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It’s all about operational excellence

2009 is all about “It’s all about operational excellence” as companies seek to maximise operational efficiency, says Logica Chief Executive Global Operations, Craig Boundy

The current economic climate has accelerated the move towards operational efficiency, the ‘less is more’ approach, as organisations seek to maximise returns with fewer resources. We’re entering an era of prioritising the machine room over the board room as most businesses take a deep look into their operational structure. The trend is to streamline processes and increase efficiencies by outsourcing non-core business operations to experienced external partners who in turn use the most effective combination of skills wherever they may be in the world to deliver the most cost effective, high quality service. This use of what we call the “blended delivery” model, which involves a mixture of on-shore and off-shore resources best suited to getting the job done, is not simply about cost arbitrage, or doing the same work more cheaply. It’s about choosing the right location and skill set to deliver the solution that best fits the customers’ business needs and risk appetite.

While there’s no generic ‘one size fits all’ approach to meeting an organisation’s business requirements, there are three types of needs that generally emerge as they look to outsourcing providers for help. These needs are all the more pressing given the tumultuous economic climate in which organisations are currently operating. Firstly, companies are naturally and almost universally prioritising cost reduction. Secondly, transfer of risk is key – putting a piece of business that is not your core competence into the hands of experts provides access to best practice and peace of mind. Thirdly, and most crucially, is the more long-sighted need to increase operational efficiencies. Our customers come to us and say ‘I need to make this run faster and better, how can you help me’.

A project’s success depends upon understanding and defining the key performance indicators and what the drivers for improvement are. Deploying the blended delivery model helps bring cost effectiveness, but more importantly, service innovation, rigour and discipline to the processes. Because we will normally have run similar processes for other organisations, we can apply best practice and avoid the pitfalls of early adoption. And we know what success looks like.

One of the specific benefits of the blended model is speed to market. In our onshore facilities – our people located in the same town as the customer, often sitting in their own building alongside their in-house team, which means the customer’s business challenges, expectations and requirements are better understood. In our offshore and nearshore facilities – our experienced, skilled teams are located in lower cost geographies – where they execute on the technical delivery of the business process or service, using the most sophisticated accreditations and processes that have been tried and tested. So, while delivering a straightforward price reduction because of a diversified skills base, you can also deliver better productivity at a very low risk to the customer. You can make things happen more quickly than the standard delivery model by leveraging the time differences between locations and utilising the ’follow the sun’ approach.

The success of blended delivery depends upon working effectively as a global team, both within the service provider as well as between the service provider’s and the customer’s teams. Managing global teams is complex and is becoming a desired management capability, much like change management has been over the recent years. You have to learn quickly how to cope with the different cultural, business and people issues that arise in multi-national teams. Living in separate parts of the world means that when you do come together you have a thousand ‘water cooler’ or coffee conversations in the short time that you're together, so when you go back to your home countries there’s a relationship in place which helps you to work more effectively. You have to leverage all available technology to communicate and make it feel like you're in the same place. Remembering all of the subtleties of different time zones, cultures, religions, and public holidays is important. Underlying these important subtleties are some simple ground rules: you need a common direction, approach and objectives. The balance is about being clear on purpose but allowing for, and appreciating, differences in style. Most importantly, you need to collaborate as a team – seeing off- or nearshore teams as just a machine room will never inspire the trust, dedication and enthusiasm you need to get a first-class project delivered

Blended delivery is about much more than doing something cheaper. It’s a mistake to think of off-shore teams as cheap resource. The key difference between on-shore and off-shore teams is proximity to, and therefore a clear understanding of the needs of, the customer. Some elements of projects are off-shored to take advantage of particular skills pools, but this could as well be in Wales as in India. Blended delivery crucially allows you to run operations more effectively, de-risk deliveries, and improve service levels. The better price tag is the icing on the cake.

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