Adventures in alliances land #14 – AI-Enhanced industry BPO part 5

5 New sales and delivery motion for strategic alliances

So, what do these four trends mean for consulting, outsourcing and systems integrations (COS) companies??

1.Blurring Industry Boundaries The distinctions between industry sectors are increasingly fading, opening opportunities for companies to offer cross-sector BPO services—even in domains where they may not have traditionally operated.

2.Growth of cloud Marketplaces The proliferation of cloud marketplaces provides both risk reduction and substantial economic advantages, creating a more favourable environment for AI-Enhanced industry BPO offerings.

3.Generative AI Disrupts Cost-Output Dynamics Generative AI is transforming the traditional cost-output relationship in business processes, enabling unprecedented efficiencies and scalability in BPO services.

4.Alignment of IP and Business Models for AI-Enhanced BPO The intellectual property and business models of consultants, outsourcers and systems integrators are optimized for AI-driven BPO, positioning them well to lead in this space.

Incidentally I've invented COS as new anagram for 'consulting, outsourcing and systems integration' companies because the more commonly used GSI for 'global system integrator' is not the most accurate label when some of the companies I'm referring to are neither global, nor systems integrators.

My prediction is there is a high growth market opportunity for AI-Enhanced industry BPO, and this will the highest growth motion for the strategic alliances for the next decade.? The new alliances sales & delivery motion that is emerging for COSs using cloud market places is shown in the fourth quadrant ‘COS as value integrator (MP)’.

Going through each of the motions in the wheel below we start with ‘1/customer as value integrator’.? This illustrates the customer doing the intellectual work of designing the tech enabled business transformation and leading the workstreams with their own staff. They purchase cloud and ISV products directly through separate channels, and the COS is providing resource augmentation on a time -&-materials basis.?

The second “2/COS as value orchestrator”.? In this motion the COS is leading and staffing the workstreams to deliver the transformation and is orchestrating the purchasing of the technology.? The customer is contracting with the technology vendors and paying them directly and the COS is managing the supply chain of technology via the customer’s contract.? As the technology contracts are not flowing through the COSs services prime contract they have limited financial and performance risk to carry.?

Motion three “3/COS as value integrator” shows the COS as being the only contract with the customer and is purchasing the technology in order to provide a fully managed service to the customer.? In this model the COS is receiving the total client budget for the project, but is also taking all the risks associated with the technology – credit, payment, availability, performance etc.? The COSs are probably also diluting their overall margin for the project.? This is because ‘margin stacking’ a normal consulting double digit gross margin on top of the technology costs which typically have single digit resell margins will appear expensive overall to the customer.?

The new AI-Enhanced motion is “4 COS as value realiser”.? This model could be engaged in one of two ways.? If the COS is managing the purchasing on behalf of the client through the CMP, but the transaction is not flowing through their books its similar to quadrant 2 the value orchestrator.? The added value to the enterprise end customer here is that the labour and technology costs should be lower via a few CMPs than via 100 direct contracts with different vendors.? This will result in a lower overall cost to the end customer.? The other way this fourth model could be deployed is the COS is using the CMP themselves and running the transaction through their books.? This model would be equivalent to quadrant ‘3 COS as value integrator’, but again you’d expect the costs to be lower because of the user of market places.? This would mean either the COS enjoys more margin, or they will pass the saving to the client and swap the margin for a higher win rate and higher market share.

Summary

In summary, over the next decade, AI-Enhanced industry BPO (Business Process Outsourcing) will emerge as the fastest-growing area for strategic alliances among consultants, outsourcers, systems integrators, and technology companies. This is due to four converging trends; 1.Blurring Industry Boundaries, 2.Growth of cloud Marketplaces, 3.Generative AI Disrupts Cost-Output Dynamics, 4.Alignment of IP and Business Models for AI-Enhanced BPO.

These factors collectively point toward AI-Enhanced industry BPO as a natural evolution for strategic alliances, set to drive significant growth over the coming decade.