“Then the goalposts shifted and outsourcing evolved into enhancement outsourcing, which was used mainly to add to existing company functions. This was still nonstrategic. Neither of these two types of outsourcing touched on transformation within an organisation. Now, with the growing field of BTO, the concept involves a strategic partnership with the outsourcing company for the sake of, and by means of, transformation.”
Perhaps one should consider what business transformation is. Firstly, it should be much more than paying mere lip service. Secondly, with the advent of King III, business reporting as in the integrated reports now being published by corporations in which governance, strategy and sustainability become entrenched in company reporting systems, businesses have had to step into line with global governance trends. The corporate governance tenets of transparency, sustainability, and maintaining a good reputation have overtaken the dash to make profits at all costs.
Against this backdrop, Ravenall explains, BTO has become a strategic tool. It gives a company direct access to best practices in the field, even without having the skills in-house. Apart from the compliance and governance issues that are tantamount to the drivers of business operations these days, BTO aims to deliver a competitive advantage to its partner(s). This is, in fact, a case of operational management and strategic management joining hands and addressing both internal and external issues.
Ravenall defines BTO as “leaving something better than it was when you started”. This may seem a rather vague definition, but, when applied to a situation, process or system, one can immediately see that small changes can bring about strategic imperatives when orchestrated and joined together. “Prior to 1997, very few people saw the concept of outsourcing as a partnership. In fact, it was mostly seen (and used) as a cost-cutting tool in areas where companies felt that they need not develop expertise, perhaps because of the limited use of a certain skills set in the business. But, when it is about transformation, the outcomes are different and the time frames have been contracted into turning businesses around in a period of time that would have seemed impossible some 25 years ago.”
“We have seen an emerging instability in value chains, perhaps mostly attributable to the development of global value chains and centring on cheaper labour costs in the case of multinationals. This trend, which started in the late 1990s, has brought far-reaching changes to global trade and investment, and, of course, has also had an impact on BTO. Outsourcing (and insourcing) affects everyone involved. This, as well as the advent of virtual trading spaces, has brought about major changes in value chains.”
Ravenall reveals that companies have found that BTO brings about competitive skills and service levels, and increases the ability to respond more rapidly to changing business needs. “BTO is bold. It needs bold people to drive big changes at a rapid pace,” she says. “Transformation means giving some of the critical processes to a specialist company that brings them into the competitive environment in a short space of time. BTO is geared to deliver measurable and predictable outcomes and involves a comprehensive approach. It is also a simultaneous approach: it creates new capabilities and then uses them to achieve a clear, strategic objective at the same time.”
“One of the tools we use to drive transformation is BPR [business process re-engineering], which means we first do an analysis and then redesign workflow, both within and between enterprises. Other principles that are an outflow of this are, for instance, organising workflow around outcomes and not around tasks, putting the decision point where the work is performed, and building control into the process,” she says. “There may well be a perception that BTO is for giant enterprises, but it is not. Fledgling companies as well could find themselves at some critical point where growing the company in-house may not be the best option. In these cases, too, BTO can be the right answer to deliver the desired outputs.”
“Transformation is not just about processes – it is, first and foremost, about a mindset,” Ravenall explains. To be able to transform an enterprise, the personal mindsets of all its employees need to shift. It does little good redesigning a process if you cannot get buy-in from the people who have to carry it out. “While it has to be driven from the top, it has to affect and change every person in the value chain. “Businesses, big or small, should carefully consider their options and weigh up the advantages of BTO in their respective situations,” she concludes.
Outsourcing Itself Transformed
Business Transformation Outsourcing is new to South Africa
Outsourcing is no longer just about utility management
Outsourcing partnerships are now about business turnaround
Outsourcing is about measurable and predictable outcomes
Outsourcing Evolves Strategically to BTO
“We have seen some shifts in the outsourcing arena in the past two decades, for the field is growing and evolving into areas which now seem quite ineligible if one applies the old definition of outsourcing to the business models being used,” says Suzanne Ravenall, CEO of The Effectiveness Company, the country’s first business transformation outsourcing (BTO) company.
Ravenall has seen some changes and shifts in the local business landscape since starting her company 17 years ago. “Outsourcing started as utility outsourcing, where a company would engage another business, mostly in the field of utilities, to take over the maintenance of that function on the company’s behalf. The main reason for this was to outsource noncore functions to another company, especially where specialist knowledge was required. These were always noncore and nonstrategic functions. The goal of this was usually driven by the need to save costs.
by Ilse Ferreira