Cloud Transformation In The Services Industry
When one observes how Cloud platforms are bringing in changes to the way businesses function, it gives rise to the question, “What is the future of the huge IT Services industry that exists in India?”Speculationvaries depending on how Cloud Services is viewed;with opinions ranging from hosting services, to infrastructure outsourcing, to shared services, among others. What comes out is that the business models today of onshore/offshore and per day billing of resources will change in the subscription world. At the same time, there is no model that has emerged which different software services companies are necessarily considering as an Industry Benchmark and have started their transformation towards.
Viewed from the prism of product organizations, there are perspectives to be considered. First, with the advent of Cloud services, the differentiation between the “Product” and “Services” companies is getting blurred. On a common platform, with similar service level agreements, and low switching costs, it will be critical to create differentiation to an otherwise similar “look and feel” order to cash cycle, or an employee centric service portal, or a trading desk. And this is where the SaaS (Software as a Service) model can fail. It provides for very little differentiation, and most of it comes from the financing model or ease of use. Over a period of time, this differentiation needs to come from innovative products and features and/or through an end-to-end user experience that different players can offer.
The PaaS(Platform as a Service) solution providesa solution with extension capabilities for SaaS applications. It is the link that bridges cloud technologies and on-premise applications. What SaaS brought for applications, PaaS brings to software development– it is a set of tools and services designed to make building and deploying SaaS applications quick and efficient. When combined with SaaS applications, a PaaS environment gives enterprises the ability to create easier-to-maintain software applications and extensions in the cloud. This powerful combination enables companies to preserve their unique, differentiated business processes and experience the benefits of the cloud without the need to compromise. This brings in immense opportunities to the Services industry to create differentiation for their customers. It is then no longer the domain of product companies alone to create innovations –services companies too can both develop and deploy. Ofcourse, what is required within Services companies is the DNA for “continuous innovation” – which currently remains an expectation only out of product companies.
The second aspect that is definitely going to change is the way services companies engage with customers. There is definitely a higher level of accountability that will be expected by customers for their business outcomes. For example, when we go to an online shopping portal, the choice of a portal largely depends on the end-to-end experience we get. As such, all of them provide a free text search, a catalogue, shopping carts, and check-out with online payment options. So what makes users stick or switch? It is the end-to-end experience, starting with how fast or slow the portal is, how many times it gives different results when you navigate through the portal, how smooth the payment process is, and most importantly what your experience has been post order confirmation. If the deliveryprocess is poor, then very often the first response is to blame the portal provider. In the backend, it may be the same set of vendors or logistics providers for multiple sites, but users still go ahead and switch.
In such situations as depicted above, the portal provider has to demonstrate a higher level of accountability than merely defining their role in making the buyers and sellers meet on a common platform. It has to be relevant to the business outcome by being part of the trading value chain.
Currently, Services companies are predominantly playing a system integrators role. The responsibilities of the software maintenance or innovations therein are mainly topics that the product vendors have to deal with. In a way, the product company becomes responsible for the end to end process outcome, whereas the service provider is only the facilitator. But with that differentiation blurring, services companies will be more responsible for business outcomes than earlier.
This greater sense of responsibility will also see a change in the skills and competencies considered critical in the IT industry, whether it is the sales force or the people managing delivery. So the Cloud that promises an effective sales campaign will need to include their workforce professionals who are familiar with this process or have done this before. Similarly, a trading desk will need to have professional traders who can run such trades and take risk positions. The need to take accountability of business outcomes and to create business validated offerings will bring the IT industry closer to the industry value chains they support. In the long run, the industry will move away from a “resource loaded” to an “expert led” industry creating higher value for networked businesses.
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