Digital Transformation, ISG Insights

Provider Positioning Problems – How to Differentiate

Rapid growth in enterprise spending on digital transformation, along with steadily accelerating change from traditional IT outsourcing to smaller and more-focused initiatives, has IT service providers and technology vendors working hard to reposition and differentiate themselves quickly. Unfortunately, we see too many failing at this important task.

What is Happening?

Rapid growth in enterprise spending on digital transformation, along with steadily accelerating change from traditional IT outsourcing to smaller and more-focused initiatives, has IT service providers and technology vendors working hard to reposition and differentiate themselves quickly. Unfortunately, we see too many failing at this important task.

The past few weeks provide an illustration. My colleagues and I have sat through numerous briefings in a variety of settings, seeing and hearing each provider using the same core digital transformation positioning as “differentiation.” Whether as part of a prepared presentation, or in response to queries about what it delivers to market, each provider we meet with uses extremely similar if not the same phrasing, verbiage, approaches and value propositions. In short, what tends to be itemized service providers – including software and hardware vendors – as differentiation comes across too often as the same types of capabilities, frameworks, platforms, technologies, strategies, and go-to-market approaches.

This is not serving any of these providers well; enterprises are too likely to see what should be perceived as differently-capable providers as more similar than not. It is not serving enterprises well either, as a lack of effective differentiation makes it less likely that any enterprise can identify a suitable provider correctly and come up with a short-list effectively.

 Why is it Happening?

We do not see vendors and service providers purposely working to sound and seem similar. We do see providers working hard to translate themselves and their portfolios into new and emerging opportunities. While all are to some extent re-inventing and innovating, the majority of what is needed entails adjusting business models, adopting or adapting go-to-market approaches, and repositioning what already exists toward what can be done. Put bluntly, this is typical provider value proposition positioning / repositioning in any emergent and shifting market.

In essence, all IT providers are (or should be) in ongoing stages of transition, including business strategy and models, pricing, and frankly, survival, as they and their customers transition in an ever-changing IT delivery and consumption market. Unfortunately, when everything is changing at once, provider positioning tends naturally to map to common denominators – usually, the most apparent changed and changing enterprise expectations – and that risks engendering the all-too-common “me too” effect rather than true differentiation.

 Impact & Guidance

Most of what is being presented by IT providers to enterprise clients as “differentiators” is more what we consider to be “table stakes” of core Digital positioning, abilities, and business-value-centered propositions. On that level, it’s good to see providers positioning themselves to meet real-world enterprise needs. But it is not differentiation.

For providers: Differentiation, to be effective, must focus on articulation of value delivery; i.e., a record of delivering business value is the only differentiator that matters. Technological and staffing capabilities are going to be similar; portfolios are going to be similar; go-to-market approaches are going to be similar. What you have, and what you do, should not be considered differentiators; the results are what counts, especially in the current environment of emphasizing outcome-based success metrics.

In speaking to enterprise clients on this, we emphasize that providers are not purposely misleading or attempting to confuse. The providers are still learning how to present their value in changing combinations of traditional IT value and business-centered value, while they re-invent their own businesses. We recommend to enterprise clients that they refrain from relying on provider “buzz words” and pursue a very traditional RFP approach, i.e., identify requirements, rank them in importance, and then evaluate each provider based on their proven ability to satisfy those requirements explained in your organization’s terminology. The provider’s ability to satisfy your specific requirements in the way(s) that you need will differentiate them better than any other factor.

For enterprise clients: Given the scope and pace of change, and the widespread and rapid increase and improvement in provider capabilities and portfolios, we strongly suggest expanding the range and number of providers to be considered in most cases. There are more providers with better capabilities out there – often at better pricing – than there were just a couple of years ago.

Of course, broader selection with less upfront differentiation requires more and better guidance. Tools such as ISG’s Provider Lens reports provide capability-, task- and business-value-centered assessment regarding provider capabilities and suitability. Our ISG Insights research clients refer to reports like our Digital Disruptors series in areas like cognitive platforms and security-as-a-service to build useful knowledge regarding changed and emerging capabilities to address still-developing IT needs. And as provider qualification, selection, and negotiation progress, our experienced advisors apply unmatched expertise and skills to enable the best possible deal and strategically beneficial relationships.

Schreibe einen Kommentar

Deine E-Mail-Adresse wird nicht veröffentlicht. Erforderliche Felder sind mit * markiert.