It’s been tough, but I’ve been spending a lot of time thinking recently. And I’ve been thinking about risk in the supply chain. My mind has been focussed on this partly because it’s become increasingly important but also because we are giving presentations this week at the EDIFICE event on “Risk and Resilience” in the supply chain. My colleague Mark Morley is giving the key note address on how to build operational resilience into your B2B activities with a robust communications programme. This got me thinking about managed services. Does a managed B2B service increase or reduce risk? And oddly three or four pieces from our thinking process helped. So let me back up a bit and explain.
Supply chain risk is not new. But it’s importance or emphasis is. The recent intensity of catastrophic events has started to focus minds, organisations, consultancies and our customers on the best ways to analyse and manage risk. Of course risk, like supply chain is different for each company, but I’ve identified some broad themes. For example, when companies rank the causes of what I call supply chain failures or outages the most important is geographic catastrophe.
The second cause of these “supply chain outages” is Information Technology failure. For an IT service provider such as GXS this is scary. It seems at first glance that we might be the second largest cause of risk in the supply chain. But I dug deeper. And it’s not us. Our Managed Services business, as a whole, has been available for more than our contracted 99.95% of the time, so it did get me wondering how robust other elements of the information chain were.
During a couple of recent customer conversations it became clear that our service driven approach is exactly what is required and generally better than their current solution. This was comforting because if your main business is providing availability in B2B then you need to be good at it. You build your infrastructure to meet the service levels, you provide backups and disaster recovery as standard and you fix things quickly because you get “pinged” if you breach your response times. Some of our customers get 100% availability and therefore no outages. When we have issues we are fixing ninety plus per cent of them within tight timescales.
Of course another indicator that we were the risk would be if customers were leaving. They are not. The retention rate in our Managed Services business is also ninety plus per cent. But actually we are finding customers are coming to us to help address their risk issues. Indeed, where there has been a catastrophic event companies are moving to managed services. We have evidence that being global, resilient and delivering high service availability is very much at the forefront of people’s minds.
Increasingly companies are converting to managed services from software vendors or from in-house. My thought is it may be too risky for many to continue to operate B2B themselves and other vendors do not offer the required service. So I offer the following conclusion. An increased awareness of risk in the supply chain will drive many to determine that they would be better served with a managed service. Existing internal solutions may not be robust or flexible enough. It is also the case that many managed service providers operators do not offer the level of global capability that the new risk conscious enterprises require. Let me report back in my next blog on our presentations at EDIFICE and the feedback we get and see what others think.