F&A differentiators - Who cares!
Every F&A BPO service provider is confronted with the following realities:
- The BPO market is getting crowded / commoditized, if not already. Consider this - the latest Gartner Magic Quadrant mentions 17 players (13 couple of years ago), HfS BluePrint mentions 15 and Everest Peak Matrix outlines 24!
- Every service provider is trying to "differentiate" itself and position uniquely
When we analyze the offerings of service providers, four clear themes emerge which are consistently presented as "differentiators":
a. Better process knowledge / management practices / quality
b. Multiple delivery centers - near shore / offshore / inshore
c. Technology tools / smart alliances with leading software service providers
d. Better overall "value" ("low cost" / "highly efficient and trained resources" etc.)
After reading multiple points of view and hearing influential industry experts in forums, I am convinced that these are NOT the differentiators that will make any provider stand out in the crowd. In fact, I believe, a provider should not shy away from asking three important questions:
- Des the client really give any "weightage" to a service provider with more "differentiators"?
- Does the client really "care" about the so called differentiators?
- And if we have loads of the above differentiators, how are we ever going to make them relevant to a client and win a deal?
When does a differentiator make sense and how should we position differentiators?
Instead of focusing on creating differentiators, the focus should be on the only reality - the customer has a 'need', we have the solution and together we create a win-win situation out of this. The trick is to see these differentiators from the prism of the client's problem statement or need. And by doing so, we can recognize the real differentiator.
To a large extent, clients also exhibit the classic traits outlined by the great psychologist Abraham Maslow in his "Theory of Human Motivation".
For a client who has more pressing cash flow problems, people challenges and a broken IT system pitching in differentiators / transformation solutions that will provide value over 18-24 months is not so exciting. Rather, they will expect benefits that will start funding the larger transformation program itself.
We can classify client challenges / needs into the following three buckets:
Discrete items like tools, quality and benchmarks are NOT differentiators. A hospital chain cannot be successful by positioning its expensive, advanced scanning machines or equipment as "differentiators".
Diagnostics-based Solutioning is the future. Clients will increasingly lose appetite of preparing 200 page documents (RFP proposals) itemizing their AS-IS situation / problem statements etc. They will start expecting leading BPO service providers to run "diagnostics" (small scale / pilot / thin slicing studies) and provide heat maps and road maps of their existing and potential problems.
In short, drawing a parallel from the healthcare industry, providers will need to have a strong "Medical Diagnostics Lab" in the front end, smart staff (Doctors, Nurses and Medical Professionals) who are ably supported by tools, quality processes and a compliance framework operating noiselessly in the background.