Organizations’ emerging transformation to digital business models is driving the need for greater IT agility to meet changing business strategies and requirements in a highly digitalized world. Traditional sourcing strategies that are either too centralized or not centralized enough, too customized or too industrialized, actually reduce, rather than enhance, agility.
Susan Tan, research vice president at Gartner, explains how service providers need different core competencies to succeed in a digital world:
Businesses are embracing adaptive sourcing, which addresses shortcomings in existing traditional sourcing strategies and management with a three-layer approach to services – innovate, differentiate and run – each with different service requirements, value expectations, governance, architecture, and vendor and risk management. The adaptive sourcing model will support the differing needs of the business for services in different layers. When both buyers and service providers embrace this approach, a closer alignment of an IT services provider’s performance and the client expectations ensue.
This is based on the following key findings:
- The three layers – innovate, differentiate and run – are present in every client’s IT and process environment, and a provider may play in one or more layers, either directly or through partners. Because of the need to integrate data and systems across different layers, service providers will need to work more collaboratively with other providers in multi-provider environments.
- Adaptive sourcing layers are not static. A service initially introduced and offered in one layer will migrate over time, requiring a different focus and expertise (and, possibly, a different service provider).
- As organizations accelerate their move to the digital business model, clients are more open to using a new service provider for innovative services in response to the need for different capability requirements from service partners to help them navigate the digital journey successfully. Innovate services give nontraditional and agile service providers the opportunity to unseat an incumbent.
- Service providers that embrace the adaptive sourcing model will be better positioned to participate in their clients’ digital journey, demonstrate relevancy, bring the right value, address the needs of their expanding audience of buyers/influencers and position as innovation partners.
Each adaptive sourcing layer requires different skills and core competencies. Only the largest firms have the investment potential to be a player in all three layers. Midsize and smaller service providers will need to focus on one to two service layers in which to invest and excel.