BPO: What Does Good Look Like in 2010? Cathy Tornbohm

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Can BPO Bridge the Gap? • • • •

Hyperefficient processes? Drastically lower-cost processes? Both more efficient and lower-cost processes? Totally standardized processes?

Organization 2009

Organization 2010/11/12

Cost and Control Pressures Will Drive Global BPO Adoption Global BPO Emerges

Global: HR, F&A, Payment Services Procurement, Contact centres “Interwoven processes”

BPO Adoption

By Region: Human Resources By Country & Finance & Accounting Region: Contact Centres Insurance Drivers: Logistics Human • Business Agility Resources • Interenterprise By Country: Check Business Processes Payroll, Processing Drivers: Contact Centres •“Business Pressures” “Single process” • Process Automation • Sale of shared service centres Drivers: • Limitations of IT • “Business Pressures” • Availability of labor arbitrage

1995

2000

2005

2010

Time

BPO Hype Cycle Trough of

Peak of Inflated Expectations

Innovation

Trigger

Disillusionment

Plateau of Slope of

Enlightenment

Productivity

Key Issues 1. What does a good BPO strategy look like? 2. What does a good BPO provider look like? 3. What are buyer best practices in BPO?

A Good BPO Sourcing Strategy Makes the Options and Issues Explicit External Options and Scenarios Make External Options Explicit

Insourced SSC or Hybrid SSC

With or without underlying IT ?

Business Process Options

MultiDomain BPO

Comprehensive BPO

Shore strategy — on, off, near ?

Piece of Process BPO

Which provider — internal and/or external: specialist, generalist, novice?

A Good BPO Sourcing Strategy Explores the End-to-End Process and IT implications Payroll Talent Management

Procurement

Education and Training Benefits

HR

Finance

MDM Marketing and Sales

Process Layer Application Layer Infrastructure Layer

Ops

A Good BPO Sourcing Strategy Makes the IT Implications Explicit Taxonomy of BPO Architectures

People and Process Workflow

Application Layer

People-forProcess BPO

User Platform BPO

Provider Platform BPO

BPU

Provider

Provider

Provider

Provider

In-house

Provider on user's platform

Provider on provider's platform

Provider on provider's platform

Provider

Provider

In-house

Infrastructure

In-house

or Provider

KPO Evolution High

Analytics Driven Decision Making Depth of Offering Level

on

Limited

Client

Multi-tenant t en m t IP Assets s e v n I Methods, Tools, Accelerators

n r tu e R Knowledge

Delivery Structure 

Workers Transactional People for Process

User Platform

Provider Platform

BPU

Transformational BPU

A Good BPO Sourcing Strategy Reviews Current and Planned Efficiency Levels Example: Accounts Payable Maturity Model Process Maturity Level Effectiveness Measures

Level 1

Level 2

Level 3

Level 4

Level 5

Number of Invoices With Purchase Orders

Don't know

Working with consolidated electronic invoices

Number of Invoices Without Purchase Orders

Don't know

Utilizing automation tools to manage nonPO spending

Invoice Turnaround Time

Don't know

Less than 5 days

Number of Employees by Location

Don't know

Fully automated

Multiple highcost locations, decentralized accounts payable teams

Full source to pay management strategically managed across the end-to-end process

Don't know

1-3 in workflow

Location and Organization of Accounts Payable Processing Number of Accounts Payable Systems

A Good BPO Sourcing Strategy Reviews Current and Planned Effectiveness Levels Example: Accounts Payable Maturity Model Process Maturity Level Effectiveness Measures

Level 1

Level 2

Level 3

Level 4

Level 5

Invoice Management

Manual and messy

Lights-out invoice processing

Invoice Processing Economics for Manual and Electronic Invoices

Don't know cost of processing invoices

Cost per invoice less than $1

Percentage of Invoices in Query Management

Don't know

Operating fully automated matching with less than 5% queries

A Good BPO Sourcing Strategy Reviews Overall Business Impact and Goal Example: Competitor launches new …

Resolve

• Mortgage product • Insurance premium

Signal

Decision

rt Re

te

po

• Utilities package • Coffee promo Capture • Eco car

a tiv Ac

• Cell phone tariff

Respond

How does your BPO provider support your business objectives and activities?

Filter

Revise

Track

Awareness

Action

Sense

Implement

• Google app • Facebook site

Market Event

Business Response Cycle Time

Consider where are the BPO "Offshore" Delivery Hot Spots in 2009 and Beyond? Canada

Ireland

CRM, HR, F&A

CRM, F&A Hungary, Poland, Czech Republic, Romania CRM, F&A, HR, Procurement China Vietnam Jamaica

HR, F&A,

F&A

CRM

Mexico

Brazil

CRM, F&A

CRM, F&A

Costa Rica CRM, HR, F&A

South Africa

India

Doc. Mgmt.

CRM

CRM

F&A

Malaysia

Insurance

F&A Procurement CRM

Banking

Philippines

Argentina Chile CRM

CRM Current BPO "offshore" delivery location Up-and-coming BPO delivery location

F&A, CRM

Key Issues 1. What does a good BPO strategy look like? 2. What does a good BPO provider look like? 3. What are buyer best practices in BPO?

BPO Competitive Landscape: Not every supplier does every process! Process Specialists Human Resources • ADP • Accenture • ACS • NorthgateArinso

• • • •

Hewitt IBM Logica Mercer

Finance and Accounting • IBM • OPI • Capgemini • HP • ACS • Accenture • Steria • Wipro Logistics • Schneider • Ryder • Penske • Menlo Procurement • ICG • Infosys Commerce • Wipro Customer Care • Sykes • Convergys • Teleperformance • ClientLogic Document Management • Xerox • Oce • LASON • API

• • • •

Capita Ceridian Raet Conclusion

• Genpact • Infosys • Accounting Plaza • Odyssey • Transplace • IBM • Accenture • IBM • WNS

Vertical Process Specialists General Banking • Fiserv • Metavante • ACS • Accenture • WNS • FirstSource • iGate • HP • Infosys • Unisys Mortgage Processing • Fidelity • Firstsource • HP • ACS • Zenta • WNS • Skipton Bldg Soc. • Wipro • Unisys Transport • TransWorks • WNS • Unisys

Note: This is not a definitive list.

Check Processing/ Payment Services • First Data • Fiserv • Symcor • Unisys • Viewpointe • Federal Reserve • Metavante • Symcor • Bankserv Insurance • CSC • Capita • IBM • CGI • EDS • Perot • Fiserv • Exl Service • Accenture • iGate • TCS

Healthcare • McKesson • Trizetto • Misys • Perot /Dell • Accretive • Vision Health. • ACS • CGI • EDS • Convegys • WNS • CSC Telecom • Convergys • Amdocs • ACS • HP • TCS

The BPO Vendor Landscape Comprehensive F&A CRM Services

Comprehensive HR

Analytics Industry-Specific BPO

Accenture, ACS, Cognizant, Genpact, HP, IBM, Infosys, Steria, Sutherland, WNS, Wipro, VWA Atento, TCS, TeleTech, Sitel, WNS, ACS, ABM, Aegis BPO, HCL, BT, Wipro, 24/7 Customer, EXL Service, Firstsource Accenture, ACS, ADP, NorthgateArinso, Capita, Ceridian, Convergys, ExcellerateHRO, Fidelity, Hewitt, IBM, Logica RR Donnelly, WNS, TCS, Cognizant, Genpact, Wipro, Infosys, Patni

Accenture, ACS, WNS, Firstsource, IBM, Genpact, TCS, Patni, Syntel

Gain Insight for Provider Evaluation HR BPO Magic Quadrant 2008 challengers

leaders

ability to execute

Accenture IBM ADP ACS Hewitt Ceridian Fidelity HR Services NorthgateArinso Logica Convergys Capita ExcellerateHRO

niche players

visionaries

completeness of vision As of November 2008

From "Magic Quadrant for Comprehensive HR BPO," 25 November 2008

Gain Insight for Provider Evaluation Finance and Accounting BPO Market Scope, 2008

From "MarketScope for Comprehensive Finance and Accounting Business Process Outsourcing, 2008," 19 December 2008

Key Issues 1. What does a good BPO strategy look like? 2. What does a good BPO provider look like? 3. What are buyer best practices in BPO?

What Does a Good BPO Buyer Look Like? Five traits BPO providers Five traits BPO providers wish clients and prospects wish clients and prospects had! didn't exhibit: 1. Throw it over the wall! 2. Lack vision of endgame

1. Sense of sharing problems

3. Lack oversight and sponsorship

2. Clear requirements in RFPs

4. Lack baselines 5. Overselling benefits internally with aggressive expectations

3. Strategic alignment with business priorities 4. Baselines and data about processes 5. Patience

Build a Strong Team for Buying and Managing ALL BPO Buying Organization

BPO Provider BPO Executive

Senior Executives CEO, CFO, COO Relationship Manager

Account Manager Sourcing Specialist

Commercials

Contract Manager Global Manager

Global Manager "Process A" Global Manager "Process B"

Global Business Process Liaison Manager IT Manager

Delivery

Technology

Global Process Delivery Manager

IT Manager

"Process A" Global Manager "Process B"

Best Practice: Create a Strong Internal Team Buying Organization

Job description …

Senior Executives

• Gather data of critical metrics and operational baselines

CEO, CFO, COO

• External market analysis of key trends

Relationship Manager

• Compare and contrast sourcing model and BPO options Sourcing Specialist

Commercials • Evaluate pricing models

• Review supplier landscape

Global Manager "Process A" Global Manager "Process B"

Global Business Process Liaison Manager

Delivery

• Site visits to vendors, references and country locations • Analyze transition and ongoing management • Develop initial business case

IT Manager

Technology

• Communications management

Best Practices: Holistic GLOBAL Management Practices Global Divisional Buy-In

End to End Process Integration Model Construct Execute Monitor

Global Labor Supply

Global IT Strategy

For BPO Hot Today • Eastern Europe • India • Philippines • Ireland

Up & Coming • China • Latin America • Vietnam

• Master Data Management • Process Automation • Data Integration points • ERP Refresh Strategy • Outsourcing strategy

Multi-Domain Optimisation Piecing Together •Human Resources •Procurement •Contact centres •Finance •Vertical Processes

Process Dash Boards

Best Practice: Build a BPO Communications Plan Problem: If you don't get buy-in and baseline the service, the business may: a) Reinvent the wheel! b) Remember it fondly as being wonderful before you're outsourced c) Have unrealistic expectations - See transformation and innovation!

Remedy: A Communications Plan •

Talk about how to share business problems with the outsourcer

•

Must communicate the benefits and rationale frequently and cleverly!

•

Openly discuss teething problems and discuss mistakes

•

Praise and highlight individuals from suppliers and internal teams who are exhibiting desired behaviors

Recommendations  Establish a BPO sourcing strategy before evaluating providers.

 Know what "good" looks like through multifaceted measurement before you sign the deal — it can't be a "gut feel," so don't play a guessing game.

 Determine if BPO is worth it — establish current total cost of process ownership; then extrapolate over next three to five years to include currency fluctuations and relevant skilled labor pools.

 Create a "living" communication and collaboration strategy.  Assess internal sourcing skills — build a strong multidisciplined team.

 Build relationships with your partner — know the delivery team.