Processes or Services?

For nearly a year, I’ve been carrying around an article that was sent to me by a colleague. I seem to pull it out on every trip, reading and re-reading on planes and trying to assess whether it has anything to say about any of our clients.

Thomas Davenport's article, “The Coming Commoditization of PROCESS,” was published a couple of years ago in the Harvard Business Review. I've read it enough times that you don't have to, but should you be so inclined, it's here: http://harvardbusinessonline.hbsp.harvard.edu/hbsp/hbr/articles/article.jsp?articleID=R0506F&ml_action=get-article&print=true

Davenport's premise is that a broad set of process standards soon will make it easy to figure out whether a business capability can be improved by outsourcing it. Such standards allegedly also will make it easier to compare service providers and evaluate the costs/benefits of outsourcing. Eventually these costs and benefits will be so transparent to buyers that outsourced processes will become a commodity, and prices will fall dramatically.

Davenport writes that the low costs and low risk of outsourcing will then accelerate the flow of jobs offshore. He concludes that these changes are already happening with some business processes and eventually will spread across all commonly performed processes.

Hmm.

Despite the convenience that is implied by Davenport, that’s not what I hear clients are looking for. In fact, many have tired of the endless droning on about “best practice processes,” or “process reengineering,” or even “process portability.” One client recently told me, “Peter, your industry seems to be in love with its processes when what your clients want to buy are services.”

It's a notable distinction.

Let's put a real-world example under the microscope. For instance: Has the use of the Software Engineering Institute’s Capability Maturity Model really leveled the software development playing field? Granted, it’s been instrumental in improving the quality of software processes, and it’s a fine measure of legitimacy as a development organization, but do clients really select providers based on their CMM level? Not that I’ve seen.

Process standards are supposed to create confidence in the effectiveness of the end result. They aren't there as the sole criteria for selecting a service provider. It’s the services that really matter, and those services are distinct by virtue of the way in which they are delivered.

As we like to tell our clients, the how is just as important as the what in successful outsourcing.