Best-of-Breed versus Bundled Services

Abstract

This chapter details the key research findings on the purchasing decisions clients make about bundling, or not bundling, ITO and BPO services. We define bundled services as “A mix of business process and/or IT services purchased separately or at the same time from the same provider where synergies and efficiencies are sought in end-to-end processing, governance, relationship management, cost and performance.” On this definition there can be bundling within IT, for example the same provider for infrastructure, applications, development; within BPO, for example training and development and payroll in the HR function; or across ITO and BPO services, for example procurement, IT applications, selected HR activities. The possible choices for bundling are considerable, making these complex decisions, with important cost and service consequences. In our view, bundling is an important trend that will grow considerably in the next five years, as providers mature their ability to deliver bigger scope offerings and clients develop their ability to plan for host and manage such deals.