Digital transformation is having a tremendous impact on enterprises and the broader outsourcing market. Cloud computing, data analytics, automation, and the Internet of Things (IoT) are fundamentally changing how organization engage with customers, suppliers, partners, and even their internal staff.  

This “Digital Fabric” is the primary driver behind the major technology trends driving the outsourcing industry. Today’s CIOs do not use outsourcing to reduce costs – they are not driven by labor arbitrage or low cost regions. Today’s CIOs are adapting to an enterprise that demands speed to market, rapid innovation, and access to a wide range of skills -- all while addressing the security concerns of an increasingly complex world. Today’s CIOS are focused on driving new revenue streams by connecting the digital fabric of their organizations.

Weaving the digital fabric into the enterprise of tomorrow requires organizations to better integrate with their partners, including outsourcing vendors, to transform the digital enterprise. Organizations face many challenges as they embrace the Digital Transformation.  There are clearly the technical and organization change management hurdles, but I would categorize the three major challenges as Agility, Security, and Talent.

The first challenge is to create an organization that is truly agile. IT Organizations have to learn how to move quicker to make the decisions that are required in the digital age. This isn’t necessarily about agile software development and DevOps.  It’s really about enterprise agility. How do organizations make better decisions around demand management? How do organizations prioritize their digital agendas? How do organizations effectively learn to “fail fast” across an organization?

"IT Organizations have to learn how to move quicker to make the decisions that are required in the digital age"

The second major challenge is security.  As we embrace cloud computing, mobility, analytics, and the world becomes more connected, the security concerns become very real. Many IT organizations continue to take a “lock down” approach to security which impacts their agility and to a large extent doesn’t make them any more secure.  Tony Scott, CIO of the U.S. government, has publicly stated that he thinks the Public Cloud is now more secure than Private Cloud for most organizations that includes many internal data centers. Mr. Scott was quoted in Oct Google for Work webcast, "I see the big cloud providers in the same way I see a bank," he says. "They have the incentive, they have skills and abilities, and they have the motivation to do a much better job of security than any one company or any one organization can probably do."The concept of building a bigger moat, higher towers, or thicker walls is really not the way to go with security.

The third major challenge is talent. This may actually be the hardest because it requires a fundamental shift in how we think about talent. Over the last thirty years, we witnessed a race for talent. First it was focused on hiring the best local talent, but, as the outsourcing market exploded, it transitioned to hiring Service Providers with access to the best global talent. Today we are seeing a new paradigm, with the most successful enterprises integrating into a global community or startups, Service Providers, and independent contractors with the goals of integrating into a broader ecosystem. Today’s challenge is not how do I hire or source the best talent in the world, but how do I gain access to best thinking, best companies, latest innovations to drive my digital agenda forward?  Organizations no longer have to hire the resource or source the resource through traditional means.  Social media and collaborative technologies are fundamentally changing how we access talent.

The rapid adoption of outsourcing over the past twenty years in many ways has enabled the digital fabric. The outsourcing community will continue to provide a critical role in analytics, automation, mobility and many of the other technologies driving our future.  Enterprise agility and security are enhanced through the successful integration of Service Provider capabilities and the ability of Service Providers to continue to tap into the best talent in the world will continue to provide significant value for enterprises.