Outsourcing operations in today’s fast changing economy has become synonymous to “offshoring” business for establishing a competitive edge & an unquestioned necessity which no organization can deny. Gone are the days when organizations use to brainstorm on “Why to Offshore” but discussions have are deliberated more around “How to maximize offshoring productivity and efficiency”, and IP protection being the main driver behind adoption of captive center model. Few other factors driving widespread acceptance of captive operating model were:
Better Operational Oversight
Quite a lot of companies are tightlipped when it comes to sensitive matters or information of strategic nature, like new product launches, organizational priorities for the future, client data, which if in public could prove to be fatal to their existence. Captive model, to a great extent ensures this critical information remains within the walls of the so-called “extended organization”, with improved control over internal operations and maintaining high-level of transparency within the system.
Keeping Knowledge, IP & Innovation Outcomes Intact
Knowledge & experience is a key asset to any organization and businesses are highly skeptical in sharing these assets developed over years with any 3rd party vendor or outsourcer and prefer keeping it intact within. The talent and experience can be groomed over time, maintaining a solid repository of knowledge to be leveraged effectively by any LOB, function or department within the organization on need basis.
Whatever said and done, business are well privy to the fact that setting operations onshore is a costly affair & given the cost arbitrage opportunity knocking at their doors, setting a captive center seems to be the most viable option, with special attention to identifying the “best-fit-location” post proper due diligence. To accentuate the cost differential, organizations globally are taking required initiatives aggressively to improve their cost competitiveness of their offshore operating model. These include reducing general and administrative expenses, increasing capacity utilization, adopting robust talent management practices to reduce attrition, and leveraging tier 2 or 3 locations.
Captives or global in-house centers emerged as the early providers of knowledge services in early 2000’s but slowly started to lose their sheen in the latter half of the decade due to inability to remain competitive with evolving technology and cost pressures, providing attractive career path to their employees, and talent acquisition & retention. Despite so much speculation that the cost competitiveness of captive offshore centers is fading, most GIC’s still save companies money over keeping non-core operations onshore. Also, in recent time, plethora of delivery locations have seen significant shifts in currency differences, economic policies, wage inflation factors, ease of doing business, mushrooming of highly cost-effective and efficient niche/boutique leading to the perception that operating a company-owned IT or business process center offshore is less financially beneficial in the past. Wages going up by as much as 20% in India for certain competencies, roles and functions, for example, has posed serious questions around the sustainability of the cost arbitrage associated with a captive center.
Umpteen times, SLA management goes for a complete toss once organizations get highly focused towards increasing operational scale in order to show quick cost benefits to the senior management or shareholders and nearly become paralyzed towards a later stage to bump up SLA’s due to weak processes and frameworks set up during the initial phases.
So how can captives truly mature to be more cost-effective & increase their relevance for the parent organizations? How can captives grow beyond just being purely tactical/operations & act as strategic partners to the business providing higher value propositions to parent through services expansion? How can they remain competitive with evolving technology and avoid ceding to cost pressures? How can they graduate beyond performed non-core / call center activities and offer end-to-end services to become strategic partners in real sense?
Rehashing Business Operations by Infusing SMAC
We are transitioning from an internet economy to SMAC economy. The murmur around the disruptive nexus of forces of Social, Mobility, Analytics & Cloud have turned into a huge outcry as captives find themselves constantly being pushed to stay competitive in this ever-evolving market landscape to be “cheaper, better, faster” than their peers. Businesses today are more concerned around:
- How can we improve the customer buying experience?
- How do we create an innovation ecosystem?
- How do we align to today’s information based markets?
- How do we cope with the digitization and resultant virtualization of business models?
- How can we create a workplace for tomorrow which is highly customer-centric, promotes workplace effectiveness and equips businesses to be closely aligned to changing workforce dynamics?
- How can we harness the multiplying effect of the SMAC stack to transform our business?
Organizations in any part of the world need the best support and resources to be globally competitive. More often than not, the resources are far over-stretched and they have the appetite to only invest in very essentials of their business. Information technology in today’s competitive environment has been a crucial enabler for business. We are fortunate to be in this era where technology is way more affordable than a decade ago and in the reach of most enterprises. Recent innovations in areas of Social, Mobile, Analytics & Cloud is making the journey of technology adoption easier, simpler and cheaper for most businesses.
Just as the way telecom industry boomed with the proliferation devices and changing the way most businesses operate in today’s economy, in a similar fashion SMAC is predominantly making businesses rethink the way they operate, serve customers, reach out their target audience, and engage their employers/partners/vendors. SMAC has lot in store to offer to captives for streamlining their business operations and stay competitive. Intelligently and cohesively exploited these technologies will transform the way they compete with other 3rd party vendors or niche/boutique firms.
The subject of Social, Mobile, Analytics and Cloud (SMAC) has been dominating debates across the world over the last year or two. SMAC is all about the integrated play of social, mobile, analytics and cloud technologies in bolstering new business model to deliver products and services in an engaging, comprehensible, intuitive, personalized and contextual manner to customers anytime and anywhere within an optimized cost structure. The business world is fundamentally shifting, but do our organizations really need to reinvent their operating models to stay ahead of the curve? Today’s enterprise buyers, advisors and providers are approaching Digital Transformation in ways unimagined until a while ago. It would be interesting to see how the digital story unfolds, the current and future expected impact, the technology and business skills required by captives to get the most out of these technologies – and how this changes the game for outsourcing, shared services and global business services strategies. Undeniably, the industry is at the cusp of a major overhaul led by SMAC technologies.
Now let’s delve a bit deeper & demystify what SMAC means and what it truly has to offer to Captive businesses. When we look at the captives, the time seems ripe for SMAC to finally move from being a hotly contested topic to a business reality. The impetus for this change is coming from the following developments:
- A connected word with exponential growth in adoption of smartphones to enable easy access to information & people
- Increased pervasiveness of social media both in the consumer world (gleaning into preference insights and listening to conversations) and internal to enterprises
- Rapidly increasing volumes of data being captured by businesses across customer touch-points
- Advancements in the field of Analytics tools/apps/platforms that aid in bringing insights closer to the actual business users and not limited to mathematicians/Phd’ or statisticians
- Cloud enabling businesses to deploy mobility and analytics capability in a cost-effective manner and reducing time-to-market
Captives have to play a leading role in adoption of SMAC services, given the huge opportunity it opens up, not only to grow revenues by increased marketing to new customers, but also to bring in operational efficiency and transform customer experience. But it’s crucial to understand how meaningful it stands for the business & uncovering the precise touch points where SMAC could truly deliver.
Each technology as part of the SMAC stack has an inherently unique quality that differentiates it and also complements other technologies. Social Platforms enable businesses to Listen, Analyze, Relate, and Act on social conversations emanating from mediums such as Twitter, Facebook, Google, blogs, reviews, forums, communities, emails, crm-notes etc and many more. It has made geographic boundaries meaningless and enabled the implementation of virtual platforms to connect, discuss and exchange views; generate, rank, rate and curate content, and collaborate with each other. These make it easy for users to reach out to a large number of industry participants in upstream, downstream and horizontal markets as well as diverse consumer segments. It has helped business answer some critical questions around some key performance parameters of a business.
On Customer Service, how do I respond faster to customer requests & issues? Social can aid in getting early warning of emerging issues, spot cries for help, flag intent to buy or churn, identify key issues, integrate social media into customer service processes, analyze the drivers behind product and service issues, get to the root cause behind the sentiment, identify opportunities to reduce churn and build loyalty.
For a Marketing/CCO, the question which looms is how to engage customers to improve product quality and brand loyalty? Social media monitoring of real-time conversation trends could mean better understanding of sentiment on campaigns and launches, identify key influencers, manage online reputation, launch informed campaigns with social intelligence, measure product launch success, track social sentiment across brands and competitors, analyze share of voice across different social channels.
To truly achieve the power of social, captives need to adopt social way of doing business internally with-in the organization as well as with external stakeholders. Social is all about Interact + Engage + Collaborate + Build Relationships and in the end social capital implies brand value implies market value. Captives need to seriously mull over how they are leveraging social to their advantage to increase collaboration within various communities like customers, partners, employees and consumers & enable real-time flow of information which can be tapped into for insights worthwhile for the parent business.
Mobile technologies have equipped businesses to engage with workforce, customers, and partners in near real-time, view and act on any information at the convenience of an individual with specific views which make meaningful information available on-the-go. To enable business leaders as well the sales force on the ground to see a clear view of their business operations and take decisions pertaining to financials, inventory management, on their fingertips. Just imagine your sales rep being equipped with an app on the smartphone to track real-time status of customer visits and calls, being navigated to reach the designated spot using the most optimal route (Gmaps) and also the key insights from previous interactions or whatever could be pulled through regarding the individual from numerous data sources (CRM, social, surveys et al). Usage goes as far as one’s imagination & mobile is the way to go in the near future. Captives could think of setting up an enterprise mobility store, with specific utility apps designed for various business stakeholders depending on their intent & usage pattern. Simple, intuitive & user friendly apps can be carved out which have applicability across the board for varied business units within the parent organization.
Analytics is increasingly becoming the point of discussion in board room meetings, strategic focus area for businesses, driven primarily by the rapidly increasing volume of data being collected, and the development of tools and technologies that help to simplify analytics and shift the power of insight generation to business users and most importantly, bring about awareness and appreciation of the power of data-analytics in optimizing business decisions, increasing operational efficiency and gaining an enhanced understanding of the customer to build a customer-centric organization , plus increased topline for the business. Customer-centric business model is need of the hour and organizations today are resting data at their core and crafting future roadmap based on facts emerging out from this data goldmine. Analytics has already established credibility in the market with:
- Increasing Topline
- Managing marketing spend, optimum channels to use, time of promotion, right customers, right messaging
- Manage profitable segments by analyzing spending patterns, past purchases and overall behavior
- “Know Your Customer” better
- Predict customers likely to churn/not renew
- Identify similar customers, market/shopping conditions, and product and upstream supplier inventories
- Awareness around customer across multiple dimensions
- Decoding Organizational Data
- Finding “hidden patterns” within the organizational data
- Uncover early warning signs
- Infrequent occurrence (e.g. fraud or missing input)
- Subtle patterns (e.g. supplier quality glitch, inventory leakage or an underserved market sub-segment)
- Optimizing business processes & managing compliance
- Complex-event processing solutions
- Recommendation engines, rule-based systems
- Proactive vs Reactive decision-making
- Identifying new patterns, performing simulations and exposing weak signals
- Leveraging Big Data
- Summarizing and drilling massive datasets by making use of advanced data modeling tools
Cloud is enabling businesses to run effectively in a cost optimized manner, with drastic shift from CAPEX based model to the OPEX based model, and investments deferred till the last moment unless required. Businesses have to worry no more about huge upfront investments (software, hardware, storage etc), ongoing maintenance or servicing costs, associated issuers pertaining to remote operations and pricing mechanics. State-of-the-art best practices are being employed to ensure data safety and seamless access with location-agnostic operations, even in case of catastrophic events.
Integrated SMAC – Enabling Digital Transformation
While social, mobile, analytics and cloud technologies add a new dimension to your business model, to fully maximize their value consider the sum is greater than its parts. The formula for the Future of Work is called SMAC – social, mobile, analytics and cloud on one integrated stack, where each function enables another to maximize their effect. This is the new enterprise IT model delivering an organization that is more connective, collaborative, real-time and productive. Integrated SMAC approach would mean:
- Seamless Access to Knowledge
- Complete visibility to operations for both upstream & downstream markets
- Tapping into expert opinions, best practices, reusable assets, IP and experiences from veteran employees
- Freedom of choice to initiate & participate in relevant discussions
- Financial Prudence & Risk Mitigation
- An ecosystem to share business ideas, cross-pollinate innovations, crowd-source opinions
- Getting holistic business view, real-time assessment of operations and business financials, increased pro-activeness
- Integrated information flow with standard procedures & guidelines being followed across the board
- Targeted Marketing efforts for improved reach & better sales
- Identifying the “Right” target audience & cost-effective channels to reach out to them at the right time
- Powerful platforms to connect with other business stakeholders like partners, buyers, suppliers et al
- Growing beyond “local” boundaries to increase reach on a global scale
- Streamlining Operations
- Support system for operational excellence & dexterity for process owners, business owners & all associated groups/functions
- Optimizing and rationalizing human intervention, automation & freeing up extra resources
- Identifying the right talent, talent grooming & curbing unwanted churn
- Better customer servicing & improved go-to-market
- Build better customer advocacy through near real-time servicing & creating self-help groups via social/digital platforms
- Identifying & partnering with the right allies/partners/vendors/suppliers who can aid in reducing time-to-market and increase reach to uncharted territories inaccessible otherwise
- Free exchange of opinions, ideas, across customer/employee/partner communities for pragmatic insights
- Real-time Insights & Decision Making
- Gaining perspective on current operations & financial to enable Fact-based decision making across all levels in the organization
- Identifying market trends, competitor moves etc and evaluating impact on business
- Analyzing & making decisions on-the-go
SMAC technologies have advanced by leaps & bounds, become way more affordable and increasingly pervasive for businesses across the globe, irrespective of industry or size. Now’s the opportunity for captives to rethink their operating models & bring them on a level-playing field with the fast-growing competition which is already encroaching into their business. Need of the hour is take lead on the SMAC initiatives, seamlessly knitting an integrated SMAC model into the fabric of their business, and make it an integral part of their business strategy roadmap. Leaders who successfully embrace and harness this new wave of SMAC to their advantage shall be leading from the front & others may end up being at the risk of fading away. Are you game to make most of the SMAC revolution !!