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OUTSOURCING
Build resilience for a post-pandemic business environment
11 JANUARY 2021   |    MARKUS VAN AARDT

OUTSOURCING DIGITAL TRANSFORMATION AGILITY CLOUD COMPUTING COVID


COVID-19 has wreaked havoc throughout the world during 2020 and continues to do so into 2021. As each of us learn to cope with the 'new normal', many of the fortunate businesses that survived the economic fallout of the pandemic have to rethink how they will respond to what the World Economic Forum now calls the Great Reset. Not only do we need to rethink our place in the new economy as a whole, on a micro-level we need to reimagine the way our businesses and their people will work in years to come. With the slow process of vaccine administration, it is yet unclear how all of this would materialise, and whether we would ever return to a pre-2020 world in any meaningful way.





Below we noted some of our own observations as to how we see businesses and their technology organisations respond to what have been the most impactful global event since the Second World War.

Acceleration of Digital Transformation

In recent years, many organisations implemented Digital Transformation (DT) strategies, in some way or the other, to leverage technologies towards improving operational efficiencies, customer engagement, service delivery or embracing mobile computing. Unfortunately, due to the complexity, cost and impact of these initiatives, many organisations haven't yet managed to reach critical mass in these activities. Regardless, DT will remain a critical element of most organisations' technology strategies for the coming decade. What we expect, however, is that DT will receive significant more attention and importance in the next two to three years in response to the pandemic. Not only did the pandemic resulted in disruption to the way customers will interact with companies and consume their products, but also internal to how companies will operate. Archaic and outdated business processes and collaboration models must be transformed to keep organisations competitive and financially viable. This can only be done effectively by doubling down on enterprise-wide Digital Transformation - no only looking at the technologies of these companies, but also how its people will remain the critical element in their value chains as consumers of technology.

Increased agility

Even though many organisations spend mountains of cash on transformational programmes, many of them fail to realise quick benefits (or even any at all) from these efforts. If we were to disregard the complexity of these activities for a minute, the majority of failures can often be attributed to organisational inertia - or its inability to move or transform. Adaptability, agility and flexibility have long been preached to large organisations as a way to remain competitive against smaller and more agile competitors. The recent rise of Fintech start-ups as alternative incubators of innovation within payments and financial service markets are testament to the inability of the dinosaurs to lead the charge. We believe that a post-pandemic world will force enterprises to implement programmes and tactics towards creating pockets of agility in order to catalyse further fluidity within the enterprise. Even though this may be localised and limited in their individual impact, as a starting point it offers organisations some traction towards achieving more agile thinking in an organic way.

Cloud adoption as critical component of Digital Transformation

As critical component to both Digital Transformation and Mobile Computing, Cloud technologies have become indispensable to companies competing within the modern economy. We believe that Cloud computing will continue to grow rapidly in both technical maturity and offering and will be critical element of organisations' response to a post-COVID world. This is due to a number of different factors. Firstly, the availability of different technologies provided on these platforms will radically decrease the time-to-market for new enterprise systems at significantly reduced cost. Secondly, what we believe will be a continued adoption of remote work will be better served by cloud-based systems than ageing, brittle and expensive on-premise systems.

Global competition for skills

If 2020 drove one thing home to enterprise micro-managers is that a collocated workforce is no longer the gold standard, and that remote work is here to stay. Widescale adoption of broadband internet services and access to increasingly inexpensive mobile computing technologies, such as tablets, smartphones and laptop computers, allowed many organisations to survive the business impact of COVID-lockdowns. On the flip side, what used to be a regional competition for skills staff has now turned into a global fight to the death. This will unfortunately present in acute challenges for specialist resources in the areas of cloud computing, networking, infrastructure, security, software engineering and architecture - to name but a few. The trade-off will of course be that start-ups in developing economies are now able to compete head-on with Silicon Valley and their European counterparts when recruiting the best of the best from anywhere in the world.

Outsourcing on the rise

Outsourcing has been a constant element of many organisations in the last couple decades and continues to rise as the battle for talent rages globally. As the 2020 pandemic finally drive the message home to many organisations that remote work and third-party delivery is a workable strategy for almost all of them, big and small, the curve in outsourcing adoption is set to turn upwards for the foreseeable future. The problem is that many organisations do not have the necessary skills, or are acutely shorthanded, do deliver on several of their survival strategies.

Enterprise-level Digital Transformation, for one, require not only highly skilled resources, but a lot of them too. Skills would be required throughout the business and software development life cycles. Improved operational and technical agility, for its part, would not require the same level of assistance from external partners, but … external partners may have the upper hand to initiate organisation agility due to not being hamstrung by the normal politics and bureaucracy that an entrenched workforce may be subject to.

Cloud engineering is another area where outsourcing partners are able to deliver change quickly, from a position of experience and knowledge that could take established IT organisations months, if not years, to reach. Do not forget that an existing engineering corps remains responsible to keep the lights on of the organisation that is, and may not have the necessary bandwidth to deliver the same momentum into transformation initiatives as you may suspect.

Choose wisely

Lastly, outsource providers often have access to global talent already, which significantly increases the resource options available to organisations. With the right partners, organisations are also able to combine different outsource partners into flexible and pliable teams to deliver large and complex projects in a highly efficient manner.

Deloitte's Global Outsourcing Survey 2020 report (get it here) highlights a number of lessons insofar service provider selection is concerned. Of these, change management was rated as a critical component of the process to ensure better adoption and organisational readiness for effectively adopting outsourcing strategies, together with shorter and more flexible contracts. More importantly, they note a critical challenge in supplier management on the part of outsourcing customers. Since this is a time-consuming growth area for many organisations, a reasonable interim approach would be to select partners who are firstly committed to the organisation's journey and strategic outcomes, and secondly, who service the customer as a full-service partner as opposed to a headcount-based body shop. It is fair to assume a higher cost in most cases, but the long-term value in delivery ownership, project continuity and sustained value to the enterprise would make up for these marginal expenses in a very short space of time.

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