Investment Rating - The report suggests a shift from traditional managed services to an AI-orchestrated model, indicating a positive outlook for companies adopting this new approach [5][36]. Core Insights - The traditional managed services model is inadequate for delivering real-time insights and resilience in today's fast-paced environment [2][3]. - The future of managed services lies in AI-powered orchestration, where intelligent agents handle transactional work, allowing humans to focus on advisory roles and governance [4][12]. - Organizations must transition to a new operating model that integrates AI into procurement and supply chain processes, enhancing efficiency and decision-making [10][36]. Summary by Sections Current Challenges - Traditional managed services are limited by manual workflows, siloed teams, and slow cycle times, which hinder scalability and insight generation [9][7]. - AI-enabled outsourcing improves efficiency but does not fundamentally change the operating model; true transformation requires AI-powered orchestration [10][12]. AI-Powered Operating Model - The new model consists of three layers: AI Foundation, Human Orchestration, and Client Value Outcomes [13][14]. - AI Foundation automates workflows and generates real-time insights, while Human Orchestration focuses on higher-value tasks and governance [15][18]. - Client Value Outcomes emphasize smarter decisions, proactive risk management, and enhanced supplier collaboration [23][35]. Transition to Fusion Pods - The delivery structure is evolving from siloed functions to integrated fusion pods, which combine category experts and AI agents to drive outcomes [25][30]. - This model simplifies complexity by coordinating tools and people around business outcomes rather than individual features [28][29]. Implementation Phases - The transition to an AI-orchestrated model should be phased, starting with automating 20%-30% of workflows and progressing to 60% autonomous operations over three years [32][31]. - The focus will shift from repetitive tasks to advisory roles, enhancing client partnerships and governance [32][36]. Strategic Implications - Embracing AI-powered orchestration provides organizations with advantages in cost, agility, resilience, and strategic impact [37][36]. - Companies that adapt to this model will outperform those that cling to outdated delivery methods [37].