Smart Partnering Strategies Pay Big Dividends

By Karen A. Frenkel  |  Posted 06-19-2013

Smart Partnering Strategies Pay Big Dividends

Partnering Strategy Matters  Decision makers who source to drive innovation are outperforming their peers in terms of revenue growth, gross profit growth and other financial measures. They are designing and managing services relationships by tying metrics to business outcomes, including process effectiveness, competitive advantage and business innovation.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

It's No Longer Just About Dollars and Efficiency  Less than 7% of those surveyed say cost reduction and efficiency were the sole reasons they outsourced IT infrastructure, applications and business processes. Many had a mix of motivations, with 39% sourcing primarily for innovation in at least one business or IT service area.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

Four Partnering Strategies Are Emerging  Enterprise innovation: 19%,  Enterprise optimization: 27%,  Focused innovation: 20%,  Focused optimization: 34%

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

Enterprise Innovation  Enterprise innovators outsource more areas of their business. Across IT infrastructure, applications or business processes, they source to drive innovation, changing how they operate, their roles in the value chain, how they monetize value, or even the way their industry works.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

The Three Others 1. Enterprise optimizers outsource a broad set of business and IT functions, but primarily aim for greater efficiency and effectiveness. 2. Focused innovators outsource more narrowly, engaging service providers to innovate particular areas of their business. 3. Focused optimizers implement a more traditional outsourcing strategy, tapping providers to improve efficiency and effectiveness in targeted areas.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

Enterprise Innovators Outperform Other Strategies  Across every financial measure tested, enterprise innovators outperformed those using other partnering strategies. They had more than twice the revenue growth and more than five times the gross profit growth of their peers.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

Business Priorities of Enterprise Innovators  While lowering cost is the top priority across every segment, enterprise innovators place a high priority on innovating rapidly and capitalizing on growth opportunities. As a result, they are more selective and assess potential providers differently.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

Geographic Agility Is Key  Enterprise innovators want to quickly expand to new markets, so they look for providers that can help wherever they want to go with proven infrastructure and on-the-ground experience. Services providers must understand their particular industry and have agile supply chains.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

Partnering for a Culture of Innovation   Enterprise innovators want providers with proven track records of capitalizing on disruptive technologies, such as mobile, social and analytics, and with strong R&D capabilities. They also want providers that can design, launch and scale those innovations quickly via the cloud.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

Anticipating Technology Shifts  Providers capable of predictive modeling and advanced analytics that can help discover new insights and opportunities are key. Enterprise innovators enlist providers that can design and implement collaborative environments, incentives and other organizational changes that help transform the culture.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

Integrated Governance  Because they recognize the need for input and collaboration across business units, enterprise innovators believe in enterprise-wide governance. Their broad business goals often require multiple service providers, which also increases the need for integration. Focused innovators also face this challenge.

Smart Partnering Strategies Pay Big Dividends

Smart Partnering Strategies Pay Big Dividends

The Formula for Outperforming Financially  To achieve business goals and a culture of innovation, organizations should tie metrics to business outcomes, transformational scope and integrated governance.

Smart Partnering Strategies Pay Big Dividends