As a 22 year-old, I was immersed into the eye-opening
experience of my first real job. While
the era was long ago, well before Silicon Valley defined the meaning of a
“startup” culture, I thrived at being fresh talent in a company that was
buzzing with energy for the work it was doing.
Based in Cambridge, MA, just outside the walls of Harvard and
MIT, the company was on a mission to change the world through the use of
innovation in networking technology.
Most of the employees were casual in appearance, wore sandals, and
enjoyed the free espresso that served as the focal point for conversations.
This era was one where email had not yet been deployed as a
basic communication utility, so the potential of an interconnected universe of
companies, research institutions, and individuals was still being formulated.
The notion of connecting people via technology was at the center of the
company’s focus.
With two years of experience under my belt, I was called to
meet the new Senior Vice President who had joined the company to lead the
business unit that I worked within. With
trepidation, I walked into the plush offices of one of the most senior people
in the company. Bob Halligan looked me
over and said, “I’ve heard a lot about you.”
My reply was a rather sheepish, “Thank you. I try hard.”
Mr. Halligan didn’t miss a beat with his response: “A lot of
people try hard. Your reputation is
framed by results.” Some encounters
stick with you for your entire life.
Fast forward to today’s highly-interconnected economy whereby
individuals and businesses are able to interact and conduct their affairs with
almost frictionless ease thanks to the growing fabric of technology-enabled
services. As consumers, we are
conditioned to expect transactions of all forms to be effective and
efficient. We’ve lost tolerance for the
well-intended best effort, and have shifted our expectations towards fast and
perfect.
What matters most to us is the quality of the result, with
diminished concern for the path required to achieve that outcome.
I’ve developed perspectives that I’ve been
calling “The As a Service Economy” through the most recent years of a long
history in the Outsourcing and Shared Services industries. These operating conventions are used by
companies to drive cost efficiency in their business operations.
Today, there continues to exist a
considerable percentage of corporate spend allocated to effort-based work. The popular use of offshore labor to execute
transactional work processes has perpetuated this mode of operating. Managers tend to define and direct work to
groups of people who are well-intended, toiling to execute tasks using the
collective knowledge and learnings of their work units.
Tribal knowledge is still pervasive as the
way things get done in many, many companies.
The promised transformation of work processes
through the deployment of technology platforms for standardization of
workflows, and consistent organization of data, has not yielded the impact that
most executives imagined when they launched these deployments. ERP solutions
have not materially refactored the way that business processes are executed.
There will be arguments to the contrary, but
my experience leads me to believe that “As A Service” is redefining the
corporate services architecture to remedy the shortfalls of offshoring,
outsourcing, and ERP adoption. There are
five truths that contribute to my worldview on this:
1.
Most
CIOs and heads of Shared Services are serving as the point of leadership for
the adoption of platform-based, industrial-grade Services. These are commonly components to the
enterprise digital transformation, as they are built-for-purpose elements that
require orchestration and integration among the service eco-system.
2.
These
strategies commonly entail a migration from legacy resourcing models - people,
processes, and technology - to embrace adoption of new forms of operating. No big bang, but a purposeful evolution. Companies are chipping away at effort-based
work processes and embracing outcome-assured service utilities.
3.
There
are readily-accepted proof points. Salesforce.com, AWS, WorkDay,
Coupa, and others are the trailblazers for the new way of running the enterprise. The objections to utilizing multi-tenant
platforms are being overturned in favor of market-based service offerings. Companies are dismantling their installed
base of facilities and organizations in order to adopt market-defined services.
4.
This
strategy is not constrained to back-office functions. Increasingly, we are seeing the bundling of
front-office applications with the attendant operating infrastructure into
turn-key business services. This is an
important shift away from optimizing the horizontal service categories like
storage, compute, payroll, and the like.
5.
A
final summary observation - many of the companies that are employing “As A
Service” techniques for how they BUY services, are also looking to apply those
same mechanisms for serving their own markets.
What this means is that the essential skills for designing and implementing
a buying strategy for market-based services are valued for helping companies
evolve their market-facing propositions.
This transformation of business operating
structures has considerable headwinds. Generations of managers have grown up
believing that their value is defined, in large part, by the number of people
they control, direct, supervise, or manage. Procurement leaders have been
trained to advocate for unique and special requirements, not buy “standard” as
a primary imperative. “As A Service” modes of operation challenge this
mindset.
Power and influence doesn’t accrue based on
the scale of effort one directs, but rather the magnitude of effect that one
assures.
As I work with enlightened executives who are
committed to transforming the profile of their businesses, there are many
complications attendant to reorienting the functions around outcomes rather
than effort. Yet, most know they need to
embrace this opportunity and are developing the roadmaps for migrating their
organizations to a new form of service delivery. The old structures and modes of operating are
being chipped away.
All in all, the greatest obstacle to this
shift is comfort with the status quo. If
management rewards “span of control”, then executives will seek to build larger
and larger organizations. This is why, in my experience, leadership engagement
is central to reimagining how the business is organized and operated, and
embracing buy/subscribe over build/operate.
At the end of the day, outcomes matter.
Peter
Allen applies
many years of operating
experience as a top executive and strategic advisor for companies of all shapes
and sizes, with focus on technology-enabled business services. He is now Chief
Evangelist at Peter Allen & Partners and Senior Advisor for Alvarez &
Marsal.
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