Sourcing Strategies – what SMBs can learn from the big boys

The central tenet of outsourcing is that you don’t know everything, others do, and that it only makes business sense to outsource what you are not good at and focus on what you are good at. Businesses of all sizes, shapes and industry have been doing this since the industrial revolution. What has changed is that the big boys have made the outsourcing practice into a religion and in the process have also made the concept expensive-sounding to implement if not sustain. Take IT outsourcing as an example, consultants use the term “proven best practices” to sell you concepts like “understanding your business requirements and aligning technology around these”. Sounds complicated right? Let’s add one more line to this: “get SLA metrics right!”

Now imagine you are a small-size business in Singapore, Hong Kong, Malaysia or the Philippines with a staff of 10 maybe 20 people. Your concept of IT is a computer connected to a printer and maybe a small network setup. Your latest technology investment is an iPad. Suddenly friends and business partners are telling you to get into e-commerce and use social media to reach out to a new audience. What do you do?

For starters, IT outsourcing, like all other outsourcing exercises, starts with knowing what you want to achieve. Simple goals like “keep the business running smoothly” or “reduce cost by automating what is practical and economical for the business” are universal needs.

Next, realize that you are not an IT expert so get someone who knows what they are talking about. There are many providers out there so ask around. Don’t be afraid to ask questions. There is no such thing as stupid question especially if you are the customer. Remember the golden rule: he who makes the gold makes the rules.

Entrepreneurs and business people often pay too much focus on money and costs. IT outsourcing is about keeping your business running so smoothly you won’t even know it’s not there.

Communicate your needs clearly so that the service provider knows and understands what you want. As in marriages, communication is key to achieving a win-win scenario.

Remember the cardinal rule? You get what you pay for! Don’t cut to close the bone lest all you get is bare bone service. IT outsourcers are not charities. They, like you, are in it to make money.

Let your service provider that you are watching him, maybe not like a hawk but close enough, so he doesn’t slack off! Remember the old adage: when the cat is away the mouse will play. Same here!

Also, just because you outsourcing something to someone else, doesn’t mean you wipe your hands clean of responsibility. It is your money, your business, so your responsibility!

 

Dell buys Perot. Is this ‘the deal’ for Dell?

Dell has been down in the dumps lately following lackluster performance. The once envy of the personal computing industry for its once avantgarde supply chain innovation has been on the prowl for acquisitions to get it back on track. But even Michael Dell’s return to the hot seat hasn’t boosted the company’s revenue – not that it should. At the end of the day, its all about technology, innovation, execution, and value.

HP has discovered that you don’t have to go direct in the low-margin, high volume PC business to gain market share. IBM took the easier way out of the PC business by selling the business to China’s Lenovo.

Dell has gone wide to get back its lustre. But its foray outside the enterprise array has probably confused its customer base of enterprises.

Speculation has been rife that Dell has been on the acquisition prowl to get out of the dumps. This morning, the Wall Street Journal reported that Michael Dell has inked a deal to acquire Perot Systems for US$3.9 billion.

Perot Systems focuses primarily in the healthcare and government sectors. What you’d think (and probably Dell hopes) is that the infusion of a services organization would allow Dell to enter every major industry that are the traditional stumping groups for HP and IBM.

Servics currently accounts for only 10% of Dell’s busines. Post Perot acquisition deal, Dell will suddenly gain 23,000 people in off-shore services capability – mostly out of India.

Forrester Research VP Pascal Matzke was quoted on CIO Today as indicating that the success of the deal for Dell will boil down to how well Dell is able to integrate the two different cultures.