Taking a BPM approach to BPO

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Centrum recently attended the first meeting of the soon to be established Australian Business Process Outsourcing Association (ABPOA). We approached the concept with tentative interest, as we were not entirely sure how our approach to BPM would align to the goals and aspirations of the BPO association. It emerges that there are actually some very strong linkages between the two concepts and we thought we would share some of our initial thoughts.

BPO is not a new concept but it does appear to be gaining some renewed traction as organisations look for the next wave of efficiency savings. Clearly, not all processes are candidates for outsourcing. It’s really the non-differentiating processes for which there is likely to be a business case. But how do organisations decide which processes to outsource and which processes to continue to manage themselves? What sort of information would help to better inform this decision and does BPM have something to offer here?

We think BPM will help and in more than one way. Firstly, a functioning BPM capability within an organisation enabled by BPM technology will provide companies with the sort of information they need to make an informed decision. This will include things like process cycle times, frequency and cost in addition to quality measures such as number of exception path executions. A set of modelled process, using a standard notation such as BPMN, will also greatly assist the outsourcer understand how the process currently works and it what way it will change when it is outsourced. In many ways a function BPM capability with an organisation looking to outsource processes is a pre-requisite to outsourcing and this is a view held by one of the more prominent BPMS vendors, Progress Savvion.

For BPO organisations the case for BPM is even more compelling. The reputation of their business depends on their ability to successfully manage the process being outsourced. They also need to provide added-value, whether it is running the process at a cheaper price, more efficiently or at a high level of quality. For these organisations, the processes are differentiating processes and as such the performance of these processes and the value they provide to clients is what separates them from their competitors.

So, a checklist for organisations looking to outsource processes:

  1. Ensure all your business processes are modelled and properly measured
  2. Decide which processes are candidates for outsourcing based on the information you have captured
  3. Identify an organisation that has a reputation for delivering value to organisations in the target process space
  4. Clearly identify the hand-off points between you and the outsourcer.
  5. Agree to a set of measurable SLAs and KPIs
  6. Work with the outsourcer to continually improve the process and ensure the arrangement works effectively for both organisations
  7. Regularly evaluate the benefit of the outsourcing arrangement and ensure you are getting value for money

And for outsourcers:

  1. Employ a continual improvement approach within your organisations to ensure your processes continue to deliver added value to your customers
  2. Use BPM technology to assist you measure your process and to automate the hand-off points
  3. Provide your clients with clear, frequent and comprehensive reports to illustrate the performance of your processes

A focus on continual improvement for both organisations is critical in maintaining the success of the working relationship. Outsourcing is traditionally not a cheap exercise but is the overall cost can be if both organisations practice BPM and use leading technologies to support them in this endeavour.

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