Select a Sourcing Partner for Your Application Development Team

Choose the right partner to enable your firm to maximize the value realized from your sourcing strategy.

Analyst Perspective

Selecting the right partner for your sourcing needs is no longer a cost-based exercise. Driving long-term value comes from selecting the partner who best matches your firm on a wide swath of factors and fits your needs like a glove.

Sourcing in the past dealt with a different kind of conversation involving two key questions: Where will the work be done? How much will it cost? How people think about sourcing has changed significantly. People are focused on gaining a partner, and not just a vendor to execute a single transaction. They will add skills your team lacks, and an ability to adapt to your changing needs, all while ensuring you operate within any constraints based on your business. Selecting a sourcing partner is a matching exercise that requires you to look deep into yourself, understand key factors about your firm, and then seek the partner who best meets your profile.

Dr. Suneel Ghei Principal Research Director, Application Development Info-Tech Research Group

Executive Summary

Info-Tech Insight

Successfully selecting a sourcing partner is not a simple RFP exercise to choose the lowest cost. It is a complex process of introspection, detailed examination of partners and locations, and matching the fit. It requires you to seek a partner that is the Yin to your Yang, and failure is not an option.

You need a new source for development resources

You are facing immediate challenges that require a new approach to development resourcing.

• Your firm is under fire; you are facing pressures financially from clients and your competitors.
• Your pace of innovation and talent sourcing is too slow and too limiting.
• Your competition is moving faster and your clients are considering their options.
• Revenues and costs of development are trending in the wrong direction.
• You need to act now to avoid spiraling further.

Given how critical our applications are to the business and our clients, there is no room for error in choosing our partner.

A study of 121 firms outsourcing various processes found that 50% of those surveyed saw no gains from the outsourcing arrangement, so it is critical to make the right choice the first time.

Source: Zhang et al

Big challenges await you on the journey

The road to improving sourcing has many potholes.

• In a study of 121 firms who moved development offshore, almost 50% of all outsourcing and offshoring initiatives do not achieve the desired results.
• In another study focused on large corporations, it was shown that 70% of respondents saw negative outcomes from offshoring development.
• Globalization of IT Services and the ability to work from anywhere have contributed to a significant increase in the number of development firms to choose from.
• Choosing and implementing a new partner is costly, and the cost of choosing the wrong partner and then trying to correct your course is significant in dollars and reputation:
  • Costs to find a new partner and transition
  • Lost revenue due to product issues
  • Loss of brand and reputation due to poor choice
• The wrong choice can also cost you in terms of your own resources, increasing the risk of losing more knowledge and skills.

A survey of 25 large corporate firms that outsourced development offshore found that 70% of them had negative outcomes.

(Source: University of Oregon Applied Information Management, 2019)

Info-Tech’s approach

Selecting the right partner is a matching exercise.

Selecting the right partner is a complex exercise with many factors

1. Look inward. Assess your culture, your skills, and your needs.

• Market
• People
• Culture
• Technical aspects

• Sourcing Strategy
• Priorities
• Profile

• Define RFx
• Target Partners
• Evaluate

• Contract Partner
• Develop Goals
• Create Process and Metrics

The Info-Tech difference:

1. Assess your own organization’s characteristics and capabilities in four key areas.
2. Based on these characteristics and the sourcing strategy you are seeking to implement, build a profile for your perfect partner.
3. Define an RFx and assessment matrix to survey the market and select the best partner.
4. Implement the partner with process and controls to manage the relationship, built collaboratively and in place day 1.

Insight summary

Addressing the myth – Single country offshoring or outsourcing

Research shows that a multi-country approach has a higher chance of success.

• Research shows that firms trying their own captive development centers fail 20% of the time. ( Journal of Information Technology, 2008)
• Further, the overall cost of ownership for an offshore center has shown to be significantly higher than the cost of outsourcing, as the offshore center requires more internal management and leadership.
• Research shows that offshoring requires the offshore location to also house business team members to allow key relationships to be built and ensure more access to expertise. (Arxiv, 2021)
• Given the specificity of employment laws, cultural differences, and leadership needs, it is very beneficial to have a Corporate HR presence in countries where an offshore center is being set up. (Arxiv, 2021)
• Lastly, given the changing climate on security, geopolitical changes, and economic factors, our research with service providers and corporate clients shows a need to have more diversity in provider location than a single center can provide.

Info-Tech Insight

Long-term success of sourcing requires more than a development center. It requires a location that houses business and HR staff to enable the new development team to learn and succeed.

Addressing the myth – Outsourcing is a simple RFP for skills and lowest cost

Success in outsourcing is an exercise in finding a match based on complex factors.

• In the past, outsourcing was a simple RFP exercise to find the cheapest country with the skills.
• Our research shows this is no longer true; the decision is now more complex.
• Competition has driven costs higher, while time business integration and security constraints have served to limit the markets available.
• Company culture fit is key to the ability to work as one team, which research shows is a key element in delivery of long-term value. (University of Oregon, 2019).
• These are some of the many factors that need to be considered as you choose your outsourcing partner.
• The right decision is to find the vendor that best matches the current state of your culture, meets your market constraints, and will allow for best integration to your team – it's not about cheapest or pure skills. (IEEE Access, 2020)

Info-Tech Insight

Finding the right outsourcing vendor is an exercise in knowing yourself and then finding the best match to align with your key traits. It's not just costs and skills, but the partner who best matches with your ability to mitigate the risks of outsourcing.

Phase 1

Look inward to gain insight on key factors

This phase will walk you through assessing and documenting the key driving factors about your firm and the current situation.

By defining these factors, you will be able to apply this information in the matching process to select the best fit in a partner.

This phase involves the following participants:

Line of Business leaders

Technology leaders

Key criteria to assess your firm

Research shows firms must assess themselves in different areas.

Market factors

• Who are your clients and your competitors, and what legal constraints do you face?

People / Process factors

• What employee skills are you seeking, what is your maturity in product management and stakeholder engagement, and what languages are spoken most predominantly?

Cultural factors

• What is your culture around communications, collaboration, change management, and conflict resolution?

Technical factors

• What is your current / future technical platform, and what is the maturity of your applications?

Info-Tech Best Practice

When assessing these areas, consider where you are today and where you want to go tomorrow, as choosing a partner is a long-term endeavor.

Step 1.1

Assess your market factors

Activities

1.1.1 Review your client list and future projections to determine your market factors.

1.1.2 Review your competitive analysis to determine your competitive factors

This step involves the following participants:

Business leaders

Product Owners

Technology leaders

Outcomes of this step

Details of key market factors that will drive the selection of the right partner.

Market factors

The Market has a lot to say about the best match for your application development partner.

Research in the space has defined key market-based factors that are critical when selecting a partner.

1. Market sectors you service or plan to service – This is critical, as many market sectors have constraints on where their data can be accessed or stored. These restrictions also change over time, so they must be consistently reviewed.

• E.g. Canadian government data must be stored and only accessed in Canada.
• E.g. US Government contracts require service providers to avoid certain countries.

Info-Tech Insight

Understanding your current and future market factors ensure that your business can not only be successful with the chosen partner today, but also in the future.

1.1.1 Assess your market factors

30 min

Market factors

1. Group your current client list into three categories:
   1. Those that have no restrictions on data security, privacy or location.
   2. Those that ask for assurances on data security, privacy and location.
   3. Those clients who have compliance restrictions related to data security, privacy, and location.
2. Categorize future markets into the same three categories.
3. Based on revenue projections, estimate the revenue from each category as a percentage of your total revenue.

Download the Select a Sourcing Partner Presentation Template

Assess your market factors

1.1.2 Review your competitive factors

30 min

Competitive factors

1. List your largest competitors.
2. Document their sourcing strategies for their development team – are they all onshore or nearshore? Do they outsource?
3. Based on this, identify competitive threats based on changing sourcing strategies.

Download the Select a Sourcing Partner Presentation Template

Review your competitive factors

Step 1.2

Consider your people-related factors

Activities

1.2.1 Define your people factors

1.2.2 Assess your process factors

This step involves the following participants:

Technical leaders

Outcomes of this step

Details of key people factors that will drive the selection of the right partner.

People / process factors

People and process have a large hand in the success or failure of a partner relationship.

• Alignment of people and process are critical to the success of the partner relationship over the long term.
• In research on outsourcing / offshoring, Rahman et al identified ten factors that directly impact success or failure in offshoring or outsourcing of development.
• Key among them are the following:
  • Employee skills
  • Project management
  • Maturity of process concerning product and client management
  • Language barrier

Info-Tech Insight

People are a critical resource in any sourcing strategy. Making sure the people and the processes will mesh seamlessly is how to ensure success.

1.2.1 Define your people factors

30 min

Skills Inventory

1. List skills needed in the development team to service current needs.
2. Based on future innovation and product direction, add skills you foresee needing in the next 12-24 months. Where do you see a new technology platform (e.g. move from .NET to Java) or innovation (addition of Mobile)?
3. List current skills present in the team.
4. Identify skills gaps.

Download the Select a Sourcing Partner Presentation Template

Assess your people - Skills inventory

1.2.2 Assess your process factors

30 min

Process factors

1. Do you have a defined product ownership practice?
2. How mature is the product ownership for the product you are seeking to change sourcing for (H/M/L)?
3. Do you have project management principles and governance in place for software releases?
4. What is the relative maturity / skill in the areas you are seeking sourcing for (H/M/L)?

Download the Select a Sourcing Partner Presentation Template

Assess your process factors

Step 1.3

Review your current culture

Activities

1.3.1 Assess your communications factors

1.3.2 Assess your conflict resolution factors

This step involves the following participants:

Technical leaders

Product owners

Project managers

Outcomes of this step

Details of key culture factors that will drive the selection of the right partner.

Cultural factors

Organization culture fit is a driver of collaboration between the teams, which drives success.

• In their study of country attractiveness for sourcing development, Kotlarsky and Oshri point to the ability of the client and their sourcing partner to work as one team as a key to success.
• This requires synergies in many cultural factors to avoid costly miscommunications and misinterpretations that damage collaboration.
• Key factors in achieving this are:
  • Communications methodology and frequency; managing and communicating to the teams as one team vs two, and communicating at all levels, vs top down.
  • Managing the team as one integrated team, with collaboration enabled between all resources, rather than the more adversarial client vs partner approach.
  • Conflict resolution strategies must align so all members of the extended team work together to resolve conflict vs the traditional “Blame the Contractors”.
  • Strong change management is required to keep all team members aligned.

Info-Tech Insight

Synergy of culture is what enables a good partner selection to become a long-term relationship of value.

1.3.1 Assess your communications factors

30 min

1. List all the methods you use to communicate with your development team – face to face, email, conference call, written.
2. For each form of communication confirm frequency, medium, and audience (team vs one-on-one)
3. Confirm if these communications take into account External vs Internal resources and different time zones, languages, and cultures.
4. Is your development team broken up into teams by function, by location, by skill, etc., or do you operate as one team?

Download the Select a Sourcing Partner Presentation Template

Assess your communications strategy

1.3.2 Assess your conflict resolution factors

30 min

1. How does your organization handle the following types of conflict? Rate from 1-5, with 1 being hierarchical and 5 being openly collaborative.
   1. Developers on a team disagree.
   2. Development team disagrees with manager.
   3. Development team disagrees with product owner.
   4. Development team disagrees with line of business.
2. Rate each conflict resolution strategy based on effectiveness.
3. Confirm if this type of strategy is used for internal and external resources, or internal only.

Download the Select a Sourcing Partner Presentation Template

Assess your conflict resolution strategy

Step 1.4

Document your technical factors

Activities

1.4.1 Document your product / platform factors

1.4.2 Document your environment details

This step involves the following participants:

Technical leaders

Product owners

Outcomes of this step

Details of key technical factors that will drive the selection of the right partner.

Technical factors

Technical factors are still the foundation for a Development sourcing relationship.

• While there are many organizational factors to consider, the matching of technological factors is still the root on which the sourcing relationship is built; the end goal is to build better software.
• Key technical Items that need to be aligned based on the research are:
  • Technical infrastructure
  • Development environments
  • Development methodology and tools
  • Deployment methodology and tools
  • Lack of/poor-quality technical documentation
• Most RFPs focus purely on skills, but without alignment on the above items, work becomes impossible to move forward quickly, limiting the chances of success.

Info-Tech Insight

Technical factors are the glue that enables teams to function together. Ensuring that they are fully integrated is what enables team integration; seams in that integration represent failure points.

1.4.1 Document your product / platform factors

30 mins

1. How many environments does each software release go through from the start of development through release to production?
2. What is the infrastructure and development platform?

Download the Select a Sourcing Partner Presentation Template

Document your product / platform

1.4.2 Document your environment details

30 min

For each environment detail the following:

1. Environment on premises or in cloud
2. Access allowed to external parties
3. Production data present and unmasked
4. Deployment process: automated or manual
5. Tools used for automated deployment
6. Can the environment be restored to last known state automatically?
7. Does documentation exist on the environment, processes and procedures?

Download the Select a Sourcing Partner Presentation Template

Document Your Environment Details

Phase 2

This phase will help you to build a profile of the partner you should target in your search for a sourcing partner.

This phase involves the following participants:

Technology leaders

Procurement leaders

Product owners

Project managers

Build a profile for the right partner

• Finding the perfect partner is a puzzle to solve, an exercise between the firm and the partners.
• It is necessary to be able to prioritize and to identify opportunities where you can adapt to create a fit.
• You must also bring forward the sourcing model you are seeking and prioritize factors based on that; for example, if you are seeking a nearshore partner, language may be less of a factor.

Review factors based on sourcing choice

Different factors are more important depending on whether you are insourcing or outsourcing.

Key risks for insourcing

• Alignment on communication strategy and method
• Ability to align culturally
• Need for face-to-face relationship building
• Need for coaching skills

Key risks for outsourcing

• Giving control to the vendor
• Legal and regulatory issues
• Lack of knowledge at the vendor
• Language and cultural fit

Assessing your firm's position

• The model you derived from the Sourcing Strategy research will inform the prioritization of factors for matching partners.

Info-Tech Insight

To find the best location for insourcing, or the best vendor for outsourcing, you need to identify your firm's positions on key risk areas.

Step 2.1

Recall your sourcing strategy

Activities

2.1.1 Define the key factors in your sourcing strategy

This step involves the following participants:

Technology Leaders

Outcomes of this step

Documentation of the Sourcing Strategy you arrived at in the Define a Sourcing Strategy exercises

Choosing the right model

Determinant	Key Questions to Ask	Onshore	Nearshore	Offshore	Outsource role(s)	Outsource team	Outsource product(s)
Business dependence	How much do you rely on business resources during the development cycle?
Absorptive capacity	How successful has the organization been at bringing outside knowledge back into the firm?
Integration complexity	How many integrations are required for the product to function – fewer than 5, 5-10, or more than 10?
Product ownership	Do you have full-time product owners in place for the products? Do product owners have control of their roadmaps?
Organization culture fit	What are your organization’s communication and conflict resolution strategies? Is your organization geographically dispersed?
Vendor mgmt skills	What is your skill level in vendor management? How old are your longest-standing vendor relationships?

2.1.1 Define the key factors in your sourcing strategy

30 min

For each product you are seeking a sourcing strategy for, document the following:

1. Product or team name.
2. Sourcing strategy based on Define a Sourcing Strategy.
3. The primary drivers that led to this selection – Business Dependence, Absorptive Capacity, Integration Complexity, Product Ownership, Culture or Vendor Management.
4. The reasoning for the selection based on that factor – e.g. we chose nearshoring based on high business dependence by our development team.

Download the Select a Sourcing Partner Presentation Template

Define sourcing strategy factors

Step 2.2

Prioritize your company factors

Activities

2.2.1 Prioritize the factors from your sourcing strategy and confirm if mitigation or adaptation are possible.

This step involves the following participants:

IT Leadership team

Outcomes of this step

Prioritized list of key factors

2.2.1 Prioritize your sourcing strategy factors

30 min

1. For each of the factors listed in exercise 2.1, prioritize them by importance to the firm.
2. For each factor, please confirm if there is room to drive change internally to overcome the lack of a match – for example, if the culture being changed in language and conflict resolution is an option, then say Yes for that factor.

Download the Select a Sourcing Partner Presentation Template

Sourcing strategy factors and priority

Step 2.3

Create target profile

Activities

2.3.1 Profile your best fit

This step involves the following participants:

IT Leadership team

Outcomes of this step

Profile of the target partner

Profiling your best fit

Creating a target profile will help you determine which partners should be included in the process.

Given the complexity of all the factors and trying to find the best fit from a multitude of partners, Info-Tech recommends forming a target profile for your best fit of partner.

This profile provides a detailed assessment matrix to use to review potential partners.

Profile should be created based on priority; "must haves" are high priority, while properties that have mitigation opportunities are optional or lower priority.

Partner Profile

• Teams in NATO and non-NATO countries
• Windows skills with Azure
• Financial Services experience
• Utilize Agile and willing to plug into our teams
• Used to collaborating with clients in one team environment
• One centre in Latin / South America

Info-Tech Insight

The factors we have defined serve to build us a profile for the ideal partner to engage in sourcing our development team. This profile will lead us to be able to define our RFP / RFI and assess respondents.

Case study: Cognizant is partnering with clients on product development

INDUSTRY: Technology Services

SOURCE: Interview with Jay MacIsaac, Cognizant

Cognizant is driving quality solutions for clients

• Strives to be primarily an industry-aligned organization that delivers multiple service lines in multiple geographies.
• Seeks to carefully consider client culture to create one team.
• Value proposition is a consultative approach bringing thought leadership and mutually adding value to the relationship vs the more traditional order taker development partner
• Wants to share in solution development to facilitate shared successes. Geographic alignment drives knowledge of the client and their challenges, not just about time zone and supportability.
• Offers one of the largest offshore capabilities in the world, supported by local and nearshore resources to drive local knowledge.
• Realizes today’s clients don’t typically want a black box, they are sophisticated and want transparency around the process and solution, to have a partner.
• Understands that clients do want to know where the work is being delivered from and how it's being delivered, and want to help manage expectations and overall risk.

Synergy with Info-Tech’s approach

• Best relationship comes when teams operate as one.
• Clients are seeking value, not a development black box.
• Clients want to have a partner they can engage with, not just an order taker.
• Goal is a one-team culture with shared goals and delivering business value.
• Ideal is a partner that will add to their thinking, not echo it.

Results of this approach

• Cognizant is continuing to deliver double-digit growth and continues to strive for top quartile performance.
• Growth in the client base has seen the company grow to over 340,000 associates worldwide.

Case study: Cabot Technology Solutions uses industry knowledge to drive successful partnerships

INDUSTRY: Technology Services

SOURCE: Interview with Shibu Basheer, Cabot Technology Solutions

Cabot Technology Solutions findings

• Cabot Technology Solutions looks to partner with clients and deliver expertise and value, not just application development.
  • Focus on building deep knowledge in their chosen vertical, Healthcare.
  • Focus on partnering with clients in this space who are seeking a partner to provide industry knowledge and use this to propel them forward.
  • Look to work with clients seeking a one team philosophy.
  • Avoid clients looking for a cheap provider.
• Recognizing the initial apprehension to India as a location, they have built a practice in Ontario that serves as a bridge for their offshore team.
• Cabot overcame initial views and built trust, while integrating the India team in parallel.

Synergy with Info-Tech approach

• Preference is partners, not a client/vendor relationship.
• Single country model is set aside in favor of mix of near and offshore.
• Culture is a one team approach, not the more adversarial order-taker approach.
• Goal is to build long-term relationships of value, not task management.

Results of this approach

• Cabot is a recognized as a top software development company in many markets across the USA.
• Cabot continues to drive growth and build referenceable client relationships across North America.

2.3.1 Profile your best fit

30 min

1. Document the list of skills you are seeking from the People Factors – Skills Inventory in Section 1.2 – these represent the skills you are seeking in a partner.
2. Document the culture you are looking for in a partner with respect to communications and conflict resolution in the culture section of the requirements – this comes from Section 1.3.
3. Confirm the type of partner you are seeking – nearshore, offshore, or outsourcing based on the sourcing strategy priorities in Section 2.2.
4. Confirm constraints that the partner must work under based on constraints from your market and competitor factors in Section 1.1.
5. Confirm your technical requirements in terms of environments, tools, and processes that the vendor must align to from Section 1.4.

Download the Select a Sourcing Partner Presentation Template

RFP skills requirement

RFx cultural characteristics

RFx market constraints

RFx technical requirements

RFx scope of services

Phase 3

Choose the partner that will best enable you to move forward as one integrated team.

For more details on Partner Selection, please refer to our research blueprint entitled Select an ERP Partner

This phase will help you define your RFx for your provider search

This phase involves the following participants:

Vendor Management Team

IT Leadership

Finance Team

Finding the right fit should always come before rates to determine value

Statement of Work (SOW) quality

A quality SOW is the result of a quality RFI/RFP (RFx).

The process up to now has been gathering the materials needed to build a quality RFx. Take this opportunity to review the outputs of the preceding activities to ensure that:

• All the right stake holders have been engaged.
• The requirements are complete.

Info-Tech’s RFP Review as a Service looks for key items to ensure your RFx will generate quality responses and SOWs.

• Is it well-structured with a consistent use of fonts and bullets?
• Is it laid out in sections that are easily identifiable and progress from high-level to more detailed information?
• Can a vendor quickly identify the ten (or fewer) things that are most important to you?

Step 3.1

Review your RFx

Activities

3.1.1 Select your RFx template

3.1.2 Finalize your RFx

3.1.3 Weight each evaluation criteria

This step involves the following participants:

• Project team
• Evaluation team
• Vendor management team
• CIO

Outcomes of this step

• Completed RFx

Info-Tech’s RFI/RFP process

Info-Tech has well-established vendor management templates and practices

• Identify Need
• Define Business Requirements
• Gain Business Authorization
• Perform RFI/RFP
• Negotiate Agreement
• Purchase Goods and Services
• Assess and Measure Performance

Info-Tech Best Practice

You’ll want to customize templates for your organization, but we strongly suggest that you take whatever you feel best meets your needs from both the long- and short-form RFPs presented in this blueprint.

The secret to managing an RFP is to make it manageable. And the secret to making an RFP manageable is to treat it like any other aspect of business – by developing a process. With a process in place, you are better able to handle whatever comes your way, because you know the steps you need to follow to produce a top-notch RFP.

Your RFP process should be tailored to fit the needs and specifics of your organization and IT.

Info-Tech Insight

Create a better RFP process using Info-Tech’s well-established templates and methodology.

Create a Better RFP Process

In a hurry? Consider an enhanced RFI instead of an RFP.

While many organizations rarely use RFIs, they can be an effective tool in the vendor manager’s toolbox when used at the right time in the right way. RFIs can be deployed in competitive targeted negotiations. An enhanced RFI (ERFI) is a two-stage strategy that speeds up the typical RFP process. The first stage is like an RFI on steroids, and the second stage is targeted competitive negotiation.

Stage 1:

Create an RFI with all the customary components. Next, add a few additional RFP-like requirements (e.g. operational and technical requirements). Make sure you include a request for budgetary pricing and provide any significant features and functionality requirements so that the vendors have enough information to propose solutions. In addition, allow the vendors to ask questions through your single point of coordination and share answers with all the vendors. Finally, notify the vendors that you will not be doing an RFP – this is it!

Stage 2:

Review the vendors’ proposals and select the best two. Negotiate with both vendors and then make your decision.

The ERFI shortens the typical RFP process, maintains leverage for your organization, and works great with low- to medium-spend items (however your organization defines them). You’ll get clarification on vendors’ competencies and capabilities, obtain a fair market price, and meet your internal clients’ aggressive timelines while still taking steps to protect your organization.

RFI Template

Use this template to create your RFI baseline template. Be sure to modify and configure the template to your organization’s specifications.

Request for Information Template

Long-Form RFP Template

Configure Info-Tech’s Long-Form RFP Template for major initiatives

A long-form or major RFP is an excellent tool for more complex and complicated requirements. This example is for a baseline RFP.

It starts with best-in-class RFP terms and conditions that are essential to maintaining your control throughout the RFP process. The specific requirements for the business, functional, technical, and pricing areas should be included in the exhibits at the end of the template. That makes it easier to tailor the RFP for each deal, since you and your team can quickly identify specific areas that need modification. Grouping the exhibits together also makes it convenient for both your team to review, and the vendors to respond.

You can use this sample RFP as the basis for your template RFP, taking it all as is or picking and choosing the sections that best meet the mission and objectives of the RFP and your organization.

Source: Info-Tech’s The Art of Creating a Quality RFP

Short-Form RFP Template

Configure Info-Tech’s Short-Form RFP Template for minor or smaller initiatives

This example is for a less complex RFP that has relatively basic requirements and perhaps a small window in which the vendors can respond. As with the long-form RFP, exhibits are placed at the end of the RFP, an arrangement that saves time for both your team and the vendors. Of course, the short-form RFP contains fewer specific instructions, guidelines, and rules for vendors’ proposal submissions.

We find that short-form RFPs are a good choice when you need to use something more than a request for quote (RFQ) but less than an RFP running 20 or more pages. It’s ideal, for example, when you want to send an RFP to only one vendor or to acquire items such as office supplies, contingent labor, or commodity items that require significant vendor's risk assessment.

Source: The Art of Creating a Quality RFP

3.1.1 Select your RFx template

1-3 hours

1. As a group, download the RFx templates from the previous three slides.
2. Review your RFx process as a group. Be sure to include the vendor management team.
3. Be sure to consider organization-specific procurement guidelines. These can be included. The objective here is to find the template that is the best fit. We will finalize the template in the next activity.
4. Determine the best template for this project.

Finalize your RFx

Key insights

Leverage the power of the RFP

• Too often RFPs fail to achieve their intended purposes, and your organization feels the effects of a poorly created RFP for many years.
• If you are faced with a single source vendor, you can perform an RFP to one to create the competitive leverage.

Make the response and evaluation process easier

• Being strategic in your wording and formatting makes it easier on both parties – easier for the vendors to submit meaningful proposals, and easier for customer teams to evaluate.
• Create a level playing field to encourage competition. Without multiple proposals, your options are limited and your chances for a successful project plummet.

Maximize the competition

• Leverage a pre-proposal conference to resolve vendor questions and to ensure all vendors receive the same answers to all questions. No vendor should have an information advantage.

Do’s

• Leverage your team’s knowledge.
• Document and explain your RFP process to stakeholders and vendors.
• Include contract terms in your RFP.
• Measure and manage performance after contract award.
• Seek feedback from the RFP team on your process and improve it as necessary.

Don'ts

• Reveal your budget.
• Do an RFP in a vacuum.
• Send an RFP to a vendor your team is not willing to award the business to.
• Hold separate conversations with candidate vendors during your RFP process.
• Skimp on the requirements definition to speed the process.
• Tell the vendor they are selected before negotiating.

3.1.2 Finalize your RFx

1-3 hours

1. As a group, review the selected RFI or RFP template.
2. This is YOUR document. Modify it to suit the needs of the organization and even add sections from the other RFP templates that are relevant to your project.
3. Use the Supplementary RFx Material as a guide.
4. Add the content created in Steps 1 and 2.
5. Add any organization-specific clauses or requirements.
6. Have the project team review and comment on the RFP.
7. Optional: Use Info-Tech’s RFP Review Concierge Service.

Download the RFx Vendor Evaluation Tool

Download the Supplementary RFx Material

3.1.2 Bring it all together

Supplementary RFx Material		Review the sample content to get a feel for how to incorporate the results of the activities you have worked through into the RFx template.	⇒	RFx Templates Use one of our templates to build a ready-for-distribution implementation partner RFx tailored to the unique success factors of your implementation.
Exercises in Steps 1 and 2		Use the material gathered during each activity to inform and populate the implementation partner requirements that are specific for your organization and project.

3.1.3 Weight each evaluation criteria

1-3 hours

1. As a group, review the selected RFI or RFP template.
2. This is your document. Modify it to suit the needs of the organization and even add sections from the other RFP templates that are relevant to your project.
3. Use the Supplementary RFx Material as a guide.
4. Utilize the content defined in Steps 1 and 2.
5. Add any organization-specific clauses or requirements.
6. Have the project team review and comment on the RFP.
7. Optional: Use Info-Tech’s RFP Review Concierge Service.

Download the Supplementary RFx Material

3.1.3 Apply weight to each evaluation criteria

Use this tool to weight each critical success factor based on results of the activities within the vendor selection workbook for later scoring results.

Download the RFx Vendor Evaluation Tool

Step 3.2

Identify target vendors

Activities

3.2.1 Identify target vendors

3.2.2 Define your RFx timeline

This step involves the following participants:

• Project team
• Vendor management team

Outcomes of this step

• Targeted vendor list
• Initial RFx timeline

3.2.1 Identify target vendors

1-3 hours

1. Based on the profile defined in Step 2.3, research potential partners that fit the profile, starting with those you may have used in the past. From this, build your initial list of vendors to target with your RFx.
2. Break into smaller groups (or continue as a single group if it is already small) and review each shortlisted vendor to see if they will likely respond to the RFx.

Download the RFx Vendor Evaluation Tool

Define your RFx timeline

Provider RFx timelines need to be clearly defined to keep the project and participants on track. These projects and processes can be long. Set yourself up for success by identifying the time frames clearly and communicating them to participants.

1. Current

• Concurrent ERP product selection
• RFx preparation
• Release of RFX

• Responses received
• Scoring responses
• Shortlisting providers
• Provider interviews
• Provider selection
• Provider contract negotiations
• Contract with provider

• Initiation of knowledge transfer
• Joint development period
• Cutover to provider team

89% of roadmap views have at least some representation of time. (Roadmunk, n.d.)

Info-Tech Insight

The true value of time horizons is in dividing your timeline and applying different standards and rules, which allows you to speak to different audiences and achieve different communication objectives.

3.2.2 Define your RFx timeline

1-3 hours

1. As a group identify an appropriate timeline for your RFP process. Info-Tech recommends no less than three months from RFx release to contract signing.
   
   Keep in mind that you need to allow for time to engage the team and perform some level of knowledge transfer, and to seed the team with internal resources for the initial period.
2. Leave enough time for vendor responses, interviews, and reference checks.
3. Once the timeline is finalized, document it and communicate it to the organization.

Download the RFx Vendor Evaluation Tool

Define your RFx timeline

Step 3.3

Evaluate vendor responses

Activities

3.3.1 Evaluate responses

This step involves the following participants:

• Evaluation team

Outcomes of this step

• Vendor submission scores

3.3.1 Evaluate responses

1-3 hours

1. Use the RFx Vendor Evaluation Tool to collect and record the evaluation team's scores for each vendor's response to your RFx.
2. Then record and compare each team member's scores to rank the vendors' responses.
3. The higher the score, the closer the fit.

Download the RFx Vendor Evaluation Tool

3.3.1 Score vendor results

Use the RFx Vendor Evaluation Tool to score the vendors' responses to your RFx using the weighted scale from Activity 3.1.3.

Download the RFx Vendor Evaluation Tool

Phase 4

Measuring the new relationship

This phase will allow you to define the relationship with your newly chosen partner, including choosing the right contract mechanism, defining shared goals for the relationship, and selecting the metrics and processes to measure performance.

This phase involves the following participants:

IT leadership

Procurement team

Product owners

Project managers

Implementing the Partner

Implementing the new partner is an exercise in collaboration

• Successfully implementing your new partner is an exercise in working together

1. Define a contract mechanism that is appropriate for the relationship, but is not meant as punitive, contract-based management – this sets you up for failure.
2. Engage with your team and your partner as one team to build shared, measurable goals
3. Work with the team to define the metrics and processes by which progress against these goals will be measured

Info-Tech Insight

Implement the relationship the same way you want it to work: as one team. Work together on contract mechanism, shared goals, metrics, and performance measurement. This transparency and collaboration will build a one team view, leading to long-term success.

Step 4.1

Engage partner to choose contract mechanism

Activities

4.1.1 Confirm your contract mechanism

This step involves the following participants:

IT leadership

Procurement team

Vendor team

Outcomes of this step

Contract between the vendor and the firm for the services

Negotiate agreement

Evaluate your RFP responses to see if they are complete and if the vendor followed your instructions.

Leverage ITRG's negotiation process research for additional information

For more details on this process please see our research Drive Successful Sourcing Outcomes with a Robust RFP Process

4.1.1 Confirm your contract mechanism

30 min

1. Does the firm have prior experience with this type of sourcing arrangement?
2. Does the firm have an existing services agreement with the selected partner?
3. What contract mechanisms have been used in the past for these types of arrangements?
4. What mechanism was proposed by the partner in their RFP response?

Download the Select a Sourcing Partner Presentation Template

Choose the appropriate contract method

Step 4.2

Engage partner team to define shared goals

Activities

4.2.1 Define your shared goals

This step involves the following participants:

IT leadership

Vendor leadership

Outcomes of this step

Shared goals for the team

Define success and shared goals

Work together to define how you will measure yourselves.

One team

• Treating the new center and the existing team as one team is critical to long-term success.
• Having a plan that allows for teams to meet frequently face-to-face "get to know you" and "stay connected" sessions will help the team gel.

Shared goals

• New group must share common goals and measurements.

Common understanding

• New team must have a common understanding and culture on key facets such as:
  • Measurement of quality
  • Openness to feedback and knowledge sharing
  • Culture of collaboration
  • Issue and Risk Management

4.2.1 Define your shared goals

30 min

1. List each item in the scope of work for the sourcing arrangement – e.g. development of product XXX.
2. For each scope item, detail the benefit expected by the firm – e.g. development cost expected to drop by 10% per year, or customer satisfaction improvement.
3. For each benefit define how you will measure success – e.g. track cost of development for the development team assigned, or track Customer Satisfaction Survey results.
4. For each measure, define a target for this year – e.g. 10% decrease over last year's cost, or customer satisfaction improvement from 6 to 7.

Download the Select a Sourcing Partner Presentation Template

Define goals collaboratively

Step 4.3

Choose your success metrics

Activities

4,3.1 Define metrics and process to monitor

This step involves the following participants:

IT leadership

Product owners

Project managers

Vendor leaders

Outcomes of this step

Metrics and process to measure performance

4.3.1 Define metrics and process to monitor

30 min

1. For each goal defined and measure of success, break down the measure into quantifiable, measurable factors – e.g. Development cost is defined as all the costs tracked to the project including development, deployment, project management, etc.
2. For each factor choose the metric that can be reported on – e.g. project actuals.
3. For each metric define the report and reporting frequency – e.g. monthly project actuals from project manager.

Download the Select a Sourcing Partner Presentation Template

Agreed-upon metrics

Research Contributor

Alaisdar Graham Executive Counsellor Info-Tech Research Group

During Alaisdar’s 35-year career in information and operational technology, Alaisdar has been CIO for public sector organizations and private sector companies. He has been an entrepreneur with his own consultancy and a founder or business advisor with four cyber-security start-ups, Alaisdar has developed experience across a broad range of industries within a number of different countries and become known for his ability to drive business benefits and improvements through the use of technology. Alaisdar has worked with CXO-level executives across different businesses. Whether undertaking a digital transformation, building and improving IT functions across your span of control, or helping you create and execute an integrated technology strategy, Alaisdar can provide insight while introducing you to Info-Tech Research Group’s experts. Alaisdar’s experience with organizational turn- around, governance, project, program and portfolio management, change management, risk and security will support your organization’s success.

Research Contributor

Richard Nachazel Executive Counsellor Info-Tech Research Group

Richard has more than 40 years working in various Fortune 500 organizations. His specialties are collaborating with business and IT executives and senior stakeholders to define strategic goals and transform operational protocols, standards, and methodologies. He has established a reputation at multiple large companies for taking charge of critical, high-profile enterprise projects in jeopardy of failure and turning them around. Colleagues and peers recognize his ability to organize enterprise efforts, build, develop, and motivate teams, and deliver outstanding outcomes. Richard has worked as a Global CISO & Head of IT Governance for a Swiss Insurance company, Richard developed and led a comprehensive Cyber-Security Framework that provided leadership and oversight of the cyber-security program. Additionally, he was responsible for their IT Governance Risk & Compliance Operation and the information data security compliance in a complex global environment. Richard’s experience with organizational turn around, governance, risk, and controls, and security supports technology delivery integration with business success. Richard’s ability to engage executive and senior management decision makers and champion vision will prove beneficial to your organization.

Research Contributor

Craig Broussard Executive Counsellor Info-Tech Research Group

Craig has over 35 years of IT experience including software development, enterprise system management, infrastructure, and cyber security operations. Over the last 20 years, his focus has been on infrastructure and security along with IT service management. He’s been an accomplished speaker and panelist at industry trade events over the past decade. Craig has served as Global Infrastructure Director for NCH Corporation, VP of Information Technology at ATOS, and earlier in his career as the Global Head of Data Center Services at Nokia Siemens Networks. Craig also worked for MicroSolutions (a Mark Cuban Company). Additionally, Craig received formal consulting training while working for IBM Global Services. Craig’s deep experience across many aspects of IT from Governance through Delivery makes him an ideal partner for Info-Tech members.

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It’s “day two” in the cloud. Now what?

EXECUTIVE BRIEF

Analysts’ Perspective

	Andrew Sharp Research Director Infrastructure & Operations Practice	It’s “day two” in the cloud. Now what? Just because you’re in the cloud doesn’t mean everyone is on the same page about how cloud operations work – or should work. You have an opportunity to implement new ways of working. But if people can’t see the bigger picture – the organizing framework of your cloud operations – it will be harder to get buy-in to realize value from your cloud services. Use Info-Tech’s methodology to build out and visualize a cloud operations organizing framework that defines cloud work and aligns it to the right areas.
	Nabeel Sherif Principal Research Director Infrastructure & Operations Practice
	Emily Sugerman Research Analyst Infrastructure & Operations Practice
	Scott Young Principal Research Director Infrastructure & Operations Practice

Executive Summary

Info-Tech Insight

Define your target cloud operations state first, then plan how to get there. If you begin by trying to reconstruct on-prem operations in the cloud, you will build an operations model that is the worst of both worlds.

Your Challenge

Traditional IT capabilities, activities, organizational structures, and culture need to adjust to leverage the value of cloud, optimize spend, and manage risk.

• As key applications leave for the cloud, I&O teams are still expected to manage access, spend, and security but may have little or no visibility or control over the applications themselves.
• The automation and self-service capabilities of cloud aren’t delivering the speed the business expected because teams don’t work together effectively.
• Business leaders purchase their own cloud solutions because, from their point of view, IT’s processes are cumbersome and ineffective.
• Accounting practices and governance mechanisms haven’t adjusted to enable new development practices and technologies.
• Security and cost management requirements may not be accounted for by teams acquiring or developing solutions.
• All of this contributes to frustration, missed work, wasteful spending, and unacceptable risk.

Obstacles, by the numbers:

85% of respondents reported security in the cloud was a serious concern.

73% reported balancing responsibilities between a central cloud team and business units was a top concern.

The average organization spent 13% more than they’d budgeted on cloud – even when budgets were expected to increase by 29% in the next year.

32% of all cloud spend was estimated to be wasted spend.

56% of operations professionals said their primary focus is cloud services.

81% of security professionals thought it was difficult to get developers to prioritize bug fixes.

42% of security professionals felt bugs were being caught too late in the development process.

1. Flexera 2022 State of the Cloud Report. 2. GitLab DevSecOps 2021 Survey

Cloud operations are different, but IT departments struggle to change

• There’s no sense of urgency in the organization that change is needed, particularly from teams that aren’t directly involved in operations. It can be challenging to make the case that change is needed.
• Beware “analysis paralysis”! With so many options, philosophies, approaches, and methodologies, it’s easy to be overwhelmed by choice and fail to make needed changes.
• The solution to the problem requires organizational changes beyond the operations team, but you don’t have the authority to make those changes directly. Operations can influence the solution, but they likely can’t direct it.
• Behavior, culture, and organizations take time and work to change. Progress is usually evolutionary – but this can also mean it feels like it’s happening too slowly.
• It’s not just cloud, and it probably never will be. You’ll need to account for operating both on-premises and cloud technologies for the foreseeable future.

Follow Info-Tech’s Methodology

1. Ensure alignment with the risks and drivers of the business and understand your organization’s strengths and gaps for a cloud operations world.

2. Understand the balance of different types of deliveries you’re responsible for in the cloud.

3. Reduce risk by reinforcing the key operational pillars of cloud operations to your workstreams.

4. Identify “work areas,” decide which area is responsible for what tasks and how work areas should interact in order to best facilitate desired business outcomes.

Info-Tech Insight

Start by designing operations around the main workflow you have for cloud services; i.e. If you mostly build or host in cloud, build the diagram to maximize value for that workflow.

Operating Framework Elements

Proper design of roles and responsibilities for each cloud workflow category will help reduce risk by reinforcing the key operational pillars of cloud operations.

We base this on a composite of the well-architected frameworks established by the top global cloud providers today.

Workflow Categories

• Build
• Host
• Consume

Key Pillars

• Performance
• Reliability
• Cost Effectiveness
• Security
• Operational Excellence

Risks to Mitigate

• Changes to Support Model
• Changes to Security & Governance
• Changes to Skills & Roles
• Replicating Old Habits
• Misaligned Stakeholders

Cloud Operations Design

Info-Tech’s Methodology

Blueprint deliverables

Each step of this blueprint is accompanied by supporting deliverables to help you accomplish your goals.

Cloud Maturity Assessment Assess the intensity and cloud maturity of your IT operations for each of the key cloud workstreams: Consume, Host, and Build		Communication Plan Identify stakeholders, what’s in it for them, what the impact will be, and how you will communicate over the course of the change.
Cloud Operations Design Sketchbook Capture the diagram as you build it.		Roadmap Tool Build a roadmap to put the design into action.

Key deliverable:

Cloud Operations Organizing Framework

The Cloud Operations Organizing Framework is a communication tool that introduces the cloud operations diagram and establishes its context and justification.

Project Outline

Project benefits

Calculate the value of Info-Tech’s Methodology

The value of the project is the delivery of organizational change that improves the way you manage cloud services

1. Average wasted cloud spend across all organizations, from the 2022 Flexera State of the Cloud Report

Understand your cloud vision and strategy before you redesign operations

Guide your operations redesign with an overarching cloud vision and strategy that aligns to and enables the business’s goals.

Cloud Vision		Cloud Strategy
It is difficult to get or maintain buy-in for changes to operations without everyone on the same page about the basic value proposition cloud offers your organization. Do the workload and risk analysis to create a defensible cloud vision statement that boils down into a single statement: “This is how we want to use the cloud.”	Once you have your basic cloud vision, take the next step by documenting a cloud strategy. Establish your steering committee with stakeholders from IT, business, and leadership to work through the essential decisions around vision and alignment, people, governance, and technology. Your cloud operations design should align to a cloud strategy document that provides guidelines on establishing a cloud council, preparing staff for changing skills, mitigating risks through proper governance, and setting a direction for migration, provisioning, and monitoring decisions.

Key Insights

Info-Tech offers various levels of support to best suit your needs

Diagnostics and consistent frameworks used throughout all four options

Guided Implementation

What does a typical GI on this topic look like?

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.

Workshop Overview

Contact your account representative for more information.
workshops@infotech.com 1-888-670-8889

Phase 1:

Establish context

Phase Outcomes:

Define current maturity and which workstreams are important to your organization.

Understand new operating approaches and which apply to your workstream balance.

Identify a new target state for IT operations.

Before you get started

Set yourself up for success with these three steps:

• This methodology and the related slides are intended to be executed via intensive, collaborative working sessions using the rest of this slide deck.
• Ensure the working sessions are successful by working through these steps before you start work on defining your cloud operations.

Create a working folder

15 minutes

Create a central repository to support transparency and collaboration. It’s an obvious step, but one that’s often forgotten.

1. Download all the documents associated with this blueprint to a shared repository accessible to all participants. Keep separate folders for templates and work-in-progress.
2. Share the link to the repository with all attendees. Include links to the repository in any meeting invites you set up as working sessions for the project.
3. Use the repository for all the work you do in the activities listed in this blueprint.

Step 1.1: Identify goals and challenges, workstreams, and cloud maturity

Participants

• Operations Design Working Group, which may include:
  • Cloud owners
  • Platform/Applications Team leads
  • Infra & Ops managers

Outcomes

• Identify your current cloud maturity and areas in need of improvement.
• Define the advantages you expect to realize from cloud services and any obstacles you have to overcome to meet those objectives.
• Identify the reasons why redesigning cloud operations is necessary.
• Develop organization design principles.

“Start small: Begin with a couple services. Then, based on the feedback you receive from Operations and the business, modify your approach and keep increasing your footprint.” – Nenad Begovic

Cloud changes operational activities, tactics, and goals

As you adopt cloud services, the operations core mission remains . . .

• IT operations are expected to deliver stable, efficient, and secure IT services.

. . . but operational activities are evolving.

• Core IT operational processes remain relevant, such as incident or capacity management, but opportunities to automate or outsource operations tasks will change how that work is done.
• As you rely more on automation and outsourcing, the team may see less direct execution in its day-to-day work and more solution design and validation.
• Outsourcing frees the team from operational toil but reduces the direct control over your end-to-end solution and increases your reliance on your vendor.
• Pay-as-you-go pricing models present opportunities for streamlined delivery and cost rationalization but require you to rethink how you do cost and asset management.
• It’s very easy for the business to buy a SaaS solution without consulting IT, which can lead to duplicated functionality, integration challenges, security threats, and more.

Design a model for cloud operations that helps you achieve value from your cloud environment.

“As operating models shift to the cloud, you still need the same people and processes. However, the shift is focused on a higher level of operations. If your people no longer focus on server uptime, then their success metrics will change. When security is no longer protected by the four walls of a datacenter, your threat profile changes.”

(Microsoft, “Understand Cloud Operating Models,” 2022)

Operational responsibilities are shared with a range of stakeholders

When using a vendor-operated public cloud, IT exists in a shared responsibility model with the cloud service provider, one that is further differentiated by the type of cloud service model in use: broadly, software-as a service (SaaS), platform-as-a-service (PaaS), or infrastructure-as-a-service (IaaS).

Your IT operations organization may still reflect a structure where IT retains control over the entire infrastructure stack from facilities to application and defines their operational roles and processes accordingly.

If the organization chooses a co-location facility, they outsource facility responsibility to a third-party provider, but much of the rest of the traditional IT operating model remains the same. The operations model that worked for an entirely premises-based environment is very different from one that is made up of, for instance, a portfolio of SaaS applications, where your control is limited to the top of the infrastructure stack at the application layer.

Once an organization migrates workloads to the cloud, IT gives up an increasing amount of control to the vendor, and its traditional operational roles & responsibilities necessarily change.

Align operations with customer value

• Decisions about operational design should be made with customer value in mind. Remember that cloud adoption should be an enabler of adaptability in the face of changing business needs!
• Think about how the operations team is indispensable to the value received by your customer. Think about the types of changes that can add to the value your customers receive.
• A focus on value will help you establish and explain the rationale and urgency required to deliver on needed changes. If you can’t explain how the changes you propose will help deliver value, your proposal will come across as change for the sake of change.

Info-Tech Insight

Work that is invisible to the customer can still be essential to delivering customer value. A lot of operations work is invisible to your organization’s customers but required to deliver stability, security, efficiency, and more.

A new consumption model means a different mix of activities

Evolving to cloud-optimal operations also means re-assessing and adapting your team’s approach to achieving cloud maturity, especially with respect to how automation and standardization can be leveraged to best achieve optimization in cloud.

Info-Tech Insight

Cloud is a different way of consuming IT resources and applications and requires a different operational approach than traditional IT.

In most cases, cloud operations involves less direct execution and more service validation and monitoring.

The Service Models in cloud correspond to the way your organization delivers IT

Define how you plan to use cloud services

Your cloud operations will include different tasks, teams, and workflows, depending on whether you consume cloud services, build them, or host on them.

Align to the well-architected framework

• Each cloud provider has defined a well-architected framework (WAF) that defines effective deployment and operations for their services.
• WAFs embody a set of best practices and design principles to leverage the cloud in a more efficient, secure, and cost-effective manner.
• While each vendor’s WAF has its own definitions and nuances, they collectively share a set of key principles, or “pillars,” that define the desired outcome of any cloud deployment.
• These pillars address the key areas of risk when migrating to a public cloud platform.

“In order to accelerate public cloud adoption, you need to focus on infrastructure-as-code and script everything you can. Unlike traditional operations, CloudOps focuses on creating scripts: a script for task A, a script for task B, etc.”

– Nenad Begovic

Pillars

• Reliability
• Security
• Cost Optimization
• Operational Excellence
• Performance Efficiency

General Best Practice Capability Areas

• Host
• Network
• Data
• Identity Management
• Cost/Subscription Management

Assess cloud maturity

2 hours

1. Download a copy of the Cloud Maturity Assessment Tool.
2. As a group, work through:
   • The balance of your operations activities from a Host/Build/Consume perspective. What are you responsible for delivering now? How do you expect things will change in the future?
   • Which workstreams to focus on. Are there activity categories that are critical or non-critical or that don’t represent a significant portion of overall work? Conversely, are there workstreams that you feel are subject to particular risk when moving to cloud?
3. Fill out the Maturity Quiz tab in the Cloud Maturity Assessment Tool for the workstreams you have chosen to focus on.

Download theCloud Maturity Assessment Tool

Identify the drivers for organizational redesign

Whiteboard Activity

An absolute must-have in any successful redesign is a shared understanding and commitment to changing the status quo.

Without a clear and urgent call to action, the design changes will be seen as change for the sake of change and therefore entirely safe to ignore.

Take up the following questions as a group:

1. What kind of organizational change is needed?
2. Why do we think the need for this change is urgent?
3. What do we think will happen if no change occurs? What’s the worst-case scenario?

Record your answers so you can reference and use them in the communication materials you’ll create in Phase 2.

“We know, for example, that 70 percent of change programs fail to achieve their goals, largely due to employee resistance and lack of management support. We also know that when people are truly invested in change it is 30 percent more likely to stick.”

– Ewenstein, Smith, Sologar

McKinsey (2015)

Consider the value of change from advantage and obstacle perspectives

Consider what you intend to achieve and the obstacles to overcome to help identify the changes required to achieve your desired future state.

Review risks and challenges

Changes to Support Model

• Have we identified who is on the cloud ops team?
• Do we know where we are procuring skills (internal IT vs. third party) and for how long?
• Do we know where we are in the migration process?

Changes to security & governance

• Have we identified how our attack surface changes in the cloud?
• Do we have guardrails in place to govern self-provisioning users?
• Are we managing cost overage risks?

Replicating old habits

• Have we made concrete plans to leverage cloud capabilities to standardize and automate outputs?
• Are we simply reproducing existing systems in the cloud?

Changes to Skills & Roles

• Is our staff excited to learn new skills and technologies? Are our specialists prepared to acquire generalist skills to support cloud services?
• Do we have training plans created and aligned to our technology roadmap?
• Do we know what head count we need?

Misaligned stakeholders

• Have we identified our key stakeholders and teams? Have we considered what changes will impact them and how?
• Are we meeting regularly and collaborating effectively with our peers, or are we siloed?

Review cloud objectives and obstacles

Whiteboard Activity

1 hour

1. With your working group, review why you’re using cloud in the first place. What advantages do you expect to realize by adopting cloud services? If we achieve what we’ve set out to do, what should that look and feel like to us, our organization, and our organization’s customers?
   • You should have identified cloud drivers and objectives in your cloud vision and strategy – leverage and validate what you already have!
2. Next, identify obstacles that are preventing you from fully realizing the value of cloud services.
3. Finally, brainstorm initial ideas for change. What could we start doing that could help us better use cloud in the future? Are there changes to how we need to organize ourselves to collaborate more effectively?

Commonly cited advantages and obstacles

Establish organization design principles

You’ve established a need for organizational change. What will that change look like?

Design principles are concise, direct statements that describe how you will design your organization to achieve key objectives and address key challenges.

This is a critically important step for several reasons:

• A set of clear, concise statements that describe what the design should achieve provides parameters that will help you create and evaluate different design options.
• A focused, facilitated discussion to create those statements will help uncover conflicting assumptions between key stakeholders.
• A comprehensive description of the various ways the organization should change makes it easier to identify misaligned or incompatible objectives.
• A description of what your organization should look like in the future will help you identify where changes will be required .

Examples of design principles:

1. We will create a path to review and publish effective application/platform patterns.
2. A single governing body should have oversight into all cloud costs.
3. Development must happen only on approved cloud platforms.
4. Application teams must address operational issues that derive from the applications they’ve created.
5. Security practices should be embedded into approved cloud platforms and be automatically applied wherever possible.
6. Focus is on improving developer experience on cloud platforms.

Info-Tech Insight

Design principles will often change as the organization’s strategy evolves.

Align design principles to your objectives

Developing design principles starts with your key objectives. What do we absolutely have to get right to deliver value through cloud services?

Once you have your direction set, work through the points in the star model to establish how you will meet your objectives and deliver value. Each point in the star is an important element in your design – taken together, it paints a holistic picture of your future-state organization.

The changes you choose to implement that affect capabilities, structure, processes, rewards, and people should be self-reinforcing. Each point in the star is connected to, and should support, the other points.

“There is no one-size-fits-all organization design that all companies – regardless of their particular strategy needs – should subscribe to.”

– Jay Galbraith, “The Star Model”

Establish design principles

Track your findings in the table on the next slide.

1. Review the cloud objectives and challenges from the previous activity. As a group, decide from that list: what are the key objectives you are trying to achieve? What are the things you absolutely must get right to get value from cloud services?
2. Work through the following questions as a group:
   • What capabilities or technologies do we need to adopt or leverage differently?
   • How must our structure change? How will power shift in the new structure?
   • Will our new structure require changes to processes or information sharing?
   • How must we change how we motivate or reward employees?
   • What new skills or knowledge is required? How will we acquire those skills or knowledge?

Design principles (example)

Step 1.2: Evaluate new ways of working

Participants

Cloud Operations Design Working Group

Outcomes

Shared understanding of the horizon of work possibilities:

• Ways to work
• Ways to govern and learn

Consider the different approaches on the following slides, how they change operational work, and decide which approaches are the right fit for you.

Evaluate new ways of working

Cut through the hype

Leverage patterns to think about new ways of approaching operations work

Patterns are strategies, approaches, and philosophies that can help you imagine new ways of working in your own organization.

• The following slides provide an overview of organizing patterns that are applicable to cloud operations.
• These are strategies that have been applied successfully elsewhere. Review what they can and cannot do and decide whether they are something you can use in your own organizational design.
• Not every pattern will apply to every organization. For example, an organization which typically consumes SaaS applications will likely have very little need for SRE approaches and techniques.

Ways to work

• What work do we do? What skills do we need?
• How do we create and support systems?

Ways to govern and learn

• How do we set and enforce rules?
• How do we create and share knowledge?

Explore Applicable Patterns

What is DevOps?

“Look for obstacles constantly and treat them as opportunities to experiment and learn.” – Jez Humble, et al. Lean Enterprise: How High Performance Organizations Innovate at Scale

1 DevOps, SRE, and Platform Engineering

What is Site Reliability Engineering (SRE)?

“Hope is not a strategy” – Benjamin Treynor Sloss, Site Reliability Engineering: How Google Runs Production Systems

1 SRE vs Platform Engineering

2. Lakhani, Usman. “ISite Reliability Engineering: What Is It? Why Is It Important for Online Businesses?,” 2020.

3. Sloss, “Introduction,” 2017

What4 is Platform Engineering?

“Platform engineers can act as a shield between developers and the infrastructure”

– Carlos Schults, “What is Platform Engineering? The Concept Behind the Term”

1 DevOps, SRE, and Platform Engineering

What is a Cloud Center of Excellence?

You need a strong core to grow a cloud culture.

What is a Cloud Community of Practice?

“We have to stop optimizing for programmers and start optimizing for users”

– Jeff Atwood

Reinforce what we mean by patterns

Review the implications of each pattern for organizational design

1. Gustavo Franco and Matt Brown, “How SRE teams are organized and how to get started.”

Review the implications of each pattern for organizational design

Evolve your organization to meet the needs of increased adoption

Your operating model should evolve as you increase adoption of cloud services.

Adapted from Microsoft, “Get Started: Align your organization,” 2021

Choose new ways of working that make sense for your team

1 hour

Consider if, and how, the approaches to management and governance you’ve just reviewed can offer value to your organization.

1. List the organizing/managing ideas listed in the previous slides in the table below.
2. Define why it’s for you. What benefits do you expect to realize? What challenges do you expect this will help you overcome? How does this align with your key benefits and drivers for moving to cloud?
3. List risks or challenges to adoption. Why will it be hard to do? What could get in the way of adoption? Why might it not be a good fit?
4. Identify next steps to adopt proposed practices.

Step 1.3: Identify cloud work

Participants

• Operations Design Working Group

Outcomes

• Identify core work required to deliver value in key cloud workstreams.

“At first, for many people, the cloud seems vast. But what you actually do is carve out space.”

–DevOps Manager

Identify work

Before you can identify roles and responsibilities, you have to confirm what work you do as an organization and how that work enables you to meet your goals.

• A comprehensive approach that connects the work you do to your organizational goals will help you identify work that’s falling through the cracks.
• Identifying work is an opportunity to look at the tasks you regularly execute and ensure they actually drive value.
• Working through the exercise as a group will help you develop a common language around the work you do.
• To make the evident obvious: you can’t decide who should be responsible for something if you don’t know about it in the first place.

Defining work can be a lot of … work! We recommend you start by identifying work for the workstream you do most – Build, Consume, or Host – to focus your efforts. You can repeat the exercise as needed.

Map work in workstream diagrams

The five Well-Architected Framework pillars. These are principles/directions/guideposts that should inform all cloud work.

The work being done to achieve the workstream target. These are roughly aligned with the three streams on the right.

Workstream Target: A concise statement of the value you aim to achieve through this workstream. All work should help deliver value (directly or indirectly).

Define the scope of the exercise

Whiteboard Activity

20 minutes

Over the next few exercises, you’ll do a deep dive into the work you do in one specific workstream. In this exercise, we’ll decide on a workstream to focus on first.

1. Are you primarily building, hosting on, or consuming cloud services? Start with the workstream where you’re doing the most work.
2. If this isn’t sufficient to narrow your focus, look at the workstream that is most closely tied to mission critical applications, or that is most in need of review in terms of what work is done and who does it.
3. You can narrow the scope further if there’s a very specific sub-area that differs from the rest (e.g. managing your O365 environment vs. managing all SaaS applications).

Create a workstream target statement

Whiteboard Activity

30 minutes

In this activity, come up with a short sentence to describe what all this work you do is building toward. The target statement helps align participants on why work is being done and helps focus the activity on work that is most important to achieving the target statement.

Start with this common workstream target statement:

“Deliver valuable, secure, available, reliable, and efficient cloud services.”

Now, review and adjust the target statement by working through the questions below:

1. Return to the earlier exercises in Phase 1.1 where you reviewed your key objectives for cloud services. Does the target statement align with what you’d identified previously?
2. Who is the customer for the work you do? Would they see the target differently than you’ve described it?
3. Can you be more specific? Are there value drivers that are more specific to your industry, organization, business functions, or products that are key to the value your customers receive from this workstream?

Identify cloud work

1-2 hours

1. Use the workstream diagram template in the Cloud Operations Design Sketchbook, or draw the template out on a whiteboard and use sticky notes to identify work.
2. Identify the workstream at the top of the slide. Update the template value statement on the right with the value statement you created in the previous exercise.
3. Review one or more of the examples in the Cloud Operations Design Sketchbook to get a sense of the level of detail required for this exercise.

Activity instructions continue on the next slide.

Some notes to the facilitator:

• Working directly from the Cloud Operations Design Sketchbook will save you time with transcription. Sharing the document with participants (e.g. via OneDrive) will allow you to collaborate and edit the document together in real-time.
• Don’t worry about being too tidy for the moment, just get the information written down and you can clean up the diagram later.

Identify cloud work (cont’d)

4. Work together to identify work, documenting one work item per box. This should focus on future state, so record work whether it’s actually done today or not. Your space is limited on the sheet, so focus on work that is indispensable to delivering the value statement. Use the lists on the right as a reminder of key IT practice areas.

5. As much as possible, align the work items to the appropriate row (Govern & Align, Design & Execute, or Validate, Support & Monitor). You can overlap boxes between rows if needed.

Have you captured work related to:

Info-Tech Insight

Cloud work is not just applications that have been approved by IT. Consider how unsanctioned software purchased by the business will be integrated and managed.

Identify cloud work (cont’d)

6. If you have decided to adopt any of the new ways of working outlined in Step 1.2 (e.g. DevOps, SRE, etc.) review the next slide for examples of the type of work that frequently needs to be done in each of those work models. Add any additional work items as needed.

7. Consolidate boxes and clean up the diagram (e.g. remove duplicate work items, align boxes, clarify language).

8. Do a final review. Is all the work in the diagram truly aligned with the value statement? Is the work identified aligned with the design principles from Step 1.1?

If you used a whiteboard for this exercise, transcribe the output to a copy of the Cloud Operations Design Sketchbook, and repeat the exercise for other key workstreams. You will use this diagram in Phase 2.

Examples of work

Examples of work in the "Host" workstream:

• Bulk patch servers
• Add a server
• Add capacity
• Develop a new server template
• Incident management

Examples of work in the "Build" workstream:

• Provision a production server
• Provision a test environment
• Test recovery procedures
• Add capacity for a service
• Publish a new pattern
• Manage capacity/performance for a service
• Identify wasted spend across services
• Identify performance bottlenecks
• Review and shut down idle/unneeded services

Examples of work in the "Consume" workstream:

• Conduct vendor risk assessments
• Develop a standard evaluation matrix to compare solutions to existing or potential in-house offerings
• Onboard a solution
• Offboard a solution
• Conduct a renewal
• Review and negotiate a contract
• Rationalize software titles

Phase 2:

Design the organization and communicate changes

Phase Outcomes:

Draft your cloud operations diagram, identify key messages and impacts to communicate to your stakeholders, and build out the Cloud Operations Organizing Framework communication deck.

Step 2.1: Identify groups and responsibilities

Participants

• Operations Design Working Group

Outcomes

• Cloud Operations Diagram
• Success Indicators
• Roadmap

“No-one ever solved a problem by restructuring.”

– Anonymous

Visualize your cloud operations

Create a visual to help you abstract, analyze, and clarify your vision for the future state of your organization in order to align and instruct stakeholders.

Create a visual, high-level view of your organization to help you answer questions such as:

• “What work do we do? What are the roles and responsibilities of different teams?”
• “How do we interact between work areas?”
• “How has our organization changed already, and what additional changes may be needed?”
• “How do we make technology decisions?”
• “How do we provide services?”
• “How might this change be received by people on the ground?”

Decide whether to centralize or decentralize

Specialization & Focus: A group or work unit developing a focused concentration of skills, expertise, and activities aligned with an area of focus (such as the ones at right).

Decentralization: Operational teams that report to a decentralized IT or business function, either directly or via a “dotted line” relationship.

Decentralization and Specialization can:

• Duplicate work.
• Localize decision-making authority, which can increase agility and responsiveness.
• Transfer authority and accountability to local and typically smaller teams, clarifying responsibilities and encouraging staff to take ownership for service delivery.
• Enable the team to focus on complex and rapidly changing technologies or processes.
• Create islands of expertise, which can get in the way of collaboration, innovation, and decision making across groups and work units and make oversight difficult.
• Complicate the transfer of resources and knowledge between groups.

“The concept of organization design is simple in theory but highly complex in practice. Like any strategic decision, it involves making multiple trade-offs before choosing what is best suited to a business context.”

– Nitin Razdan & Arvind Pandit

Identify key work areas

Balance specialization with effective collaboration

• Much is said about breaking down organizational silos. But at some level, silos are inevitable – any company with more than one employee will have to divide work up somehow.
• Dividing up work is a delicate balancing act – ensuring individuals and groups are able to do work that is related, meaningful, and that allows autonomy while allowing for effective collaboration between groups that need to work together to achieve business goals.

Why “work areas”?

Why don’t we just use teams, groups, squads, or departments, or some other more common term for groups of people working together?

• We are not yet at the point of deciding who in the organization should be aligned to which areas in the design.
• Describing work areas as teams can shift the conversation to the organizational chart – to who does the work, rather than what needs to be done.

That’s not the goal of this exercise. If the conversation gets stuck on what you do today, it can get in the way of thinking about what you need to do in the future.

Create a future-state cloud operations diagram

1-3 hours

1. Review the example cloud operations diagram example in your copy of the Cloud Operations Design Sketchbook.
2. Identify key work areas (e.g. applications, infrastructure, platform engineering, DevOps, security). Add the name of each work area in one of the larger boxes.
   • Go back to your design principles. Did you define any work areas in your design principles that should be represented here?
   • If you have several groups or teams with similar responsibilities, consider lumping them together in one box (e.g. applications teams, 3x DevOps teams).
3. Copy the tasks from any workstream diagrams you’ve created to the same slide as the organization design diagram. Keep the workstream diagram intact, as you’ll want to be able to refer back to it later.

Activity instructions continue on the next slide.

Cloud operations diagram (cont’d)

1-3 hours

4. As a group, move the work boxes from the workstream diagram into the appropriate work area.

• Don’t worry about being too tidy for the moment – clean up the diagram when the exercise is done.
• Make adjustments to the wording of the work boxes if needed.

5. Use the space between work areas to describe how work areas must interact to achieve organizational goals. For example:

• What information should be shared between groups?
• What information sharing channels may be used?
• What processes will be handed-off between groups and how?
• How often will teams interact?
• Will interactions be formal or informal?

Create a current-state operations diagram

1 -2 hours

This exercise can be done by one person, then reviewed with the working group at a later time.

This current state diagram helps clarify the changes that may need to happen to get to your future state.

1. Color code the work boxes for each work area. For example, if you have a “DevOps” work area, make all the work boxes assigned to “DevOps” the same color.
2. On a separate slide, sketch your existing organization indicating your current teams.
3. Copy the tasks from the future-state diagram to this current-state chart. Align the tasks to the appropriate groups.
4. Review the chart with the working group. Discuss: are there teams that are doing work today that will also be done by different teams? Are there groups that may merge into one team? What types of changes may be required?

Check for biases to make better choices

Use the strategies below to spot and address flaws in your team’s thinking about your future-state design.

Framework above adapted from Kahneman, Lovallo, and Sibony (2011)

Be specific with metrics

Thinking of ways you could measure success can help uncover what success actually means to you.

Work collectively to generate success indicators for each key cloud initiative. Success indicators are metrics, with targets, aligned to goals, and if you are able to measure them accurately, they should help you report your progress toward your objectives.

For example, if your driver is “faster access to resources” you might consider indicators like developer satisfaction, project completion time, average time to provision, etc.

There are several reasons you may not publicize these metrics. They may be difficult to calculate or misconstrued as targets, warping behavior in unexpected ways. But managed properly, they have value in measuring operational success!

Define success indicators

Whiteboard Activity

45 minutes

1. On a whiteboard, draw a table with key objectives for the design across the top.
   • What cloud objectives should the redesign help you achieve? Refer back to the design principles from Phase 1.
   • Think about the redesign itself. How will you measure whether the project itself is proceeding according to plan? Consider metrics such as employee engagement scores and satisfaction scores from key stakeholders.
2. Consider whether the metrics are feasible to track. Record your decisions in your copy of the Cloud Operations Organizing Framework deck.

Populate a roadmap

Tool Activity

45 minutes

1. In the Roadmap Tool, populate the data entry tab with the initiatives you will take to support changes toward the new cloud operations organizing framework.
2. Input each of the tasks in the data entry tab and provide a description and rationale behind the task (as needed).
3. Assign an effort, priority, and cost level to each task (high, medium, low).
4. Assign an owner to each task – someone who can take points and shepherd the task to completion.
5. Identify the timeline for each task based on the priority, effort, and cost (short, medium, and long term).
6. Highlight risk for each task if it will be deferred.
7. Track the progress of each task with the status column.

Download the Roadmap Tool

Step 2.2: Communicate changes

Participants

• Operations Design Working Group

Outcomes

• Build a communication plan for key stakeholders
• Complete the communication deck Cloud Operations Organizing Framework
• Build a roadmap

“Words, words, words.”

– Shakespeare

Communicate changes

Which stakeholders will be affected by the changes?

Decision makers: Who do you ultimately need to convince to proceed with any changes you’ve outlined?

Peers: How will managers of other areas be affected by the changes you’re proposing? If you are you suggesting changes to the way that they, or their teams, do their work, you will have to present a compelling case that there’s value in it for them.

Staff: Are you dictating changes or looking for feedback on the path forward?

Source: The Qualities of Leadership: Leading Change

Follow these guidelines for good communication

“We tend to use a lot of jargon in our discussions, and that is a sure fire way to turn people away. We realized the message wasn’t getting out because the audience wasn’t speaking the same language. You have to take it down to the next level and help them understand where the needs are.”

– Jeremy Clement, Director of Finance, College of Charleston

Create a communication plan

1 hour

Fill out the table below.

Stakeholder group: Identify key stakeholders who may be impacted by changes to the operations team. This might include IT leadership, management, and staff.

Benefits: What’s in it for them?

Impact: What are we asking in return?

How: What mechanisms or channels will you use to communicate?

When: When (and how often) will you get the message out?

Download the Communication Plan Template

Support the transition with a plan to acquire skills

Identify the preferred way to acquire needed skill sets: contracting, outsourcing, training, or hiring.

• Some cloud projects will change the demand for some skills in the organization, and not all skills should be cultivated internally. Uncertainty about future skills and jobs will cause anxiety for your team and can lead to employee exit.
• Use Info-Tech’s research to conduct a demand analysis to identify which new and critical skills should be acquired via training or hiring (rather than outsourcing or contracting).
• Create a roadmap to clarify when training needs to be completed, a budget plan that accounts for training costs, and role descriptions that paint a picture of future work.
• Within the confines of a collective agreement, managers may be required to retrain staff into new roles before those staff are required to do work in their new jobs. Failing to plan can be more consequential.
• Remember that in cloud, a wealth of automation opportunities present a great option for offloading tasks as well!

Info-Tech Insight

Identify skills requirements and gaps as early as possible to avoid skills gaps later. Whether you plan to acquire skills via training or cross-training, hiring, contracting, or outsourcing, effectively building skills takes time. Use Info-Tech’s methodology to address skills gaps in a prioritized and rational way.

Involve HR for implementation

Your HR team should help you work through:

• Which staff and managers will move to which roles, and any headcount changes.
• Job descriptions, performance metrics, career paths, compensation, and succession planning.
• Organizational change management and implementation plans.

When do you need to involve HR?

Related Info-Tech Research

Bibliography

“2021 GitLab DevSecOps Survey.” Gitlab, 2021.
“2022 State of the Cloud Report.” Flexera, 2022.
“DevOps.” Atlassian, ND. Web. 21 July 2022.
Atwood, Jeff. “The 2030 Self-Driving Car Bet.” Coding Horror, 4 Mar 2022. Web. 5 Aug 2022.
Campbell, Andrew. “What is an operating model?” Operational Excellence Society, 12 May 2016. Web. 13 July 2022.
“DevOps.” Atlassian, ND. Web. 21 July 2022.
Ewenstein, Boris, Wesley Smith, Ashvin Sologar. “Changing change management” McKinsey, 1 July 2015. Web. 8 April 2022.
Franco, Gustavo and Matt Brown. “How SRE teams are organized, and how to get started.” Google Cloud Blog, 26 June 2019. Web. July 13 2022.
“Get started: Build a cloud operations team.” Microsoft, 10 May 2021.
ITIL Foundation: ITIL 4 Edition. Axelos, 2019.
Humble, Jez, Joanne Molesky, and Barry O’Reilly. Lean Enterprise: How High Performance Organizations Innovate at Scale. O’Reilly Media, 2015.
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Murphy, Annie, Jamie Kirwin, Khalid Abdul Razak. “Operating Models: Delivering on strategy and optimizing processes.” EY, 2016.
Shults, Carlos. “What is Platform Engineering? The Concept Behind the Term.” liatrio, 3 Aug 2021. Web. 5 Aug 2022.
Sloss, Benjamin Treynor. Site Reliability Engineering – Part I: Introduction. O’Reilly Media, 2017.
“SRE vs. Platform Engineering.” Ambassador Labs, 8 Feb 2021.
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“Understand cloud operating models.” Microsoft, 02 Sept. 2022.
Velichko, Ivan. “DevOps, SRE, and Platform Engineering.” 15 Mar 2022.

Research Contributors and Experts

Enable Omnichannel Commerce That Delights Your Customers

Create a cohesive, omnichannel framework that supports the right transactions through the right channels for the right customers.

Analyst Perspective

A clearly outlined commerce strategy is a necessary component of a broader customer experience strategy.

Ben Dickie
Research Lead, Research – Applications
Info-Tech Research Group

“Your commerce strategy is where the rubber hits the road, converting your prospects into paying customers. To maximize revenue (and provide a great customer experience), it’s essential to have a clearly defined commerce strategy in place.

A strong commerce strategy seeks to understand your target customer personas and commerce journey maps and pair these with the right channels and enabling technologies. There is not a “one-size-fits-all” approach to selecting the right commerce channels: while many organizations are making a heavy push into e-commerce and mobile commerce, others are seeking to differentiate themselves by innovating in traditional brick-and-mortar sales. Hybrid channel design now dominates many commerce strategies – using a blend of e-commerce and other channels to deliver the best-possible customer experience.

IT leaders must work with the business to create a succinct commerce strategy that defines personas and scenarios, outlines the right channel matrix, and puts in place the right enabling technologies (for example, point-of-sale and e-commerce platforms).”

Stop! Are you ready for this project?

This Research Is Designed For:

• IT leaders and business analysts supporting their commercial and marketing organizations in developing and executing a technology enablement strategy for e-commerce or brick-and-mortar commerce.
• Any organization looking to develop a persona-based approach to identifying the right channels for their commerce strategy.

This Research Will Help You:

• Identify key personas and customer journeys for a brick-and-mortar and/or e-commerce strategy.
• Select the right channels for your commerce strategy and build a commerce channel matrix to codify the results.
• Review the “art of the possible” and new developments in brick-and-mortar and e-commerce execution.

This Research Will Also Assist:

• Sales managers, brand managers, and any marketing professional looking to build a cohesive commerce strategy.
• E-commerce or POS project teams or working groups tasked with managing an RFP process for vendor selection.

This Research Will Help Them:

• Build a persona-centric commerce strategy.
• Understand key technology trends in the brick-and-mortar and e-commerce space.

Executive Summary

Your Challenge

Today’s customers expect to be able to transact with you in the channels of their choice.

The proliferation of e-commerce, innovations in brick-and-mortar retail, and developments in mobile commerce and social media selling mean that IT organizations are managing added complexity in drafting a strategy for commerce enablement.

The right technology stack is critical to support world-class e-commerce and brick-and-mortar interactions with customers.

Common Obstacles

Many organizations do not define strong, customer-centric drivers for dictating which channels they should be investing in for transactional capabilities.

As many retailers look to move shopping experiences online during the pandemic, the impetus for having a strong e-commerce suite has markedly increased. The proliferation of commerce vendors has made it difficult to identify and shortlist the right solution, while the pandemic has also highlighted the importance of adopting new vendors quickly and efficiently: companies need to understand the top players in different commerce market landscapes.

IT is receiving a growing number of commerce platform requests and must be prepared to speak intelligently about requirements and the “art of the possible.”

Info-Tech’s Approach

• Leverage Info-Tech’s proven, road-tested approach to using personas and scenarios to build strong business drivers for your commerce strategy.
• Before selecting and deploying technology solutions, create a cohesive channel matrix outlining which channels your organization will support with transactional capabilities.
• Understand evolving trends in the commerce solution space, such as AI-driven product recommendations and integration with other essential enterprise applications (i.e. customer relationship management [CRM] and marketing automation platforms).
• Understand and apply operational best practices such as content optimization and dynamic personalization to improve the conversion rate via your e-commerce channels.

Info-Tech Insight

• Support the right transactional channels for the right customers: there is no “one-size-fits-all” approach to commerce enablement – understand your customers to drive selection of the right transactional channels.
• Don’t assume that “traditional” commerce channels have stagnated: IoT, customer analytics, and blended retail are reinvigorating brick-and-mortar selling.
• Don’t buy best-of-breed; buy best-for-you: base commerce vendor selection on your requirements and use cases, not on the vendor’s overall performance.

A strong commerce strategy is an essential component of a savvy approach to customer experience management

A commerce strategy outlines an organization’s approach to selling its products and services. A strong commerce strategy identifies target customers’ personas, commerce journeys that the organization wants to support, and the channels that the organization will use to transact with customers.

Many commerce strategies encompass two distinct but complementary branches: a commerce strategy for transacting through traditional channels and an e-commerce strategy. While the latter often receives more attention from IT, it still falls on IT leaders to provide the appropriate enabling technologies to support traditional brick-and-mortar channels as well. Traditional channels have also undergone a digital renaissance in recent years, with forward-looking companies capitalizing on new technology to enhance customer experiences in their stores.

Traditional Channels

• Physical Stores (Brick and Mortar)
• Kiosks or Pop-Up Stores
• Telesales
• Mail Orders
• EDI Transactions

E-Commerce Channels

• E-Commerce Websites
• Mobile Commerce Apps
• Embedded Social Shopping
• Customer Portals
• Configure Price Quote Tool Sets (CPQ)
• Hybrid Retail

Info-Tech Insight

To better serve their customers, many companies position themselves as “click-and-mortar” shops – allowing customers to transact at a store or online.

Customers’ expectations are on the rise: meet them!

Today’s consumers expect speed, convenience, and tailored experiences at every stage of the customer lifecycle. Successful organizations strive to support these expectations.

58%
of retail customers admitted that their expectations now are higher than they were a year ago (FinancesOnline).

70%
of consumers between the ages of 18 and 34 have increasing customer expectations year after year (FinancesOnline).

69%
of consumers now expect store associates to be armed with a mobile device to deliver value-added services, such as looking up product information and checking inventory (V12).

73%
of support leaders agree that customer expectations are increasing, but only…

42%
of support leaders are confident that they’re actually meeting those expectations.

How can you be sure that you are meeting your customers’ expectations?

1. Offer more personalization throughout the entire customer journey
2. Practice quality customer service – ensure staff have up-to-date knowledge and offer quick resolution time for complaints
3. Focus on offering low-effort experiences and easy-to-use platforms (i.e. “one-click buying”)
4. Ensure your products and services perform well and do what they’re meant to do
5. Ensure omnichannel availability – 9 in 10 consumers want a seamless omnichannel experience

Info-Tech Insight

Customers expect to interact with organizations through the channels of their choice. Now more than ever, you must enable your organization to provide tailored commerce and transactional experiences.

Omnichannel commerce is the way of the future

Create a strategy that embraces this reality with the right tools!

Get ahead of the competition by doing omnichannel right! Devise a strategy that allows you to create and maintain a consistent, seamless commerce experience by optimizing operations with an omnichannel framework. Customers want to interact with you on their own terms, and it falls to IT to ensure that applications are in place to support and manage both traditional and e-commerce channels. There must also be consistency of copy, collateral, offers, and pricing between commerce channels.

71%
of consumers want a consistent experience across all channels, but only…

29%
say that they actually get it.

(Source: Business 2 Community, 2020)

Omnichannel is a “multichannel approach that aims to provide customers with a personalized, integrated, and seamless shopping experience across diverse touchpoints and devices.”
Source: RingCentral, 2021

IT is responsible for providing technology enablement of the commerce strategy: e-commerce platforms are a cornerstone

An e-commerce platform is an enterprise application that provides end-to-end capabilities for allowing customers to purchase products or services from your company via an online channel (e.g. a traditional website, a mobile application, or an embedded link in a social media post). Modern e-commerce platforms are essential for delivering a frictionless customer journey when it comes to purchasing online.

$6.388
trillion dollars worth of sales will be conducted online by 2024 (eMarketer, 14 Jan. 2021).

44%
of all e-commerce transactions are expected to be completed via a mobile device by 2024 (Insider).

21.8%
of all sales will be made from online purchases by 2024 (eMarketer, 14 Jan. 2021).

Strong E-Commerce Platforms Enable a Wide Range of Functional Areas:

• Product Catalog Management
• Web Content Delivery
• Product Search Engine
• Inventory Management
• Shopping Cart Management
• Discount and Coupon Management
• Return Management and Reverse Logistics
• Dynamic Personalization
• Dynamic Promotions
• Predictive Re-Targeting
• Predictive Product Recommendations
• Transaction Processing
• Compliance Management
• Commerce Workflow Management
• Loyalty Program Management
• Reporting and Analytics

An e-commerce solution boosts the effectiveness and efficiency of your operations and drives top-line growth

Take time to learn the capabilities of modern e-commerce applications. Understanding the “art of the possible” will help you to get the most out of your e-commerce platform.

An e-commerce platform helps marketers and sales staff in three primary ways:

1. It allows the organization to effectively and efficiently operate e-commerce operations at scale.
2. It allows commercial staff to have a single system for managing and monitoring all commercial activity through online channels.
3. It allows the organization to improve the customer-facing e-commerce experience, boosting conversions and top-line sales.

A dedicated e-commerce platform improves the efficiency of customer-commerce operations

• Workflow automation reduces the amount of time spent executing dynamic e-commerce campaigns.
• The use of internal or third-party data increases conversion effectiveness from customer databases across the organization.

Info-Tech Insight

A strong e-commerce provides marketers with the data they need to produce actionable insights about their customers.

Case Study

INDUSTRY - Retail
SOURCE - Salesforce (a)

PetSmart improves customer experience by leveraging a new commerce platform in the Salesforce ecosystem

PetSmart

PetSmart is a leading retailer of pet products, with a heavy footprint across North America. Historically, PetSmart was a brick-and-mortar retailer, but it has placed a heavy emphasis on being a true multi-channel “click-and-mortar” retailer to ensure it maintains relevance against competitors like Amazon.

E-Commerce Overhaul Initiative

To improve its e-commerce capabilities, PetSmart recognized that it needed to consolidate to a single, unified e-commerce platform to realize a 360-degree view of its customers. A new platform was also required to power dynamic and engaging experiences, with appropriate product recommendations and tailored content. To pursue this initiative, the company settled on Salesforce.com’s Commerce Cloud product after an exhaustive requirements definition effort and rigorous vendor selection approach.

Results

After platform implementation, PetSmart was able to effortlessly handle the massive transaction volumes associated with Black Friday and Cyber Monday and deliver 1:1 experiences that boosted conversion rates.

PetSmart standardized on the Commerce Cloud from Salesforce to great effect.

Case Study

Icebreaker exceeds customer expectations by using AI to power product recommendations

INDUSTRY - Retail
SOURCE - Salesforce (b)

Icebreaker

Icebreaker is a leading outerwear and lifestyle clothing company, operating six global websites and owning over 5,000 stores across 50 countries. Icebreaker is focused on providing its shoppers with accurate, real-time product suggestions to ensure it remains relevant in an increasingly competitive online market.

E-Commerce Overhaul Initiative

To improve its e-commerce capabilities, Icebreaker recognized that it needed to adopt a predictive recommendation engine that would offer its customers a more personalized shopping experience. This new system would need to leverage relevant data to provide both known and anonymous shoppers with product suggestions that are of interest to them. To pursue this initiative, Icebreaker settled on using Salesforce.com’s Commerce Cloud Einstein, a fully integrated AI.

Results

After integrating Commerce Cloud Einstein on all its global sites, Icebreaker was able to cross-sell and up-sell its merchandise more effectively by providing its shoppers with accurate product recommendations, ultimately increasing average order value.

IT must also provide technology enablement for other channels, such as point-of-sale systems for brick-and-mortar

Point-of-sale systems are the “real world” complement to e-commerce platforms. They provide functional capabilities for selling products in a physical store, including basic inventory management, cash register management, payment processing, and retail analytics. Many firms struggle with legacy POS environments that inhibit a modern customer experience.

$27.338
trillion dollars in retail sales are expected to be made globally in 2022 (eMarketer, 2022).

84%
of consumers believe that retailers should be doing more to integrate their online and offline channels (Invoca).

39%
of consumers are unlikely or very unlikely to visit a retailer’s store if the online store doesn’t provide physical store inventory information (V12).

Strong Point-of-Sale Platforms Enable a Wide Range of Functional Areas:

• Product Catalog Management
• Discount Management
• Coupon Management and Administration
• Cash Management
• Cash Register Reconciliation
• Product Identification (Barcode Management)
• Payment Processing
• Compliance Management
• Basic Inventory Management
• Commerce Workflow Management
• Exception Reporting and Overrides
• Loyalty Program Management
• Reporting and Analytics

E-commerce and POS don’t live in isolation

They’re key components of a well-oiled customer experience ecosystem!

Integrate commerce solutions with other customer experience applications – and with ERP or logistics systems – to handoff transactions for order fulfilment.

Having a customer master database – the central place where all up-to-the-minute data on a customer profile is stored – is essential for traditional and e-commerce success. Typically, the POS or e-commerce platform is not the system of record for the master customer profile: this information lives in a CRM platform or customer data warehouse. Conceptually, this system is at the center of the customer-experience ecosystem.

Strong POS and e-commerce solutions orchestrate transactions but typically do not do the heavy lifting in terms of order fulfilment, shipping logistics, economic inventory management, and reverse logistics (returns). In an enterprise-grade environment, these activities are executed by an enterprise resource planning (ERP) solution – integrating your commerce systems with a back-end ERP solution is a crucial step from an application architecture point of view.

Case Study

INDUSTRY - Retail
SOURCES - Amazon, n.d. CNET, 2020

Amazon is creating a hybrid omnichannel experience for retail by introducing innovative brick-and-mortar stores

Amazon

Amazon began as an online retailer of books in the mid-1990s, and rapidly expanded its product portfolio to nearly every category imaginable. Often hailed as the foremost success story in online commerce, the firm has driven customer loyalty via consistently strong product recommendations and a well-designed site.

Bringing Physical Retail Into the Digital Age

Beginning in 2016 (and expanding in 2018), Amazon introduced Amazon Go, a next-generation grocery retailer, to the Seattle market. While most firms that pursue an e-commerce strategy traditionally come from a brick-and-mortar background, Amazon upended the usual narrative: the world’s largest online retailer opening physical stores to become a true omnichannel, “click-and-mortar” vendor. From the get-go, Amazon Go focused on innovating the physical retail experience – using cameras, IoT capabilities, and mobile technologies to offer “checkout-free” virtual shopping carts that automatically know what products customers take off the shelves and bill their Amazon accounts accordingly.

Results

Amazon received a variety of industry and press accolades for re-inventing the physical store experience and it now owns and operates seven separate store brands, with more still on the horizon.

Case Study

INDUSTRY - Retail
SOURCES - Glossy, 2020

Old Navy

Old Navy is a clothing and accessories retail company that owns and operates over 1,200 stores across North America and China. Typically, Old Navy has relied on using traditional marketing approaches, but recently it has shifted to producing more digitally focused campaigns to drive revenue.

Bringing Physical Retail Into the Digital Age

To overcome pandemic-related difficulties, including temporary store closures, Old Navy knew that it had to have strong holiday sales in 2020. With the goal of stimulating retail sales growth and maximizing its pre-existing omnichannel capabilities, Old Navy decided to focus more of its holiday campaign efforts online than in years past. With this campaign centered on connected TV platforms, such as Hulu, and social media channels including Facebook, Instagram, and TikTok, Old Navy was able to take a more unique, fun, and good-humored approach to marketing.

Results

Old Navy’s digitally focused campaign was a success. When compared with third quarter sales figures from 2019, third quarter net sales for 2020 increased by 15% and comparable sales increased by 17%.

Info-Tech offers various levels of support to best suit your needs

DIY Toolkit

“Our team has already made this critical project a priority, and we have the time and capability, but some guidance along the way would be helpful.”

Guided Implementation

“Our team knows that we need to fix a process, but we need assistance to determine where to focus. Some check-ins along the way would help keep us on track.”

Workshop

“We need to hit the ground running and get this project kicked off immediately. Our team has the ability to take this over once we get a framework and strategy in place.”

Consulting

“Our team does not have the time or the knowledge to take this project on. We need assistance through the entirety of this project.”

Diagnostics and consistent frameworks used throughout all four options

Guided Implementation

What does a typical GI on this topic look like?

A Guided Implementation (GI) is a series of calls with an Info-Tech analyst to help implement our best practices in your organization.

A typical GI is between 8 to 12 calls over the course of 4 to 6 months.

Enable Omnichannel Commerce That Delights Your Customers – Project Overview

Phase 1

Identify Critical Drivers for Your Omnichannel Commerce Strategy

1.1 Assess Personas and Scenarios

1.2 Create Key Drivers and Metrics

Enable Omnichannel Commerce That Delights Your Customers

Step 1.1

Assess Personas and Scenarios

This step will walk you through the following activities:

1.1.1 Build key customer personas for your commerce strategy.

1.1.2 Create commerce scenarios (journey maps) that you need to enable.

Identify Critical Drivers for Your Omnichannel Commerce Strategy

This step involves the following participants:

• Business stakeholders (Sales, Marketing)
• IT project team

Outcomes of this step:

• Critical customer personas
• Key traditional and e-commerce scenarios

Use customer personas to picture who will be using your commerce channels and guide scenario design and key drivers

What Are Personas?

Personas are detailed descriptions of the targeted audience of your e-commerce presence. Effective personas:

• Express and focus on the major needs and expectations of the most important user groups.
• Give a clear picture of the typical user’s behavior.
• Aid in uncovering universal features and functionality.
• Describe real people with backgrounds, goals, and values.

Source: Usability.gov, n.d.

Why Are Personas Important?

Personas help:

• Focus the development of commerce platform features on the immediate needs of the intended audience.
• Detail the level of customization needed to ensure content is valuable to the user.
• Describe how users may behave when certain audio and visual stimulus are triggered from the website.
• Outline the special design considerations required to meet user accessibility needs.

Key Elements of a Persona:

• Persona Group (e.g. executives)
• Demographics (e.g. nationality, age, language spoken)
• Purpose of Using Commerce Channels (e.g. product search versus ready to transact)
• Typical Behaviors and Tendencies (e.g. goes to different websites when cannot find products in 20 seconds)
• Technological Environment of User (e.g. devices, browsers, network connection)
• Professional and Technical Skills and Experiences (e.g. knowledge of websites, area of expertise)

Use Info-Tech’s guidelines to assist in the creation of personas

How many personas should I create?

The number of personas that should be created is based on the organizational coverage of your commerce strategy. Here are some questions you should ask:

• Do the personas cover a majority of your revenues or product lines?
• Is the number manageable for your project team to map out?

How do I prioritize which personas to create?

The identified personas should generate the most revenue – or provide a significant opportunity – for your business. Here are some questions that you should ask:

• Are the personas prioritized based on the revenue they generate for the business?
• Is the persona prioritization process considering both the present and future revenues the persona is generating?

Sample: persona for e-commerce platform

Example

Persona quote: “After I call the company about the widget, I would usually go onto the company’s website and look at further details about the product. How am I supposed to do so when it is so hard to find the company’s website on everyday search engines, such as Google, Yahoo, or Bing?”

Michael is a middle-aged manager working in the financial district. He wants to buy the company’s widgets for use in his home, but since he is distrusting of online shopping, he prefers to call the company’s call center first. Afterwards, if Michael is convinced by the call center representative, he will look at the company’s website for further research before making his purchase.

Michael does not have a lot of free time on his hands, and tries to make his free time as relaxing as possible. Due to most of his work being client-facing, he is not in front of a computer most of the time during his work. As such, Michael does not consider himself to be skilled with technology. Once he makes the decision to purchase, Michael will conduct online transactions and pay most delivery costs due to his shortage of time.

Needs:

• Easy-to-find website and widget information.
• Online purchasing and delivery services.
• Answer to his questions about the widget.
• To maintain contact post-purchase for easy future transactions.

Info-Tech Tip

The quote attached to a persona should be from actual quotes that your customers have used when you reviewed your voice of the customer (VoC) surveys or focus groups to drive home the impact of their issues with your company.

1.1.1 Activity: Build personas for your key customers that you’ll need to support via traditional and e-commerce channels

1 hour

1. In two to four groups, list all the major, target customer personas that need to be built. In doing so, consider the people who interact with your e-commerce site (or other channels) most often.
2. Build a demographic profile for each customer persona. Include information such as age, geographic location, occupation, and annual income.
3. Augment the persona with a psychographic profile. Consider the goals and objectives of each customer persona and how these might inform buyer behaviors.
4. Introduce your group’s personas to the entire group, in a round-robin fashion, as if you are introducing your persona at a party.
5. Summarize the personas in a persona map. Rank your personas according to importance and remove any duplicates.
6. Use Info-Tech’s Create Personas to Drive Omnichannel Requirements Template to assist.

Info-Tech Insight

Persona building is typically used for understanding the external customer; however, if you need to gain a better understanding of the organization’s internal customers (those who will be interacting with the e-commerce platform), personas can also be built for this purpose. Examples of useful internal personas are sales managers, brand managers, and customer service directors.

1.1.1 Activity: Build personas for your key customers that you’ll need to support via traditional and e-commerce channels (continued)

Input

• Customer demographics and psychographics

Output

• List of prioritized customer personas

Materials

• Whiteboard
• Markers

Participants

• Project team

Build use-case scenarios to model the transactional customer journey and inform drivers for your commerce strategy

A use-case scenario is a story or narrative that helps explore the set of interactions that a customer has with an organization. Scenario mapping will help identify key business and technology drivers as well as more granular functional requirements for POS or e-commerce platform selection.

A GOOD SCENARIO…

• Describes specific task(s) that need to be accomplished.
• Describes user goals and motivations.
• Describes interactions with a compelling but not overwhelming amount of detail.
• Can be rough, as long as it provokes ideas and discussion.

SCENARIOS ARE USED TO...

• Provide a shared understanding about what a user might want to do and how they might want to do it.
• Help construct the sequence of events that are necessary to address in your user interface(s).

TO CREATE GOOD SCENARIOS…

• Keep scenarios high level, not granular, in nature.
• Identify as many scenarios as possible. If you’re time constrained, try to develop two to three key scenarios per persona.
• Sketch each scenario out so that stakeholders understand the goal of the scenario.

1.1.2 Exercise: Build commerce user scenarios to understand what you want your customers to do from a transactional viewpoint

1 hour

Example

Simplified E-Commerce Workflow Purchase Products

Step 1.2

Create Key Drivers and Metrics

This step will walk you through the following activities:

• Create the business drivers you need to enable with your commerce strategy.
• Enumerate metrics to track the efficacy of your commerce strategy.

Identify Critical Drivers for Your Omnichannel Commerce Strategy

This step involves the following participants:

• Business stakeholders (Sales, Marketing)
• IT project team

Outcomes of this step:

• Business drivers for the commerce strategy
• Metrics and key performance indicators for the commerce strategy

1.2 Finish elaboration of your scenarios and map them to your personas: identify core business drivers for commerce

1.5 hours

1. List all commerce scenarios required to satisfy the immediate needs of your personas.
   1. Does the use-case scenario address commonly felt user challenges?
   2. Can the scenario be used by those with changing behaviors and tendencies?
2. Look for recurring themes in use-case scenarios (for example, increasing average transaction cost through better product recommendations) and identify business drivers: drivers are common thematic elements that can be found across multiple scenarios. These are the key principles for your commerce strategy.
3. Prioritize your use cases by leveraging the priorities of your business drivers.

Example

1.2 Finish elaboration of your scenarios and map them to your personas: identify core business drivers for commerce (continuation)

Input

• User personas

Output

• List of use cases
• Alignment of use cases to business objectives

Materials

• Whiteboard
• Markers

Participants

• Business Analyst
• Developer
• Designer

Show the benefits of commerce solution deployment with metrics aimed at both overall efficacy and platform adoption

The ROI and perceived value of the organization’s e-commerce and POS solutions will be a critical indication of the success of the suite’s selection and implementation.

Info-Tech Insight

Even if e-commerce metrics are difficult to track right now, the implementation of a dedicated e-commerce platform brings access to valuable customer intelligence from data that was once kept in silos.

Phase 2

Map Drivers to the Right Channels and Technologies

2.1 Build the Commerce Channel Matrix

2.2 Review Technology and Trends Primer

Enable Omnichannel Commerce That Delights Your Customers

Step 2.1

Build the Commerce Channel Matrix

This step will walk you through the following activities:

• Based on your business drivers, create a blended mix of e-commerce channels that will suit your organization’s and customers’ needs.

Map Drivers to the Right Channels and Technologies

This step involves the following participants:

• Business stakeholders (Sales, Marketing)
• IT project team

Outcomes of this step:

• Commerce channel map

Pick the transactional channels that align with your customer personas and enable your target scenarios and drivers

Info-Tech Insight

Your channel selections should be driven by customer personas and scenarios. For example, social media may be extensively employed by some persona types (i.e. millennials) but see limited adoption in other demographics or use cases (i.e. B2B).

2.1 Activity: Build your commerce channel matrix

30 minutes

1. Inventory which transactional channels are currently used by your firm (segment by product lines if variation exists).
2. Interview product leaders, sales leaders, and marketing managers to determine if channels support transactional capabilities or are used for marketing and service delivery.
3. Review your customer personas, scenarios, and drivers and assess which of the channels you will use in the future to sell products and services. Document below.

Example: Commerce Channel Map

Input

• Personas, scenarios, and driver

Output

• Channel map

Materials

• Whiteboard
• Markers

Participants

• Project team

Step 2.2

Review Technology and Trends Primer

This step will walk you through the following activities:

• Review the scope of e-commerce and POS solutions and understand key drivers impacting e-commerce and traditional commerce.

Map Drivers to the Right Channels and Technologies

This step involves the following participants:

• Business stakeholders (Sales, Marketing)
• IT project team

Outcomes of this step:

• Understanding of key technologies
• Understanding of key trends

Application spotlight: e-commerce platforms

How It Enables Your Strategy

• Modern e-commerce platforms provide capabilities for end-to-end orchestration of online commerce experiences, from product site deployment to payment processing.
• Some e-commerce platforms are purpose-built for business-to-business (B2B) commerce, emphasizing customer portals and EDI features. Other e-commerce vendors place more emphasis on business-to-consumer (B2C) capabilities, such as product catalog management and executing transactions at scale.
• There has been an increasing degree of overlap between traditional web experience management solutions and the e-commerce market; for example, in 2018, Adobe acquired Magento to augment its overall web experience offering within Adobe Experience Manager.
• E-commerce platforms typically fall short when it comes to order fulfilment and logistics; this piece of the puzzle is typically orchestrated via an ERP system or logistics management module.
• This research provides a starting place for defining e-commerce requirements and selection artefacts.

Key Trends

• E-commerce vendors are rapidly supporting a variety of form factors and integration with other channels such as social media. Mobile is sufficiently popular that some vendors and industry commentators refer to it as “m-commerce” to differentiate app-based shopping experiences from those accessed through a traditional browser.
• Hybrid commerce is driving more interplay between e-commerce solutions and POS.

E-Commerce KPIs

Strong e-commerce applications can improve:

• Bounce Rates
• Exit Rates
• Lead Conversion Rates
• Cart Abandonment Rates
• Re-Targeting Efficacy
• Average Cart Size
• Average Cart Value
• Customer Lifetime Value
• Aggregate Reach/Impressions

Familiarize yourself with the e-commerce market

How it got here

Initial Traction as the Dot-Com Era Came to Fruition

Unlike some enterprise application markets, such as CRM, the e-commerce market appeared almost overnight during the mid-to-late nineties as the dot-com explosion fueled the need to have reliable solutions for executing transactions online.

Early e-commerce solutions were less full-fledged suites than they were mediums for payment processing and basic product list management. PayPal and other services like Digital River were pioneers in the space, but their functionality was limited vis-à-vis tools such as web content management platforms, and their ability to amalgamate and analyze the data necessary for dynamic personalization and re-targeting was virtually non-existent.

Rapidly Expanding Scope of Functional Capabilities as the Market Matured

As marketers became more sophisticated and companies put an increased focus on customer experience and omnichannel interaction, the need arose for platforms that were significantly more feature rich than their early contemporaries. In this context, vendors such as Shopify and Demandware stepped into the limelight, offering far richer functionality and analytics than previous offerings, such as asset management, dynamic personalization, and the ability to re-target customers who abandoned their carts.

As the market has matured, there has also been a series of acquisitions of some players (for example, Demandware by Salesforce) and IPOs of others (i.e. Shopify). Traditional payment-oriented services like PayPal still fill an important niche, while newer entrants like Square seek to disrupt both the e-commerce market and point-of-sale solutions to boot.

Familiarize yourself with the e-commerce market

Where it’s going

Support for a Proliferation of Form Factors and Channels

Modern e-commerce solutions are expanding the number of form factors (smartphones, tablets) they support via both responsive design and in-app capabilities. Many platforms now also support embedded purchasing options in non-owned channels (for example, social media). With the pandemic leading to a heightened affinity for online shopping, the importance of fully using these capabilities has been further emphasized.

AI and Machine Learning

E-commerce is another customer experience domain ripe for transformation via the potential of artificial intelligence. Machine learning algorithms are being used to enhance the effectiveness of dynamic personalization of product collateral, improve the accuracy of product recommendations, and allow for more effective re-targeting campaigns of customers who did not make a purchase.

Merger of Online Commerce and Traditional Point-of-Sale

Many e-commerce vendors – particularly the large players – are now going beyond traditional e-commerce and making plays into brick-and-mortar environments, offering point-of-sale capabilities and the ability to display product assets and customizations via augmented reality – truly blending the physical and virtual shopping experience.

Emphasis on Integration with the Broader Customer Experience Ecosystem

The big names in e-commerce recognize they don’t live on an island: out-of-the-box integrations with popular CRM, web experience, and marketing automation platforms have been increasing at a breakneck pace. Support for digital wallets has also become increasingly popular, with many vendors integrating contactless payment technology (i.e. Apple Pay) directly into their applications.

E-Commerce Vendor Snapshot: Part 1

Mid-Market E-Commerce Solutions

E-Commerce Vendor Snapshot: Part 2

Large Enterprise and Full-Suite E-Commerce Platforms

Speak with category experts to dive deeper into the vendor landscape

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Evaluate software category leaders through vendor rankings and awards

SoftwareReviews

The Data Quadrant is a thorough evaluation and ranking of all software in an individual category to compare platforms across multiple dimensions.

Vendors are ranked by their Composite Score, based on individual feature evaluations, user satisfaction rankings, vendor capability comparisons, and likeliness to recommend the platform.

The Emotional Footprint is a powerful indicator of overall user sentiment toward the relationship with the vendor, capturing data across five dimensions.

Vendors are ranked by their Customer Experience (CX) Score, which combines the overall Emotional Footprint rating with a measure of the value delivered by the solution.

Leading B2B E-Commerce Platforms

As of February 2022

Data Quadrant

Emotional Footprint

Leading B2C E-Commerce Platforms

As of February 2022

Data Quadrant

Emotional Footprint

Application spotlight: point-of-sale solutions

How It Enables Your Strategy

• Point-of-sale solutions provide capabilities for cash register/terminal management, transaction processing, and lightweight inventory management.
• Many POS vendors also offer products that have the ability to create orders from EDI, phone, or fax channels.
• An increasing emphasis has been placed on retail analytics by POS vendors – providing reporting and analysis tools to help with inventory planning, promotion management, and product recommendations.
• Integration of POS systems with a central customer data warehouse or other system of record for customer information allows for the ability to build richer customer profiles and compare shopping habits in physical stores against other transactional channels that are offered.
• POS vendors often offer (or integrate with) loyalty management solutions to track, manage, and redeem loyalty points. See this note on loyalty management systems.
• Legacy and/or homegrown POS systems tend to be an area of frustration for customer experience management modernization.

Key Trends

• POS solutions are moving from “cash-register-only” solutions to encompass mobile POS form factors like smartphones and tablets. Vendors such as Square have experienced tremendous growth in opening up the market via “mPOS” platforms that have lower costs to entry than the traditional hardware needed to support full-fledged POS solutions.
• This development puts robust POS toolsets in the hands of small and medium businesses that otherwise would be priced out of the market.

POS KPIs

Strong POS applications can improve:

• Customer Data Collection
• Inventory or Cash Shrinkage
• Cost per Transaction
• Loyalty Program Administration Costs
• Cycle Time for Transaction Execution

Point-of-Sales Vendor Snapshot: Part 1

Mid-Market POS Solutions

Point-of-Sales Vendor Snapshot: Part 2

Large Enterprise POS Platforms

Leading Retail POS Systems

As of February 2022

Data Quadrant

Emotional Footprint

Summary of Accomplishment

Knowledge Gained

• Commerce channel framework
• Customer affinities
• Commerce channel overview
• Commerce-enabling technologies

Processes Optimized

• Persona definition for commerce strategy
• Persona channel shortlist

Deliverables Completed

• Customer personas
• Commerce user scenarios
• Business drivers for traditional commerce and e-commerce
• Channel matrix for omnichannel commerce

Bibliography

“25 Amazing Omnichannel Statistics Every Marketer Should Know (Updated for 2021).” V12, 29 June 2021. Accessed 12 Jan. 2022.

“Amazon Go.” Amazon, n.d. Web.

Andersen, Derek. “33 Statistics Retail Marketers Need to Know in 2021.” Invoca, 19 July 2021. Accessed 12 Jan. 2022.

Andre, Louie. “115 Critical Customer Support Software Statistics: 2022 Market Share Analysis & Data.” FinancesOnline, 14 Jan. 2022. Accessed 25 Jan. 2022.

Chuang, Courtney. “The future of support: 5 key trends that will shape customer care in 2022.” Intercom, 10 Jan. 2022. Accessed 11 Jan. 2022.

Cramer-Flood, Ethan. “Global Ecommerce Update 2021.” eMarketer, 13 Jan. 2021. Accessed 12 Jan. 2022.

Cramer-Flood, Ethan. “Spotlight on total global retail: Brick-and-mortar returns with a vengeance.” eMarketer, 3 Feb. 2022. Accessed 12 Apr. 2022.

Fox Rubin, Ben. “Amazon now operates seven different kinds of physical stores. Here's why.” CNET, 28 Feb. 2020. Accessed 12 Jan. 2022.

Krajewski, Laura. “16 Statistics on Why Omnichannel is the Future of Your Contact Center and the Foundation for a Top-Notch Competitive Customer Experience.” Business 2 Community, 10 July 2020. Accessed 11 Jan. 2022.

Manoff, Jill. “Fun and convenience: CEO Nany Green on Old Navy’s priorities for holiday.” Glossy, 8 Dec. 2020. Accessed 12 Jan. 2022.

Meola, Andrew. “Rise of M-Commerce: Mobile Ecommerce Shopping Stats & Trends in 2021.” Insider, 30 Dec. 2020. Accessed 12 Jan. 2022.

“Outdoor apparel retailer Icebreaker uses AI to exceed shopper expectations.” Salesforce, n.d.(a). Accessed 20 Jan. 2022.

“Personas.” Usability.gov., n.d. Web. 28 Aug. 2018.

“PetSmart – Why Commerce Cloud?” Salesforce, n.d.(b). Web. 30 April 2018.

Toor, Meena. “Customer expectations: 7 Types all exceptional researchers must understand.” Qualtrics, 3 Dec. 2020. Accessed 11 Jan. 2022.

Westfall, Leigh. “Omnichannel vs. multichannel: What's the difference?” RingCentral, 10 Sept. 2021. Accessed 11 Jan. 2022.

“Worldwide ecommerce will approach $5 trillion this year.” eMarketer, 14 Jan. 2021. Accessed 12 Jan. 2022.

z/Series Modernization and Migration

The biggest migration is yet to come.

Executive Summary

Info-Tech Insight

“A number of market conditions have coalesced in a way that is increasingly driving existing mainframe customers to consider running their application workloads on alternative platforms. In 2020, the World Economic Forum noted that 42% of core skills required to perform existing jobs are expected to change by 2022, and that more than 1 billion workers need to be reskilled by 2030.” – Dale Vecchio

Review

We help IT leaders make the most of their z/Series environment

Analyst Perspective

Good Luck.

Modernize the mainframe … here we go again. Prior to 2020, most organizations were muddling around in “year eleven of the four-year plan” to exit the mainframe platform where a medium-term commitment to the platform existed. Since 2020, it appears the appetite for the mainframe platform changed. Again. Discussions mostly seem to be about what the options are beyond hardware outsourcing or re-platforming to “cloud” migration of workloads – mostly planning and strategy topics. A word of caution: it would appear unwise to stand in front of the exit door for fear of being trampled. Hardware expirations between now and 2025 are motivating hosting deployments. Others are in migration activities, and some have already decommissioned and migrated but now are trying to rehab the operations team now lacking direction and/or structure. There is little doubt that modernization and “digital transformation” trends will drive more exit traffic, so IT leaders who are still under pressure to get off the platform need to assess their options and decide. Being in a state of perpetually planning to get off the mainframe handcuffs your ability to invest in the mainframe, address deficiencies, and improve cost-effectiveness.

Darin Stahl Principal Research Advisor, Infrastructure & Operations Research Info-Tech Research Group

The mainframe “fidget spinner”

Thinking of modernizing your mainframe can cause you angst so grab a fidget spinner and relax because we have you covered!

External Business Pressures:

• Digital transformation
• Modernization programs
• Compliance and regulations
• TCO

Internal Considerations:

• Reinvest
• Migrate to a new platform
• Evaluate public and vendor cloud alternatives
• Hosting versus infrastructure outsourcing

Info-Tech Insight

With multiple control points to be addressed, care must be taken to simplify your options while addressing all concerns to ease operational load.

The analyst call review

“Who has Darin talked with?” – Troy Cheeseman

Scale out versus scale up

Consider your resourcing

Understand your options

Migrate

Having perpetual plans to migrate handcuffs your ability to invest in your mainframe, extend its value, and improve cost effectiveness.

Hosting

Using a hosting provider is typically more cost-effective than running your mainframe in-house.

Potential for reduced costs

• Hosting enables you to reduce or eliminate your mainframe staff.
• Economies of scale enable hosting providers to reduce software licensing costs. They also have more buying power to negotiate better terms.
• Power and cooling costs are also transferred to the hosting provider.

Reliable infrastructure and experienced staff

• A quality hosting provider will have 24/7 monitoring, full redundancy, and proven disaster recovery capabilities.
• The hosting provider will also have a larger mainframe staff, so they don’t have the same risk of suddenly being without those advanced critical skills.

So, what are the risks?

• A transition to a hosting provider usually means eliminating or significantly reducing your in-house mainframe staff. With that loss of in-house expertise, it will be next to impossible to bring the mainframe back in-house, and you become highly dependent on your hosting provider.

Outsourcing

Re-platform – z/Series COBOL Cloud

Re-platforming is not trivial.

Re-platform – z/Series (Non-COBOL)

But what if it's not COBOL?

Reinvest

By contrast, reducing the use of your mainframe makes it less cost-effective and more challenging to retain in-house expertise.

• For organizations that have migrated applications off the mainframe (at least partly to reduce dependency on the platform), inevitably there remains a core set of mission critical applications that cannot be moved off for reasons described on the “Migrate” slide. This is when the mainframe becomes a costly burden:
  • TCO is relatively high due to low utilization.
  • In-house expertise declines as workload declines and current staffing allocations become harder to justify.
• Organizations that are instead adding capacity and finding new ways to use this platform have lower cost concerns and resourcing challenges. The charts below illustrate this correlation. While some capacity growth is due to normal business growth, some is also due to new workloads, and it reflects an ongoing commitment to the platform.

*92% of organizations that added capacity said TCO is lower than for commodity servers (compared to 50% of those who did not add capacity)	*63% of organizations that added capacity said finding resources is not very difficult (compared to 42% of those who did not add capacity)

*Maximize the Value of IBM Mainframes in My Business

An important thought about data migration

Mainframe data migrations – “VSAM, IMS, etc.”

Enterprise class job scheduling

Job scheduling or data center automation?

• Enterprise class job scheduling solutions enable complex unattended batched programmatically conditioned task/job scheduling.
• Data center automation (DCIM) software automates and orchestrates the processes and workflow for infrastructure operations including provisioning, configuring, patching of physical, virtual, and cloud servers, and monitoring of tasks involved in maintaining the operations of a data center or Infrastructure environment.
• While there maybe some overlap and or confusion between data center automation and enterprise class job scheduling solutions, data center automation (DCIM) software solutions are least likely to have support for non-commodity server platforms and lack robust scheduling functionality.

Note: Enterprise job scheduling is a topic with low member interest or demand. Since our published research is driven by members’ interest and needs, the lack of activity or member demand would obviously be a significant influence into our ability to aggregate shared member insight, trends, or best practices in our published agenda.

Data Center Automation (DCIM) Software

Orchestration/Provisioning Software

Enterprise class job scheduling features

The feature set for these tools is long and comprehensive. The feature list below is not exhaustive as specific tools may have additional product capabilities. At a minimum, the solutions offered by the vendors in the list below will have the following capabilities:

Understand your vendors and tools

List and compare the job scheduling features of each vendor.

• This is not presented as an exhaustive list.
• The list relies on observations aggregated from analyst engagements with Info-Tech Research Group members. Those member discussions tend to be heavily tilted toward solutions supporting non-commodity platforms.
• Nothing is implied about a solution suitability or capability by the order of presentation or inclusion or absence in this list.

Info-Tech Insight

Creating vendor profiles will help quickly filter the solution providers that directly meet your z/Series needs.

Advanced Systems Concepts

ActiveBatch

*Advanced Systems Concepts, Inc.

BMC

Control-M

*BMC

Broadcom

Atomic Automation

Autosys Workload Automation

*Broadcom

HCL

Workload Automation