What does a smart outsourcing contract look like today?
"Everything is changing"
How do we address our cost base to ensure we deliver a quality product at a reasonable price? That's the challenge for British Gas and that's what John Dickens is working hard to resolve.
John is one of those rare individuals who truly has 'seen and done' it all when it comes to shared services. A 20-year veteran of this industry he says he is in the "fifth or sixth" iteration of the shared services model. And with the threat of price capping in that sector looming large, there is a certain pressure to set things right, right now.
The biggest opportunity, says John, is to move away from the federated model that has defined much of British Gas operations in the past. "There's a real opening there," he says, "namely for all services – and Finance is only one of 19 services – to operate on a much lower cost base."
The basic methodology remains the same as it always has been: centralize, standardize, eliminate what's not necessary, replace work through automation, and outsource or offshore. But while in the past the 'outsourcing' element tended to attach to the back of this list of activities, today, John sees that moving further up the process.
"In renegotiating outsourcing contracts what we are seeing is that everything is changing," he says.
A lot of the productivity clauses have become exhausted after five or seven years and there have been a lot of learnings that accrued over that time. Providers, only to aware of this, are changing their business models accordingly, predominantly around analytics and robotics.
"It's about the BPO firms recognizing where they can deliver value and selling that to us in a different format. It's not just about doing things cheaper anymore," says John.
The new business partnership models emerging are a fairly radical departure from the early outsourcing contracts. Whether the 50:50 split between onshore and offshore is still viable remains to be seen. What's certain is that the advent of new technology tools is providing completely new opportunities. "It could be that the top 5% of that kind of work could be taken care of through RPA, now," explains John, "and that, in addition, outsourcing becomes part of the middle of the process."
Watch the full interview below.