Becoming a digital business
Can managed services de-risk your digital transformation?
By Dan Greengarten, SVP, Sales, Managed & Cloud Services; and Raj Mistry, Group Director – Manufacturing & Retail, Dimension Data
Trying to do everything yourself inhibits transformation
Many companies have been trying to transform themselves the hard way. Doing it all themselves.
IT departments have tried to be the people who run the technology that makes the existing business work, and at the same time build a different kind of technology to enable the new digital business model.
But this has proved to be too much. While they’ve been good at operating the existing, building the new has taken too long. Their business colleagues have become frustrated at what they perceive as IT’s inability to transform fast enough. Sometimes, IT is even seen as an inhibitor to digital transformation.
The inability to execute digital transformation quickly is today’s No.1 strategic risk.
Today’s generation of managed services can accelerate and de-risk digital transformation
Companies are now looking to transformative managed services, in which a managed service provider not only operates their existing technology but actually transforms it, accelerating and de-risking the client’s digital transformation.
Our research into how companies are executing their digital transformation found that ‘60% of organisations engage in digital transformation through outsourcing and partnering’.i
Today’s generation of managed services can accelerate and de-risk digital transformation in five key ways.
1. Platform-based delivery of managed services speeds up execution
A good managed service provider will have invested in a managed service platform that features pre-prepared service elements and scalable templates, to make it quicker and cheaper for you to launch new initiatives. They’ll use standardised, reusable components to roll out technology services quickly and reconfigure them if circumstances change.
The best managed service platforms abstract away complexity using micro-services and open APIs, decouple workloads from the underlying infrastructure, and roll out reference architectures automatically across hybrid IT environments. By using high degrees of automation, they can orchestrate workloads at cloud speed across multi-vendor hybrid IT environments.
The standardised, automated nature of modern managed service platforms also reduces compliance and security risks by re-using previously-validated security policies, integration components, and architectural templates.
The provider’s service management platform should be integrated with those of their client and equipment manufacturers, to enable automation of operational processes. It should also feature embedded analytics to enable visibility of recurrent problems and rates of adoption, to identify opportunities for continuous improvement and further automation.
2. Using specialists reduces operational risk
A company’s ability to roll out an innovation depends on the quality of its foundational infrastructure. Ford found this when they started rolling out their Maestro app.
‘Maestro enables dealers to conduct their sales process in a collaborative, transparent manner through a single mobile device, streamlining the shopping experience and increasing customer satisfaction,’ii says Mike Jurecki, CEO, FordDirect.
Ford found that the network connecting the online customer configuration portal to the dealerships wasn’t delivering the performance required to deliver a seamless customer experience. They turned to a managed services partner to provide a reliable dealer network capable of supporting the app.
3. Organisations can partner to innovate as well as operate
Large organisations with huge IT departments are more than capable of doing IT operations themselves. But they want to focus on the things that they can do better than other players in the market. Things that constitute a source of competitive advantage in their market. They look to a managed service partner mainly for operational services and do their innovation in house.
Mid-market enterprises, with fewer in-house IT resources, tend to have a greater need to partner for the technology platform for the future digital business. Companies like these use managed service providers to help design the digital customer engagement as well as create and operate the technology platform necessary to execute it.
Mid-market enterprises, with fewer in-house IT resources, tend to have a greater need to partner for the technology platform for the future digital business.
But sometimes big companies partner for their innovation too. For example, Dimension Data, alongside our parent company, NTT, find ourselves working with some of the largest automakers in the world. This partnership helps them explore the infrastructure for autonomous vehicles and create the aftersales experience for the connected car.
4. Transfer commercial risk to the provider
The commercial model of managed services has completely changed in recent years. In the old world the service provider sold at the client’s risk. The service provider only built the service once the client had bought it and started paying for it.
With today’s managed services, the service provider carries more of the commercial risk. They have to make massive investments in the capability to deliver a service ahead of any revenue from their clients. They must now build the platform before they sell it, and they only get paid when the client starts using it.
Instead of simply collecting a monthly fee for providing availability, they’re increasingly becoming responsible for delivering a business outcome and contracts with outcome-based SLAs are becoming more common.
This paradigm shift dramatically reduces commercial and operational risk for the client.
5. Managed services can bridge your skills gap
Managed service providers tend to attract scarce talent early in a technology lifecycle, because of the variety of interesting projects they can expose their people to. This gives them insight into the skills their clients will require in the future and they invest heavily in them because their business depends on it.
This gives their clients access to the skillsets they may not have in house, on a pay-as-you-go basis. One of the reasons managed services are attractive is that they advance a company’s method of operation beyond what was possible with technology and skills that were becoming dated.
It’s essential as you adopt a new delivery model not to lose your institutional memory. You need to extract that knowledge from the heads of your people and transplant it into the new managed service you’re setting up.
Why companies increasingly execute their digital transformation through managed services
Transformative managed services can help you standardise and automate processes, make service integration easier, improve efficiency, and reduce cost. They can improve control over security and compliance risk, give you access to scarce skillsets you don’t have in house, and free up your people to focus on more strategic initiatives.
Consuming information technology as a managed service can accelerate your transformation to a digital business. By focusing on the business outcomes you want to achieve, a good managed service provider will transform your technology, processes, and commercial frameworks into a platform for digital innovation.
They’ll increase your business agility and speed of execution, improve your governance, risk and compliance, and allow you to consume and pay for technology services in the way you want. They accelerate and de-risk your company’s digital transformation and allow the IT department to finally become the true partner to the business they have long aspired to be.
Consuming information technology as a managed service can accelerate your transformation to a digital business.
As one of our managed services clients said, ‘We can now accelerate our digital transformation journey by increasing efficiency and eliminating cost pressures. Our team is free to focus on strategic business initiatives, and improve and grow the business in a rapidly changing market.’ Sanil S.K, DGM (P&HR) at Kerala State Financial Enterprises.iii
iiNew Mobile Sales App Maestro Enhances Digital Retailing Experience for Customers by Taking Car Buying Experience Fully Digital, Ciston PR newswire, 21 March 2018 https://www.prnewswire.com/news-releases/new-mobile-sales-app-maestro-enhances-digital-retailing-experience-for-customers-by-taking-car-buying-experience-fully-digital-300617676.html
iiiKSFE uses savings from digital transformation to reinvest in their customers https://www.dimensiondata.com/en-eu/insights/case-studies/2018/05/ksfe
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