Tuesday, June 16, 2009

From sourcing ingredients to delivering the Burger - Suggested Recipe for Indian IT Service providers to move up the value chain







Imagine walking into a McDonald’s restaurant and being served the following in a plate - A slice of Tomato, some Lettuce, a slice of Cheese, a Chicken or Vegetarian or Beef patty and some mayonnaise on the side.
Place you hand on the heart and say what would your reaction be? It is more likely to be “I don’t think I will be satisfied eating this and by the way where’s the bread?” This is precisely what the CIO feels when he is evaluating you as a vendor for IT services outsourcing. The service stack of 9 out of 10 Indian CSI (Consulting and System Integrator) would resemble the one depicted in the burger picture with perhaps very few even having visibility about the breads “Business Strategy” and “Business Operations”.
A hungry person feels happy only when she can chew from top to bottom in every bite. Similarly, a business would get ROI from IT only when it cuts through all components that link strategy to operations as shown in the burger picture above. What can we learn from this very simple burger example?

Today, most CSIs have the following goals:
1. We are looking to plan next wave of growth and revenues?
2. We are aiming to be different than the others in the pack?
3. We need to move away from being known as a body shopper or “run of the mill” Application Management Services(AMS) provider and move up the value chain

If your answer is “Yes” to one or more of the above sentences, here are some ideas that you can use to achieve those goals for yourself.

1. Try switching yourself from a “Services” to “Solutions” mindset. Mind you a solution cuts across current services that you have. Choose specific focus areas such as verticals or business improvement opportunities. Services are one of the most common elements I find on every company’s website. This hardly articulates what challenges of which customer you will help overcome. Remember customers don’t care so much about the glory of your methodologies as much they do about proving themselves to their organization. A solution to a recognized problem may perhaps create a hook!
2. Understand the uniqueness of your customer’s business situation and then create a burger that she will love. I have heard of and even been in some meetings where a vendor and customer celebrate 5 or 10 years of partnership and the customer says “We cherish the partnership too” and goes ahead and selects other vendors for services. You had 5 years to understand the uniqueness of the business and still allowed other vendors in! Make the transition from “Gathering Requirements” to “Advising on Requirements” today.
3. Don’t just focus on the ingredients. You will not be able to serve a burger if you focus on supplying ingredients for too long. You will end up creating an ingredients mindset that will be tough to change. This will also make you extremely vulnerable in uncertain times because you wouldn’t know just how many burgers will be consumed and your customers won’t tell you that. You will end up justifying, like others, why you produce the most superior Tomato slice!
4. Get the Bread. Your Sales team and Delivery Heads may tend to be people with very generic skills. You may well be using General Program Managers to deliver just about anything. This may be stopping you from showing the popular “value add” in delivery. Can you see the gap? Your sales team should be consultants who understand customer’s business extremely well. This will give you a clear ability to command respect and access to all levels, spot opportunities faster and of course sell much better. Try fixing this and see how the burger of win-win can be made.

In conclusion, use some of these ideas to become that true strategic partner to your customers and help a CIO achieve the elusive ROI from IT services and enable business become competitive.

7 comments:

  1. This comment has been removed by the author.

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  2. Aptly and suitably said IT industry as a whole should focus on well contemplated soln. complacent with client's strategy where main edge should be innovation , creativity and rather than taking suggestive inputs we should put forward solns. which can help them gain better economic efficiency , improved process and product optimization.

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  3. Brilliant, Mr. Datar! As always, couldnt agree with you more.

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  4. You have hit the bull's eye Nikhil. Well said.

    It is apparent that most of the Indian IT companies end up justifying, why they produce the most superior Tomato slice!

    Companies...think solutions and not bodies.

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  5. Hi Nikhil,

    What about the cost that goes into hiring and retaining such people with "specialized" skills to deliver a "solution" rather than an "ingredient"?
    And if that cost leads to an increased billing rate, will customer's business consider the outsourcing option?
    Would moving to a solutions approach provide an ROI to the IT Service Provider? How much will be the turn around time?

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  6. Jincy.

    A couple of considerations:

    1. Cost does not lead to increased billing
    rate. Customers always pay a premium for
    the value you bring to the table.
    2. The customer for serving ingredients (an IT
    Project Manager within the IT shop of a
    business) is not the same as the customer
    for solutions (CIO or Business)

    The point is that IT services companies do not have the guts and vision to invest in moving up the value chain (also the customer value chain). Dont we all know how inefficiently MBA is used in the IT Industry?

    Ingredients business keeps you very vulnerable and has very low entry barrier.

    Do read "What the Customer wants you to know" by Ram charan.

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  7. I am with you and beginning to understand and apply ("forced to apply" would be appropriate) this "Burger" concept.
    It works better than I thought it would!- not just for the customer but for my own learning and growth as well.

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