Functional Sourcing: The Past Versus The Future

As the world moves towards an age of increased adoption of managed services, Service Providers must find new Sourcing models that appeal to the evolving needs of businesses. We see a pronounced market shift from standard to customized solutions. There is no better time than now for IT Service Providers to use the Functional Sourcing approach, which offers cross-functional experts to deliver a variety of services for SMBs and large enterprises.

A relatively old concept, Functional Sourcing was made popular by the clinical research industry, and today it is widely used by Service Providers to diversify their portfolio, no matter the type of industry or the size and scope of their operations. Businesses value their partnerships with Service Providers when they can differentiate their services and continue to provide a complete and comprehensive portfolio of solutions matched with expertise in delivery and competitive pricing.

This trend, towards breaking down old functional barriers to accept and even promote multi-functional teams of experts, has shown positive results for clients, and for Service Providers it has led to improved service quality, better customer experience and stronger partner relationships. Functional sourcing has therefore emerged as a game changer, enabling service providers to expand their customer and service delivery footprint.

The Functional Sourcing Landscape in IT

The Functional Sourcing landscape continues to evolve, with enterprises shifting their focus to strategic and collaborative sourcing for IT operations to drive service quality. Functional Sourcing is an ideal way for businesses and their IT teams to fill the skill gaps and shift their focus to business innovation and growth. Information Technology is not only one of the areas influencing the increasing role of Functional Sourcing; but it is one of its largest consumer.

Functional Sourcing in IT Managed Services

Disruptive technology, innovations, globalization, and unsettling changes in business-IT dynamics have impacted IT operations management. With traditional structures giving way to modern IT operations and management systems, a transformation is underway. However, the magnitude of the transformation makes it a daunting task for enterprises to tackle it on their own. Hence, the dependency on specialized Service Providers who not only offer the domain expertise and advanced skill sets required to drive the transformation but also package their service delivery in the form of new sourcing models, the most popular of which is Functional Sourcing.

IT Operations Management Transformation through Functional Sourcing

A shift in market dynamics and the need to build agile, modern ITOM practices might have provided the catalyst for ITOM transformation, but Service Providers are the ones bridging the gap between transformation initiatives and business optimization by providing the resources and expert teams needed to carry out the mission.

The focus of IT has moved from maintenance and monitoring to delivering business value and positive outcomes, in changing technology and regulatory environments. Functional Sourcing teams bring the flexibility, efficiency, and effectiveness needed to lead the transformation from the front. Therefore, the primary goal driving the popularity of Functional Sourcing is its flexibility to react to these changes in real-time.

Here are a few examples of Functional Sourcing service categories that can be offered by Service Providers:

• Event Management
• SOP Execution
• Patch Management
• Release Management
• OEM Management
• Circuit Management
• IT Operations Reporting
• Email management
• Telco MACD services
• Technical Experts

Download the “FS Case Study” to learn how NetEnrich’s comprehensive Functional Sourcing services for IT Operations Transformation have helped a leading Service Provider.

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Conclusion:

It is evident that Functional Sourcing teams, offering the benefit of improved integration, communication, and coordination, often across functional boundaries, are increasingly becoming the go-to sourcing models preferred by enterprises looking to manage and optimize their IT operations transformation and modernization. Service Providers who are already providing Functional Sourcing services no longer need a foot in the door, are quickly adding new customers, and driving better margins with their clients. In our next blog we will discuss the Benefit of adding functional managed services to the portfolio of Service Providers.

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