Keep your eye on your core business
BUSINESS| July 19, 2012, 11:16 a.m.
Outsourcing and managed services have been business buzzwords for over a decade, with the benefits being touted by experts across numerous industries as the answer to cutting costs for business functions ranging from information technology to accounting, marketing and human resources. However, according to Anton van Heerden, General Manager at Altech ISIS, many South African companies are still reluctant to outsource certain elements of their business due to a misconception that these must remain in-house in order for the business to function effectively.
He explains that this false impression is the result of a lack of understanding between the core business of a company and the core functionality that enables the business. “Every company has a single focus to all of its business activities: providing the products or services that form the foundation of the business. Core business operations are all of the activities that yield an income for an enterprise, and support operations – which are the core functionalities – are ancillary activities that permit or facilitate the core business. For example, a bank’s core business is banking. While a call centre is essential to the functioning of a bank, it is not the core of the bank’s business. It is a core functionality.”
It is precisely because core functionalities are essential to the running of the business that many companies feel the need to manage them rather than outsourcing them – if a core function of the business fails, the whole operation stands still. However, allowing a trusted third-party partner, such as Altech ISIS, to manage these will ultimately result in improved performance and reduced costs.
There is more to managed services than merely handing an element of the business over to an outsourced service provider, van Heerden says. “The ever-changing technology and business landscapes are throwing up challenge after challenge to companies. It is neither practical, nor possible, to be a jack of all trades. Outsourcing lets a business focus on its core competencies while another company focuses on theirs. The return on investment is so much greater when you outsource to a company that specialises in the areas you need, effectively turning a cost centre into a profit centre.”
Gone are the days when businesses could afford to carry any additional costs. In economic times like these, it is vital that every company be as efficient as possible. This is the reason that the trend of outsourcing core functionalities such as billing has emerged in the US and Europe, allowing companies to achieve greater economies of scale and empowering them to better achieve their business goals.
"Instead of just the knowledge of one person, you benefit from the collective experience of a team of professionals. In addition, because professional outsourced providers work with multiple clients and need to keep up on industry best practices, they typically know what is right for a business and what is not. This kind of knowledge and experience dramatically reduces the risk of implementing a costly or wrong decision. By allowing a specialist to manage the core functions of a business, a company can focus on its core competencies, all the while sharing and managing any risks. Real-world examples prove the outcomes of this approach,” van Heerden concludes.
MORE BUSINESS NEWS
Collymore: PPP transparency to fuel Africa’s renaissanceAfrica’s renaissance will be fueled by transparent partnerships between governments and private businesses working to improve the livelihoods of the continent’s population, Safaricom CEO Bob Collymore has predicted. Read More
Lack of technology bane of Nigeria’s SMEs, says Matt O’Bell chiefAside financial constraints, the non-application of technology has been identified as one of the constraints of small and medium enterprises (SMEs) in Nigeria. Read More
Telecom M&A and digital convergence to lead deal activity in AfricaTMT Finance is teaming up with IHS Towers, the largest mobile telecommunications infrastructure provider in Africa, Europe and the Middle East, to bring an international audience to Africa’s technology hub, Lagos, for the first event of its kind in Nigeria. Read More
Reach for Change Africa calls for strengthened social entrepreneurshipReach for Change Africa is calling on social entrepreneurs, NGOs and government to play their role in strengthening the social entrepreneurship sector in Africa on International Day of Youth 2016. Read More
Stanford Seed Entrepreneurs join top Silicon Valley business leaders at Global SummitAfolabi Abiodun, CEO of Nigeria-based telecommunications company SB Telecoms, couldn’t quite believe his eyes as he stood on Stanford University’s bustling Silicon Valley campus recently. Read More
Etisalat, YuuZoo launch e-commerce portal for SMEsNigeria’s most SME-friendly telecommunications operator, Etisalat, in partnership with Singapore’s YuuZoo Corp, has unveiled a bespoke e-commerce platform, SME Arena, to facilitate the growth of Small and Medium Enterprises (SMEs) in Nigeria. Read More
Mstore plans $50m African expansionMidcom Group has announced expansion plans aimed at making its Mstore the largest mobile and electronics retailer in Africa. Read More
*astTECS Expands Operations in Africa*astTECS, a leading provider of Enterprise Telecom Technology Products and Asterisk based Open Source Communication Solution, is expanding its Africa footprint with a presence in Ghana and Botswana. Read More
The Tech Revolution: Sage Sets out the Vision for African BusinessesSage, a market leader in cloud accounting software used its global Sage Summit 2016, held this week in Chicago, to outline its strong commitment to future technologies, with a focus on new and existing initiatives that power business growth. Read More
FEATURED STORYFinancial services sees AI as both opportunity and threat
Banking is already a key area where technology is having an impact throughout Africa, and a new survey assesses the impact artificial intelligence will have on this sector.
BEST READ NEWS
IN DEPTHAccess and Use of ICT stats released
Statistics Botswana has released the first results of the 2014 Information and Communication Technology Household Survey.
COMPANY NEWSTigo explores options to give customers a greater choice for 4G services in Ghana
Following her recent visit to Ghana, Cynthia Gordon, the CEO of Millicom Africa, has emphasized the remarkable growth opportunities in data and Tigo’s commitment to giving customers ...