The Internet is forcing companies to redefine themselves. One of the first places this seismic change hits is in a corporation’s business processes. David Swart believes the karmic lesson of the Internet revolution is to learn how to decrease manpower and at the same time increase profitability.
Swart, the president of Intell-a-Pro, Inc., a business process outsourcing (BPO) firm based in Amelia, Ohio, feels tools now becoming available on the Net will allow companies to reduce labor intensive areas in their business processes. “The whole goal of these tools is to save time, effort and money,” he says. The company’s motto sums up its unique selling proposition: “Redesigning today’s business processes for tomorrow’s profits.”
Swart learned the value of being lean when the Internet was just a group of university computers linked together to defend the free world during the cold war. Swart, who worked for a technology firm, was charged with starting contract programming firms from scratch for client corporations. Once the programming company was up and running, he would hand it to a branch manager of his client, who then integrated this company within the corporate fold.
His modus operandi was to learn the specifics of the project – typically automating a specific function within the business – and then pen a Cliff’s notes summary of the process. He would share this report with his programmers so they were well aware of the client’s corporate idiosyncrasies before they wrote a single word of code.
This work made Swart realize he was interested in the details of process design. Years of experience taught him that if he automated one piece of the process, the change created problems in others areas. He began to write a process methodology based on his experiences. “My goal is to get the results the client is after without leaving any holes behind,” he explains.
Working with a Core Group
In 1990 Swart struck out on his own, working by himself in his basement. He understood outsourcing, so he outsourced his non-core or contextual processes. He laughs when he says he could work more efficiently than his clients who were operating in big corporations.
Today, when Intell-a-Pro takes on a new assignment, Swart asks that the client assign a core group to him. He then teaches this core group his tools. Then this group has to do the next project on its own using the new management tools. The outsourcing goal is to have these employees be able to repeat the process again and again.
During the first solo mission, Intell-A-Pro evaluates the team’s progress and resolves any problems. “We hit the target numbers and then leave,” he says.
Swart says he only brings in three to five staffers for each assignment, utilizing the client’s core group to do the work. This integration helps retain key employees, he observes.
He notes that his way of outsourcing requires his buyers to gather data and then make decisions “very quickly.” Most corporations, he notes, have trouble making decisions. He modifies this foot dragging behavior by creating a sense of urgency.
Swart says one of his firm’s biggest success stories centered around American Axel, a General Motors buy-out. The assembly line was stalled by bottlenecks. After Intell-A-Pro examined its business processes, it made some obvious changes. One line had a 400 percent increase in production. “We wrote a very detailed success plan. We gave them formulas that they couldn’t screw up,” he says.
Sometimes the assignment is to figure out how to outsource a business process. “Most companies don’t have any criteria for outsourcing,” he has noticed. So Intell-A-Pro pens a document outlining how the client should go about outsourcing its business processes. “We have to educate them,” he adds.
Turning its Back on the ‘Old Outsourcing Model’
Unlike other BPO experts, Swart says he “doesn’t want to get into the ASP wars.” Instead, his company has “private labeled” its intellectual capture tool defining best practices. The process is called “Intelligent Process.”
Swart’s system stands in stark contrast to what he calls “the old outsourcing model,” which he says centers around suppliers “growing the billing” by continually adding people to the project. The Internet, however, is changing the outsourcing process. “I use the tools on the Internet to grow profitability, not manpower,” Swart says. Moreover, when customers learn how to use the Internet tools, “they don’t need the outsourcing provider.”
Swart believes outsourcing engagements will change. “They have to,” he says. It won’t be long before a buyer realizes it “doesn’t need 15 people here taking up space and spending travel dollars,” he says.
The chief financial officer is “the perfect buyer” for his type of outsourcing, says Swart. He typically works with the CFO because “my company delivers a financial impact to the business,” he says.
Intell-A-Pro has three business plans for its clients. Level one fees equal cost plus expenses. Level two is cost plus 10 percent, which is a break-even position for the Cincinnati company. Then, a gain sharing arrangement kicks in. The parties base the gains on results compared to established metrics.
Gain Sharing a Popular Option for Start-Ups
Intell-A-Pro’s third level is the favorite of start-up companies. This one feature 100 percent gain sharing. Dot.com companies select this option “because their burn rate is high,” he reports.
Lessons from the Outsourcing Primer:
- The Internet is forcing companies to become lean while at the same time increase profitability.
- BPO tools on the Internet allow the client to learn how to do business process outsourcing themselves.
- The old outsourcing model of increasing revenues by adding bodies will change because of these Internet tools.
- Teaching a core group the BPO methodology allows them to continue to apply the teachings long after the outsourcer leaves.