IT Services 2.0 (Part I of II)

There were many discussions about IT Services 2.0 before and we have seen many definitions of the phrase. All of those are derivations of individual opinions and I don’t think there is any official definition for the concept yet. Here is my take on the next generation of IT services.

So far, the best articulated opinion I have seen is from Chris Barbin of Apprio (http://www.sandhill.com/opinion/editorial.php?id=129). While I agree with Chris on most aspects, there is an apprehension that he is limiting the scope to only SaaS based services in general, and Salesforce.com based services in particular. Here is an attempt to define IT Services 2.0 in a broader sense. It is clear that many of the thoughts presented by Chris are borrowed in this definition as well.

General Objectives

IT Services 2.0 is not too different from the erstwhile (1.0?) services in its theoretical objectives. If we were to look at both from an idealistic viewpoint, the guiding principles would look the same. The difference will primarily be in how the services are rendered and the motivations behind adhering to the objectives. The objectives recommended to be set for a 2.0 solution are:

1. Tangible business benefits to the customer
The most important objective of a Services 2.0 solution is to ensure tangible and measurable benefits to the customer’s business.  This is easier said than done. IT services companies hardly understand their customers and their business today. I don’t think we can blame these services companies because in many cases the IT departments of the customers may not have ample knowledge about the businesses their organizations are into. It is imperative that IT services companies invest in KYC (Know Your Customer) exercises throughout the engagement periods. The services company should be able to understand, articulate, deliver, and reiterate the business benefits derived out of an engagement to the customer.

2. Smaller and measurable project life cycles
In today’s scenario, customers don’t have the stomach for monolithic projects. In my opinion, the biggest positive to the IT industry from the global economic downturn will be the intolerance to very large IT initiatives. Since every investment will now be dissected and analyzed in all possible directions, it is essential to realize an ROI and that too in as little time as possible. So, individual IT projects will be looked at as 3-6 month exercises that will start yielding benefits within a maximum of 7-8 months from the initial decision point. This will enable the customers to realize the ROIs within the same budgeting year.

3. Expectations on value addition
A major requirement for a 2.0 service provider is to be savvy about the customer’s business parameters. Rather than supplying with lines of code or people who can code, these firms will be expected to provide the customers with ideas and suggestions as to how technology can help improve their business. The services firms will be expected to bring expertise and prior experience in solving the exact problem the customer is facing today.

4. “Show me” as compared to “Tell me” approach
The current approach to IT services puts a lot of thrust to tons of presentations, documents, status reports and innumerable meetings. Both the vendor and customer spend too much time and effort in communicating with each other formally with words, numbers and pictures. The thrust of the 2.0 services will be to show how things work right from the first meeting. “Show Me” as an approach will play a significant role in selling the services as well, thus reducing the sales cycle times drastically. SaaS will be a significant delivery model in 2.0 services and with the hosted approach, “Show Me” will be lot easier for the service provider to handle and the customer to comprehend.

5. Assembling instead of building
Building software from scratch is a thing of the past. Now we are surrounded with umpteen enterprise software platforms, technology frameworks, and rapid application development toolkits. Many of the current service providers make use of “reusable components” they have accumulated over a long period of time. I am talking about going to the next level of software solution preparation. This process will be carried out more by solution consultants with minimal effort from programmers. To achieve reduced turn around time for solution delivery, services companies will have to practice the art of quick solution assembly.

6. Paying for value generated and not for resources
What all these will culminate into is a significant shift in service vendors’ mindsets. Service 2.0 companies will not talk about billability of resources, will not send timesheets for customer approval, and will not look for deploying their workforce on customers’ sites on contract. Instead, the focus will be on how quickly they can get out of a customer’s active project. Billing will be based on the achieved business value generated. Most contracts will be subscription based or fixed bids.

What are the key ingredients of a successful 2.0 IT services offering? I have some thoughts on it as well. More on that topic, next time!