Why the mid-market is the mother-in-law of outsourcing : Enterprise ...

I want the best SaaS platform, some great BPO and a bunch of data scientists?

When is comes to outsourcing, dealing with the middle-market has been somewhat akin to dealing with the mother-in-law: ?can be awkward to deal with, very hard to please, and always has complex demands on your patience and resources. ?However hard you try, defining and delivering a solution that can deliver the outcomes you both want seems like the impossible nirvana.

However, as the wise ones among us have now discovered, winning over the mother-in-law goes a whole long way to achieving future happiness. ?What?s more, those of you who have avoided addressing the mother-in-law?s demands will soon regret it?

However which was you look at it, many of today?s middle-market firms are going to be the F1000 of the future. ?What?s more, most are seeking technology and sourcing solutions that can drive nimbleness and cost-effectiveness, as they simply do not have the prodigious people and technology resources within their IT, finance, HR, marketing and supply chain operations to manage their evolving needs.?In fact, many of them can?t afford the top talent to run their operations, and those providers which can deliver it are already in high-demand.

Let?s examine what 399 enterprises had to say about their mission-critical objectives driving both ITO/BPO decisions in today?s market. ?It?s already becoming abundantly?clear that high-end businesses today, unlike their mid-market counterparts, are focused primarily on cost-reduction when outsourcing, as opposed to investing in new solutions and?capabilities that providers could (and really should) bring to the table:

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Why aren?t today?s providers winning over their mothers-in-law to grease the wheels for their future success?

So? if most the providers are promoting their wondrous capabilities in terms of talent, technology and analytical capability, why aren?t they targeting those clients who actually?want?those capabilities: ?the middle-market firms?

Providers are set up for high-end enterprise deals, not the mid-market. Sadly, most of today?s leading outsourcing providers are geared up for big, bloated enterprise deals, where the economics of labor arbitrage are simple, and selling cost-reduction is a much, much easier than selling business outcomes. ?What?s more, the providers themselves are not structured to sell aggressively to the mid-market ? they tend to have limited sales talent and they want their A-team delivery teams concentrated on their A clients. ?When you talk to their sales heads, they?ll likely be able to tell you, pretty much, how the entire F1000 shapes up in their pipelines, but when it comes to the next few thousand firms, they?ll have little insight or visibility.

High-end buyers want to get smaller and drive out cost, not invest in new solutions. Moreover, the $10bn+ enterprises want to get rid of cost ? they know they have hoards of talent, but their main motivation today is to get leaner and more flexible, to standardize processes and (if we are so bold to surmise) become smaller. ?Today?s enterprises want to grow their top lines, not their bottom-lines. ?This is why today?s outsourcing industry is so fixated on labor arbitrage, FTE-cost models and achieving basic operational success.

Middle-market solutions require business platforms, based on industrialized tech platforms and processes. ?We?ve talked about this for a few years now, but it?s taking an age to evolve. ?Where are the platform partnerships between the Netsuites, the Workdays, the SFDCs with the BPOs? ?Why haven?t we seen a ?middle-market FAO solution? between a mid-market SaaS accounting provider and a leading F&A BPO provider? ?While there have been a few mutterings of hope, we are yet to see a single enterprise-scale SaaS/BPO platform engagement?that we can write about.

The Bottom-line: ?The leading SaaS vendors don?t ?get? BPO and the leading BPOs don?t want to invest in SaaS

Having spent the best part of ?my earlier career as an analyst studying apps and packaged software, before being subjected to the horrors of the BPO business, it?s as clear as daylight where enterprise solutions need to be focused ? on the middle-market enterprises who want solutions that can be industrialized for the high-end enterprises of the future.

SaaS providers are blind to ADP?s success. However, one thing is very apparent ? while SAP and Oracle quickly realized they needed to preserve their license revenue when clients signed BPO deals (both have?practices?dedicated purely to this cause), the likes of Workday, Salesforce.com and Microsoft Dynamics have shown little-to-no appetite to understand the?opportunities?a BPO channel can provide. ?Like, haven?t they noticed how ADP has become the world?s leading SaaS/BPO provider, with more then $10bn in annual income?

IT-BPO providers only looking to invest in niche tuck-in areas. Sadly, too many buyers are too focused on their quarterly balance sheets to focus really long-term on their operations; their operations heads are focused on preserving their empires with a few snips here and there to the operating budget. ?In addition, providers are also focused on their quarterly balance sheets and find it so much easier to pander to the needs of today?s F1000? not tomorrow?s. ?While we?ve seen a few niche acquisitions where providers are adding platform capability in process niches, such as Accenture/Octagon, Genpact/Jawood,?Capgemini/VWA and Infosys/McCamish, we?re yet to see any of them really attack the mid-market with horizontal solutions that can infiltrate thousands of organizations, such as in Finance, HR and CRM.

The train is leaving the station? but who is going to jump on? ?As the existing high-end business opportunities slowly shrivel up, the new logos are springing up in the mid-tier. ?The winners of today will only be the winners of tomorrow of they can truly invest and build the solutions today?s mothers-in-law are craving. ?Those who have ignored the mothers-in-law are already in trouble? Hope springs eternal

(Cross-posted @ Horses for Sources)

Source: http://www.enterpriseirregulars.com/59798/why-the-mid-market-is-the-mother-in-law-of-outsourcing/

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