Jörg Stimmer and Hartmut Jaeger
Digital Business models are one of the hottest topics discussed today. Strategy consultants, especially when having a background in IT see a lot to gain – for their corporate clients as well as for themselves.
When we started pliXos, our main goal was to come up with a solution to offer transparency in application development projects, mainly when working with a distributed team. As a result, an automated cockpit of Key Performance Indicators (KPIs) was developed and offered to large and mid-size corporations as our Outsourcing Director.
Thanks to the investments by innovative customers, we have extended this solution by SaaS tools supporting sourcing strategy definition, business case simulation, supplier selection etc. Additional governmental funding allowed building an integration bus and also a free global B2B Marketplace for SW projects.
Looking at successful digital strategies in B2C and the impact on the market we see quite some similarities to what is possible with our tool chain. One inspiring example is the importance of hotel ratings by travelers in portals and our scientific provider rating in our B2B Marketplace.
It is our opinion that the tools described do have the potential and eventually will disrupt the IT Sourcing Advisory market itself. It impacts the corporate as well as the consultants.
It is motivating to see that the SaaS offerings we have been working on at start, the extension we have build together with innovative customers as well as the new modules we could develop with universities due to a governmental funding have developed into a comprehensive set of cloud based tools which offer digital solutions for IT Sourcing Advisory as well as ongoing supplier governance. This tool chain is extended towards a supplier management by fitting solutions of a partner.
We are excited about the opportunities coming up and expect the story to be continued soon …
The aforementioned observations underpin the statements already made by Hartmut Jaeger in his article “Automated Advisory: Contradiction or Trend?”:
The out sourcing market gets mature and more agile. Reports from organizations monitoring this market identify a number of factors influencing this market. We see smaller deal-sizes, shorter deal-duration and a trend to renegotiate contracts more frequently. There is a broader provider community and an increasing interest of small- and medium-sized companies to look into sourcing in a more professional way. Also the irresistible rise of cloud-based offerings changes the sourcing market drastically. Sourcing advisory will have to adapt to these changing market conditions and find new ways to add value to activities during the sourcing life cycle. Much of the knowledge that used to be the IP of sourcing advisories has become more and more a commodity. Social media and special interest groups disseminate the latest thinking on sourcing for free. In many blogs, users can discuss the questions they have with a broader group of experts. Standardized descriptions of the outsourcing process, best practice outsourcing contract structures, or templates for any step in the outsourcing life cycle can be easily obtained in a book store or on the web. Especially for operational tasks in the sourcing process, the value an advisor can add to the play is limited. We also see that support from a specialized advisory is requested on a completely different level. The first level clients can enter into the souring market are B2B-market places (e.g. pliXos for application and application development). Market places will structure the offering and allow a broader provider community to place their offerings in a comparable way. The ultimate market place will look like a Deutsche Börse Cloud Exchange, which offers a trading platform for standardized cloud infrastructure. The whole contracting and settlement process is embedded in this platform—no RFI/RFP etc. needed.
Underneath these market places the client can access a set of tools for each phase of the sourcing life cycle. These tools will help to build the business case, select and contract with the provider, and monitor performance of the delivery. Only if the client feels that further support is needed, a click will connect to a specialized sourcing advisory.
Even if a client wants to start the process with the help of a sourcing advisory, these will be measured by the effectiveness of their support. Advisories will need tools to create this effectiveness and stay competitive.
This leads to the first implementations of an automated advisory framework. Automating certain steps in the outsourcing life cycle is not a contradiction to the advisory role. It’s the answer to smaller, more frequent transactions and developments in the cloud market. Clients will require a more continuous and flexible support for tasks they cannot resolve with tools and knowledge available on the web.
We see these changes leading to advisory services as defined in the Sourcing Advisors as a Service (SAaaS®) framework. SAaaS® combines market places, advisory tools and expert knowledge to support and complement sourcing teams. The teams need to handle more transactions in a higher frequency, and they need to establish a governance model to manage a growing sourcing portfolio. Therefore automated advisory is the right direction for these organizations to remain on top of the changing sourcing world.