Follow sourcingfocus on Twitter

The “Fast” Side of Bi-Modal IT: An Opportunity for Service Providers

by Steve Jeffree, Managing Director, Alsbridge

Today’s IT landscape is characterised by an increased focus on a “bi-modal” approach to management, whereby CIOs make a conscious distinction between “run the business” services on the one hand, and “change the business” services on the other.  The run the business or “slow” side of IT oversees stability, security and up-time, and places a premium on rigorous testing and process discipline.  The change the business or “fast” side of IT, meanwhile, is all about flexibility, agility and a fail fast mentality.

While these dual streams of service delivery are well established, the recognition that different types of processes, organisational structures and financial controls are needed for each signals a heightened level of management maturity, as well a recognition of the increasingly ubiquitous role of IT in business. From a sourcing perspective, clients have traditionally worked with service providers to address run the business/slow IT requirements. By contrast, change the business/fast IT activities have typically stayed in-house within the domain of the internal IT organisation. 

Why have outsourcers not played a more prominent role in change the business IT functions? One fundamental obstacle is the established model of outsourced service delivery. Service providers typically prepare and submit a proposal for a specific scope of work, execute the agreed-upon services and then charge a fee based on the terms of the agreement.  The trouble is, this discrete, project-based approach doesn’t apply to the needs of “change the business” IT, where teams quickly align and realign to services and products, and where success is rarely measured as a function of investment in a project. To take an example, a traditional sourcing arrangement simply doesn’t accommodate the “fail fast” philosophy of change the business IT.

Today, some CIOs are recognising that excluding service providers from the fast side of IT results in expertise, and for service providers to deliver additional value to their customers. As a result, they’re reconsidering their approach to bi-modal IT, and looking for ways to make service delivery agreements more amenable to the requirements of change the business IT.

At a high level, CIOs are working with their service provider partners to develop delivery models that assess the value that a vendor delivers to the business, and then link the provider’s compensation to that value contribution.  One innovative approach being taken is to dedicate service provider resources to a client’s agile service teams on a long-term basis. This enables enhanced control, knowledge management and training that typically wouldn’t result from a more tactical contracted resource model. The dedicated resource approach offers opportunities to innovate and develop new compensation models.  As resources are invested in long-term success, value can be assessed against overall service performance rather than the traditional deliverables-based approach.

Bringing service providers into the fold of fast IT requires a change in the CIO’s role to more of a conductor or orchestrator who ensures that service providers stay engaged on both sides of the bi-modal IT model. Balancing “fast” and “slow” presents a variety of new challenges, not least of which is understanding the role service providers play in delivering business value. Recognising this and building an embedded agile capability can enhance the role of providers and present the CIO with greater flexibility in meeting these demands.

For more articles like this, subscribe to our email newsletter.

  • Favicon
  • Digg Favicon
  • Facebook Favicon
  • NewsVine Favicon
  • Reddit Favicon
  • StumbleUpon Favicon
  • Technorati Favicon
  • TwitThis Favicon