Providing news, views and unrivaled content for the global sourcing community

 

 

Walk a mile in your BPO provider's shoes

Posted: 08/05/2016 - 19:54

Organisations that enter business process outsourcing (BPO) transactions inevitably experience challenges with BPO providers – often resulting from unmet expectations, difficult transitions and erratic steady state delivery. While it is reasonable to expect the value promised by a provider to be delivered quickly and consistently, walking a mile in a BPO provider’s shoes can help buyers understand the typical challenges BPO providers face when taking over execution of business processes from their clients. This knowledge can help buyers proactively prevent or mitigate common BPO relationship frustrations. A buyer’s misunderstanding of scope elements (including detailed process requirements), requisite technology needs, data integration challenges, retained responsibilities, performance measurements, or even a lack of a robust transition support system, can create significant challenges for BPO providers. While the reasons for these hurdles are often due to a shared responsibility of buyers and providers, awareness of the potential for these to occur, and proactive engagement to help ensure they don’t manifest into significant issues or create unnecessary complexity, can help limit the impacts on both parties.

Hurdle # 1: Scope Confusion
Misunderstandings about specific scope elements are often the most critical issue that causes disruption between buyers and BPO providers during both transition and steady state operations. If buyer processes and associated sub-components are poorly documented and not communicated clearly, the provider will likely struggle to grasp the finer intricacies of the in-scope requirements. For example, in many Finance & Accounting BPO engagements, an organisation’s corporate finance and individual business units may have different and very specific processes for analytics and reporting, which may not have been highlighted or specified during provider scoping exercises. Similarly, in customer care outsourcing, incomplete or non-comprehensive catalogues can lead to inadequate training and scope mismatches, both of which can translate into delays, missed deadlines and improper steady-state service delivery.

Hurdle # 2: Insufficient Transition Preparation
Lack of buyer transition readiness happens frequently and is often due to buyer misperceptions of internal outsourcing “readiness” or designated transition support team capabilities. Underestimating the complexity of transitioning existing processes to a BPO provider can lead to major pitfalls. Organisational culture, internal change management communications, and employee readiness for an outsourced arrangement all can significantly affect the handover of services to the provider. Further, if as-is process flows and reporting requirements are not documented in detail, challenges will likely arise from the BPO provider’s inability to foresee buyer-side implications of process changes. In addition, buyer resources (individual process owners) identified for provider interactions may not have the requisite experience or skill sets related to working in an outsourced environment to appropriately support the provider in executing a smooth transition. The buyer transition support office also may lack the necessary tools, comprehensive knowledge of the scope and deal elements, issue resolution mechanisms and experience to support the BPO provider in mitigating emerging obstacles.

Hurdle # 3: Over-Specification
Overly detailed process steps that extend beyond basic explanations and dictate how activities “must” be performed often add unnecessary complexity, time and possibly additional costs. Such over-specification can create a significant and unplanned burden for the provider as well as implicit managerial requirements for the buyer, which can further hinder the provider’s ability to deliver value. BPO providers typically have tested and proven processes for executing commonly outsourced functions and processes. As a result, they will likely be hesitant to incorporate additional and redundant process steps from buyers such additional elements can also complicate the process of establishing, monitoring and measuring SLAs. Unfortunately this dynamic may also result in buyers partially sharing accurate information around ‘Service Levels’ and ‘Defects’, primarily because buyers never had a process in place to capture them accurately.

Hurdle # 4: Lack of Transparency
Oversimplifying process redesign requirements can translate to provider miscalculations of the time and effort required to redesign, incorporate, and execute on buyer processes. This can result from inadequate transparency around the buyer’s process operations prior to the BPO transaction. This issue can throw a curve ball into how provider transition/delivery teams identify additional activities, sub-tasks, and touch-points to take over process requirements. In complex, highly-structured buyer organisations, sub-entities may actually execute processes differently or have additional undocumented requirements. These process intricacies and accurate ‘time and effort’ estimates, along with ratified assumptions, must be communicated to the provider in a timely manner. Full buyer transparency and disclosure is a key to success and can be achieved by identifying key buyer stakeholders, aligning appropriate consulting parties and jointly facilitating scoping and clarification sessions.

Hurdle # 5: Data Integration
Data integration challenges, which are often intertwined with buyer-provider technology platform misalignment, are a regular source of frustration and struggle for BPO providers. While a provider’s technology is usually modern and updated, many buyers use legacy systems extensively and haven’t adopted new and innovative technology approaches (e.g., cloud-based applications). This dynamic creates significant data integration misfires, as buyers typically expect providers to fix these problems when, in reality, data ownership and stewardship is usually a buyer-retained responsibility. Further, legacy buying organisations often “sweat” assets and versions, having forgone investments in upgrades or potential automation. This can further impact the integration effectiveness that providers target.

While these hurdles are some of the most frequent impediments to successful BPO buyer-provider interactions and relationships, they are almost never deliberate or due to a lack of collaborative intent. Being aware of these frequently faced hurdles can help buying organisations better prepare for challenges they are likely to face. Proactively engaging in dialogue with BPO providers about these prospective challenges, and agreeing on specific actions or mitigations to be initiated (before the challenges arise), can be an effective way to ensure that value can be delivered more efficiently and effectively.

 

Organisations that enter business process outsourcing (BPO) transactions inevitably experience challenges with BPO providers – often resulting from unmet expectations, difficult transitions and erratic steady state delivery. While it is reasonable to expect the value promised by a provider to be delivered quickly and consistently, walking a mile in a BPO provider’s shoes can help buyers understand the typical challenges BPO providers face when taking over execution of business processes from their clients. This knowledge can help buyers proactively prevent or mitigate common BPO relationship frustrations. A buyer’s misunderstanding of scope elements (including detailed process requirements), requisite technology needs, data integration challenges, retained responsibilities, performance measurements, or even a lack of a robust transition support system, can create significant challenges for BPO providers. While the reasons for these hurdles are often due to a shared responsibility of buyers and providers, awareness of the potential for these to occur, and proactive engagement to help ensure they don’t manifest into significant issues or create unnecessary complexity, can help limit the impacts on both parties. Hurdle # 1: Scope Confusion Misunderstandings about specific scope elements are often the most critical issue that causes disruption between buyers and BPO providers during both transition and steady state operations. If buyer processes and associated sub-components are poorly documented and not communicated clearly, the provider will likely struggle to grasp the finer intricacies of the in-scope requirements. For example, in many Finance & Accounting BPO engagements, an organisation’s corporate finance and individual business units may have different and very specific processes for analytics and reporting, which may not have been highlighted or specified during provider scoping exercises. Similarly, in customer care outsourcing, incomplete or non-comprehensive catalogues can lead to inadequate training and scope mismatches, both of which can translate into delays, missed deadlines and improper steady-state service delivery. Hurdle # 2: Insufficient Transition Preparation Lack of buyer transition readiness happens frequently and is often due to buyer misperceptions of internal outsourcing “readiness” or designated transition support team capabilities. Underestimating the complexity of transitioning existing processes to a BPO provider can lead to major pitfalls. Organisational culture, internal change management communications, and employee readiness for an outsourced arrangement all can significantly affect the handover of services to the provider. Further, if as-is process flows and reporting requirements are not documented in detail, challenges will likely arise from the BPO provider’s inability to foresee buyer-side implications of process changes. In addition, buyer resources (individual process owners) identified for provider interactions may not have the requisite experience or skill sets related to working in an outsourced environment to appropriately support the provider in executing a smooth transition. The buyer transition support office also may lack the necessary tools, comprehensive knowledge of the scope and deal elements, issue resolution mechanisms and experience to support the BPO provider in mitigating emerging obstacles. Hurdle # 3: Over-Specification Overly detailed process steps that extend beyond basic explanations and dictate how activities “must” be performed often add unnecessary complexity, time and possibly additional costs. Such over-specification can create a significant and unplanned burden for the provider as well as implicit managerial requirements for the buyer, which can further hinder the provider’s ability to deliver value. BPO providers typically have tested and proven processes for executing commonly outsourced functions and processes. As a result, they will likely be hesitant to incorporate additional and redundant process steps from buyers such additional elements can also complicate the process of establishing, monitoring and measuring SLAs. Unfortunately this dynamic may also result in buyers partially sharing accurate information around ‘Service Levels’ and ‘Defects’, primarily because buyers never had a process in place to capture them accurately. Hurdle # 4: Lack of Transparency Oversimplifying process redesign requirements can translate to provider miscalculations of the time and effort required to redesign, incorporate, and execute on buyer processes. This can result from inadequate transparency around the buyer’s process operations prior to the BPO transaction. This issue can throw a curve ball into how provider transition/delivery teams identify additional activities, sub-tasks, and touch-points to take over process requirements. In complex, highly-structured buyer organisations, sub-entities may actually execute processes differently or have additional undocumented requirements. These process intricacies and accurate ‘time and effort’ estimates, along with ratified assumptions, must be communicated to the provider in a timely manner. Full buyer transparency and disclosure is a key to success and can be achieved by identifying key buyer stakeholders, aligning appropriate consulting parties and jointly facilitating scoping and clarification sessions. Hurdle # 5: Data Integration Data integration challenges, which are often intertwined with buyer-provider technology platform misalignment, are a regular source of frustration and struggle for BPO providers. While a provider’s technology is usually modern and updated, many buyers use legacy systems extensively and haven’t adopted new and innovative technology approaches (e.g., cloud-based applications). This dynamic creates significant data integration misfires, as buyers typically expect providers to fix these problems when, in reality, data ownership and stewardship is usually a buyer-retained responsibility. Further, legacy buying organisations often “sweat” assets and versions, having forgone investments in upgrades or potential automation. This can further impact the integration effectiveness that providers target. While these hurdles are some of the most frequent impediments to successful BPO buyer-provider interactions and relationships, they are almost never deliberate or due to a lack of collaborative intent. Being aware of these frequently faced hurdles can help buying organisations better prepare for challenges they are likely to face. Proactively engaging in dialogue with BPO providers about these prospective challenges, and agreeing on specific actions or mitigations to be initiated (before the challenges arise), can be an effective way to ensure that value can be delivered more efficiently and effectively.


About the Authors Adam Cummins is a Director at business optimisation and outsourcing advisory firm Pace Harmon, providing strategic sourcing, supply chain management and outsourcing advisory services to commercial clients across multiple industry verticals.           Sam Arora is a senior associate at Pace Harmon.

Region: 

About The Author

Outsource Magazine provides unrivaled content for the opinion-formers and decision-makers at the heart of the global sourcing community. This indispensable resource for news, views, analysis and thought leadership was launched in 2005 and acquired by Sourcing Industry Group (SIG) in 2016. Outsource columnists and contributors are thought leaders in the global sourcing community and provide insight on challenges and opportunities in the industry today.