Friday 11 June 2010

Core-business versus business criticality

[Image: Reactor core of the Gösgen Nuclear Power Plant]

I've seen the different concepts of core-business and business criticality every single time in my line of work around Integration. B2B e.g. is hardly any company's core-business, but it always becomes business-critical when over 90% of your order-entry flows fully automated through your company from outside - and then what? Third-party it, outsource, offshore, half, whole?
The great mistake made here is that the usual driver for keeping a process or activity inhouse is judged on the core-business aspect. The less core-business to the company it is, the farther it will be outhoused, really (I think that outhousing gives a proper picture of what happens to that activity or process when outsourced in the usual fashion).
Not really core-business? Let some third party handle it partially or entirely. Hardly core-business? Outsource. Not even close? Offshore to some far foreign country.
This is the usual behaviour, and very wrong - for two reasons:

First, the only reason to outsource an activity or process is because it's repeatable, tedious, too simple (and thus error-prone), boring, in other words: industrialisable. If your employees or customers become unhappy because their tasks are automated and still tedious, you should try to do that somewhere else so the complex and interesting work and tasks remain for those you care for most.
Prerequisite for that: it's specified to detail, highly predictable and static. As a Law of Physics however, work with properties like that does become tedious, simple and boring, so that usually works out allright.
They can make cars all over the world because every single part is specified down to nitty-gritty detail. Try doing that with e.g. Customer Support, or your Employee Helpdesk (...)

Second, there is core-business and business-criticality. Whether something is core-business doesn't matter at all, it matters how critical it is for that which you do consider core-business. It is business criticality that matters! If something is core-business but can become and remain broken for a week, that's fine. Take a water-company for instance: will they really panic when the piping to your house suddenly collapses? Of course not. But if their server park has an outtage, they will - that's why business criticality matters most.
The same Customer Support simply is business critical for your core business to survive. Outsourcing that merely shifts costs on the balance sheets and quadruples them to someplace else. Projects in stead of organisation will take the costs, or customers in stead of employees. Those will still be costs to your company, but only eventually, and mostly hidden

Organisations realised that. Insourcing back activities and processes began a few years ago already, with banks and insurance companies getting their Customer Support back in control. Unfortunately, the costs of that were 3-4 times as high as outsourcing them.
Under the influence of Social, companies are now also starting to think twice about their customer as some distant aunt or uncle that sends them money on a regular basis, and are strengthening the ties by simply making them shorter

I now see trends to at least Rightshore e.g. Employee Support: serve from the same timezone and culture as much as possible. But just as outsourcing Customer Support drove customers away, outsourcing or offshoring Employee Service will drive employees away. It's bad enough as it is that mobile employees have to accept company phones and laptops while they can basically pick any car they want. People want freedom to choose hardware like mobile devices, laptops, etc. that fit their individual work style and needs. They don't want a company laptop that breaks down all the time and forces them to hang on the phone for a few half hours, wasting their work or even private time

Organisations will have to realise for a second time that there is a huge difference between core-business and business criticality, and that the latter matters far more than the former. The Social Employee is here to no longer take no for an answer. The crisis is almost over, the big rounds of lay-offs are ending or have even ended, and there is a second round of resignations lying ahead and even starting here and there: the voluntary exit of people that simply want Social Work in a Social Organisation - and very often thus choose to become self-employed

Employees: core-business? Only in certain lines of business. Business-critical? Almost always

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