Facing immense competition and the bottom line pressure, IT services vendors are looking for ways to protect their positions. At the same time, clients are looking for solutions that will help them differentiate at a business process level. To combat this dual-faced issue, smart IT services firms are investing into building domain-specific and business-process-expertise based “Solution Accelerators” which work on re-usable software code, lower labour costs, and domain specific process automation principles.

Solutions accelerators are neither software products nor custom applications. Forrester defines Solution Accelerators as:

Pre-developed software that is used by the IT services firm to automate a particular business process or aspect of product development where 30% to 70% of the code can be reused across clients.

How solution accelerators will change the IT Services equations…

• Big firms expect 30-50% of revenues from solution accelerators in next 5-7 yrs
• Forrester expects solution accelerators to save 15-18% of overall project costs
• Solution accelerators will change the typical offshore advantage game from ‘Time & Material’ to ‘Value Pricing’

Early Implementations Demonstrate Benefits

An early success of experimenters amply justifies the benefits the solutions accelerators can deliver, which age-old frameworks and productivity tools could not. Some of these benefits are:

Non-linear ways of delivery to combat skill-shortage, rising staffing costs and attrition: Acute shortage of skills coupled with high costs drove western world firms to locations such as India, only to find similar issues arising in those geographies in a decade. Intense competition for resources has plagued the offshore business today, and firms are exploring if technology could help them break today’s direct, straight-line relationship between their manpower headcount and growth. Firms do believe that building intellectual property will help them get over the current HR challenges.

Improving productivity and domain skills to boost differentiation and margins: Top Indian vendors are raising the competitive bar in IT services space by furthering their process or quality leadership, and building domain niches via small to midsize acquisitions.

Make money in BPO: Present situation marred by rampant attrition and rising costs is taking a heavy toll on most BPO vendors’ margins, even pushing a few in losses. So to ensure the self-competitiveness, and achieve scales of volume and increased profitability, firms are building platforms for select segments of services they focus on.

Elements of the Solution Accelerators value equation

While some firms made strides and clients saw benefits in early deployments of solution accelerators, most efforts are in the stage of either nascence to adolescence. Following are essential characteristics of solution accelerators and distinguish it from the software products on one side and pure custom application on the other:

Ability to address unique business challenge: Solution accelerator is built around a known business issue or challenge. The approach of a solution needs to clearly demonstrate domain expertise that vendor has captured, and as it includes sizeable custom development; it becomes a unique proposition yet highly relevant to every client.

Faster to market: Its reusable coded components make it easy to deploy and shorten the time frame to go live. A detailed study of over a dozen solution accelerators shows an average time saving of 25 – 30% in implementation cycle for the client.

More predictable: As solution accelerators are developed with intention to deploy at multiple client sites, they are well tested and possibly even implemented earlier. This makes it a less risky bet as its outcome in terms of business benefit as well as time frame required to roll-out are predictable. In addition, modular architecture – mostly SOA based - and ability to deploy as a service (SaaS) makes it compelling as firms can implement incrementally after seeing benefit.

Saves money: The partial reuse of the code and domain expertise in architecting solution, coupled with majority development happening in the low-cost locations such as India makes it highly economic. Our research shows that when the concept will settle well and clients get ready to pay for the value, solution accelerators will yield a saving of 12 -15% in overall project cost.

Applicability across delivery mechanisms: The concept is adopted across all three major work or service delivery categories -custom built software, Software as a service, and BPO. A combination of industrialisation of services and intellectual property based accelerators applications span across verticals.

Sudin Apte is senior analyst and country head (India), Forrester Research