As the body count of the high-flying dotcom grows, companies are getting “back to basics,” observes Jeff Rich, president and chief executive officer of ACS, a Dallas-based supplier. At the same time old economy companies are growing comfortable with the new economy, using the Web to improve their businesses.
Rich says “there’s very little we do today that doesn’t involve the Web.” The Internet allows companies to provide “better and faster customer service” through quicker response times. Speed to market is a hot button for new offerings. The dotcom shake out has made it clear, however, that the Web is just another business tool.
Business process outsourcing (BPO) “is a huge growth opportunity,” continues the CEO. Customers want to do more than just outsource their IT.† Today the thinking is, “Let’s just buy results and outsource everything,” he reports.
Vendors are developing expertise in specific processes like payments, back office, customer care and information-intensive processes like finance and accounting. ACS sees “a lot of opportunity” in both the healthcare industry and the utilities business.
But companies still want to outsource IT.† Buyers “don’t want to get involved in technology,” observes the ACS CEO. Today the IT moniker includes data centers, applications, networks, desktop and Web hosting. Rich says the increasing complexity of today’s technology is making it difficult for buyers to keep up. Instead, they want to purchase a solution. “What they are interested in at the end of the days is: How will outsourcing reduce my cycle time or unit costs?”
Rich says buyers prefer one-stop shopping to best-of-breed vendors. “It costs more to manage multiple partners,” he explains.
The Prognosis for 2001
This year Rich predicts corporations and governments will continue to incorporate the Web around information systems like procurement, supplier management and customer relationship management. He calls this process “webification.” He believes companies “will get more and more comfortable doing business over the Web.”
2001 will be the year when wireless gets some respect, as Rodney Dangerfield would say. Companies could save “a lot of money” if they could get their data traffic off the company’s backbone, Rich observes. He says wireless is a viable solution for companies with multiple locations or with huge numbers of employees who work away from the mother ship. While still embryonic, wireless is a continuing long-term trend.
2001 is also the year niche markets on the Web take hold. For example, Rich sees the demand for Web-based security to continue to grow.
This year may be the year of the application service provider (ASP) shake-out. “There are just too many of them,” says Rich. But the problem is a classic oversupply situation. It’s not the business model. Rich believes the ASP module is “the best way to deliver information technology.”
Lessons from the Outsourcing Primer:
- BPO presents a huge opportunity for vendors because today buyers are interested in outsourcing the entire process, not just the IT portion.
- The complexity of technology today is encouraging IT outsourcing because buyer’s can’t keep up with the constant change.
- Old economy companies are growing comfortable incorporating the new economy in their business model.
- Companies are searching for vendors who can handle everything because they don’t want to bear the expense of managing suppliers.
- Niche markets like Web security will grow this year.
- Wireless technology will grow in importance, especially for companies with distant locations or a large number of employees who work away from headquarters.