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InSource

I know, as of to day, the word insource is not in the latest release of Merriam-Webster's dictionary. Not yet!

However, all it takes is sufficient citations to make it to this publication. If enough people use the word with consistent purpose, it is noted (cited) and given enough usage the word is officially entered into our vocabulary. Well, most of the time anyway. Some words may never make it.

Insource will replace outsource. But did outsource gain official recognition? I believe that after two decades of outsourcing the time has come to start citing insourcing. Before we define insource, lets look at it's predecessor outsource.

You may not have stumbled over this word if you were not concerned with business models of the last couple of decades, or actively looking for this word on the world wide web. If you have been involved in business processes this word has grown into an industry. This is a large industry with over 100,000 companies in North America and millions of employees still growing at 25 percent a year which is worthy of mention. This omission from the dictionary doesn't reflect the use and popularity of the industry, just the posture it has taken. We do not talk about outsourcing a lot outside the industry because by nature the service is to appear transparent to the business process. So outsource will not get cited enough to qualify as vocabulary, and people will not read about this section of commerce in the dictionary. This particular industry is not much "into" being published, anywhere. So outsource as of to day, is not in the latest release of Merriam-Webster's dictionary. Not yet!

Note, that personal computer, internet and world wide web have hit the dictionary, so we can expedite Merriam-Webster when we all jump on board and cite up a storm. These were popular high profile additions to our commercial and personal way of life. These innovations were not meant to be transparent and do get their fair share of recognition and have rapidly entered the official status.

Although outsoucing has not hit publishing yet, and may not soon, I know it has been cited just about enough times, in my industry anyway. We have been neck deep in outsourced models for the last couple of decades. And like the 25 year old Personal Computer, business is starting to prompt for "what's next?".

Now here's the commercial side of the story. We have been capitalizing on the economies of "scale" and "specialization" using telephony and computing tools for some time now. Well let's just look at this picture a bit closer. I've had several wonderful past lives including manufacturing efficiency and performance studies down to the dreaded stop watch metrics. Add a dash of church and military discipline, and voila, the makings of a stanch efficiency proponent. Well then, the move to packet people in "like processes" and restrictively manage the packet is right up my alley. It's slick and cost effective. So we commercially can identify like processes (customer inquiry) where the process is to answer a customer question. Well at an overview level, a straightforward process. Accept the question, gather additional pertinent information, access company data, and provide the answer. So now if this is a disruptive random entry to your company, there are companies that specialize in doing just this process. It's their business and they are designed to be efficient at this process. If you were to send the queries to this company for response, you have outsourced this process. Imagine all the possibilities! Is there more to commerce? Seems there is.

The word commerce, much like the words hot, cold, small or large is a subjective word that conjures up different meanings to each individual. Have you ever noticed, it's not always easy to visualize what someone is saying? Or for that matter, writing. So here's my intent. To have you visualize the word insource as it sits in my mind, crouched ready to catapult commerce to the next plateau. That way you will subjectively know how pertinent my observation. Commerce, outsource and insource are then the three elements we need to visualize. Commerce is the name and a transformation from outsource to insource is the game.

Commerce, then, is the first picture to create. That is crystal clear in my mind. It is the greatest team sport in history! Teams compete. There are rules. You must keep winning to survive. Toughest sport in history. You must win following the rules or the cheating will eventually get exposed and destroy your team. Then you all lose. We have been hearing a lot about this group lately. So commerce is a team sport to be played by the rules with victory mandatory. Well now isn't that just crystal clear. At least it would be if we all agreed on the rules.

Relax, this is not an examination of the horizontal and vertical matrices of the rules of the legal department, the finance department, or the local, regional, national, and international bodies of regulations, standards and laws. Or, for that matter the hidden dimension of fair play, ethics and morality. That's what keeps commerce subjective on the world stage. In my world, sheltered as it may be, you play to win by the rules. Is there a lead rule? I believe so. Profit. No other reason to play the game! There are a multitude of other great dimensions that can be a good thing to do. The larger the pool of "good things" your team can accomplish, the greater the win, keeping in mind the winning metric is profit.

So now with commerce tightly nailed down, we look at outsourcing. Once again to keep the visualization crystal clear we will look at this from the door of my sheltered world. Outsource was not initiated as a program that hit the list of "good things" to do that would make the win even greater. This was a primal move to serve and protect profit. This was on the critical path of "must keep winning to survive". As such it must evolve with the same reverence as all critical path choices. Not to be taken lightly. But what was "it"? It, outsourcing as viewed from my vantagepoint, is the gathering of non-core business activities and releasing the performance of these items to other teams that specialize in this segment of the game. So once again, what is so complex about that? Here instead of heading down the rat hole of "rules" we could examine the mire of non-core. No thanks. Lets once again just stick to the who, where and when not the what and why.

Then simplistically outsourcing gathers a team's "to be orphaned" tasks and hands them off to a specialized team that excels in these tasks. Even I can see the potential for bottom line improvements in that. There are even some points for the "good things" pool. This handoff has brought employment and prosperity to geographical regions that truly needed the opportunities. Outsourcing then is a macro business process that meets all the criteria of being a true commercial advancement. So right about here, we should leave well enough alone, and go home. Not on your life! This was yesterday's victory. We must keep winning.

Should we then just tweak the outsource process and look for improvements. When I started we used to baby-step a process forward, simulate its potential and pray for marginal improvements. Now to win we must bulldoze ahead at Internet speed. Bit of an oxymoron here, but intentional. We do have to move quickly, but decisively, clearing the path in our way. It may not be in one foul swoop, but we must move forward and I believe that insource is not the reverse of outsource but an extension of a good solid path. So outsource was a commercial move to heightened efficiencies in the late nineteen hundreds. That's clear enough.

Insource, the next installment. Well here is where the view really brings out our subjective differences. Unlike commerce and outsource we are not looking at what "was there" or "is there", (both crystal clear to me), but what will be there. Clairvoyancy at its best.

Now we finally get to where I'm going. About time.

The evolved state of outsourced will push harder on technology and process to deliver all the bottom line results and "good things" benefits of to day and much more. Straight forward so far! Now would be a good time to examine not only the who, what, why, where, when but really the how. So insource is not a reverse in direction, but a fast-forward position. So don't go throwing reverse switches. We have created a telephony and computer infrastructure that works. Can it work better? Can our outsourced activities be more tuned to our existence? Would that contribute to profit, or just be a good thing to do?

Insourcing will contribute to profit. Insourcing will contribute to profit. And no, I don't stutter. Not on a keyboard anyway. Impossible to stutter with one finger. I just know that the golden rule has to be met before examing the other benefits. We are going forward to improve the bottom line and that is why insource will happen. There are additional market indicators pushing this direction also. Recent studies are starting to reveal Brand Breakdown. Once again in a summarized fashion, just having the recognition will no longer be enough to guarantee winning. On another front standards bodies like ISO are embedding new requirements on customer behalf that will change the complexion of acceptable processes. And probably most significant is the increased freedom and power of the consumer.(us) We can change a lot more than our hair color today, so business better listen up. That puts a fair push on the why, so lets accept the why and look at some of the other concerns. We could even say in "business" "everywhere" " now" and clear off the who, where and when.

So it's sleeves up time for the what and how.

The what

Well it would seem that if outsource was the removal and delegation of a process to a specialized company, then insource, would be simply to take the process back. Wrong. We are not going back. The process delegation added efficiency and still does. We need that improvement to stay. But we need more so we will have to advance. Lets first just fanaticize for a moment. We put all the benefits of outsource in the bank and maintain this advantage while simultaneously eliminating the drawbacks. Therefore insource is outsource without the disadvantages. Somewhere, probably buried, is a list of pro(s) and con(s) for/against the outsourcing actions taken. We dust off the list, and go back to work eliminating con(s) that made outsource less than ideal. Then my basic definition of insource is, that insource is an outsource with the con(s) eliminated. Even the not so apparent customer satisfaction failings that will be reflected in tomorrow's revenue numbers must be eliminated.

The how

We have come this far on the KISS principle, so let's stay with it. (Keep It Short Simple) The elimination of the con(s) is directly dependent on knowing the con(s). Especially identify the items that are eventually going to surface as financial impacts. Business processes are simple. The collective results get complex. What appears simple in one business area is causing serious negative impacts in other areas. The how cannot happen in isolation. Here I mean more than just the different company groups have to come together. I mean all stakeholders of the game, better get represented in this advancement. Company departments, vendors, competitors, regulatory organizations and customers. I put the customer last, least we forget.

These are all elements on the road to revenue. Here is where we must look. Given the basic metric is simple:

Revenue (minus) Costs = Profit

Once again, simplification by avoiding all the (pre and/or post) qualifications placed around profit. Costs are much more straightforward. Remove a person or building and eliminate the associated costs. Hold on to your revenue, lower the cost, and for this moment anyway, you have increased your profit. Simple enough. Removing costs increases profit. Outsourcing removed processes and demanded that suppliers provide lower costs. At what point does cost reduction also impact revenue? The con(s).

I often push a formula to extremes to enhance my view. So if I pushed costs down to zero, could I still generate the revenue? Not in any of the business models I've been part of. Somewhere down the line of cost reductions, we're going to impact revenue. The trick now will be to move down this path and know where and how to compensate. In the case of outsourcing our list of con(s) indicated the "bad things" of taking this path. Some of these are tied more directly to financial impact than at one time thought. New consumer freedom impacts the validity of yesterday's lists. Time to revisit these concerns. Get out the bulldozer. Technology!

Technology allowed outsourcing. Technology will champion insourcing. There are now options to explore. So we are going a step beyond using technology to lift a process out of our company. We want to use even more technology to reap additional benefits from the process. A small example. A computer company assigns their delivery process to a delivery company because this delivery company is very good and costs less than what it was costing the computer company to run their own delivery service. The delivery process is now outsourced. It costs less! An item of concern on the list of con(s) had been "the loss of process control". How true. Additional concerns detailed under this topic included isolation of buyer contact. Also true, buyers are contacting the delivery company looking for information. Or even more serious, buyers don't know whom to contact. Here is where we move forward. The computer company can outsource or delegate the process, but they must insource accountability. The delivery company has beautiful technology with handheld electronic input devices and satellite tracking and reporting systems so sophisticated that a "minute by minute" movement path could be plotted if asked for. But they are in delivery. Their systems tell them how good at delivery they are. The original transaction was a buyer bought something from a computer company. The buyer will be pleased or dissatisfied by the completion of this transaction. The superb delivery statistics of the delivery company is not the key factor. Here is where the theory of insource states the computer company owes the buyer an unqualified, "our issue we will correct it". The delivery company's technology and all processes must lead us back to basic accountability. More often than not a buyer expects the seller to answer for their product or service. Yes, efficiencies must be factored in, but not by leveraging accountability out.

In staying with this model then the computer company is not going out to buy delivery vans again. But the computer company better position itself to deliver critical buyer information in exchange for pertinent company knowledge. When we reach this position insource has arrived. Then the output of outsource has to expand from process efficiency to process efficiency plus creative knowledge implement. So insource will be a knowledge base advancement. Most recognize knowledge as power; insource recognizes knowledge as profit. To insource we will capitalize on outsource efficiencies while moving data and assembling knowledge in our own domains. Buyer requests, concerns, feedback must reach the seller. Action based knowledge being returned to the source, not buffered or deflected by an open-ended process. This is profit driving customer information fresh from the "free" to chose cyber buyer of the 21st century.

So to insource we will provide all the costs benefits of outsource while contributing to the knowledge exchange that will become more not less critical, at this new speed of business.

So listen carefully for the word "insource", it will push technology for delivery of solutions to meet our new and advanced expectations.

Lee