Discuss trends and ideas on the convergence of Infrastructure Technology Outsourcing (ITO) and Business Process Outsourcing (BPO). Find out how you can benefit from adopting a managed services delivery model, and learn more about how the bundling of consulting, technology and BPO services can transform your organization.

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February 15, 2010

Multiply your supplier collaboration effort using Platform

I had an interesting comment in one of my blog entry that  - we need to be cognizant of the fact that while supplier consolidation offer better negotiation power and control on supplies in addition of host of other benefits, there is another school of thought that drives de-risking of supplies by using more suppliers. While there’s no one-size-fit-all approach while attempting supplier rationalization (read consolidation)  in the present economic environment it is also important to have a rigorous supplier risk management plan in place while taking a decision on supplier rationalization. On one hand the idea of supplier rationalization is extremely effective in improving relationship with a focused supplier base and thus helping you in increasing your sourcing effectiveness, I have also seen instances where organization after consolidating its supply base continue the business-as-usual with the remaining suppliers attempts no improvement in collaboration, partnership or try to come out with a new road map and such supplier rationalization is certainly not good for organization’s health in the long term.

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January 06, 2010

Unified technology is vital for managing Supply Risk effectively

The rapid embracing of globalization during last few decades has created an extremely profitable complex network business environment and on the other hand it has also made the global supply chain extremely vulnerable to any adverse event even in the remotest part of the world. You may ask any CPO and one of their biggest concerns today is supply continuity without disruptions and organization’s ability to manage any supply disruptions. While prevention is always better than cure, in managing supply risk you actually need a balanced combination of both. Today’s supply chain needs to be much more agile and adaptive to both external & internal events and should have the ability to react quickly to any negative signals popping up anywhere down the supply chain. With slow recovery though the number of bankruptcies have been abated and there’s an ease on liquidity, today’s global supply chain is bound to face newer kind of risks in the form of trade barriers, sustainability regulations, fluctuating currency rates, volatile commodity market etc, which mean that we need to gear up our supply chain eco-system beyond the myopic view of supplier monitoring alone. There’s also a need to evaluate supply risk from a multi-tier perceptive for any risk event at supplier’s supplier supply also that can impact our supply chain, and so access to diverse and fragmented sources of supply information is absolutely critical.

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December 16, 2009

Should You Build, Buy, Host, Rent or Managed while addressing your underlying technology?

The emergence of Application software during last few decades has addressed one of the most common business dilemma - ‘buy versus build’ with ‘build’ clearly becoming a default and preferred choice for most of the organizations. However this panacea was short lived and organizations grapple with yet another challenge of heterogeneous and fragment technology landscape multiplied over years. This happened especially in supply chain area where these applications are unable to communicate with each other resulting in sub-optimized underlying technology. While consolidation of different technology applications into a single & common instance is the most common acceptable approach, which however is a costly endeavor in current state of capital crunch. The recent economic downturn has also seen the fast emergence of  yet another option – ‘Rent versus Managed’ riding on cloud computing wave and providing serious options to business and contemplate yet another model to keep pace with adaptive supply chain and remain competitive.

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November 19, 2009

‘Cloud services’ delivered through Platform Model

The fast maturing cloud computing concept is going to disrupt and change the way organizations would use and leverage technology as a strategic tool in managing their businesses. Organizations are seriously evaluating cloud applications along with underneath computing power due to its ability to provide agile, flexible and adaptable services. In its simplest sense cloud computing will eventually involve into like simply dialing into the cloud exchange, connect with right helpdesk support & gets immediate expert response on the phone and the caller will eventually pay based on time duration. However the significant business value really lies in the bundling of business services plus cloud computing plus cloud application through a third party which will  take cloud computing to the next paradigm i.e ‘cloud services’ wherein organizations would  look to offload their non-core processes to providers who can deliver the cloud services in the most efficient and effective way.

While there are many different ways these cloud services can be delivered, the two main conduits are ‘Public cloud’ and ‘Private cloud’. Public cloud typically is the service which is available to everyone with a standard offering and you pay a fee based on computing power usage while Private cloud on the other hand is available to specific organization only on a platform model. For eg. not anyone can plug into to spend analytics service provider say at Infosys cloud and can buy the spend report based cloud services from Infosys.  However the real test of cloud services provider would be their ability to evolve this platform model on a multi-tenant architecture. Shared infrastructure thus would not only bring economy of scale but would also be a good breeding ground in driving innovation due to its ability to get a real time access of customer behavior, business need and cross pollination of best practices within the private cloud and let organization drive non-core business processes managed through the cloud services using platform model.

October 30, 2009

Business Platforms are nothing but Managed Services on the Cloud !!

The different jargons floating around in the outsourcing industry for the evolving new  services model are Platform BPO, Business Services Cloud, Managed Services, SAAS, SAAS + BPO , Software on demand et al. As I had mentioned before, Business Platforms are not just bringing technology( read ERP) and BPO together, but bringing along with it a value-added layer of cloud based managed services. This means deep domain knowledge in an horizontal functional area and /or, vertical industry process area  is successfully configured and encrypted on to a technology tool along with hosting of the same.

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October 21, 2009

Business Platforms: Cascading Horizons in Outsourcing

Over the last 2 months, through my travel across North America and United Kingdom, I experienced clients are well into concept understanding, acceptance and wanting to try out the business platform model of outsourcing. Be it a Head of Shared Services in a large retailer looking for a HR platform, or a Global Head of HR looking for an integrated core HR and payroll Business platform , or a CPO of a large European bank looking for a centralized end-to-end procurement platform, the common driving factor is all about doing more with less. It is about conserving CAPEX dollars and undertaking large scale transformation with a partner who is willing to share the risk by providing a pay-as-you-go option.

As the green shoots emerge from the current downturn, client captains simply cannot afford to follow more of the old outsourcing model and have to try newer ways of optimizing business process & technology bundled together. Business Platforms is fast emerging to be that innovative alternative model, which can help in the bounce back and in driving sustainable business value. Some of the areas of business platforms adoption are in procure-to-pay, hire-to-retire, item data lifecycle management, order-to-cash and in vertical process areas like advertising order management in newspapers, customer relationship management in retail banking, customer billing in telco and claims management in insurance.

Business Platforms is that emerging model which can help clients cascade into the next horizon of outsourcing.

October 19, 2009

eAuction is just one aspect of eSourcing strategy

eAuctions erupted into sourcing scene with lots of hype later failed to live up to the high expectations, and organizations slowly realized that other modes of negotiations are equally essential as well to sustain healthy supply relationships and cost competitiveness. In many instances we have seen that the over usage of eAuctions ended into fiasco primarily due to lack of supplier acceptance and inability to cut down the cost beyond certain level. This has resulted into many organizations eschewing their eAcution tool and relook at traditional negotiation strategy like RFx, Cost model, Face-to-Face negotiations as well to drive viable & sustainable cost savings, which became important during these tough years when we saw a string of supplier bankruptcies resulting in immense supply chain risk. Having said that organizations in early stages of eAuction adoption curve, for instance in Asia region where eAuction penetration had been low due to cultural reasons, continue to reap initial success and saving benefits. Most of the eSoucing tools available in the market are pretty matured with stable functionality and differentiate very little in terms of attributes.

While evaluating eSourcing tool organization needs to consider two very important factors as well – one: Ease of use, two: Customer and training support. It is vital to keep following in mind while choosing eSourcing tool:
1.      Focus on business aspect than technology superiority: It is important to consider ‘ease of use’ and this need to be from the perspective of internal users as well as external users to accommodate change management on the supplier side also.
2.      Look for business value of feature than just availability: It’s a known fact that organizations typically use only a fraction of functionality available in any package. So the evaluation of solution should be based on business value the feature would actually be providing rather than just availability and complexity.
3.      Effective Customer Support: It is absolutely essential to have support from your eSourcing tool vendor in terms of high responsiveness and resolution of customer queries. This is a key to successfully conduct sourcing event and achieve the end objective.

Fortunately now organizations also has option of managed services for Sourcing which focuses on realized savings as an outcome rather than underlying eSourcing technology and is fast emerging as a generally accepted service model. It is typically on a gain share pricing model – a trend maturing fast in this space.

September 14, 2009

Pay-as-you-Use Pricing Model - for Managed Services

Imagine a Cell phone operator instead of charging you ‘per call’, charges you based on high monthly rental irrespective of calls you make or Utility provider charges you high periodic fee irrespective of units you consume. Now after getting used to ‘pay-as-you-use’ pricing model in these areas, any other alternate pricing model is just unthinkable.   As a consumer we are more comfortable and would love to pay ‘metered fee’ for the ‘service usage’ instead of just ‘service availability’. In fact much credit for the explosive growth of Telecom during last few decades can be easily attributed to user friendly innovative fee model which helped in taking telecom services closer to the mass consumers.
Platform service model is trying to emulate exactly that only by making its services available in much cost effective way for SMB segment – who often grapple with unpredicted demand and so cash flows. It allows companies to adapt to the changing external environment which could be either rapid growth or reduction in a smooth way. There are different ways evolving to define or meter the ‘service usage’ – for eg ‘$ spend’ in case of Source-to-Pay or ‘# Employee’ in case of HRO and all this make the pricing model evolution extremely challenging for managed services vendor from two aspect: One – Acceptance of pricing model plus price points by mass companies; two – Challenge for managed services provide to ensure a stable revenue. While it’s still a challenge for managed services providers to customize its services for ‘mass adoption’ and evolve an ideal ‘pay-as-you-go’ model, early drift indicates the future trend and the necessary need to come up with an innovative pricing model in this fiercely competitive services arena.

September 07, 2009

Ensure Green Purchasing thru Green Technology

Green purchasing has shown excellent resilience during current tough economic time and delivered value through sustainable cost savings thereby breaking the myth that – It’s a social obligation and so you have to necessarily pay an extra premium. There are three most important aspects to be considered while detailing out policy for green purchasing – social obligation, environmental impact & economic benefit. Of these the latter – which is directly related to the cost equation needs to be broadened for life cycle costing approach , so the  cost equation not only need to capture cost for energy, waste and duration but also additionally include cost for  repair & maintenance, disposable effort, health & safety compliance thereby offsetting any potential financial and environmental risks to the organization in today’s increased regulatory world.

We have noticed that most of the organizations assessment of carbon footprint is mostly limited to ‘organic buying’, ‘local buying’, ‘eco friendly or 'energy star certification’ and reason for this is that there’s no universal criterion which can be applied to every situation. Buyers need to define green policy for each spend category keeping following broad criteria in mind:
- Look for energy efficiency
- Avoid hazardous, toxic foot print in the product or services
- Conservation for heat, light, water and other natural resources
- Look for refurbishment and recyclability
- Easy disposability like bio-gradable
- Leverage technology automation

This brings us back to the most debated aspect – How compliant your purchasing processes are?
Unless organization leverage technology to embed green policy into its purchasing processes- like green specification & standards, green selection criteria, life cycle costing approach, green clauses in contracts at an enterprise level, it is difficult to comply with green purchasing commitment. It is extremely important for organization to leverage the green technology – eSourcing, eProcurement and eAccount Payable  (which avoid paper heavy manual processes – saving tones of paper) thereby making its purchasing processes not only more effective & efficient but would also ensure complying with green purchasing policies at an enterprise level.

August 27, 2009

Next generation BPO: will drive on tailored standardization

It is now by and large evident that the next generation BPO will happen on more complicated and knowledge based process outsourcing in a much shorter time span, and organization’s objective would be to attain transformational benefit rather than cost savings alone. The ongoing recession has brought some method in the madness towards outsourcing rush wherein service providers are being challenged to articulate value proposition beyond ‘cost savings’ alone as a long term strategy. Today we are seeing plethora of solutions mushrooming in the provider’s offering list even if they are not solution in real sense. The next generation BPO solution has to primarily address:

-‘Standardization’ to drive savings through shared service model from a low cost location and this invariably can’t be achieved unless the underlying technology layer is seamless
-‘Tailoring’ to address client specific nuances in terms of process, language and skills in an integrated fashion to enable client become more agile to external environment.

Standardization and Tailoring, though sounds conflicting necessarily needs to be in optimal balance and its right mix is key to the success of next generation BPO solution. This would also mean that service providers would need to have a good handle on both process and technology while executing outsourcing for much needed aspired transformational benefits.

July 29, 2009

How Source-to-Pay platform can help you achieve transformational savings?

While leading economic indicators are showing sign of slight recovery there’s still a long way to stabilization of economy and get over current uncertainty. Smart organizations are using this challenging environment as an opportunity to drive some of the tough transformation changes while outsourcing which otherwise would have been difficult to implement. Such transformational changes invariably require overhauling of existing process and underlying technology layer to achieve savings beyond traditional ‘lift & shift’. Endured by various hype & bust cycle over last two decades, organizations today are more sensible when it comes to drive the transformation changes instead of looking for panacea to the problems.  Platform BPO being a new concept is going through initial hype cycle and so also need to cross the chasm of some of the glaring expectation gap. Organizations need to evaluate this as an integrated combination of both ‘process’ and ‘technology’ in a synergistic way instead of evaluating alone on just process or technology. If any one of the vital element is weak or ignored, it will fail to deliver the complete transformational savings.

Continue reading "How Source-to-Pay platform can help you achieve transformational savings?" »

June 30, 2009

Leverage your suppliers to drive innovation

With most of the supply management community focusing on ‘supply risk’ due to increased adoption of globalization and outsourcing during last decade, many are still missing one of the most positive and unprecedented opportunity, the current situation has provided to us i.e.  Drive innovation by leveraging intellectual capital of your diversified supplier base. With suppliers acting as an extended fourth wall,  organizations are in a state to increase their competitiveness by driving all important elements of cost, quality, time, responsiveness and technology in an innovative way. Organizations with better insights about their suppliers are in a better position to involve and collaborate with suppliers to innovate their products and services. Technology continues to become a key enabler for collaboration with extended enterprises in a supply management arena.

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June 22, 2009

Voice of Customer Analytics - a managed service offering for telcos to help combat recession

In the wake of the global economic crisis, firms across industries and geographies have come under tremendous pressure to reduce costs. Most have responded by adopting a 'Capex Freeze' and 'Opex Reduction' mentality, which has been evident in their spending decisions, including those involving their outsourcing partners. Communication Service Providers (CSP) has been no exception!

Against this backdrop, Analytics as a BPO service offering assumes significance, considering its potential to deliver quick and tangible Return On Investment (ROI) against relatively minor investments on the part of CSPs.

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June 18, 2009

What exactly should a Platform service provider really ‘own’? – Part II

Continuing from where I left last time, lets talk about ownership considerations for the Infrastructure layer. 

Infrastructure layer has three broad components – the actual hardware on which the application/s will be set up, the connectivity (with the client data centre & the process execution (BPO) delivery location/s), and the hosting services (data centers).

Continue reading "What exactly should a Platform service provider really ‘own’? – Part II" »

June 03, 2009

We must look at GREEN solutions.......

…Its been a crazy last 10 days for me travelling from Melbourne to San Fran…then to Chicago, Montreal, Salt Lake City, LA, Sydney, Melbourne and write this sipping on a coffee on Orchard road in Singapore before I head into a meeting which is focused on why Business Platforms (BPO) is the next generation solution as against traditional BPO…
Is that a real question?

Continue reading "We must look at GREEN solutions......." »

May 26, 2009

Big Bang with the BOX

In my recent interaction with a global client CFO of a large publishing company, he made a very insightful observation, as to how keeping things simple in this increasingly complex world can be value-adding. When I pressed him further, he went on to say, “how I wish I can have a service on tap which brings along business process, people and technology together with accountability for business results”.

At that instance, I realized that the CFO was looking for a magic pill  ala process-in-a-box solution for his needs. Business Platforms brings to life not only  horizontal processes like Procure to Pay but also vertical specific industry processes  as well.

BPO players like us  have started out a new business-line of making boxes, for example: newspaper-in-a-box , bank-in-a-box (for more  details on vertical industry boxes -watch this space) to provide an out of the box solution bringing together the various pieces of vertical industry process, people domain expertise and technology together.

Business Platforms is the box to success for clients and BPO providers like us.

May 14, 2009

BPO mantra for success: Tech-savvy BPO

When the BPO industry came into existence more than a decade ago, the industry growth was enabled by Information Technology (IT) infrastructure. Today, the IT layer has moved past enablement to deliver differentiated services to customers that enhance business value facilitated by business process excellence + lean (six-sigma) based process improvements multiplied by the power of IT, thus helping business value multiplication for customers by an order of Magnitude.

In the new Information Technology Differentiated Services (ITDS) BPO world, you will see two layers of new services:

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May 07, 2009

Business Platform Benefits: Part 2

I was posed with a question in one of the discussions, which I am raising again in this post. What should be the primary metric of evaluation for business benefit realization, for an enterprise which is on-boarding on the platform?

While I organize my thoughts let me put some numbers around the definition of the enterprise for more clarity in my thoughts as well the question, let a small size enterprise be less than USD 1bn in revenue, mid size ranging from USD1 to 10bn in revenue and large size be more than USD 10bn in revenue.

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April 24, 2009

Business Platform Benefits : Part 1

Business platforms should ideally be viewed as a logical extension of Customer’s enterprise. Although the unique delivery methodology would have customer’s business processes to be executed outside of its enterprise boundaries. This delivery methodology also ensures shift from a capex to a opex based operating model. There is also increased management focus on strategic initiatives, as transaction management of  the business process is now being executed on business platform and the responsibility of processes, application management and hardware provisioning has been transferred.

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