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The onset of digital has put many companies on the back foot. Few were ready to embrace the technology and business shifts that will delineate the next generation of market leaders

Coeus blog: Is Digital changing the way we source IT?

The onset of digital has put many companies on the back foot. Few were ready to embrace the technology and business shifts that will delineate the next generation of market leaders. New technologies ranging from social-media, mobile, cloud computing, digital and analytics, to name a few, will now help to redefine how organisations deliver value to their customers.

Responses to the digital revolution

The digital revolution has not only created challenges for adopters and businesses, but also for IT service providers around the globe. Service providers are confronted with a fundamental change to their business model, as they struggle to piece together the strategic business aspects of digital transformation with the necessary technology elements. Over the last few years, we have seen a tectonic shift in how these providers have evolved and how they have moulded their offerings to meet the new digital demand.

IT Consulting Firms Response to Digital

IT consulting firms, which are providing more strategic and advisory services, have been very vocal about the changes they have made to meet the digital aspirations of the market. In June 2014, PwC launched PwC Digital Services, a new business unit specialising in digital consulting.Deloitte set up Deloitte Digital, bringing together people from across the firm. Deloitte Digital has a core team of 440 people and a separate ‘halo team’ of 200 employees, who work on digital projects.Accenture set up Accenture Digital, which has around 28,000 employees, and KPMG launched The C2FO Market, a new finance platform for the digital supply chain of UK businesses. At the same time,an increasing number of smaller specialist firms have been capitalising on the challenges of the digital world, such as cyber-security and international e-commerce.

The System Integrators Response to Digital

We have witnessed a similar change in the business offerings of large System Integrators. Wipro have set up Wipro Digital as an independent business unit to prepare itself for the new wave of opportunities in the digital space. The company had then said that its Digital business would have a key target to generate $1 billion in annual revenue within three years.India’s largest IT services firm Tata Consultancy Services (TCS) expects to turnover $5 billion in cumulative business over the next few years, from what it touts as the “digital opportunity”.Cognizant has been a pioneer in leveraging on its digital business model, with a strong focus on SMAC (Social Media, Analytics & Cloud). It now delivers this technology to 60% of its top 100 customers. “We see strong evidence that SMAC is the next secular shift in computing. This new IT model blends multiple technologies to promote productivity and competitiveness,” Cognizant CEO Francisco D’Souza said.

Built to adapt rather than built to last

In this disruptive environment, sourcing strategies must diverge from approaches that were "built to last" to ones that are "built to adapt". We are now all aware of the phenomenon of crowed sourcing, where bussing inventors and entrepreneurs gaining investment from a large number of small investors via the internet. However, this model is also now being exploited in reverse by some businesses. Though crowdsourcing is relatively new to IT sourcing, it allows tapping into the community collective for an agile, low-cost sourcing option to meet demand and the need to innovate. It is widely recognised that a one-size-fits-all technology architecture and delivery model is no longer appropriate. This also has a knock on impact on the sourcing strategy; whereby a one-size-fits-all sourcing strategy is no longer appropriate. IT organisations will increasingly be challenged to innovate and increase their speed to market, whilst at the same time delivering the traditional large scale enterprise services. Adaptive sourcing helps organisations move away from a traditional layered sourcing strategy and aims to adapt their IT sourcing to respond swiftly to changes in customer demand, or to harness opportunities in new sectors and markets.

Coeus Sourcing Services 

At Coeus we provide support to clients on their sourcing journey, from helping to select the most appropriate sourcing strategy and the right suppliers, to negotiating contracts that work in the real world. To find our more about our offerings have a look at our Sourcing Services page www.coeusconsulting.co.uk/services/sourcing

about the author

Saurabh Ranjan

Saurabh has over 10 years’ experience in the IT industry advising clients on maximising value from their IT organisation and running high value transformation programmes. Saurabh’s area of focus has been on the strategic, commercial and technical evaluation of large scale IT initiatives and programmes.

Email: info@coeusconsulting.co.uk

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