Roadblocks to Growth

Most of the readily available outsourcing services fall into a few narrow categories—information technology, transactional business processes, and well-defined specialty services such as wastewater treatment, executive education, prison and hospital management, and food service, for example. Organizations have been able to use outsourcing to remove roadblocks to growth only when their particular roadblock happened to fall into one of these categories. This will change. As strategic outsourcing gathers steam, providers will extend their offerings to broader and potentially more valuable types of capabilities. Then companies that find themselves verklempt will have ready partners for the capabilities they really need.

For example, in the past, EMC has sold storage hardware and storage- network management systems. As those products have come under margin pressure, the company has decided to move toward platform-indepen- dent data storage solutions. In a five-year pact, EMC and Accenture have agreed to create a new unit, the Information Solutions Consulting Group, which will use Accenture staff to help EMC customers streamline business processes and integrate hardware and software from different vendors into an effective storage environment. While EMC already has a 1,400-person professional services organization focused on its own technology, this new organization will be separate. ‘‘Just as EMC is creating platform-independent software through the AutoIS strategy, we are now developing a full range of consulting services for heterogeneous storage environments,’’ says Joseph Walton, an EMC senior vice president.^[4]

EMC describes the value proposition as follows: ‘‘Accenture establishes long-term relationships with their clients, delivering high-value technical solutions at much improved speed, scale, and cost. Accenture delivers an objective, expert solution to their customers’ unique business problems. EMC products and services are becoming an integral part of Accenture’s go-to-market strategy.’’^[5]

The Accenture–EMC partnership illustrates the trend toward providers offering, and companies using, a broader array of strategically critical outsourcing services. We should expect to see growth-oriented companies evaluating outsourcing to build their capabilities in product commercialization, marketing analytics, postacquisition integration, and globalization, to name only a few.

Some of these new capabilities will emanate not from traditional outsourcing suppliers but from hands-on experts. For example, one of the world’s largest consumer products companies recently out-licensed its reliability engineering know-how to a service company that will offer it on an outsourced basis. A senior executive explains: ‘‘We acquire businesses all over the world, and we have developed a toolbox of capabilities to get our manufacturing lines up to unprecedented reliability levels in a very short time. We signed a few deals to take that outside ourselves, but it is not scalable for us because it is extremely labor-intensive. So we found a partner who is in that business. It filled a need in their suite of manufacturing services so they’re taking our process to market.’’ He added: ‘‘I would salivate if we had an opportunity to offer our market research capabilities; we’re world-renowned in that arena.’’^[6]

These examples point to only two higher-level processes that now are available in the outsourcing marketplace. Watch this space for many more.

^[4]Colin C. Haley, ‘‘EMC, Accenture form Storage Consulting Unit,’’ Aspnews.com, July 10, 2002. See http://www.aspnews.com/news/article/ 0,,4191_1383011,00.html.

^[5]See http://www.emc.com/partnersalliances/partner_pages/accenture.jsp.

^[6]Personal interview, October 2002.