The ‘big shift’ in Enterprise Service Delivery

Enter the digital world of Service Marketplace where any automated service for an Enterprise is pre-built, ready to be used and can be subscribed just like downloading an app from an app-store. Why bother with the mess of building/ automating complex tools or solutions when you can have them as a catalog in a service marketplace. Empower users through a Consumer like experience while maintaining your competitive edge. Reimagine your Enterprise Service Delivery thru the eyes of a consumer.

Challenges in the Managed services world..

IT Service Delivery in Enterprise is going through a major shift.

The current managed services model was best suited to the needs of Enterprises until a few years ago where structure and process were much needed. However Digital has ushered in major changes in the form of user expectations and business complexities.

Let us look at how well the trillion dollar IT services industry (Garter Jan-2020) is coping up with today’s needs.

1. Long procurement cycle & longer contract tenure: Organizations go for multi-year, multi-million-dollar contracts to procure services from providers. The whole procurement process takes 3–6-month period (at a minimum) with all the elaborate evaluations and references. By the time the benefits of services are realized, almost a year passes by. Can we sustain such long cycles going forward?
2. Siloed automation approach: The automation strategy in IT service delivery depends on buying and implementing siloed tools and platforms (costs borne by Enterprises). In spite of all the efforts, even the best solutions in automation, does not offer benefits beyond a certain point (30–40%). Should organizations continue to worry about such automation efforts or focus on their core business?
3. Fixed cost structure: The cost structure for IT service delivery is fixed. Just in the last 6 months several businesses took a beating in revenue because of Covid, while their internal costs stayed the same resulting in margin pressures. Could we afford to stay in this model in future?

Service Delivery today is no more the ‘nimble enabler of Business’, it once promised to be.

The perfect storm in the current model

In the last decade or so, with the rapid adoption of digital consumer services, users are thrown open to a lot of possibilities. Multiple factors are acting and coming together in unison to create a perfect scenario for a NexGen service delivery that not just addresses the inefficiencies of the current model but opens up a new world of possibilities for users

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a. Users are spoilt in choice and expectations through their exposure to consumer world. They want everything ‘here and now’.

b. We have been witnessing rapid increase in the use of virtualized services in IaaS, SaaS and PaaS. This has also opened a plethora of technology and platform options for enterprises (Operational model shift)

c. Subscription economy is here to stay. More services are being subscribed by users based on outcomes not discrete tasks or inputs. People are looking to buy music not CDs.(Business model shift)

Consumer world . .anyone?

The above mentioned behavioral factors and technology business innovations are commonplace in the consumer world.

Any service in a consumer world, be it a cab-ride on Uber or a movie-streaming on Netflix is

1. A packaged and productized service, available as an App
2. Hosted in an app-store
3. Downloaded on a smartphone
4. Ordered through a click by the user
5. Personalized to their needs & 
6. Delivered instantly through zero-touch

And the nature of these services is complex. Users are even able to trade stocks or do money transfer. If a consumer world can successfully productize and package their services for easy consumption and provide better experience at economic prices, why can’t Enterprise service follow suit.

It is time we start looking at a similar pattern in Enterprises. We are at the cusp of this transformational in Enterprise Service Delivery

Enter Digital Service Model

Digital Service model is a NexGen delivery model that is highly productized, service centric, fully automated and enables consumer grade user experience.

It draws inspiration from the consumer world and Digital Native companies like Amazon and Google. Any service that an Enterprise needs will be provided as a catalog that can be consumed from an App-store equivalent. These services are fully automated and enabled as self-service.

Digital Service model can be explained better through these 10 attributes. Most users are well-versed with these in consumer world.

Digital Service Model is a user centric delivery approach that accelerates digitization, enhances experience and enables dimensional improvements in outcomes through an operating model shift.

How will Enterprise Service Delivery evolve over the next decade

Services procurement will no longer be a monolith. Take the example of Digital Workplace services today in an Enterprise. The entire area is serviced through one or more providers as a single bundle probably split by functional areas. The new model will break the monolith to a number of component services that are digitized and made available through a service cloud, an app-store equivalent of Enterprises. See Diagram below for componentized services.

Digital Service Model will digitize these component services and move them to cloud. The service cloud is the marketplace of sorts for the Enterprises.

We expect nearly 40–50% of Enterprise services to be available through the Service cloud that is the Source of procurement for an organization.

i) On one-side, Providers will constantly upload new services (similar to how apps are being added in App-store today). Services are productized, digitized, fully automated, and provided on a pay-as-you-go model. Providers get an advantage by means of competitive edge, wider market reach, better margins and an improved quality of business.

ii) On the other-side Enterprises can subscribe to these services as they need, order-at- a-click and get a consumer like user experience. They get reduction in delivery costs (30–40%), improvement in speed, Enterprise agility and standardized and simplified IT 

The new model brings benefits to both Services Providers and Enterprises

And in summary, Digital Service model is the step zero in the Digital transformation journey for an organization. Several commoditized service offerings are ready to be digitized and offered thru a marketplace approach that can potentially impact $ 300B of addressable market size in IT services. Every Enterprise that can adopt this model can truly set themselves up for success in achieving Enterprising agility similar to Digital Native companies.

Ganesh Kannan

Guest Author Co-Founder and Chief Customer Success Officer ,DigitalXC