Extreme Outsourcing: A Dangerous Sport?

Posted on : 27-09-2019 | By : kerry.housley | In : Uncategorized

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Recently I’ve thought about an event I attended in the early 2000’s, at which there was a speech that really stuck in my mind. The presenter gave a view on a future model of how companies would source their business operations, specifically the ratio of internally managed against that which would be transitioned to external providers (I can’t remember exactly the event, but it was in Paris and the keynote was someone you might remember, named Carly Fiorina…).

What I clearly remember, at the time, was a view that I considered to be a fairly extreme view of the potential end game. He asked the attendees:

Can you tell me what you think is the real value of organisations such as Coca Cola, IBM or Disney?

Answer: The brand.

It’s not the manufacturing process, or operations, or technology systems, or distribution, or marketing channels, or, or… Clearly everything that goes into the intellectual property to build the brand/product (such as the innovation and design) is important, but ultimately, how the product is built, delivered and operated offers no intrinsic value to the organisation. In these areas it’s all about efficiency.

In the future, companies like these would be a fraction of the size in terms of the internal staff operations.

Fast forward to today and perhaps this view is starting to gain some traction…at least to start the journey. For many decades, areas such as technology services have be sourced through external delivery partners. Necessity, fashion and individual preference have all driven CIOs into various sourcing models. Operations leaders have implemented Business Process Outsourcing (BPO) to low cost locations, as have other functions such the HR and Finance back offices.

But perhaps there are two more fundamental questions that CEOs or organisations should ask as they survey their business operations;

  • 1) What functions that we own actually differentiate us from our competitors?
  • 2) Can other companies run services better than us?

It is something that rarely gets either asked or answered in a way that is totally objective. That is of course a natural part of the culture, DNA and political landscape of organisations, particularly those that have longevity and legacy in developing internal service models. But is isn’t a question that can be kicked into the long grass anymore.

Despite the green shoots of economic recovery, there are no indications that the business environment is going to return to the heady days of large margins and costs being somewhat “consequential”. It’s going to be a very different competitive world, with increased external oversight and challenges/threats to companies, such as through regulation, disruptive business models and innovative new entrants.

We also need to take a step back and ask a third question…

  • 3) If we were building this company today, would we build and run it this way?

Again a difficult, and some would argue, irrelevant question. Companies have legacy operations and “technical debt” and that’s it…we just need to deal with it over time. The problem is, time may not be available.

In our discussions with clients, we are seeing that realisation may have dawned. Whilst many companies in recent years have reported significant reductions in staff numbers and costs, are we still just delaying the “death by a thousand cuts”? Some leaders, particularly in technology, have realised that not only running significant operations is untenable, but also that a more radical approach should be taken to move the bar much closer up the operating chain towards where the real business value lies.

Old sourcing models looked at drawing the line at functions such as Strategy, Architecture, Engineering, Security, Vendor Management, Change Management and the like. These were considered the valuable organisational assets. Now. I’m not saying that is incorrect, but what often has happened is that have been treated holistically and not broken down into where the real value lies. Indeed, for some organisations we’ve heard of Strategy & Architecture having between 500-1000 staff! (…and, these are not technology companies).

Each of these functions need to be assessed and the three questions asked. If done objectively, then I’m sure a different model would emerge for many companies with trusted service providers running much on the functions previously thought of as “retained”. It is both achievable, sensible and maybe necessary.

On the middle and front office side, the same can be asked. When CEOs look at the revenue generating business front office, whatever the industry, there are key people, processes and IP that make the company successful. However, there are also many areas where it was historically a necessity to run internally but actually adds no business value (although, of course still very key). If that’s the case, then it makes sense to source it from specialist provider where the economies of scale and challenges in terms of service (such as from “general regulatory requirements”) can be managed without detracting from the core business.

So, if you look at some of the key brands and their staff numbers today in the 10’s/100’s of thousands, it might only be those that focus on key business value and shed the supporting functions, that survive tomorrow.

The Challenges of Implementing Robotic Process Automation (RPA)

Posted on : 25-01-2019 | By : kerry.housley | In : Innovation, Uncategorized

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We recently surveyed our clients on their views around the future of technology in the workplace and the changes that they think are likely to shape their future working environment. 

One of the questions identified by many clients as a major challenge was around the adoption of RPA. We asked the question; 

“Do You Agree that RPA could improve the Efficiency of Your Business? 

Around 65% of the respondents to our survey agreed that RPA could improve the efficiency of their business, but many commented that they were put off by the challenges that needed to be overcome in order for RPA deployment to be a success. 

“The challenge is being able to identify how and where RPA is best deployed, avoiding any detrimental disruption 

In this article we will discuss in more detail the challenges, and what steps can be taken to ensure a more successful outcome. 

The benefits of RPA are:

  • Reduced operating costs
  • Increased productivity
  • Reduce employee’s workload to spend more time on higher value tasks
  • Get more done in less time! 

What Processes are Right for Automation? 

One of the challenges facing many organisations is deciding which processes are good for automation and which process to choose to automate first. This line from Bill Gates offers some good advice; 

automation applied to an inefficient operation will magnify the inefficiency” 

It follows therefore, that the first step in any automation journey is reviewing all of your business processes to ensure that they are all running as efficiently as possible.  You do not want to waste time, money and effort in implementing a robot to carry an inefficient process which will reap no rewards at all.  

Another challenge is choosing which process to automate first. In our experience, many clients have earmarked one of their most painful processes as process number one in order to heal the pain.  This fails more often than not because the most painful process is often one of the most difficult to automate.  Ideally, you want to pick a straightforward, highly repetitive process which will be easier to automate with simple results, clearly showing the benefits to automation. Buy-in at this stage from all stakeholders is critical if RPA is be successfully deployed further in the organisation. Management need to see the efficiency saving and employees can see how the robot can help them to do their job quicker and free up their time to do more interesting work. Employee resistance and onboarding should not be underestimated. Keeping workers in the loop and reducing the perceived threat is crucial to your RPA success.  

Collaboration is Key 

Successful RPA deployment is all about understanding and collaboration which if not approached carefully could ultimately lead to the failure of the project.  RPA in one sense, is just like any other piece of software that you will implement, but in another way it’s not. Implementation involves close scrutiny of an employee’s job with the employee feeling threatened by the fact that the robot may take over and they will be left redundant in the process.   

IT and the business must work closely together to ensure that process accuracy, cost reduction, and customer satisfaction benchmarks are met during implementation.  RPA implementation success is both IT- and business-driven, with RPA governance sitting directly in the space between business and IT. Failure to maintain consistent communication between these two sides will mean that project governance will be weak and that any obstacles, such as potential integration issues of RPA with existing programs, cannot be dealt effectively. 

Don’t Underestimate Change 

Change management should not be underestimated, the implementation of RPA is a major change in an organisation which needs to be planned for, and carefully managed. Consistently working through the change management aspects is critical to making RPA successful. It is important to set realistic expectations and look at RPA from an enterprise perspective focusing on the expected results and what will be delivered. 

 RPA = Better Business Outcomes 

RPA is a valuable automation asset in a company’s digital road map and can deliver great results if implemented well. However, often RPA implementations have not delivered the returns promised, impacted by the challenges we have discussed. Implementations that give significant consideration to the design phase and realise the importance of broader change management into the process will benefit from better business outcomes across the end-to-end process. Enterprises looking to embark on the RPA journey can have chance to take note, avoid the pitfalls and experience the success that RPA can bring. 

Five minutes with…

Posted on : 27-11-2015 | By : Maria Motyka | In : 5 Minutes With, Cloud, Cyber Security, Innovation

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We are doing a series of interviews with leaders to get their insight on the current technology market and business challenges. Here in our first one, we get thoughts from Stephen O’Donnell, who recently took up the post of CIO for UK & Ireland at G4S.

Which technology trends do you predict will be a key theme for 2016?

“The key trend is the adoption of cloud technology moving from the SME market space, where it is already strong, to really making an impact in the enterprise space.

We’ve seen cloud and SaaS being adopted by smaller companies and now it will be adopted by bigger enterprises. We’ve also seen support for cloud based services from major system integrators and software suppliers like Microsoft, SAP and so on. The time for IT delivered as a service has come and the cloud is about to become all-encompassing across the entire IT world.

This has big implications in the ways that CIO’s and business leaders need to manage their systems, away from low-level management of infrastructure into the management of services and concerns about service integration.

Fundamentally it’s a bit like the Hollywood movie industry moving from the silent movie era to the talking era. Not all of the actors made it through – they did not have the skills and experience and I think this is what will happen in the IT industry. Some IT leaders will have difficulties, others will be more successful thanks to their deeper understanding of the business impact of IT, how automation and cloud based services can really help businesses drive competitiveness and agility, reduce risk and cut costs.”

 

You recently joined G4S as CIO, the worlds leading international security solutions group. What is your vision for the future of technology services there?

“G4S are adopting the cloud very aggressively. We have 622,000 employees, we’re a really large entity and we have stopped using Microsoft technology and are now using Google and the cloud instead. This consists of Google Apps for work, Google Docs for word processing, Google Sheets for spreadsheets and Gmail for email and collaboration platforms. In terms of the cloud, we use Google Drive for storage, everything is now in the cloud and we access it through a browser.

You have no idea how much simpler the world becomes. All of the complexities fade away. It’s now very much about managing the cloud contract and ensuring that the end-users are familiar with the technology and are appropriately supported. It’s very simple, it integrates extremely well with any device. We’ve seen very happy customer experience – whether using a chromebook, a Mac, a PC with a browser – people can access the systems in the same way and just as securely. Wifi capabilities in the office also become a lot simpler and we don’t have to be worried about highly secured corporate networks.

I think everyone would agree that the world is moving away from landlines to mobile communications. From standard telephone calls to IP-based telephone calls: using – in the consumer space Skype and WhatsApp, in the business space Google Hangouts, Skype for Business and so on – we see a massive adoption of that in business. We’ve really adopted Google Hangouts for collaboration and conferencing and have moved away from desk phones to cellphones.

Even when you look at the shape of our business… we have a huge number of people and the vast majority of them are working on customer site because they are security guards there, they do facility management, they’re doing cash in transit. They’re working in public services, working for hospitals… Having landlines just doesn’t make sense.

The whole company has gone mobile I don’t have a desk phone and – actually – you know what? I don’t miss it at all. I have a cellphone and it works extremely well, when I want to collaborate I use some of the internet-based tools like Hangouts. Equally –  why do you need a fax? When was the last time you’ve sent or received a fax…?

Migration from fixed to mobile has been a key change in the workplace and I’ll be surprised if more companies don’t adopt this. It’s all about simplifying the environment and being more economical.”

 

In your opinion, what are the greatest challenges IT leaders face in terms of securing organisations’ critical data?

“It’s a very relevant question. In the aftermath of the Paris attacks by ISIS someone said the terrorists only have to be lucky once and the authorities need to be lucky all of the time. I think the same applies to corporate and corporate data security.

Everyone is under absolutely intense attack and due to the complex systems, we have to make assumptions that, regardless what we do, some of our critical data will become exposed.

It could be through employees or through contractors whom we trust who might choose to do the wrong thing, or it might be via external agents, who manage to overcome our security systems either by using technology or by stealth, for example phishing attacks getting access to our data.

I think the key things are that we can put all the peripheral protections on our data: firewalls, secure data centres, the man guards on the gates etc. but we have to encrypt the data.

We have to adopt digital rights management so that we can restrict the data to those who are supposed to see it and ensure that anyone who steals it won’t be able to use it due to encryption.

If you can’t publish your corporate data on the internet and know it’s safe, then it’s not safe. So it really needs to be encrypted and protected. That’s the core principle.”

 

You spent two years at Broadgate, what was the most rewarding client project you delivered working with them as a consultant?

“That’s a really difficult question as all my projects at Broadgate have been quite exciting. If you don’t mind I’ll tell you about the highlights of the things that I did as a Broadgate Consultant.

I worked in the insurance business for as Chief Technology Officer and I took a massive 2 year development backload and cut it down to delivering in real time. My change programme involved taking the company from being a waterfall software delivery shop into being an agile delivery shop.

It involved the entire Development Team and Project Managers and the end result was that in a very short period of 6 months, we changed the business and its view on the IT departments ability to deliver. A very positive outcome.”

 

It’s interesting how your work was also about changing businesses’ view on the importance of IT protection?

“I very much agree. I think that very often businesses wrongly focus merely on cost-cutting.

It is also worth noting, that a radical process, such as operating model change can be difficult for incumbent teams to deliver. Bringing in a fresh pair of hands, someone who doesn’t have the business-as-usual activities to get on with and can focus on change really accelerates such projects and helps business.

At a large retail bank, I went into the voice communications department. The organisation was spending £55m a year on third party costs – telecommunications, calls etc.. My work there was to introduce a new operating model – consolidating business into a single telecoms entity and cutting costs. In a very short period of time (11 months), I saved the company £27m and simultaneously dramatically improved service levels offered by the business, so it was a real success.

Another engagement was really a short but exciting project at a wealth management client who had a business imperative to modernise their IT platforms. It was a really exciting piece of work working with the CIO and we made the decision not to modernise IT platforms but migrate functionality into the cloud. The piece of work I was set to do was responsible for the new cloud strategy: assessing costs, determine what the approach should be, identifying critical success factors and considering the things that might get in the way of the client executing on their vision.”

 

What do you see as the biggest technology disrupters in data centre services?

“Just like everything else in the world, IT is commoditising and lately we’ve seen this accelerating.

Everyone uses IT, the younger generation check their Facebook and Instagram several times an hour, it’s an absolutely essential business tool – try to work without email – absolutely impossible.

The industry commoditises and consolidates and IT is becoming a service. We see large global organisations delivering IT services that are ready to be consumed, you don’t have to self-assemble them. If you buy a car you expect it to come with tyres and a steering wheel. That’s not how IT has been consumed – you had to buy all the parts separately and assemble them. That’s changing. It is all commoditising, it’s becoming holistic, delivered as a service.”