The Benefits of BPO Realization

By Mark Cioni

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The business case for a BPO (business process outsourcing) initiative may be relatively complex or very straightforward, but a “build-it-and-they-will-come” paradigm can dilute even the best strategy.

Organizations too often implement BPO, then expect the anticipated benefits to become manifest as a fait accompli. Predictably, the villagers set about burning the windmill when the benefits fail to make their command appearance. The monster, unfortunately, escaped very early on in the form of a belief that benefits “just happen” if the business case is sound.

Business case realization provides the framework for bringing the benefits anticipated from BPO initiatives to fruition. It is a proactive, continuous process to understand, measure and achieve predictable and sustainable business value.

Instead of asking “Are we there yet?” business case realization ensures we understand progress, make course corrections as necessary and, most importantly, that our destination is still viable. This approach is ideally incorporated into the BPO initiative from the start, touches multiple areas and disciplines within the initiative and is not as easy as “wait and see,” but it works out much better in the end.

Now that you’re sold on “what and why,” let’s look deeper at how business case realization works via some key attributes of this approach:

Outcome Focused: The business case is the compass that specifies benefits in terms of the outcomes, associated measures and value. Beginning with this end in mind, business case realization must develop the activities, resources, accountability and measures needed to achieve those benefits.

If this sounds a lot like program management, you’re right, and it’s one of the key disciplines aligned with this approach. The outcomes also establish traceability, and there needs to be a clear line of sight between BPO benefits and organizational imperatives.

As a simple example, consider a utility delivering electricity and gas to its customers that outsources the design of its pipes and wires infrastructure. If the organization subsequently decides to focus just on operating the infrastructure, the benefits associated with outsourcing design will likely change, and even more importantly may not even be viable goals for the future.

Proactive: Anticipating and controlling instead of reacting is a key enabler for business case realization, and pays big dividends with stakeholders.

Although each BPO initiative is different, key groups such as the providers, management, employees and customers will be involved to a great degree, and it’s important to get ahead of the curve. For example, have you helped to create a strong linkage of shared accountability between your management and all BPO providers? Do the providers look at this as just a service level agreement (SLA) or do they really understand the interdependency of their services on your operations and ability to provide customer value?

Conversely, does management view the providers as just more vendors to beat up when they screw up, or have they taken the right steps to ensure seamless integration between the services they provide and rest of the organization, such as making key resources available for knowledge sharing?BPO rarely fails in the executive suite, but it can die an agonizing death in the remaining offices and cubicles, or even worse in plain sight of your customers.

Multi-Disciplinary & Process Oriented: Program management and change leadership are critical to realizing sustainable benefits from BPO. I noted earlier that program management was a key companion discipline, but in reality business case realization is better viewed as a cornerstone process of the BPO program plan from the start.

In other words, “start right and stay right” trumps developing a plan and process for business case realization later, and increases the chances that the approach will be woven into the entire DNA of the initiative. If so, the activities, resources, accountability and measures for business case realization can be managed much more easily.

The same is true of change leadership, and is even more important in a BPO scenario given the potential for associated staff reductions, skills and process redesign, customer anxiety and other factors. I can’t give it full treatment here, but change leadership is about helping BPO stakeholders understand where we are, where we’re going and why.

It should also help us understand how we’ll get there, how we’re progressing and the uncertainty involved in the journey. Perhaps most importantly, it must help us to individually and collectively own that change and share the rewards, the risks and the accountability.

As an example, consider the recent impacts to market share and customer loyalty resulting from organizations outsourcing customer service. In many cases, failure to execute and follow through on core tenets of change leadership with customers, as well as partners and employees, has led to adverse consequences.

Measured: It’s been stated that “we get what we measure” and business case realization is a prime example of that premise.

Measurement has to be meaningful relative to the anticipated benefits from BPO—establishing key performance indicators that alert the organization to success as well as the need for corrective action, and ultimately driving accountability for success.

This is another area where stakeholder commitment is crucial: You can’t expect people to make the journey if they don’t know the road signs and the speedometer is broken, no matter how lovely the destination. For example, outsourcing customer service processes might have some obvious indicators for success such as call abandonment and percentage of self-service. And, for some organizations, it could impact indicators such as DSO.

The key is to instrument the processes both outsourced with and connected to the BPO initiative to get a holistic view of success. Don’t forget that sustaining the benefits from BPO is just as important as realizing them, and measured accountability provides a strong foundation for continuing and even optimizing benefits.

BPO investment is often biased toward a small subset of concern such as cost reduction, but it’s important that organizations don’t develop tunnel vision. When we look broadly at leading change in the related processes, culture and organization, and apply solid program management to BPO, the benefits still don’t just happen, but they’re much more likely to happen.

Mark Cioni is president of MV Cioni Associates. He has been helping global businesses to improve their decisions, operations and performance for over 25 years and can be reached at mark@mvcioni.com.