How analytics, insights and innovation are revolutionizing the outsourcing industry
Since its mainstream inception in the 1990s, a comprehensive and successful business process outsourcing (BPO) program has consisted of three main elements: cost reduction, transaction processing of non-core functions (such as human resources and finance and accounting), and offshoring. The entire concept was built around cutting costs and the only way providers could truly differentiate themselves was through pricing. Success was measured by costs savings and reliability.
These parameters and value proposition are no longer good enough to solve the client pain points of today. BPO clients want more than a cheap and efficient service provider to cut costs on the peripheries of their operations. They want a partner who delivers sustainable innovation and value. They want a provider that can transform back, middle and front offices, to deliver improved business performance and to provide the kind of business flexibility that enables an organization to make those quick and efficient directional shifts that have become essential to maintaining a competitive advantage. Low cost is still an important goal, but strategic business impact is just as important if not more so. The modern parameters for evaluating a successful BPO program are measurable business outcomes, such as increased speed to market, increased revenue and improved customer satisfaction.
A major key to achieving these objectives involves using information that is accumulated through the BPO provider/client relationship to deliver improved outcomes, and being able to use and implement solutions in ways that promote efficiency and grow business outcomes for clients.
Today’s BPO providers and their clients are sitting on a mountain of data and untapped potential. The most successful BPO programs give providers the power to deploy analytics to extract usable insights from the immense stores of transactional data amassed during transaction-to-transaction, day-to-day client engagements. These insights are then used to generate new kinds of business outcomes – outcomes not commonly associated with BPO that deliver top and/or bottom line results. Results can include accelerated speed to market, optimized spending for significant, sustainable reinvestments back into operations, enhanced innovation, stronger customer service, improved talent management and top-line growth.
Effective use of analytics in BPO environments – through sophisticated tools and techniques for statistical surveying, root-cause analysis and process optimization – paired with focused industry expertise has a major impact on organizational performance. Providers should use descriptive analytics to help C-level executives gain an immediate understanding of what is happening with their businesses. And predictive analytics can provide these same executives with a clear picture of what might happen in the near or even distant future. The next step is to craft the right strategies, incorporating the vast volumes of transactional data a provider accumulates through its management of a client’s business processes, and the performance of those processes, over the long haul.
Helping to bolster analytics, technologies such as software-as-a-service and mobility are catalyzing BPO’s further evolution. Characterized by on-demand services applied across multiple clients through flexible software platforms and commercial contract structures paired with standardized processes, the modern and innovative BPO solution is emerging process by process. As these technologies mature and clients increasingly embrace process standardization, value creation and efficiency can only improve.
The new frontier – the next generation of BPO – involves online social networking. Individuals are increasingly using social media to build communities where members share best and worst practices, and discuss strategies for overcoming tough business challenges. People are constantly learning from one another. Social networking will become an extension of next generation platforms, helping to build networked communities centered on BPO-based processes. These platforms will be supplemented by integrated online communities linking client users and BPO provider staff. Through participation in the community, clients will be able to exchange ideas and benefit from each other’s insights about how BPO can help to achieve new business outcomes as well as shape the ongoing evolution of the on-demand platform and standardized processes.
Solutions that deliver business value beyond cost savings will only accelerate in 2014 and beyond. Companies are finding themselves part of or competing against highly networked systems of partners, customers and suppliers. Multi-company systems are able to innovate rapidly, leap frog the experience curve and quickly attain market leadership. These future networks will be enabled by cheap bandwidth, computing power and online collaboration platforms. Advances in technology provide the flexibility to quickly assemble processes and services that leverage business networks. Companies that choose to ignore the business network and attempt to do it on their own may find themselves increasingly isolated and vulnerable.
The ideal BPO provider is a partner, not a service provider. That provider will be able to take those mountains of accumulated data and turn it into an efficient and essential weapon that helps to fine-tune decision-making and grow a company’s bottom line. Those who do not take advantage of this next generation of BPO will find themselves being left behind in the highly competitive digital age.
Michael Corcoran is the Growth and Strategy Lead for BPO at Accenture