Outsourcing Model Layer

This step in our journey along the business architecture routemap is the Outsourcing Model.  Not everyone will have a need for this model layer as there are still many organisations who maintain most or all of their business capabilities in-house.  However, an increasing number of other organisations have been very keen to exploit the advantages of outsourcing and for them this model layer is very relevant.

The organisations who outsource, be it near-sourcing (i.e. just down the road), off-shoring (i.e. half-way around the world) or any other hybrid in between have done so for a few basic reasons.

Firstly, they may no longer consider the things they outsource to be among their core competencies.  Secondly, there should be scale and productivity advantages if an outsourcer is good at the services it provides.  Thirdly, connected to the first two reasons, costs, either through lower wages or greater efficiencies, are more attractive for accomplishing the same work outputs.  And fourthly, probably for a minority of cases, outsourcing is a way of gaining a presence in a developing economy which is an emerging marketplace in its own right!

Although there sometimes seems to be an increasing appetite to outsource just about anything, and we are sure some have done so, most of the activity has tended to fall into the areas marked by the large, dark-blue dashed ovals superimposed on the figure below (click on it to see an enlarged version in a new window).

In this model layer, perhaps more than for any of  the others, there is no ‘standard’ amount of outsourcing…..just areas that are more common than others.  Even allowing for the generic, cross-industry nature of the figure above the fact is, even those organisations who feel they are a close match to the processes depicted, will still often make different outsourcing decisions.

Some will outsource nothing, some will outsource bits of processes / functions and related systems, some will outsource whole processes / functions and related systems, and some of the more aggressive organisations out there will outsource things you might have thought were among their core competencies!

In the end all we can do is depict in our model some of the more common processes / functions that organisations outsource and leave it to you to fill in the specifics for your organisation as they apply

It is worth noting here that part of the reason for leaving the development of this model layer until this late stage in the architecting journey is that, unless outsourcing ‘X’ was mandated as part of a business transformation’s objectives, whether and what to outsource should be the subject of considered analysis (e.g. make or buy).  That analysis is easier to undertake if all the information that precedes this step is already available.

Obviously, once outsourcing decisions are taken there is likely to be some degree of knock-on effect for model layers developed earlier; e.g. ownership of processes, metrics, organisation roles, etc. can be migrated across to the outsource provider.  These changes need to be reflected in the other model layers and this rework is a good example of what we meant when we stated elsewhere on this website that the business architecture routemap was very interactive and iterative between and across model layers!

On the plus side this interaction and iteration can simplify the details held in other model layers; e.g. if the decision is taken to outsource some or most of the organisation’s IT environment then clearly this could make the technology model much simpler.  In fact your outsourcing provider should take care of the technology infrastructure and migration planning required to support your needs in the agreed outsourcing area(s).

You can thus treat the outsourced area(s) as a ‘black box’ which you manage via contractual service level agreements (SLAs).  In this scenario your technology model would only have to detail the side of the IT equation that your organisation will still manage for itself as well as dealing with how it plugs in to your outsourcers ‘black box’ environment!

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