CHICAGO, October 6, 2009 — Christine Ferrusi Ross certainly had a good foundation to build off of: Learning to navigate the roundabout-ridden streets of Boston is no simple task -- and neither is attempting to grapple with how changes in technology impact the organization. Kicking off Forrester Research's third annual Services and Sourcing Forum, Ferrusi Ross applied the lessons she learned from driving a vehicle to that of leading a technology team down a bumpy road. Her presentation, aptly titled "The Future of I.T. Services - Roadmap, Roadblock, or Roadkill?," covered how the market has changed, what tradeoffs need to be considered, and what role technology now plays in the organization.
Ferrusi Ross highlighted several drivers-no pun intended-that mark the transformation in today's technology landscape:
- new delivery models (e.g., software-as-a-service, or SaaS);
- blurred lines between products and services;
- emergence of new vendors as old suppliers consolidate;
- fundamental restructuring of many global industries;
- consumerization of technology; and
- economy of technology with SaaS, platform-as-a-service, infrastructure-as-a-service, and more point solutions.
As a result of these changes, the dynamics of the technology industry are changing dramatically as well, which Ferrusi Ross segmented into four critical areas:
- Architectural: While point solutions drive down the cost of technology, each individual piece is getting more complex, she said, especially since one solution can marry both product and service into one. The key before adoption, then, is to ensure there is a plan that allows them to work together.
Short-term goal: run applications that exist today.
Long-term goal: implement and build for the future.
- Financial: New technology models, call for new business models, which are largely still uncertain, Ferrusi Ross said. As a result, this suggests less transparent vendor viability, and in turn, an increase in the potential vendor and application risks involved.
Short-term goal: most savings today.
Long-term goal: total overall value.
- Contractual: Particularly in the "as-a-service" models, customers are "renting" the technology and therefore, when a vendor leaves, the solution leaves with it. This model, however, also reduces upfront investment costs for the customers and gives them room to negotiate. "Fair market rate," Ferrusi Ross said, "value to me." The contractual conversation is changed once customers are able to ask "Am I willing to pay this much? Is it worth it?" The subjectivity of rates, however, speaks to a lack of transparency in terms of what defines "worth."
Short-term goal: labor-based contracts that can be easily renegotiated.
Long-term goal: outcome-based visibility to avoid having to worry about the bits and pieces.
- Relational: New vendors entering the market lack enterprise-level expertise and best practices. Enterprises that do adopt SaaS solutions are only doing so at the departmental level, and therefore, face risk and management issues as they juggle multiple vendors for each departmental need. Moreover, technology teams are having to incorporate needs of the evermore demanding end user (Why can't I use a Mac instead of a PC? Why can't you support my iPhone instead of this BlackBerry?).
Short-term goal: get a vendor that executes on immediate tasks.
Long-term goal: an innovative, value-add supplier.
In order to act upon these market shifts, Ferrusi Ross concluded with four types of technology leaders and delineated the approaches each type may be most successful at assuming. Based on the individual's leadership strength and the financial stability of the organization, Ferrusi Ross identified the roles as:
- Restorers (high leadership strength, low financial stability) should focus on building for the long-term as long as it doesn't infringe upon short-term initiatives. Restorers must work closely with leadership and help justify the need for innovative solutions that will ultimately improve financials. Even if it can't be done today, Restorers should advocate for keeping innovation on the table.
- Builders (high leadership strength, high financial stability) need to find technology solutions and establish relationships that provide incremental benefit to the organization over time, rather than one-off resolutions. Their disciplined decisions to benefit the long-term, however, should be careful not to hinder short-term performance, Ferrusi Ross warned
- Survivors (low leadership strength, low financial stability) must think about creating wins in the short term until the ground is stable enough to invest in long-term goals. Push aggressively for SaaS solutions given the cost benefits, even if risk tolerance of the organization is low. (Ferrusi Ross doesn't suggest Survivors dive in blindly, but that they should strive to explain the benefits of SaaS and, of course, focus on mitigating risk.)
- Improvisers (low leadership strength; high financial stability) can focus on educating the organization about what solutions are possible and with the help of short-term wins -- these can whet leadership's appetite for more successes through innovative means. Aim for flexibility to prevent the company from signing deals that lock them into costly commitments that may be disadvantageous after the economy turns around.
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