Discuss, debate and exchange ideas on latest trends and opportunities in the Business Process Management (BPM) landscape. Deliberate on adding “business value” to clients, vendors, employees and various other stakeholders to enhance customer satisfaction and sustain long term partnerships.

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February 28, 2014

Transformation in a fast-changing world

Infosys Process Progression Model™ (PPM) is the answer to address the needs of global organizations prepearing themselves to embrace change.

The world is changing faster than ever! Global organizations are preparing themselves to embrace this change. This calls for significant transformation in the way they do their business and the way they run their business processes. Functional silos are being demolished by moving towards process-based organization with a clear focus of achieving business outcomes. This requires agility, sharper focus, willingness to challenge the status quo and a structured approach towards business process transformation. Infosys Process Progression Model™ (PPM) is the answer to address these needs of time and the changing world.

PPM, is a holistic model to transform client's business processes. Infosys BPO has put together all the competencies with the rich experience of their practitioners in play to help our clients. This is a journey, a journey of transformation with meticulously planned approach coupled with measurable business outcomes. A recipe of success both for client's and Infosys BPO. PPM helps in transparently collaborating with the clients on the transformation journey with best of the breed solutions and execution. PPM delivers the promise of innovation and transformation of client's business processes.

Can Accounts Payable processes be 'Touch Less'?

This post attempts to identify few of the levers which can make the AP process automated, improve upon the overall-cycle time, increase accuracy levels and cut down the overall costs.

Accounts Payable (AP) processes were one of the early adopters of outsourcing. Being transactional in nature it is one of the typical processes which is picked up by the clients for outsourcing. Yet, managing this process effectively is a real challenge for the clients as well as the service provider. Of late, there has been a paradigm shift across the organizations in turning AP Department into a Profit Center. In line with this changed vision, clients are expecting service providers in bringing transformation ideas onto the discussion table on a continuous basis. This blog attempts to identify few of the levers which can make the AP process automated, improve upon the overall-cycle time, increase accuracy levels and cut down the overall costs

Levers which enable higher levels of automation in an Accounts Payable Process
We have experienced implementation of a particular point solution like an OCR engine or workflow solution or enhancement of a feature within the ERP improves the efficiency levels; however, it doesn't make the AP process completely automated. Also quite often, it is seen that the focus is just kept on implementing a particular solution and eventually the desire to achieve excellence gets lost post implementation. A combination of tools & technology, improving the ERP capabilities and bringing process efficiencies together can make an Accounts Payable function more efficient. ERS (Evaluated Receipt Settlement) is one of the most efficient solutions, where the invoices are automatically generated by the customer's ERP system (client in this case) against the approvals created by users. This eliminates the need to receive, OCR and process invoices of vendors. Some of these levers are listed below:

To summarize, a combination of technology, ERP and process tweaking can lead to a high level of touch less environment in an AP process. Involvement and commitment of the senior management is key in driving a leaner and efficient work environment. With the global business dynamics putting pressure on organizations to cut their costs, the focus on improving the automation levels is more relevant in Accounts Payable than it was earlier.

Securitization Business - A Prime Candidate for Transformation

Despite some critics blaming securitized and structured products for the Great Financial Crisis of 2008, recent trends confirm that the global securitization market is here to stay.

Securitization has been an integral part of global financial system for decades and despite some critics blaming securitized and structured products for the Great Financial Crisis of 2008, recent trends confirm that the global securitization market is here to stay. In this high risk, high gain business, regulators across the world are bringing in a slew of new legislations designed to usher in more transparency, accountability and stability in the financial markets.

Challenges in securitization business for servicers

  • Securitization business is complex in nature and the inherent risk associated with the business is very high, on account of the high value of each transaction and nuanced / complicated structure.
  • Due to the complex nature of the securitization products, most of the banks use MS Excel spreadsheets and MS Access databases to manage this business. 
  • Too much of paper work is followed and physical data storage is costly, cumbersome and unreliable.
  • Managing risk profile / risk exposure of the asset is complex and is prone to errors in a manual processing environment.
  • It is difficult to have audit trails in place to support the independent review performed over key tasks where the processes are manual in nature.
  • High dependency on individuals with good knowledge of the securitization operations is required to manage day to day operations smoothly. To compound matters, there is a huge shortage of skilled resources with knowledge of securitization products and processes.

Risk management best practices across the industry

  • Segregation of duty between front office, middle office & back office is critical to manage risk effectively.
  • Strong Compliance procedure and systems should be put in place to ensure securitization transactions are done correctly. Efficient documentation of the process steps and controls is critical to avoid operational risks.
  • Maker -Checker approval (4 eyes / 6 eyes controls) on all the manual processes should be followed across the process chain.
  • Spreadsheet models and access databases developed using right Relational Database Management System (RDBMS) principles helps avoid some of the operational errors.
  • On the job training is the major training approach followed across the securitization processes. There are some excellent training programs on securitization run by Chartered Financial Analyst (CFA) Institute, American Securitization Forum, Chartered Institute for Securities & Investment (CISI) etc. which are also used by many firms to augment domain knowledge within the team.

Solution to drive growth in securitization business
Considering the complexity of securitization processes, a robust control environment supported by IT systems and automated work flows to mitigate risk is highly necessary. However, the current set of Commercial Off The Shelf (COTS) products are either too specific to any particular securitized product e.g. Credit Default Swap (CDS) or Loans, or they do not cover the entire value chain.

To conclude, securitization industry is going through major changes and it's critical for banks to have a robust IT platform based operations structure to support this change and revitalize growth in business, while meeting the new regulatory requirements.

February 26, 2014

F&A differentiators - Who cares!

Instead of focusing on creating differentiators, the focus should be on the only reality - the customer has a 'need'.

Every F&A BPO service provider is confronted with the following realities:

  1. 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!
  2. 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:

  1. Des the client really give any "weightage" to a service provider with more "differentiators"? 
  2. Does the client really "care" about the so called differentiators? 
  3. 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: 


To conclude
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.

February 19, 2014

Achieve efficiencies in mortgage servicing with the right partnership

Here are some of the key trends and how servicers can leverage an outsourced service provider effectively

It's really an opportune time for discussing US Mortgage Servicing Industry as we participate in the Servicer's conference by Mortgage Banker's Association from 17th to 20th February 2014. As an operations service provider, I believe servicers and banks can achieve quite a lot of efficiencies by engaging in a partnership with players like us with deep expertise in the entire servicing value chain. Some of the key trends and how servicers can leverage an outsourced service provider like Infosys effectively are shared herewith:

A) Basel III norms suggesting caps for MSRs as a percentage of common equity to 10% from existing 50% seen Banks offloading MSRs to servicers.  As Servicers are acquiring MSRs in the markets, they look at increasing operational capacity: As a large and scalable outsourced service provider, Infosys can perform both core and default servicing process value chain thru its onshore and offshore delivery centers. This helps servicers to release capacity and acquire incremental work. With us, you will find a flexible partner who can scale operations within short-timelines & at the same time bring the necessary experience of handling servicing requirements for about 2 decades.

B) Strong focus on Compliance:

  1. CFPB: Redefining Servicing standards effective from this year focused on process compliance, defined norms of communications and transparency in dealing with the customers. This requires servicers to define and follow process rigorously. 3rd party service provider like us can provide rigorous operations management and monitoring which will ensure compliance of processes with regulations.
  2. OCC Consent Order: Setting overall guidance & baseline for default servicing and foreclosure processes specifically under broad themes of Foreclosure compliance, dual tracking mechanism, affidavit and notarization, document custody and retrieval mechanism, legal compliance and 3rd party vendor management.  This invigorates appropriate tracking of data, documents and process compliance. As an operational partner Infosys can help to consultatively baseline the processes and metrics that are compliant with regulations. 

C) Technology & Automation: Servicers continue to operate with legacy applications and they continue to face the problems such as difficulty of tracking data and difficulty of customization in constantly changing business environment. We provide tools of smart automation which provides improved compliance and ease of process management for the servicers.

At Infosys BPO, we have 2000+ Mortgage processors working with various Banks and Servicers helping to transform their processes by cost arbitrage and significant productivity gains. We look forward to interact with servicers and understand some of their challenges to provide and evolve our solutions in this space further.

February 13, 2014

Emergence of IT+BPO players in BPO

Increasingly, organizations are looking to have both process experts and IT experts work together to define a "Target Operating Model" that helps meet the organizational objectives.

Of late, there has been a significant increase in the IT+BPO deals in the F&A space with customers increasingly preferring vendors who can offer both IT and BPO in an integrated way. The increased focus on IT+BPO contracts stems from organizations' growing need for relevance and need to transform their businesses to counter the challenges arising from the dynamic business environment that they operate within.

When an organization decides to outsource its business services to a service provider, the organization inevitably has to go through change management. So, when an organization is looking to outsource their IT support like ERP roll out, application maintenance, etc. they choose to bundle it with the BPO services to effectively manage change. This also gives the organization the opportunity to have both process experts and IT experts work together to define a "Target Operating Model" that helps meet the organizational objectives.

Some of the benefits arising from an IT+BPO are discussed below:

Combining process know-how with Technology know-how:  Partnering with an IT+BPO service provider enables an organization to have access to industry aligned services that weave together consulting, enabling technologies, process best practices, automation, business analytics capabilities that drive meaningful business outcomes. This is specifically handy in cases when there is a new regulation and processes/applications have to be created anew to cater to the new regulatory requirement.
Business Process as a Service (BPaaS): With the advent of BPaaS, (Platform based BPO offerings) organizations can now have access to best in class technology without need for capital investments while reducing the overall operational expenses. BPaaS delivers business process services on applications hosted on the cloud to help reduce the overall cost of ownership (achieve economies of scale, reduce spend on technology infrastructure, reduce capital costs, minimizing license costs etc.). BPaaS, also gives organizations access to Mobility that empowers stakeholders to review and approve requests even on the move.
Access to New technology advancements:  An IT+BPO service provider has access to the process best practices and technological advancements that have come up in the specific industry or in the market. This can be easily extended to the client organizations. E.g. Robotics has been gaining momentum to eliminate repetitive transactional activities that can be automated. 
Automation and other improvement projects: Automations, technology improvements, customizations are some of the potential benefits arising from an IT+BPO deal.  With a technology service line, companies are equipped to cater better to the organizations' changing needs through development of customized tools/solutions to address the client organization's challenges. 
Single vendor performing F&A services along with ERP system support: The potential benefits arising from a single vendor performing F&A services along with ERP system support services are:

  • Better understanding of client processes, requirements, nuances resulting in accurate and quicker resolutions
  • Complete ownership of end to end SLAs.
  • Single and simpler governance model
  • Currently, clients pay IT vendors on number of tickets getting generated for support and typically pay BPO vendors for number of FTEs. However, with single ownership for both ERP and F&A, a client can contract for an outcome - e.g. vendors paid on time, or books closed on time, rather than focusing on tickets and FTE
  • A focus on ERP functionalities/automation to eliminate process inefficiencies. This might not get the required priority if there is a separate vendor performing the SAP system support. In our experience, most times ERP systems get implemented and there are deviations from desired outcomes. Once ERP is implemented, it is usually status quo with support applying patchwork to changes that ERP brought in. However, with IT and BPO being with one provider, the service provider can focus on eliminating some of the implementation defects that might arise during ERP implementation rather than instituting manual fixes to the ERP at a later stage, by leveraging business analysts who are well versed with the respective ERP and finance processes.

Based on the organization objectives and long term goals, companies decide to go with an IT+BPO service provider v/s a pure play BPO service provider.

February 11, 2014

BPR v/s ERP - Part 2

This is the second and concluding part of BPR v/s ERP. Click here to read Part 1.

Understanding the linkage between defined Critical parameters, defined Implementation model using a case study helps acquiring practical explanation for the "what", and "how" they contribute to help understand the thin line between ERP Implementation and Business Process Reengineering.

The success or failure of any ERP implementation exercise depends on certain key tangible and measurable variables. An integral part of any ERP implementation exercise is streamlining of business processes. However, the converse does not hold true. This gives organizations the option of adopting one of the following 2 scenarios:

  • Scenario 1: Implement ERP as business requirements and then streamline all business processes accordingly
  • Scenario 2: Streamline Business processes and then Implement ERP based on the outcome and requirements.

A practical approach (Analysis in practice) has been considered to evaluate the above mentioned scenarios.

Angle 1 - Considering Critical Parameters (CP) : We define these variables as CPs that will collectively ensure predicts the outcome of the implementation. We have considered the following CPs:

  • ERP Misfit
  • Heavy customization
  • ERP consultant efficiency
  • Business Process Reengineering
  • Knowledge transfer
  • Testing
  • Project buffer consideration
  • Unclear ERP objective
  • User perspective
  • Change Management.

Angle 2 - Cost Implications

This study is an attempt in helping to understand user perspective and change management as key factors for any Implementation.  Understanding and drawing the expectations clearly and doing "As-is" vs "To-be" process mapping check helps in defining Process Re-engineering. The above factors will help evaluate the critical parameters and give the organizations a Risk-fit model to evaluate their ERP implementation.

February 6, 2014

BPR v/s ERP - Part 1

The role of business process re-engineering needs to be recomposed and rebuilt in implementing enterprise resource planning.

"In a world of change, the learners shall inherit the earth, while the learned shall find themselves perfectly suited for a world that no longer exists."
― Eric Hoffer

The environment in which any business operates is always driven by external factors. Since these factors change, businesses also need to change to prove their existence and relevance.

In the modern era, technology plays a vital role to help bridge the gap between the changed or new external factors and business operations. Understanding application of any technology to one's business is a key and vital attribute to achieve the larger goal of modernization of business.

Application of any technology will delve between the will help pros and cons of "As-is" and "To-be" processes. Movement from the "As-is" and "To-be" processes will involve business process re-engineering (BPR).

A lever that helps bringing your entire business (including upstream and downstream supply chain units) unit closer with respect to data, performance, relations, etc... is what will help prove any business' existence and relevance. The technology lever that is currently driving transformation across various businesses is enterprise resource planning (ERP).

The role of BPR needs to be recomposed and rebuilt in implementing ERP. Through this blog post I will make an attempt to show the importance of BPR and reiterate - ERP successful implementation depends on BPR. Reengineering processes within organization to big a change in form of ERP is of paramount importance.

Implementing ERP is a lengthy and complex process which has direct and major impact on business processes. Inefficient ERP functioning paralyses day-to-day Business processes. Any implementation would have two certain outcomes:

  • Success
  • Failure

The linkage between the success/failure of any ERP implementation exercise depends on certain key tangible and measurable variables that are driven by BPR. Explanation for the "what" and "how" of these linkages is food for thought and we will discuss them in our next and concluding part.

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