Times are tough and this is shifting the buying behaviour of services procurers, increasing the need for stability and a longer-term vision of how IT services will support the business, according to global analyst firm, Ovum.
In addition to tracking the growing demand for more comprehensive services offerings, Ovum has created the Bundling Index, which assesses and tracks the core components of larger and more complex contract engagements.
Figure 1: The Bundling Index
Source: Ovum Bundling Service Line
Jens Butler, principal IT services analyst at Ovum and author of the report, says: “With an unpredictable outlook for IT services, buyers are demanding financial stability, the ability to drive real innovation, and longer-term commitments – at a contract and operational resource level.
The introduction of newer technologies such as cloud, analytics, mobility and social media offerings is impacting the sourcing markets. However, Ovum believes these technologies and their associated engagement models, as disruptive as they are expected to be, are only likely to augment and refine existing engagement models until providers convince customers that they are able to address their business needs, as well as technology needs.
Buyers are increasingly looking for a single point of accountability when sourcing external services, and Ovum expects engagement models appropriate to different types of service to exist alongside each other – these may all be managed and governed via a single supplier agreement”, says Butler.
This is partially driven by demand for increased control and management of these engagements, emanating from previous engagement failures where an inability to monitor and manage multiple suppliers resulted in less positive outcomes for buyers. In Ovum’s recent Bundling Outsourcing Business Trends 2013 survey and report (IT019-003194)* buyers highlighted that managing the scope of a program of work across a multitude of suppliers is a key factor, and indicated that engagements were less successful if this was not closely controlled.
The growing need to partner with a service provider is also driving the uptake of larger and longer multi-year bundled engagements. This is increasing demand among buyers for a more encompassing program of change, but committing to such fundamental organization-wide change programs requires key stakeholders to be “along for the whole journey.” The willingness of buyers to commit to such programs of work demands stable, trusted and well-funded partners,” concludes Butler.
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