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Move Beyond the Lowest Bidder for Outsourcing, Says Leading Consultant
As the trend toward outsourcing business processes continues to grow, organizations are discovering that their choice of IT and software vendor is key in minimizing the risks—and maximizing the benefits—associated with their overall outsourcing strategy.
In order to weave together outsourced and in-house people and processes, forward-thinking companies are increasingly relying on "software-based infrastructure to help achieve standardization," says Peter Allen, partner and managing director of market development at Houston-based consulting firm TPI.
You Can't Outsource Responsibility
Traditionally, outsourcing has been seen as, above all, a way to rapidly and dramatically cut costs.
But, according to Allen, companies have much more success when they move away from a "lowest bidder" mentality and approach outsourcing as another way to "enhance their supply chain of talents and supply chain of delivery resources."
"I can tell you from practical experience that, as outsourcing matures, the lowest bidder rarely wins," says Allen.
Why not? Allen puts is simply: "Because you can't outsource responsibility."
Sometimes, he says, companies think they can craft a contract with an outsourcing partner that guarantees quality service delivery of critical business operations, such as human resources. But at the end of the day, if payroll goes awry, for example, "it’s the head of HR that’s going to pay the price," says Allen.
Software as the Lynchpin
As outsourcing matures, companies are also realizing that the business processes they outsource still must be woven into larger, end-to-end processes. For example, sales from an overseas call center still must roll up into an organization's financials systems—the faster and more seamlessly, the better.
This, in turn, requires software that is not just dependable but open and rapidly adaptable. This new way of merging in-house and outsourced technology and applications is transforming the jobs of executives in charge of corporate functions such as IT, finance, and HR, according to Allen.
"We've entered into a new era where their role is in essence to integrate various internal and external delivery organizations—and to do it all in a fashion that insulates all of that integration from the business consumer of the services," says Allen.
From a technology perspective, this approach requires the ability to unify a "multi-ecosystem environment," says Allen.
Now, Oracle is extending that lead with pioneering technologies ranging from service-oriented architecture (SOA) and application integration architecture (AIA) to the powerful software-as-a-service (SaaS) delivery model provided by Oracle On Demand.
In each case, innovations at Oracle dovetail with the trends Allen identifies in best-practices outsourcing—the ability to construct seamless, reliable business processes while insulating the business consumer from the complexities of a multi-ecosystem environment.
Price Versus Value
The same principle, of course, applies to the choice of software vendor. Besides the ability to create seamless processes from disparate systems, companies must consider everything from service levels to the long-term viability of their software partner.
To learn more about trends in outsourcing, you can hear Peter Allen speak at Oracle OpenWorld 2007 in San Francisco November 11-15. Allen's presentation, titled "Outsourcing: The Software Vendor Matters," will be held on Monday, November 12, 11:00 a.m.–12:00 Noon, Marriott Salon 12 and 13.
Get conference information and registration
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