Is Traditional BPO = (Platform minus on-demand application)?
Consider the following two situations for a client organization:
a) Using an on-demand application with the process execution outsourced to a different service provider
b) Is live on a business platform with a single service provider providing IT application & process execution
In both these situations the organization is using services of external providers for provisioning of technology application (infrastructure, hosting, maintenance, support, etc.) as well as business process execution (BPO).
Are the client expectations from BPO service provider in these two situations identical, or does the BPO service provider provide some ‘additional value’ to the client organization in either of these situations?
I my view, the BPO layer in situation (b), helps clients achieve much beyond simple process execution. The SLAs & metrics to measure process efficiency are similar in both (a) and (b), but the BPO partner is in a much better position to help client in improving process effectiveness in (b).
In a typical process outsourcing engagement, the BPO service provider is responsible for and is measured on process related SLAs & KPIs. The service provider is neither in a position nor is inclined to influence the usage of the underlying technology application by the client organization. The user adoption for the application, the degree to which the users adhere to standard process configured on the IT application and the nature & frequency of ‘exception processing’ – are all beyond the scope & control of the BPO service provider. In this case, the responsibility for improving the user adoption of the IT application and tracking the users who don’t adhere to the standard process & route exceptions for process execution lies with the client organization. All these result in sub-optimal usage of the technology application, and consequently the benefits that client anticipated from the IT application roll-out are not realized. This is where the BPO layer in situation (b) can contribute. The payout to the service provider in this situation is linked partly to the number of transactions processed and partly to the usage of the IT application. Also, some of the SLAs & KPIs on which the service provider is evaluated are tied to the application usage. So, the service provider benefits as the usage of the IT application improves. Here, the service provider typically configures the IT application as per industry best practices, so any deviation from the configured process (read exceptions) leads to inefficient process execution, for which the service provider is not compensated by the client. The exception processing is costly for the service provider for it needs to deploy additional processing FTEs to manually process the exceptions.So it is in the service provider’s interest that
a) all the functionalities of the IT application are used by client users (minimal manual processing),
b) more and more transactions are processed on the application (increased user adoption) and
c) the exceptions to the configured processes are kept at the minimum (adherence to best practice processes)
Essentially, the service provider is helping client in better adoption of the IT application and client is able to realize the benefits that the IT application promised in the first place.
