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Sharing services May 27, 2011

Posted by Mark Hillary in Government, IT Services, Outsourcing.
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I have recently commented in this blog on the opportunities for sharing services that overlap, particularly in the public sector. Most organisations have similar support functions that can be shared with others, providing the right procedures around data security and ease of use are addressed.

This has not been questioned in the private sector because it is essential for survival. The private sector has had a rough ride in most developed economies since the downturn in 2008, and the UK is no exception. It could be argued that with growth still within the margin for error, the UK has yet to really recover.

So nobody has to convince private sector companies of the benefits for sharing HR, or payroll, or finance and accounting services, either through outsourcing or by reducing a multiplication of effort by several divisions within the same organisation. It seems that many in the public sector still need convincing though.

A new report from the analyst firm Ovum suggests that half of all European public sector CIOs don’t think that the savings are worth the upheaval. Changing software, systems, retraining staff, migrating data – it’s a complex process to venture into a shared service arrangement with no guarantee of success. But as the story in Computer Weekly notes, the NHS is doing it, police services are doing it, councils are doing it.

Is it time for the bar to be lowered on how much needs to be saved to make sharing worthwhile?

Collaboration drives innovation May 13, 2011

Posted by Mark Hillary in IT Services, Outsourcing.
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What is the biggest change in outsourcing over the past decade? Probably the level to which it has become an established part of the executive toolkit – no longer an exotic strategy adopted by the manager as he returns from a career-break spent completing an MBA at Harvard.

Outsourcing has become a normal and accepted business strategy for different types of company and business functions. But there is a world of difference between procuring a service and working with a partner. Despite the way most suppliers toss around ‘partnership’ during the sales process.

As outsourcing has matured though, it has become clear that it works best when there is a genuine sense of partnership and collaboration. This is hard to create, and even harder to sell, but it is possible.

What is needed though, is for the buyer of a service to appreciate that they are buying from an expert, not trying to find the cheapest possible deal from a company they don’t care about at all. The service provider has to understand that they are not going to just deliver a service at the lowest possible cost, but they are going to become an integral part of the client’s supply chain.

Traditionally the power has always been with the client. They are buying the service and they call the shots. But as it becomes clearer that many client firms are really just brands with a controlled network of suppliers, who has the power?

It is not that suppliers have suddenly achieved the upper hand, but their importance in making a business relationship work is acknowledged far more today, and that opens the door to a genuine partnership where doing well together works for both client and supplier.