Outsourcing receives its share of bad press, and usually the negative press has to do with companies complaining about their suppliers not fully understanding their business, says Rob Grimes, CEO and chairman of CynterCorp. And without a fair amount of knowledge of the company that the vendors are dealing with it is difficult to create a partnership scenario.
In some areas of outsourcing a vendor doesn’t particularly have to know too much about its client. For instance in the technology area it is much easier to outsource a mainframe than it is to outsource the actual applications that are on the mainframe, he says. In order to support mainframes a company doesn’t really have to understand the applications that are running on them, they only have to understand how to make sure they are running properly. But supporting the applications themselves, which are something that the employees use everyday to do their jobs, requires an understanding of how they are being used.
The Service Industry
Grimes company, CynterCorp, is made up of a number of different companies, all of which are focused on technology services for the hotel, restaurant and retail industry. Being very liberal about that, the company includes healthcare under hospitality, and includes retail financial banks under retail. So basically the company provides service to the service sector. It supports systems that are used at the unit level – where the end users are actually working with them. These systems include cash registers, front desk systems and time keeping systems. So not only are there a lot of sites involved, but there are a lot of hands-on employees involved.
But the largest group within CynterCorp is a company called Cyntergy, which provides technical outsourced services primarily in the call center, helpdesk and training area. So when Grimes talks about obtaining a knowledge of the company he is working for, he takes the discussion very personally.
“I hate it when my own company says that we compete with EDS, Lockheed Martin, CSC, or IBM,” Grimes says. “I say no way, because those guys cannot win the types of deals that we win and we can’t, quite frankly, win a lot of the deals that they win. They go after general outsourcing business, and I go after very industry specific outsourcing business.”
Working Together Seamlessly
CynterCorp works in a lot of restaurant environments where it supports the corporate franchises. And Grimes says that half the time the company’s clients don’t tell their franchises that they are even outsourcing. What does that mean? “That means that we absolutely have to understand their environment and be their partner, or the relationship just won’t work,” he says.
This also means that CynterCorp has to hire professionals that have experience in the service industry. Grimes says that in the typical outsourcing model, outsourcers get their knowledge by acquiring the people at the company that they are doing the contract with. The problem with that is that if they don’t have other clients to spread that cost upon then they are building their whole business model on the cost savings of only outsourcing the data center, he says. Usually, outsourcers have a hard time making money by solely taking over their client’s people.
But CynterCorp actually hires employees from the hospitality, food service or retail industry – the same kind of people that its clients would hire themselves, he says. So there is no need to take over someone else’s staff to gain the knowledge. “I can use my staff because we already have the knowledge of how the business runs and how the applications work; now I just have to learn how they are using the applications.”
The Triangle of Knowledge
There are three sides to the equation. One side is industry knowledge, the second is a knowledge of the applications and the third side is the knowledge of how the applications are going to be used in a particular business. Companies like CynterCorp come to the table with two sides. They hire people who have been restaurant and hotel retail managers, so they have a knowledge of the industry and as a result also have a knowledge of the applications. Now all they need to know is how Marriott is different from Hyatt, and those are usually standard operating procedures. That is something that can be learned, but not something a computer technician, who has never been in the hospitality field, will understand, he says.
Once these people are put in place it should be forgotten that they are even an outsourced group because in order to form a partnership the arrangement should never be looked at as an outsourcing relationship. “We tell people that we are not successful unless we are really considered a part of their staff,” Grimes says. “If we are looked at as just the outsourcing supplier, while we may reach certain financial goals, we have not achieved our purpose.”
There is often resistance to this because in the IT area the MIS people are usually not the ones that make the outsourcing decisions. Most MIS positions are not board level seats and they report to a CFO, which can be a problem. CFOs sometimes make decisions based strictly on the bottom line. And the MIS department isn’t in favor of full-fledged outsourcing initiatives, he says. Grimes remarks that MIS is an overhead department and is afraid of giving up head count.
“Actions speak louder than words,” he says. “So you just have to step into that type of environment, and once they see that you’ve hired the same kind of people that they would have hired, they begin to understand how the operations people can work together seamlessly. If they don’t work together it usually won’t end up going on the right direction.”
Lessons From the Outsourcing Primer:
- When a company outsources something that its employees have to work with on a daily basis it is essential that the outsourcer knows the culture of its client.
- It is not essential for outsourcers to know as much about their clients when they are simply running the mainframe.