Consultant Insight: Duncan Hoggett

29 September 2016

Support services: Transforming a traditional business model

The support services sector has thrived in recent years. The need to outsource non-core operations leapt to the top of the boardroom agenda in response to mounting pressures to cut costs across both public and private organisations. But now, with the proliferation of technology in business processes, the industry faces a swathe of new challenges – and technology is the answer.

There is a general sense within all kinds of business that the savings achieved through streamlining operations have now been realised. Assets have been sold and contracts tendered for all sorts of functions, from the back to front office.

Now, for many management teams, attention is turning inwards to improve cost structures and explore ways that centralisation, with the support of technology, can more effectively pare costs. New systems offer the potential for companies to ‘insource’ and deliver non-core operations without a significant impact on the ‘bottom-line’.

As a result, the support services industry faces a threat from technology. In a low margin environment providers have been slow or reluctant to invest in the skills and infrastructure required to reap its benefits.

But tech is also the solution. Providers should see this as a challenge that can be overcome – so long as they keep up with the race to incorporate technology into their business.

Talent and technology

In the boardrooms of support services providers, there is an increased appetite to attract expertise that can help embrace technology.

Primarily, providers are looking for the skills to explore ways that will improve contractual performance.

Technology is an obvious tool to improve the speed and standard of contract delivery, which in turn improves margins and increases customer service levels. Crucially, the pace of developments in software mean that there are now game-changing methods of monitoring contracts – to make sure they are running effectively and efficiently.

The development of the ‘internet of things’ is also causing a stir in the industry with management teams mulling over how best to harness its potential. Process automation, with smart, connected devices will enable providers to deploy staff to more value-add services and decrease the labour demand for core, routine services.

But all of these developments require technology to implement, maintain and improve.

From what we see, the demand for those with the expertise to deliver such-disruptive projects is increasing and will only get more intense. In fact, given the specialist nature of the skills required, many are now looking beyond their own market to attract the best talent into the sector.

Making technology supportive

As clients integrate technology into every aspect of their organisations, management teams often find they need expert help to guide them through the process. The need for labour in some parts of an organisation may drop – but the demand for specialist expertise will grow considerably.

As their exposure to technology increases, clients find themselves calling on the support services industry to guide them through growing reputational, operational and security risks.

The frequency and severity of cyber-attacks in both the private and public sector is increasing. And, with ever larger amounts of data involved and increasingly confidential and commercially sensitive functions held online, the risk is very real.

Managing that risk will be a key challenge for those that invest in developing their technology-based offering – but there is no fundamental reason why data and technology should be any more of a risk to outsourcing firms than to their clients’ own systems. The difference is between support services providers with access to the top tech talent, and those without.

Providers must invest in the expertise and experience to manage any threats and instil that confidence as a trustworthy partner. That is the mission and the future of support services in conjunction with technology, not pitted against it.

The talent agenda is as important as ever. Organisations need to identify the skill and capability gaps they have and work quickly to fill them.

Fortunately, there is a lot of talent out there in the market and these skills provide the key to evolving and adapting to client needs. Without it, however, support services risks losing its relevancy and ability to adapt to client needs and could let in-sourcing in through the backdoor.

Duncan Hoggett is a support services Partner at Odgers Interim


Categories: Energy, Manufacturing & Infrastructure

Comments

barry ryan at 15/10/2016 09:30 said:

Interested article. In my own experience, the majority of blockers are in middle management. They are often the group who fear change the most. If their nature is to also be micro managers, then the problem doubles. Directors dont always spot this, untill it's too late and considerable damage has been done.

George Lilley at 30/09/2016 09:38 said:

Duncan

A very good article, as an MD who has a track record of differentiating through the use of technology I find the talent is already in the business.

The blocker is mostly at the Board where risk of change is perceived as too high, this gets harder to overcome as the company gets bigger.

The risks of change are normally well considered, the opportunity that change could bring rather less so.

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