Keep your eye on your core business

BUSINESS

|
Image: By BiztechAfrica
Keep your eye on your core business

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.



Share the News

Get Daily Newsletter

comments powered by Disqus

MORE BUSINESS NEWS

Kenyan SACCOS riding on innovation to attract customers

As confidence in mainstream banks remains low due to prohibitive interest rates, customers are embracing Savings and Credit Cooperatives (SACCO) as an alternative. Read More

BITC invites ICT investors

The Botswana Investment and Trade Centre (BITC) is casting its net wide to appeal to players in the Information Technology sector to invest in the country. Read More

Yudala ‘an unstoppable movement’, says Zinox chief

Yudala VP Stanley Uzoechina, Access Bank CEO Herbert Wigwe and Zinox CEO Leo Stan-Ekeh The opening of Yudala outlets, combining an online shopping platform with retail stores, has been described as a game-changer in Nigeria. Read More

Travelport, TTS sign reseller agreement for Africa, Middle East and Asia Pacific region

Travelport and TTS have signed a sales and distribution agreement for TTS products in the Africa, Middle East, and Asia Pacific regions. Read More

Airbnb to expand further across Africa

Airbnb, the world’s leading community-driven hospitality company, announced that its CEO, Brian Chesky will attend GES 2015 to meet with entrepreneurs from around the world and explore the sharing economy’s impact and expansion, particularly on the African continent - which represents a huge opportunity for the company.  Read More

What African entrepreneurs want

On the eve of U.S. President Barack Obama’s visit to Kenya for the Global Entrepreneurship Summit, GeoPoll, the Global Entrepreneurship Network, and the U.S. State Department have released a survey of 1,000 business owners throughout sub-Saharan Africa on entrepreneurship in their countries. Read More

ISON eyes 25,000 jobs, $400m in Nigeria

Pravin Kumar ISON Group has projected the creation of 25,000 new jobs and $400 million revenue within space of one or two years in Nigeria. Read More

NEC invests in XON to accelerate regional African growth

NEC Europe, a wholly owned subsidiary of NEC Corporation, has invested in XON, the sub-Sahara African ICT group, and the two organisations will have an integrated market approach that will combine their local expertise in the region to provide greater sales coverage in the sub-Sahara African market. Read More

Orange, Airtel in talks on acquisitions

Orange and Bharti Airtel International (Netherlands) BV, have entered into an exclusive agreement to explore the possible acquisition by Orange of four Airtel subsidiaries.  Read More

Equitel seeks a share of Kenya’s lucrative telco market

Equity Bank’s subsidiary, Finserve Africa, has launched Equitel, a new mobile payment and banking platform for its customers, which officially brings to the fore the convergence between mobile and banking services in Kenya. Read More

PRESS OFFICES

Sage ERP AfricaSAP AfricaSage Pastel AccountingTrust PayVMWareSamsung ElectronicsMitsumi DistributionPhoenix DistributionMTN BusinessSchneider ElectricMultichoiceMicrosoft 4Afrika

FEATURED STORY

Kenyan SACCOS riding on innovation to attract customersKenyan SACCOS riding on innovation to attract customers

As confidence in mainstream banks remains low due to prohibitive interest rates, customers are embracing Savings and Credit Cooperatives (SACCO) as an alternative.

IN DEPTH

As curtain falls on MDGs, what next?As curtain falls on MDGs, what next?

Dr. Bjorn Lomborg, president of the Copenhagen Consensus Centre, speaks to Biztechafrica about setting smart targets.