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BPO Partnering Models (#4): Platform & Transformational BPO

By:  Steven Pollard, BPS EMEA Solution Leader & UK Public Sector BPS Capability Lead, Hewlett Packard Company


This is the fourth blog in a series of blogs discussing BPO partnering models.  

 

Rubik cubes.jpgThe previous blog in this series provided a deep dive view on Traditional BPO. This blog now goes a step further to consider the more contemporary partnering approaches available in the marketplace – Platform BPO and Transformational BPO.  The final blog in this series will discuss Utility BPO in-depth.

 

What is Platform BPO? 

Business Process Outsourcing partnerships are comprised of three foundational components, people, processes and technology. These building blocks are present in all BPO partnering models, it is the ownership and level of sophistication of each of these components that ultimately drives the degree of business value and savings accrued.  As discussed in the previous blog in this series, Traditional BPO typically sees only two of these components transition to the service provider —  people and business process.  In this model the client retains ownership of the technology layer, including the expert systems (applications), infrastructure and support services required to deliver the end to end business service.  

 

Platform BPO differs from Traditional BPO as this model requires the customer to pass responsibility for the technology that supports the BPO service, to the service provider.  Unlike a full IT Outsource, where all of the technology and staff are transitioned to a service provider, the BPO platform model implies a selective transition of the discrete applications, infrastructure and resources that underpin the scope of the business service being outsourced.  For example if a client outsourced a customer services operation, you would expect to see not only the Customer Service Agents (CSAs) transition, but also the technologies and resources that support this service e.g. CRM, Self Service Portals, Call Recording, Workforce Management, Telephony infrastructure and potentially the system administrators and developers that maintain and develop these components. 

 

The dependency between business processes and the enabling technology that underpins the delivery of an end-to-end service, is of critical importance. It is for this reason that Platform BPO as a partnering model has the potential to deliver significantly more benefit than Traditional BPO.  If for example, the technology stack supporting a back office function is expensive, inflexible and slow to change, it can add significant cost and delay when seeking to implement transformative change.  Also If a client doesn’t have enough capacity of skilled resources to maintain BAU service levels and support a change agenda, transformation can  again be delayed and or drive unsustainable levels of cost.  However, if a service provider is responsible for the supporting technology and the business processes, significant opportunities are available to streamline change and remove barriers on the way to achieving an optimal Target Mode of Operation (TOM).   When you add to the equation that agility provided by the New Style of IT such as Cloud platforms (infrastructure and software/platform), the speed of change and transformation can be accelerated further.

 

Platform blog pic.jpg

 

What is Transformational BPO? 

Transformational BPO is an evolution or variant of a Platform model.  As with Platform BPO, this model sees people, process and technology transfer to the Service Provider.  However in a standard Platform model it may not always make sense to drive a high degree of transformation. Transformational BPO implies a large degree of technology and business process re-engineering (BPR) to deliver a materially improved service.

There are a number of factors that inform how much investment/transformation is required and the pace at which it can be delivered, including: 

  • Contract Term: if the contract term is short <5 years the business case for large scale investment may  be challenging and may ultimately constrain levels of investment
  • Customer Goals/Imperatives: Does the client want world class services or maximized savings (this position will of course affect the solution approach)
  • Investment: client budget cycles, affordability limits, leveraging legacy investment 
  • Legislation/Policy & Standards: may support or constrain the rate and scale of change
  • Agility: the speed and cost of implementing change to the technology
  • Security: the robustness of the current platform
  • Disaster Recovery/Business Continuity Planning: the platforms capacity to survive component failures and maintain availability
  • Functionality: the degree to which the platform supports the business process/requirements

It is important to recognize that in some cases the ‘as-is’ service that transitions from the client to the service provider will be largely fit for purpose. The service may meet the functional needs of the business and may have been subjected to appropriate levels of historical investment.  In such cases a step change in the technology or process re-design may not be warranted or necessary, especially if the principle goal of the partnership is to reduce the Total Cost of Ownership (TCO) of the service. Simply adding some marginal investment in in BPR and enabling technology will meet the near term objectives.  In these instances the catalyst/driver for selecting a BPO partner might be centered on proving a Global Operating Model that can scale to support a rapidly growing business, or it might be that they need a specific injection of innovation in one specific area to enhance business benefits e.g. investment in decision support using advanced analytics or big data technologies. 

 

True Transformational BPO however sees the service provider driving significant change in collaboration with the client in order to meet the business objectives.  Again there are many scenarios where this model may be required.  If a business has underinvested in their service and is encumbered by complex, high risk and expensive legacy technologies or perhaps a business that has grown rapidly through mergers and acquisition and as a result has no strategic/standard operating model or consistent enterprise architecture.  Or it may simply be a client whose business model needs to change to keep pace with market expectations, for example a council that needs to embrace digital channels (web & mobile) in order to meet citizen expectations and government guidelines on citizen engagement.

 

In these instances the service provider will be required to make large scale strategic changes in the one or many of the following domains in order to deliver a Future Mode of Operation (FMO) that meets the client’s objectives:

  • Business Process
  • Organizational Structure
  • Real Estate/Delivery Locations
  • Data Models/Master Data Management
  • Applications Landscape (rationalize/modernize/cloud enable/mobile apps)
  • Technology (data center, LAN/WAN, end user computing, storage & compute)

In summary, Transformational BPO is a model that requires complex large scale investment and change to meet the client’s business imperatives.  It is also important to recognize that this goal can be achieved using industrialized technology platforms (on premise or private cloud provided); where cloud delivery models are not appropriate custom dedicated services that are bespoke designed for a client’s needs.  However leading BPO providers and the analyst communities concur in agreement that the marketplace is seeking to realize the benefits of true multi-tenant platforms, since they offer levels of flexibility, best of breed processes and price points, that dedicated traditional approaches cannot match.

 

Transition 

Transitioning to a Platform BPO partnering model can take a number of routes dependent on the client requirements and their Current Mode of Operation (CMO).  The two most common transition models are Greenfield and Brownfield. Greenfield engagements require the Service Provider to set up a new service.  This typically involves securing real-estate or adding seats to a shared service center, hiring and training resources and delivering a pre-integrated technology stack to enable and support the business processes being provided.  Brownfield transitions have to take account of and leverage historical investment and assets.  Typically there will be existing functions/staff that will be eligible for TUPE transfer from the client to the service provider and there will be legacy technology assets that a service provider will manage.  This process commonly requires novation of contracts to the service provider, sale of assets and or right-to-use legal provisions being made.

 

Service providers understand that outsourcing or indeed a change of this scale requires careful consideration and planning in order to ensure that BAU service levels are maintained, staff is motivated and no unwanted churn/attrition is experienced.  Hewlett Packard Enterprise Services (HPES) have a mature and proven approach to transition, developed using decades of global experience.  Our dedicated Transition & Transformation practitioners work with clients to plan a transition that is cognizant of business plans and risk appetite.

 

 Conclusion 

While Traditional BPO is by far the most common in the industry, it also presents serious limitations, such as the degree of client savings it can deliver and the complexities of managing mutual dependencies without a unique end-to-end accountability over the BPO transactions in scope. 

 

Platform BPO, as a partnering model, removes the potential for the dependency between technology and the business to cause delay and diminish the effectiveness of transformation, since the service provider is responsible for the people, process and technology.  Each of these domains can be optimized to achieve the best possible FMO.  Labor can be placed in the most appropriate location, yielding savings and productivity gains.  Technology and business processes can be transformed to reduce the TCO and drive service agility, drive service improvement, deliver cost savings and resolve business problems, without being constrained by technology. 

 

Other blogs in the BPO Partnering Models series:

Related Links: HP Business Process Services

 

About the author

 

Steven Pollard, BPS EMEA Solution Leader & UK Public Sector BPS Capability Lead, Hewlett Packard Company

 

Steven Pollard.jpg

Steven has been working within the technology industry for 18 years and has held notable positions with leading outsourcing providers.  He has broad experience in ITO and BPO, with a specific depth of experience within the public sector.

 

 

 

 

 

 

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