1. Much of what you say can also be applied to premise providers. For example, the need for a results oriented approach, rather than a widget oriented one, is no less important for those of us who push tin, not minutes. How does the aphorism go? No one’s ever listened herself out of a job (or a sale)?

2. Similarly, Llance’s comments should be heeded by premise providers. All of the vendors in this industry (in fact most industries) are constantly innovating to stay ahead of the commoditization curve. There are, of course, those who successfully embrace the inevitable and chase scale and service quality so they can stop trying to compete on features.

By and large, though, shiny features capture the attention of customers, even if dull ones are ultimately delivered (due to budget and timing constraints to be generous to vendors, and to technical challenges to be generous to customers).

An interesting, often overlooked, aspect of service that customers value almost above all other attributes is consistency. While we have many technologies at our disposal, we ought to consider the value of simply meeting customers’ expectations, rather than delighting them in some calls and completely letting them down in others. This variability destroys good will faster than a few great calls builds it.

But back to the point…

The hosted service providers have at least one key advantage - they can innovate much more quickly since they much more control over upgrade cycles. When shipping product, one always faces customers who do not want to upgrade (with very good reason, i.e., it’s working and the new features simply don’t justify an upgrade). End of life cycles take years to implement, so there’s a non-trivial tail to consider when allocating resources to support vs. R&D.

Google’s certainly taught us a lot in this area. It’ll be interesting to watch how they use the nature of hosted applications vs. shipped product to their advantage in the battle with MSFT.

In my experience, I have found that there is only a small fraction of outsourcers who are willing to go out on a limb, without the explicit direction of a customer. It’s a margins game for a service provider and there isn’t much room for error. But, the best service they can deliver, as a trusted advisor, is to look out for technologies that can bring the any advantage to the end client. Technology and expectations from technology are not static and the rules can be changed at any moment. The best thing is to stay true to value that is being delivered, but be smart when it comes to any advantage that technology, or a hybrid of technology and live agent can bring you.