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STAMFORD, Conn., June 16, 2014

Service Providers Need to Develop Different Core Competencies to Succeed in a Digital World

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.

In today’s blog post, Susan Tan, research vice president at Gartner, explains how service providers need different core competencies to succeed in a digital world.

Ms. Tan said:

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:

  1. 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.

  2. 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).

  3. 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.

  4. 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 (see Figure 1). 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.

 

Figure 1. Core Competencies by Service Layer
Source: Gartner (May 2014)

 

More information is available in the report entitled “Market Insight: Service Providers Must Align Strategies and Capabilities With Adaptive Sourcing Requirements to Succeed in a Digital World” which can be found on Gartner’s website at http://www.gartner.com/doc/2743519.

Adaptive sourcing strategies will be discussed at the Gartner Sourcing & Strategic Vendor Relationships Summit 2014, September 10 -12 in Orlando, Florida. Details on the Summit can be found at http://www.gartner.com/technology/summits/na/outsourcing/. Members of the media can register to attend by emailing janessa.rivera@gartner.com.

Information from the Gartner Sourcing & Strategic Vendor Relationships Summit 2014 will be shared on Twitter at http://twitter.com/Gartner_inc using #GartnerSSVR.

About Gartner

Gartner, Inc. (NYSE: IT), is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

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