There is near perfect agreement in the IT services world that organizational spend priorities are evolving to align to digital technology advancements (Read investments in AI/ML, cloud, cyber security etc.). Another undisputed fact is around the purchase decision being taken over by business stakeholders. However, remaining in the shadows is an equally powerful trend, which is the disruption in the decision-making process itself.
Don’t worry, you are not about to be subjected to stories on shorter contract durations that have long since attained mythical status. Instead, this disruption is about organizations becoming wise to the ways of service providers and making fundamental changes in the decision-making process. The impact of these changes is not universally favorable, and this could be one of the reasons for the topic not being discussed widely.
Change #1: Past experience, proprietary tools and a large pool of experts are no longer sufficient
Case in point is the increasing number of RFPs that have a “Proof of concept” stage embedded in the evaluation cycle. A clear departure from vanilla demos and customer references, service providers are asked to apply their expertise and tools on a use case that is directly relevant to the customer context. A recent example is that of an airlines company that asked competing vendors to build a mini app stack that replicates their core functionality and prove how efficiently their toolsets could make it cloud-ready. Another financial institution has asked vendors to use BPM to replicate a use case and showcase how their test automation suites could increase velocity.
Change #2: Brand matters, but so do flexibility and partnership
Many RFP processes have started adding one or more smaller /niche players to the fray. While the primary intent is to challenge the cookie cutter solutions that traditional players bring to the table, there are occasions where the dark horse walks off with the prize on the strengths of solution quality and ability to provide customized services
Change #3: Technology capability is alright, but do you really know why we need you?
A few years back, most RFPs gave detailed requirements on the technology front and operational elements such as SLAs, while the business context was often compressed into a paragraph or so at the beginning. The term ‘innovative solution’ was translated to innovations in commercial and operating models and the use of proprietary tools.
Though the change is slow, the asks are very different today. For example, a global financial services provider starts off an RFI with an open-ended question on why the internal team is more productive than vendors. On a different note, a high tech company in the US asks vendors whether they should use process, IT or operations levers to reduce costs. The asks are ambitious, vague and require business thinking rather than a showcase of technology might.
What is common to all the changes is the fact that size is no longer as important as it was a decade ago. “Deep pools” and “long benches” are not the only determinants to contract awards. Rather, the ability to view each customer requirement as unique and the capability to walk the talk are the critical success factors.
