Outsourcing SERVICE BUYERS ARE STRUGGLING TO FIND INCREMENTAL VALUE FROM THE TRADITIONAL MODEL, SUCH AS  DEPLOYING END-TO-END PROCESS DELIVERY, AND DRIVING DOWN OPERATING COSTS WITH ACCESSIBLE PLATFORMS BASED ON COMMON STANDARDS ENABLED BY THE CLOUD.

According to HfS research, the As-a-Service economy, requires new levels of investments in platforms, partnerships, enabling technologies and talent.

The smart service providers need to accept the fact that they will have to adapt to more consultative engagements, such as “operational excellence as-a-service”.

The 10 Key Principles Driving the As-a-Service Economy

Looking at this next evolution of value, it is coming from technology-driven “As-a-Service” advances that directly enhance employee, partner and consumer effectiveness:

1. Services and technology are available on an as-needed (plug-and-play) and/or subscription based model. Traditional commercial models from pricing to contract durations will be replaced by
2. “As-a-Service” solutions meeting an increasing buyer expectation that flexibility is at the core of the service provider proposition.
2. Further automation changes the focus of services staff from cost take-out to value-add. By automating formerly manual tasks and replacing legacy applications, business services staff will have more time to drive business outcomes, as opposed to keying in data, cross-checking data tables or the other tasks that were integral to service delivery before.
3. End-to-end process delivery becomes standard. Business services teams will be able to design/drive/enhance end-to-end business processes across multiple technologies including: mobile/SaaS/Internet of Things all supported by a delivery model.
4. Analytics capabilities can be more readily tapped. Both clients and service providers will no longer have to recruit and then train highly specialised data scientists to perform largely descriptive analytics tasks. Instead both will be able to use more intuitive As-a-Service applications together with less specialised business service staff to produce analytics to support both operational and market decisions that overcome the data gaps and system complexities of the present environment.
5. Services become fungible and the one-stop service provider model disappears. Formerly niche services will be easier to “plug-and-play” into a multi-sourced model – when building comprehensive solutions that go beyond turning to a one-stop shop service provider, whose niche capabilities may be missing or inferior.
6. Specialisation trumps scale. Service providers will deliver more specialised services that are: enabled by technology and priced by outcomes, require less arduous implementations on the front end, and provide more consultative ongoing, “light touch” support that can be delivered inexpensively and virtually. These will ultimately be smaller in scale than legacy people-based services, but higher-margin and operable on the one-many utility model.
7. Services talent become value-brokers. Services governance staff will need to become “brokers” of service delivery, where they manage multiple supplier relationships (tech implementers, BPOs, process specialists, consultants) to deliver maximum value to their organisations.
8. The best combination of capabilities and flexibility. In the “As-a-service” economy, service buyers will, over time, migrate to the solutions and service providers which offer the best combination of capabilities and flexibility, so that service buyers are no longer as locked-in to a service provider as they may have been in the past. Service providers will also be expected to be much more transparent as to how migrations to and from their “as-a-service” environments can be undertaken by clients.
9. Legacy technology investments will be written off. Even today, many service buyers are dissuaded from buying new technology-enabled solutions, as their organisation has made significant past investments in legacy technology solutions and feel they have a certain degree of “technology debt” that needs to be repaid. Forward-thinking enterprises are now realising that many past investments in technology platforms and services have now become redundant with the availability of Business Process-as-a-Service (BPaaS) offerings that negate the need for major future technology investments.
10. Integration headaches will be reduced effectively delivered to them on a seamless “As-a-Service” model

A new breed of service provider emerges, that disrupts the legacy labour-based model

The Bottom Line:

The way service buyers receive services and the way service providers sell them is going to be very, very different.

BPaaS solutions will make the technology investment a redundant issue, as cloud-based process delivery does not entail a need to invest significant in technology, but more the interfaces to create the appropriate integration points between the “leased” process and the necessary in-house systems.

As enterprises move more and more of their solutions into the cloud, their future integration headaches will be reduced effectively delivered to them on a seamless “As-a-Service” model and enjoy significant cost and speed-to-market advantages.

There will likely be a whole new ecosystem of niche specialist right across the services spectrum offering process services in horizontal areas such as finance and HR, through to industry domain specialties.

There will also be many vertical focused As-a-Service providers services who understand the uniqueness of business conditions.

There are two levers the surviving service providers will have to pull to deliver more value to clients:
(1) Higher-value consultative talent;
(2) Technology-enabled BPO (BPaaS) solutions that can scale and be more profitable to both seller and buyer.
The next wave of value for the post-labour arbitrage enterprise is to reduce the reliance of manual labour and create value from SaaS-platforms analytics tools and other digital solutions.

The smart service providers need to accept the fact that they will have to adapt to more consultative engagements, such as “operational excellence as-a-service”.