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According to Dustin Kehoe, Principal Analyst at Current Analysis, transformational outsourcing can help companies reduce costs and bring their ICT landscape up to date.

Mr. Kehoe, why do you think transformational outsourcing is appealing to companies at the moment?
Dustin Kehoe: More than ever before, cutting costs is top of the agenda for businesses. This innovative outsourcing model enables companies to exploit new potential, that would not have been possible previously. When a provider not only takes over operation of IT but also revamps it, costs can be significantly reduced in a number of areas. Economies of scale enable providers to operate IT architectures much more cost effectively. A proportion of these savings can then be invested in modernizing the customer’s landscape. The new-look IT is leaner and business processes more streamlined, saving even more money.

Are there any further benefits?
Dustin Kehoe: Yes, greater efficiency. When companies transform their IT in this way, they benefit from the latest developments, for example Dynamic Services, which delivers resources flexibly in line with demand. In addition, a leaner IT landscape and virtualized resources help lower energy consumption. Instead of 100 servers, you may only need ten. We’ve noticed that transformational outsourcing is a hot topic at the moment. It gives companies the opportunity to streamline their processes and implement innovative new business models – without major capital investment. As a result, they will be well prepared when business picks up again in the future.

What is the key to success with this model?
Dustin Kehoe: Transformational outsourcing drills deep into business processes. Every industry and every organization requires its own tailor-made model. That means companies need an experienced, expert partner who understands their industry-specific needs. The basis for transformational outsourcing is a strong relationship and mutual trust between the service provider and the customer. When it comes to transformational outsourcing, you can’t afford to settle for second best.

What should companies look for?
Dustin Kehoe: Businesses have to ask: what experience does the provider have in our industry? What references can they offer? Can they provide nearshore and offshore services? Do they have the international delivery capability required? And very importantly, is the provider in a financially stable position in the long term? These are the key questions for me.

Do you think the market is ready for transformational outsourcing?
Dustin Kehoe: Yes, definitely. We’re currently witnessing a trend toward outsourcing in industries that were reluctant to do so at first. What’s more, in times of crisis, companies act more radically and start thinking about what they want to achieve. And they see IT as a strategic tool to help them work more flexibly and efficiently. Being able to scale resources up or down within 24 hours, for example with Dynamic Services, is very important right now – and it would not have been possible in the past.

Do you think T-Systems has got what it takes to help customers successfully implement transformational outsourcing projects?
Dustin Kehoe: Yes, T-Systems fulfils the key criteria: expertise in systems integration and infrastructures, an international presence, offshore resources and experience in a wide variety of industries. In many sectors, for example, automotive, T-Systems is already the leading IT provider. In others, skills need to be developed further. What’s more, as a subsidiary of Deutsche Telekom, T-Systems has the financial backing necessary to be successful. The key differentiator is the company’s expertise in telecommunications and networks. A network is at the heart of IT, if it fails, everything fails. So when it comes to transformational outsourcing, the more areas of expertise a service provider can offer the better.