Discuss, debate and exchange ideas on latest trends and opportunities in the Business Process Outsourcing (BPO) landscape. Deliberate on adding “business value” to clients, vendors, employees and various other stakeholders to enhance customer satisfaction and sustain long term partnerships.

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January 31, 2012

I like the best of both worlds...some call it choice, and some two timing!!!

As an ardent car lover I fancy the hybrids - they are efficient, have great fuel economy and are evolving - from the conventional hybrids right through the plug-ins. Essentially it is the synergy of how two or more technologies play out to deliver a seamless enhanced driving experience and deliver on a common goal. Likewise in the world of shared services, the concept of hybrid has evolved from merely a cost play to a strategic transformation initiative. The world is moving to the global business services model to drive efficiency and effectiveness. That is paving the way for co-creation and effective governance of insource and outsource model. For an organization, a hybrid setup does three things: provides access to world-class best practices and methodologies, allows an infusion of  standardization and improvement rigor through the insourced framework while allowing the flexibility to retain processes viewed as too risky.  Tactically, the presence of a vendor partner helps keep the captive honest, something that most captives may not like to hear...but which to my mind, is ultimately in the best interest of the organization. So why lose sleep agonizing over whether to make or buy?  Instead make and buy. Nothing wrong with having the best of both worlds, is there?

January 23, 2012

When the old customer service script doesn't work anymore...

You think any BPO model delivers pretty much the same kind of high-quality end-customer experience as any other? Or do you think a BPO must expressly build elements that are crucial to high-quality customer experience into its business model? A colleague of mine threw these questions at the CXO of a celebrated US credit card bank while taking part in an industry conclave. The questions seemed to have set alarm bells ringing in his mind. For, the CXO turned reflective. Like anyone in his place would be. Customer experience, as we well know, is the hardest for any BPO to build into its business DNA. Especially considering that many BPO providers/buyers take the old school scripted approach to delivering customer experience. Old scripts aren't working anymore. At their best, these process-standardization-based approaches might help the BPO meet regulatory compliance, that's all. All this said, customer experience, once built, is easier to sustain, unlike, say, your product/service differentials. My colleague, Vijay Narsapur's Point of View, 'Enhancing Customer Experience with the Right BPO Model' discusses how you can make the right moves toward enhancing customer experience and see your efforts paying off big time. 

Customer experience is a measure of "how a customer feels". Over the past year we have seen customers getting more and more demanding. Increasingly, they are requesting immediate escalation of unresolved issues and are using social media services like Facebook and Twitter to make sure their voices are heard. They are vocal about the smallest of changes to how they are treated. Customers expect super-fast responses and demand that company policies be waived in their interest. And their list of demands goes on and on. Customers today increasingly compare the service they receive not with what peers are receiving from a competitor, but with what customers are receiving from any best-in-class service company. Therefore, in matters like customer service, the competition for a telecom company no longer comes from the service levels its direct competitor is providing.

BPO providers/buyers must navigate the above issues as well as deliver business operational metrics for clients. Their challenges are manifold. They must leverage technology to ensure first contact resolution. They must have robust operational structures in place. They must move to outcome-based performance models. In short, BPO providers/buyers must put more skin in the game like never before.

Lots of thought points for BPO providers and buyers to improve how customers feel when their service 'touches' them. I particularly liked this nice little nugget in Vijay's Point of View: "Customer needs and BPO models may be thought of together - much to the profit of both". An inclusive revenue model that should interest both customer and shareholder, balancing all of their interests. What do you say?

January 17, 2012

Sourcing v/s Procurement- The tug of war

Organizations have come a long way, stepping away from considering the purchase department as an administrative function which is limited to order management, to the current scenario of strategic sourcing and procurement. Sourcing personnel have now begun being involved in the development of requirements, specifications and value analysis (for example, automotive industry leads through concurrent engineering, VA/VE programs perpetually). However, traditional organizations which have a common team which handles sourcing as well as procurement activities often find that the transactional procurement activities take precedence over sourcing. This leads to savings leakages, opportunities lost and compliance issues. The scenario could be because of various reasons:  time and capacity constraints, lack of skilled resources, lack of use of technology tools and non-standardized processes etc.

So, what are the ways out? A clear segregation between the transactional procurement and sourcing departments, outsourcing of the transactional processes and the non-critical activities/categories thus freeing time of the in-house resources to concentrate on more strategic work, and more use of technology like e-sourcing tools, process automation etc.

This New Year might bring in new challenges for the sourcing and procurement functions the world over, but with the best practices being put in place in the function, they would be well versed to meet the challenges head-on.

January 6, 2012

It takes two to tango - is partnering with procurement BPO vital to increase stakeholder satisfaction?

Imagine the typical sourcing and procurement (S&P) function of any firm to be akin to a large ballroom. Also assume all the stakeholders of S&P functions as the spectators who are interested to know how the S&P performs for them and of course want to feel satisfied with the performance. Now imagine that there are 4 performances lined up for the 4 main spend categories -Direct materials, Indirect materials and services, MRO, and capital equipment. After seeing the performances, the spectators are likely to either cheer or boo, depending on their satisfaction levels.

What are the possibilities here? Many varying performance levels as intuitively we can imagine. For example, there could be lot of cheers for say the Direct materials performance but not for others, and combinations similar to this. Another possibility could be that the performances are completely solo (i.e. by a captive S&P team which takes care of all 4 spend categories) or tango (i.e. S&P team comprises of a captive and procurement outsourcing firm's combination for all or few of the 4 spend categories). Various other possibilities also exist around the standards of dancing. The tango could be an Argentine tango or a Ballroom tango where steps, speed and co-ordination differ thereby providing a varying visual treat. The spectators/stakeholders can be qualified experts in both to evaluate the performances objectively or can just view a dance as a nameless performance with expectations of seeing something that is good as per their own standards/frame of references.

Sounds familiar and easy to relate to the usual but complex buyer-stakeholder interplay across most of the firms in any industry vertical (i.e. discreet, process or service)?  What do you think is the likelihood that performances most likely to be cheered would be solo or tango? Why would you think so and what would you recommend to any firm in general and some firms in some particular industry vertical to treat as vital to obtain an all-round, pleasing and non-varying performance?  Invite all to discuss these 3 questions.

January 4, 2012

Is my procurement BPO service provider overcharging me?

This question has come to me multiple times - sometimes explicitly from customers, prospects and from myself when I was an industrial buyer like them buying professional services.  Believe it or not, many procurement BPOs cannot answer this objectively primarily due to the absence of structured FTE (full time equivalent resources) computation methods which are statistically significant, and/or banking solely on their own experience and heuristics. Or it may simply be because they believe higher the better for their business.

A number of buyers themselves do not ask this question in RFIs, cost break downs or just believe on the procurement BPO suppliers' credentials to slip themselves into the comfort zone like "when a renowned supplier like M/s ABC has stated this, there would be some basis for that". On the other hand, various buyers are uncomfortable thinking "I am being quoted for 50 Sourcing FTEs and I feel that this is high. How do I validate that at RFx, during contracting and post business award stages? Although my management has left it to my decision but still...."

So what happens is that some buyers continue to accept higher quotes, hire more # of FTEs from procurement BPO service provider(s) than they should and still be completely ignorant about this problem that is eroding value. Some are ambivalent about this but don't ask this question to procurement service provider(s) and some do ask, but do not get a favorable answer because the procurement BPO service provider may not be driven by objective of creating right value for clients (e.g. a procurement service provider whose leadership is structured on Partnership model will often do this). Some buyers will choose the FTE model while they should have chosen transaction based pricing or outcome/gain-shared based pricing.

One of the CPOs of one of the world's biggest telecom firms asked me this in 2010 and I had the convincing answers - thanks to the S&P CoE of Infosys BPO Limited - of which I am part of.  We were down selected based on our BAFO (best and final offer made on clients' own assessed FTEs) and MSA (master services agreement) was being negotiated. I was conducting an on-ground due diligence in the US and found that in fact the client required 10% lesser FTEs than they had specified and we had quoted for.  So what did I do? Simple.  Just walked up to the CPO and provided him the statistical model that detailed at a 95% level of confidence that 10% lesser FTEs should be fine to meet the given procurement BPO processes, their complexity etc. for next 1 year but that would be required to increase by 30% from year 2 (they had large expansion plans in 2011-2015).

Any views from someone who is facing such a question?

January 2, 2012

Non-value adding procurement practices usually die hard but can be made to die quickly

In my almost 20 years experience, I have worked with multiple stakeholders (clients, suppliers, prospects, internal team members etc.) while executing Sourcing & Procurement related projects. One of the things that I found common across multiple busines verticals was the relatively slower or inactive state of response to modify a non-value adding Sourcing & Procurement processes like purchasing mismatch errors resolution (errors between Contract, PO, Invoice, Payment); following up for obtaining PO amendments; getting quotes on non-structured RFP templates; working with unclassified spend data (e.g. 9999999 item code; non standard item descritions etc.). The other thing that used to surprise me was what I call as the "high tech buy - low tech use" syndrome prevelant across many of the organizations. What this simply means to me is that organizations will buy best of the breed ERPs (say mySAP, Oracle), procurement applications (say Ariba Sourcing Pro, Ariba P2P) at a very high upfront price with long term maintainence and product support contracts, but use just 20 to 30% of their features (e.g. not creating Contracts within ERP but in papers; not leveraging category management workflow capabilities of Ariba Sourcing Pro but just conducting RFIs and RFPs). So I have often witnessed CIOs, CPOs, CEOs presenting proudly that Ariba Sourcing Pro has gone live during last 1 year successfully without even mentioning the adoption rate of its total features.

A seminal quote came from Albert Einstien who paralleled insanity with doing the same things over and over again and expecting different results (e.g. how do we get higher ROI from our investments is still an undisputed goal for any organization but while continuing to work the same old, less efficient, effective or best in class way). One thing leads into another is an old adage. So what seems to be a common, unsolveable problem continuing due to lack of attention, rigor, investment or all of these, is often a business expertise area and model for procurement BPO service providers. Ask anyone of them and they will provide you N number of case studies, approaches and frameworks to not only transform/modify such situations but also add significant value (e.g. sourcing savings, compliance savings, risk reduction etc.) in the procurement performance. I have myself conducted a number of diagnostics, designed solutions, supported stakeholders to implement as well as proudly measure and report these regularly. I do believe that this assesment can be and should be started anytime, in any country and at whatever stage of Sourcing & procurement maturity a firm is. Like mining, one can always find some new oppurtunities everytime one mines. Anyone wants to support or negate the view?

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