A recent report by the technology analyst firm, Information Services Group (ISG), found that the number of IT outsourcing contracts that were restructured between July and September this year more than doubled over the same period last year. Commenting on the report, David Barker, IT Contracts Expert at Pinsent Masons, said: “Buyers are looking to change the scope of contracts and make the supply more relevant to what their business looks like today”. One of the key motivators for this change, said David, is “…the customer wanting ‘best of breed’ for each service they buy, rather than buying everything from one of the biggest players”.
In our previous post we talked about the advantage of “focus”, and how companies are moving away from large scale contracts to best of breed service providers that offer deep domain expertise over scale. In this post, we take a look at how those qualities that buyers cited as important are driving this trend. They are: agility, flexibility, vertical alignment, responsiveness and trust.
The pace of business today is faster than ever before, and the technologies that support business are evolving at a rapid pace. A stark illustration of the pace of change can be seen in Research in Motion (RIM), the company behind the Blackberry smartphone. In the space of a few short years, RIM went from being top dog in the smartphone industry to an ‘also ran’. Shares slumped from an all-time high of $114 in 2011 to under $10 in May of this year as rivals such as the iPhone and Samsung out-innovated and out-performed them in almost every aspect. Although an extreme example, agility is fundamentally important across every facet of every business, everywhere. And service providers who support these companies must be able to match this pace to provide the right level of support for an agile business environment.
Evaluating Agility: Talking to a prospective service provider’s existing customers about their specific experiences is key here. Questions like: “how quickly do they respond to a change in support requirements”, and “are they prepared to accommodate requests normally outside the scope of your contract” can highlight how agile a support provider can be to a changing environment.
Because business today changes so fast, flexibility is paramount. Corporate business plans and strategies change, new markets and opportunities open up (and, of course, new challenges arise). This means that the ability to change accordingly helps to make a business less vulnerable when faced with an unpredictable business environment. Likewise, not all business decisions will prove to be right and so flexibility becomes a critical factor in making the necessary course corrections quickly.
To embed flexibility into an organisation means that every system that supports the business must match the speed at which it needs to respond to change. Software that allows a business to be more flexible is a critical factor in success, but so is how that system is managed and supported. Specialist providers, like Invenio, are usually more able to adapt and tailor the support they deliver to offer that level of flexibility. This versatility in delivering the right offerings is a critical aspect in allowing customers to maintain business as usual in an ever-changing environment.
Evaluating Flexibility: Overly prescriptive SLAs and an unwillingness to flex “standard” contractual terms during the evaluation and negotiation process is a good indicator of a service provider’s flexibility. However, it is wise to be wary of those service providers who don’t ‘push back’ on certain elements of the negotiations. According to Esteban Herrera, COO of HfS Research “Providers [who] don’t raise any objections or bother to delve into the details of the service agreement – that’s a red flag. The provider that says ‘yes’ to everything usually doesn’t know or doesn’t care what they are doing. At a minimum, they should seek clarification on some SLA and other performance commitments.”
We think it is better to do one thing really well – which is why we focus solely on delivering SAP services. But behind this focus lies another layer of expertise which can set best of breed service providers apart – and that lies in vertical (or industry) focussed service delivery. With so many different types of business and industry categories today, being able to offer deep domain expertise across a smaller number of industry verticals means service providers like Invenio can offer an enriched support service that takes into account the specific nature of a customers’ business. By having a detailed knowledge of regulatory and compliance practices along with common industry-specific workflows and processes, the support offered can be more specific and add more value to the relationship.
Evaluating Vertical Alignment: Ask the service provider to provide specific case studies and references of customers in similar industries. Requesting sight of the CVs of consultants that offer specific industry and SAP module knowledge will also help to give you a sense of the in-house skills available to support your specific requirements.
According to the London Business School, customer responsiveness is “about being fast and being right”. Increasing competition, globalisation, digitisation and many other factors combine to make the business landscape more complex, and business decisions need to be made fast for a company to maintain its competitive edge. When systems fail and problems arise, fixes must be fast, efficient and effective. With the pace of change accelerating across every business, responsiveness becomes increasingly important and, with best of breed SAP support provision, deep domain knowledge means that customers can speak to the right person at the right time to get the problem solved.
Evaluating Responsiveness: How a potential service provider responds to your requests throughout the evaluation process can provide good insight into how they will respond if you decide to become a customer. A service provider that requests an extension or delivers a proposal late should be approached with extreme caution. “The inability to organise resources or meet timelines during the honeymoon period is a clear indication of bigger issues” said Ruckman of vendor selection consultants, Sanda Partners. Speaking to existing (long-term) customers about how a service provider beats – not meets – SLAs, is another key factor that should help influence a decision.
Consumer trust in many public and private corporations is at an all-time low. The authors of a report released by the Institute of Business Ethics states that: “Living up to the principles of trustworthy conduct across an organisation is a challenge”. Getting it wrong, they say, “can damage stakeholders’ trust, including that of employees, and also undermine the reputation of the organisation”. No service provider gets it absolutely right all of the time, but those providers that take the issues of trust and ethics seriously should be able to openly demonstrate how they build trust with customers by embodying the traits of trustworthiness and ethical behaviour right across the organisation.
Evaluating Trust: Ask to see evidence of how a potential service provider performs according to a stated set of principles and practices which prioritise relationships and ethical practices across the organisation. Seek out customer references that demonstrate how a potential service provider deals with any failures and works to correct, protect and restore a customer’s confidence as quickly as possible.
If you would like to learn more about how Invenio can deliver a better support service for your SAP landscape please contact us.