17 - Karmic Cycle of IT Services –Transmute or Perish

This is certainly not the spirituality around “What goes around comes around” theory but maybe IT especially the IT services industry is at a point of inflexion. There has been enormous transformation over time, but maybe it is time to transmogrify. The service portfolios have been broadly as depicted below starting from Infrastructure management, App Development / Support, Enterprise Applications, Product Implementation and Business / Technology Consulting

, the span of each block indicating the potential volume of business and height indicating the cost these services come at. Interestingly, traditionally consulting companies have come down the volume curve opting to set up captives while IMS, ADMS companies have dabbled in consulting and product management as shown below searching for the sweet spot where Value can co-exist with Volume. Well, this has gone ahead and created a plethora of delivery models starting from Onsite, Hybrid, Extreme off shore, near shore –we’ve seen it all though in all fairness to the industry, Space and Water are yet to be explored !!



Entrez La “ IT Services Salesman”: A good indicator of what IT Customers look for in a vendor is the SALES KIT salesmen lug around. They sold skills, they sold scale, they sold processes, they sold compliance and governance, they sold lower costs with an overdose of juxta positioned jargon, the whole thing stank to high heaven –but hey, the stuff worked . Well think again buddy, while we are Evolving from state A to B, customers are choosing disruption as the means to growth –aka innovation, speed, agility. A client of mine put it so well in just two lines:

• Can you Solve my Problem with a Nimble two-pizza team (size that’s right for two large pizzas).
• Can you Give me More for Same today and More for Less next year?

Well, one thing that’s not going to change is the fact that IT is literally transmogrifying at real time pace be it development, testing or deployment frameworks. Here’s a quick comparison of what IT Services were , maybe still are in many places and where the smart ones are headed to.


IT Services based organizations have the opportunity to gain domain knowledge over repetitive engagements with customers – Health Care, BFSI , Automotive etc. With each engagement and each domain specific deliverable, organizational internal confidence goes up. The smart ones abstract this knowledge to focus on one or two industry specific problems and call it a “Vertical Solution”.
Solution: A solution is what it is a theoretical answer to a practical challenge in a specific vertical, credibility coming from the deep domain expertise garnered through a powerful customer portfolio. Sounds like an easy sell?
 Advantage to customer: 50% off on Discovery and Design Effort. 10-20% lower cost on overall cost. Time to Market.

Frameworks: The smarter ones go one step further and build reusable components – physical software components that can be plugged together like pieces of a puzzle with critical components built on demand. Advantage to Customer: 30- 50% cost savings on cost & time to market.

Products : Probably the final leg of the journey where the organization feels that the solution and the frameworks have reached a point of maturity with repeated implementations that the whole concept can be commoditized. Advantage to Customer: I think the advantages to a customer is obvious but the kind of credibility and branding that the vendor gets is an icing on the cake. Of course, this approach is really not as hunky dory as it seems.

Organizations especially service industries do need to answer tough questions and do some deep soul searching to get to first base. Some questions that can put organizations on the way are
* Do we have deep expertise in the functional area?
* Have we identified a pattern – a similarity of challenges in the industry?
* Does solving the problem matter to some one? Who is it?
* Do we have the risk appetite to invest in product development and most importantly got market strategy?
* How many such initiatives can we encourage and develop as an organization and do we have the mind share to achieve this?
* How do we have a nice blend of skill dependent IT services complemented by niche, verticalized solutions or frameworks? Can products and services co-exist?
* What kind of change management is necessary to run such an organization in terms of innvovation, People policies, management skills etc?