The Importance of Service Ecosystems

May 04, 2020 • Features • Martin Summerhayes • field service • IT Services • ITSM

The world of IT Services has evolved on many an occasion, however, right now it needs to prepare for another iteration of the new normal for it to continue to thrive writes Martin Summerhayes...

IT services have come a long way over the past 20 years or so. From the heyday of the hardware manufacturers, rolling out ever more sophisticated technology solutions; with faster compute power, larger storage capabilities and faster network performance; the pace of change seemed to be faster and faster.

Long Tail Service Support

Then the average sales lifecycle for the hardware platforms was a couple of years and services had to keep up with the ever-expanding portfolio of solutions. This meant a longer and longer list of products that had to be supported and maintained. What is known as “the long tail”.

I was part of the long tail of support. When I first started as a field engineer for Hewlett-Packard (HP); HP had just released its first HP LaserJet printer, the 2686A and shortly afterwards its first PC. Within five years, the market had exploded and there were hundreds of different models. Combined, with the mini computers, servers, storage and network products being produced; it felt as if it was a quarterly tech refresh and learning hamster wheel.

The implications for many services companies meant, having to train the workforce on an ever expanding list of products, servicing more and more options and then having to keep, maintain and supply more and more variants of spare parts. As HP moved into the multi-vendor field of service deliver, this became even more complex.

"As the consolidation of software operating system platforms has accelerated, so has the consolidation and merger of major hardware and solution platforms as well..."

At the same time as hardware manufacturers grew their product portfolio, the operating systems that were used to manage these diverse hardware platforms started to consolidate. From fifteen or more different types of operating system, over the past fifteen years, we have seen the standard platforms evolve to be either Microsoft or Linux/Unix based for the B2B market. For the B2C market Googles Android and Apples IOS operating systems are the two predominant variants.

As the consolidation of software operating system platforms has accelerated, so has the consolidation and merger of major hardware and solution platforms as well. What was once a diverse and jumbled array of solution providers; from an IT perspective; consolidation has meant standardisation, supply chain simplification and “more bang for the buck” that companies pay for their IT.

However, “the long tail” persists. Even today, with 70%, yep 70% of IT spend just keeping the “lights on”.

Only 20-30% of IT budgets are spent on new solutions, and the vast majority of that spend is now on software, not hardware. If you look at the hardware sale of servers, storage and networking solutions across Europe over the last few years; we have seen a steady decline in growth and a flattening of sales. It is almost at a point where customers are no longer purchasing hardware at all.

This might be an oversimplification, but the market figures do seem to indicate that the market is flat or even declining (If you are in hardware sales, and disagree, please feel free to say so in the comments below).

The Origins of Everything as a Service

This hardware sales decline has been driven largely by the “as a Service” models, starting with “IaaS – Infrastructure as a Service”, where customers could purchase raw hardware compute poser – be it servers, storage or network capabilities; expanding into “Software as a Service” – which has had a dramatic and completely disruptive effect on the traditional software annuity licence model and now a new variant called “Platform as a Service (PaaS)”, which wraps up IaaS, SaaS and extends it across the complete enterprise of services and IT organisation is offering to its business and end user base.

If you check out companies such as Salesforce.Com or ServiceNow, they are moving rapidly away from their heartlands of Customer Relationship Management (CRM) for Salesforce.Com which tracks the sales engagement and onboarding of new customers and IT Service Management (ITSM) on a Service Desk (for ServiceNow) where you track end-user incidents, problems and issues that they face; into a eco system called “Platform as a Service”.

This means that ServiceNow is launching solutions for HR; for Finance, for Marketing, for example. Salesforce.com is offering the ability for apps developers to develop applications, standing on top of the salesforce platform, that also expand into HR, finance and Marketing. (As a foot note, I can see a major battle developing between these two companies over the next few years).

Why are these companies doing this?

As markets exist, companies expand to meet those markets. The number one in the CRM and ITSM markets, are respectively, Salesforce and ServiceNow. To be able to continue to grow, provide shareholder value and appear to be leading edge, the local answer is to expand their market presence into similar market landscapes – hence – moving out from their core business models into parallel markets.

Time for Evolution in IT Service Design

So from an IT service model perspective, we need to adapt and change as well.

Too many of the service models that exist today are silo’d; focused on vertical optimisation of an element of the service lifecycle – Service Desk, Diagnosis, field service (massively silo’d), forward and return logistics and finally repair. This, I would contend, runs the risk of a continued race to bottom line, with lower and lower costs, less margin and an ever decreasing customer experience. Oh, and before you ask, when you get to the bottom, there is nowhere else to go!

"We need to think more of the lifecycle and value stream across IT..."

Whilst customers are looking to maximise the value of their IT estate, they also want to further standardise and modernise the services that they offer to their businesses. They are looking at IT service organisations and the value that they can bring in terms of supporting and transforming their IT services; bringing more of the adaptive model that we see in the consumer world; hand held devices, mobility, ease of use and adaptive adaption to rapidly changing business needs.

This needs a new set of thinking about how services need to be positioned. We need to think more of the lifecycle and value stream across IT.

I like to think that services will continue to develop and evolve and a new ecosystem will emerge where organisations strategically partner with one another; leveraging others strengths, as well as the clients they serve; to bring better value to the IT customers. This is going to need some new thinking, maybe, from learning from the software services world. I don’t have all of the answers, but have experience a number of these cyclical changes, so understand the changes companies need to make.

If you think that it is just “business as usual” and we as a community do not need to adapt, feel free to challenge.

I would love to hear your thoughts on this.