January 18, 2017 3:23 pm | Updated 3 years ago.
Are Specialty Service Providers – Preferred by American Companies?
Until a few years ago, most Fortune companies in the USA had a program to select a set of IT Service Providers that they would use to meet the IT requirements of the company, ranging from application development and maintenance (ADM) to remote infrastructure management support (RIMS). These programs to select the “Preferred Service Providers” were usually run by the Procurement department of the US Fortune companies and typically consisted of one or two MNCs and one or two offshore IT service providers usually from India. To avoid the preferred vendors from stepping on each other’ toes to the extent possible; the client would clearly delineate the areas of responsibilities for each of the preferred vendor.
While these practices of provisioning IT services from the preferred IT service providers are still in existence in most US Fortune companies, there is a clearly noticeable shift towards provisioning a part of IT services from specialty and super-specialty IT providers, especially in the area of products and solutions. This change in the provisioning of solutions and services from specialty providers rather than “Preferred Vendors” is gaining ground as the level of automation provided by newer products and solutions of the specialty IT vendors is sharply increasing.
The primary reasons or objectives for the US Fortune companies to have a set of preferred Vendors were that:
- Preferred Vendors have institutionalized knowledge of the Client’ IT systems and environment
- Preferred Vendors would ensure knowledge retention by committing certain resources for certain duration and have appropriate knowledge management systems in place
- Preferred Vendors would give preferential pricing
With the advent of the digital age and rapid changes in the business scenario, the above objectives are no longer sacrosanct for the US Fortune companies.
US Fortune companies are now beginning to see a lot of benefits from provisioning services from newer agile IT service providers that may have state-of-the-art products to bring in a higher level of automation to reduce headcount and, therefore, the cost to the customer and also enable the customers to align their business strategies with the emerging technology changes.
This change was well articulated by Gartner in their postulation of Bimodal IT architecture, where the US Fortune companies were advised to run both the legacy and digital application streams in parallel.
In D2E’ opinion, over the next 5 years, the above scenario will go through a major transformation in favour of US Fortune companies provisioning most of their IT needs from specialty solution providers, where the solution architects provided by the Specialty solution providers can not only implement the solutions of their companies but also integrate it with the client’ IT infrastructure, which by all reckoning would have moved to a mostly could enabled environment with each application having an open API for easy and robust integration.
For example, in D2E’ opinion, very few US Fortune companies will spend millions of dollars in developing Claims Management System or a Core Banking System with hundreds of man-years of effort. In all likelihood, these Clients would procure cloud-based systems to provide the basic functions required by their business and then build unique differentiators by integrating these cloud-based systems with other technology solutions (Analytics, Mobility, IoT etc.) in line with their business strategies and direction.
D2E’ Aggregator platform is building a network of specialty IT service providers to cater to the above emerging scenario.