Integrated Outsourcing: A Positive Sign For
BY FRED YENTZ
A double-edged sword of shrinking venture capital and profit-minded
downsizing faces many product-development managers. Headlines abound of
large-scale layoffs and the implication is a loss of knowledge workers in
some critical aspects of our business. To compound their pressures, managers
must scramble to beat their competitors to market with powerful new
solutions despite their streamlined operations. While they are left with
less human capital, they've held onto a vision of where they want their
company to make its play -- and they've seen no reduction in their revenue
What's a visionary, but resource-strapped, product-development manager to
do? Leverage your alliances and partnerships! Hold on to what makes your
business unique, but let go of functions that others may perform more
efficiently. Redirect your own people and investment onto higher-value
activities that create smarter products, higher customer satisfaction, and
achieve business objectives. Focus on one or two core competencies and
outsource everything else. Tap outside expertise to accelerate product
development, manufacture the solution and manage the inevitable changes in
technology for the life of the application. This emerging phenomenon --
fusing knowledge, experience, and technology in a single partner with a
long-term, vested interest -- is "integrated outsourcing."
The cycle of layoffs two decades ago severely reduced companies'
manufacturing capacity. As the economy rebounded, companies still needed
someone to "build boards and boxes." Many evaluated their value
propositions and core competencies and chose contract manufacturing to fill
the gap. In the new economy, the current cycle of layoffs will focus not
only on manufacturing, but it will also reduce companies' bevy of knowledge
workers. The result is a similar need for contract manufacturing. But this
time, partners provide engineering and design capabilities. That is, a need
for fully integrated outsourcing will develop further.
The critical requirement for knowledge workers is not in doubt -- witness
the 80,000-plus high-tech worker (H1-B) visas this country awards each year
(and the industry's attempts to increase the limit on those visas).
Companies are willing to expend the resources to find, hire, and process
skilled foreign professionals because their knowledge is supremely critical
to the success of the organization.
Smart managers can acquire access to the knowledge they need, while still
getting to the market quickly through integrated outsourcing. Identifying a
business partner truly capable of delivering on the promise of a speedy time
to market can be a daunting task. Conversely, selecting the wrong partner
could cost you more in time, money, and resources than just going at it
alone. The characteristics you should look for in a world-class technology
and services partner include a diverse technology portfolio, global reach,
world-class manufacturing and research facilities, and the commitment and
support of dedicated management.
DIVERSE TECHNOLOGY PORTFOLIO
Total integrated outsourcing is not merely contract manufacturing or product
delivery. To add true value, an integration partner must have the ability to
assist with product design, testing, agency certification, and even
lifecycle management. Beyond engineering skills, a true partner should also
be able to provide the high-quality technology building blocks or components
that you will need to turn your good idea into a complete solution. Not only
do you want a partner who can build the technologies and tools you need, you
want one with standard technical assets already in hand. Since every
integration engagement is unique, a "perfect fit" calls for an
outsourcing partner with a full suite of product and service offerings. They
should have enough purchasing power to procure those pieces at costs that
will ensure a competitive market price for the end product.
A partner with maximum leverage will actually design and produce many, if
not most, of the vital components of your solution -- offering much greater
control over variables like cost, quality, and product lifecycles. As a
result, they are far less likely to be surprised by unexpected technical
difficulties during the design, build, and test stages of the program. This
type of partner has ownership over much more of the solution and can ensure
interoperability and timely delivery.
Too many partners and relying on the ease of "open" systems is
another area where some companies falter. If several different partners are
selected, each could be on a separate schedule and could prioritize your
project differently. You may be left holding a partial solution, waiting for
some partners to deliver while others have already done so. Who has the
responsibility to fully integrate, test, and manage multiple technologies?
Open systems are guideposts, not a fixed path to interoperability.
If looking for the simple building block that your solution needs and
your core competency includes the balance, then "catalog
engineering" is a good bet. If you need multiple building blocks or
assistance in other engineering, program management, or manufacturing
expertise, then catalog engineering can cost your program a bundle. You
should turn instead to a partner in integrated outsourcing.
Equipment spending in the international telecommunications market is
expected to sustain robust, double-digit growth through 2004, this according
to the Telecommunication Industry Association's (TIA) MultiMedia
Telecommunications Market Review and Forecast. Telecommunications is a
global market. Any company that competes in such a market will of necessity
be a global company. The ability to project a global presence is one of the
most valuable services a total solution integrator can provide. In fact,
many small telecommunications companies are simply research and development
entities. The integrated outsourcing can become the outsourced mechanism for
product fulfillment on a global scale. Only a partner with worldwide office,
manufacturing, integration, and support facilities is equipped to carry out
MANUFACTURING & LAB FACILITIES
Any company considering the total integrated outsourcing model will need a
partner with world-class facilities and quality standards. Integration and
manufacturing facilities must meet or exceed all international certification
standards such as ISO. The facility should have well documented procedures
and controls for all of its manufacturing processes. Operators should be
certified to work on specific products. Each operation in the manufacturing
process should also be certified. The performance of individual operators
and operations should be continuously monitored, tracked, and analyzed for
MANAGEMENT FOCUS & COMMITMENT
It's almost impossible to overstate the critical importance of a total
engagement in the success or failure of a program. Such a project should
never be undertaken without the demonstrated endorsement, commitment, and
support of the integration partner's management team at all levels.
The engagement customer should expect and demand a direct first-hand
relationship with the potential partner's management team. Further, there
should be a well-defined and specific process for problem resolution and
management escalation in place from the outset.
The successful track from drawing board concept to market reality is almost
all about solving problems, overcoming obstacles, and getting it right the
first time. That's why integrated outsourcing. in concept, makes so much
sense. Selecting the right partner can give you a "virtual
division" with cradle-to-grave accountability for product development,
production, and lifecycle management.
To gain access to potential partners, one must take advantage of the
networking and alliance development promotion programs available through
various industry associations, such as the TIA. As reliance on the Internet
forces networks and enterprises alike to restructure to enable new business
capabilities for their customers, these associations focus on building
market awareness and helping members partner to shorten product development
and product sales cycles. No one goes it alone these days. Partnering with
companies for product development or for marketing and sales enables you to
"get there first with the most." In this very volatile market, we
all have the imperative to do just that.
Fred Yentz is vice president & general manager, Enterprise Systems
Division, for RadiSys Corp. Fred is a member of the TIA board of directors
and chairman of the association's Global Enterprise Market Development
Council. He recently received TIA's Carter Award to recognize his
outstanding service in the public interest in the field of
telecommunications. Please visit the TIA Web site at www.tiaonline.org.
RadiSys designs and manufactures
building blocks enabling next-generation Internet and communications
systems. As the leading independent provider to OEMs, RadiSys delivers a
time-to-market advantage in a tight "virtual division"
relationship with its customers.
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