Outsourcing and innovation
by
Charlie Bess
I was in a meeting recently when Tom Hill (another EDS fellow who posts entries to this blog) was talking with some folks about the Technology Adoption Curve that Geoffery Moore introduced in his series of books (Crossing the Chasm…). It got me thinking about the conflict between outsourcing and the need to inject innovation and thought leadership.
It seems that when some organizations outsource a function, it’s because they don’t want to know the details and want to trust someone else to operate the task. They view the work as being in the main stream and not of real strategic advantage (at least not the way they were doing it).
The problem appears when the outsourcer, who takes over the work, wants to improve the environment using new techniques (since it is in their area of expertise, you’d think they should know some better ways). This new approach is a change and viewed as risky by the outsourcing organization.
They don’t want to understand it, and yet don’t want to accept the advice of someone who is knowledgeable about what needs to be done in this area. Obviously, this is a recipe for stagnation and frustration and possibly dissatisfaction with the outsourcing arrangement.
This change by the outsourcer may even enable the outsourcing organization to reach a new level of business value generation (yet more change). That’s why organizational change management may be as important to an outsourcer as their ability to execute. Having a functional governance process is also critical, since the business value generated by the change should be discussed openly in this sort of enterprise level setting - especially when it involves techniques that are by their very nature enterprise wide (e.g., SOA, or business rules deployment).
The challenge for the technical services companies in the second half of this decade will be to be viewed as a value delivery partners and not (just) as people who can execute and hide the details. Response to this issue has been on the rise in Business Process Outsourcing, where the entire business function is outsourced, not just a silo within the process. A counter balance would be Software as a Service where the capabilities are provided but the organizational issues remain to be addressed internally, instead of outsourced.
