Focusing on the core: the importance of outsourcing

The replacement of dedicated hardware devices with commodity-based systems for broadcasting infrastructure has enabled the offloading of many elements of traditional broadcasting to third party suppliers in the form of hosted services and outsourced operation and management.

This has been a boon to companies, allowing them to focus their energy and resources on core business without the distraction of anything that falls outside of that boundary.

But the concept of “core business” applies to service providers as well, and the industry needs to develop a keen understanding of just what kind of business their outsourcing partners are in, and what their core business actually is.

Hard as it may be to believe, as little as twenty years ago, most large companies could have been described as “DIY enthusiasts.”

Not only did they own and operate their own factories and office buildings and data centres – they ran their own canteens, infirmaries, and crazy as it may sound, even built their own office furniture.

The early days of broadcasting were similar.

Companies like the BBC in the UK and NBC in the US built their own studios, mixing desks, and assembled a significant portion of the transmission chain as well.

This was a nascent industry, so it was do it yourself or do without. As broadcasting developed, and expanded from radio to television, an entire ecosystem of companies were created to support the growing industry.

Some stepped in to build components, others to connect the components together, and yet more to design the architectures that defined how the components fit together.

They all had one thing in common, however: broadcasting was their core business.

The move to software-based systems running on commodity IT hardware has completely changed this ecosystem.

For the first time in history, broadcasters are now relying significantly on suppliers for whom broadcasting is not their core business.

In and of itself, this is not necessarily a bad thing.

The use of standardised hardware means that there is a greater pool of people who know how to do basic repair and maintenance without needing broadcast-specific knowledge.

In most cases the software that provides the broadcasting functionality is provided by a company whose core business is broadcasting, which means that they have the expertise to provide the necessary application support.

This can make the development and support processes more complex, but with the proper management regime in place, this can be managed, and still allow broadcasters to get on with their jobs without the annoying distractions of non-core business.

Unnecessary distractions

An astute reader of this article (well, any reader) will have noticed and probably become quickly annoyed by the seemingly endless repetition of the phrase, “core business.”

I’ve become rather tired of typing it, actually.

But there is a point to it. The key point of outsourcing is to allow a company to strongly focus on core activities without unnecessary distractions, and to allow the market to make the best decisions about functionality and development roadmaps.

But what are the implications when the function you’ve outsourced is not part of supplier’s core business? Considering how small and idiosyncratic the broadcasting industry is compared to the general enterprise market, and how slow its rate of growth, the chance of this is extremely high.

If broadcasters are eager to offload non-core activities, we need to take note that the, “core business,” mantra is pervasive in the IT and networking hardware world, and companies are ruthless in shedding underperforming divisions and killing products that distract from their primary focus.

Even moderately performing products are abandoned if they don’t deliver the high growth targets demanded by shareholders.

As discussed in a previous column, we’ve seen development work on the broadcast-optimised ATM protocol dropped in favour of IP because of the relative sizes of the markets for each.

All we need to do is look back six years and recall the seismic impact on the post production world when one of the major computer manufacturers shifted the target market of their video editing package from professional to the prosumer, leaving at least one major broadcaster in the lurch just prior to the launch of a major new facility.

The fact the broadcasters usually must stay at least two versions behind in the update cycles of the two leading OS providers simply to be able to run mission critical software is a good indication where the industry sits on their priority lists.

Relying on external suppliers is not a bad thing in itself.

There are numerous technology companies to whom broadcast and media are core, and who work in collaboration with their customers to develop sustainable partnerships and to advance the industry.

Outsourcing some activities to more generalist companies can have advantages as well, if the relationships are entered into with eyes wide open.