Two thirds of BPO engagements do not include innovation and transformation

BPO is lagging behind when it comes to digitalisation. Two thirds of engagements are still about moving a business process to an external supplier that can do it for less, with no transformation or innovation.

In this guest blog Accenture’s CTO Operations, Liv Sandbaek, explains the problems and suggests some remedies for businesses looking to transform their BPO relationships..

Embracing Digital Operations for Competitive Advantage

By Liv Sandbaek, group technology officer, Accenture Operations

“These days, retail companies are becoming health care providers, industrial companies are becoming customer service companies, media and entertainment companies are becoming logistics companies, and the list goes on. Digital technologies are changing how companies create products, interact with customers, and manage operations and workforces; in the process, they’re responsible for transforming whole industries and markets.

But while everyone else is rapidly embracing digital, many business process outsourcing (BPO) buyers and providers are still running on an analog path. Accenture-sponsored research from HfS Research reveals that two-thirds of today’s BPO engagements are still of the “lift and shift” variety: simply moving existing processes to external providers to reduce cost –technological innovation and digital business transformation not included.

So what’s holding organizations back from moving to a digital operations environment? Often the business services engagement is set up merely as a transactional partnership and the team is focused on contractual obligations and service level agreements, instead of on leveraging technology innovations.

On the brighter side, our study found that those who are getting it right–those who are embracing technologies such as automation, analytics and cloud computing–have an infinitely better chance of achieving greater value. Digital platforms improve the speed and quality of process execution by automating mundane processes like data entry, which in turn eliminates human error and delays. Systems become highly robust and standardized, enabling processing in the cloud, optimizing analytics and embracing mobility for rapid implementation. This frees up staff to concentrate on the creative and value-generating aspects of their jobs. By collecting and mining data, moreover, service providers can present a clearer picture of the client’s business performance, allowing the engagement to be re-shaped and sharpened to focus on driving real business outcomes.

Companies looking to build high performance digital operations must address four key components:

1.    Build for flexibility and resilience. The digital services platform must be dynamic, accessible, easy to use and continuously available in the cloud. It must possess the ability to respond to changing customers, evolving technology and real-time market developments. New innovations in hyperscale systems provide opportunities to adapt business process services to take advantage of increased processing capabilities at lower costs. Because more processes are becoming interconnected and automated, service providers must focus on building secure, scalable, agile and easy-to-deploy systems.

2.    Leverage analytics for real-time insights. Advanced analytics can move a business from a reactive to a proactive state by more accurately predicting what’s coming next. Data must go from being siloed and unmanaged to becoming more integrated across the enterprise. Big Data techniques can, for example, enable business services providers and their customers to sift through terabytes of operational and customer data for insights that could drive both greater efficiency and innovations to grow revenue. Predictive analytics that are integrated into day-to-day operations can drive decision-making, predicting events such as machine failure based on environmental factors, enabling an organization to schedule maintenance before a failure occurs. Adding mobility to the equation will also increase workforce productivity.

3.    Connect the digital workforce. Technology significantly impacts the nature of business services work and enables far greater performance and productivity. Giving workers access to collaboration tools and social media turns them into connected knowledge workers and enables collaboration across the extended enterprise workforce. Automation removes the need for mundane clerical work, helping to clear the way for employees to make higher-level contributions in a more efficient way.

4.    Participate in the digital innovation ecosystem. Technology is moving too fast for a company to think it can do it all without some outside help. It’s important to broaden this outlook beyond just the corporate world by establishing relationships with a larger ecosystem of research institutions, universities and government agencies that can provide a competitive edge. These relationships also enable a more “modular” approach to business services solutions. Although there will continue to be large enterprise software systems to support core functions such as manufacturing or finance, given the push for greater operational agility, we expect to see a shift to simpler, more modular apps that are both low-cost and easy to deploy.

We’re living in a digital world, and it’s ever evolving. Business services providers and buyers have a tremendous opportunity to turn a cost cutting operational practice into a major value driver by moving from analog to digital. It’s an opportunity that they must seize, or risk the fate of the 8-track and other analog technology: obsolescence.”