The sobering writing is on the wall, and only getting bolder: nearly 50% of enterprises are dissatisfied with their incumbent IT service provider. With this all-time low enterprise satisfaction level, and outsourcing deals worth more than US$50 billion coming up for renewal over the next 18 to 20 months, service providers are rolling up their sleeves and fighting to protect their turf. Whether they succeed in notching their performance up to the enterprise expectation levels – or are led to digging their own graves – remains to be seen.
“Change the Business” is Becoming Table Stakes
Enterprises today are trying to ease into the digital age, and realigning their focus from the erstwhile cost-efficient, technology-focused solutions towards more business-focused, productivity-enhancing, and outcome-oriented service models. Next-generation themes such as automation, analytics, and DevOps have started to capture the imagination of IT leaders as they seek to improve overall service quality and agility.
In this regard, enterprises expect their service providers to start focusing beyond the traditional “run the business” mandate, and function as end-to-end transformation partners. This means bringing in strong point-of-view and context around how disruptive technologies can be leveraged by enterprises to drive competitiveness and business agility/resilience.
These evolving enterprise expectations, coupled with massive technology strides, have placed a huge responsibility on the service providers’ shoulders, especially in an environment wrought with strong anti-incumbency sentiments. To be able to increase deal renewal success, service providers need to work on building a broad set of organizational capabilities and solutioning best practices to supplement their investments in building differentiated service offerings and solutions.
Here are some of the key factors that, if managed the right way, can influence deal renewals in the service providers’ favor.
Interesting times lie ahead, brimming with massive sets of opportunities and challenges for services providers as they continue to wage wars in the contract renewal battlefield. As service providers work their way around retaining existing relationships, meeting renewed enterprise expectations, and warding off strong competition, will there be clear winners and losers? Only time and numbers will tell.
May the force be with you, service providers!
For drill-down data and insights into outsourcing transaction trends by function, geography, industry, and service provider type, and implications for key stakeholders (both buyers and suppliers), please see Everest Group’s newly released reports, “Upcoming Contract Renewals: Application Services” and “Upcoming Contract Renewals: Cloud & Infrastructure Services.”