Pushing the CX Envelope Supported by SaaS and Mobile

We should not downplay the importance of applications in the digital enterprise. From delivering better outcomes by boosting employee productivity to boosting customer experience through more effective interfaces, applications have fast become an essential part of conducting business in the modern world. In this report, we examine the crucial role application development, and management services play in the modern enterprise by establishing the priorities and influences of enterprise buyers and how they view their provider’s strengths and weaknesses.

As we would expect, applications have become more central to business operation, and the importance of application services providers has increased significantly. There are clear signs of the importance that enterprise clients place on application services both now and as an integral part of their future roadmap.

Using the data and direct feedback from enterprise buyers and clients we have been able to generate a picture of where the applications services industry is headed and, vitally, where key providers in the space are delivering the services clients need and where they are missing the mark.

Application Services Are Essential to Support Client Investment Priorities in CX and Digital

Applications now play a pivotal role in the way modern enterprises operate, providing interfaces for both customers and employees. As a result, they are often first on clients’ lists when planning improvements to customer experience or a boost to digital readiness.

It should come as no surprise that both boosting digital readiness and improving CX featured highly in a recent poll of IT investment priorities in large enterprises (see Exhibit 1). Both improving CX and preparing for digital – through the implementation of technologies that largely lie within the application space – have a considerable amount of mindshare for executives plotting out their investment priorities.

Executives are also keen to exploit application based technologies specifically, with many advising that building mobile applications is key as a standalone priority. There is also considerable demand for other application services-based priorities, including the consolidation and management of enterprise applications and a drive to use more software-as-a-service solutions.

All of these investment priorities combined place high demand on application services that can get to grips with real business challenges – such as rationalising sprawling estates or developing mobile solutions that support an enterprises’ digital ambitions.

It’s vital that applications development and management agreements are able to deal with a more diverse set of applications and, as a result, work in co-operation with both internal development teams and other external specialist service providers. This is particularly important when applications rely on shared data or shared resources.

IT Investment Priorities for 2017

 Exhibit 1: Top IT Investment Priorities for Global 2000 Enterprises

Source: HfS Research 2017, n=302 IT Services Clients

Quality of Service Is Important, but Only Slightly More Important than Familiarity

It should come as no surprise that the quality of the service is crucial to an enterprise buyer selecting a provider to support their application services (see Exhibit 2). But few could predict the importance clients place on familiarity and existing relationships with providers, with 14% of clients advising this was a key part of their selection process.

Investigating this surprising trend further in qualitative feedback sessions, it’s clear that when clients have found a provider that delivers, they tend to come back to them when other application work arises. Increasingly, we are seeing providers and clients working in the application services space forming deeper and longer term partnerships as the requirements of operating in the digital market call for speedier releases.[1] This relationship is increasingly important when customers adopt agile and DevOps as part of their application development and management methodology.

Supporting this development is the influence of the overall financial health and stability of a provider, as clients seek out providers that are likely to last in the competitive space in hopes of avoiding upheaval from unstable providers or those with an insecure future.

Factors that we would normally associate with the development and management of enterprise applications, such as ability to innovate and the technical proficiency of staff are all key factors cited by clients, but are considerably less influential on the overall selection process. Crucially, factors such as capability with digital technologies and partnerships hold less sway over enterprise buyers, as clients focus on the outcomes to be achieved rather than the adoption of particular technologies.

Exhibit 2: External Service Provider Selection Criteria

Source: HfS Research 2017, n=302 IT Services Clients

Where Providers Are Getting It Right

 With modern enterprise applications a vital building block of digital operations, it’s essential that providers are able to deliver the right solutions to solve clients’ business challenges. Of course, some providers are able to deliver what’s needed, while others often miss the mark. With the candid qualitative feedback taken from the Application Development and Management Blueprint report process, we can identify where things are going right and where things are going wrong from the perspective of the client. Let’s begin with what’s going well:

• Focusing on long-term partnerships: Multiple clients cited their provider’s clear commitment to going above and beyond traditional transactional approaches to engagements. Providers are instead focused on building long-term partnerships, ensuring not only that clients remain with them, but also that their clients’ businesses can become more competitive and successful in the digital space. Given the importance of existing relationships highlighted in Exhibit 2, this is a vital step for providers that want to retain existing clients and attract new ones.

• Driving innovation: Some clients valued the ability of their provider to develop innovative solutions to solve their business challenges. This varied with some clients citing an inventive approach to amalgamating and rationalising a sprawling application estate and others who recognised their provider’s capacity to develop pioneering business applications that support critical business objectives.
• Focusing on supporting clients, even at the expense of the provider: Clients appreciate the real commitment shown to their business as providers work hard to rationalise their estates as an ongoing engagement, even though this leads to a drop in revenue as there are fewer applications to support. Crucially, several clients advised that they too would be moving to rationalise their application estate and were concerned providers may not be as willing to support them. Clearly, with the right partnership in place, short-term loss in revenue is dwarfed by the potential of the gains a long-term partnership may bring.

• Bringing in much needed talent: For many clients, the engagement is about accessing vital development talent. As a result, a provider’s capacity to bring talent to engagements is seen as a real plus for clients. In the increasingly complex enterprise application environment, clients value providers that can come into their business and simplify the estate with much needed talent.
• Speed, agility, and quality: Clients are placing considerable emphasis on the need for providers to come into the engagement and bring high quality development and management solutions to bear on a business challenge, and then continue to do so with quick and agile development and release. In the increasingly competitive digital market, all companies are digital companies, which places a considerable burden on continually developing key applications and speedily pushing products and services to market that meet business and customer needs.

• Frameworks and approaches: Customers want a provider that can demonstrate delivery capability. References are important but increasingly they want the provider to bring a standardized, proven solution to the table – not a highly customized solution, but a solution framework that has worked for other clients, that is flexible enough to adapt to the client’s specific needs without a huge customization overhead, and, increasingly, that is able to fit in with internal teams and other providers where necessary.

Where Providers Need to Improve

 While there is certainly a plethora of encouraging signs coming from client references, there are undoubtedly some areas where providers can improve. Below are some of the weaknesses and areas of improvement cited by clients in qualitative interviews:

• Being more frank and honest: A key weakness highlighted by many clients is their provider’s unwillingness to say “no”, or push back. While this may sound positive, ultimately it leads to challenges down the line as providers say “yes” to tasks they are unable to achieve. Clients want providers that are unafraid to push back, to be frank and honest, and to help them achieve results through realistic means. This is not possible if providers just say “yes”.

• Talent and skills gap – leaving legacy behind: As providers focus on training their staff in the latest technologies, a significant skills gap is opening. Not all client businesses are operating on, nor have the capacity to upgrade to, the latest technologies and applications. Ultimately, they need support in keeping the legacy technology up and running. However, many have argued that the skill and talent they need to get things done in a legacy environment are simply not available.

• Bringing success stories to market: In a competitive marketplace, clients are increasingly looking for proof of concept and ability to deliver. For some clients, this proved a sticking point as several providers were simply not able to provide success stories. While client references and industry expertise are not the highest influences on selection, they are still seen as vital in the process by clients. Firms must bring more success stories to market to help clients pick the right provider and solution for their business.
• Being more proactive: Clients emphasised the need for providers to be more proactive across their services, instead of waiting for clients to lead the engagement.

Bottom Line: Now more than ever, providers building the right relationship is key to retaining and attracting clients, and in the lucrative and high demand application services space, providers need all the help they can get to differentiate themselves. 

[1] See the recently published Collaborative Partnership Drives Digital Transport Firm Forward for a client story on how a long-term partnership enabled their business to become more competitive in the digital market.