During Part I, we discussed the gradual simplification of cumbersome people-centric outsourcing towards technology-centric “As-a-Service” solutions, driven by the need for enterprises to remove their excessive operations costs and anti-competitiveness burdens inflicted by legacy processes and obsolete technology.
Simply put, what worked last decade no longer works for ambitious enterprises striving to stay competitive, plus the emerging “Born in the Cloud” enterprises, many of which will comprise tomorrow’s FORTUNE 500, where As-a-Service is native to their operations, not retro-fitted in painful increments. Their mantra is to invest in outcome-centric services first, then hire talent to broker these capabilities and align them to the revenue-generating activities of the business.
Gone are the days when the only solutions were to reduce labor costs and hope for the best. Arriving are the days where investments in outcome-driven solutions, fueled by common standards and automation, ubiquitous cloud delivery, digital tools and apps, are being seen to have genuine long-term ROI. Enterprise leaders, in our discussions, are much more willing to make investments in permanent solutions, where the outcomes are tangible, as opposed to temporary solutions, where there is some short-term benefit, but the long term outcomes are still murky and unclear.
We know the future is moving towards a state of creative, motivated operators accessing available tools and intelligent platforms to help their enterprises achieve their desired outcomes. We know most viable enterprises, today, cannot afford to drag around these archaic, obsolete infrastructures and operations – and remain competitive in the long-term.
So what, pray tell, is really driving our enterprises to make decisions today, what will our world really look like in five years’ time as a result, and what are the implications for society and business? Oh the questions that need answering…
Two-thirds of enterprises are actively pursuing strategies to reduce reliance on human capital
“How much of this room will be replaced by bots in the next three years?” I asked, polling some peers and colleagues deep in client-side automation research attending a recent service provider conference.
“As many as 60%” was the collective response – 30% directly through improved automation capability and another 30% simply through better apps and efficient processes”. Just think about that for a minute… we’re really on an path away from people to technology. So why are so many services and operations professionals so blissfully unconcerned of what’s coming? Are we living in permanent state of denial that the business world around us is simply never going to change? It’s not as if the majority of senior operations leaders do not see As-a-Service as critical, according to our new Ideals of As-a-Service study:
So, while the leadership layer is clearly bought in and ready to go, why aren’t the operational middle and junior layers following suit? Why aren’t these leadership ambitions being translated down through the ranks? Why does this desire to challenge ourselves and improve our capabilities dissipate when we reach the rank and file?
Maybe this is the reason why two thirds of operational C-Suites are actively pursuing policies to restrict labor investments and are evaluating automation strategies… they’ve accepted they can’t really change the people they have (only 48% see improving operations talent as important/critical), so need to focus on the overall model, the technology and tools, to make the real sweeping changes:
Lots of talk, not too much action, as seven-out-of-ten firms pass the real challenge of change onto others in the future…
When we asked the buyers in the As-a-Service study when their enterprises were going to have its core processes delivered “As-a-Service”, many answers to these nagging questions are revealed:
Lets face facts here – anyone who predicts something for their business five years out is, is predicting science fiction. Noone can really see out more then two years, possibly three at most, with their organizational investments and intentions.
Simply put, most major enterprises still believe they have mileage in the traditional labor arbitrage model. There is clearly an absence of a burning platform—or capability—to drive change in the foreseeable future. Our research found two exceptions: healthcare and life sciences organizations that have exhausted this model, and enterprises under $1 bn. Small and mid-sized enterprises (SMEs) are often less resourced and with fewer opportunities with the labor arbitrage model, having less operational scale.
The Bottom-line: Enterprises must fix the disconnect between leadership ambition and operation lethargy …and go for more “big Bang” change
What is truly worrysome here, is the speed of change in today’s global environment and what could happen to many of the organization simply paying lip-service, when it comes to hauling their antiquated back offices out of the dark ages. And, heaven-forbid, we are struck by a renewed global downturn, with so many of our enterprises failing to adapt to the modern business environment. Last time I checked, worrying signs are emerging with the faltering Chinese currency and European basket-case economies seeking to go beyond being basket cases (a phase for which has yet to be coined).
One of the biggest obstacles to enterprises achieving progress towards achieving As-a-Service Ideals, is this huge delta between the desire of operations leadership to make the transition and the lethargy of the middle management layer. If this gap cannot be closed, there will eventually be ramifications for many enterprises which will see their competitiveness slip away due to an overly complex, expensive and inefficient operating model. People’s careers need to be aligned with where the industry is going – not where it has languished for many years.
What’s more, incremental fixes clearly do not work – for all stakeholders. We have entered an economy where writing off legacy investments needs to occur for so many. Just because an enterprise invested millions in a now-obsolete set of processes and technologies doesn’t mean that enterprises should been persisting with plowing further resources into them – there comes a point where money spent in maintaining the old is wasted, while investments in solutions that drive real outcomes have some ROI down the road.
We need to reach that pivot-point where business leaders make real, definition investment actions to change their operations, otherwise we’ll be forced into another recession-induced series of changes to many businesses, which are rarely driven by proactive decisions – but by reactive behaviors only designed to make quick fixes, not long term ones.
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