Unisys ANZ boss sees outsourcing co-op as future

Stan Beer
Friday, 30 September 2005 11:00

IT Industry - Market

An evolution of outsourcing to a model resembling utilities, where competing enterprises share the resources of an outsourcer on the non-differentiating parts of their business, has been predicted by the boss of Unisys in Australia.

Mike Ettling, managing director Unisys Australia and New Zealand, outlined his vision for the future of outsourcing at a recent presentation to the American Chamber of Commerce in Sydney. According to Ettling, the move to co-operative outsourcing will be driven by the talent war, the need to achieve scale and Australia’s opportunity to become an up-skilled offshore centre, where India and China can’t compete.

Ettling believes the evolution of outsourcing will be from the ‘simple’ outsourcing of IT infrastructure through to Business Process Outsourcing and beyond. He says co-operation between businesses otherwise competing in the same industry will not only drive efficiencies it will also be the catalyst for business transformation.

“Outsourcing has traditionally been used to drive down costs and to shift capital costs around on a balance sheet,” said Ettling. “Most organisations have already driven these efficiencies as far as they can. There comes a point where simple outsourcing provides only limited strategic advantage.”

Unisys vision is for a new model of outsourcing which will see otherwise competing businesses agreeing to outsource non-differentiating functions to one provider. This model, called a Business Transformation Utility (BTU), goes beyond BPO because it does more than simply shift who actually manages a process. A business utility would deliver critical, but non-differentiating, business functions to multiple participants in an industry.

“The new business utility model allows its participants to determine the future direction of their industry by freeing resources for those business initiatives that do create competitive advantage," said Ettling. “In sharing resources and using variable pricing, the business utility also reduces major operational and capital costs.”

Efficiencies and strategic advantage are just two drivers that Unisys believes will lead enterprises to join business utilities. The growing shortage of skilled workers will be one factor that will require companies to share resources in the form of a utility, according to Ettling  The need to overcome the cost and limitations of legacy systems will also be a key driver for the creation of utilities, he says.

“The business transformation utility drives fundamental change across the entire industry, thereby making the industry more cost competitive and efficient overall,” says Ettling. “Australia will leapfrog many nations in the creation of sophisticated business utilities allowing it to compete higher up the value chain.”