by John Sundberg
Date Published - Last Updated February 25, 2016

Innovation and differentiation are two of the driving forces behind the outsourced services industry. This is a major shift from the early days of outsourcing, when clients primarily sought to drive out as much cost as possible. That meant they were willing to turn over IT, business services provisioning, human resources, and other functions to an outsourcer in exchange for a uniform set of services that reduced costs but varied little from client to client. Like Henry Ford with his Model T, outsourcers offered customers “any color they wanted as long as it was black.” Applications were the same, reports were standardized, and if your business had unique service needs, you probably figured outsourcing wasn’t for you.

Today, outsourced service providers live in a world where customers call the shots. As a customer, you’ve come to expect more than a standard set of services. Instead of one model in one color, you want outsourced services that can be customized to your needs, uniquely branded and themed for your business, and integrated with other business processes and applications. Those services should be available on a self-service basis that reduces the need for phone calls, emails, and other manual delivery methods. It’s all about service provider innovation. Some outsourcers get it; others don’t.

One of the most common outsourced services is enterprise-wide service request management. When you calculate the difference between your internal costs for managing service requests and the cost of outsourcing, you’ll undoubtedly see substantial savings. But cost alone shouldn’t be the deciding factor. Instead, look for vendors who offer cost savings plus innovation. And when it comes to innovation, three key areas set the best outsourcers apart.


When you outsource service request management, you’re basically renting space in the underlying application platform the outsourcer uses to deliver similar services to all of its clients. Since all tenants in such a multitenant environment share the same application, it seems logical that the application must function in pretty much the same way for all tenants. In the past, that meant that while a multitenant application provided broad value to all customers, its monolithic nature limited the unique value it could provide in meeting your unique business needs.

Today, that’s no longer the case. Some outsourcers are agile enough to offer clients a range of differentiated services that rely on the same underlying service management platform but look, feel,
and act differently for individual clients. Service catalogs are an excellent case in point.

Service catalogs—the electronic list of products and services available to user groups and departments within an organization—are rapidly replacing paper-based forms, phone calls, and emails for fulfilling business services requests. A well-designed service catalog should explain services in plain business-oriented language and make it easy to place requests, automate approval processes, monitor the status of required fulfillment tasks, and ensure delivery within the parameters defined by your service level agreements. And the use of service catalogs shouldn’t be limited to just the IT department. Indeed, they can be used to streamline business processes in HR, facilities, finance, training, sales, marketing, and other areas.

Does your outsourcer make it easy to create any number of service items within a service catalog? Or do they box you into a one-size-fits-all approach using prebuilt content based on arbitrary service definitions and unrealistic SLAs? The former is a prime example of service provider innovation; the latter is the status quo that many outsourcers still expect their customers to endure.

Actionable service catalogs also enable you to provide your employees with 24×7 self-service in a manner that mirrors the online world where they spend much of their time. While many service request systems are still inefficient and cumbersome, based as they are on hard-to-decipher service definitions and convoluted email threads, innovative outsourced service providers make initiating a service request as easy as ordering a product on Amazon. You go to a front-end portal, you order what you need, and the service provider’s back-office systems automate and track the approval and fulfillment process.

Unique Branding

Research into service innovation lags far behind that for product innovation, despite the fact that services represent approximately 80 percent of the US GDP and a growing percentage of GDPs in
countries around the world. One reason is that service innovation is simply harder to study. That’s because services are experiencebased and often dependent on human, interpersonal delivery
systems, where the value is created by the client’s interactions and experiences with the service itself.

One way to create a meaningful and valuable business service provisioning experience is by branding the service to reflect your business’s unique corporate style and culture. Innovative outsourced service providers put customers in control of the language, look, and feel of service request portals and service item definitions. It may seem like a simple thing, but branding instills in users the confidence that they are not just dealing with anonymous entities in some faraway call center, but with real people who have a real connection to their business and a real understanding of their needs. Giving customers the ability to brand their outsourced services can require some effort on the part of outsourcers, but it’s another noteworthy example of the way innovation is changing the outsourced services industry.


Competition and changing customer expectations have rapidly eroded the monolithic process-centric service delivery model that once characterized the outsourced services industry. Today, innovative outsourcers must compete in an environment which demands that every customer experience is unique—whether a service provider has thousands or tens of thousands of customers. That requires the pragmatic use of multitenant application technologies and other resources, and a tool set that sits atop that technology and gives the outsourcer sufficient flexibility to deliver any number of tailored customer experiences.

In this new customer-centric world of outsourced services, if you are outsourcing or considering outsourcing IT service management, the questions you should ask include: 

  • Can request portals, forms, and other service items be easily configured and managed without expensive and time-consuming coding? Can they be branded to meet enterprise and departmental needs? 
  • Can users control their own tasks, workflows, and approvals, or are these predefined and prebuilt by vendors?
  • Can requests be embedded in major ITSM, ERP, and application systems, or do users have to launch (and learn) a standalone application to make a service request?

Given the evolution of the managed services marketplace, you shouldn’t have to settle for anything less than a system with this level of flexibility. And for truly innovative outsourced service providers, these aren’t difficult challenges. Often such flexibility can require little more than having a business analyst flip a switch, change a parameter, or tweak a process. If your service provider tells you that innovation requires expensive programming, that provider is likely using obsolete application technologies and has a business built on maintaining the status quo.

Three Dimensions of Innovation

The simplest dictionary definition of innovation is “the introduction of something new.” When it comes to outsourced service providers, innovations typically fall into three categories: 

  • Those that emphasize service leadership, including tools that increase collaboration and enable the collaborative creation of services, allow controlled sensing and responding, can be integrated with other client applications, migrate value to new areas, and transform their clients’ business models. 
  • Those that emphasize operational excellence, including tools that can be deployed rapidly, automate processes, replicate efficiencies, drive out costs, enable rapid response to client issues, and provide self-service features. 
  • Those that emphasize customer intimacy, including tools that provide increased visibility, allow a greater degree of self-service, enhance the customer experience, provide interactive feedback, and allow for collaboratively created experiences.

Some business process automation outsourcers focus on just one area. That’s a good start, but the most innovative attempt to continually introduce “something new” in all three dimensions.
They do it: 

  • Through flexible configurability, with services that can be collaboratively created, are customer-centric and service-level driven, and can easily be integrated with other enterprise applications and services. These secure and stable services can be themed and branded for individual customers, configured to meet their workflow requirements, and created and delivered without programming code changes to the underlying service support platforms. 
  • Through self-service capabilities, with services that are transparent and visible to customers, managed and configured via a management console without modifying the underlying IT service support platform, and available to customers 24×7. 
  • Through scalability, by enabling services that are cost-effective and rapidly deployable, require no end-user licenses, and allow outsourcers to sense and respond to customer needs rapidly. As customer requirements change, additional capabilities can be activated and configured without risk.

Cost may still be the driving factor when making decisions about outsourcing, but in the current buyer’s market, you’ve got the right to expect a lot more. Your bottom line should be cost savings plus service provider innovation and differentiation. That’s the new reality of the outsourced services industry. And it’s making the benefits of outsourcing more appealing than ever.


John Sundberg is founder and president of Kinetic Data . During fifteen years of designing and managing successful, innovative information system implementations, he has been a lead architect, developer, or project manager, with extensive experience in large systems, distributed systems, and systems management. Prior to founding Kinetic Data, he worked for 3M, Programming Alternatives Inc., Wilson Learning, and as an independent consultant. John currently serves as president of the Minnesota chapter of the Association for Services Management International.

Tag(s): practices and processes, outsourcing, process management, business of support, sourcing


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