Blog Archives - Page 3 Of 161

Unleashing IT Industry Growth Potential with Asset-Based Business Models | Blog

October 18, 2023

With slowed IT industry growth, service providers can drive momentum with asset-based business models that center on delivering services built on digital products and platforms or monetizing the platforms and assets themselves. To learn about the advantages and key questions service providers should ask to successfully move to this model, read on.

After fast growth on a once expansive highway, the IT industry hit a roadblock in recent years and is now navigating on narrower lanes. Service provider leaders are grappling to help the IT industry find new avenues of growth. Asset-based business models that prioritize the monetization of digital products and platforms may hold the key to moving forward. Let’s explore this concept further.

Finding stability amid uncertainty

With IT revenue and operating margins already down (approximately 14% decline in operating profit per employee since 2018), larger macroeconomic and geopolitical disruptions will continue to impact the IT services industry as the sector interconnects ever more closely with enterprise operations.

This tough climate is pushing service providers whose traditional linear business model is oriented around services to seek innovative growth opportunities. Amid these challenges, the asset-based business model is attracting attention.

An asset-centric business model revolves around a strong foundation of digital assets like products and platforms. Asset-based models are appealing because they help promote client loyalty, streamline operational costs, expedite market entry, and provide a competitive edge.

Assets as catalysts for growth

Some may argue that the concept of harnessing assets isn’t new, as it has been a steadily growing trend for a long time now. While some suppliers use assets closely bundled with their services, others have been able to position themselves as product providers.

Some large system integrators record anywhere between 8-12% of revenue in 2022 through assets. Their lessons learned and success stories have paved the way for other service providers to explore and scale asset-based models.

For instance, Accenture’s acquisitions of Navitaire and Duck Creek Technologies showcased the power of assets, while TCS strategically positioned ignio™ as a transformation catalyst and upheld BaNCS as a revenue-generating platform within banking, financial services, and insurance (BFSI).

Some of the notable benefits realized by these leading players include:

Revenue diversification: Relying solely on traditional services may no longer be sustainable. Integrating digital assets can create new revenue streams and ensure business sustainability
Time-to-market advantage: Developing digital products and platforms allows IT service providers to respond quickly to market demands, gaining a competitive edge
Reduced cost-to-serve: Automated and scalable digital assets enable cost efficiencies, enhancing profitability while delivering high-quality services
Talent solution: The scarcity of skilled resources in the market makes it imperative for service providers to embrace digital solutions and optimize their talent pool

Embarking on the asset-based journey

When considering moving to an asset-based business approach, providers need to answer key questions and consider their unique objectives, strengths, and market synergies. These include:

What is the appropriate business structure? Should we opt for a specialized asset-centric business distinct from the services business or integrate assets within the existing services structure?
How does an asset-based business model impact the existing service provider positioning?
How do we select the products that can help drive long-term growth? Should we build or buy them?
How does this approach change our talent model? Do we need a team of product specialists? How do we train sales teams to pivot to products from services? How will this impact internal collaboration?
Who owns the responsibility of developing the asset and subsequent implementation?

When beginning this transformative journey, we recommend:

Pick the battle and weapons meticulously: The first and the most critical aspect is strategically selecting assets based on market potential and alignment with business objectives
Manage synergies internally and externally: Strike a balance between maximizing synergies and mitigating conflicts between the existing services business and the new asset-based ventures. Addressing any potential conflict in customers’ perception is crucial
Establish a holistic model: Forge a comprehensive asset-based business model, addressing strategic vision, organizational alignment, commercial models, talent strategies, and operational intricacies

Don’t miss Everest Group’s much-anticipated annual webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to gain valuable insights into the current perspectives of IT-BP industry leaders.

Asset-based business outlook

With the bumpy road ahead in IT, the asset-based business approach gives service providers a new lane to accelerate in. By embracing this model, businesses have the potential to transform into innovative engines that can swiftly navigate obstacles and seize new opportunities.

To discuss strategies for adopting an asset-based business model, reach out to Alisha Mittal or Parul Trivedi.

Exploring Emerging Generative AI Trends in Technology | Blog

October 18, 2023

Generative Artificial Intelligence’s rapid evolution holds the promise to transform enterprise operations and decision-making across many industries. Several emerging key generative AI (GAI) trends can profoundly impact automation, productivity, and human expertise, but harnessing GAI’s many opportunities will come with risks that will require enterprises to make complex choices and strategically adapt. Read this blog for valuable insights to prepare for this new frontier.

Developing Generative AI Trends and Innovations

The trends to watch in the near and mid-term:

The move from general to specialized models – As generative AI moves into specific industries and domains, more examples of models fine-tuned for specific purposes are expected to emerge. For instance, models could be specifically trained for banking, insurance, or Human Resources domains, with the capability to speak the language of these narrower fields
Applications built on top of foundational GAI models – Apps built on top of large language models (LLMs) or conditioned LLMs to solve for specific needs will likely proliferate. Beyond ChatGPT, we already see early-stage web navigation concierges, code development assistants, and more. Initially, business-to-consumer (B2C) contexts will rise, but once the risks around GAI are solved, business-to-business (B2B) or business-to-employee (B2E) applications also will surge in activity
Lower costs – GAI is still relatively expensive but prices already have dropped significantly. As infrastructure, hosting, training, and inference become more efficient and economies of scale improve, we expect further cost reductions

What the generative AI trends mean for enterprises

Automation, productivity, and skills – Automation of tasks by GAI will boost employee productivity and also change the nature of expertise. This shift will require enterprises to rethink their talent agenda, workforce planning, learning and development (L&D) programs, and so on. Consider the example of an entry-level developer. With the benefits of GAI, the traditional “skill” of knowing a particular syntax for a specific language will become much less important. As a result, the bar of “valuable” human expertise will be raised. Enterprises need to account for these changes by rebuilding skill taxonomies and subsequently reassessing talent planning
Focus on enterprise data strategy – The true power of GAI comes into play once enterprises go beyond the low-hanging fruit of using it to generate generic outputs, like text, images, or other media. For instance, we could envision a world where GAI creates appropriate business or IT workflows, creates complex documents from scratch, or generates marketing collateral tailored to a company. Getting to these use cases will require seamless access to enterprise data, regardless of the approach (whether specialized models built from scratch, fine-tuning, or in-context learning). While GAI will unlock the power of this data, enterprises will need to surface it for use. The enterprise data journey is not new, but GAI will require a renewed focus and potentially more investments to advance it
Competition, disruption, and lowered barriers to entry – As GAI enables significant automation, organizations can do more with less. With lower costs, fundamentally new business models will become more feasible in multiple domains. Similar to how digital banks, built from the ground up, started nipping at the heels of established brick-and-mortar ones, this technology can potentially give birth to new contenders. One possible scenario to imagine is a new video game company creating complex video games relying heavily on GAI with a dash of human ingenuity. Similarly, GAI has the potential to disrupt stock media, customer service, entertainment, and other industries.

Enterprises may face difficult future choices, including making massive pivots, cannibalizing existing revenue streams, etc. While these decisions will naturally be difficult, enterprises must be willing to make hard calls to rapidly evolve and stave off existential threats further down the line.

However, there is no need to press the panic button yet. By investing in leadership education, keeping on top of developments, being open to innovations, and investing in home-grown and external GAI solutions, enterprises can position themselves well for when the time comes to make those hard choices

But before putting the horse before the cart, the many primary risks around GAI need to be addressed for broad-based enterprise adoption. These include regulatory concerns (including intellectual property), data and privacy, explainability (to some extent, at least), and others. Based on early trends, at least partial workarounds or mitigation mechanisms will be developed, in the short-term.

Everest Group provides insights and guidance on the risks, use cases, pricing, and implementation strategies to best position enterprises across industries for GAI adoption success. To learn more about Everest Group’s generative AI research or to discuss generative AI trends, reach out to Anil Vijayan.

Don’t miss our webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to hear our analysts discuss major concerns, expectations, and trends for 2024.

Examining the Impact of the Israel-Hamas Conflict on Cybersecurity Innovation | Blog

October 17, 2023

The Israel-Hamas war has immediately increased cyberattacks, depleted technology provider resources, and postponed venture capital funding. While novel cybersecurity products from Israeli startups will face temporary setbacks, the situation may foster future cybersecurity innovation. Read on to explore the impact of this conflict on Israel’s cybersecurity firms, technology providers, enterprises, and venture capitalists.

Reach out to discuss further.

Israel’s cybersecurity innovation under attack

A powerhouse of cybersecurity innovation, Israel has nurtured a rich startup ecosystem that has skyrocketed to global fame. Companies like Orca, Imperva, CyberArk, Radware, SentinelOne, Wiz, and Snyk have broadened their wings to the US but maintain deep-rooted connections to Israel. Many cutting-edge cybersecurity solutions have emerged from Israel’s robust research and development (R&D) and product engineering foundation.

Let’s delve into how the ongoing conflict is impacting various areas:

Israeli technology providers

The conflict has reverberated across Israel’s tech landscape. The mobilization of reserve troops, many of whom play integral roles in cybersecurity companies, has created an immediate resource gap. Israel Defense Forces (IDF) veterans who established many of these startups have been deployed to the battlefield. The sudden staffing shift has caused internal R&D and engineering delays, hampering cybersecurity innovation and project timelines.

Looking ahead, the ramifications could manifest more significantly. The ongoing challenges may lead companies to strategically reshuffle and geographically diversify critical R&D endeavors to avert future disruptions.

This resource shift can have long-lasting impacts on global technology conglomerates that have deeply ingrained partnerships with Israeli cybersecurity startups.

The mobilization of Israeli cybersecurity specialists has created an expertise shortage likely to have a ripple effect, causing short-term disruptions in international alliances and collaborations. Consequently, global tech providers may face challenges in maintaining the innovation charter in cybersecurity solutions as their niche Israeli partners grapple with a temporary resource crunch due to the war.

In the long term, the heightened conflict could catalyze cybersecurity innovation, fueling the development of novel solutions tailored to an evolving threat landscape.

Broader impacts

The conflict has had repercussions in the digital domain. Recent cyber incursions targeting Israel’s missile alert systems and media outlets are mere precursors to potentially broader cyber warfare. The looming threat of escalated cyberattacks menacing critical infrastructures such as power grids, oil and gas installations, and telecommunication networks is palpable.

With its robust cybersecurity infrastructure, Israel stands well-poised to thwart these cyber forays. Yet, maintaining unwavering vigilance coupled with a strong response and recovery strategy is imperative to safeguard both national interests and ensure uninterrupted business operations.

IT service providers

Indian IT firms have limited exposure in Israel, which accounts for less than 1% of their revenue base. Nevertheless, even though these firms have a solid foundation due to offshore operational bases, the IT security services continuum is still vulnerable to the unfolding scenario.

A noticeable delay in the rollout of novel cybersecurity products from Israeli startups is anticipated, stemming from the reduced engineering and R&D workforce. As a result, service providers entrenched in the Israeli startup ecosystem aiming to drive innovation with clients stand to be the most impacted.

Venture capitalists

The venture capital ecosystem has been disrupted by the conflict with a few early-stage companies from Israel recently postponing funding announcements. Merlin Ventures, a US-based firm that invests primarily in Tel Aviv security startups, canceled its planned Israeli Cyber Showcase. We believe the war will not only slow new cybersecurity product development in the short term but also cause venture capital funds to divert attention to other geographies.

The outlook

The Israel-Hamas war highlights a complex scenario that arises when geopolitical discord and cybersecurity intersect. This situation has quickly elevated cyber threats and strained technology resources. However, in the longer term, it could lead to a new chapter in cybersecurity innovation to thwart the increased threats emerging from this conflict.

At Everest Group, we remain focused on following the evolving situation and providing insights to navigate cybersecurity challenges in these turbulent times. To discuss, contact [email protected].

Stay informed with Everest Group’s annual webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World, to gain valuable insights into the current perspectives of IT-BP industry leaders on trends for 2024.

Creating a Sustainable Workforce through Employer of Record (EOR) Partnerships | Blog

October 16, 2023

Step into the realm of responsible business practices and sustainability with an employer of record (EOR). Numerous studies have suggested that organizations with Environmental, Social, and Governance (ESG) initiatives are better equipped to create a positive impact on the world while also driving growth and business success. Read on to discover how EOR partners can guide organizations toward achieving their ESG goals, including architecting a blueprint for a sustainable workforce.

By incorporating ESG principles into an organization’s vision and strategy, businesses can align themselves with broader ethical and sustainable goals. The “E” emphasizes preserving natural resources, “S” nurtures relationships and reputation within communities, and “G” commits to upholding impeccable corporate ethics and governance. In a nutshell, ESG charts a course for businesses to be responsible, well-regarded, and successful all at once.

Enterprises can build a sustainable global employment and mobility strategy by leveraging the services of an EOR, a third-party organization that enables companies to legally engage with workers in a new country or region without needing to set up a legal entity or risking violating local laws. The EOR undertakes the responsibility to pay and manage permanent or temporary employees on behalf of another company.

EOR providers have emerged as key partners in assisting organizations not only to build a resilient and diverse workforce but also to foster a sustainable future that aligns with their ESG commitments. Let’s explore this further.

Cultivating a workforce on ESG principles: the impact of EOR partners

Traditionally, business success has been measured by the bottom line. But what if success was not only about making a profit but also about the difference the organization makes? By balancing the needs of people, the planet, and profit in a sustainable way for all stakeholders, businesses can generate true value. This “triple bottom line” approach has pioneered a new era of business prosperity.

EOR firms act as guiding partners, helping businesses embrace flexibility, inclusivity, and ethical practices. EOR providers can help organizations advance their ESG goals in the following key ways:

Looking toward a brighter and more sustainable future

EOR providers act as catalysts for change, enabling organizations to cultivate a sustainable workforce that flourishes within today’s dynamic business environment. By promoting environmentally friendly practices, nurturing a socially inclusive work environment, and upholding ethical governance standards, EOR providers empower organizations to realize their ESG commitments and goals.

As the world continues to evolve, EOR providers remain unwavering allies, guiding organizations toward a future where both business success and societal well-being go hand in hand. A workforce characterized by sustainability, diversity, and accountability can materialize through these collaborative efforts. Partnering with EOR providers can help organizations transcend from simply aspiring to have a globally dispersed sustainable workforce to achieving that exciting vision.

India’s Infosys Cuts Top End of FY Revenue Outlook | In the News

October 12, 2023

Infosys (INFY.NS) cut the upper end of its annual revenue forecast on October 12, raising concerns about near-term demand for services provided by the US$245 billion Indian information technology sector. The No.2 Indian software services exporter said it now sees full-year revenue growth at 1-2.5%, excluding foreign exchange volatility, versus a prior view of 1-3.5%.

Considering the reluctance by clients to spend on discretionary projects, Peter Bendor-Samuel, CEO of Everest Group, said, “We continue to see a significant amount of market hesitancy resulting in delayed revenue. This is driven by uncertainty about the economic cycle and the increasing conviction that a recession is likely in 2024.”

Read more in Reuters.

Still Elusive but Within Reach? Effective GBS Business Relationship Management | Blog

October 7, 2023

Finally, GBS organizations have woken up to the reality that it’s not what you deliver, it’s how your stakeholders feel about what you are delivering. Yet because it’s considered “soft stuff,” too difficult to manage, or better yet, left to the vagaries of individual GBS managers to sort out, GBS organizations suboptimize the relationships they have with the business. And that negatively impacts brand, the ability to scale, and even the sustainability of the GBS model itself. How many GBS organizations met their deconstruction, or even their demise, because business relationship management got short shrift?

Today, many of my conversations center around the quality of GBS’s relationship with the businesses they partner with. They go something like this: why doesn’t the business “get” GBS? How do we change the tenor of the relationship in order to scale? This business (or function) doesn’t line up.

Why is good business relationship management or BRM elusive for the majority of GBS organizations? I think there are a number of causes:

Seeing BRM as a role, not a way of working: Often, GBS organizations think anointing team members to manage relationships is the right way to approach what is a vital component of the model. It’s a flawed construct; in a model that is very much an ensemble act, everyone takes some level of responsibility for BRM. It’s a process that underpins everything GBS does.
Ill-defined responsibility: What is the goal? Defining customer strategy? Preparation of quarterly business reviews? Tracking stakeholder health? Playing postman? Who does what? For many, BRM’s responsibility is not clear.
Poor definition of the customer: Now, this may seem elementary, but if the GBS organization can’t define with whom they must forge effective relationships, how can they possibly manage them? Is it the leaders of the functions? The business? Both? Everyone with equal weight?
Too many customers: In a multi-function GBS, the customer map is complex. However, we tend to over-index on quantity rather than impact. A slot on an org chart does not automatically merit a tight, ongoing relationship with GBS.
No success measures: How do GBS organizations accurately gauge the outcomes of a full-on BRM program? Is it down to noise reduction? High net promoter scores, which have their own biases? A “feeling” that a relationship is supportive? And what’s the economic value of the investment?
Siloed GBS organization structures: When GBS is a collection of functional shared services that more or less operate independently, the focus of relationship health is on the parts, not the sum. When finance thinks that only finance stakeholders matter, or HR works for the CHRO and their henchmen, it is difficult to design and implement a program that considers enterprise—as opposed to functional—stakeholders.
Assignment to junior staff: Business relationship management requires a deep knowledge of the business, some level of functional knowledge, an ability to determine cause and effect, and finely honed relationship skills. When junior staff are anointed to manage relationships (all too often as a side hustle in enabling processes such as program management or solution development), they become nothing but letter carriers.
Lack of trust: Telling a leadership team that another, usually more junior team will take primacy in business relationship management is a sure recipe for dysfunction. It’s impossible to isolate BRM from the responsibilities of top management.
Belief that it can be fixed with a silver bullet: Suddenly putting on a temporary full-court press of love and attention by assigning someone to play point with or over-communicating with the business never works. Relationships take time to nurture or repair.

What should GBS leaders do to implement a more effective business relationship management program?

Be clear about what the GBS business relationship is, does, and should achieve and how it works with and within other GBS functions. Is the prime focus managing day-to-day relationships? Effective escalations? Providing input to strategy or solutions? How does it collaborate with the transformation team? The vendor management team? The change management team? Top leadership? Remember that BRM is not a standalone endeavor. Set the guidelines and the guardrails.
Ask the business! We usually design our interaction models in a vacuum, for the convenience of GBS, or because one of our peers says their model is a best practice, so we adopt it. Why not ask the business how they’d like to approach governance? How best to work within their existing communication channels? Which routines would be most valuable to them? Co-creation will go a long way to developing more effective relationships.
Decide who matters. If your GBS is designed to support the functions, your primary relationship, like it or not, is the function. If you directly serve the business, you still have to liaise with the function. Enough said. However, neither can be ignored nor can the GBS team develop constructive relationships with everyone. Take the time to examine GBS’s relationships, segmenting them into primary, secondary, and tertiary along such factors as scale of relationship, risk, potential for growth, influence, and others.
Focus on process first. Refrain from slotting business relationship management roles into your operating model until BRM as a process is established. Identify the relationship lifecycle. Determine who within GBS interacts at any given time. Deploy journey map methodology to identify the most common relationship scenarios. Design for dynamism as the business goes in and out of transformation, transition, and silent running. Tie escalation management into a relationship management regime. Document, document, document. And don’t forget to socialize within your GBS team and the business to get buy-in.
Determine what the interaction model should be—before you develop job descriptions. If BRM is seen as a process as opposed to a function, the implications on the org chart will change from role to responsibility. While defined roles may be effective, they should result from a thoughtful process. Play with the org chart and JDs last to fill gaps in BRM.
Add B-sat (business relationship satisfaction) to your performance evaluation criteria. Rarely are satisfaction measures part of the GBS team’s evaluation criteria. Work to align satisfaction measures to individual job performance.
Consider making business relationship management the prime task of site for regional leaders. All too often, these folks’ roles are relegated to managing the delivery team, not playing a vital role in engaging with the business. Take the opportunity to rethink how GBS can harness its proximity to create better business intimacy.
Decide who is on first, second, and third. Thoughtfully assign responsibility to your leadership team and their direct reports. Develop decision rights and implement communication regimes. Drive to develop trust amongst team members.
Align communications and change. Too often, they focus on parallel universes without the same priorities. Comms and change management are vital components of BRM; they work together as a unit.

Implementing BRM as a process. Aligning the team. Making it a component of performance. Identifying business journeys. All of these—and more—are critical to improving GBS’s relationships with the business.

However, one change underpins all this hard work—disabusing team members that they “personally” own business relationships. GBS has a relationship with the business; individuals collectively foster and nurture the relationships by interacting with individual stakeholders. When we realize that it’s a team effort, GBS’s success and sustainability are definitely within reach.

Current Risks Involved In Adopting Generative AI Technology | Blog

October 4, 2023

There is no doubt that generative AI technology is incredibly important, extremely powerful, and will have a significant and disruptive effect on how businesses operate. The release of ChatGPT by OpenAI exposed Gen AI to the world and allowed people to experiment with it. This caught the attention and imagination of every business and every board of directors. It is certainly top of mind today for most senior executives. For example, one major corporation recently charged each of its departments to come up with actionable strategies to incorporate Generative AI into their operations.

Evolution of Pricing Teams: Pricing Support to Strategic Partners in Winning Deals | Blog

October 3, 2023

Deal pricing teams have evolved from providing traditional cost-plus functions to becoming strategic commercial and negotiation partners. Modern pricing teams offer market insights, innovative pricing, and contractual models that enhance deal profitability and success. Learn about the changing dynamics of deal teams, their structures across various types of service providers, and other valuable insights from our analysis of pricing support teams in this blog.

Recognizing that pricing is one of the most important aspects of winning any deal, service providers have created the dedicated function of deal pricing teams to help sales, presales, and solution teams build compelling pricing proposals.

Pricing teams play a vital role in securing pivotal business agreements and ensuring deal success by shaping pricing strategies and contracts. These teams empower sales units to effectively respond to proposals and requests for quotes, ensuring they meet client expectations while also supporting the company’s financial goals.

Today’s pricing teams have transformed into strategic partners to the organization that provides market insights, innovative pricing, and contractual constructs. Their involvement throughout the deal cycle ultimately ensures deal profitability and long-term business success. Let’s first explore how their role has taken on increasing importance over time.

How traditional pricing teams functioned

Traditionally, deal pricing teams were comprised of pricing experts with finance and accounting backgrounds who prepared commercial proposals in addition to other tasks like periodic numbers closing, tracking account level parameters, financial reporting, tracking budgets, etc.

In the past, the primary role of pricing support teams has been limited to one or more of the following activities:

Estimating resource costs based on products and services estimates prepared by the solutions, sales, and presales teams (known as the “pursuit team”) and calculating margins
Reviewing and approving commercials prepared by other teams
Safeguarding the organization’s margin and commercial guidelines
Advising deal teams on finance-related contract clauses
Offering pricing support and negotiating deal contracts at arm’s length

Our analysis of various pricing teams across different service providers over the past decade reveals a noteworthy trend to watch: These teams are becoming increasingly important within their organizations and gaining traction as strategic partners in bringing more business.

A deal lifecycle generally consists of anywhere from seven to ten steps from pursuit preparation to final negotiation and contract signing. Historically, the pricing team had limited influence and would only get involved in the last stages of commercials derivation or approvals, pricing proposal preparation, and client negotiation support.

Typically, they were not involved until the commercials preparation stage, and even then would only base their work on the pursuit team’s inputs and the prior decisions made to win the deal, including aspects like solution strategy, commercial modeling, competitive price points, and client pricing options.

The team would calculate the commercial aspects using Excel or web-based tools configured with resource rate data and other financial guidelines, such as margins, contingencies, and discount percentages.

Pricing would be based on two key parameters – resource effort estimates provided by the pursuit team and the cost rates/salaries embedded into the tool, along with commercial guidelines. Depending on the pricing function maturity, the standardization of these tools could vary significantly among service providers.

Next, let’s look at how their roles have progressed.

The emergence of new-age pricing teams

Leveraging extensive experience in managing deals and accounts over time, the pricing team has started wielding significant influence in mid to large-sized deals. Harnessing their expertise strategically has become a standard practice. However, the impact the deal pricing team has in winning proposals still varies widely based on the maturity of providers across different segments.

Key traits of modern pricing teams

Service providers have been taking steps to empower their pricing teams and transform them into strategic partners. New-age pricing teams in today’s competitive market landscape share the following traits:

Early involvement in pursuits: The pricing team makes a significant impact on a deal if they are involved early in a pursuit. They can help identify win themes, make quick go/no-go decisions, decide on favorable pricing strategy, prepare preliminary estimates for the base case, and bring in past deals/account level intelligence during storyboarding
Bringing in experience and knowledge: With their experience in handling pricing for multiple deals and contracts and tracking account performance, deal pricing teams bring in a wealth of account-level insights. They work closely with the sales, account teams, and pursuit leaders to generate client-specific insights that can be leveraged to better address client’s requirements
Market and competitive intelligence: New-age pricing teams have access to multiple third-party benchmarking vendors, advisors, and other industry experts. Combining knowledge gained from working with various service providers with insights garnered from external sources, pricing teams have built a huge repository of the latest market and competitive pricing/solution data. This information is continuously refreshed on an annual/bi-annual basis. Accessing this intelligence gives them a competitive edge in any pursuit
Pricing strategy formulation: Mature pricing teams work closely with the pursuit teams to make early decisions on a deal’s commercial structure to finalize various financial levers, such as volume discounts, margin percentages, alternate commercial models, etc.
Proposal writing and review: Typically, pursuit teams own the end-to-end bid response formulation and writing, including the pricing proposal. Modern pricing teams have matured into a partnership role. They now review the overall proposal to ensure the client’s ask is addressed and the key messages highlighting their unique capabilities are comprehensively demonstrated. Pricing teams take charge of leadership review cycles of the pricing proposals and also compare the solution to other deals of similar nature and size drawing on market intelligence from their benchmarking third-party advisors
Leading negotiations: Empowered pricing teams today are not just supporting pricing and contract negotiations with clients, they are leading this important stage along with the pursuit teams. In addition to designing fallback options and in-room tactics, pricing leaders are making real-time decisions to win deals by leveraging data-based insights on markets, accounts, and competition
Building a deep knowledge base: Organizations have come to recognize that making faster data-based decisions on pricing and solutioning deals can position them well ahead of the competition in any pursuit. Consequently, pricing teams have evolved beyond merely collecting data for deals, which often is underutilized for insights. Instead, they now leverage many data sources for each parameter, enriched with intelligence from diverse origins. This comprehensive dataset is employed in every pursuit to make informed decisions within short timelines
Deploying and using advanced tools: These teams leverage advanced tools that offer flexibility and robustness to generate various pricing scenarios with all financial parameters, as well as real-time market intelligence analysis. Possessing this ability is viewed as a characteristic of mature players. The turn-around time from resource estimates to final pricing figures has always been a critical factor in judging any tool’s capabilities. Pricing teams play a key role in developing and deploying new-age integrated tools for specific needs

Emergence of tech tools to aid pricing teams

Pricing tools have come a long way in terms of technology, data, and pricing process maturity. Advanced players today leverage a gamut of connected tools that cover every key aspect of the deal lifecycle, starting from deal qualification to contract signing and then supporting delivery teams after the deal closes.

All parties involved in a pursuit leverage pricing tools at some stage. Tools that seamlessly integrate with critical systems such as Customer Relationship Management (CRM) and knowledge repositories while also harnessing advanced data analytics capabilities have become a prevailing norm within mature pricing organizations.

As Generative Artificial Intelligence (GAI) emerges, the analytical prowess embedded within these tools will push these players significantly ahead of their competitors, making it imperative to establish a solid foundation for these technologies.

Equipped with advanced tools, pricing teams can more accurately anticipate customer needs, enabling them to design pricing strategies precisely and respond to market changes in real time. This degree of agility and customer-centricity will propel organizations far ahead.

The current state of providers in this transformation journey

Let’s take a look at where different types of service providers stand in their pricing team’s transformation journey.

Traditional service providers: Most players in this group have dedicated pricing teams that leverage standard deal pricing tools (web- and excel-based) with basic to advanced financial and operational capabilities. These teams generally have well-aligned structures with clearly defined roles and responsibilities. However, they still have room to progress to enhance their ability to influence overall pricing and solution strategy and create a structured knowledge base with sufficient resources to leverage it efficiently

Consulting heritage firms: These players are on the journey to deploy dedicated pricing teams with well-defined structures and roles and responsibilities. They use tools with basic financial capabilities. Pricing teams serve more as advisors to the pursuit teams with low decision-making influence and play a limited role in a deal cycle
Niche consulting organizations: This group does not have dedicated pricing functions, and the pursuit team mainly handles deal pricing. They have very low maturity in using data and insights. Overall, the pricing function within niche consulting organizations is lagging by a good distance compared to the other two groups

It is important to note that certain players stand out in their maturity level when compared within the category.

In today’s landscape focused on value realization, organizations must comprehensively analyze all pricing support function aspects on a maturity scale. This is an essential initial step to determine the organization’s current standing and identify ways to stay competitive. Effectively partnering with modern deal teams can improve an organization’s success in winning new business and ultimately succeeding.

For more information about pricing support teams, please contact Achint Arora, Abhishek Biswas, and Amit Dhiman.

Check out the webinar, Current Solution Trends and Their Impact on Outsourcing Deals and Pricing, to learn why is solution sizing important in today’s competitive deal environment.

What Is Happening Now In Tech Services Spend? | Blog

September 28, 2023

The beginning of 2023 saw tech services budgets slightly up, with robust IT spend during the first quarter. In mid-April, companies began significantly reducing their discretionary spend and delaying or canceling initiatives that had been budgeted. Any new initiatives focused on cost saving and how to do more with less. Now, the sentiment is shifting again: there is a bit more money to drive business value, and I expect that to slowly build for the rest of the year. Where will IT spending occur for the rest of 2023, and what are the implications?

Cisco’s Acquisition of Splunk Marks the Beginning of the Battle for Integrated IT Operations | Blog

September 27, 2023

In the biggest technology transaction of the year so far, Cisco agreed on September 21 to buy cybersecurity firm Splunk for a staggering US$28 billion. With the potential to help organizations integrate their IT operations across various aspects such as applications, data, infrastructure, security, and networks, this acquisition is highly significant. Cisco’s purchase of Splunk clearly indicates that the convergence of IT operations and data analytics is a priority in today’s digital business landscape. Read on for our expert analysis of the deal.

Why did Cisco acquire Splunk?

Cisco has wanted to buy Splunk for some time due to multiple business and revenue synergies. Cisco will immediately gain approximately US$4 million in recurring revenue from subscription-based services. Cisco’s revenue is currently split between products (74%) and services (26%). By increasing services, Cisco will be better positioned to compete with hyperscalers, cybersecurity providers, and platform providers to capture the major portion of enterprises’ IT spend.

Cisco has somewhat lagged behind competitors in the cloud wave of enterprises’ technology spend and has experienced a decline in its collaboration product suite, making its cybersecurity portfolio a key investment area. The deal will act as a catalyst for Cisco’s business transformation, heightening focus on subscription-based revenue and, in the long run, Artificial Intelligence (AI)-driven integrated IT operations.

Key benefits Cisco’s customers will see from this acquisition include:

Cybersecurity development: The cybersecurity space will most immediately be impacted by the acquisition of Splunk, the leading security analytics platform in the market with a highly loyal customer base. This platform will enable Cisco customers to transition from threat detection and response to threat prediction and prevention by leveraging generative AI (GAI) to improve visibility and data usage
Observability platform: Splunk’s comprehensive and highly regarded observability capabilities could complement Cisco’s products and platforms. Splunk has strong integration capabilities with most of Cisco’s products across data centers and networks. With the acquisition, clients can expect better visibility, and with the incorporation of AI and analytics, they can effectively utilize the terabytes of available data

Beyond this, the biggest benefit that customers can anticipate from this deal is the potential for integrating IT operations across the entire stack – solving a problem of siloed operations and insufficient end-to-end visibility that has plagued enterprises for years. Cisco’s acquisition of Splunk is a clear signal that the integration of IT operations and data analytics is a priority in today’s digital business landscape.

Enterprises stand to gain many benefits through an integrated IT operations approach, including optimized resource utilization, single pane of glass view, agile and prescriptive problem resolution, enhanced security, improved collaboration between IT and the business, cost savings, enhanced user experience, and data-driven decision making aligned with business outcomes.

Cisco and Splunk union in the data-driven AI world

This combination of synergies, coupled with the power of AI, can result in a comprehensive suite of solutions that can help organizations more effectively achieve their IT and business objectives.

Among the potential benefits are:

Single pane of glass view: The integration of Cisco’s networking solutions with Splunk’s analytics tools can offer end-to-end visibility into an organization’s infrastructure. This visibility would enable companies to identify bottlenecks, improve performance, and optimize their IT operations
Advanced threat prevention: With the combination of the IT telemetry data and Splunk’s powerful analytics, threat detection capabilities will be enhanced. Organizations can proactively identify and respond to security threats, reducing the risk of data breaches and other cyberattacks
Improved performance: Efficient troubleshooting through preventive diagnostics can create a world where IT systems are always available and efficient
Business-driven IT operations: By accessing rich data analytics, businesses can start to make data-driven decisions that positively impact their top line, whether optimizing supply chain operations or improving customer engagement

Cisco is not the first to move in this strategic direction. IBM, for instance, recently acquired Apptio to gain end-to-end visibility across the IT stack and build its cloud-agnostic IT operations model. All hyperscalers have been expanding their capabilities through acquisitions in the cybersecurity space to provide a unified view of the IT environment.

In the long run, the acquisition of Splunk is likely to be highly beneficial for Cisco.

This significant deal will act as a catalyst for Cisco’s business transformation, heightening focus on subscription-based revenue – a strategy other providers of all sizes have seen success in.

If Cisco gets this right, its customers will benefit from an array of operational benefits across the IT stack. It also has the potential to make the IT stack always available, secure, and aligned to business outcomes.

To discuss the potential of this acquisition and what it means for businesses, reach out to Titus M at [email protected].

Register for our annual webinar, Key Issues 2024: Creating Accelerated Value in a Dynamic World

Category: Blog