BPaaS + Agile Workforce – Delivering services at a fraction of the cost
As a business-process re-engineer, I spent most of my time looking at how banking operations could adopt new workflow technologies as these same platforms evolved from simple piecemeal tools that fixed specific problems (loan application scoring for approving loans) all the way to end-to-end solutions that spanned entire business functions (e.g. product control in investment banking). Over 20 years, the technology and jargon progressed quickly – global standards in BPMN and then end-to-end technology platforms (Pega, Appian, Tibco, Bonitasoft, SAP etc).
BPaaS (Business Process as a Service) began to make an impact from around 2012. A paper by the Everest Group indicated costs savings of up to 40%, 30% and 10% for small, medium and large businesses respectively – making it a topic that was regularly bought up in corporate workflow strategy sessions… and then typically that was where it stopped because it was in the “too-many unknowns” basket.
Past the hype, what is BPaaS is showing about the traditional BPO model?
Five years later, we are seeing a significant impact of BPaaS on the traditional BPO model. Probably one of the best commentary comes from Phil Fersht of HFS:
Today’s enterprise world is littered with literally hundreds of legacy outsourcing relationships where the service providers are unwilling (and many just plain incapable) of making any genuine productivity improvements….Close to half (47%) the enterprise leadership we spoke to in our recent As-a-Service study view their service provider’s unwillingness to cannibalize their existing revenue model as a highly significant obstacle to make the As-a-Service shift
Traditional BPOs are in a conundrum, they have invested several millions to adopt their client’s technology platforms and need to continue pumping millions again to maintain them and deliver incremental change. Their investment model is based on economies of scale which means that they need to bring more companies on to these platforms in order to justify the original investment. Meanwhile, most of the innovation on robotic process automation, data inter-connectivity and business intelligence reporting is happening on BPaaS – it’s as if the party is in the other house and most companies are not invited – never a good feeling….
What the smarter companies are doing
Companies are trying to gain the productivity, cost and efficiency gains that they are seeing with BPaaS in the fastest and safest way possible. In several conversations with executives across insurance, banking, technology and B2C sectors, it was clear that clients are moving from the “fill the seat” BPO+IT model – instead, the conversations are now around whether BPO service providers have already got both robotics and BPaaS in their offering and then pricing their services on an output basis.
Perhaps they are reading reports from BPaaS technology providers on the success stories that they are seeing with BPOs (note the free plug to NetSuite):
Speed: Deploying a BPaaS model can be much faster than leveraging a traditional onpremise BPO model – in one recent instance, a company was being spun off its parent and needed to get core operational systems up and running in a matter of a few months. A BPO provider using NetSuite as its platform was able to get an operational infrastructure in place very quickly and without disruption.
Integration & Interconnectivity between the client and BPO: BPaaS clients can easily adopt the cloud software used for the BPO outsourcing at their HQ operations – the client could even choose to take over ownership of the configured system with the cooperation of the outsourcing partner, allowing a seamless transition to managing their own operation, or managing new aspects of their operation while the outsourcer continues to provide services around select processes.
Extensive service suites through BPaaS: BPO providers can extend the level of services that they offer to their clients through a BPaaS model – the flexibility and agility of cloud-based software enables BPO providers diversify their service offering from launching new subs quickly to building customizations
DataMotivate= BPaaS+ AgileWorkforce
In a recent conversations with clients, I was asked how DataMotivate is different from other BPOs. This led to a quick conversation on DataMotivate’s adoption of Jira Core (the enterprise grade cloudbased workflow platform), why we chose Jira over everyone else (the Lufthansa example was a great one to use) and some of the work we are doing with companies to deliver integrated solutions (in the coming weeks, I will be covering our shift to a “BPaaS-service-provider” model and the services we deliver).
Our clients are telling us that they want to move towards BPaaS – and they are now more interested in smaller but more advanced BPOS that already uses multi-tenanted BPaaS infrastructure to deliver services – in this way, benefiting not only through the technology and also utilising the human resources that are already trained on the process and platform.
So – let’s face facts here – we’re at an impasse. There are tremendous opportunities to create genuine productivity advancements through robotic process automation, smarter analytics and the onset of cognitive computing, but much of the present service provider bunch are not going to be the ones to take true advantage of them. I predict a few will break out, but the next winners will be from a new breed of As-a-Service provider, many of whom many not even have been formed yet.