Say the word “outsourcing” in many organisations, and you’ll be met with a frosty reception. People will recount tales of how huge chunks of their company were laid off or sold off, and will talk about how things have never quite been the same since. They’ll talk about how it used to be possible to respond to changing customer demands quickly and swiftly, but now implementing any change takes forever because there is a rigid and inflexible contract in place with an external partner… and they may well argue the case for bringing the outsourced capability back in house.
In fact, in some organisations the word “outsourcing” has become a dirty word. Saying it creates controversy, and can even create ill feeling. There is no doubt that some companies have entered into ineffective outsourcing arrangements—perhaps they have chosen the wrong partner, outsourced a capability that was better serviced in house, or perhaps the relationship went sour. However, it’s important not to discount an entire solution approach, and in the ever-changing business environment that we live in, strategically outsourcing activities to carefully selected partners or Managed Service Providers (MSPs) can yield significant benefits. Whilst there are undoubtedly examples of outsourcing going wrong, where it is implemented well can be very beneficial indeed. It can help organisations to smooth demand, to expand into new areas quickly, and to secure expertise that they don’t want to (or can’t afford to) employ in house.
I’ll tell you what led me to write this article. Just the other day I realised that my car is overdue its annual service, and I was trying to figure out which garage to take it to. I was discussing this with a good friend of mine who knows a lot about cars, and he offered me some useful advice:
“Adrian, your car getting old. It’s important that you service it but the service history won’t add to its resale value any more. Why don’t you do a basic service yourself?”
I started to discuss with him what was involved. He started to talk about oil changes and air filters. He talked about some things that you can “easily” do at home. The trouble is, I’ve never been good with cars – mechanics just isn’t my thing. In fact, when I bought my first car I drove around with the bonnet (hood) unlatched (but luckily secured by the safety catch) for about a week because I’d pulled the hood release when trying to open the boot (trunk). Hey, I was younger back then…
The key point here is that I know I have no mechanical prowess—and neither do I have the will or desire to learn right now. The most effective thing for me to do is to take the car to an expert, and pay them to do the job. Doing it myself would be crazy—I’d take days to learn the skills, and even then I’d struggle and the job wouldn’t be done as well.
Essentially, I have subconsciously made the decision to “outsource” the maintenance of my car to a garage, and I expect many people reading this do the same thing. I also “outsource” most of my healthcare to a doctor, and most of my dental care to a dentist. Over time I’ve come to trust many of these professionals, and stick with them time and time again. With this in mind, doesn’t it make sense for businesses to outsource activities too? When carried out in a targeted and sensible way, this can help create more time for an organisation to focus on its core capabilities. In fact, most organisations are already outsourcing some activities—arguably when you buy software-as-a-service you are “outsourcing” the maintenance of those servers to a third party. Many organisations “outsource” delivery of parcels to couriers, rather than buying vans and hiring drivers.
Making it successful: What this means for business and business analysts
When we are considering helping our business stakeholders solve business problems, we’ll often intuitively think about how changes to processes, organisational structures and IT could potentially help. It’s also useful to think about how any capabilities are delivered—and whether they need to be in house, or whether expanding outside the organisational boundaries could be beneficial. Particularly if an organisation is expanding, or if it has spurious demand for a particular service, relying on an external third party could help ‘smooth’ that demand. Thinking about managed solution providers outside is another solution approach that merits consideration.
It’s time for us to stop thinking of outsourcing as a dirty word. If it’s done well, it can create situations where everyone is better off.
What are your views on this topic? How have you helped stakeholders make outsourcing work? I’d love to hear from you. Please add a comment below.
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This post was brought to you by IBM for MSPs and opinions are my own. To read more on this topic, visit IBM’s PivotPoint. Dedicated to providing valuable insight from industry thought leaders, PivotPoint offers expertise to help you develop, differentiate and scale your business.