Johannesburg, 16 Oct 2003
Today`s competitive marketplace demands operational productivity, administrative efficiency, business agility, shorter turnaround times and increased shareholder value. Business process outsourcing (BPO) is the survival key in transforming processes to achieve these end results.
As the modern enterprise seeks to focus ever more narrowly on its core activities, BPO is increasingly being considered as a business strategy that provides access to best-of-breed processes and cost predictability.
This is according to Staffware SA Managing Director Mark Ehmke. "The growing trend for enterprises globally is to review their internal operations regularly, to more fully understand what their true core competencies are, and to focus only on these core competencies. This is the primary driver behind the growth of the BPO market," Ehmke maintains.
He says that, to ensure they are well placed to address this market growth, BPO service providers are facing a number of challenges, which include the following:
* Visibility of ongoing improvements in operational efficiency.
* Reducing processing costs through continuous process improvements.
* Maximising BPO revenues within shortening BPO contract terms.
* Increasing customer satisfaction by realising business benefits sooner.
* Improving service levels through accurate process monitoring and reporting.
* Avoidance of long and costly development cycles to achieve a faster ROI.
* Defining and enforcing 'best practice` processes.
* Implementing effective change management capabilities.
"Gartner Dataquest defines BPO as the delegation of one or more IT-intensive business processes to an external provider that, in turn, owns, administrates and manages the selected process(es) based upon defined and measurable performance metrics," points out Ehmke.
"This is essentially what BPO is all about - it is about allowing the business to conduct its core competencies to the best of its ability, allowing organisations to focus on building their value network and deepening their stakeholder relationships.
"As a BPO provider, we have long since recognised that business is not about technology - it is about people and processes."
He maintains strongly that many organisations in today`s marketplace, where generalised IT outsourcing has become very popular, think that BPO is exactly the same as the outsourcing of one`s entire IT function.
"Many organisations undertake generalised IT outsourcing for the same reasons that BPO would be undertaken - such as allowing the business to concentrate on its core revenue-generating activities, with the resultant cost- and time-efficiencies and streamlining which then become possible. However, the reality is that BPO is actually quite different," Ehmke points out.
The reason it is important to make this distinction is that the risk element with BPO is not the same as it is with generalised IT outsourcing.
"Think about it. If you outsource your entire IT function in a company, then you are actually running quite a substantial risk," Ehmke says.
"However, because BPO only involves the outsourcing of certain stable, consistent and repeatable business processes, and not the entire IT or for that matter business function, the risk of something going wrong is far, far less."
He advises that BPO is a far more specific, specialised and niche practice than the outsourcing of the entire IT function, which is often done in organisations purely as a cost-cutting exercise, with little consideration given to the level of skills that the outsourcers demonstrate.
"BPO providers who are worth their salt are, by definition and necessity, experts in terms of the process or sub-process that you outsource to them. This expertise then becomes even more focused and niche when one considers that all business processes are aligned to, and defined by, the vertical industry in which the core business operates," says Ehmke.
He does, however, caution that the market in SA is not really 'BPO-ready`, as such. He maintains that this is because business process automation, on which workflow is based, is a necessary precursor to BPO, or the outsourcing of those automated processes to a third-party service provider.
"Once business process management becomes more thoroughly entrenched in South African business practice, BPO will take off," he predicts.
In terms of skills levels and the ability to handle business process automation in-house, Ehmke says the likelihood of mundane processes that do not typically require much level of skill to handle, such as certain Insurance or banking processes, could be handled within the organisation.
However, the more complex and time-consuming processes requiring automation may very well be best outsourced to a BPO service provider.
"If this is indeed the case, the best course to follow is to settle on very strict service level agreements with the service provider, to ensure that the business processes or sub-processes you do outsource to them are handled in a timely and efficient manner. If this procedure is not adhered to, the business will of course ultimately suffer in terms of internal and external operational and services efficiencies," he concludes.
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