Companies in virtually every industry are racing to develop new ways to compete against agile startups and well-heeled incumbent competitors in an increasingly challenging digital environment. While many have seized on digital transformation as a key strategy, getting there can be equally challenging, given that some IT teams only devote roughly 20 percent of their resources to strategic innovation, according to 451 Research.
For many companies, the solution isn’t to add more internal IT resources, but to work with a trusted partner that can oversee aspects of the company’s digital initiatives; including migrating to cloud-based environments and managing hosted applications. “What that does is shift a lot of the complexity around new innovations to somebody else that’s been doing it for a lot longer,” says Sheryl Kingstone, director of customer experience and commerce at 451 Research. “Managed services can bring a level of agility because you can scale up and scale down—and improve operational efficiencies.”
Of course, that doesn’t mean just outsourcing everything to a third party. Businesses need to have a focused business strategy and map their digital innovation goals against that strategy. According to 451 Research, digital transformation goals can be divided into four key categories: improvements in operational efficiency, improvements in the customer experience, greater agility and better risk management.
“You need to ask yourself what you’re trying to do with digital transformation overall. Are you trying to go after new business models? New areas of revenue? Better experiences with your clients?” says Scott Brindamour, AVP, architect team, advanced technology solutions at CenturyLink, which provides a range of managed service solutions to its clients. “Are you trying to increase or improve your operational procedures to either lower your costs or make yourself more efficient or more agile in how you do business?”
As companies begin harnessing data to transform their business, their needs continue to evolve. Kingstone cites data analytics as being among the key capabilities many companies lack internally, particularly in industries such as retail that are racing to catch up to digital competitors. “A lot of companies need help in understanding what the right data is and how to leverage some of these new technologies, such as data lakes and data infrastructure, to provide the line of business with the right tools at the right time. And that’s really all around analytics and predictive analytics,” she says.
In fact, according to a recent survey conducted by 451 Research, 42 percent of respondents from the retail sector identified analytics as a key positive disrupter. For example, organizations that deploy analytics via a managed services platform can create targeted marketing campaigns that turn repeat customers into loyal brand advocates. These businesses not only avoid costs associated with purchasing an in-house solution (data specialists, IT support, etc.), they also gain instant access to emerging technologies to move their digital initiatives forward. Other industries, including health care and financial services, also see access to richer data sources as critical priorities.
With digital growth, there is an accompanying need for greater digital security integrated into all aspects of the operation, Kingstone says. “You can’t really bolt on security, but really have to understand, layer by layer, the way that plays out.” Managed service providers can help organizations meet evolving regulatory and compliance standards, strengthen perimeter security and provide industry-specific expertise. In addition to 24/7 monitoring, a provider can simplify the process of patch management and upgrades, perform systematic audits and assessments, and quickly respond to security breaches.
By offloading the tactical security work, IT teams are freed up to focus on continuing digital services adoption. “We augment the end-of-the-line providers’ security posture by helping enforce IT standards on top of that,” says Jeff Katzen, director, cloud practice lead at CenturyLink. “We can help put controls around how our customers and their end users use those platforms to make them even more secure.”
While nearly all businesses—92 percent—surveyed by 451 Research said they planned to work with external service providers to help manage their digital transformation, companies chose a wide range of partner disciplines, from cloud service providers to management consultants, depending on their needs. At the top of the list were IT service providers and telecoms, cited by 49 percent of respondents. “When you’re looking at things, it really comes down to the problem you’re trying to solve, and that’s really where you have to look at the best fit for the provider,” Kingstone says. “If you’re just going to an infrastructure provider and all you’re trying to get is compute power in the cloud, just get that compute power from the provider. But if you’re also looking for an understanding of how to migrate legacy applications, and then you layer services on top such as business process consulting and strategic advice—that’s where you look at the IT service providers like CenturyLink.”
Regardless of provider choice, Kingstone says, the No. 1 goal for businesses looking at managed service options is to look at them from a business outcome standpoint. “What is it going to give you that you don’t already have today?” she asks. “That’s what’s most important. How are you going to shift your strategic resources away from keeping the lights on to doing more strategic applications in the future?”
This article originally ran in the Wall Street Journal. WSJ. Custom Studios is a unit of The Wall Street Journal advertising department. The Wall Street Journal news organization was not involved in the creation of this content.