In-Depth

Dos and Don’ts of Globalized Analytics Initiatives (Part 2 of 2)

Five mistakes to avoid when moving any operations offshore

• By Mark Nelson
• 08/30/2005

Globalization affects every business today—from production costs to pricing to new market opportunities. Companies understand that there may be significant labor cost savings in other locations around the world, but cost savings are often only the first benefit of offshoring operations.

Last week we looked at the "Do's"—the best practices of successful global analytics and business intelligence initiatives. This week we examine the "Don'ts".

#1: Don’t believe it's impossible

The idea of utilizing analytics talent and resources halfway around the world can be overwhelming. However, a company should understand that the project isn’t as large an undertaking as it might think.

Collaboration with teams around the world is far easier today, and the world’s communication infrastructure has made working with someone eight time zones removed nearly as easy as working with someone eight cubicles away. The talent pool available offshore has expanded and matured over the last several years and is highly educated, fluent in English, and has deep domain expertise in mathematics and the analytics software programs that power business decisions.

Today’s reality is that other companies are using outsourced analytics as a way to achieve competitive advantage. If you don’t act, you will find yourself left behind. Almost anything that you set your sights on doing offshore can be done.

#2: Don’t look at outsourcing as merely a cost-reduction effort

If you approach outsourcing as a mere cost reduction effort, that is likely all you will get out of it. If you believe it can be something more, something that can transform the way you run your business, you can make significant gains. Expanding the available resources within a fixed budget by tapping into a talented (yet lower-cost) labor pool can improve data quality, reduce latency of analysis, allow for analysis at a more granular level, and develop more accurate predictive analytical models.

Look at outsourcing as a business enabler, not merely a labor-cost reducer. By building an offshore team with this in mind, organizations can leverage a knowledgeable, scalable pool of resources that enable your company to tap into new markets, more quickly analyze customer data and industry trends, and focus on innovation and delivering value to your customers.

Be clear about your long-term goals for the business and how outsourced analytics can play a role in achieving those goals—this will shift your thinking from traditional bottom-line cost-cutting to really creating new opportunities for driving revenues and top-line company growth.

#3: Don’t underestimate the value of security overseas

Companies are highly protective of their intellectual property—and rightfully so, as it is typically what makes up the basis of their product or company. So naturally, when the topic of outsourcing comes up, companies are hesitant to discuss letting anyone else deal with their propriety data and market approach.

Whether your analytics partner is in Cleveland, OH, London, England, or Bangalore, India, security is of prime importance. To satisfy concerns such as data protection, be sure your facilities or your partner’s facilities employ state-of-the-art security practices. Biometrics, employee screening, and global information centers, with teams dedicated to your company, are a must. Taking security seriously will help mitigate concerns, ensuring confidence from customers, employees, and stakeholders while enabling you to enjoy the benefits of work moved offshore.

#4: Don’t go it alone

Setting up shop in a foreign land can produce valuable benefits, but access to talent and navigating the local customs and laws can produce headaches. Stick to what’s core to your business, and let other experts and service partners deal with the headaches of foreign operations while delivering what you need from them.

Other countries have different tax laws and operational regulations. In addition, navigating the culture and customs of a foreign country can add significant challenges to the effective operations of a local presence. Subtle differences—social, religious, and political—can create additional challenges and hinder productivity. A local partner can help you find and buy office space; set up a culture and work procedure in line with the local culture; and learn how to find, hire, and keep the talent you need more quickly and efficiently.

More companies are taking a hard look at the cost/benefit relationship at play here. They're asking whether things can be better doing it on their own or with a service provider. By straying from your main business focus and getting into the business of setting up and running offices/centers thousands of miles away, companies open themselves up to problems that could hurt them in the long term.

Service providers have the ability to ramp up a team quickly and provide faster time-to-value. Subsidiaries or captives without local contacts or a strong local brand name (recognized and respected by the people you’re trying to hire, not to consumers back home) typically have trouble hiring and take too long to scale. In addition, service providers can offer a company more flexibility, as they have the ability to scale and immediately take on additional or unexpected work, where an internal organization does not.

#5: Don’t drive the decision-making down to the operational level

The benefits of a cost-effective growth strategy for analytics could extend beyond the day-to-day production challenges of your current team. It is crucial to have top-level executive sponsorship and commitment in offshore analytics initiatives. Sponsorship at this organizational level can focus the efforts of your team, help identify the best opportunities for immediate support and growth, and overcome some of the normal territorial reactions to high-end global sourcing.

Talent is talent, and in a global economy, smart companies figure out how to find and leverage the best talent to meet performance objectives. This trend is embedded in every successful company. As outsourcing moves from a cost-motivated option to a globalization imperative, the nature and approach to leveraging offshore talent is becoming longer term and more strategic—and access to hard-to-find analytical talent that can help the business make better decisions is topping the executive wish-list.