“Transformation” is one of the hot buzzwords of the day in many industries, including global services. With so many public and private institutions coming under fire, “transformation” has a nice ring because it implies a really, really big change that will fix whatever is fundamentally wrong.
When providers, customers and analysts throw the word around they seem to mean “some really big and really good improvement.” Push advocates to define it more precisely, and they’ll tend to say “transformative” improvements are:
• Significant to the bottom line, rather than minor tweaks in efficiency;
• Lasting, rather than temporary boosts that will fade when the project champion moves on or business takes a turn for the worse, and
• Comprehensive, affecting multiple parts of the organization rather than only “leading edge” or high-glamour units (or low-hanging improvement fruit).
But even that definition leaves plenty of room for misinterpretation. To learn more, Tata Consultancy Services surveyed buyers, outsourcing advisors and service providers about what they see as the top “transformation” priorities. The results reinforced several trends we’ve been seeing over the last six months, including:
A “small but significant” group of customers are seeking gain-share arrangements, where the provider earns more if they produce specific business results for the customer. Still to be determined is how to measure the shared gains to ensure both sides really win, and to avoid the temptation on the buy-side to just beat up the provider for price cuts in tight economic times.
While innovation was not specifically mentioned, up to 40 percent of buyers are choosing a collaborative approach to managing transformation initiatives. This requires, TCS says, “a provider who can offer consulting and advisory capabilities in addition to being able to drive implementation collaboratively.” It also requires measuring the value of innovation so the customer can be convinced to pay the provider a decent margin on it.
Analytics (also known as “Big Data”) is another buzzword of the hour, with more than half the respondents saying “seeking greater insights from available data.” For now, the survey said, buyers want this capability to be delivered from onshore or nearshore locations. I would guess this is to better assure security and that the outsourcer is doing exactly the right type of detailed analytics the business needs. Here, for transformation to work vendors need to provide good security technologies, and both buyer and seller need to beef up their planning and coordination.
While I would have thought most customers had long ago outsourced most of the IT operations they needed to, more than 60% of the organizations are still seeking to outsource IT in some form. Here, I would guess the outsourced capabilities revolve around the cloud (including the combined outsourcing of business processes and the IT infrastructure) and around specialized areas such as testing.
I’d argue that until we define transformation, we can’t achieve it, and the TCS survey is a good first step.
Read a more detailed summary of the results by Shyam Kerkar, AVP, head of marketing and Knowledge Champion for Business Process Services at TCS.