Digital business leaders are laser-focused on creating value. They drive digital initiatives to accelerate top-line growth. They use digital technologies that unlock and enhance revenue streams. Digital business strategy providers are crucial in this journey. They leverage their strategic market expertise and technological capabilities. Value creation should be at the center of each criterion for selecting digital service providers (see Figure below).
Figure: Criteria For Choosing A Service Provider For Value Creation
Source: Forrester
In a transforming market, delivering value for digital business strategy services is challenging. Service providers must move beyond traditional selling, managing, and delivery approaches. Enterprises and public sector organizations increasingly demand a greater focus on tangible value outcomes, provider accountability for results, and lasting sustainability through effective knowledge and technology transfer. The main challenges that digital business service providers need to address are:
- Pricing digital business strategy offerings. Clients demand that digital business service providers focus on delivering top-line financial value. This creates pricing challenges for providers if fees depend on value delivered. Traditional time- and material-based pricing is ineffective under these conditions. Providers are often required to commit to vested interests linked to variable performance outcomes. These are difficult to quantify and structure in agreements, especially when critical project execution stages fall beyond the scope of traditional strategy consulting.
- Quantifying the value delivered to clients. Clients expect comprehensive support in launching new digital business models, including strategy development, data foundation planning, digital product and service design, technology stack, and an implementation plan backed by financially sound business cases. Service providers must demonstrate clear business value across these areas using a set of metrics that prove the outcome.
- Managing multi-stakeholder relationships. Digital business service providers must navigate complex, multi-stakeholder environments. They engage with everyone from board-level executives to engineers. Board representations are increasingly deeply involved in digital projects. They demand governance frameworks and ROI calculations as well as business case confidence and value-delivery predictions and updates. Understanding the objectives of various stakeholders is crucial for providers to access digital budgets and deliver successful digital business services. For instance, budgets for user interface, data products, customer experience, and business value usually reside with the chief digital officer (CDO) or chief digital information officer (CDIO). Customer touchpoints are often owned by business units, while the basic tech infrastructure typically falls under the CIO.
The State Of Digital Business Strategy Services, 2024 provides a comprehensive overview of the challenges and opportunities that digital leaders encounter when partnering with service providers to craft and execute their digital business strategies.
