As Stan Lepeak, an analyst with Meta Group, looks at electronic commerce, he sees an extremely lucrative area for outsourcing, with a high percentage of applications being turned over to providers. That fact, said Lepeak, means that relationship management will play a key role in success or failure.
Most Visionary Relationship: Beaumont Hospital and PricewaterhouseCoopers. Like most health care delivery organizations, Beaumont Hospital is under constant pressure from the government and insurance companies to find new ways to reduce costs.
Best Integrated Relationship: Brunswick Outdoor Group and ACS. The relationship between Brunswick Outdoor Group, a division of Brunswick Corporation, and Affiliated Computer Service (ACS) began slowly in 1995 with a contract for ACS to take over the data center of Zebco, a Brunswick Outdoor company.
Best Strategic Partnership: DIRECTV and Digital Equipment Corporation (Compaq). In the days just before the launch of DIRECTV in 1992, the founders identified two truths important to their new company’s future. Acting on those realizations, they embraced outsourcing as integral part of their business strategy.
Most Effective Deal: Kellwood Company and EDS. In most business circles, the Kellwood Company is a well-kept secret. Although the company is the fourth largest apparel company in the U.S. and the largest producer of popularly priced clothing, their clothing does not carry the Kellwood label.
Best Niche Deal: Merrill Lynch and AT&T Solutions. Merrill Lynch and AT&T Solutions could give lessons in how to make a niche deal work. Merrill Lynch had specific network needs, so they turned to the vendor dominating that segment of the industry.
Most Improved Relationship: TransAlta and Digital Equipment Corporation. In 1995, TransAlta, a privately owned Canadian electrical utility company, and Digital Equipment Corporation were involved in an outsourcing relationship that was headed south in a hurry.
Tomorrow’s clients are looking for ways to gain competitive advantage, to increase efficiency, to transform their workforce, and to reach new levels of performance.
The move toward selective outsourcing has created a marketplace where fewer big outsourcing deals will be transacted and more niche vendors will team together to deliver the services they do best to specific customers.
Partnership: More Than a Fancy Phrase. One of the most telling changes in future outsourcing will be the reshaping of relationships as companies continue to move away from cost reduction as the single key driver.
Outsourcing: The Big Picture. The outlook for pure outsourced big deals will decrease in the coming year, according to Jim Champy, chairman of outsourcing at Perot Systems.
As the industry continues to move from cost-based to value-based outsourcing, technology trends that leverage network over premise infrastructure will offer new opportunities in business processes and functions.
Business process outsourcing now accounts for 30 percent of Affiliated Computer Service’s (ACS) more than $1.1 billion consolidated revenues. Jeff Rich, president and chief operating officer, said that figure is just one indication of a healthy industry.
Outsourcing is exploding, with new vendors scurrying onto an increasingly competitive landscape, and the ‘hot stuff’ offerings of yesterday are becoming standardized fare today.
By the year 2002, over 50 percent of everything that is spent externally on IT services will be expended around e-business activities. That’s part of the e-business explosion predicted by Doug Elix, general manager for IBM Global Services.
The proliferation of outsourcing is just phenomenal across types of activities, across industries and at every level of the organization.
Outsourcing Buzz Blog Outsourcing Alert