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As businesses rebuild, transformation and the ability to think differently are critical – managed services can be the solution.
In brief
- 84% of organizations are adapting to address deficiencies in current operating models.
- COVID-19 has accelerated the need for businesses to look at moving operations across to a managed services model.
- Adopting managed services can be a faster, more effective route to transformation.
Traditional business models are under increasing pressure. The COVID-19 pandemic is wreaking havoc on businesses across the globe. There is widespread disruption to supply chains, government-mandated shutdowns and changing consumer behaviour. But the truth is many traditional business models were already feeling the pressures of a shifting working world:
- Cost reduction is a priority, as management teams seek to leverage new technologies and improve efficiency metrics
- Key functions must do more with less – non-core but board-critical functions such as tax, compliance, risk and finance are expected to increase effectiveness without any additional resources
- Managing regulatory obligations is more complex and costly, as rules change faster and faster across multiple jurisdictions and regulators demand greater transparency
- Board demands are on the rise, with tougher expectations around return on investment and performance
- Keeping ahead of competitors is harder than ever, requiring deeper industry insights, digital tools and data analytics – as well as the specialized talent to run them
Counting the true cost of the crisis
To reimagine effectively, businesses must first assess the damage of COVID-19, which means looking beyond just the numbers.
Of course, the immediate and ongoing focus for all was the health and safety of their people. Beyond that though, for many companies, the real cost was one of missed opportunity. At the peak of the crisis, their best and brightest were required to spend most of their time ensuring the business’ plumbing continued to work so that critical functions kept operating and information was valid, credible and timely. This prevented them having time to focus on key strategic decisions that may have helped better navigate the virus’s impact on the business and position for recovery – such as flexing operations, pivoting to offer more relevant products and services or reconsidering capital positions.
Others saw that COVID-19 laid bare the inadequacies of current technology solutions driven by years of postponing investment and multiple manual workarounds. Legacy systems were often simply unable to support remote working, meet customers’ needs to transact online or address growing regulatory demands for transparency and digital reporting.
Operating models under pressure
of organizations are adapting to address deficiencies in current operating models. Source: EY Tax and Finance Operate Survey, 2020.
As companies begin to look ahead, these lessons make it clear that going back to “normal” is simply not an option. Surviving volatility and succeeding in a post-pandemic world will typically require total business transformation – either to address weaknesses, access new opportunities, or both.
Transformation to run better
Transformation is a term used so frequently in business now that its true meaning can be lost. It’s not about implementing more technology or making some improvements to internal functions – transformation is about reimagining the entire business model to be more resilient and agile.
For many businesses, the path to reinvention is through managed services. Prior to COVID-19, an increasing number of companies were considering moving to a managed services operating model, but the option is now firmly front and center of many boardroom agendas, because of its ability to enable:
- Opening the mindset: Throughout the crisis, we’ve seen that companies that are open to doing new things have tended to fare better. In the recovery period and beyond, this fresh thinking will define successful businesses. Businesses that are ready to let managed services take on those functions that are board-critical but not business-differentiating can free leaders to focus on the innovation that will drive recovery.
- Reshaping spending: When companies shift major functions such as tax, finance, risk and compliance to managed services, they avoid huge upfront and fixed capital costs and instead consume services in a flexible, on-demand way. Managed services moves beyond Business Process Outsourcing to leverage providers’ core domain expertise and technology investments to make key functions more efficient and effective. This allows companies to reap immediate cost savings while reshaping their approach to capital investment.
- Tapping insights to fuel innovation: Successful transformation will enable faster, better decisions that fuel smarter innovation. Managed services can provide the deep industry expertise, combined with sophisticated data analytics, that guide smart strategic shifts.
- Improving agility: COVID-19’s disruption, particularly across supply chains and infrastructure, has heightened the importance of the need for businesses to adapt fast to change. Building this agility into operations will require companies to renew their focus on forming new ecosystems with partners, including with managed services providers.
- Rebuilding confidence: Despite volatile conditions, businesses must not be timid in recovery – bold moves to reshape will be critical. History has taught us that most major market share shifts occur after significant crises. A trusted managed services provider can ensure compliance with changing industry and regulatory obligations across all operational jurisdictions, giving leaders the confidence to push forward to access those opportunities.
- Accelerating digital: Many businesses were already enhancing operations with digital tools and capabilities but the impact of COVID-19 has underlined the urgency of accelerating this shift. Managed services gives companies solutions that already include fast, cost-effective access to technologies such as AI, trusted intelligence and automation as well as the technical expertise needed to master these, without the big upfront costs or challenges in talent.
With managed services, businesses have the tools to ride out what may be a long and volatile recovery, the resilience to confront the next economic challenges with confidence and the agility to make the most of future opportunities.
Change is no longer an option
COVID-19 has changed the working world, possibly forever. Companies that can mitigate the downside of these changes and seize the upside of opportunities to transform can recover stronger, rebuild better and give business leaders the freedom to focus on driving their business forward. Adopting managed services can be a faster, more effective route to transformation – giving companies access to the tools, talent and insights that will help them make the bold moves that will define success in a very different business landscape.
Summary
Traditional business models were already under pressure but COVID-19 has accelerated the urgency to transform. Managed services can be a fast-track to change, enabling companies to leverage providers’ core domain expertise and technology investments to make key functions more efficient and effective.
What if managed services could run your world better?
How EY can help
Summary
Traditional business models were already under pressure but COVID-19 has accelerated the urgency to transform. Managed services can be a fast-track to change, enabling companies to leverage providers’ core domain expertise and technology investments to make key functions more efficient and effective.