Thursday, May 7, 2009

Business Transformation VI : Managed Service and Application Development

There are different forms of outsourcing model which are existing today . However the economic pressure will create a consolidating move. Solo-sourcing is already in challenge . It is too risky to concentrate only in one vendor . The Multiple sourcing is still alive . This is where companies meet there outsourcing goals from a number of vendors . Still ,the tough economic climate is making one outsourcing model most ‘sought after model’ – i.e Best of Breed model . This is where the niche suppliers are brought into and they not only cut cost ,but creates a lot of value. This intrinsic value is something which will determine the survival of a company on the long period of present recession which Past Chairman of Infosys ‘Narayanmurthy’ refers as the “Mother of all Recession”.

Obviously these recession brings a new form of Budgetary pressure to the business model and need for a shared risk and reward model would be adopted by increasing number of corporation.

This way, Managed Service model provides a noninvasive approach to outsourcing. The skills and competencies are provided with customization to client's requirements. It gives a certain degree of flexibility to implement and manage key projects, without the disadvantages of full blown outsourced contracts.

On the top of it there was a new requirement for further specialized managed application suits. This takes it more close and similar to the SAAS ( Software as a Service ) which gives the flexibility of on demand solutions which gives the best of both world – control and flexibility of our information system without the pain or cost of running them yourself which are denoted as the traditional constraint of outsourcing . This also brings closer to the classic ‘economies of scale model’ which gives more for less.

However , the new wave goes even further , and tries to determine that what kind of value on terms of business a managed service provider can give on the top of specialized application suits . This is where the vendor needs to know about the business of the client and how it could be transformed . The value which is generated from this move is much higher as it outsourcing is not moves from transactional to transition and further moves to transformational .

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