Digital: Outsourcing your Business Transformation

Incremental change is insufficient and it is necessary to fundamentally rethink and radically redesign what a business or organization does in order that it can flourish in a changing world.

Business transformation brings radical change in three principal areas of business: Processes, Organizational structure and Technology. Its purpose is to help deliver the improvements and benefits that business seeks for (a) Customers – better services and products (b) Employees – greater job satisfaction, (c) Efficiency- better use of resources, doing more for less money.

Transformation programs are engaging and draw heavily on organization resources. It requires time and effort to effectively bring change. Managing transformational change is a vision-led, benefits-driven journey.

It finds acceptance and ultimately success through management of people emotional change curve and management of benefits life-cycle from identification, enablement to realization of benefits.

Business Transformation programs bring change and improvement to known problems. However it may lack agility in solving problems you don’t know yet. Hence not preparing you to be Situationally ready.

Business Transformation Outsourcing program enables businesses to outsource pain-point business processes to strategic partners. Partners who have experience in the trenches, hands-on expertise and knowledge of how the global best work and run their business.

The partner works in close collaboration to continuously improve & systematically transform your business, delivering quick benefits and reducing time-to-market. Your Business Transformation Outsourcing partner not just improves or manages the business process, but is empowered to re-design it if necessary.

In traditional outsourcing, business process is outsourced to partner as it is non-core and primarily for cost take-on. The partner supports the process and is monitored on Service Levels agreed.

Business Transformation Outsourcing (BTO) agreements almost resemble joint ventures where you share risks and gains with the BTO partner.

Transformation programs may require multiple skills and knowledge to be brought together e.g. problem solving methods, improvement tools and techniques (qualitative and statistical), innovation, enterprise IT governance and management.

Through outsourcing of business transformation, the strategic partner may bring deep skills in all these areas and provide a comprehensive framework to problem solving and solution generation.

Moreover the strategic BTO partner will bring strong domain and functional knowledge of business processes, which are part of BTO, in order to manage, improve, innovate, optimize and re-design.

Challenges in Outsourcing Business Transformation

In mature and large organizations business processes are automated and run on enterprise IT infrastructure. The BTO partner may therefore need access to your IT infrastructure to manage the pain-point business processes that have been outsourced.

The outsourced processes may have dependencies with other processes that are still internal to business. This presents a governance and management challenge for businesses to outsource their transformation.

BTO resembles Joint Ventures, in both parties working closely and sharing risks and gains. Considering the BTO program is not a Joint Venture, a pro forma organization and governance structure may need to be created and also a P&L structure to monitor success.

BTO, unlike traditional outsourcing is still in it’s nascent stage and there are no widely acceptable standards or benchmarks available. Making contracting, monitoring and management unique to each program.

Through BTO, a significant set of business process maybe completely outsourced to BTO partner’s ‘ownership’. This may lead to reduction in staff in your company, leading to de-motivation among employees.

Why it makes sense for small & medium enterprises?

Small and Medium Enterprises (SME) are warming up to BTO, as they may not necessarily have integrated enterprise IT and business processes running on such infrastructure. SME’s are also constrained for resources vital to growth.

Functions like marketing, human resources, Customer Relationship Management (CRM) and administration are ideal business process sets for SME’s to BTO to strategic partner.

Digital transformation (Social, Mobility, Analytics, Cloud and IoT) is another disruption that is impacting SME’s that do not have skills or can attract such trained resources to help them get onto this platform.

Business Transformation Outsourcing programs help SMEs move their businesses online, host infrastructure on Cloud, have strong Analytical capabilities, reach and goodwill thru Social.

Outsourcing framework