Pre-Covid, the main driver for outsourcing was cost reduction. Many small and much larger businesses used a third-party provider to keep the IT lights on under a flat cost arrangement, typically based on the number of users supported.
Medium sized businesses often had their own internal IT teams, outsourcing small elements of their operations, from a one-off project to a specific area of security, to a third-party.
Post pandemic, the motivations for using an external IT service provider have changed dramatically. The last year or so has seen outsourcing become essential to most organisations’ operations and wider business strategies.
A new generation of outsourcing partners are helping deliver the enhanced service levels and top and bottom-line improvements that businesses need in a post-pandemic world.
Here are six reasons why:
1. Speed of change
Most organisations are transforming at pace, to meet the needs of their clients and win market share. The rate of change means that many IT teams cannot keep the lights on from an IT operations perspective and handle the volume of strategic and systems focused projects that are thrown their way.
In-house IT teams are often much better focused on delivering strategic projects, while a trusted IT partner manages day to day IT operations as an extension to the team.
2. Talent shortage
The worldwide shortage of IT talent includes the UK. This has led many organisations and service providers to outsource overseas to meet demand.
The pace and volume of change in terms of transformation projects post-pandemic, along with a lack of new IT sector talent has created a crisis. There were more than two million UK job vacancies in tech in 2021, more than any other labour area.
Businesses face a perfect storm of rapid transformation, skills in global shortage, and a fast-growing cybersecurity risk landscape.
IT teams within organisations are seeing pressure from all sides, which is a tough place to be.Many are leaning on their IT service providers to take responsibility for elements of cyber security, be it day to day security operations, compliance, or governance overlay. This gives an organisation comfort that a third party is providing checks and balances and is making sure that what needs to be done from a security perspective is done.
4. Too complex
The race to the cloud and between cloud, the rise of cyber-crime and swathes of transformation projects have made IT environments complex. Arguably more complex than they were prior to the cloud boom. However, most IT departments have not had the budget, talent, or experience to keep up with the demands placed upon them.
Partnership-focused IT service provider relationships, with the skills and experience these bring, help to augment their own.
5. Enhanced value
Many older, larger IT service providers have usually delivered flat cost savings based on labour savings. This type of flat service outsourcing, if done correctly, will realise straightforward cost-savings, especially as talent and experience wane. However, a new generation of dynamic service providers are helping businesses to not only control costs, but also enhance their operations, deliver strategic initiatives, boost their digital transformation capabilities, introduce automation, and Lean initiatives.
Local, national, and international competition has amplified in most sectors. The largest value gains now are typically driven or supported by some form of digital transformation. This had led businesses to lean on IT service providers to keep operations secure and available while the IT team focus on business and digital transformation projects.
Whichever way this use of external and internal IT support is married, augmented teams are invaluable in the current national and international business landscape.
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QuoStar CEO Robert Rutherford looks to the future, sharing his view of what’s going to be big for businesses this year.
Tech trends in 2022.
A shortage of tech talent will widen and rapidly develop the global IT skills market
There is a significant skill shortage in the UK from an IT perspective, which has been coming for some time due to numerous factors. The COVID crisis has certainly added fuel to the fire, as businesses have got used to working effectively with staff and 3rd party suppliers in a digital-only manner. This will certainly push more and more businesses to outsource parts of IT service, development, and other IT projects to outside partners.
You’ll see many businesses reach overseas to where the talent lies at the perceived right price. However, they are going to have to be extremely careful, especially where service is involved. The management overhead is also often underestimated, both during start up and day to day operations. You really need experienced and proven managers and frameworks to get the overseas play correct. The lure of ‘cheap’ labour always has hidden costs.
Digital First a core strategy
Anything that can be done digitally will be getting real focus in 2022. In any new business and departmental strategy, or project that involves a process or a procedure (most, if not all), a digital solution will gain extra weight by default. This is going to be driven by a need to improve efficiency, margin, and security, whilst also improving the user or customer experience. Of course, a digital first strategy doesn’t mean that every operation and interaction must be digitised, but it must be considered.
It is important that digitisation isn’t viewed as simply purchasing technology to solve problems. It’s about understanding the operations and processes (systems) within a business operation and choosing the right technological change or transformation to achieve a business result that is both measurable and positive. This is certainly going to lead to a board having to really get to grips with the strategic use of IT, whilst also bringing in senior IT professionals, such as aCIO, into the core of the business decision making process.
CRM technologies and their uptake will develop quickly
CRM growth has been ramping over the last few years due to customers’ service demands and expectations. Again, due to COVID, the expectation for rapid and effective service in a personalised manner has increased. The fact that most markets have in effect got smaller due to globalisation, businesses are going to need to do more to mine and utilise their data to compete and hold market-share.
It should be noted that CRM is not simply an IT project. It’s really an organisational transformation piece that involves most of the business, and it can take a year or more to even begin to realise the true value it can deliver. Too many businesses have been flying out to ‘buy’ a CRM post-COVID, which will typically lead to a failed ‘business’ project.
Automation will become essential
Due to skills shortages and growing competition, businesses are going to need to get leaner and smarter in how their operations and services are delivered. AI and other technologies are certainly going to help, however businesses do need to take responsibility for truly understanding, mapping and measuring their processes. This is where organisations can protect, as well as increase their margins, plus improve employee and client satisfaction.
You are certainly going to see process improvement and automation come down into the small and mid-market, as margins get squeezed, as the world effect becomes smaller, and as the pace of change ramps – fuelled again by COVID. The demand for systems and business analysts is certainly going to rise, but again the UK is significantly disadvantaged due to a lack ofstrategy from successive governments. Businesses are often going to need to train and develop their own talent to deliver initial and ongoing value.
Improvement in the User Experience
Many industries have been really let down by their main Line of Business vendors, in terms of the Customer Experience (CX), support and product development. This is going to create real friction points due to the more fractured way of working. Software vendors and those providing services to customers online are really going to have to work hard to ensure their products and service offerings better fit the new working model, in terms of the user’s experience.
Businesses are also going to have to consider how easy it is for their staff to complete their duties, especially when working in a remote manner. Are they really as effective as they should be? Is their working experience acceptable? Can they get support when they need it, i.e. 24x7x365? There is a growing trend of staff leaving businesseswhere they feel the technology and support overlays are holding them back.
Cloud workloads move around
There’s been a rush to the cloud prior, and during the pandemic, particularly the public cloud, and predominately Microsoft Azure for day-to-day operations infrastructure and systems. However, the cloud markets move extremely quickly, and a single infrastructure doesn’t fit all workloads, in terms of functionality, security, performance, interoperability and price. The market is pushing private and public vendors to compete within these areas and thus splitting workloads between public and private cloud. A true hyper-connected hybrid model will typically deliver organisations the best value going forward, right now and ongoing.
The rise of cloud multi-platform management, automation tools and the competitive landscape continues to drive innovation and creates specialist vendors and cloud providers. It’s continually becoming simpler to run, manage and migrate between different cloud vendors and platforms with ease. The shift is certainly empowering and aiding the customer. You’ll certainly see more workloads (not entire infrastructures) reverse out of the large public cloud providers into niche players who can deliver greater support, performance, and operational value to specific sectors.
ZTNA becomes the focus
The rapid escalation of remote working has dramatically increased the risk profile of a large percentage of operations. This will rapidly move the focus and ramp adoption of Zero Trust Network Access (ZTNA) – theGartner coinedterm to enable greater control and security of network access.
Traditional VPN type connections are clunky and can be slow, they also consume significant resources, in terms of equipment and management overheads. Organisations will look to ZTNA to improve the granularity of control of their remote workforces’ access to corporate systems, whilst also simplifying it through ABAC (Attribute Based Access Control) and RBAC (Role Based Access Control). There’s too much to go into here but the rise of cybercrime led by organised gangs focused on monetary rewards means that every door must be locked shut, whilst also not hampering the user experience.
Cyber security becomes board’s problem
Many leadership teams have had some experience of cyber security, due to experiencing a painful incident or perhaps implementing Cyber Essentials (the very basics). However, due to the risk landscape being so huge, and the impact of a security incident being so great, boards are going to have to take the reins on risk management from a cyber security perspective. They are going to have to fully understand risks and controls, thus expect to see a ramp in the demand for Information Security Management Systems (ISMS’s) and the experience of aCISO.
If a board doesn’t insist on an ISMS to ensure that Information Security is managed appropriately then in reality, they are being negligent; regulators know that, as do customers and insurers. No longer can the board leave Information Security to the IT team, they are going to have to take direct responsibility for some of the largest risks their businesses face.
Optimising manufacturing operations isn’t always easy, but it can be achieved with the right IT Solutions.
Manufacturing businesses are typically the best at seeking out efficiency and productivity in their operations, particularly on the shop-floor. However, many still do not apply the same LEAN principles to the rest of their operations, and that can mean the optimisation of processes is more challenging because of a lack of consistency throughout the business.
Systems and process analysis, and automation can be used throughout an organisation to drive down inefficiencies. IT is certainly an enabler of an efficient and well-performing optimisation.
As QuoStar’s Robert Rutherford was recently quoted in the Manufacturer: “Finance operations, for example, are often very bloated, but IT can facilitate outsourcing or offshoring, not only reducing costs but also allowing the process to become quickly automated to a good extent.”
What types of IT solutions and services can help with Optimising manufacturing operations?
Historically, manufacturers were always at the forefront of technology. This has in many ways meant that they experienced the falls and disappointments that come with testing cutting edge solutions. However, technology systems have also been driving results for manufacturers in some areas – such as IoT, cloud services and CRM.
Internet of Things (IoT)
The Internet of Things (IoT) has certainly given advantage to manufacturers both on the shop-floor and within their products on customer sites – by helping in support and maintenance, but also in querying big data for insights and value. It’s driving decisions around productivity, wastage and research & development to deliver wins across the board.
Cloud services are also still extremely valuable to manufacturers. Although many still keep heavy processing in a private cloud, the public cloud (particularly AWS and Azure) allows operations and development to flex, trial and scale-up (and scale-out) without the traditional costs and complexities of big kit in the server room. The pandemic has heavily accelerated change. Customers have demanded faster innovation, more data and information, greater integration, and increased security.
CRM systems have moved on significantly and its greatly improving the service manufacturers are able to deliver to customers, whether it is on managing expectations, delivering value or collecting relevant information. They can also drive an increase in sales in terms of new business wins, cross-sales and real-engagement with marketing automation.
Big CRM projects were historically associated with large capex costs. However, now they virtually all come in a cloud-based delivery model on a price per user basis.
Digital Transformation Road Mapping & IT Consultancy