Digitisation has a profound impact on everyday life at home and in your professional life. Companies are introducing a series of tools and new technologies to support processes digitally. Here, companies like to use their own resources as well as external service providers. But even that is changing like the service provider Arvato states in his blog: The digital transformation creates new forms of cooperation with external partners such as suppliers, consulting and IT service providers as well as with cooperation partners for the development and marketing of products and services. But what is the design of such a new cooperation and what does this mean for German SMEs? So does a classic IT service provider have to reinvent its business model or is it enough to turn some adjusting screws?

Digital transformation in IT SMEs

What is the role of outsourcing service providers and consultants in the digital age? Computer Week has already asked this question to IT smimmers. For example, the journal notes that outsourcing is an elementary part of IT strategy, risk management and efficient operations in most companies. The digital transformation is making what service providers provide in sourcing services and consulting increasingly complex. This concerns factors such as pricing, the duration of sourcing partnerships and the mindset of stakeholders, as demonstrated by a discussion among providers, personnel service providers and consultants.

Thus, the magazine draws the following conclusion: Flexibility and the ability to anticipate developments are becoming more important. Customers already want to recognize that their service provider is able to integrate technologies and services that are not yet known, according to one of the participants of the roundtable on which the article is based. Another participant puts this statement into perspective: “As service managers and consultants, we should create a ‘feeling of cuddle’ between digitalisation and our customers, of course, not without the appropriate competence and know-how.”

The Digital Era of Agile SMEs

So something is changing in THE IT middle class or not? This is not quite clear from the articles. For this reason, I searched a little further and found an article by Alain Veuve that says: The consulting business will be difficult. This is based on the following statement: When I founded my consulting company in digital transformation questions 4 years ago, the world was relatively simple: there were companies that advised clients strategically and conceptually, there were companies that implemented the concepts and there were companies that operated the solutions. All in all, there is a so-called old world for service providers, which according to the author is expensive and slow.

Old world: slow and expensive

To describe this ancient world, Veuve says: Admittedly, the sequence of strategy, conception, implementation and operation was and is obvious and old-fashioned for everyone. However, it has two fundamental drawbacks; it is extremely expensive for the customer and it takes an enormous amount of time before something concrete sees the light of day. As a result, of course, everything was extremely expensive. The larger the consulting firms, the higher the daily rates and the younger the consultants. What was and is, of course, a kind of magic formula for the consulting companies, depressed many customers.

This idea also seems familiar to me from my consulting career. Often a service provider was brought in for each process step, which supported the customer in the waterfall model. The administrative burden is very high and to this day framework contracts are still awarded to large service providers for certain areas. Thus, service provider A is only allowed to carry out testing and operation and service provider B only conception and test, etc.

digital transformation medium-sized companies
Specialization: 1 service provider per process step – often tedious for the customer (own presentation)

New world: agile and fast

In the meantime, it is increasingly becoming clear that the websites of IT service providers are changing. You read buzzwords like “agile service provider” or “agile enabler/companion of digital transformation”. But are they really so agile and fast, or is it just marketing?

Also, there is a question that I keep asking myself: How much agility do customers actually want? Veuve believes that many customers at least have such an approach in mind. It is true that the vast majority of calls for tenders and concepts are still being drawn up. But he believes that the IT middle class as an industry is moving at great speed towards a Lean Prototype / Design Thinking Approach as the standard method of choice.

But a service provider often cannot cover everything. Let us think of a small consulting house with 30 people. It’s just impossible to cover an entire IT process. One solution I have already explained in the Consulting 4.0 article is: you enter into partnerships. This means that customers are offered a complete and comprehensive service. As a service provider, I use other service providers for this purpose, but manage them in such a way that the customer does not notice, with the focus on high added value for the customer.

digital transformation medium-sized companies agile
Generalized specialist: An agile service provider with partners for everything (own presentation)

Conclusion: New forms of cooperation

The service provider Arvato draws the following conclusion: The digital transformation leads to a variety of change processes in companies, both technical and organizational. The development of new business models, shorter technology cycles and the digitization of analog processes and data are just some of the challenges that companies face.

Veue also warns that anyone who, as a software service provider, now feels that this does not affect him is mistaken. The same shifts exist, simply in the opposite sense, also for pure implementation service providers. They, too, need to get used to smaller budgets, take smaller steps and develop solutions that work economically.

Reading tip: Consulting 4.0 white paper

I think that a certain amount of change is certainly necessary and that we certainly need to turn some of the screws on the IT smand. Basically, Arvato, Veuve, Computerwoche and certainly many other service providers think in this direction and I think that these statements are justified and we should definitely question the current business in the consulting. I think that the article has already created a first approach to understand this phenomenon and that a framework has now emerged around the set of agile IT service providers. I will update the article from time to time. Tell me at the end how your opinion is like this: How do you think the IT middle class will change? Please also take note of my other book suggestions on small and medium-sized enterprises.

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I blog about the impact of digitalization on our working environment. For this purpose, I present content from science in a practical way and show helpful tips from my everyday work. I am a manager in an SME myself and I wrote my doctoral thesis at the University of Erlangen-Nuremberg at the chair of IT Management.

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