If you’re like many companies that are outsourcing business processes and evaluating your technology options, then you’re probably buying products and services separately. In other words, whether you’re outsourcing Accounts Payable, Order Management or any other process, your provider would typically deliver a made-from-scratch product topped with best practices and complementary services to meet your specific business needs.
In this approach, products bring standardization, fast deployment and vertical-specific solutions to certain audiences with clear-cut, predictable needs. The services and best practices, on the other hand, are flexible, highly-customizable and can be aligned to business goals.
However, if you opt to pick and choose the best of products and services, then you face a time-consuming, expensive and duplicative endeavor. In addition, you may face accountability issues among parallel stakeholders, and you could miss out on the real objective of achieving business outcomes. Even more, amid today’s tighter IT budgets and mandates to sweat existing assets, an initiative to start from the ground up on new technology products is far from preferred. Instead, speed and cost are critical.
A new approach
That’s why, when it comes to products and services, buyers increasingly are seeking the best of both worlds– a combination of operational and process best practices that are tied to business outcomes. Instead of spending your energy trying to make products and services work together, it’s time to have a different conversation with your service provider. How can you combine the elements into a single solution that provides a flexible, fast, mix-and-match platform that accommodates your unique processes?
This kind of solution, called an “asset-led approach,” is the new normal of business process outsourcing. The “assets” in this case are prebuilt, configurable components that, like Legos, can be mixed and matched-and very quickly deployed-to meet your needs. Assets can be processes, data sets or technologies, all of which enable business users to perform tasks. In essence, assets are a culmination of technology, best practices, ease of deployment and codified operational best practices.
Examples: From assets to outcomes
With an asset-led approach, you don’t have to wait for your provider to code new solutions from scratch for each project. Instead, you can purchase customizable, interchangeable assets that have built-in best practices and process standardization. Assets go beyond mere operational delivery to drive specific objectives.
Consider these key advantages:
- When predesigned assets have embedded best practices, they can be mixed and matched to achieve the goals of a process. For example, a manufacturer of electronic equipment wanted to book orders faster to improve customer satisfaction and recognize revenue more quickly, while reducing bad debt and sales returns. The company achieved its objectives by using the following assets for Order Management:
- Data integration asset. This asset brought the sales order information from the enterprise resource planning (ERP) system into the workflow for faster processing.
- Validation assets. These assets were configured at two levels. First, they checked for the completeness and correctness of data in the sales orders. Second, they used credit-check rules to confirm that orders were from creditworthy customers, thereby reducing bad debts.
- Exception management assets. These assets resolved exceptions for faster processing of incorrect and incomplete orders.
- Prioritization and allocation assets. This set of assets was configured to ensure that transactions were processed to meet payment and delivery terms, which led to improved customer satisfaction.
- Data integration asset. This asset communicated with the warehouse module of the ERP to prevent stock-out and delays, which in turn would lead to better customer satisfaction and reduced sales returns.
- Assets also can be threaded together, with one asset serving as an input or a configuration parameter for another. For example, a steel manufacturer in Europe wanted to improve vendor satisfaction by making payments on time, while preventing cash leakage due to payments before the due date. The company achieved these Accounts Payable objectives through the following assets:
- Input management and indexing assets. These assets were configured to index incoming invoices based on information from input sources such as electronic data interchange and optical character recognition.
- Data integration assets. These assets were configured to incorporate vendors’ master information from the ERP.
- Validation assets. These assets validated the master data against the invoice data.
- Data integration assets. The process again tapped these assets to validate each invoice, process the data and post it into the ERP.
- Exception management assets. These assets, which can be configured for different exceptions and resolution rules, managed all the fallouts of validation and posting.
- Prioritization and allocation assets. These assets, which determined due dates based on the vendors’ master information, were configured to ensure timely payment of invoices that were neither early nor delayed.
- When you have a change in business rules or process goals, an asset-based strategy ensures a faster transition while reducing risk. For instance, when an American beverage manufacturer started operations in Europe, it was using payment-related processes based on U.S. compliance regulations stipulated by the Financial Accounting Standards Board. Thanks to available process assets, the company was able to quickly change its payment processes to align with the relevant regulations of the Foreign Corrupt Practices Act.
Getting into action
Compared with the traditional project approach, an asset-led approach is an easier, faster and more flexible route for meeting outsourcing objectives. So, for your next engagement, don’t look at products and services and technologies separately. Instead, ask your service provider about plug-and-pay assets, which are codified with best practices that can be quickly customized to accommodate you unique business nuances. This way, you can buy the business outcomes you want while continuing to drive efficiency and standardization in a faster and leaner manner.