But beware new POPI legislation will affect businesses and outsource service providers soon

 

New research from the Grant Thornton International Business Report (IBR) reveals that more South African businesses favour outsourcing than the global average.  The survey highlights that almost half (48%) of all local companies surveyed outsource back-office services (or plan to), while only 40% of companies globally, and 37% of the BRIC countries, choose to outsource.

 

While the cost savings and process efficiencies outsourcing can provide are widely recognised globally, many business leaders are worried about losing control of a key process by outsourcing.

In the Managed Service Provider (MSP) arena, multi-tenancy is becoming increasingly popular. More and more, MSP's are starting to use converged infrastructures to support multiple customers on one integrated platform. This trend is supported by various suppliers of software for infrastructure management, data management and security. It is obvious that multi-tenancy addresses the specific challenges of the MSP industry. But it also provides excellent opportunities for the enterprise market.

 

Big multinational companies traditionally use many different solutions to support and manage their infrastructure. They may for example use solution "A" for back-up and recovery in one country and solution "B" in another region. In addition, solution "C" may be used at one specific department. This has led to a proliferation of many products for the same tasks. Until now this has limited companies in getting a global view of what is happening in their IT. Global insight, however, is becoming increasingly important in view of global competition and the need to be compliant. Limited insight can be solved by deploying a multi-tenancy solution. These solutions support a company in two specific ways:

 

1.      A true multi-tenancy solution will provide one single platform for, for example, global data- and information management or security. It offers the CIO a complete view of the IT environment and enables the IT department to focus on services instead of managing hardware and software.

 

2.      At the same time, the solution provides a department, a facility or office all the features of a purpose-made product, giving IT managers at the specific location the idea they work with their own tailor-made platform.

 

Directory Services

One of the main features of a multi-tenancy management solution is the ability to integrate with Directory Services. This enhances security and usability significantly. A system manager can establish rights granularly for each user and for example determine which user may restore a specific database and who has access to a production system. This is especially important as IT systems are becoming increasingly complex and compliancy is an important issue for any company. Tight integration with Active Directory also prevents the proliferation of generic admin accounts, used by various system managers. This is a well-known practice in IT, but it makes it impossible to track and audit changes. By integrating the management solution with Directory Services System managers always log in with their own account and as a result can always be tracked and traced.

 

Charge back

A second important feature of a multi-tenant solution and one that particularly addresses the current needs of companies is charge back capabilities. Whereas MSPs need this capability to charge their individual clients, an enterprise may use this feature to give internal clients insight in their use of IT or charge departments internally. It also enables companies to offer departments more freedom of choice with regard to their IT investments. They know what they spend and can decide themselves in which solutions they want to invest to reach their business goals.

 

Control

The third feature is focused on control. As pointed out earlier, multi-tenancy provides a single platform that can be adapted to the use of various locations or departments as it is their own separate solution. This also means that the solution must provide means for a granular set-up, enabling for example to deliver specific views of departments' IT infrastructure. This does not only enhance the quality of systems management, but will also contribute to the commitment of the IT staff. When staff is able to focus on their own dedicated systems, instead of having to go through tens or hundreds of servers to find their own systems, they will definitely make less mistakes and have the feeling they are more in control.

 

The IT world is changing from a focus on physical infrastructure to virtualised but very real services. MSPs lead the way by deploying new, converged infrastructures that fully profit from virtualistion and multi-tenancy solutions. They no longer deliver hardware or software, but only services. Also, in the enterprise world, IT departments are looking for ways to make this shift to a services-oriented organisation. They can also profit form the multi-tenancy approach that is already widely used in the MSP arena. It will offer them global insight in IT, with sufficient room for a local touch. In the end, it will enable them to be a true services organisation.

It seems that diversification is the order of the day. Medical aids are punting movie tickets and travel discounts, supermarkets are offering courier services and wi-fi is sold along with breakfast specials in coffee shops. The line extension trap is worrying, but it is also endemic of the myopic thinking that most companies have fallen prey to. One could argue that companies are so caught up in the business of producing goods and services that they’ve lost focus on the things that actually make people want to do business with them in the first place, frittering away money and time on resources entirely unrelated to the core driver of their success.

 

Small, start-up companies tend to outsource the elements that fall outside their scope of expertise, whether it is legal guidance, graphic design or technology, to those who do it best. But as they grow, they fall into the trap of assuming that they can replicate business success and cut costs by having expertise in every area. Ultimately, it takes more effort to develop a measure expertise in areas that are secondary to the core of the business than it is to remain focused on your strengths. It drains profitability and becomes a nightmare to manage.

The adage says “a jack of all trades is a master of none”. Many companies in the technology space today try to solve all the tech problems their customers have, or as many as their capabilities allow them to. However, rather than meeting all of the needs of their customers, the result of this approach is often that that companies try to service too broad a customer base and are unable to deliver the quality of products and services demanded by today’s exacting business environment.

Business Intelligence is not just about software – it is a long term strategy best carried out in partnership with experts. Sean Paine, Chief Operating Officer at EnterpriseWorx, explains how to choose the right BI partner.

As outsourcing gains momentum in the Information Technology (IT) space, particularly in mission critical areas such as the database, a Service Level Agreement (SLA) is essential in order to govern the type and frequency of services offered and the acceptable level of downtime.  However, as database environments differ from company to company, it is important to ensure the SLA is customised to ‘fit’ the client’s environment and unique requirements. Furthermore, requirements change and the SLA must also be flexible to accommodate updates and modifications.

Outsourcing has become a popular service model, particularly in the Information Technology (IT) space, as it can help to deliver greater cost efficiencies and high levels of service. However, a trend has emerged in recent years to move away from large multi-service outsource providers and towards smaller, specialist niche service providers. These niche IT outsource providers are providing a multitude of benefits to business.

 

This shift has occurred for a number of reasons, mainly due to the ability to drive greater value from outsource contracts. While each model has its own pros and cons, a more focused niche provider typically specialises in a specific area of IT outsourcing. This results in greater efficiency, better service delivery, a more granular view of the IT outsource service, and a significant reduction in the typical red tape associated with a basket of services from a single large provider.

 

Despite these benefits, larger IT outsource providers who offer a wide range of services have traditionally been popular, as they offer the perception of a ‘one stop shop’ for all of a company’s IT needs. This is an attractive concept, as it means that there is only one contract to manage for multiple services. A single contract decreases administration and the need to maintain relationships with multiple vendors. However, this single contract concept is also where the biggest detracting factor for multi-service outsourcing comes in.

 

The reality is that most large outsourcing companies only specialise in one or two areas and offer other services as an ‘add on’. This means that service levels are often inconsistent across the different services as skills levels within the provider are inconsistent. The challenge for businesses that are tied into multi-service contracts is to remove one of the services that they may not be satisfied with. This is a difficult and time consuming process and will require renegotiation of the entire contract. Engaging the services of specialised, focused service providers on the other hand, while it does require more maintenance of relationships and contracts, will ensure that service levels can be easily monitored according to specific services. If these service levels are not delivered according to the Service Level Agreement (SLA), contracts can easily be terminated and a new provider sourced.

 

While it may seem that outsourcing multiple services to a single provider will drive the greatest efficiencies, this is often not the case. Services are consolidated into a single contract and fee, which means that costs for each individual service are difficult to control. It is not possible to identify the individual cost of maintenance of each service unless the service provider is completely transparent and provides a granular breakdown.

 

With specialised contracts, this process is simplified and it is possible to easily manage and control spend on each service. This is becoming an increasingly important factor in light of King III recommendations and regulatory requirements, which require the justification of all IT spend and reporting to stakeholders on the effectiveness and value derived from each service.

 

Niche service providers also tend to be Small Medium Enterprises (SMEs).  They are more motivated to deliver as their livelihood hinges upon their reputation for service delivery. Terminating the services of a single service provider that is not delivering a particular service is also far easier than trying to terminate a single service from a large basket contract.  This in turn motivates the niche outsource provider to deliver better services. If a small company loses a contract, the impact is far greater than that of a large company losing a single service contract. SMEs also tend to deliver more personal interaction, more personalised service and better turnaround times, as these companies are typically more agile with more flexible processes. 

 

IT Outsourcing as a model for service delivery is here to stay and continues to grow in the current economic climate due to budget constraints and the ever-present need to deliver better services for lower IT spend. However, the one stop shop model is no longer as popular as it has been in the past and we will continue to see an uptake in services from more specialised, smaller outsourcing providers who deliver better service levels and greater cost efficiency.

Outsourcing has become an increasingly popular option for businesses as the current economic climate continues to put pressure on spend, driving cost cutting initiatives within companies, particularly in the Information Technology (IT) sector. However, outsourcing can deliver value beyond cost savings, further improving service levels and driving greater efficiencies.  It also minimises downtime and improves profitability as a result. Getting full value out of your outsource contract can, however, prove challenging. An outsource contract needs to be carefully controlled to ensure it continues to deliver the expected service levels and benefits.

 

In order to get the most out of your IT outsource contract, there are six core ‘tips’ or best practices that clients should ensure outsource service providers subscribe to. By following these six top tips, organisations will obtain the best possible balance of service and cost.

Top tip #1: Define SLAs and OLAs

A service level agreement (SLA) is the foundation of any outsource contract and provides the standard for expected service levels. This must be agreed on between both the outsourcer and client and once established, will outline the requirements such as time-to-respond and mean-time-to-repair. A thorough investigation is required to determine the type of service levels that are required for the client’s business. It is also important to link the SLA to an Operations Level Agreements (OLA), which is an extension of the SLA, by determining and outlining how the SLA is executed. These two agreements provide the benchmark for measurement and management of the outsource contract.

Top tip #2: Communication – a two way street

Communication is an important component of a successful outsource contract and should be a ‘two way street’ whereby feedback is given from both the outsource provider and the client. The communication should also involve all parties including the client, consultants on all levels (from Junior to Principal) as well as the management team. Discussions around health checks and regular updates between the client and outsource provider will assist to identify issues or problems proactively and resolve them quickly. Equally important, communication allows the client to manage the SLA and OLA, ensuring standards and service levels are maintained and delivered according to expectations. 

 

If communication is not clear and well structured from all sides, issues and problems may ‘slip through the cracks’ and impact the business. This in turn will impact service delivery which may fall below expected levels, resulting in poor outcomes.

Top tip #3: Appropriate skills levels

It is vital for the outsource consultant to have the appropriate skills when engaging with a client. If consultants are not equipped with the required skills to match the needs of the client, they will not deliver the required services efficiently or effectively. This is especially important in the IT sector where outsourced services may be mission critical to the business.

 

Furthermore, the outsource provider must ensure that consultants are properly and continuously trained on the latest developments within their industry and the services they provide. The outsource service provider should ensure that training forms part of its consultants Key Performance Indicators (KPIs), with regular reviews and planning as well as repercussions if targets are not met.

Top tip #4: Culture fit

Another important area to consider is that of culture fit. Consultants need to align themselves with the culture of the organisation they will be working with to ensure they function optimally in their job. This requires knowledge and research from the outsource provider prior to engagement with the client. It is important to establish values, culture and ethos to ensure the outsourcer ‘fits’ in with this culture.

 

If the culture fit between the client and outsource provider is not aligned, it can lead to poor service delivery. Outsource providers should also be flexible and sensitive around the issue of culture fit and if there is a potential problem, to proactively remedy.

Top tip #5: Measurement of Service

All aspects of the contract including the SLA and OLA should be monitored on a regular basis to ensure the highest levels of overall satisfaction.  If the contract is a large one, meetings should be more frequent.  However, these meetings should be kept brief and to the point.  With regular monitoring, issues can be raised, documented and adequately addressed. It is also important to obtain positive and negative feedback from the client so that the outsource provider has an understanding of what is successful and which areas need to be addressed.  This allows the outsource provider to reward and remunerate consultants that are performing, keeping them motivated.

 

Regular service delivery surveys are also vital, allowing the outsource provider to assess the overall satisfaction of the client and address if lacking.

Top Tip #6: Maintain the management of the contract

One critical error organisations often make with outsourcing is completely relinquishing control in favour of the service provider. This often leads to poor delivery. Maintaining the management of the contract including the SLA and OLA with regular communication from the outsource provider is the final step or best practice to ensure outsourcing delivers full value.

 

Customers who maintain control and incorporate regular communication around this will typically receive higher levels of service and greater value than organisations that don’t.

To end

IT outsourcing is beneficial due to the skills levels required in this field and the shortage of certain specialists. However, when opting to outsource, it is important to look towards best practices that are aligned with industry standards, which will prevent misunderstandings and issues with service levels resulting in a more stable environment. This will also allow companies to make the most of their outsourced services including greater economies of scale, access to skills, cost effective services and improved productivity.

Is your business truly prepared to invite a consultant into the professional mix?

 

Although the financial services sector is widely regarded for its ability to bring together teams of dynamic professionals to lead and manage new strategies or product implementations, the organisations which make up this industry often feel the need for rare or exceptional skill sets in order to remain agile in increasingly competitive markets.

 

It is this very need that has enabled the growth of professional consulting over the years, evolving from a niche offering into a vitally important resource to any business seeking to retain a competitive advantage or improve upon ineffective internal processes.

 

Partnerships of this nature are not without their challenges. Business consultants and the corporate entities they counsel require a keen understanding of the unique opportunities and challenges that each faces in order to promote a healthy working relationship.

 

With this in mind, let us take a closer look at a few of the more common obstacles encountered by both consultants and clients when introducing a new face into a functional business environment.

 

Choosing the Right Supplier

The financial services sector frequently requires the supplementary services of a broad range of professionals.

Naturally, this persistent need has encouraged a number of prospective suppliers to enter the market - each offering attractive packages and extensive expertise in niche disciplines.

 

For this reason, it is vitally important that clients adequately investigate consultant histories and experience prior to signing on the dotted line. A poor fit would not only result in hours of lost productivity, but may also result in missed opportunities, a loss of income and ultimately, delayed success.

 

A Clear Goal

Organisations seeking external counsel and assistance should maintain a clear view of the goals associated with business and project objectives throughout the implementation process.

 

All too often, businesses call upon the services of a specialised individual or team without truly understanding what needs to be achieved. Appreciating the finer details and how a consultant will fit into the mix will ultimately enable clients to allocate valuable time and energy to what really matters – strategic productivity.

 

Continuity of Sponsorship

Although a consulting agreement is, by its very nature, one which is focused on business objectives and outcomes, this professional connection should still be viewed as a relationship which requires constant open communication.

 

By regularly engaging with consulting teams, organisations are afforded the kind of detailed view of the project which will ultimately guarantee vital internal buy-in down the line.

 

Nonetheless, it is also vital that organisations ensure that legacy communications are shared and available if the internal team responsible for the project alters.

In order to ensure continuity of sponsorship, the ideal is that clients enforce internal permanence relating to the ownership of projects or the implementation of new services or strategies.

 

If this ownership alters without a clear and comprehensive hand-over strategy in place, project objectives can easily be delayed while inconsistencies in project expectations flare up.

 

Regulatory Challenges

Business activity within the financial services sector is often influenced by regulatory requirements. For this reason, clients in search of a consulting partner to offer professional assistance in the implementation of a legally sensitive project or strategy should always ensure that the chosen supplier is both qualified and familiar with these governing frameworks.

 

Culture Clash

Although consulting partnerships are often formal in nature, they do require personal understanding and indeed solidarity, in order to be successful.

For this reason, organisations should be mindful of interpersonal compatibility before contracting a new supplier. A team which gels well together is often able to produce the best results.

Not only are advisers facing an ever mounting barrage of legal and regulatory requirements, they are also experiencing increasingly assertive clients, ready and willing to lodge complaints with the ombudsman. In this environment, having clear service parameters in the form of a properly drawn up service level agreement has become imperative. 

 

“Complaints occur when there is an expectation gap,” says Richard Rattue, managing director of Compli-Serve, a leading provider of professional compliance support and services to financial professionals. “Being able to deliver to your clients is key to success.”

 

A well prepared Service Level Agreement (SLA) sets out the expectations between the client and the provider, helping define the relationship between the two parties. It is the cornerstone of how the service provider sets and maintains commitments to the client, and is essentially a binding contract. “An SLA incorporates clearly defined undertakings and deliverables thus reducing the chances of disappointing a client,” adds Rattue.

 

Under the FAIS General Code, it’s important to ensure that the relationship with the client is documented to an extent that both parties are aware of their duties and obligations to each other. The SLA is a two-way street and allows the provider to set out what they expect from the client, for example, through disclosure, reading the documentation supplied, or by informing the provider on any change in financial circumstances.

 

A good SLA should address the following key aspects;

• What the provider is promising.
• How the provider will deliver on those promises.
• Service costs 
• How delivery will be measured
• Limitations of use by the consumer of the service
• What happens if the provider fails to deliver as promised
• How the SLA terms may change over time.

 

The challenge for a smaller Financial Service Provider (FSP) is to get the relationship right between what is promised and the FSP’s resources. “An SLA can’t be created in a vacuum and must be designed with the available infrastructure and resources in mind,” says Rattue. Obviously, a relationship exists between what is promised and costs. 

 

Rattue advises using a segmented service model.  Some clients need higher levels of availability and are willing to pay more.  They would have various spheres of service incorporated into the SLA. As the services and offerings of the Financial Services Board change, the SLA may change to reflect the improvement and/or changes. “The SLA should be reviewed every 6 months and updated accordingly, and the customer should be asked to review and approve the changes,” adds Rattue.

 

Segmenting service offerings with different pricing for different service levels benefits both provider and client, in that the provider widens its target market and the customer only pays for what he or she needs.

 

Key performance indicators come into play when assessing how a quality improvement process can be integrated. By tying a problem resolution process to an SLA, improved customer service satisfaction stays a clear objective.

 

“As an SLA links the client requirements to infrastructure requirements, it creates the ability to link service levels to service cost, and as a result profitable pricing can be set.”

 

An SLA sets the standards to which the FSP is committed, and as a result a set of common goals can be managed and measured for both parties.

 

Rattue advises consulting a professional to draft an SLA.

 

“When creating an SLA, one must keep the agreement simple and measurable, set realistic goals and keep penalties limited to serious offences,” Rattue concludes.