Solution Centers: Sourcing Survival Strategy #4

Right now, Bo DiMuccio and I are working on a Services Insight for the TSIA community titled “Seven Sourcing Survival Strategies.” The paper overviews tactics embedded PS organizations should be pursuing to stay competitive in the technology services marketplace. One of the tactics we discuss is leveraging centralized solution centers. In this blog entry, I will share some of the content from the pending paper. However, before I delve into the topic, I want to make TSIA members aware that we are currently conducting a member survey that captures both practice and results data related to optimizing solution center resources. To participate in this study and receive the readout, please visit:

http://www.tpsaonline.com/member_surveys.asp#pssolcenpractices

Why Solution Centers?

Earlier this year, I wrote about the bifurcation of sourcing strategies  within embedded PS organizations. In this post, I discussed the fact that results from a new TPSA survey showed an emerging class of product companies that are deploying a much more leveraged model for sourcing services engagements. A model where centralized solution centers, local partners, and global partners play a key role.

We believe the trend to create leveraged delivery models will continue. Specifically, we expect PS organizations within product companies to aggressively leverage centralized solution centers, where a pool of delivery expertise is established in a centralized location and leveraged across multiple geographies. Embedded PS organizations are creating these solution centers for several reasons, including:

1. To increase the ability to provide service offerings to low volume geographic locations, where it does not make sense to establish a large local delivery presence.
2. To support low volume service offerings that are important to product adoption but not demanded enough to warrant training local delivery staff in delivering the offering.
3. To drive consistent delivery methodologies across engagements throughout the world
4. To accelerate the creation of unique expertise around emerging solutions.
5. To provide a resource buffer for lumpy demand within each geography

Moving forward, we will be trending the resourcing mix of embedded PS organizations. We know from a multi-member study conducted this year, that a majority of embedded PS organizations have less than 5% of their delivery cycles being sourced from centralized solution centers. The image below shows results from that study for various peer groups.

Resourcing Mix for Embedded PS Organizations

In November, we will be launching an updated industry benchmark study that collects thirty new data points related to the practices and results of PS organizations.  One of the new questions will capture data on the resourcing mix as shown below.

New Benchmark Question on Resourcing Mix

At the Technology Services World conference next week, I will be reviewing the entire update to the TPSA benchmark study in the breakout session titled Comprehensive Update of the TPSA Benchmark Survey and Database:

Hope to see you in Vegas next week. If you are a fan of the blog and you are at the conference, make sure to introduce yourself.