3 minute read 8 Mar 2019
Fighter pilots in cockpit

Why managed services can be the C-suite’s greatest weapon

By Paul Clark

EY Global Vice Chair, Managed Services

Leader of change. All-in on helping clients achieve their vision. Proud husband and father. Sports fan.

3 minute read 8 Mar 2019

Different than but related to outsourcing, managed services can be an effective weapon for C-suite leaders looking to convert cost into value. 

“We don’t compete on how great our finance or tax function is – but if they’re not effective, it’s a huge issue. And that’s a hard business case to make when it comes to prioritizing investments.”

This comment was made to me recently by a senior executive and it highlights how far the world has come from outsourcing low-end, often IT-related processes to more efficient specialist information technology outsourcing and business process outsourcing providers based offshore. The latest evolution of managed services is solving a more complex equation for companies in a business environment changing rapidly due to four key drivers: 

  1. Cost and investment pressures are increasing
  2. The regulation bar is getting higher and more complicated
  3. Technology is accelerating at a pace that makes it difficult to update, maintain and integrate effectively
  4. The talent to manage complex business areas is scarce, and expensive to recruit and retain

How do leaders balance the need to invest in new technologies for their core functions, often to access critical regulatory data from numerous disparate systems? And how can they ensure these core functions – too often viewed as a cost center – add genuine value to the broader business? 

The rapid pace of change means the C-suite must find answers to these questions quickly.  There’s even more pressure to increase the performance of core functions, just as it becomes more difficult to do so. 

By uncovering new insights around tax, finance, risk management and financial crime, managed services can truly transform key operations – they won’t just be more efficient but more effective.

Transforming cost reduction into value creation  

This is where managed services can change the game. Where outsourcing once helped companies take cost out of the business, managed services now focuses on adding value across all elements of the value chain. Yes, it will deliver cost efficiency, but that’s more a function of the fact that most organizations still require a fair degree of transformation in their core functions. 

The real magic happens when deep domain expertise is combined with global reach and a state of the art technology stack that leverages both new technologies and common data sets. In this way, managed services can solve businesses’ most complex challenges around their core functions – ensuring that they are not just run with an eye on compliance, but with a vision for the future.

By uncovering new insights around tax, finance, risk management and financial crime, managed services can truly transform key operations – they won’t just be more efficient but more effective. They’ll add new value and competitive advantage which is even more critical is a more fast-moving business landscape. 

Successful managed services requires a rich skillset

But when considering managed services relationships, business leaders need to be aware that this is a market not everyone can play in. Bringing the magic requires a rich tapestry of scale, geographic footprint, technology capabilities and – crucially – technical expertise and qualifications (including potentially certain licences) that few are capable of combining. 

Managed services is rapidly becoming a key weapon in the C-suite arsenal, capable of addressing needs that outsourcing does not and one that we’re seeing more and more companies add, which, if nothing else, should beg the question, “How are you managing without managed services?”

Summary

Managed services has its roots in outsourcing – but it’s not the same. The distinction is an important one to understand for all CFOs and COOs. Managed services can solve businesses’ most complex challenges around their core functions – ensuring that they are not just run with an eye on compliance, but with a vision for the future.

About this article

By Paul Clark

EY Global Vice Chair, Managed Services

Leader of change. All-in on helping clients achieve their vision. Proud husband and father. Sports fan.