Although vendor-written, this contributed piece does not promote a product or service and has been edited and approved by Network World editors.
The As-a-Service model promises to reshape business service delivery to provide companies with plug-in, scalable, consumption-based services, but the opportunities are vastly untapped. According to an Accenture and HfS Research survey of more than 700 enterprise service buyers, advisors and service provider executives, seven out of 10 enterprises with over $10 billion in revenues do not expect their core operations to be delivered As-a-Service for at least another five years.
Ironically, these are the companies that face the greatest pressures: demands on IT are doubling each year, but budgets are flat. There is intense pressure to improve operations using current levels of resources by moving away from legacy business models and capitalizing on the benefits of As-a-Service capabilities. Meanwhile, small and medium enterprises, and companies in areas such as Asia-Pacific, are moving more quickly.
To evaluate if your organization is benefiting from the full power of As-a-Service, consider whether your service delivery is hitting on the following eight value levers:
* Plug in: Accessing services quickly—in days or weeks, not months. Modular design means companies can mobilize and then demobilize rapidly when necessary.
* Scalable: Ramping up and down to match actual business volume needs.
* Standardized: Moving to a shared services model to standardize and scale processes and delivery. Repeatability is achieved with a multi-client and multi-tenant model.
* Consumption based: Paying based on what is used rather than committing to services or functionality that may not be needed.
* Outcome oriented: Working as part of a relationship where both buyer and provider are committed to specified business outcomes.
* Vendor agnostic: Providing deep knowledge and experience across multiple provider offerings in order to assemble just the combination of solutions appropriate to the business and performance outcomes desired.
* Innovation enabled: Committing to ongoing innovations in business processes, infrastructure and applications.
* Future protected: Shielding the buyer from the potential disruption of upgrades and future change. Services are always up to date, and buyers have continuous access to innovation, scale and in-depth expertise.
Although its potential remains largely untapped, some forward-thinking large companies have adopted an As-a-Service model with encouraging results. Deutsche Bank, for example, is in the midst of a procurement transformation, automating its source-to-pay process – including invoice processing and contract compliance management – and migrating the bank’s current on-premise procurement IT platform to an on-demand, cloud based solution. This has helped Deutsche Bank realize savings in both procurement operations and operational IT costs. The introduction of process automation and the migration to a simpler, standardized, on-demand cloud solution has helped the bank gain even more business value through greater cost control, faster procurement processing, and streamlined transaction processes.
Similarly, Rio Tinto, the diversified global mining company, is moving to a new information systems and technology delivery model that migrates core enterprise information systems and technology to a cloud-based, As-a-Service solution. The model also incorporates pay-for-use pricing so costs are flexible and services are scalable based on business demand. The program will include the modernization of the company’s existing enterprise resource planning and information management platforms, consolidating and hosting these applications in the cloud. Rio Tinto expects to realize substantial cost savings through the increased business agility and cost flexibility inherent in cloud services, and from continued lower infrastructure prices – another cloud feature.
Six steps to achieve an As-a-Service transformation
So how are companies like Deutsche and Rio Tinto moving briskly to the As-a-Service economy? Here are several factors to keep in mind:
1. Be prepared to encounter resistance and manage change. The data from our research shows a considerable disconnect between leadership (53% view as critical) vs. middle managers and delivery staff (29%). It is important to make sure the whole business is aware of the overall strategy – people need to be confident and understand the reasons for the change and the new possibilities being created. The role of change management in embracing an As-a-Service model should not be underestimated.
2. Learn to buy in new ways. Executive leadership will need to be educated about how to buy As-a-Service in a piece-by-piece manner. The financial value proposition of As-a-Service is compelling, especially when it comes to technology upgrades or changes.
3. Focus on leadership and talent. Only one-in-four buyers is actively addressing their talent shortfall. To be successful with As-a-Service requires broad and deep expertise across functions, industries and technologies, and at tremendous scale. The role of the right As-a-Service provider will become critical in addressing the talent and capabilities challenge.
4. Blend analytics and automation strategies to deliver intelligent automation. By moving to real-time, automated process enacted on a secure, scalable, cloud-based platform, companies can obtain much richer and better-quality data. Companies can then deploy sophisticated, cognitive analytics tools to delivery higher-quality insights.
5. Start small, pilot, pivot, then scale. Consider beginning with a function that is less business critical and then use that success to build commitment with both senior leadership and middle management. Also consider a pilot in one geographic area, and then be prepared to build on successes to scale As-a-Service capabilities globally and throughout other functions. The beauty of an As-a-Service model is that it allows you to start small and scale fast in a way that other models don’t.
6. Build a relationship that drives innovation. A provider gains in-depth knowledge over time about the buyer’s business, and should bring that knowledge and its industry expertise to bear every day to drive innovation. The best providers are not just transaction engines, but consultants-always looking for ways to advise, identify and drive additional value, reengineer and even unravel processes, not just incrementally improve them.
Those capitalizing on As-a-Service realize that traditional business models for delivering process efficiencies are no longer enough. They’re taking a completely new approach to buying and using services to support business operations, and reaping the benefits of the collaborative, entrepreneurial, innovative and value driven As-a-Service business model. As a result, they’re disrupting entire industries and outmaneuvering their competitors in the process.