Two current trends driving the growth of business process outsourcing (BPO) are the trend toward outsourcing of packaged software applications and the trend for end-to-end hosting management of those applications. Within BPO’s segment of the outsourcing industry are such critical, non-core functional transactional processes as payroll, payroll tax services, and benefits administration. In companies that have made a strategic decision to outsource non-core business processes in order to ensure the company is focused on only its core functions, human resources and financial processes are ideal candidates for outsourcing.
Enter reSOURCE PARTNER, Inc. (rSP). An application service provider with an end-to-end solution around PeopleSoft’s HR and PeopleSoft’s Financials applications, rSP offers its clients across a variety of industries world-class business expertise and customer service.
“At home, I use Word and PowerPoint,” explains Randy Kautto, CEO of reSOURCE PARTNER, Inc. “But I probably know and use only five percent of the capability of that software,” he adds. “Companies are in the same position with robust ERP software solutions.” That is the starting point for the BPO work that rSP performs for its clients. rSP first develops an understanding of the client’s current business processes and an understanding of where the clients want to go with regard to those processes. Redesigning (or reengineering) the business process to get the maximum value out of a software application is the next step. The client may be a prospective new PeopleSoft software user, or it may be an existing PeopleSoft client that has made a decision to outsource instead of continuing to perform a non-core process in-house.
In most cases, clients enter a hosting environment where the application resides on rSP’s servers. rSP owns its data center and has its own network design. rSP then manages the application, providing day-to-day end user support; this includes development of a customized training program, and the actual training of end users. Hosting also means that rSP takes care of future new releases, upgrades and patches for its clients.Where BPO really enters the picture is when a client decides that it makes strategic sense to go beyond those services and outsource entire management of functions such as payroll, payroll tax reporting and benefits administration services to rSP.
In its operating center associated with the data center, rSP builds dedicated networks for its clients and also builds interfaces from the PeopleSoft HR and Benefits modules. This permits data to be entered by an end user at his or her desktop, and it will automatically be driven through to both the payroll side and the benefits side. In this manner, a seamless solution is provided for the client, so that only the “front end” functions are done by the end user. The benefits of this type of BPO are invaluable to such end users as managers and department heads. For example, a client’s end user may simply enter new employee data (or a change in marital status or home address for a current employee) into the system. The end user does nothing else. The data is then automatically reflected on both the paycheck as well as the benefits statement.
“Back end” services are also provided by rSP. An end user at a desktop in a client’s office can extract reports from the application. These include both standard PeopleSoft reporting formats, as well as customized reports developed through rSP’s support center. The end user then can access any information from the system to compile a report (on tax filings, overtime paid for a particular period, for example) or to answer employees’ questions.
What the Future Holds
Kautto mentions the current willingness of companies to explore BPO as a trend that projects growth in the industry. Until recently, it was not unusual for a company to explore BPO, but an enlightened business decision was often hampered because CFOs asked for opinions from department managers responsible for the functions. The managers’ first priority, of course, is job security.
The current success stories of results of BPO have changed management’s exploration of the possibility of BPO from an attitude of “should we do it?” to one of “we have made a strategic decision to focus on our core functions.” Once a company has decided to outsource non-core processes, Kautto explains, it is simply looking for a quick, yet reliable solution that will be flexible and affordable.
“What is really exciting,” Kautto says, “is the quickly emerging trend in the ASP (application service provider) area.” BPO transaction processing is a natural association with software application rental and hosting. Not long ago, he explains, a company that wanted to outsource its HR functions had to use one supplier for its payroll needs, another for its benefit claims processing, another for record keeping, and still another supplier to handle retiree pensions. With the increasing popularity of ASPs managing the software and providing seamless connectivity, companies like rSP are able to serve clients in a “one-stop” manner.
A willingness for many companies to include their financial systems as critical, non-core functions that can be outsourced is an important trend to BPO suppliers like rSP. “Companies being more willing to have suppliers host and manage applications of their financial systems is beginning to make sense,” says Kautto. “Although many will keep the operating part in-house because it is so important to their day-to-day, strategic operations, the support of the applications by outsourcing suppliers is beginning to happen.”
For many companies, the processes involved in HR and financial systems are side by side. The output from the payroll and benefits systems, for example, has to be able to feed into the company’s general ledger. Often, companies purchase both the HR and financial software licenses at the same time (or sequentially close in time) and implement them at the same time. Although rSP began its services with a core competency of a focus on HR processes, it has taken note of this important trend in BPO and has added a second core competency in financial systems and processes.
Finally, among many successful outsourcing relationships, there is an important component that they share. In BPO, it is advantageous for the supplier’s consultants to be business oriented and experienced. rSP’s ability to redesign a client’s business processes are strengthened by the fact that its consultants come from backgrounds with years of business experience in many industries, rather than just software or consulting experience. That knowledge and experience goes hand in hand with the benefits of software applications to provide an even greater strategic advantage to their clients..