In fashionable outsourcing circles, it is whispered that, “stack is the new black.” The stack, they say, is this year’s must-have business process outsourcing (BPO) accessory.
OK, maybe I’m overdoing it a bit, but I do think an “as a stack” approach really is the hot new thing in BPO (and it’s happening now – we’re currently delivering this out in the field). This is mainly because it represents a more efficient but also much easier way for an organisation’s leadership to run and control its processes.
Traditionally, companies looking to outsource business processes have had their thinking constrained by traditional boundaries between the service, process, application and infrastructure layers. They tackle all these elements of a business process separately. This has led to a situation where they are often outsourcing and managing them all separately, resulting in multiple contractual arrangements and high demands on senior managers’ time.
An example of the Finance stack…
With a stack approach to outsourcing you can address all of the components that make up a business process together, and buy from a single provider that has delivery capabilities and governance across them all. This brings the benefits of improved standardisation and synergies, as well as convenience. You can almost think of adding or updating these services as being like downloading and updating apps on your smartphone.
You also get a much clearer view of the costs and savings of each business service, not just a simple headcount ‘FTE’ measurement.
Another key change of mindset is the focus on business outcomes rather than the mechanics of the processes themselves. The provider of the ‘stack’ offering should be judged on the relevant business results derived from the process, more than simply the delivery of certain components. The ownership of business outcomes triggers much healthier behaviours in both client and provider organisations.
The stack in the real world: three lessons from a restaurant chain
One of our recent outsourcing deals with a global restaurant group draws on this stack approach and clearly shows its value. There are a number of reasons why it’s particularly relevant to the restaurant sector.
- First is the scalability. Restaurant chains often need to respond quickly to changing demand or exploit new opportunities. They also need to consider the specific needs of franchisees or innovative and experimental subdivisions. Here the stack model’s agility and ease of use is a big plus.If you want to simplify the back office support for an asset-light franchise model, then that’s what you build around; if you want to scale up a pilot operation in a new market, then you can ‘turn the tap on’ and get the necessary support in place. You don’t need to go through the nightmare of managing the increase in work and shifting scope across multiple suppliers or internal delivery teams. This kind of agility is incredibly valuable to all sorts of other industries.
- The stack also makes good sense from a risk perspective. As you scale up you can be sure that the ‘stack’ provider’s repeatable governance, risk and compliance measures will scale with you – with the same strong quality controls in place. You don’t have to worry about establishing a team with the complex combination of process and technology skills and experience to manage this.
- Finally the stack approach also improves things from a reporting point of view. You can see across the layers of your processes more clearly and take advantage of consistent reporting methodologies and dashboards. This makes it much easier to understand the total performance of a process and better understand the costs and benefits of doing things differently. A really good BPO provider should also be able to help you act on this insight, bringing all kinds of best practice to the table, amassed from hundreds of outsourcing engagements.
When you put it all together, it’s a compelling case. Managing multiple layers separately is so last year: in 2015, the stack is the new black.