Increasingly organizations rely on external service providers to assist in business processes or IT operations. In past decades, this would be called outsourcing, as organizations removed assets, people and processes to outside vendors, and then created a contract to buy the service from the vendors over an extended period. The practice of purchasing services from external vendors continues today; however, the emphasis has shifted from outsourcing legacy or traditional services, to outsourcing for digital transformation (DX). Many organizations are recognizing both the importance of DX in competing with others, especially regarding customer interactions. At the same time, organizations are learning that their in-house DX skills are inadequate to deliver the needed transformation.
DX requires a combination of skills that are not readily available in-house, so there is an increasing reliance on external DX providers, both product vendors and consultants. The motivation for external DX services is not primarily to reduce costs, as traditional outsourcing transactions have accomplished in the past. The primary motivation is to enable DX through rapid delivery, innovation and reliable services. Further, because of the paucity of DX and 3rd Platform skills in the market, many organizations increasingly rely on external providers to deliver technical capabilities that are simply not available in-house.
This is a new era for outsourcing, recognizing that the in-house model may be forever replaced by a multi-source, multi-purpose external provider management framework. CORE’s Digital Transformation course details how companies must manage DX providers with a different model than traditional outsource providers, with an emphasis on delivery of competitive DX capability that is measured in business outcomes not cost reduction.
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