Wednesday, February 12, 2014

Platform of Platforms

Last week’s post about how “Capabilities Aren’t Services” earned over 1,400 reads and some nice re-postings.  I think I may have touched a nerve.
So, let’s move onto observation #2 around how the Outsourcing Industry is rebooting – at least in the eyes of the buyer community.

It wasn’t too long ago that the dominant enterprise strategy for business process enablement centered on a holistic Enterprise Resource Planning (ERP) platform.  Hordes of consultants were called upon to lay down these ubiquitous services to enable the workflows of a wide range of (generally) back-office functions.
I won’t name names.  You know the players.  Their numbers have whittled to a very few, both of which remain acquisitive towards any new bright and shiny capability to enter the enterprise market.

·        The ITO industry made hay by offering “hosting” services for these behemoths.  

·       The SI and Consulting industry ran circles around “instance consolidation” as companies tried to reign in the multitude of parallel islands of autonomy across their global operations. 

·        And, the Applications Services segment trained up armies of programmers and support staff to care and feed the permutations, databases, unique configurations, interfaces, and bolt-ons that dangled from the “common platform” that ran the back-office of the business. 

·        Finally, let’s not forget the many BPO providers who took flight by being expert at the design and operation of transactional business processes – often merely providing the lower-cost labor to do the work with the Client’s systems and proprietary processes.
Today, most major corporations run their back-office operations on an “ERP Platform” that was cobbled together over the past two decades and which are supported by legions of internal and external staff to maintain harmony and run reports.

The significance of ERP to the ITO/BPO industry is considerable.  This is because, to a great degree, ERP merely automated the processes and procedures that required almost the same number of people to perform as was required pre-ERP.  Ask any CFO or Shared Services leader how much labor was saved as a result of and ERP adoption.  The cost may be lower – owing to the ability to offshore the work – but the effort held largely at the same levels.
Alas, that was yesteryear.  Fast-forward to the enterprise strategy for business processes today.

Thanks in no small part to the wild success of, the enterprise strategy has been enlightened. ERP need not be monolithic.  Heterogeneity is celebrated.  Cloud-hosted functionality is proven.  Rapid deployment is expected.  Configurability is cherished.
While these lessons could be seen as merely the next generation of ERP, there’s an even more substantial significance to what has happened.  Beneath the application layer exists the “dial tone of business process connectivity” – the platform layer that was portrayed as the secret sauce for yesterday’s ERP platforms.  Today, platforms are the common language of enterprise operations.

No longer is the standardization and automation of business processes relegated to the back-office.  No, we’re seeing new innovations in front-, mid-, and back-office services.  CIOs and business architects aren’t looking to buy point solution applications, but rather subscribe to business process platforms.  And, these new platforms are about the business of the business – sales and services to customers.
The platforms are being united within the enterprise in ways that allow for modularity, regional and business unit customization, but also integrity in data, security, and operational performance.  There’s a fair amount of added complexity – a call to action for the Supply Chain community – and a reinvention of many roles in the company.

There’s much more written on this topic in our industry, but my point of emphasis centers on the impact to the ITO/BPO industry.  What’s to become of the companies whose models exist only for the care/feeding of yesterday’s ERP-laden business operations?
Some progressive providers will be the pathway for the modernization of the Clients’ operations.  For most, I fear, this context shift is too great.

One needn’t wonder why there aren’t large-value outsourcing contracts being awarded.  The answer lies in the strategy to subscribe to best-in-class services platforms, united through a services integration platform. 

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