"Most of our managers are happy sitting on a shrinking business" bemoaned a senior executive the other day. Sound familiar?
I hate to say this, but too many senior executives I talk to these days adopted this survival mechanism during the economic crisis, and are clearly struggling to change their mind-set now it's clear that armageddon has been averted. And the main reason seems to be that the last year has exhausted them, preventing fresh, bold decisions to be made. Hey - it's exhausted everyone.
Smart business leaders are now trying to re-energize their staff, take that deep-set panic out of the daily job, and find reasons to celebrate, like a not-so-bad-quarter.
I clung to the forlorn hope that a year-long economic crash, a transformative president, and new approaches to business ideology would encourage businesses to start thinking differently. But, in many cases, I appear to have been naïve . The result is that many businesses are going to have to force real change upon themselves to escape this malaise.
From wanting change... to embracing it
In reality, most businesses are coming out of recession having already cut visible costs to the bone, for example areas where cost can be directly extracted from the business without any form of arbitrage such as travel feezes, headcount reductions from non-critical areas, budget reductions across departments in areas such as marketing or IT, and so on. The next steps are to explore cost arbitrage through labor (i.e. outsourcing), and ultimately process transformation that should accompany any form of outsourcing. Simply put, it's nigh-on impossible to dig out further pockets of cost, without re-wiring the guts of business operations to find new efficiencies.
Global sourcing provides one of those vehicles where businesses
can effect progressive shifts in their business models to approach things differently. It can provide the change agent to make this happen, but only when our management talent has the energy and determination to look at things differently - and refuse to settle for sitting on that shrinking P&L.
"You are going to keep doing that blog aren't you?" seems to have been the most frequently-asked question I've had since I changed my day-job.
And a few people have asked whether I can still credibly run this blog, now I work for one of the firms actually tasked with delivering the services we have been talking about for the best part of three years. Heaven forbid.
As we have discussed at length, blogs and other social media have been a major game-changer with how we engage with issues, market dynamics - and each other.
We live in a different world today, where the rules are changing and we are constantly seeking out new and innovative ways to reach our industry. To sum up the new constant in a nutshell, credibility is in the eye of the beholder.
So here are the reasons for keeping these hooves galloping:
When I returned to these Western shores 6 years' ago, I was given the the unenviable task of working with the indomitable Andy Efstathiou.
Now, analysts who have spent 20 years working in commercial banks are not to be messed with - and I quickly learned my lesson with Andy, who (literally) has an encyclopedic knowledge and perspective of everything that has gone wrong with the world. I recall Andy warning us years' ago that this was all going to go horribly wrong... and did anyone listen?
Andy has since become a good friend over the years, and has always been one of my first ports-of-call when I want to understand anything about sourcing and the banking sector. He now runs the Banking Sourcing Program for BPO analyst NelsonHall, but his real claim-to-fame is that he finished seventh in the US Olympic trials for sailing in 1988 (pictured). Not many people knew that...
Anyhow, I caught up with Andy last week to pose a few direct questions on the current state of the banking industry, how sourcing strategies will evolve after the recession, and how banks can navigate these choppy waters (sorry):
Phil Fersht (PF): Andy, firstly, let's not beat around the bush here. What's the climate like in the banking, financial services and insurance (BFSI) sector these days? Do you expect things to continue improving, or are we in a false dawn right now?
Andy Efstathiou (AE): Banks will continue to do well as long as they are on performance enhancing stimulus. However, the banks are aware that some day they will have to stand on their own two feet. In order to do that they need to be able to scale operations in both directions without eating overhead on the downside or investing capital to expand on the upside. Therefore banks have been aggressively working with outsourcers to create engagements built around transaction based pricing.
You can't understate the importance of relationships in business - especially sourcing, where it's all about cultural fit and working relationships. In business, it's not always about liking people, it's about being able to trust - and work - with them. Sometimes, you will actually grow to like someone, in addition to trusting them and working well with them - and that is special; but let's face it, it's quite rare.
In many cases, people you like are not always people you're going to work well with - and vice-versa. You may not have any affinity or liking for someone at all, but you are straight with other in a working scenario, and have an effective working relationship. You can always develop a professional respect for someone - and that is different from developing a personal relationship.
If there's one thing that irks me, it's those people who only bother to talk to you when they need something, but paint a facade that they're one of your real "friends". I like to create a distinction between someone who is a genuine friend, and someone who is a colleague / industry contact. It's like when you change jobs - you are often surprised by whom was really a friend, versus who was merely toadying up to you, to get you to do things for them...
In the second-part of this two-part interview, Oracle's Tibor Beles discusses how service providers can be successful at platform-BPO offerings, how the broader BPO industry can improve, in addition to discussing the shifting dynamics with software licensing models. Tibor is also a blackbelt in martial arts (not the Six Sigma category), but spends more time hitting tennis balls these days with his teenage daughter. He also loves political thrillers, but he didn't elaborate whether that was through his day-job, or reading Le Carré novels -:)
Phil Fersht (PF): Do you see platform-based BPO as a major threat to the BPO pureplays which are not experienced in broad-based ERP enablement and implementation services?
Tibor Beles (TB):The first question calls for a long answer but I will try to keep it short. An aggregate BPO service provider must be passionately committed to process and IT excellence in its chosen function. Offshoring for labor arbitrage alone has limited benefits.
We've had a number of discussions with some of the SAP executivesover the last few years regarding its highly-publicized BPO partner-program. Meanwhile, there's been a crack Oracle team quietly working on developing its own BPO strategy, led by its enigmatic commander Tibor Beles. After being been educated on the nuances of Hungarian beer in a Budapest bar recently, I decided it was time to drag Tibor away from his Karate sessions to talk about his team's progress...
Phil Fersht (PF): Tibor, why does Oracle have a group dedicated to BPO? What's the game-plan here?
Tibor Beles (TB): Our customers demand more choice when it comes to leveraging Oracle software. In addition to the traditional on-premise deployment and hosted/managed applications our customers expect us to offer BPO services powered by the software they like and are familiar with. As we don’t want to be a BPO provider, we have created the BPO powered by Oracle choice by partnering with leading service providers. Our goal is to place Oracle software under the hood of their offerings.
In 1597, Sir Francis Bacon coined the famous phrase "Knowledge is Power". While knowledge does create power to the beholder of that knowledge, it can rarely be harnessed effectively until is it shared with other entities. In today's business world, I'd broaden that phrase to "Sharing Knowledge Creates Value".
Let me explain my thinking here. Too many employees today have a tendency to hoard their nuggets of knowledge, for fear of fear that giving them away will weaken their value and, ultimately, their job security. This can sometime be as rudimentary as documenting a business process, through to sharing knowledge of a particular market, discovery or idea.
It never ceases to amaze me how much better businesses could perform if their employees were better at sharing their knowledge with each other, and - ultimately - with their trusted partners. We can talk for hours (and have done) about how you can develop service levels, contract stipulations and incentive plans to drive more value into a service-contract. But ultimately it's the spirit of collaboration and knowledge-sharing that wins the day.
How can firms create this spirit? Can they go out an buy some software to enable it? Can they call up McKinsey or PwC and pay for them to create it for them? Sometimes; these are measures that can help, but ultimately it's about corporate leadership driving change throughout their organization that is likely unprecedented for them. And sadly, it's a change that is likely abhorrent to the culture that has blighted so many organizations in this modern business world. This change is about making talent feel secure about their jobs and their futures.
Let's take some examples from across the sourcing industry where knowledge-sharers succeed: