Business Platforms – Business and Technology confluence is a value multiplier
The current business cycle and liquidity crunch is forcing companies to bring a razor sharp focus on operational costs with capital reduction high on the CFO’s agenda. The traditional BPO model, where the process and people are managed by a BPO service provider where as the technology is still owned and managed by the customer has limited effectiveness, as the fundamental bottlenecks are not addressed. This has led to customer expectations of alternate delivery models that enable technology led transformation with minimal CAPEX.
Achieving seamless global delivery is often hampered by a complex, heterogeneous systems landscape unable to communicate with each other. Due to inorganic growth strategies or through tactical de-centralized IT investments, many organizations find themselves operating fragmented, heterogeneous enterprise resource planning (ERP) systems and home-grown custom applications. This presents a significant challenge for an organization seeking to maximize benefits from consolidation and standardization. The common approach of in-house consolidation to a harmonized single instance implementation needs signification CAPEX and long lead times, and produces limited results at an unacceptable cost.
To address the challenges mentioned above, Platform BPO has emerged as an innovative service delivery model, wherein end-to-end processes are offered as "Managed Services", on a standardized "Business Platform" based on a best-of-breed ERP solution, hosted, managed and maintained by the Service Provider. This involves implementing, and managing an end-to-end process that converges the ownership of the outsourced process, people and technology to the Service Provider and is aligned to the business and strategic objectives of the customer. This bundling of technology, consulting and BPO helps synergistic value creation, delivers transformational value through global scale, technology innovation, process optimization, and centralization.
This service delivery approach helps customers move from a CAPEX to OPEX model and enables higher value creation by moving from an input-centric model to an outcome-based model, and by combining internal capabilities with specialized processes and tools from providers. Depending on where an organization is in terms of process, people and technology maturity, savings between 20 to 40 percent on operational costs is possible by embracing the Platform paradigm.
Comments
This is awesome - can you give examples of when Infosys started this service and how many clients do you have in this space?
Posted by: richard savage | April 11, 2009 4:15 PM
Platform BPO definitely has interesting proposition for the clients. However, I feel that one of the biggest challenges that is to be overcome is to how to integrate Platform BPO into an organization that is already having a myriad of systems and processes.
For example, if the Platform BPO is only for F&A or for HR then how does it integrate with rest of the enterprise systems and isn't maintaining data across multiple systems (e.g. ERP for manufacturing, platform for F&A or HR, other ancilllary systems for reporting) going to increase the complexity with respect to maintaining interfaces, complexity of managing multiple applications etc.
I still think that there is a value proposition for Platform BPO and getting a perspective on the above challenge will be interesting.
Posted by: Anshul | April 12, 2009 5:31 AM
Richard,
Infosys has been offering "Business Platforms" for the last 15 months and we now have platforms in horizontal processes as well as vertical functions. The horizontal platforms that we offer are - HRO (multi-function HR), Source-to-Pay, and Order Management (Quote-to-Cash). The vertical platforms that we offer are Newspaper-in-a-Box (media industry focused) and Bank-in-a-Box (Banking services in a box across corporate, retail and treasury). We have customers being on-boarded onto these platforms in a number of these platforms across the horizontal and vertical offerings.
Posted by: Hariprasad | April 20, 2009 7:30 PM
Anshul,
You make a valid point. I have experienced that this is a consideration in the minds of many customers while evaluating Platform BPO. That said, what I have seen is that the "platform paradigm" is redefining the managed services model. The traditional managed services model is around being self contained and delivering processes that are stand-alone and can be decoupled. More and more the requirement is to integrate with the customer's ecosystem that will lead to maximum value being delivered. The advent of technologies such as SOA, standards-based integrations, etc have made it easy to integrate the platform with customer systems. In fact, I think this approach enables customers to adopt a best-of-breed or horse-for-courses strategy and go for solutions that best fit their needs rather than get constrained by technology considerations.
Posted by: Hariprasad | April 23, 2009 8:28 PM