Beyond the back office: How managed services partnerships drive outperformance

Overcoming cultural resistance

Taking a more mature approach to managed services partnerships requires investment, not only in your level of spending (winning companies are 4.2 times more likely to out-invest their peers in managed services), but in your organizational culture. Companies that have a culture characterized by a not-invented-here (NIH) disposition, or by silo syndrome, or by general resistance to change for whatever reason, may struggle to expand their use of MSPs—and thus lack the willingness to trust external partners with crucial elements of their strategic advantage.

How might you recognize an NIH disposition, for example? One indication might be your track record in building new businesses. When was the last time your company started and then scaled a new business to greater than 10 to 20% of your existing revenues? New business building can often be sabotaged by the same “antibodies” and cultural resistance that undermine the more strategic use of MSPs.

If your organizational culture displays some of those tendencies, look for ways to revisit the status quo. You might consider zero-based budgeting, for example, as a forcing device to subject longer-standing fiefdoms or investment areas to more frequent scrutiny—perhaps encouraging them to thereby reconsider which activities they might consider giving to managed services partners. Or you could examine the incentives you provide to your executive team—for instance, by rewarding business units for taking a broader approach to MSPs in support of a clear strategic focus.

Reducing friction

You’ll also want to look at the level of friction in your organization, or what economists call transaction costs. These terms refer to the time and resources needed to do business inside your own organization and with external parties. Companies with high transaction costs can be slow to arrive at consensus, to sign off on decisions, to allocate (and reallocate) budget, or to act on strategic objectives—all of which are impediments to working effectively with managed services partners. According to our research, companies that use these partnerships for strategic advantage are 1.4 times more likely than less mature ones to have lowered their transaction costs.

How much friction is in your business? One way to find out is what author Cass Sunstein calls a “sludge audit,” which can help measure the extent to which paperwork, inconsistent and duplicative requirements and reporting mandates, and muddled governance slow your organization’s decision-making and dynamic resource allocation.

Getting the technology right

There’s an additional point that nearly goes without saying: if you don’t have your technology basics sorted out, chances are you won’t get very far in your effort to get the most from managed services.