Why BPO Buyers and Suppliers Changed Their Focus to Automating Their IT Infrastructures | Article

Tibor Beles, VP Sales, Global BPO, Oracle

Tibor Beles, VP Sales, Global BPO, OracleTibor Beles, VP Sales, Global BPO, heads Oracle’s BPO practice. Read why he thinks automating BPO can increase service provider sustainability by cutting cost and adding capabilities. He also discusses new BPO areas like pharmaceutical clinical trials and new growth in BPO segments such as fourth-party logistics; he believes service provider expertise as well as lowered cost are key to buyer adoption of BPO in these areas.

Q: Have BPO buyers changed their focus?
Yes. Today the focus is on automating BPO operations by changing the supporting IT infrastructure. This is the fastest way to gain efficiencies.

Q: Why is this a welcome change?
Automating BPO operations creates a significant improvement in service provider sustainability. It also helps their service delivery.

Q: What has been the biggest change in BPO in the last 12 months?
The expansion of BPO offerings into parts of the company that the market previously had thought was not capable of outsourcing.

Q: Like what?
Clinical trials in the healthcare area. Clinical trials are an important phase in the life science/pharmaceuticals space. BPO providers saw that pharma companies needed help.

Outsourcing clinical trials is an exciting trend because it goes well beyond the traditional horizontal processes like human resources or finance and accounting. It’s industry specific. It highlights the expertise of the provider. And it’s not just about cost savings. The pharma companies are outsourcing because of the savings the service provider can produce as well as its industry expertise.

Q: How does this differ from the most well-established areas of BPO?
In HR, for example, the cost benefit is still the primary driver to outsource.

Q: How does Oracle work with outsourcing service providers?
We have always worked with the providers to help them with their IT platforms. But now they engage us more often than before in determining how to set up their IT platforms for scale and sustainability.

Q: Is this a new mindset?
Yes. Suppliers have changed their perception of IT in the BPO equation. Now the suppliers are paying more attention to building reusable service delivery platforms. Before, BPO providers wanted to build unique products in house. Now they want to leverage a prepackaged solution. This changes how the providers are deploying IT.

Q: Why is this an advantage?
First, a solution like ours is scalable; suppliers can handle greater volumes as the business grows. Second, they have the ability to link to other packages.

Q: How does this change how Oracle works with suppliers?
This calls for a new approach. Now we have the opportunity to explain what we can do for them. We understand the industry’s changing needs. I see this as a mutually beneficial trend for both us and the outsourcing suppliers.

Q: How do suppliers innovate their service offerings given their service level agreements (SLA) and margin pressures?
Suppliers can use companies like Oracle to innovate their offerings. We are keen to have these conversations. We can help them outline their new offerings and then deliver the IT infrastructure to initiate them. In addition, our technology can help them provide better service and easier and faster adoptions. These lead to increased customer satisfaction.

Q: Does this trend apply to any particular group of suppliers?
Surprisingly, we see suppliers who work with the Fortune 20 and suppliers specializing in the small to medium businesses taking this approach. I believe this is a long-term trend.

Q: This sounds like the ERP adoption cycle of the late 1990s.
Yes, back then companies were adopting standard applications rather than building their own in house. Now the same thing is happening in BPO.

Q: Why?
Cost: Companies that have offshored are finding the cost savings provided by large arbitrage have become limited. For one, the cost of the resources has become more expensive. Foreign exchange rates have worked against Western companies. So they had to find a new way to reduce cost. Now companies can adopt better technology, which is cheaper to run than their in-house platforms. We help suppliers run their infrastructure with smaller IT budgets and more capabilities.

Q: How can you do this?
In the past, companies either wrote their own platforms or cobbled together existing products from a variety of vendors. This resulted in a high cost of ownership. It’s more cost-effective to have all the software as a suite from one vendor.

Q: Any other advantages beside cost?
Standardized technology also is a source of efficiency gains. For example, suppliers can set up service delivery in a shorter time period. And they can incrementally add capability easily. These reasons are why a standard platform is a better choice.

Q: What about new markets?
There it’s not about cost at all. It’s about introducing new capabilities as fast as possible. For example, fourth-party logistics (4PL) is a new opportunity for us that is growing aggressively. Another fast-growing area is loyalty and marketing management for consumer-focused businesses. These companies have to be able to handle volatile transaction volumes.

Q: How is Oracle innovating?
We are continuously adding to our own product offerings. Our customers can rely on our ability to add functionality to our existing productions. As the business world in the future changes, our customers will benefit from our flexible products.

We have an acquisition strategy for new products as well. We will keep adding industry-specific capabilities.

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