Sourcing Realities: Platforms Make the World Go Round

Remember when the phrase “Operating Model” was commonly interpreted to be a clever way to discuss “organizational structure”? Indeed, it wasn’t unusual for the Operating Model of a business to be expressed via an Org Chart and a RACI matrix. (For the uninitiated, RACI is an acronym and equates to “decision rights”.)

I’ve been observing recently that when I speak with a company and the topic of Operating Model arises, we inevitably go down a different path of conversation. The most prominent word in those conversations? Platform.

In the world of business, the term “Platform” has come to refer to the idyllic state of broad, ubiquitous relevance for conducting commerce. It’s the way that machines interact seamlessly to knit together complex processes by bringing together tasks performance by various parties.

Platforms infer a high degree of automation and consistency of execution. They are launching points for doing other things, the foundation from which activity yields value.

Once a business adopts a platform, it tends to define business processes – the protocols through which work occurs – around the platform’s features and functionality.

Salesforce.com is a Platform. It’s hard to escape or ignore the profound impact that Salesforce.com has delivered to enterprise strategies and their Operating models.

Ease of implementation, ease of use, ease of interoperability … all virtues of frictionless operation. Not the same emotions as consumer experiences, but emotional attachment nonetheless.

In the world of Business Process Outsourcing, platforms are the central point of demarcation between the players and the pretenders. I see this to be true in the strategies of major companies, and even the mid-market.

Yesterday, BPO providers delivered services using the Client’s systems and processes. Value was harvested by improving the processes through repeated execution and refinement, and lower cost of labor.

Today, Clients are commonly quizzing their incumbent and prospective BPO providers with the core question: “What is your platform strategy for your services?” Expressed a bit differently, this really implies: how do you think you will be relevant to me over time?

I am struck by the wide variability that exists across BPO providers in answering this central question. Most commonly, there is a sense that the Client has a “right answer” in mind when the question is posed. You can see the shuffling of proverbial feet when a BPO provider seeks to articulate a direction with confidence. This is the moment of truth, the blink that implies “we can be all things to all people” that erodes confidence (and interest) in a flash.

Players in the world of platform-based Operating Models need to market themselves differently, sell differently, contract differently, and service differently.