Three Steps to Greater Value

By Mark Cioni

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I’ve written previously about the importance to outsourcing initiatives of a solid business case and a plan for realizing its expected benefits. The business case is the compass and the realization plan provides the navigation for a successful journey.

Extending this loose analogy, business process management (BPM) focuses on making the trip more effective and efficient. When the bumper sticker on our shiny new business process outsourcing (BPO) initiative asks “How’s My Driving?” we can use BPM to help answer that question.

BPM has historically suffered from conflicting interpretations. It is often equated to workflow, enterprise integration and even content management. It has been disgorged in the same breath as BPMN, BPEL and other guttural noises. Instead, I want to focus on how key BPM principles can help enable outsourcing.

I’m not diminishing any of the technical innovations within the BPM space, but it’s the approach built on these key principles that affords the best chance for effective process management. The principles apply as much to outsourced processes as to those performed internally, and it’s important to understand how outsourcing providers incorporate them within their offerings, and how they integrate them with their customers’ BPM efforts.

Active Monitoring

Business processes that truly add value have inherent critical performance metrics. To manage the process effectively, an organization needs the appropriate visibility into the process and these metrics. Within BPM, business activity monitoring (BAM) provides this visibility by collecting raw process data, then making this data actionable by putting it in a business context.

As an example, consider an organization outsourcing its customer contact processes to a provider offering a multi-channel contact center. The provider works with the organization to balance service levels and costs by trying to shift some customer contact scenarios to a self-service model.

BAM can help both the organization and the provider understand whether the shift to self-service is achieving the expected balance of service convenience and quality with lower costs. Ideally for the organization, there will be a clear line of sight from process performance metrics to its broader key performance indicators (KPIs).

Important considerations for organizations looking at BPO providers include:

  • What mechanisms do the providers offer for BAM? This includes the types of process instrumentation, the frequency of data collection, the added business context for that data and the accessibility of the information among other aspects.
  • How will the providers integrate with any existing internal BPM framework with respect to broader, macro level process management and organizational KPIs? This could include anything from simple reports to more sophisticated real-time data/process integration.
  • How can the organization and the providers use BAM to optimize the value from the relationship, such as fine-tuning service levels or identifying needless costs?
  • What are the incremental costs of Monitoring relative to the overall outsourcing scenario, and are do they constitute a good investment?
  • Agile Response

    Organizations using BPM internally are ultimately seeking to improve their decisions, operations and performance. This improvement naturally involves process changes based on activity monitoring and other input factors.

    Outsourcing providers have, until recently, tended to limit the options for process changes because it made BPO easier to sell, operate and profit versus customization. However, one of the newer approaches in outsourcing is selective customization, and providers are beginning to use it as a key differentiator versus commodity pricing in a copycat market.

    Example scenarios for selective customization might be a Human Resources department using outsourcing to manage a large number of expatriates across several dozen countries or emerging outsourcing areas such as R&D.

    In order to make selective customization work, outsourcing providers need to at minimum effectively couple monitoring and agile response. Key considerations include:

  • What selective customization options are offered by outsourcing providers?
  • What mechanisms for activity monitoring are in place for selective customization options versus those established for the “more mature” segments of the process offering?
  • What is the response cycle for changing selective customization options based on activity monitoring and/or changing business conditions? What can the outsourcing providers offer in terms of guidance on how to most effectively leverage these options?
  • Continuous Improvement

    Breakthrough process innovation is generally a welcome development, but increasing process value often means incremental and continuous improvement. Completing the loop begun earlier by active monitoring and agile response, some important considerations for continuous BPO improvement include:

  • What process performance mechanisms are offered by the outsourcing providers? These could range from standardized reports to graphical scorecards to real-time BAM visibility.
  • What notification mechanisms complement the process performance infrastructure? This could include real-time alerts for performance deviations, or trend analysis and recommendations based on leading and lagging indicators for process performance.
  • How will the organization and the outsourcing provider partner to identify and deploy process improvements? It’s possible that these improvements may not be limited to the outsourcing provider’s domain, and in these cases it presents an opportunity for the provider to add an additional level of value.
  • BPM has helped organizations to maximize process value and improve their decisions, operations and performance. It makes sense to examine whether leveraging these principles for BPO can help to catalyze success for both the organization and its outsourcing providers.

    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.