Convergence of Cloud, SaaS and BPO Services - the Future of Outsourcing
Cloud has caught the imagination of everyone i.e. companies (buy-side and sell-side), analyst, BPO vendors, IT vendors etc. and is seen as the next big thing. Is it really a revolutionary business model or old wine in a new bottle? I think it is high time we analyze and understand how the ecosystem will evolve to leverage the full potential of upcoming technologies to provide real value add to businesses.
Cloud Computing - Will it be pervasive?
While cloud is used generically to refer to public and private cloud, I think it is important to differentiate between public and private cloud. Private cloud - though it was not named as such - existed since the time of mainframes. In fact, if you remove the frills, the mainframe era was nothing but private cloud wherein all the enterprise data resided on the mainframe server and user had a dumb terminal to carry out the activities.
Public cloud is a new relatively new concept and so far has achieved very modest success. There are multiple concerns around public cloud based offerings but most important of them are the perceived threats of data security and loss of control which makes adoption of public cloud very limited among large enterprises. Large enterprises are talking about big plans for cloud but mostly focusing on private cloud. Only SMB segment is seriously trying to leverage the private cloud to reduce one-time cost and ongoing operating cost.
SaaS - Software as a Service - Why large enterprises are still reluctant to leverage it?
SaaS has been around for some time and has also achieved success in some functional areas i.e. CRM etc. which were new and upcoming areas at the time the SaaS model was coming up. ERPs did not have good solution to manage these functions and companies wanted a solution to manage customers in a new way, which helped adoption of the SaaS model. However, even the SaaS model has been a great success only in the SMB segment, and large enterprises still rely on on-premise ERP to manage their businesses. A recent Forrester survey of 2,403 IT decision-makers showed that only 15% of organisations plan to implement ERP SaaS before 2013. Two-thirds (10%) of planned implementations will use ERP SaaS to complement existing ERP on-premise services.
If you look closer, SaaS is actually a standardized application on public cloud and offers all benefits of 'Cloud' and also provide standardized applications to help organizations in standardizing and harmonizing their processes. If 'cloud' has to achieve larger acceptability it has to understand the reasons behind large organizations not adopting SaaS in a meaningful way. It may be difficult for proponents of cloud to define what exactly SaaS did not offer that they would bring in which would drive their success.
Convergence of Cloud, SaaS and BPO Services: - Future Model?
Business Process Outsourcing (BPO) services have matured and achieved significant scale from the time SaaS was initially launched and it is important to look at what configuration of technology and services will provide most benefit to clients and also address the concerns related to public cloud and the SaaS model. Large enterprises have already outsourced their processes and have achieved the first wave of cost reduction in the form of labor arbitrage. Now they expect BPO companies to offer value beyond cost reduction and also become a partner in their journey i.e. outcome based pricing. It is difficult to achieve these in the current operating model where BPO more often than not does not manage end-to-end processes and can't drive outcome effectively. However, a combination of Cloud, SaaS, and BPO Services provide BPO companies opportunities to onboard end-to-end processes on Business Platforms and manage it completely to drive business outcome.