Companies Can’t Get What They Want Without A New Services Delivery Model And New Contractual Mechanism

The possibilities promised in taking full advantage of the new digital IT environment characterized especially by agile, DevOps, automation and cloud, are exciting. However, service providers struggle to deliver digital services at their customary profit levels, and customers aren’t prepared to buy the new digital environment because they’re stuck with their existing purchasing/contracting vehicle. So, we have two sets of constraints: Service providers don’t want to leap to the new model the customers want, but customers’ old purchasing model constrains providers from moving to the new model even if they really want to.

As a result, some, if not many, service providers market that they offer solutions utilizing digital technologies. However, they haven’t evolved their business model to take full advantage of those technologies. People often refer to this phenomena as cloud or digital washing. When this washing occurs, customers don’t capture the full benefit of the productivity, business alignment, speed and cost reduction that the new environment and services should deliver.

Further complicating this picture, clients need to evolve their own governance and operating environments to form an integrated digital and cloud operating environment if they wish to achieve the full value and impact that these new technologies promise. One of the important things firms must do to close this performance gap and realize full value is evolving the way they operate. This, in turn, will require a different contractual mechanism to buy services.

Read more in my Forbes blog: