2020
Insourcing - keeping the outsource edge
PEAK SIGNAL
Maintaining outsource benefits in an insource model
Rise and fall of the media outsourcers It’s taken just over 20 years to go from the arrival of mainstream multichannel TV, with its associated explosion in outsourcing of all sorts of media services, through to the pendulum swinging back, through consolidation, to a smaller number of global media players. With that consolidation and the overall shifting media landscape, those of us within media service provision have seen the assumptions around outsourced service provision shifting. In the past, there were a number of reasons why critical elements of a company’s media supply chain, like Playout, would be outsourced. For a small service requirement, it was cost-effective to buy into a bigger operation where things like power, equipment and a 24/7 operation were in place - far more attractive than setting up and funding expensive infrastructure and operations. For larger companies, outsourcing operationally intensive services removed the business overhead of managing both the services and the personnel. This enabled companies to focus on their core functions, such as content creation Where a service-oriented culture change was needed to move the operation forward, outsourcing to a service provider was an attractive way to achieve what would have been a difficult culture shift We are now seeing that a number of these elements no longer apply. With the reduction in EPG space and carriage deal value, and competition for ad revenue, there aren’t many smaller channel operators left. So, as more and more consolidation takes place there are less actual customers within the marketplace to use outsourced service providers. In many areas of the media services value chain, there has been significant oversupply; while this has had great economic benefits for customers of these services, as service providers have competed for business by lowering prices, it has meant a number of providers have either exited the market voluntarily or gone bust. Previously, even for larger companies, it was attractive to them for the service provider to shoulder the capital investment, make investment in project resources and, frankly, front the implementation risk. The customer mitigated their risks and ended up with a monthly opex charge. Now we are seeing the double whammy of cloud-based offerings delivering an opex model but still leaving the service providers with the investment in implementation and the implementation risk, as well as the not so insignificant risk of modelling the cost of their services in the cloud, meaning that if they get it wrong they are living with a monthly reality that their expected return is not being achieved. Many service providers now do not have the financial stomach for this, contributing to the exodus that we have seen. So - where now? With consolidation, insourcing once again looks like a viable economic option for these media giants. There have been some interesting articles produced which are worth looking at if you have the time: Devoncroft’s article on the filing for bankruptcy by Deluxe which looks at how the changing media landscape is playing a lead role in making insourcing attractive and how that contributed to Deluxe’s situation - link Blue Lucy’s article on the shift from outsourcing to insourcing - link These cover the topic from the economic and technical perspective, so I am not going to re-run their excellent assessments here. Rather, I wanted to focus on aspects that perhaps are over-looked but I believe have delivered major advantages to broadcasters that have successfully outsourced. When boiling down the advantages of outsourcing, that would add value if retained in an insourcing arrangement, my thoughts have coalesced around maintaining customer-centric service delivery and collegiate learning arising from services run for a group of different customers. Within a provider delivering outsourced services, they are dealing with an environment made up of multiple customers, with multiple requirements. Although the bulk of requirements will be similar, how the customers interface with the supplier and also the specific requirements will vary between customers. This means the service provider is often solving problems for one customer which then can benefit other customers. In this article, I want to focus on the service delivery aspects and articulate why I think these have been beneficial to companies that have outsourced and offer some thoughts about how not to throw the baby out with the bath water when considering re-insourcing. Any service provider worth their salt will have built strong partnerships with their customers and will not only have focussed on the hard metrics around service availability but also on ensuring the customer receives the time and attention to focus on continuing improvements to ensure strong customer engagement. There are definitely benefits to an outsourced service delivery over insource provision. The service availability is as contracted - there are no ‘ifs and buts’ about achieving it in an outsource relationship; with insource provision it can become a refereeing decision between the departments within the company receiving the service and those delivering it. The contractual relationship around the service availability in an outsource relationship provides a clear, non-debatable deliverable Service improvements - in an outsource relationship, continuing to evolve the service should be a key function in developing the service relationship with the customer, that is, it is not wise to rest on your laurels if you want to renew a contract Root cause analysis vs convoluted workarounds and internal workflows - within a customer/supplier relationship, there is often a healthy tension between getting to root cause diagnosis, the actual impact of the incident versus the cost to get to RCA. In mature relationships, the focus will be on getting to RCA for incidents with high impact, ongoing impact or the potential for high impact. The danger within insource arrangements is that the time and resource needed to get to RCA is not invested and quick fix workarounds creep in, which can become convoluted and high risk in their own right Management intensive operations - a number of services which have typically been provided by outsourcers have a high management overhead in terms of people management, service management and reporting, which was one of the reasons to outsource the service originally - to be able to focus on core business functions such as making great content The contractual relationship gives the clarity of purpose to the team within the service provider operating and supporting the service delivery; how do people retain that within an insource relationship? Maintaining the key elements of a service provider relationship within the insource provision I believe provides the opportunity to continue to reap the benefits within an insource arrangement. The high level areas identified as being critical are: We have undertaken detailed analysis of each of these to identify the attributes that are the building blocks for successful service provision. If you’d like to find out more, please contact Peak Signal at hello@peaksignal.io
Peak Signal
As consolidation in the media industry makes insourcing attractive again, we look at what benefits might be lost and how to maintain them within an insource model
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insourcing once again looks like a viable option for these media giants
Don't throw the baby out with the bathwater
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as more and more consolidation takes place there are less and less customers"
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Paula Mathews
Outsourcing now - a risky business
Responsibility and Accountability
Processes
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this is key to successful support services, such as having the right amount of resources, the right skill set and retaining key resources
defined accountability and responsibility are important to support the operational and technical teams delivering to customer and business requirements
Any service provider worth their salt will have built up strong partnerships with their customers
a governance structure which shapes positive performance from operational and technical teams
Governance
Supplier Management
Tools
proactively manage system health status, track issues and identify sources of information such that teams can respond to issues effectively
There are no 'ifs and buts' about achieving service availability in an outsource relationship
service delivery is influenced positively and negatively by the performance of suppliers and there needs to be focus on the key areas that influence improvements in service delivery
How to retain service benefits in an insource approach
clearly defined to support the services being delivered consistently and to a high standard
Resourcing
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