{"id":1706,"date":"2010-03-27T16:04:00","date_gmt":"2010-03-27T16:04:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/why-innovation-in-global-business-operations-is-critical-for-survival\/"},"modified":"2010-03-27T16:04:00","modified_gmt":"2010-03-27T16:04:00","slug":"why-innovation-in-global-business-operations-is-critical-for-survival","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/why-innovation-in-global-business-operations-is-critical-for-survival\/","title":{"rendered":"Why innovation in global business operations is critical for survival"},"content":{"rendered":"

There was a suggestion recently (see <\/strong>“Busting the Innovation myth”<\/strong><\/a>)\u00a0that innovation in back office operations wasn\u2019t important and it\u2019s all about the “front” office.\u00a0\u00a0We would argue that achieving\u00a0innovation in the global support\u00a0operations of businesses, is\u00a0often the only<\/em>\u00a0lever\u00a0most firms can pull to remain competitive in this economy.<\/strong>\u00a0<\/p>\n

In\u00a0most cases, it\u2019s not enterprises’ products and services that have to change,\u00a0but\u00a0the speed and efficiency<\/em> with which they can adapt to the changing environment, that now provides the competitive edge.\u00a0\u00a0 Here’s an overview of the secular changes impacting the very core of today’s industries:<\/p>\n

\"\"<\/p>\n

Can BPO engagement models broaden to help businesses stay ahead of secular changes?<\/p>\n<\/div>\n

Our research delves into the heart of major industries, to understand how sourcing engagement models can enable firms up and down their entire supply chains.\u00a0 Let’s take a closer look at a few examples:<\/span><\/p>\n

Life Sciences and Manufacturing<\/span><\/em><\/strong><\/p>\n

In the pharmaceutical business, for example,\u00a0the increase in the use of generics is bringing the issue of cost and speed-to-market into play.\u00a0 In\u00a0previous times, innovation was focused primarily on research and development of new blockbuster drugs, but with those becoming fewer and further between, combined with the massive\u00a0M&A activity in the sector, the innovation\u00a0focus<\/em>\u00a0has quickly shiften to the support operations and the supply chain.\u00a0 With generics, there really isn\u2019t much you can do to differentiate by product, but you can compete on price and respond to market demand quicker than your competitors.\u00a0 Driving down production costs across both manufacturing and business operations processes is critical, and having a global support infrastructure to get these products to market, and keep inventory levels optimized is how to stay ahead of the competition.\u00a0\u00a0\u00a0<\/p>\n

Core sourcing challenges:<\/strong>\u00a0 BPO providers need to step up their competency delivering managed supply chain processes that encompass master data management processes and other supply chain functions, to help their customers.\u00a0 It’s not simply about payroll and payables anymore; life sciences firms need to drive their providers to invest in taking a greater interest in creating new ways to reach their markets faster and more intelligently.<\/p>\n

Media and Entertainment<\/em><\/strong><\/span><\/p>\n

In the media business, the impact of web 2.0, social media etc., hasn’t altered the actual “products”, but \u00a0the way in which they are delivered to – and consumed by –\u00a0the end-customer.\u00a0For example, the diminishing need for printed media products is shifting the focus to driving out as much cost from the operation as possible so media firms can invest in quality content to remain in business.<\/p>\n

Core sourcing challenges:<\/strong>\u00a0 The bottom is getting ripped out of the media business at an alarming pace and media firms have no choice but to eliminate as much cost from their distribution channels as quickly as they can, in order\u00a0to survive.\u00a0 Many media firms\u00a0 have run out of time to go through gradual transformation;\u00a0 in most cases, they\u00a0simply have to find providers\u00a0which can\u00a0enable rapid lift and shift<\/em> deals to rip out as much short term cost as possible.\u00a0 Then they have to streamline the operations in the BPO environment as quickly as they can to take advantage of the cost take-out (see Surviving the Aftermath of a Lift and Shift Transition<\/a>).\u00a0 Being able to grasp – and live –\u00a0with such rapid change, and find a provider which can work with you to\u00a0ahieve that is the only way forward.\u00a0 Selecting the wrong provider in this market could be fatal.<\/p>\n

Financial Services<\/span><\/strong><\/em><\/p>\n

In financial services, the appetite to move away from captive-only support\u00a0models is helping many firms find new levels of cost-elimination, but also new flexible models for improving the delivery of their current services.\u00a0 Banking and insurance services aren’t changing that much per se, it’s how effectively<\/em> they are delivered to market that is providing the competitive edge.\u00a0 <\/span>Deploying more flexible and sophisticated global sourcing models, is the only\u00a0way to go for most financial services firms today.\u00a0 By staying with\u00a0 jaded and often expensive\u00a0captive operations, is holding many financial services firms back from being exposed to new ideas, new process flows, and\u00a0the new energy\u00a0some BPO providers can bring to the table, based on their experience with many other enterprises.<\/span><\/p>\n

Core sourcing challenges:\u00a0 <\/strong>The majority of financial services enterprises are busily shopping their captives at present, and only a few will find willing service providers to buy them.\u00a0\u00a0\u00a0Most providers now\u00a0have the scale they need, and are only interested in specific niche competencies that give them new capability.\u00a0 Many financial service firms are facing the prospect of having to phase out their captive operations in order to move into a blended, or fully-outsourced, operational support environment.\u00a0 They will need to decide whether or not to write-off\u00a0years of investment in their captive operations,\u00a0in order to transform their delivery model.<\/span><\/p>\n

The Bottom-line:\u00a0\u00a0We’re caught in a\u00a0relentless pursuit of cost elimination and efficiency<\/span><\/em><\/strong><\/p>\n

We\u2019ve spent the last few weeks having intense dialog with buyers regarding how the uncertain, but recovering, economy, is impacting their stance on outsourcing, and the common thread is one of speed and urgency.\u00a0 There\u2019s a genuine impetus from business leaders to act on new efficiency drives that were formulated during the recessionary months \u2013 and global sourcing strategy is right at the heart of these.\u00a0 The conversations dominating this week\u2019s SSON show in Orlando left\u00a0us with the phrase \u201cthe relentless pursuit of cost elimination and efficiency\u201d firmly etched on\u00a0our minds.<\/p>\n

Our\u00a0argument with current BPO engagement models is that they have to encompass more<\/em> than simply a few administrative processes to be truly effective.\u00a0 If your BPO provider is only fulfilling a few standalone functions such as purchasing, or invoice processing, it’s going to be very difficult for them to achieve much more than a few dollars shaved off the labor cost, and perhaps some elimination of duplicate tasks and unnecessary process steps.\u00a0<\/p>\n

In order to find that next level of performance, you need to take a broader view of your entire global business operations and find ways to bring your BPO partner into the heart of your critical data management processes, so they can help you source unique and creative ways to be more productive and source new avenues for growth.<\/p>\n","protected":false},"excerpt":{"rendered":"

There was a suggestion recently (see “Busting the Innovation myth”)\u00a0that innovation in back office operations wasn\u2019t important and it\u2019s all…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,50,81,838,836,832],"tags":[364],"ppma_author":[19],"yoast_head":"\nWhy innovation in global business operations is critical for survival - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/why-innovation-in-global-business-operations-is-critical-for-survival\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why innovation in global business operations is critical for survival - 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