Outsourced systems - a higher price to be paid

Pacific Wireless Communications Pty Ltd
By David Cox, Operations Director*
Tuesday, 11 April, 2006

From these sectors our industry has adopted many business approaches that have provided real benefits for users, manufacturers and service providers.

However, we need to question whether the current trend of outsourcing core radio systems is, in reality, delivering the operational promises presented and the value expected.

There is no doubt that multiple organisations that collaborate can share infrastructure and support programs to achieve operational cost savings combined with easy access to competitively priced radio products.

A common system will generally enable improved coverage and features for small radio fleets but often at the expense of dumbing down the requirements of sophisticated radio fleet users.

The socialisation of the radio system usually means that the greater good for all outweighs the unique needs of the few. This shared model delivers cost-effective dispatch radiocommunications for commercial and industrial customers but is the 'organisational' price and operational impact too high for our major governmental and emergency services!

Without question, the excitement sold in the early stages of outsourcing overlooks the intricate operational needs of specialist users. The vendor's belief is that the new 'cookie cutter' equipment will wow and satisfy the users just because it is the latest model and used by 'shoot and run' police departments.

The overlooked issue is that very often the radio solution being replaced has been refined operationally for a distinct purpose through organisational experience, knowledge and often customisation and innovation.

Experience from the IT sector has demonstrated that the outsourced contract terms become the focal point and operational needs are compromised with escalating costs associated with any minor variations or customisation.

The outsource vendor's strategy is often one of a Trojan horse where once within the gates hidden costs are unleashed on the client at every minor change or variation.

The decision by the client then becomes one of altering operational procedures and tactical needs to meet the contractual delivery of the system.

The 'flexibility' once presented in the pre-contract discussions becomes new unique requirements with associated increased service fees.

The ultimate success for some service vendors is to introduce proprietary solutions at reduced variation costs that take the pain away in the short term but leave the user with an escalating service fee and tighter handcuffs.

Once locked in, the ability to switch vendors becomes near impossible.

The tragedy is that users just fall in line and begin to change their operational requirements to fit the system delivered - the path of least resistance.

The greatest challenge facing outsourced users, particularly our emergency services, is to maintain the highest possible levels of in-house expertise that can translate business needs into solutions that drive new thought and innovation for their organisation, ie, best-in-class work practices.

This expertise will ensure the agency can debate, articulate and justify their needs to their own management clearly, while also navigating, negotiating and maximising the outsourced contract.

Without this in-house expertise, total reliance on the outsourced vendor may result in minimal solutions that are extremely cost-effective - for the vendor!

In the next article, I'll focus on the strategic importance of keeping core radio system elements in-house and how even the demise of some menial positions can long term adversely impact an organisation's ability to secure the right operational solution.

* David has extensive two-way industry experience initially as a commissioned officer with the Army Signals Directorate followed by 20 years at Motorola Australia. He resigned as general manager - Indirect Distribution in 2001 to pursue wider industry interests.

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