Anton van Heerden is GM at Altech ISIS.

Outsourcing and managed services have been business buzzwords for over a decade, with the benefits being touted by experts across numerous industries as the answer to cutting costs for business functions ranging from IT to accounting, marketing and HR. However, many South African companies are still reluctant to outsource certain elements of their business due to a misconception that these must remain in-house in order for the business to function effectively.

This false impression is the result of a lack of understanding between the core business of a company and the core functionality that enables the business. Every company has a single focus to all of its business activities: providing the products or services that form the foundation of the business. Core business operations are all of the activities that yield an income for an enterprise, and support operations – which are the core functionalities – are ancillary activities that permit or facilitate the core business. For example, a bank’s core business is banking. While a call centre is essential to the functioning of a bank, it is not the core of the bank’s business. It is a core functionality.

It is precisely because core functionalities are essential to the running of the business that many companies feel the need to manage them rather than outsource them – if a core function of the business fails, the whole operation stands still. However, allowing a trusted third-party partner to manage these, will ultimately result in improved performance and reduced costs.

There is more to managed services than merely handing an element of the business over to an outsourced service provider. The ever-changing technology and business landscapes are throwing up challenge after challenge to companies. It is neither practical, nor possible, to be a jack of all trades.

By allowing a specialist to manage the core functions of a business, a company can focus on its core competencies, all the while sharing and managing any risks. Real-world examples prove the outcomes of this approach.