Remembering fondly when the acronym BTO referred to Bachman Turner Overdrive with Canadian musician Randy Bachman, I found it amusing to learn that BTO now also represents what IT consulting and outsourcing firm Accenture heralds as the most strategic form of outsourcing relationships: Business Transformation Outsourcing. After all, wasn’t one of the hits of BTO – the musical group – the song Taking Care of Business?
Accenture reports that BTO – the outsourcing strategy – is on the rise in other markets around the world and “has the potential to create fast, sweeping improvements in business performance.” However, it seems that 79 per cent of Canadian executives responding in a recent study commissioned by Accenture were not familiar with the term. Of the 15 per cent who claim to have implemented BTO, 84 per cent reported a favourable experience. Implementing BTO includes working with outsourcers to invent new product lines, improve customer relationships as well as renew operations.
Accenture notes that while Canadian executives consider outsourcing as part of their means to cut costs and increase efficiencies, they are held back by worry about having to develop a new management style and a reliance on “tactical vendors.”
The study by a third party – Northstar Research Partners – indicates that organizations find strategic providers more effective than vendors. “Seventy-six per cent agree that (strategic providers) have a clear advantage over vendors in delivering effective solutions.” However, the study also finds that “despite their stated preference for strategic providers, most interviewees currently work with vendors… They are more likely to employ tactical vendors in 18 areas, including security, Web-based customer service, call centres, marketing and finance. Strategic providers only predominate in billing/invoicing and real estate management. Interviewees outsource their product development to equal numbers of vendors and strategic providers.”
Accenture warns that many Canadian organizations lack the outsourcing experience to compete with global and national competitors. The company makes four suggestions: re-evaluate existing outsourcing agreements; identify new challenges, then partner for breakthrough results; consider the potential for shared services; and cement relationships using innovative incentives and metrics.
“Rather than rely on traditional contract terms such as service levels or cost reduction targets, organizations can compensate partners according to enterprise-wide outcomes: increases in revenue, company valuation or market share gains.”
Outsourcing is a complicated world. There’s business process outsourcing (BPO), document and knowledge management outsourcing, technology outsourcing, E-sourcing and ASPs, sales, marketing and customer care outsourcing, and distribution and logistics outsourcing — to name a few options. But maybe Canadian companies have slipped behind the times and need to be looking at more of these ways of taking care of business.