Knowing the difference between what’s critical and what’s core is more important than ever.
Managed services can free up your people from non-core work so they can focus on your organisation’s core mission.
But outsourcing a business process sounds scary. Doesn’t it represent a loss of control? How can you keep the outsourcer honest if you’re not managing the work yourself? Will it stifle innovation? Is it worth all the effort anyway?
The short answer is: sometimes.
It greatly depends on what area of your operation you’re considering outsourcing. In the wrong area, it can kill your business very quickly. But in the right area, outsourced management offers a lot of benefits.
In short, outsourced managed services can help enterprises take advantage of economies of scale and operation by leveraging a specialist. Organisations can then focus more tightly on core functions, and as a result, create more value.
The key question for any business leader considering outsourced managed services will be:
“Can I improve operations and efficiency with a managed service provider without sacrificing the positive differentiators of my business?”
Let’s look at how this works, taking the example of a fictitious public health care provider.
As Harvard Business Review agues, the secret to improving health care is “fixing systems, not people“.
Here’s how that might work for XYZ Inc:
In-House: Core Competencies – XYZ Inc. operates as a health care provider, specialising in patient care and leading medical treatments. Developing medical protocols, training healthcare professionals, and maintaining patient care standards are critical components of their operation. These activities, which directly impact patient outcomes and distinguish XYZ Inc. from other public health care agencies, are considered the ‘crown jewels’ of the organisation. As such, these functions should always be managed internally to ensure quality and consistency.
Partner: Complementary Services – XYZ Inc. offers various health care services that could be enhanced by partnerships. For instance, providing patients with access to exercise programs, nutrition planning, or wellness programs can differentiate XYZ Inc. in the market. These services are beneficial but not essential to the core function of delivering health care. Partnering with companies that specialise in these areas can offer added value to patients while allowing XYZ Inc. to focus on its primary mission.
Exit Completely: Non-Essential Services – Initially, XYZ Inc. maintained a fleet of vehicles to transport staff within its primary service area. Over time, as public transportation and rideshare options improved, the need for these vehicles diminished. Today, most staff use alternative transportation methods. Maintaining a fleet of vehicles is no longer a differentiator or critical to operations. The logical decision is to sell the fleet and exit this non-essential area, reallocating resources to more impactful activities.
Outsource: Essential but Non-Differentiating Services – There are several operational activities that, while critical to XYZ Inc.’s daily operations, do not provide a competitive edge. Managing IT infrastructure, processing payroll, and handling administrative tasks are vital but do not directly contribute to the organisation’s special value in the health care sector. Outsourcing these functions to specialised service providers can improve efficiency and cost-effectiveness. For example, contracting with a managed IT service can ensure robust and secure IT operations, allowing XYZ Inc. to concentrate on delivering superior patient care.
The same is true for IT & telecommunication services. Companies like XYZ Inc. typically have significant communications spends, and in complex structures. Not only are there different carriers and plans and contracts, but a variety of different data and access services and mobile assets (smartphones, tablets, laptops, satellite terminals, body cams, IOT, remote health monitors, etc.) that are constantly changing and upgrading.
How can XYZ Inc. manage such and environment without building their own in-house expertise on telecoms and mobility? Telecommunications, and mobility in particular, are critical to XYZ Inc.’s success and the wellbeing of their patients – they must work perfectly, all the time.
The spend is big, so it is critical that it be good value, all the time, or it would impact the bottom line. But IT & communications is not a differentiator for XYZ Inc (all organisations have phones) – it is simply a business enabler. It is essential and critical, but not core. One solution is Managed Mobility Services (MMS), where a specialised provider manages all aspects of the IT and telecoms operations and spend, including the Device Lifecycle Management and the Technology Expense Management.
In analysing your own company’s operational areas, a great starting point is figuring out which quadrant each activity falls in. Armed with that knowledge, you can then start to assess where outsourced managed services should and should not be considered in your business.
How do your organisation’s activities stack up on the quadrant diagram?
