While few technogeeks may have useful business skills, even fewer suits have the technical skills to see danger in outsourcing business processes. Here’s another case of using technology to alienate and lose customers.

Company A’s suits determine that market pressures require them to establish a new service to be like their competitors. But it takes time to find the technical talent, design a system, integrate it into the back office and production systems (note the plural), and as everyone knows time is money.

Company B has developed a service that seems to meet the needs of Company A, and the fact that it already exists and is used by peer companies is a major advantage. Even better is the price: no up front development costs, fixed monthly fee, a small one time charge for configuration that can be amortized. All that’s good and true about software as a service. What’s not to like?

Company B, in turn, has all of its customer support done by Company C, which also is a service. All it needs is some help information, which can be provided by the subscribing companies with a standard document specification that is used to build a Knowledge Base.

Life in the cloud is good. Until one of Company A’s customer has a problem, any kind of problem, that they can’t solve themselves. They call what they are led to believe is Company A’s support line, not knowing that Company C is actually providing the support, through an unknown and invisible Company B. Among other things, the view of the customer’s information as seen by support (Company C) is not the same as what the customer can see for themselves online, using Company A data. The customer has no idea that Company A is becoming a virtual company, or that some of its services and products are actually being done by other companies.

So the support person at Company C, whom the customer thinks is an employee of Company A, has to be the whipping boy for both Companies A and B. Company A happens to be a bank, and it didn’t take the customer too long to figure out that the bank did not have control of its back office. The customer took the business elsewhere.

Company A, removed from these little exchanges with Companies B and C, doesn’t have any feedback that would set off alarms. Word of mouth advertising is powerful when establishing a reputation; it is even more powerful when destroying one.

The suits may have saved a few bucks with their brilliance, but they soon move on to bigger and better things. Someone else inherits their train wreck.

© Copyright 2009 Chuck Brooks for FutureWare SCG

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Tags: cloud computing, management mistakes, outsourcing, saas, software as a service

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