SIMON ASHBY Outsourcing may have its own problems, but don’t rule it out
OUTSOURCING How AI technology can help enhance staff productivity
BREAKING THE BANK Metro Bank founder Vernon Hill on how the Big Five need to shape up or ship out…
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Outsourcing comes with its own problems, but don’t rule it out entirely OPENING SHOTS SIMON ASHBY
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HEN I was a student studying industrial economics at the University of Nottingham two questions fascinated me: why do we need large firms to produce goods and services (instead of relying on smaller enterprises and markets)? And if we do need large firms, why do they not keep in house every aspect of their supply chain and associated production process? I admit that, during my first and second years of study I needed to get out more, though deciding to make up lost time and party hard in my final year probably wasn’t the best idea. Nevertheless I still spent many happy hours reading dusty tomes on the optimal size and structure of firms. Of course the reasons why large firms keep certain processes in-house, while outsourcing for others, are to save costs and increase operational efficiency. In the case of outsourcing, a service provider may be able to conduct a particular
activity or process at a lower cost, due to economies of scale or cheap labour. In terms of efficiency an outsource service provider may have the specialist skills and experience needed to conduct certain activities/processes more quickly and reliably, increasing output and customer satisfaction. But there are also significant negatives to using outsourcing. A firm effectively loses control over the delivery of the activities and processes that it outsources which can lead to inefficiencies elsewhere and possibly poor customer service. There is also the possibility of service disruption, contractual disputes and even bankruptcy. Given the potential problems with outsourcing it is no surprise that some firms have taken the decision to bring activities and processes back in house. In areas like IT services and call centres, for example, firms such as General Motors (IT) and Lloyds Bank (call centres) have taken back control. But that does not mean that such a decision is right for all firms. Indeed, other large firms such as Apple have built their success on outsourcing
“For firms struggling to decide whether to keep activities in-house, automation be a solution”
DR SIMON ASHBY IS ASSOCIATE PROFESSOR OF FINANCIAL SERVICES AT PLYMOUTH UNIVERSITY
large parts of their production processes, including the manufacture of hardware such as iPhones. For firms struggling to decide whether to keep certain activities in-house or to outsource, automation may be a substitute to traditional in-house production, or outsourcing. Automation – whether via a virtual IT system or physical robots (in the case of manufacturing) – can enable firms to achieve significant cost and efficiency savings. After all, people are expensive and can be unreliable, while automated systems do not require industrial relations experts, rest breaks, and rarely make mistakes (although on the rare occasions they do go wrong, the consequences can be disastrous). Given the benefits of automation, firms might also feel that outsourcing, especially when overseas to exploit cheap labour, is no longer necessary – better to retain the control of the automation yourself than to pass over that control to an outsourcer. Yet I cannot help but wonder whether firms that make such a decision are missing a couple of key
issues. Firstly automation is expensive and can require significant capital outlay. Workers may also be expensive, but they can be made redundant. Specialist automation solutions will be hard to sell on if they prove ineffective, or if business volumes decline. Secondly, a high level of expertise is needed to get the best from any automated solution. It is unlikely that a firm will have this in-house, at least initially. GM, for example had to recruit 8,000 specialist software engineers to take its IT systems back in house. Few firms will have the resources for that kind of investment. So do not cancel your outsourcing contracts just yet. Computers and robots may be able to do far more than they did in the past, but the chances are that your outsourcing partners will be better able to exploit these advantages. In part this is because outsourcers can develop automated systems that serve multiple clients (thus achieving major cost savings) and because of their access to the highly skilled experts that are needed to make these systems work effectively.
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F1 could lend a winning formula to small businesses MATT SMITH
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HE GLAMOUR of Formula 1 might seem a world away from many SMEs’ offices, but they could have more in common than you think when it comes to cyber security. Speaking at the start of the motorsport’s summer break, Williams F1’s IT director Graeme Hackland (right) said small businesses with limited
budgets – including Formula 1 teams – need to prioritise the threats relevant to their operations and build their defences accordingly. “I can’t protect myself against everything,” he told Business Reporter in an interview discussing Williams’s new technical partnership with Thales e-Security. “Williams is an SMB and it has a finite budget in terms of what it can spend on risk. “Sometimes we live with risk and accept risks that for other companies
would not be acceptable. But we do it because we try to understand where we’re potentially vulnerable and what’s going to harm our main business criteria of growing our advanced engineering business and winning in Formula 1 and focusing on those things.” Thales e-Security’s CTO Jon Geater explained that small firms first need to think about why cyber-criminals would be interested in their data before spending money on measures to protect against those specific risks and the potential
damage they could do. “Threats are constantly evolving – new things come up all the time,” he said. “But actually, you can never defend against everything, and if you’re just taking a general approach… you’ll never keep up and you’ll never be protected. “The right thing to do is to walk back a couple of steps, look at why your stuff is interesting and then think about why somebody might want to disrupt it. Taking this proactive, threat-based approach is absolutely essential.”
Brexit uncertainty hits SME confidence, survey finds JOANNE FREARSON
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USINESS OPTIMISM for the UK’s small and medium-sized (SME) fell at its fastest pace since January 2009 in the three months to July amid ongoing uncertainty following Brexit, according to the latest CBI Quarterly SME trends survey. A round 8 per cent of small to medium-sized manufacturers said they were more optimistic, while 53 per cent said they were less optimistic – the sharpest fall in optimism since January 2009. The survey reported that total new orders and new domestic orders for SMEs were relatively unchanged. However, firms expected these to fall over the next three months and were planning to scale back investment intentions in buildings, planting and machinery.
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Plans for capital spending in the year ahead fell 16 per cent for both plant and machinery – the lowest since July 2009 – and buildings fell 24 per cent – the lowest since October 2009. However, investment in product and process innovation was expected to rise at a moderate pace of 7 per cent, as was spending on training and retraining at 8 per cent. Export orders fell over the past three months according to 23 per cent of respondents, while 15 per cent said export orders rose and 9 per cent anticipated them to grow over the next three months. Although firms were a little more optimistic about their exports prospects for the year ahead, the proportion of SME manufacturers citing concerns about political and economic conditions abroad as likely to limit exports was at a record high at 49 per cent.
Uncertainty about Britain’s future with the EU has led to scaled back investments by SMEs
There was also a rise in employment in the last quarter, with the expectation that hiring would remain stable over the next year. Rain Newton-Smith, director for Economics at the CBI, said: “The UK’s SME manufacturers reported higher production, more staff hired and now expect to sell more of their world-class goods overseas over the next quarter, with a weaker sterling having a hand in this. “But overall, they do feel less optimistic and are scaling back
THE INNER GEEK
some investment plans in machinery and plants. “Naturally, much of the concern is related to uncertainty and businesses want to now see the new government deliver a clear plan and timetable for the EU negotiations ahead, while cracking on with immediate domestic priorities, including a decision on new aviation capacity in the South East, which will help the UK’s SME manufacturers to reach new markets in the future.”
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Fact or fiction: understanding the world of outsourcing
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HERE ARE a number of widespread myths surrounding Business Process Outsourcing (BPO). Organisations can often feel concerned that outsourcing is risky, time-consuming and non-beneficial. In such instances, internal departments often attempt to juggle various roles that could be outsourced, causing them to be overworked, outdated and less efficient in their outcome. These misconceptions often originate from a poor understanding of the core purpose of BPO. For example, for human capital management (HCM) and payroll functions, it ensures that organisations can follow best practice and remain compliant with changing legislation, while in-house professionals can use their time to focus on value-adding tasks. Organisations need to stop considering it a way to “cut out and hand over”, or as being troublesome or repetitive. Instead, businesses should start embracing BPO as an opportunity to better streamline processes, alleviate internal burdens and create a competitive advantage.
Do I really need to outsource? As companies become increasingly multinational, HR and payroll functions are under greater pressure across an increased number of geographies. They often become overwhelmed by the local employment laws, taxation and payroll practices, which could pose a significant business risk. By working with a global HCM partner that obtains local expertise, companies can ensure compliance across all markets, and make global processes smoother, faster and more efficient. This also provides firms with access to specialists in fields such as payroll, pensions, benefits or workforce management, as well as the latest technology.
Will confidential assets be exposed? There is a common perception that outsourcing back-office systems, such as payroll and HR administration, can mean a loss of control and too much exposure of confidential internal assets. In situations
where this is a real concern, organisations should consider forming an internal team that has overall responsibility for the BPO provider, the outsourced functions, scope of services and access to private data. This will guarantee that all processes are governed, and internal departments can be reassured that they have complete control over the services that are outsourced.
26% The amount by which companies with a successful human capital strategy can potentially reduce their TCO by
How much does it cost? Another confusion which organisations face is around the cost of working with an external supplier. When making outsourcing decisions, companies should always consider the total cost of ownership (TCO), and how it relates to their workforce. It is important to focus on the actual spend on employees and the related management cost and not just the cost of salaries and benefits. On top of this comes t h e r e q u i r e d t e c h n olo g y infrastructure, which can become particularly expensive when a company operates across multiple locations around the world. Also, a number of these costs are hidden to organisations as they are often “owned” partly by HR and partly by IT, finance or other functions. Identifying TCO is not only a cost-cutting exercise − it examines how current processes work, turning HR into a value-adding strategic function. Companies that have a successful human capital strategy in place can reduce their TCO by as much as 26 per cent*, while enjoying the benefits of higher retention rates, employee engagement, and more efficient systems and processes.
Will senior management view BPO as an investment? Although departments are under pressure to contribute to overall company savings, focusing on finding ways to reduce costs is only a small part of the picture. In fact, the C-suite and management teams within organisations are often interested in alternative strategic approaches – for example, increasing process effectiveness, while also reducing risk and responsibility. By looking beyond cost-savings, senior management teams will
“Specialist services can transform an organisation’s operations, meaning outsourcing cannot simply be regarded as a one-off purchase”
understand that BPO programmes can also deliver harmonised, integrated and consistent policies that optimise various business functions. This will not only reduce long-term expenses, but also free up management time to focus instead on strategic planning, core competencies and customer satisfaction.
But really, where’s the longterm value? Payroll and HR functions can offer strategic support, and should not be disregarded as
merely an administrative burden. HR professionals are under constant pressure to demonstrate their value to the organisation, and outsourcing to a standardised, single system gives firms a global view of their workforce, to help make fully informed decisions backed by accurate data. The right outsourcing partner can offer innovative and flexible solutions that adapt to your business priorities. Specialist services and technology solutions can transform an organisation’s operations, meaning
outsourcing cannot simply be disregarded as part of a simple one-off purchase. It gives organisations across the globe the opportunity to form valued longterm partnerships between the business and the provider, building effective, efficient and reliable processes that help drive future business success. INDUSTRY VIEW
0800 1707 677 adp.co.uk/outsourcing-and-tco *NELSONHALL (2014) TARGETING PAYROLL OUTSOURCING.
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SPECIAL REPORT DAVID CRAIK
The dog days are over…
Business Reporter talks to Metro Bank founder and CEO Vernon Hill about how his “disruptor model” is changing the way SMEs bank
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“The Big Five obviously don’t give a damn. If I can do it, they should be able to. Their IT services are one step above a quill” – Vernon Hill, Metro Bank
Vernon Hil is already shaking up the traditional UK banking sector with his new model
ALKING INTO a branch of Metro Bank can only be described as colourful, fun and, if this is possible for any financial service, uplifting. With the red water bowls at the entrance reinforcing its dog-friendly “Dogs Rule” ethos and the Magic Money Machines that eat up small change geared for young savers, it’s not hard to imagine the appeal of the open spaces and grand furnishings for depositors tired of deteriorating branch service elsewhere. What though does all this mean for your average SME – a sector still unsure about its status with British high street banks even eight years after the onset of the credit crunch? What does Metro, led by the ebullient American born chairman Vernon W Hill II, have to offer in their search for lending, advice and support? The group, founded in 2010 and with 41 branches in London and the South East, posted a 23 per cent increase in second-quarter revenues, rising to £46.3million at the end of June 2016 from £37.8million in the first quarter. This was driven by growth in demand for residential mortgages but also commercial lending. Metro says it is the “Bank for Entrepreneurs”, offering tailored and specialised services such as invoice discounting, factoring and cash-flow funding. The bank was the second largest provider of business funding in 2015 according to Bank of England figures for the Funding for Lending scheme. After sweeping up the cruise-ship-style staircase into the offices of its Holborn branch and being greeted by Hill with that impressive stateside hospitality, I hear his take on the bank’s approach to SMEs. “That figure showing that we are number two in the UK for lending is pretty impressive for a bank smaller than [those
of] the Big Five,” he says in his deep Virginian drawl. “When we launched we always had an expectation that our customer base would be 50 per cent commercial and 50 per cent consumer. Business banking is core to what we do.” It’s clear that Hill has entrepreneurialism close to his heart. In his 2012 book Fans! Not Customers: How To Create Growth Companies In A No Growth World – Hill describes a childhood where he was “always intrigued by the magic of business”. While a student at the Wharton School of Business in Pennsylvania he worked full-time in the banking industry. After graduating he set up a real estate development business called Site Development and, then aged 26, he formed Commerce Bank in New Jersey with one office and nine team members. It eventually grew to 500 branches and was sold for $8.5billion in 2007. “I think I have a different perspective on what an entrepreneurial company needs in terms of banking and credit. That gives us a big advantage,” he explains. When it came to Metro Bank, London was the natural choice. “If you want to develop a successful retail model you don’t build two branches in London, one in Manchester and one in Birmingham. You put them in the same market,” he says. “We have branches from Brighton to Reading to Cambridge and Southend. Our invoice finance business works over the country meeting SME needs and we have regional commercial lending teams.” Metro recognises much of its success stems from its AMAZE! customer service culture. A stands for Attend to every detail such as ensuring that every branch looks its best, M for Make every wrong right, A for Ask if you’re not sure, Z for Zest is contagious, share it and E for Exceed expectations.
“Customers, both personal and commercial, want their banks to arrange their car loans, £5million business loans and their mortgages. They want their bank manager to know them, someone who can make a decision without referring it to a credit division. He wants to look him in the eye and if something goes wrong he wants that banker to help him get it fixed. We are working to restore that relationship between a borrower and his banker. That has been lost in Britain. In the US banks are still embedded in the community,” Hill states. “The Big Five here in the UK admit it takes six to eight weeks to open a new business deposit account. We open them in an hour. The Big Five obviously don’t give a damn. If I can do it, they should be able to. Their IT services are one step above a quill.” Hill pulls no punches. “They are big, they are broken and their customers don’t like them,” he adds. “They have never been threatened before. We haven’t had a free market here before,” he says. “I’ve been really surprised that they treat their commercial customers worse than their consumer customers. But I don’t want to tell them what to do better!” Hill admits that marketing services to business customers is far trickier than with consumer customers. “We do oneon-ones and we talk to business groups but our basic philosophy remains ‘fans not customers’. They use the bank, remain loyal and bring their friends,” he explains. “Word of mouth is the number one way.” Opening more branches will help. Hill envisages “hundreds more branches” in the South East. “The guy with a local store down the street is one of those SMEs who wants to have a branch to pop into. It is a gigantic market and we are opening one new store a month now. They are brand new stores and yes, it does mean
as much to a commercial customer as a consumer. It is about making a brand statement,” he states. “It’s no accident that our stores look like the Apple stores. Lots of glass, high ceilings, all with the same feel. We are giving you a unique end to end experience.” Hill admits SMEs do have more lending options at present, with alternatives such as crowdfunding and peer-to-peer. However, he says it is difficult to imagine these businesses “ever getting to scale” given lending and funding imbalances. More generally he sees a strong SME sector in the UK. There has been much debate about the levels of red tape businesses have to deal with, but Hill says it is far less than their counterparts in the US face. “It is way better here. I could give you 8,000 examples where US firms have a bigger burden,” he laughs. “The UK is a very entrepreneurial country. It is a very exciting market.” With that Hill reaches across his desk and offers me a copy of his book. He picks up a red pen and signs it. “Welcome to Metro Bank,” he writes. As we walk out he urges me to describe his bank as having a disruptor model, rather than its usual term of reference as a challenger bank. “The banks in the UK lend to SMEs on a numbers basis. But the people are more important. We do the numbers and the people together. Sometime you make decisions which might be marginal on the numbers but you meet and trust the people. That is what community banking means.” There is more evidence of SME demand as we return to the ground floor. The Magic Money Machine is busy but this time it is not a youngster piling in the change. “Taxi driver,” says Metro PR. “They love these things.”
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Shelf life: how AI will soon be in charge of product displays JOANNE FREARSON
R Contact centres investing heavily in automation
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HREE QUARTERS of the contact centre outsourcing (CCO) sector invested in enabling technologies in 2014-2015, with analytics, automation and multi-channel tools being the major areas of investment, according to research from consulting firm Everest Group. “Contact centres across the world are moving into the digital era with a focus on enhanced customer experience in a multi-channel environment,” said Katrina Menzigian, vice president at Everest Group. “Service providers are responding by shifting their value proposition from the traditional, full-time-equivalents (FTE)-based focus on cost containment and implementation to an emphasis on providing insights and innovation to enhance the customer experience.” There was also an increase in onshoring activity in 2015 as buyers increased their focus on improving service quality and demonstrated a preference for agents located close to customers. In 2015, the percentage of CCO contracts with significant onshore delivery rose to 53 per cent, compared to 35 per cent in 2010 and 49 per cent in 2013. This trend has also led to the growth in adoption of a work-at-home agent’s model, which incurs lower operational costs than onshore FTEs. The research also showed that the CCO industry is more focused on value-added services such as performance management, customer retention, customer analytics and channel management. The study also found benefits in automation such as increased customer satisfaction and loyalty, decline in fraudulent activities and reduced average resolution time. According to the Everest Group, automation has, through the reduction of repetitive tasks they would otherwise have to perform, helped to empower agents to focus more on solving complex customer problems. Automating systems can also predict customer’s problems and can help proactively solve them even before the customer has realised there is one, improving customer satisfaction and loyalty. Overall, the global CCO market grew at a rate of 4 per cent in 2015 to reach $75-78billion. The global contact centre spend stood at $300-320billion, of which third-part y outsourcing accounted for approximately 25 per cent.
ETAILERS ARE looking towards artificial intelligence (AI) such as image recognition technologies to help enhance sales staff productivity as well as make them be more competitive against their peers. Alexander Laugomer, project manager digital merchandising at consumer and industrial goods firm Henkel, says: “The major benefit of the AI technology is that it not only provides us with information on our own and our competitors’ products, but it also gives us an actionable report straight to our mobile devices. “This allows our sales reps to improve our brands’ situation instore there and then, without the time-consuming task of manually compiling data.” Henkel outsources this function to retail image-recognition firm Trax. The technology works by being able to recognise more than eight million images on a shelf. After recognising the products, the artificial intelligence system gives the sales staff real-time recommendations on what needs to be done to give them a competitive advantage in the marketplace. The technology is designed to help improve productivity and reduce the time an employee needs to spend checking inventory on store shelves, as well as gathering analysis about things such as shelf location and different types of promotions. Laugomer says: “The software provides an electronic list that is entirely objective and significantly more accurate than previous manual processes, which are obviously prone to human error.” Research has shown that retailers were investing in smarter analytics and technologies to gain a competitive advantage and improve the experience of the customer. A survey by KPMG International and The Consumer Goods Forum showed the usage of techniques such as predictive analytics, customer path-to-purchase analytics, and artificial intelligence were expected to double over the next two years, to 59 per cent, 54 per cent and 43 per cent, respectively.
Trax’s technology gives retail staff realtime analysis of how their products are performing
Usage of AI techniques in retail Over the next two years, the percentage of retailers using AI is set to increase to:
59%
…using predictive analytics
54%
…using customer path-topurchase analytics
43%
…using artficial intelligence
SOURCE: KPMG/CONSUMER GOODS FORUM
The research also found 29 per cent of firms surveyed currently use data analytics, with this proportion expected to double to 58 per cent in the next two years. Willy Kruh (inset, below), global chair of consumer markets at KPMG International, says: “Companies need to gather and analyse as much circumstantial, situational and demonstrated behaviour data as possible so they can start to understand the motivation for why, when and how a consumer makes a purchase decision at any given time.” Companies in the drinks industry have been using Trax AI to help make them more productive. In 2014 Coca-Cola gained 1.3 per cent in market share within five months and was listed in Australia’s BRW Maga-
zine’s 50 Most Innovative Companies after using the technology. The soft drinks giant was able to get real-time images of its products in store, giving sales staff insights into any performance gaps, so that they could apply corrective actions in the store as soon as problems were found. Elsewhere, beer manufacturers have been using it to better manage their stocks, gain greater visibility into trends across markets and improve their ability to predict and respond to competitor behaviours. It has also helped beer brands make sure their products have been placed on the shelf during peak periods. According to Joel Bar-El, CEO of Trax, fast-moving consumer goods (FMCG) companies spend about $70billion on shelf merchandising standards, buying shelf space and marketing materials, promotions and exhibitions.
Companies positioning their products in-store can get the maximum number of people seeing their products, thus potentially improving sales. And through using AI imagerecognition technology, they can use real-time analysis of how their products are doing on shelves, giving them the best sales potential. Dror Feldheim, co-founder and chief commercial officer at Trax, says: “Retailers turn our data and insights into broader market intelligence and highly accurate trend predictions that shine a light on new ways to improve their customer experiences in-store.” The technology is also being used by companies in conjunction with their loyalty programmes, so consumers can look at the shelf digitally and make smarter choices. They can use it to filter specific products on shelves, such as gluten-free or lowfat, for example.
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Digital access improving customer experience for local authorities ANNABELLE GREEN
L Julian Cook of M-Files believes the government’s paperless NHS targets are unrealistic
ANNABELLE GREEN
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HE NATIONAL Health Service (NHS) has a long way to go before it meets its desired goals of going paperless by 2018 and must be handled correctly to reduce risk of failure, according to document solution provider M-Files Corporation. Julian Cook, director of UK business at M-Files, said: “The plan to have a fully paperless health service by 2018 is a very ambitious goal to strive for. “With huge swathes of documentation requiring differing levels of security and protection, it will be vital both for the NHS
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Paperless NHS by 2018 ‘ambitious’, say experts and patients’ peace of mind that an effective document management system is in place to ensure sensitive information does not fall into the wrong hands.” Early this year, health secretary Jeremy Hunt announced his intention to see the NHS go paperless by 2018. But recently Dr Robert Wachter, interim head of a governmental review into NHS IT systems, remarked that “a fully paperless system by
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2018” was not feasible, and that the NHS was more likely to run an interoperable system switching between digital and paper systems. A survey undertaken by iGov and Open Text also found that 46 per cent of NHS chief information officers were “concerned or unsure” about making the paperless target, while two fifths have not implemented basic digital patient records.
Cook added: “Areas such as administration and the back office are heavily entrenched in paper and can slow down many of the vital behind-the-scenes actions that contribute to a smooth running healthcare system. It will be vital that the systems leveraged for making the transition are simple, easy for employees to use and easy to configure and update for IT departments.”
OCAL AUTHORITIES are using outsourcing to help g ive residents access to digital technologies, improving the information they can offer. “Typically there’s an appetite for citizens to use the online channels, to use modern and digital means to access the council services,” Charlie Bruin, chief executive of business process innovation company Liberata, told Business Reporter. “A big part of our work with a lot of our term contract customers, such as North Somerset and Bromley [councils], is all about putting in these online additional channels, so citizens can access council services in a modern, efficient way. We can dramatically improve the efficiency and the satisfaction of those interactions by making those channels available.” At North Somerset Council, for example, Liberata provides
a range of customer services to help staff deal with general enquiries, revenues relating to council tax and benefits such as housing. Bruin also pointed out that outsourcing has helped councils improve their finances and get access to expert resources that they otherwise would not have the internal resources to do. He added: “A lot of the conversations I have with chief executives are about how we can help them improve the revenue side in addition to their cost side.”
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“Optimists do a lot better than pessimists when it comes to business” Business Reporter speaks to Sir Richard Branson and Sara Blakely about Britain’s new breed of entrepreneurs and the aftermath of the Brexit vote THE BIG INTERVIEW JOANNE FREARSON
100+
The number of Virgin marques and companies worldwide
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IR RICHARD Branson, founder of Virgin Group, is sipping a cup of tea in the make-up room at ITV Studios, relaxing before the final of Virgin’s Voom entrepreneur competition with Sara Blakely, founder of underwear firm Spanx, who is a judge at the event. The pair go back a long way – ever since Blakely appeared on Sir Richard’s reality TV show The Rebel Billionaire in 2004, the pair have been firm friends. The pair come across as charming and witty as I talk to them. “Optimists do a lot better than pessimists in business,” Sir Richard tells me. “Obviously, you need to protect against the downside all the time and look at the worst thing that can happen, and how you can avoid that happening. But being an optimist is so much more fun – and you then make your optimism happen.” The optimistic way of thinking certainly seems to have proved successf ul for t he pair in t heir respective ventures. Both having built billion-dollar businesses from scratch, they are two of the most famous names in business. “You have to work day and night – you have got to put everything into it. In the early days it is like climbing a high wall,” Sir Richard says. “There is a very thin dividing line between success and failure and you have to fight extremely hard to start on the right side of that dividing line. “It takes quite a long time to get to the top of the wall and then start to come down the other side and feel that your businesses are secure.” My meeting with Branson and Blakely comes just after Britain’s vote to leave the EU, and Sir Richard – a prominent campaigner on the Remain side – makes no bones about voicing his unhappiness with the outcome of the referendum. When I ask him about challenges in businesses, he pointedly replies: “politicians.” Of the referendum result, he says: “It is the biggest blow that has
happened to business that I know potentially in my lifetime. It is going to be worse than the 2007 crash – the banks have been pulverised, and it is going to be really difficult for young people to get money from the banking system. It is likely we are heading into recession.” In the aftermath of the Brexit vote, some bank stocks went down as much as 50 per cent. Although most bank stocks have recovered from the lows of the immediate shock of the vote, this does not necessarily mean it is plain sailing ahead for the British economy, and measures have been taken by the Bank of England to help provide additional support to the UK. The BoE has cut interest rates to 0.25 per cent from 0.5 per cent and introduced other monetary stimulus measures to help sustain growth and employment. On its website, it states: “If we hadn’t acted quickly these uncertainties would have meant lower economic activity and more people out of work.” Branson (who we spoke to before the BoE’s measures were put in place) predicts that the coming business environment will be challenging to say the least. “Young entrepreneurs are going to have to deal with it – they are on the verge of having a £500million market taken away from them,”
“It takes quite a long time to get to the top of the wall and then start to come down on the other side” – Sir Richard Branson
he tells me. “They are going to have to come up with imaginative ways of overcoming all the hurdles that have just been put in front of them. Where there is a will there is a way. Obviously some are going to be completely destroyed, and others will overcome.” “It is going to be devastating to employment in Britain. It is going to be devastating to wages. It is going to be devastating to business. It is going to be devastating to infrastructure. In business, if we suddenly realise we have made a dreadful mistake, we will change tack. For the sake of the country, people have to be brave and change tack. Sir Richard believes the result of the referendum will further stifle the already sluggish flow of cash in the UK, and if people can get access to money to start their business, it will help compensate for the hurdles Brexit will give them. He is certainly an authority when it comes to dealing with harsh economic conditions – when he first started out interest rates were 18 per cent. Blakely is similarly motivated when it comes to dealing with challenges. She started underwear company Spanx right before 9/11, and initially found it hard to get people to buy her underwear. To get a buyer interested in her product, she had to go into the toilet
The pair met when Blakely appeared on Branson’s TV show The Rebel Billionaire in 2004
@biznessreporter Branson and Blakely at the Sara Blakely Foundation’s Give A Damn event earlier this year
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Branson and Blakely: the CVs Richard Branson started his first business, Student magazine, in 1968 when he was only 17 years old. In 1970, he launched Virgin as a mail-order record company, opening the first Virgin Records store the following year. In 1984 Branson founded Virgin Atlantic, the first part of his transport empire. He was awarded a knighthood in 1999 for services to entrepreneurship, and established Virgin Unite in 2004 to tackle tough social and environmental problems. There are now more than 100 Virgin companies worldwide, employing approximately 60,000 people in over 50 countries.
and show them the before and after effect of her underwear. Blakely says it is important to not see everything as a challenge but as an opportunity. “There is a mindset that happens when you are in business that is really important,” she says. “Each challenge that comes along you try to outsmart, or you find the people that can help you manoeuvre around those challenges. “I stayed so closely connected to the consumer and what the consumer wanted and the products I could deliver to them, that the path sort of took care of itself.” Indeed, Blakely’s line of undergarments is so popular that talk show host Oprah Winfrey has them on her ‘Favourite Things’ list. “I’m always asking my team, will I get arrested?” she laughs. “I nearly called my first autobiography – instead of Losing My Virginity – Talking Ahead Of Yourself,” offers an amused Sir Richard. “You have somehow got to motivate everyone – talk ahead of yourself, then try to catch up with what you have been saying.” That, in effect, is why Sir Richard and Blakely are in London at the moment, to inspire and select Britain’s next best entrepreneurs at the final of Voom. “When I started, I did not have anyone to hold my hand,” Sir Richard says. “It gives young people who are starting businesses a much better chance if they have a really good mentor and also a leg up financially. “Voom has just got stronger and stronger over the last five years. We also have something called Virgin Start-up Loans, which gives money
Sarah Blakely came up with the idea for Spanx in 1998 after she cut the feet off her control-top pantyhose to stop the seams from showing through her dress. In 2000, she started to manufacture her underwear – which were soon endorsed by talk show host Oprah Winfrey on her “Favourite Things” list – Winfrey claimed that she had given up regular underwear to only wear Spanx. In 2004 Blakely travelled the world with Fox TV for Branson for his TV show The Rebel Billionaire . Blakely has also set up the Sarah Blakely Foundation, which empowers women to make the world a better place. Spanx is based in Atlanta and can be found worldwide in more than 50 countries.
“It’s important to not see everything as a challenge but as an opportunity” – Sara Blakely
and creates apprenticeships on the back of Voom. We want to try and help thousands of young people to get their businesses going.” Voom started about five years ago, set up by Virgin Media Business to help give start-ups a chance to pitch their business ideas to Branson and receive valuable financial support as well as mentoring and PR. What Branson and Blakely have both been particularly impressed with at the Voom final are entrepreneurs who have ideas which have a social conscience. The two big winners for Voom 2016 were MacRebur, which uses recycled material such as plastic to produce asphalt for roads, and biobean, which turns waste coffee grounds into sustainable biofuels. Sir Richard believes that successful businesses boil down to those that come up with an idea that is going to improve other people’s lives. “My motto in life is, screw it – just get on and do it,” he says. “Then you have a business.” And at a time of economic uncertainty, such boldness is perhaps just the tonic the business community needs.
Blakely’s lauded underwear range made her business name
R3: Resilience, Response & Recovery Summit 2016
Your roadmap to a robust incident response plan The R3 Summit takes you through the most vital steps of your response and recovery strategy, sharing practical takeaways alongside legal guidance and incident exercises. In its second year, the R3 Summit brings you: 150+ information security professionals • 20+ top-notch speakers • 6 how-to guidance sessions • 2 case study sessions • 2 spotlight sessions • 1 cyber-breach simulation • 1 set of collaborative roundtable discussions • 1 hands-on workshop • 1 head-to-head session • 1 friendly fireside chat • 1 champagne reception with 150+ networking opportunities This is your chance to join industry professionals across business sectors to meet and exchange best practices on recovering from data breaches and creating first-rate responses to them. For more information and to register, please visit our website, call Tracey on 020 8349 6475 or email tracey.m@business-reporter.co.uk www.r3summit.co.uk
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Inspector Inspector Dogberry has been discovering local SMEs and enjoying even more walks than usual, thanks to the new Pokémon Go app! The Inspector has caught lots of digital monsters and has also explored some new places while on the lookout for them. As well as getting plenty of exercise, he has discovered quite a few new local shops while on the Poké-hunt. The Inspector found a PokéStop populated with the small creatures while partaking of his favourite meal of chips and gravy in a nearby café. The owner was very friendly, and said there had been lots of new regular customers thanks to the popular app. The Inspector also went to a Pokémon Go gym, where the characters you catch can be trained and used to compete against each other. These are located in areas of local activity such as town halls, churches and shops. Dogberry uncovered one Pokémon on a visit to a sports shop, during which he was persuaded to splash out on a new pair of trainers – probably a good thing given the amount
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of walkies he’s had to do while searching for virtual monsters. In fact, the game has been categorised as a fitness app by online communities, and the creators have said they designed it to incorporate exercise into its use. Pokémon Go is also having a beneficial effect on the economy – not only helping players get out and about and get more exercise, but also giving a boost to SMEs while they do it. US start-up AllSet is one of a number of SMEs using Facebook’s new chatbot feature to connect with customers and
BY MATT SMITH, WEB EDITOR
Dogberry promote local restaurants. Through the Facebook Messenger app, customers can discover new restaurants in their local area, giving these businesses new consumers to engage with. This is achieved by typing a series of commands, which allows food to be ordered with a restaurant ahead of arrival, enabling customers to eliminate waiting time by turning up when the meal is ready to serve. The feature combines aspects of takeaway with an inhouse dining experience, while promoting up and coming local SME restaurants. French start-up Sport Heroes has reached more
than 300,000 sports people worldwide by using online technologies to build sports communities. Sport Heroes has been helping to keep sports fans engaged in three ways. The first is through online sporting communities in running, cycling and skiing, where Sport Heroes works with more than 350 brands such as Nike, Adidas, Under Armour and Holiday Inn to provide members with rewards and discounts. The second is through a new digital consultancy called “We Are Heroes” which helps brands create tailor-made sports activities to engage fans. It organised the first connected worldwide race, which saw 5,500 runners around the world participate via a GPS app or watch. The race raised £100,000 for UNICEF’s vaccination programme. The third is through United Heroes, which is about creating a connected sporting experience for businesses and their employees.
Small Business Trends smallbiztrends.com
The award-winning Small Business Trends brings you advice from more than 400 experts on all areas of running a small firm, from marketing to finance. Some of the latest pieces on the site include tips on how to appeal to millennials and why your business needs a mobile app.
Women on Business
www.womenonbusiness.com
Read about business from a female perspective on the Women on Business blog.
One of the site’s most recent articles is a look at ways that small businesses can boost their online security, which is crucial to the survival of SMEs in the digital world.
Entrepreneur on Fire www.eofire.com/blog
This business podcast focuses on what makes a successful entrepreneur. Each day, host John Lee Dumas speaks to a different entrepreneur about their successes, failures and the best advice they have to offer anyone thinking of starting their own business.
Small Biz Survival
smallbizsurvival.com
CamScanner (Free – Android, iOS) Digitise your
documents on the go with this app, which uses your smartphone’s camera to take photos of documents and turn them into PDFs.
Any.do (Free – Android, iOS) Take your to-do list
to the next level by adding reminders, notes and files to each item and sharing them with your colleagues, friends and family.
Entrepreneur Becky McCray focuses on local businesses on this blog. When visiting the site you’ll be asked to choose whether you’re dreaming of starting a business, growing a new firm or levelling up an established SME, and the site will give you advice to suit your stage.
September 2016
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Four pages of analysis and expert comment
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S Sarah Musgrove is editor in chief at Opus Energy
“Opus Energy knows that transparency is the simplest way to shed light on energy management”
MALL BUSINESSES are tenacious, it’s been proven. The latest figures from the Enterprise Research Centre show that SME growth is now back to where it was before the 2008 recession hit. During that time, new start-ups created four million jobs, while existing small and medium businesses added a further 9.4 million. This is all positive news, but it’s undeniable that it’s taken a lot of hard work to get to this point. Fluctuating economy aside, the daily trials and tribulations of running a small business alone are enough to give any business leader a headache. Small business owners everywhere are getting sidelined by admin. Research by Opus Energy found that 62 per cent of SME management check their emails constantly, while 70 per cent fail to delegate some of their most pressing jobs. Getting back to business could be the most important thing an SME can do to ensure plans stay on the track to success, but doing so isn’t easy when the paperwork is piling up and administrative duties are less than crystal-clear. This is something of a trend. Small businesses are now busier than ever, with 47 per cent of SME management working through a weekend due to work commitments. Add to that the fact that 74 per cent of small business owners surveyed reported that relationships with their partner, friends or family have been affected by long working hours and you get a good picture of why it’s so important that the administrative duties an SME owner is
Clearing up admin can help SMEs succeed obliged to do are as clear-cut and time-efficient as possible. Sorting out your energy is a huge part of this. Something as simple as keeping the lights on should never be a foggy issue, and clearing your statements should never be hard work. Some energy suppliers are a little sharper when it comes to knowing what a business owner wants. Take Opus Energy, a leading independent energy supplier for businesses in the UK. With as much focus on making energy management as clear as possible, every service Opus Energy provides is tailor-made for busy SME management.
Opus Energy knows that transparency when it comes to energy usage and spending is the simplest way to shed light on energy management. All Opus Energy SME customers get free smart meters for their electricity so they can see exactly how much they’re consuming, in pounds and pence. This also means that every energy bill they receive is completely accurate, so there are no surprise invoices or chasing of owed credit. Forget about digging out paperwork and rushing to make phone calls during working hours as well. Opus Energy
customers get an innovative online account for 24/7 access. You can manage multiple sites in bulk, view your monthly usage and download multiple statements at the click of a mouse, wherever you are and at any time of day. Less time doing admin, no hidden surprises, and the freedom to get back to business. If you’d like to see these benefits for yourself, visit opusenergy. com/clear to start getting back on track. INDUSTRY VIEW
0843 634 9805 www.opusenergy.com/clear
Smart banking revolution starts in the small business sector
B
anks are poised for a radical technical shake-up after consumer watchdogs announced customers must be able to access details of their entire finances through a single mobile app by 2018. The so-called “smart banking” phenomenon will relieve many of the money management headaches small business owners experience. Issues such as juggling multiple bank accounts, managing expenses and international payments make it incredibly difficult for SMEs to get an accurate financial overview. So, the ability to consolidate all of your finances into one app could save small business owners and freelancers in particular both time and money.
The smart banking revolution is already quietly marching on in the SME sector, with one innovative mobile solution already available to consolidate small business owner’s finances into a single app. The Curve solution is made up of two parts: a bank card and a mobile app. Using the app, you scan and upload all of your existing bank cards. This information is brought together to show every transaction in real-time across all your bank cards on one simple screen. You can even tag
specific transactions as expenses and export this information into your accounting software. Here’s the really clever part, though. Your existing bank cards then become virtual entities in the app, and you only need one physical card to pay through multiple accounts – the Curve MasterCard. The app links to the Curve MasterCard so you can switch between your existing cards by selecting them in the app. Each payment instantly appears on the app, which is a reassuring
line-of-sight to pick up potentially fraudulent activities. Curve is also accepted everywhere that MasterCard is and – the app is currently available only on the iPhone, but will be rolled out on other plaforms later this year. It’s a disarmingly simple solution for a range of financial bugbears many SMEs face. Until its consumer launch early next year, Curve is available to small business owners and the selfemployed – giving an exclusive glimpse into the smart banking revolution. INDUSTRY VIEW
Charlie Taylor is growth and analytics lead at Curve charlie@imaginecurve.com www.imaginecurve.com
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ROWE HORWATH LLP is launching Crowe Agile, a unique style of service to support clients to address the challenge of short-termism. Crowe recognises that all sizes of companies need to determine how they are run, and whether they are governed effectively. Pressure from investors, markets, customers and all other stakeholders is increasing. Regulatory demands and compliance expectations only heighten the requirement for an inclusive approach.
How well prepared are you for the unexpected? Do you understand the key components of your business model? What are the value drivers that will bring about the success you want to achieve? What could push you off track, and are you ready? How effective are you at managing and controlling all aspects of your business? Boards must achieve the right balance between short-term and long-term goals. Short-termism can drive poor business behaviours and inappropriate conduct, leading to adverse customer outcomes. Long-termism may limit the ability to respond to opportunities and unexpected challenges. The business framework and associated control environment needs to consider: • The likely consequences of any decision in the long term • Employees’ interests • The need to foster business relationships with suppliers, customers and others • Community and environmental impact • The pursuit of high standards of conduct Boards and senior management have the responsibility to ensure their governance arrangements are appropriate. This necessitates an assessment of the effectiveness of the risk management approach across the business and the framework within which decisions are made. Regulation and compliance only make the task more complicated. Too often people think this creates an unjustified and costly burden on a company, but a more positive view is that getting it right far outweighs the potential costs. The backbone of the governance structure to achieve this goal would be evidenced in a company by: • How it links its strategy to its risks, then to its control environment • How it ensures risk identification is owned at the right level • How it ensures the appropriate management, reporting and challenge processes are in place Crowe Agile aims to address this challenge, turning risk management from “chore to core”, and demonstrating
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How to reduce uncertainty and eliminate ‘shorttermism’ “All sizes of companies need to determine how they are run, and whether they are governed effectively”
that, at its best, it is about running a business better.
Do you have all this in place? If not, then who do you turn to? Crowe Agile is a combination of business and risk management processes supported by technology platforms incorporating Crowe’s experience gained over the years supporting clients. It is designed to be a new style of delivering external support and expertise that is very different to the traditional consultancy models.
Crowe Agile A focus on strategic imperatives supported by a robust control environment. It includes a determination of your business’s aspirations and plans, provides shoulder-to-shoulder expertise and support to deliver value and create long-term, sustainable business growth. A service based on your firm’s business needs, but encompassing the design principles of speed, agility, and flexibility, to enable enhanced strategic delivery and to leverage investment value. This is achieved by ensuring full awareness of your business’s opportunities and risks at the right level, so that with appropriate oversight we develop a dynamic relationship with your business. A disruptive approach to the provision of expertise that delivers smart decisions and lasting value for companies. Crowe Agile is based on a forward-looking assessment, aiming for a proportionate contribution from both parties, so any knowledge transfer benefits all.
Client case study THE CONSUMER credit market has been undergoing a huge amount of change over the last couple of years. A new entrant with ambitious plans was faced with the need for additional support with its strategic development, as well as ensuring that the firm’s risk and compliance requirements were being fully achieved.
• Was aware of the inherent risks that could impact the firm’s plans, both internally and externally
Their size meant the breadth of the client’s requirements could not be matched by a single individual. They needed a partner who:
Crowe Agile was the service selected, and the firm has moved forward strongly in the knowledge that the partnership with Crowe will continue to meet the changing needs of the business, be flexible enough to support the growth plans, and ultimately provide the protection from regulatory scrutiny.
• Understood the business model • Appreciated the firm’s strategic intention
Tailored to your needs so that each solution is dependent on your particular circumstance. Based on a combination of service items that can be varied as developments and progress are achieved, Crowe Agile is designed to cover defined objectives and caters for the inclusion of additional activity. This is all packaged into a subscription service, smoothing the costs of the service across a year (or more) and providing more effective budget and assessment control. A new approach to securing the right expertise when you need it. Crowe Agile opens up access to specialists around the globe, who can be included in programs. With an innovative solution to providing access to these skills, the new approach means you can secure expertise when you need it. Crowe Agile delivers virtual access alongside an agreed programme of benefits – both on-site and remotely – available when you need it. The approach is genuinely and inclusively
• Had the level of expertise required • Offered a service that met all these elements, at a cost that reflected the size of the business
covering needs from board level to junior management.
Our challenge to you Crowe Agile can enhance the chances of avoiding the pitfalls that can beset many firms as they tackle these challenges. As a result you will be able to: • Focus on your strategy and delivering top-end results • Maintain a robust governance framework to evidence appropriate board involvement • Meet your risk, regulatory and compliance requirements in a costeffective manner. INDUSTRY VIEW
For further details, contact Richard Warrington or Andrew Bird at Crowe Horwath on 01242 234421, or by email at Richard.warrington@crowehorwathgrc. com and Andrew.bird@crowehorwathgrc. com
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Protect your business from currency shocks
A
ny UK-based company that imports from Europe by paying suppliers in euros will have seen the rate fall sharply over the past 12 months, falling from a high of 1.44 to below 1.18 – a fall of over 18 per cent. Even those who may have budgeted for rates fallen to 1.35 as a protective measure will still be hit, paying over 12 per cent more for their euros than their budgets had suggested on January 1. This can be disastrous for many businesses already operating on tight margins as they look to invest for further growth.
of currency for immediate delivery (within two working days) if you can get a particular rate. These can either be a rate that is better than where the market is currently trading (to try and catch the rate when it moves in your favour), or worse than where the market is currently trading (to ensure you have a worst-case rate). Orders for forwards: This works in the same way as an order for spot and, if your selected rate is achieved, would then automatically create a forward contract.
18% The amount the sterling/euro exchange rate has dropped by over the past 12 months
What can you do?
Should your company have a risk management strategy?
If your business imports from or exports to businesses and individuals abroad, your firm will be exposed to currency fluctuations. Earlier this year, World First research found that UK SMEs faced a £35.6billion currency risk as many remain ill-prepared to deal with ongoing currency volatility, especially in the wake of the UK voting to leave the EU. Any business operating internationally needs to have a currency strategy to manage its risk. While this will be dependent on need, many businesses find that a combination of solutions like forward and spot contracts are effective
in limiting exposure. Most importantly, businesses should speak to a currency specialist who can look at the best options available for the business.
What products are available? You can approach your currency risk in a number of different ways, from spreading out the purchasing of currency over an extended period to using risk management and hedging methods to curtail your risk exposure to the FX market itself.
Forward contract: A forward contract allows you to buy or sell an amount of currency at or before a set time in the future. It allows you to effectively pre-purchase your currency by paying deposit ahead of time. The rate for a forward contract may differ from the spot rate, as the market calculates a forward rate depending on the difference between the interest rates between the two currencies. Orders for spot: An order allows your company to agree to transact an amount
If you raise a proportion of your revenues or pay a proportion of costs in a foreign currency, it is imperative that you have a solid risk management strategy. These will vary in size and complexity according to the size and complexity of your business, but products are available that could help you approach your exposure in a sensible and measured manner. INDUSTRY VIEW
020 3582 8744 www.worldfirst.com/fixit
Getting the deal done and delivering positive change
H
ELPING COMPANIES to transform their performance and increase their value is an intensive activity requiring a great deal of time and attention to detail. Choosing the right investment and paying the right price are clearly the critical first steps. However, the potential to deliver genuine improvements to the business over the plan is also a key factor. Enabling this positive change is not just about turning around underperforming companies for Rutland Partners; Rutland also focuses on situations where there is complexity in getting the deal done followed by an opportunity to deliver further positive change post-deal. Rutland’s latest transaction was a highly complex situation, but, due to its experience of these deals, it was an attractive investment: backing UK commercial print group Walstead to acquire European printing group, LEYKAM Let’s Print. Oliver Jones, partner at Rutland, talks about the deal and how it came about: “Walstead was introduced to us early because the adviser knew it was exactly the kind of deal we had the expertise for. A previous Rutland example of this type of multifaceted deal was our acquisition of AFI-Uplift, which was a complex and simultaneous
“The commitment we bring to each of our investments is what distinguishes us in the UK mid-market” – Oliver Jones, Rutland Partners transaction combining three businesses in the UK and the Middle East. The Walstead deal was a similar situation; a complex refinancing and merger with LEYKAM Let’s Print that represented an exciting scale opportunity where we could go on to support an experienced management team in maximising the potential of the enlarged group. “Walstead is an entrepreneurial print business, and, with a strong track record, it is well positioned in a challenging sector. The management team has a strong appetite to progress an ambitious strategy in Europe, and in order to help enable that, they wanted to bring in an
institutional financial partner for the first time. Following detailed analysis of the print sector we were able to form a view on the opportunities for the enlarged group and conclude that Walstead was well placed to benefit from the increased scale and geographic reach that this acquisition would deliver. “With operations already in the UK and Spain, this acquisition gave Walstead four further production sites in Central and Eastern Europe, two in Austria and one each in Slovenia and the Czech Republic. By enlarging its manufacturing footprint, Walstead now has opportunities to offer larger European customers a
more joined-up selling approach and also deliver efficiency benefits from greater scale. “This was a complex transaction with a clear set of objectives based on the core strengths of the business, which will drive opportunities for further European growth. Throughout the deal process we have built a strong relationship with the management team and, going forward, we will continue to strengthen this relationship by working closely with Walstead to support it in integrating and then expanding this multi-territory group. “The types of transactions we focus on, the commitment that we bring to each of our investments and the quality of the relationships we build with management teams and advisers is what distinguishes us in the UK mid-market. Through hard work and active engagement, we are confident that the Walstead team will deliver the full potential of the opportunity ahead of them in the European print sector.” INDUSTRY VIEW
Oliver Jones is a partner at Rutland Partners +44 (0)20 7451 0700 oliver.jones@rutlandpartners.com
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The debate What is the secret to successful outsourcing?
Keith Stagner
Tej Kohli
C
T
CEO T-Impact
Kevin McLoughlin
Founder and CEO Kohli Ventures
USTOMERS EXPECT transformational returns from outsourcers, yet 56 per cent are dissatisfied with BPO solutions. Shrewd leaders know cost-per-seat is no longer a differentiator, with 49 per cent of BPO buyers planning widescale processes transformation enabled by technology. Asking outsourcers to manage broken processes invariably results in failure. Organisations who understand their own processes and what they require from their BPO vendors are well placed but still face substantial overhead costs. The solution is process design and automation to control and monitor processes in real time. Tools such as Business Process Management Suites (BPMS) and Robotic Desk Automation (RDA) will reduce costs and risks while enabling a better customer experience. The best solutions include real time performance management alongside policy compliance reporting. This powerful capability supports a continuous improvement culture. Successful BPO’s will use process experts to help remove waste and defects from processes. They will provide real-time dashboards utilising process automation data to enable customers to monitor performance and reduce overhead costs.
Director of procurement Opus Energy
HE FIRST step is to decide on a single provider, taking into consideration the priority that your project will take with them. Ensure that the chosen provider’s ethos is aligned with your own as the relationship is key. Trust and mutual respect are the cornerstone of successful outsourcing. To achieve this there must be clear channels of communication that are kept open throughout the transaction, buyers must communicate objectives clearly and suppliers must be transparent with operational issues. Ensure you have a contact with whom you communicate well and that will stay consistent throughout the process. A balance must be found that suits supplier and buyer – if the relationship favours either too much it will become difficult to maintain, and projects will struggle to run smoothly. The key to this is foreplanning: clearly outlined roles, responsibilities and payment structure in a solid contract with agreeable terms. As long as businesses adhere to these basic points they will find that outsourced projects can not only be successful, but mutually beneficial.
0843 634 9805 www.opusenergy.com
info@kohliventures.com www.kohliventures.com
sales@t-impact.com www.t-impact.com
UTSOURCING NON-CORE activities remains an attractive option for expanding businesses, to offload niche or specialist services that could be better managed by third parties. However, while outsourcing is typically considered a money-saving activity, the reality might be very different. Specialist services from third parties can be priced slightly higher than what it might cost to maintain equivalent employees to deliver the same service. The logic of accepting a slightly higher cost versus managing the service in house might be the opportunity to avoid expensive and time-consuming recruitment, while having the potential to gain from the latest techniques or methodologies. If saving cash is the driver behind an outsourcing activity, a thorough analysis of business requirements and the abilities of multiple market providers is required. Customer references need to be followed up with site visits to meet the individuals that will be providing the service. This will help ensure effective delivery of quality services at the right price. INDUSTRY VIEW
INDUSTRY VIEW INDUSTRY VIEW
O
Eoin Kenneally
Charlie Bruin
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I
Head of e-commerce Hermes UTSOURCING HAS the potential to free up a considerable amount of time and revenue for any business in the UK. However, it needs to be managed and implemented in a way that allows the business to successfully manage the solution. All outsourcing deals should be structured in a manner that allows you to clearly understand and set the service level expectations. The ideal situation would be to sit down and structure your needs and requirements in such a way that when you approach your chosen provider or providers you can tell them clearly what you need and what they need to deliver against. When choosing a provider it’s also important that you assess the level of their capabilities and whether they have the ability to be agile enough for your business. Once you have delivered an initial successful partnership you must maintain a very structured and communicative relationship. This ensures that you receive the level of service you want, and that your outsourcer knows what level of communication you need.
CEO Liberata
N THE public sector it is imperative to have a detailed understanding of the legislative and citizen environment surrounding the services to be outsourced. This understanding of how services operate in the real world is key. Technology can help to bring efficiencies and improve the citizen experience, but this is the plumbing rather than the engineering. Liberata combines technology with specialist service expertise to drive through operational innovation across the public sector; whether it’s the use of data to dramatically cut fraud and error in the council tax and benefits system, or automation to speed up payment processing in central government. Technology is vital in these examples, but the key to success is a deep knowledge of the services themselves, and continuously delivering on outcomes and promises over a sustained period. It is this continuous good service, regular innovation and keeping of promises which results in healthy, strong client relationships, and this makes for good outsourcing of the type that naturally extends and grows over the long term.
INDUSTRY VIEW
Eoin.Kenneally@hermes-europe.co.uk www.hermesworld.com/en
INDUSTRY VIEW
info@liberata.com www.liberata.com