By Richard Ostrander, COP, Principal, JDalal Associates, LLC
What would you say are the most important trends and events occurring in today’s business climate that is influencing outsourcing?
Political upheaval, market volatility, ransomware, tariffs, privacy legislation, all are dominating the news cycles, but how important are they to a company’s execution of outsourcing as a management practice?
IAOP Leadership Hall of Famer and Thought Leader Jag Dalal, COP, decided to put that question to his OWS18 Advanced COP workshop of Certified Outsourcing Professionals (COP). So, read on and see how their perspectives align with yours.
Why ask this group of professionals? One of the key elements of becoming a COP is maintaining currency in the profession. IAOP expects these highly qualified professionals to contribute to the knowledge base of the organization. All COPs are invited to attend a complimentary workshop at the end of the Outsourcing World Summit where over a three-hour period, current issues are discussed as well as new topics introduced. The Advanced COP workshop at the end of OWS18 in Orlando saw approximately 40 professionals attending. Many are responsible for sourcing decisions in outsourcing IT and business processes while others have leadership responsibility for the all-important relationship governance process. Let’s look at the results of this informal survey and the author’s analysis of the discussion that took place.
The survey design presented 11 topics that participants were asked to rate each on a scale of five (highly impacts outsourcing in 2018-2020) to zero (little impact on outsourcing in 2018-2020).
The topics were taken from themes that were represented at OWS18 as well as discussion topics that generated the most interest during the customer and provider discussion sessions:
- Artificial Intelligence
- Cloud-based process/technology (service model) offerings
- Cyber-attack (e.g., hacking)
- GDPR legislation (European privacy laws)
- Skill shortage in the technology field
- Impact sourcing
- Global unrest (e.g., nationalism, North Korea)
- U.S.A. (“America First”) isolationism
- Stronger China (as a global leader)
For simplicity of analysis, we have grouped results into two categories:
- Top three ranking – scoring of three, four or five (higher impact)
- Bottom three ranking – scoring of zero, one, or two (lower impact)
The results are shown by the following chart:
First, a caveat.
A respondent’s perception of impact will obviously be influenced by the nature of the company where they are employed. For example, a multi-national company may view GDPR as having a significant impact on them, but a U.S.-based public sector company would likely not view GDPR this way. (See our stories on GDPR). With that in mind, let’s look at some general conclusions that can be inferred from the results.
It is perhaps of little surprise that over 90 percent of respondents view cyber-attacks as having the most potential to impact outsourcing in 2018-2019 with less than 5 percent of respondents viewing it of little impact.
Cyber offenses consist of infiltrating computing environment with:
- Trojan Horses / Logic Bombs
- Social Engineering (Phishing, Pharming)
- Rootkits (Man in the middle)
- Botnets / Zombies
At the workshop, Dalal introduced a risk-based management model to counter the impact of cyber offenses.
This simple process will become a requirement for all outsourcing engagement just as risk management is today.
This also holds true for the impact of RPA.
Although class discussion revealed few had implemented RPA, most felt it is an area they were expected to give greater consideration to. RPA had a lot of discussion at the Summit and was one of the key topics at the workshop. One of the key discussion items at the workshop was how can a team prepare to create and adopt RPA successfully. Dalal shared a unique team approach to managing innovations like RPA – shown in the diagram below:
Create a Thinking Team
- Blue hat: Focus on process, managing time, keeping big picture in mind
- White hat: Focus on facts on the ground, figures, metrics, reality of situation
- Red hat: Focus on emotional aspects
- Green hat: Focus on creative thinking, new possibilities
- Black hat: Focus on skeptical outlook, risks
- Yellow hat: Focus on optimistic outlook, benefits
Interestingly, respondents were fairly consistent on the significance of the global and domestic political environment’s impact on outsourcing over the next several years. Just over half of participants consistently see the effects of isolationism, global unrest and the role of China as having an impact on outsourcing.
So, are the results consistent with your own expectations? While certainly an informal survey, the results do speak to some general conclusions that the outsourcing industry should take note:
- Technological service delivery models are a significant enabler for outsourcing but both parties are going to spend time and resources addressing the risk of cyber-attacks during negotiations and throughout the governance of the agreement
- The dynamics of the political environment and global leadership will continue to influence not only using specialized third party providers but impacts the decision of where service delivery should be located and the need to have flexibility within the agreement to respond to changes in regulation.
About the Author: Richard Ostrander, COP is an IAOP Master Class Instructor and Principal of JDalal Associates, LLC.