As enterprises ramp up their digital transformation initiatives, the IT Strategic Sourcing and Vendor Management (SS&VM) function faces the onerous task of establishing and orchestrating an IT services vendor portfolio that can help the enterprise navigate the proverbial IT maze and fulfill strategic business objectives.
However, this is clearly easier said than done from an SS&VM function standpoint. Current enterprise satisfaction with their incumbent IT service providers stands at an all-time low – 54% of all reference enterprise discussions conducted by Everest Group over 2017 expressed dissatisfaction with their IT service providers.
A careful examination reveals that a large part of the enterprise dissatisfaction with providers is associated with a perceived lack of innovation and business value within the IT services engagements. While enterprises point out that service providers are largely at fault for this phenomenon, Everest Group’s research uncovered key fundamental challenges that lie in the sourcing model and its associated practices that should share the blame.
The current IT services sourcing model is designed with scale and cost effectiveness as the primary objective and vendor selection/categorization premise. However, the new age IT services delivery requires service providers to be properly incentivized and equipped with sufficient enterprise context in order to drive business value from IT.
Evidently, IT SS&VM functions need to fundamentally reimagine the way the sourcing model is designed, and redefine how vendor rationalization, selection, and management processes are conducted.
This report is the first of a series of two viewpoints on the subject, and covers the following:
- Imperatives for enterprise IT in today’s digital world
- Limitations of the current IT services sourcing model
- Introduction to a reimagined IT services sourcing framework to drive business value
- A beginner’s guide for adopting the reimagined sourcing framework
- Broad recommendations around dealing with the evolving IT services sourcing landscape
The second report on this theme will delve into a detailed framework and best practices for provider portfolio rationalization to align with the reimagined sourcing model.
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