As both business and governments look to digital technologies to enhance agility and scalability in a bid to drive efficiencies and reduce costs, traditional outsourcing is being reinvented. In order to compete in today’s digital world, organisations are exploring ways to outsource entire business functions and services, aiming to drive innovation and enable greater business agility as well as optimise operations.
The most innovative organisations are beginning to combine traditional outsourcing with software-as-a-service offerings, enabling them to outsource whole business functions and the systems they use. This merging of people and digital systems being outsourced is referred by Accenture as operations-as-a-service (OaaS), which is defined as the combining of proven business process transformation and management disciplines with intelligent, cloud-driven technologies.
According to Accenture, through OaaS, companies can take advantage of cloud-based applications to reduce traditional IT spend, and increase IT flexibility and scalability, while still achieving the operational and service quality benefits that business process outsourcing (BPO) can provide.
Australian organisations in both the public and private sector have been slow to adopt OaaS, meanwhile uptake of OaaS is increasing across the globe and has been particularly popular in local governments across the UK. In fact, around 90% of local authorities use Civica to support their IT systems and business processes.
Denbighshire County Council in Wales is a leading example of a local government organisation that has adopted a full OaaS solution. The council outsources its entire revenues and benefits services to Civica, including its systems and people.
According to Denbighshire’s Cabinet Lead Member for Finance, Councillor Julian Thompson-Hill, the council was forced to look at innovative ways of working in order to continue to provide services in the face of severe budget restrictions. The council now saves £200,000 (approx. AU$323,000) annually by outsourcing.
While the adoption of OaaS in Australia has been arguably slower than global counterparts, there are a few examples of Australian organisations moving towards an OaaS model. For instance, the NSW Department of Justice now operates its previously siloed systems as one streamlined as-a-service model.
According to Accenture, the public sector was an early adopter of the as-a-service model, citing the federal government’s ‘cloud first’ policy first announced in 2013 – which required agencies to prioritise public cloud services for new IT procurements – as an example.
However, despite 62% of Australian and APAC organisations seeing OaaS as critical to their business, just 8% have implemented a core enterprise function under the OaaS model. Various barriers still prevent OaaS from being fully realised in the Australian public and private sector organisations. Some potential reasons are the misconceptions regarding costs and data security, as well as the perceived logistical difficulties involved in updating legacy systems and transferring people and processes to third parties. One way to avoid this is to outsource both systems and people to a third party with experience in these kinds of transitions.
The challenge for some organisations in the region has been to reconcile needing to hire skilled staff and also keep jobs within regional and rural communities – if the job goes elsewhere there is a risk that the financial benefit and value of the employee is lost to the local economy. There are a number of ways to mitigate this however and there is no cookie-cutter approach that works for all scenarios.
The key to overcoming the supposed barriers to BPO adoption lies in collaboration. Organisations cannot afford to have an ‘us-and-them’ mentality, as both parties need to work alongside one another to achieve optimal results. Clear and transparent communication on both sides is necessary in order to align aims and goals. To get public support for the partnership, the two parties need to appear as a united front.
In order to offset the shift in management control, solid relationships need to be built between the two (or sometimes multiple) parties, with each party willing to share knowledge, specialised expertise, business processes and technologies.
Another key factor to achieving success is choosing the right service provider when considering BPO. Third party providers need to ensure data security and availability, while offering data insights, advice, new ideas and knowledge.
The right provider will be able to complement and develop existing internal skills and capabilities. Without a shared cultural fit and values, the partnership is unlikely to succeed. Overall, the concerns over loss of skills, job protection and lack of understanding of how to deliver the win–win–win trifecta for government agencies, employees and citizens are all holding back wider adoption of BPO within the Australian public and private sector.
However such concerns can largely be overcome through a combination of transparency and collaboration. By shifting the focus from menial tasks, governmental bodies can become highly agile and scalable. Organisations within the public sector can put their people first without distractions while planning for tomorrow.
