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Service providers must go bimodal or become irrelevant

By Heather Wright
Tue 5 Apr 2016
FYI, this story is more than a year old

Gartner has cautioned service providers that if they don’t become bimodal, they will be left behind.

The analyst firm says many incumbent IT service providers are finding themselves challenged to make the required transition to embrace a bimodal work style, delivering product and services via new consumption models, providing the basic sales model enhancements and focusing on rapidly changing customers expectations across both Mode 1 – focused on stability – and Mode 2 – focused on agility – IT demands.

Gartner says failure to implement a two-pronged approach could see service providers becoming irrelevant and uncompetitive as organisations themselves become bimodal and demand similar from their IT providers.

It says in the next two years, many organisations will reconsider existing provider relationships while implementing their own bimodal IT and adaptive sourcing roadmaps.

Claudio Da Rold, Gartner vice president and distinguished analyst, says while organisations are already well on the road to bimodal, service providers are lagging behind.

“Confronted by digital transformation, IT leaders recognise the need to innovate more, manage uncertainty better and establish more agility,” Da Rold says.

“We anticipate that three out of four organisations will be at some level of bimodal maturity by 2017. Unfortunately, the same can’t be said for providers’ ability to aggressively transform into organisations that are able to respond to the needs of agile, bimodal enterprises.”

Da Rold says the speed of digital business is dictating a new speed for IT – and a new pace for providers own internal innovation, if they want to remain relevant and competitive.

He says cultural and mind-set challenges are among the issues the few service providers already employing bimodal capabilities in some business units, are facing as they try to scale bimodal out across their business.

Gartner says while not all providers will need to build bimodal capabilities organically, if they are targeting a customer segment which is interested in building stronger digital and bimodal capabilities ‘it is in [the provider’s] best interest to identify how best to transform’.

Da Rold says success will be built on culture changes.

“Start with small experiential steps but keep the momentum going by transferring a sense of urgency from top to bottom and from Mode 2 to Mode 1,” he says.

“Use small Mode 2 proof of concept projects to imfluence and sell the large Mode 1 projects that will follow.”

Gartner says service providers looking to differentiate themselves in the market and evolve rapidly toward a bimodal approach must create a practical roadmap of the many changes required for a successful bimodal transformation.

When providers make the decision to embrace a bimodal work style and capabilities, they must also consider the overall go-to-market, sales and partnering strategy.

“Providers that fail to co-innovate with their customers will not realise the full potential of digital business,” Gartner says.

However, those providers that demonstrate understanding, alignment and prioritisation of both Mode 1 and Mode 2 initiatives will accelerate their relevance and exploit large opportunities, the company says.

"Winning providers will co-innovate with customers, get linked into their proof of concepts and pilots, and ramp up in influence, volumes and large-scale Mode 1 transformation and modernization projects," Da Rold says.

"Providers that are unable to meet Mode 2 business buyers' expectations of speed, trust and credibility will face a market of cost-reduction-oriented services, frozen IT budgets and high competition for traditional spending."

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