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Innovation in Outsourcing and the Rise of the CXO

by Jeremy Coward

The ‘Innovation Reality Report’ published by Aecus in February 2015 is enough to make any individual working in the world of outsourcing optimistic.

Innovation is a concept that has encountered a lot of scepticism on the vertical side of the outsourcing industry. Paul Morrison, Head of Outsourcing Innovation at Aecus, defines innovation as ‘creating value by doing things differently,’ something every business should desire. It is not innovation, then, that buyers of outsourcing have been suspicious of, but rather the ability of their suppliers to provide it.

If the ‘Innovation Reality Report’ demonstrates anything, it’s that suppliers have finally managed to turn this state of affairs around.

Innovation

Of the 100 senior outsourcing buyers Aecus interviewed, 92 said they believe their partners want to drive further innovation, with 83 of those claiming that they have experienced innovation in their outsourcing relationships. 63 proudly claimed to have incentives built into their outsourced operations which encourage innovation and 58 reported a healthy culture of innovation present within their own companies.

Not only do the majority of buyers now value and expect innovation - they also receive it. And that’s not just thanks to the supplier. In the report, Paul Morrison goes on to acknowledge that ‘innovation is becoming an increasingly important consideration’ for buyers of outsourcing. Buyers are starting to share the responsibility of fostering innovation with their suppliers. There is still a discrepancy between those buyers who seek a culture of innovation and those who actively go out of their way to encourage it, but that gap is thinning year by year, with an increasing number of suppliers also offering the possibility of innovative change.

Chief Experience Officers

Chief Experience Officer (CXO) is a relatively new job title which has become vastly more popular with the growth of the internet and ecommerce. The responsibilities associated with the job role are also rapidly expanding. In the report, Paul Morrison comments ‘CXOs are rapidly raising their sights from simple process improvement, to explore how their partners can change their businesses for the better.’

The CXOs involved in Aecus’s survey were heavily pro-outsourcing. 90 per cent believed that their outsourcing agreements help to improve products and services, with 86 per cent convinced that outsourcing retains customers and 85 per cent also expecting top line revenue growth as a result of their outsourcing.

Unfortunately, a significant portion of those CXOs are struggling to keep up with their ever-growing list of duties: almost a third do not think they have sufficient knowledge to manage suppliers for innovation.

With more responsibility being placed upon the shoulders of CXOs, it is important that they are sufficiently trained; both management and the CXOs themselves need to ensure that this takes place. Basic training can be administered in-house, while organisations like the National Outsourcing Association (NOA) offer specialised training courses and qualifications for outsourcers. If CXOs are to promote innovation in their outsourcing relationships, they will need the required knowledge to do so.

The Future of Outsourcing

So what other factors will contribute to the growth of innovation in outsourcing? Unsurprisingly, the report showed that robotics is likely to be a dominant factor, with almost half of the companies surveyed likely to integrate robotic automation into their processes over the next three years.

The respondents also demonstrated a strong appetite for multi-channel engagement. 47 of the 100 buyers interviewed already run multi-channel operations, while a further 33 per cent are likely to implement multi-channel over the next 12 months. Omni-channel engagement will also be a significant factor, although omni-channel was not specifically mentioned in the report.

Analytics should be recognised as an equally important factor – it is difficult to judge the success of innovation if the results aren’t being analysed. Despite this, the report showed that analytics is not being prioritised as highly by buyers as one might expect. 46 per cent claimed that they already have analytics implemented, with just 19 per cent likely to adopt analytics in some form over the next three years. This leaves a sizeable 35 per cent not analysing their data, and with no intention to start doing so.

Perhaps this comes down to the nebulous nature of the term ‘analytics’ – it seems unlikely that so many buyers would entrust their services to another company without tracking the outcomes and comparing those with past results. Rather than there being a general apathy towards data analysis, many companies may just be practising analytics without realising it. Regardless, data analysis is essential to innovation – it is the mathematic, factual counterpart to what is otherwise largely a creative process.

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