From Traditional to Cloud-Based Outsourced/Managed Services: Optimal Business Models for Multiprovider Management in Delivering Business Process and Application Services

  • Feb 2014
  • By IDC
  • 33 pages

From Traditional to Cloud-Based Outsourced/Managed Services: Optimal Business Models for Multiprovider Management in Delivering Business Process and Application Services

  • Feb 2014
  • By IDC
  • 33 pages

This IDC study provides a qualitative analysis of the potential opportunities for what IDC refers to as multiprovider management (MPM) but with a focus on "managed/outsourced" MPM services over the next 5-10 years. MPM managed (outsourced) services involve third-party providers offering buyers a 24 x 7 service by which the service provider/outsourcer manages the procurement of the actual outsourced/managed services, using an business support services-operational support services (BSS-OSS) set of capabilities, on behalf of a buyer across all types of service providers/outsourcers involving both traditionally delivered services (e.g., more labor oriented) and more highly automated environments referred to as cloud services. The types of providers examined in this study include enablers, aggregators, and integrator/operators. Additionally, the service areas this document focuses on involving business applications and processes (e.g., ERP, SCM, CRM, productivity, BI) as well as IT (e.g., server, storage, desktop/mobile) used by both small and large businesses. This document excludes the market for providing just content and media services (movies, books, magazines, etc.). The goal of this document is to provide a framework of analysis that answers the following three questions:

  • Optimal business model for MPM. What business model or models are optimal for buyers to use in managing multiple outsourcers and service providers across both traditionally delivered outsourcing-managed services and cloud-based outsourced/managed services?
  • Roles for enablers and aggregators. Is there a role for enablers and aggregators? If so, what should it be?
  • Impact of the integrator/operator model for service providers-outsourcers. What is the impact of the integrator/operator model on service providers/outsourcers offering an MPM set of managed services capabilities?

"Buyers are increasingly looking to gain greater control over all their outsourced business process and IT services whether using traditional delivery models (e.g., labor-based) or more automated services via the cloud, which is leading many suppliers to offer some type of what IDC refers to as an MPM set of capabilities that could range from in-house deployment of an MPM environment to using a managed MPM service and whose capabilities mimic those of the OSS and BSS management functionalities used in the telecommunications industry," said David Tapper, VP of Outsourcing, Managed, and Offshore Services at IDC. "Key for buyers and service providers/outsourcers is to understand the optimal MPM business model or models that buyers of outsourced services (both traditionally delivered and cloud based) will likely utilize in the short- and long-terms and to create a holistic framework of the variables that will shape the optimal MPM model that includes such factors as the structure of the buying organization's procurement and governance of business and IT, risks to both buyers and service providers, the end-state structure of the outsourcing industry as it evolves to cloud-based delivery, and the impact of event-driven markets."

Table of Contents

IDC Opinion

In This Study

Survey Methodology

Respondents and Interviews

Data Weighting and Calculations

Respondent Profile

Note on Document Focus

Executive Summary

Buyer Procurement and Governance Challenges in Using Service Providers and Outsourcers

Buyer Options for Multiprovider Management

Buying Organizations Need Centralized Governance and Procurement

Need for Integrated MPM Services: BSS-OSS

Optimal Business Model for MPM

Primary Buyer Reasons: Drivers Shaping Optimal Buyer and Provider Models for MPMOpportunities for Third-Party Providers of MPM Managed Services

Situation Overview

Shifting Market Dynamics: An Event-Driven World

Need for Business and Service Integration

Convergence of Traditional Outsourcing and Telecommunications: Creating a Common Platform to Ensure Business and Service Integration

Shift to Centralize Governance and Procurement of Outsourced/Managed Services

Buyer Expectations of Providers and Sourcing Structure

End-to-End Capabilities

Optimal Number of Providers

Shifting Providers

Future Outlook

Emerging Providers of MPM Managed Services

Impact of Shift to Cloud Service Providers on Enterprises for Multiprovider Management

Business and Operational Capabilities: Need for BSS-OSS for Cloud Services

Benefits and Challenges of MPM Options

Buyer and MPM Platform Provider Risk Profiles

Buyer Risk Assessment: Enterprise View

Evolution of Service Provider/Outsourcer Industry

From IT to Business Process: The Cloud Services Ecosystem

Essential Guidance



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Related Research


Table: Impact of Cloud on Converging Outsourcing and Telecommunications Management Functions

Table: Buyers: Benefits and Challenges of MPM Options

Table: Risks by Stakeholders

Figure: IDC Outsourced and Managed Services Survey Respondents by Company Size

Figure: MPM Options

Figure: Integrated MPM Services Requirements: BSS-OSS

Figure: Optimal Buyer Governance and Procurement Models: Small to Large Firms

Figure: Impact of Drivers on Need for Third-Party Providers of MPM Managed Services

Figure: Long-Term Evolution of Buyer Procurement Potential for Third-Party MPM Managed Services

Figure: Event-Driven Markets: Sense and Respond

Figure: The Value of Cloud Service Delivery: Impacts of a Changing "How" in Consuming and Delivering Services

Figure: Convergence of Key Traditional Outsourcing and Telecommunications Management Functions

Figure: U.S. Degree of Worldwide Centrally Managed IT Environment

Figure: U.S. Degree of Controlled Versus Shadow Spending on Cloud Services

Figure: U.S. Buyer Expectations of Outsourcers

Figure: U.S. Optimal Number of Providers Worldwide, 2012 and 2013

Figure: U.S. Shifting Providers: From Traditional Outsourcers to Pure-Play Cloud Providers

Figure: Impact on Governance and Management of Multiple Service Providers and Outsourcers

Figure: Stakeholders Risk Profile Using MPM Managed Services (BSS-OSS)

Figure: Evolution of Cloud Service Providers/Outsourcers

Figure: Aligning Cloud Service Provider Business Models and Their Ecosystems with Enterprise Ecosystems