing. Service providers that can offer these cutting-edge capabilities will draw significant positive attention.

4. Co-innovate. Enterprises need their service providers to work with them to not only solve their most urgent and pressing problems today, but to anticipate and solve possible future problems and uncover new business opportunities. They want competitive advantage, and they know seeing around corners is a powerful way to get there.

5. Invest in developing digital solutions. Enterprises are most likely to partner with service providers that have made a commitment to research and development and that are acquiring niche companies with compelling platforms. They want to work with market movers.

While some cite revenue cannibalization as a risk of automation and migration to the cloud, service providers can offset that potential by ensuring they directly impact the enterprise in terms of business results and by forming true partnerships with enterprise customers by sharing investments and rewards.

ISG offers expert advice to enterprises in their journey to digital transformation. Contact me to discuss further.

About the author

Dinesh is a highly experienced and well-respected advisor in the outsourcing industry with more than 23 years of experience in management consulting and outsourcing. He works with enterprises to craft sourcing strategies, structure and negotiate complex sourcing transactions and design and implement sourcing governance organizations. Prior to joining ISG, Dinesh worked with Infosys and Accenture, where he led large transition programs and consulted on IT strategy and implementations, business process-reengineering and operational improvement programs. He is a published thought leader and a regular speaker at industry conferences. Dinesh manages the ISG India Business.