There is no existential threat, such as Y2K, driving the transition to digital business, just the relentless pressure to reduce cost. Phil Fersht says that all the easy cost cuts have been made, so what’s left?
Drivers behind Digital Transformation
I think the first big challenge is supplier change and having a yearning platform change. So I was commenting at the moment there is no millennium bug, there is no dot.com bust, there is no great recession and there’s nothing hanging over our heads that is forcing us to make this change overnight.
So a lot of this is driven from the C-Suite in terms of what are we doing next to, you know, to find that next 20 or 30% wave of productivity improvement. Now in the last 10 years, you know we work in the outsourcing space a lot, but many clients can find 20, 30, 40, 50% price improvements, cost improvements just by shifting work to an outsourced model, taking advantage of lower cost offshore labor and that sort of thing, you know, particularly in locations like the Philippines and India are very popular.
And what’s happening now is many of these clients as the milk that low hanging fruit as much as they can. They’ve run out of wiggle room and they have moved as much IT offshore as they can, or finance or procurement, or HR and that sort of thing.
It’s a find that next wave of productivity improvement by having to look at actually transforming the business in the way of doing things. And the pressure from the C-Suite, and we’ve got really good data to show this, there’s 95% of clients today who are getting pressure from there C-Suite to find much deeper productivity improvements within their operations.
Clients today are still not happy with how they’re running things and they’re trying to find every new improvement. But that also means that the operations leaders, the CIOs, the CFO’s are looking at their business thinking, you can’t keep moving work offshore. We need to look at other ways of change, and that is the big impact that that’s, you know, the big question mark that’s hanging over many of our clients heads right now.