Enabling a Subscription Model in IT Service Delivery
We are in the world of a subscription model economy. The current approach of buy/build/operate for products /platforms does not scale in the digital world. Let’s take a cue from Digital native companies in moving to a subscription approach. Say goodbye to long implementation cycles in Enterprise service delivery.
Let us look at how a Business model shift will impact the Digital Services of the future. We are evaluating the business model paradigm shift across three dimensions
- Shift from Buy/Build model to a subscribe model
- Source services from Service Marketplace
- Move from a fixed to a variable cost model
Challenges with the Buy/Build Model or Current Model
Most enterprises are involved in a buy/build model.
Long implementation times: Whether it is an ITSM tool, automation solution or an analytics engine, every product involves a buy/build/operate cycle that typically takes 4-6 months or more to stabilize and return benefits. While the features of the products and solutions cannot be refuted, the question remains if Enterprises can afford to wait for as long and spend as much in going through these long implementations in future. The current process is time consuming both for the customer and provider.
Inefficiency & Poor reusability: In many instances we see services being built from scratch. The problem with this approach is the limited reusability of services across Enterprises. What is needed by one Enterprise is also need by another. Take examples associated with services needed for every organization — server build, access provisioning, environment provisioning, server restarts, data updates etc, There are so many standard resolutions that are highly automated that could be used across organizations. However we see automation being built from scratch. This is highly inefficient.
Speed & agility are key in Digital Enterprises. The current model of but/build/operate will not scale in the Digital world
And the solution….
We look to Digital native companies for a solution in this space. Their world has slowly but surely moved into subscription economy. They have responded well to meet the rising user expectations.
People are only interested in the outcomes. They want the milk not the cow, music not the CDs, the ride not the car.
Digital Native companies are exactly offering Enterprises what they need. They digitize services, move them to cloud and offer them as subscriptions to users. We are already aware of 2 waves of digitization so far
Enterprise service delivery will move from a buy/build/operate model to a subscription model. This is the third wave of digitization.
This approach of digitization and cloudification works exactly the same irrespective of the underlying tools/technology/platforms.
They key benefit here is that of speed much needed by an enterprise.
The subscription approach also screens Enterprises from any complexities associated with tools and platforms.
More and more productized services will now be available as outcomes for subscription. This behaviour triggers the need for Marketplaces for services, another major dimension in business model shift.