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Leaders are seeing the benefits of “as a service” business models. Middle management are reluctant to adopt because they feel threatened. Interesting cultural dilemma. At Atlas Digital Partners we make sure that our MaaS model is one that works with our clients and not “on” their business.
By Michael Liebow, Global Managing Director, Accenture Cloud Platform
If you’re an executive at a major enterprise, you’re likely grappling with some business service issues—specifically around keeping pace with the rapid change in technology. You want to accelerate your transition to an As-a-Service model, but you’re encountering resistance. Not from your board, but from the rank and file. Culturally and historically, this has always been an issue; people simply resist change.
A recent study from HfS Research shows a staggering “disconnect between leadership ambition and operational execution.” Of the 700+ enterprise service buyers, advisors and service provider executives surveyed, 53 percent of operations leaders view As-a-Service as critical, yet only 29 percent of middle managers and delivery staff do. That’s unsettling.
According to the study, “more than two-thirds of today’s enterprises are simply not ready for what’s coming.” A cynic might say this is no surprise—management has a long history of not always playing well with staff. But business leaders who build the best case for implementing As-a-Service across their enterprises may outpace their competitors and create a real legacy—a survivor to the disruption. These are the leading-edge businesses hell-bent on improving the customer experience and keeping employees satisfied while simultaneously watching revenues grow.
And there is a big bang. With As-a-Service, companies can create ecosystems comprising strategists, technologists and business process service providers—among others—to better align themselves with industry trends. They can offer their workforces attractive long-term career opportunities. The proliferation of process delivery in cloud platforms can put outdated legacy technologies out to pasture once and for all. The simplifying of process automation can give rise to smarter analytics, more mobile-enabled operations, better cloud-based standards and more secure process delivery. As-a-Service also offers employees the freedom and capacity to understand contexts and apply technologies to reimagine business models and processes for groundbreaking results.
About 50 percent of enterprise buyers see these benefits as desirable. But the results show very little investment in analytics and process automation, two critical tools needed to achieve these goals. In fact, one-third of the buyers surveyed said they have “no plan around analytics, and very few buyers are investing in automation.”
Why the reluctance to adopt As-a-Service? Again, it’s a matter of culture. As far back as business history goes, those managers tasked with implementing change are hesitant to put themselves out of a job. They want clear-cut evidence of what’s in it for them. These same managers don’t love taking risks, and they’re not necessarily motivated to upgrade or refresh their skills.
This culture is causing a ripple effect across the entire food chain. Typically, there’s tension among leadership, management and vendors—and let’s face it, vendors often market capabilities that they don’t truly offer. So now you have business leaders trying to convince staff and vendors that change is good.
In fact, the HfS survey reveals a significant number of vendors—45 percent—are “overly focused on marketing and tweaking their existing delivery [capabilities] than making real investments in platforms, technologies and outcome-driven revenue models.” A mere one in three survey respondents, meanwhile, believe that “cannibalizing short-term revenues to deliver As-a-Service would differentiate them as an As-a-Service provider.”
Another challenge implementing the As-a-Service model has to do with timing. With today’s business speed essentially set at warp, moving “quickly” simply isn’t fast enough. Yet an astounding 70 percent of the HfS survey respondents said they’re looking at a minimum of five years before making “the leap to As-a-Service.” At the same time, providers seem to be getting the message—at least on paper.
Here’s further proof that As-a-Service—particularly cloud—is the smart choice for business. Amazon Web Services (AWS) reported that its business grew by an astonishing 69 percent in fourth-quarter earnings. That’s $2.4 billion in revenue and $687 million in operating income. Not bad for an emerging tech powerhouse that is apparently masquerading as an online retailer. And to put it in fitting perspective, Amazon now has a market cap larger than Wal-Mart’s. That’s the level of disruption we’re talking about.
Make no mistake: a tough road lies ahead. While management must be convinced that this is the way forward, a full 60 percent of leaders surveyed said they’re “ready to replace” their legacy IT for a compelling As a Service value proposition. Maybe they’ve adopted the motto “Choose As-a-Service, or go out of service,” but regardless of catchphrase, change-adverse culture or vendor hype, the time to move is now.