CIOs Aren't Ready For As-a-Service Economy

by Sohini Bagchi    Aug 20, 2015

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Enterprises are looking to move beyond traditional labor arbitrage into a more collaborative, value-driven business world to become more competitive. Yet a large section of them are not yet ready for this “as-a-service economy,” which can bring such a change. In an exclusive interaction with CXOToday, Anoop Sagoo, Senior Managing Director – APAC, Accenture Operations discusses the various challenges and gains for businesses in the as-a-service economy and the changing role of the CIO in it.

Can you please throw some light on the recent growth trends in the IT as-a-service economy?

The services industry is going through a huge transformation as enterprises are looking to reduce their reliance on labor arbitrage and outdated legacy technology in order to better compete in the digital world. The as-a-service economy is about delivering value via on-demand, highly scalable plug-and-play services that impact business outcomes. With this model, simplification is critical - and complexity, poor processes and manual intervention is eliminated in favor of working smarter through simplified, intelligent operations.

The research we recently launched with HfS found that 53 percent of senior executives view as-a-service as critical for their organization, yet 68 percent of enterprises report that their core enterprise processes will not be delivered As-a-Service for five or more years, There is clearly some work to be done in order to accelerate As-a-Service adoption in the near term.

What’s the role of software in a service economy?

The HfS research identified eight ideals of the As-a-Service Economy. One of the ideals that is especially relevant to the role of software is cloud. As cloud-based offerings continue to chip away at on-premise legacy applications, the power of “plug-and-play” software is further solidified. According to the research, of all the As-a-Service ideals, based on current investments, organizations expect to make the most significant progress in the next two years around cloud.

Another as-a-service ideal relevant to software is automation. Fragmented and highly manual processes are mundane and can be quickly automated by software that takes over highly repetitive tasks. This enables employees to focus on higher-value tasks and more fulfilling work.

How is the nature of vendor-buyer relations fundamentally changing?

The new realities of the market are shifting buyers’ expectations and needs in order to remain competitive. Vendors and buyers will increasingly need to work more closely together to manage business services holistically. At many organizations, global process owners work within a consistent governance framework overall but collaborate with their counterparts at the service providers to find and address better ways to get something done – such as automating a process or eliminating it completely. Many service providers are redefining the account management role to incorporate a more consultative and solution architect capability.

What new challenges do CIOs face as they move to on-demand service models and what should they do about this transformation?

CIOs are pressured from the digital business evolution to help increase revenue and margins while improving the client experience.  By effectively moving to the cloud and applying the right digital technology, automation, artificial intelligence and analytics to unlock competitive advantage from data, and utilizing talent smartly, CIOs can help put their organizations in a better position to innovate faster, create new services and drive business outcomes that positively impact their top and bottom-line.

Are CIOs merely providing a service to the business, or have a more strategic role to play?

CIOs have a strategic role to play in as-a-service as they sit at the C-suite leadership table. They have an obligation to understand the new market realities and help steer their companies towards the As-a-Service future.

What would be Accenture’s role in driving as- a-service businesses?

Accenture has long recognized that the market needs to move toward the As-a-Service model. In fact, nearly two years ago, we made the move to merge our IT infrastructure and business process outsourcing businesses under one umbrella, called Accenture Operations. This breaks down barriers and creates a culture of enabling technology-driven services, moving processes into an “as-a-service” model and creating the skills and acumen needed to make its delivery effective. We’re making strategic investments in software platforms, strategic alliances and focusing on training for our services talent to provide higher value services for clients.