Service Providers Will Play Crucial Role in Digital Era

News Article - Thursday, 31 July 2014 12:45

By: Kerry Butters Category: Hosting

According to Gartner, Inc., more and more opportunities are opening up for service providers which means that they should begin to align their business structures and capabilities in order to thrive in the digital era.

Those businesses which don’t prepare to help organisations with the innovations necessary to transform into a digital company will lost market share, the analysts say. The research house predicts that by 2017, 60% of Global 1000 organisations will "execute on at least one revolutionary and currently unimaginable business transformation effort” and further to that, by 2023, those with superior digital capabilities will reposition their brand promise or build new brands.

"The market opportunity arising from broad technology changes is creating a digital business opportunity that is forcing a restructuring in strategy, talent, portfolio and organization within services providers," said Susan Tan , research vice president at Gartner.

"In the past 12 months service providers have taken explicit steps to prioritize the pursuit of digital business opportunities ranging from restructuring and realigning their organization to forming entirely new business units or subsidiaries. They have announced new digital leaders and investments to organically build or acquire digital skills/assets and many have launched innovation centers to serve as client development labs. The restructuring and new digital business units and leadership are needed to focus investment and develop resources for applying digital technologies to realize business value."

This serves as an indicator when it comes to predicting the business impact on service provider and the threat posed to more traditional business.

In order to ensure their slice of the market is stable and can experience growth, service providers should invest time in planning for the future. This should include an investigation into how prepared businesses are for digitally propelled expansion and whether restructuring is necessary.

Once this has been done, it will then be necessary to look at establishing digital leadership skills and hiring the right talent. The analysts also say that service providers must also be prepared for the fact that current delivery models may be outstripped by new demands in the fast-paced digital environment.

The researchers have further identified two key areas in which service providers should understand in order to "shape the future of client strategies”.

These are complementary IT spending priorities and "bimodal IT”. The former addresses recent research on CIOs which shows that a lot of new spending goes on the improvement of existing systems as well as new technologies. For service providers, this means that rather than just selling new services, providers should position their offerings in "a digital business context for clients' IT spending priorities”.

When it comes to bimodal IT, Gartner has put it forward as a concept which addresses how organisations need to operate when it comes to capturing digital opportunities. This means that CIOs need to act with speed, innovation and uncertainty. This means that they will have to be flexible in in their working of IT, concentrating on two modes of enterprise tech. These are the more conventional approach alongside a more experimental approach which is naturally fast evolving.

"Digital business enablement will span six domains, requiring service providers to realign their core competencies toward a new vision, investments and offerings for a portfolio that delivers innovation, transformation and industrialization for buyers' digital businesses," said Ms. Young.

"With the broad range of services and equally broad array of digital strategies of providers, it is critical that service providers clearly define their own portfolio and focus, and identify the targeted buyers appropriate for their selected services."

Further information and analysis is available in the Gartner report What Service Providers Must Do to Succeed in the Digital Era .

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