Outsourcing and automation not mutually exclusive
Why not combine two seemingly opposed ways to raise efficiency, asks Barry Regan
Over the past decade, outsourcing and business process automation have been used by many organisations as separate ways to help improve the efficiency of IT.
Many companies have used third-party suppliers to deliver non-core processes such as IT support and call centres across all verticals, while one of the primary benefits of business process automation is removing non-value-add human interventions to make certain business operations faster.
The problem for organisations is that the quality and cost benefits from outsourcing and business process automation have largely dried up. Companies have banked the savings from large outsourcing contracts over the past 10 to 15 years and there are few new incremental savings to be found.
The largest contracts are also now a thing of the past, because more service providers are looking to have clear SLAs to minimise risk for the customer.
However, when profitability stumbles, managers seem to think they must either invest in business automation technology or outsource production.
And many companies don't look far enough ahead, walking down the wrong path, too quickly. One choice does not exclude the other.
By moving forward with the globalised provision of outsourced services, with experience in process automation from certain cloud enablers, there is the potential to achieve the cost savings seen in the initial wave of outsourcing nearly a decade ago.
Both can exist on shared or virtualised infrastructure, which can be shared evenly with other parties without compromise. In addition, the service source and delivery is independent of the location.
Good candidates for business automated and outsourced services will tend to have the capability for a uniform service, regardless of location or role of the end user. Desktop support is a classic example. Furthermore, business automation and outsourcing should both follow standard processes such as software testing, HR, security, payroll, and have consolidation as a design feature via server farms.
A combined business process automation and outsourcing strategy also needs to be considered as an opportunity by the end user IT team. While outsourcing can reduce the need for in-house IT, business process automation can require it.
And this should increase shareholder value as the years progress.
This will require an active collaboration between customers and suppliers on the efficiencies and innovation that business automation may bring. Some suppliers may resist the idea of a combined business automation and outsourcing strategy in an attempt to protect their own profits.
Those suppliers will remain wedded to a classical outsourcing model, and will be driven into offering commoditised services at lower prices and margins. These will not be the chosen partners of innovative companies that wish to move their business-critical applications into the cloud over the next few years.
Combined process automation and outsourcing services are long established in sectors such as manufacturing. For example, car makers have shared platforms that deliver multiple model ranges and rival glassmakers have built factories together.
This can happen in IT, where organisations are only just beginning to identify processes that can be automated and outsourced simultaneously as part of a single business transaction.
Barry Regan is UK partner manager for Visionapp