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Provider’s Operations
In resolving the Sourcing Dilemma for their customers, service providers need to resolve their own internal dilemma that guides their selection and defines their own methods of provisioning services to customers.
Competitive Advantage
Service providers must first identity their intended and real competitive advantages. The business model may involve wage arbitrage, technology leverage, process transformation, or all three. Sustainable competitive advantages require predicting and meeting customer demands with high level of resource utilization.
Proximity to Customers
Today, virtually all businesses compete with foreign competitors, whether or not they know it. Proximity to customers may therefore serve as a barrier to entry. The service provider’s provisioning model must therefore define territorial scope as well as industry focus.
“Best of Breed” vs. “Full Service”
Sourcing advisors regularly warn new enterprise customers of the risks and opportunities of selecting niche service providers (“best of breed”) in contrast to those that offer “full service” across multiple service sectors. When selecting a provisioning model, the service provider must position its offering within these categories. Over time, a “best of breed” today may pursue new opportunities in related fields, which could deplete resource reinvestment in the core niche or generate new revenues for such investments. For this reason, enterprise customers need to track the business evolution of their service providers, and service providers need to consider the impact of expansion upon their core clientele.
Maturity Levels of Sourcing Strategies
Virtual Captive: Build-Own-Operate-Transfer
Lease Financing
License Procurement
Provider’s Go-to-Market Readiness
Exit Strategy
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