Engaging a Global Service Provider to Support Digital Transformation

Overview

As digital transformation adoption progresses, businesses have become increasingly dependent on technology and software for planning, managing, and operating their enterprises.  The competitive environment and rapid business dynamics continue to raise the bar for technology adoption to be successful.  Internal staff familiar with the company’s operations focus on high-value strategy and application needs.  Global service providers (GSP), in turn, often have broad and deep talent pools to provide companies with the resources for execution.

Move Fast in a Dynamic Business Environment

The rate of change in today’s business environment has become faster and more dynamic than at any point in history – going back 3,000 years to when coins first started to replace bartering in China[1].  Recently, many companies have been caught in a “Kodak moment” only to become irrelevant and struggle to recover.  New technologies rapidly impact business models, putting executives under extraordinary pressure to adapt and execute change.

Digital transformation has become the foundation of most corporate strategies for sustaining the business and/or gaining a competitive advantage.  The general areas include (listed in order of increasing risk):

• Re-engineer existing business processes, both internal and in the supply chain, to improve costs and speed.  This involves digitalization (replacing paper-based and manual processes).  Particularly for a commodity business, lower operating costs becomes a competitive advantage.
• Change customer engagement from the outside in (i.e., not driven by internal KPIs) to improve the customer experience.  The customer experience extends across pre-sales, using the product, and post-sales support.  Today, a better customer experience drives increased revenues.
• Re-imagining the marketing strategy particularly for product packaging and distribution channel to create a new business model (example SaaS).

Digital transformation needs speed of execution and flexibility to pivot when needed.  Managing both human and technical resources in this dynamic environment has become a leading management challenge.

Managing Human Resources

Successful execution of a digital transformation program involves a multitude of technologies and people skilled in those technologies. 

Time-to-Market and Sustainability

Hiring internal people for the associated IT skills has become impractical.  With the continued high demand and short supply, experienced people with the specific IT skills needed have become hard to recruit.  The calendar time required to recruit and hire them delays projects significantly.  Continuously training and maintaining the skills of internal staff on the variety of modern technologies is management intensive, costly, and subject to rapid decay when not used.  After an inevitable pivot, a change in technologies creates a need to change people.  Employees can become like an anchor delaying the project and inflexible.

Focus Internal Resources on Strategy and Application Needs

Typically, employees have a deep understanding of the company, its business model, processes, and legacy applications.  So, it makes sense to focus internal resources on the strategy and program management including assessing business needs and creating the business plan.  A GSP can help with this planning by including its deeper knowledge of technical trends and barriers.

Global Service Provider Provides Technical Skills for Program Execution

Availability and Scalability: GSPs have access to a wide range of IT skills that can be applied to a project when needed.  The large pool of people in these companies are engaged in projects when required and later disengaged when no longer needed.  These resources quickly accumulate significant experience and expertise from previous projects. 

Value-added Services:  Global service providers have seen technical IT and engineering services become commoditized with lower prices and margins.  Most GSPs upgraded their capabilities to offer more value-added services, which expanded the potential scope of engagements.  The broader scope has facilitated more strategic relationships with a deeper understanding of the client’s business processes and industry dynamics.

Software Assets or Accelerators:  GSPs have gained application and industry expertise through repeat engagements in a domain area or industry.  This allowed them to create reusable software code that can be applied for multiple clients to improve project cost, risk, and time-to-benefit. 

Managing Technology Risks

GSPs can typically leverage a broad talent pool and other resources to help their clients manage technology and mitigate some of the associated risks.  As issues emerge, project management and resource allocation need to adapt – requiring agility in staffing.  Sources of technology risk include:

• Legacy systems contain a wide range of older technologies that often break with upgrades and the addition of new systems – particularly with the current high generational change.
• New systems involve a variety of new technologies relating to IT cloud services, business analytics, enterprise mobility, and social technologies
• Migration from current systems and transition to new systems with changes affecting operations, business processes, and reports that require troubleshooting, resolution, and user training.
• Support: Maintaining continuity of product/service delivery and revenue is necessary.  A poorly executed digital transformation can result in outages, data losses, recovery costs, and lost revenues. 
• Security and recovery for network intrusions and environmental causes.

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Keywords: Global Service Provider, GSP, Digital Transformation, Digitalization, ARC Advisory Group.