Outsourcing | June 27, 2017
Reduce Uncertainty in Business
Global competition, the dynamically changing rules of the market, where conditions are increasingly dictated by startups, as well as phenomena such as the shorter product life cycle, the quest for innovation, and the need to respond immediately to change and customer expectations – all challenges which the entrepreneurs of today must face. The current economic reality is not the rosiest, so it is small wonder that they are increasingly taking a step back from aggressive competition and are beginning to look for a safer survival strategy.
A safe haven seems to be the idea of a network economy in which companies coexist on the basis of partnerships and mutually interchangeable services. Instead of competing, there would be a gentlemen’s agreement in which each party develops in its specialist field. And specialization is the way to gain unique value, differentiate yourself from others, and also maximize profits and stability in today’s uncertain environment. In a network economy where companies constitute a network of connected vessels, the risk is scattered. But such a model requires one of the most scarce resources – trust.
How to build competitive advantage?
From the point of view of survival on the market, the most important element of the company is its competitive advantage, which is what distinguishes it from other companies in the same industry. Traditionally, it can simply be price, but also prestige, i.e. consumer brand recognition, the high quality of products or services, experience in the industry, or knowledge. A common feature of these elements is their uniqueness, the internal characteristics of a particular organization that enable them to offer products and services of a certain value to the customer, leaving competitors behind. Features such as the ability to offer a lower price than others, but still earn a profit, or to build a reputable brand, are very difficult to copy. And it is on precisely these characteristics that organizational strategy should be based. Consequently, the greatest effort should be invested in developing these unique qualities. If a company “spreads itself too thin” it will be at the expense of investing in key activities.
The solution is the network economy, i.e. an ecosystem of many companies which focus on the development of their unique characteristics, and work together in other areas to develop mutual benefits. What are these benefits?
- reduction of uncertainty – resulting from the sharing and spread of risk. The network of dependency ensures cooperative behavior, rather than competitive;
- access to scarce resources and skills – especially important in knowledge-based industries; companies no longer have to compete with each other for specialists, competences become a service;
- new development opportunities and access to knowledge – thanks to access to the business partner’s knowledge and experience, the company gains a broader view of its situation and the ability to utilize solutions that it would not have considered if left to its own devices;
- increased flexibility – web services are implemented as and when necessary, on demand, without wasting time, which arises in the traditional model due to the need to obtain appropriate resources independently
IT is a highly specific industry. On the one hand, every company, regardless of its area of activity, is forced to use widely understood IT technology. On the other hand, competence in this area is relatively difficult to access. This means that a business may invest in a digital transformation of business strategy, but investment in the development of their own IT team does not often go in step with the abovementioned focus on what the company really does, i.e. its specialization. Should a furniture manufacturer, for example, begin to build extensive IT structures, and hire teams of developers and administrators? The problems in this case are the costs of infrastructure, the high costs of salaries and training required in this industry to keep up to date in the dynamically changing market, and the need for specialized knowledge such as a management team.
No wonder, then, that most companies are looking for a business partner who is in a position to take IT projects on. Companies offering IT services, such as those which specialize in IT technologies, employ professionals who have essential, often niche competencies, and with design, business and industry expertise. Business partnerships can be highly fruitful in this case – as in the previous example of the furniture company working with an IT service provider, which can therefore focus on the most important aspects of business, such as product design, production, marketing, or sales. It draws on the benefits of cutting-edge technology such as optimization of the production process, automation, data analysis, and adapting the product to the client’s needs (e.g. so-called mass customization). The IT partner thus acquires specific design and technology expertise from the client’s industry, thereby gaining an advantage in the market.
IT services which are worth utilizing:
– talent leasing and team leasing – talent leasing, which enables the recruitment of a specialist, especially in situations when such skills are difficult to come by on the labor market, or a whole team of specialists selected for the optimum implementation of a particular IT project.
– IT consulting – due to the fact that information technology is so deeply ingrained in all aspects of the company’s operations, IT services are becoming more and more popular, meaning that companies can obtain information on technology and business opportunities in their area or industry.
– IT Transformation – IT has the potential to introduce revolutionary changes in any company, no matter what kind – whether it be product manufacturing, service providers, commercial firms, financial companies, health care facilities, and so on. Technological transformation should, however, be carried out in a well-thought-out, orderly manner with clearly defined objectives. IT Transformation is an end-to-end service in which a technology partner carries out an in-depth analysis of a company’s processes, presents a plan for their digitization and optimization, and then follows the digital transformation plan of the company step by step.