One of the things you hear a lot these days is that companies want outsourcing to change their business. Customers don't want to just cut costs. They want specialized skills, they want innovation, they want help cracking new international markets.
They want external services providers to be a seamless part of their overall business services strategy. This approach goes beyond the usual shared services or outsourcing models and focuses on the priorities of the whole business, the entire enterprise.
Cliff Justice, a principal with KPMG, calls this new delivery concept "the extended global enterprise." He says it's not a set-in-stone delivery method but rather a way of thinking about delivering business services "that is based on the concept of end-to-end processes, internal and outsourced service providers, high value services, and strong central governance."
Justice says the EGE model has four main attributes:
• It's goal is to help achieve competitive advantage
• Customer need and business strategy shapes the design of the enterprise
• The EGE consists of a "balanced portfolio" of services and processes, deployed according to what makes most sense
• It's all ruled by a group that "has a charter to support the business and manage the delivery model" and presumably not be over-managed
Here's the real key: Instead of relying on resources "within the four walls, the EGE leverages a global pool of internal and outsourced resources" in order to be agile and responsive to clients, suppliers, and employees. That global pool would be fluid, like pools tend to be, but as if fed by several different streams. So, a particular project might include internal talent that's appropriately located for the job, an outsourcing partner that's available to provide certain other functions, and a cutting-edge partner/provider that brings niche skills to the project.
This "extended enterprise" won't work for everyone. But Justice reports that clients KPMG has surveyed say that taking the type of approach he describes has resulted in cost savings of 15% to 20% beyond the usual shared services or outsourcing approach.
EGE is about smartly making use of talent and relationships to be more competitive. It's not surprising to hear from businesses that this kind of flexibility and on-demand utility pays off. It's a bit like having IronMan, Thor, Black Widow, the Hulk, Captain America, and Nick Fury at your disposal and calling them in according to the task at hand. For a superbig job, you source it to the whole gang. You have something that requires a large hammer, well, you call in the guy with the large hammer.