Welcome!

AJAX & REA Authors: Carmen Gonzalez, Scott Hirsch, Pat Romanski, David H Deans, Aria Blog

Related Topics: SOA & WOA, Java, AJAX & REA, Web 2.0

SOA & WOA: Article

Business Process Outsourcing and the Shared Services Center

BPOs and SSCs in the Business Process

Business process outsourcing (BPO) of shared services centers (SSC) is not really something new, but lately BPOs and SSCs have become particularly popular as discussion topics in large organizations with complex and simple business processes.

In reality, the BPO function is nothing more than the contracting of specific business tasks, typically back office business tasks, to a 3rd party service provider. Companies like a payroll bureau and recruitment agencies have been effectively performing these kinds of services for decades. In the late 1990's improvements in computing technology, the internet and global communications allowed an explosion in outsourced customer services centers. This in turn led to an increased focus in businesses not just looking at the BPO function but also in the breaking down of traditional organizational processing silos and the creation of aggregated back-office functions in the form of shared services centers.

Lately there has been a large amount of business and research focus on the optimal combinations of outsourced processes and shared services and some of the trends in this area. Of particular interest was the recent Deloitte Consulting 2011 Global Shared Services Survey.  InformationWeek's Chris Murphy says "Business Process Outsourcing (BPO) is the fastest growing worldwide outsourced market segment".  According to analyst firm NelsonHall, the global BPO market valued €217.8 billion in 2007 and is expected to reach €323.6 billion in 2011, showing an average growth rate of 10% per year.

BPO is catching up with industries like medical transcription services that have effectively provided a BPO service for more than a decade. Moreover, it is not just India or the Philippines that are booming with BPO services; Central & Eastern Europe are aggressively chasing near-shore outsourcing for Europe and the North America.

A 2005 combined study by InformationWeek magazine and EquaTerra, an outsourcing advisory services firm, showed that 73% of BPO customers surveyed believe BPO improves processes, demonstrating that principal drivers for BPO are efficiency and effectiveness.

With median revenue of $12bn among the Deloitte survey respondents, shared service centres were identified as largely distributed between APAC, LATAM, Western Europe and North America. Roughly half of all SSC's being based in North America (29%) and Western Europe (23%). Many of these organizations (38%) operated out of just one SSC and 71% operated with three or less. However as the size of the organization grows, the trend is for the number of SSC's to increase with companies with revenue of $25b or more, having on average 4.3 SSC's.

Key drivers for SSC selection unsurprisingly focus on quality, ramp-up-time, labour costs and language. Unsurprisingly, relatively unimportant factors were physical proximity to operations and HQ, regulation riskiness and sustainability. The U.S. has the most well-established Shared Services market with over 44% of all centers that are over 10 years old. 51% of SSC's support only 1 language. The U.S. also has the highest concentration of multi-language centers serving multiple continents.

In terms of the costing profile for SSC's since 1999 at least, services charged based on volume continue to be the primary chargeback model used by respondents. The respondents cited that the primary modes for effective management were site visits, leadership meetings, SLA's and continuous improvement initiatives.

Probably the most important discoveries were that the bulk of SSC activities are centered on financial operations (93%), human resources (60%) and IT (48%). 53% of respondents only serviced one process area with a SSC. In the financial processes space, 84% of respondents indicated that they handled AP processing, 72% Fixed Assets and General Accounting and 70% Travel and Expense management.  In human resources, almost half were running payroll and time administration (40%) out of the SSC, 36% Employee Data administration and 33% benefits administration.

Of all the SSC respondents, 87% indicated that workflow was important to effective operations, with 67% already having workflow in place. Electronic Document Management was considered important by 88% with 52% already having EDM in place. Although relatively low in the adoption stakes, Vendor Self Service featured as important to 65% of respondents with 1 in 4 already having a vendor self-service solution in place.  There was over a 35% increase in respondents that have implemented workflow and call center since the 2005 survey.

Timeliness of response to requests was stated as a key driver for 96% of respondents and that measurement was being driven by process based KPI's it is unsurprising then that products like Winshuttle Workflow are focal to BPO's in ensuring SSC performance optimization and effectiveness.  For 91% of the respondents, SSC's resulted in cost reductions and for 85% levels of control increased with 87% reporting that they saw process efficiency.

In order to deliver services with quality and stability, BPO providers have to have a service methodology, and the requisite infrastructure, people and reporting metrics capabilities. Leveraging technological and communication advances are the fundamental factors that lead to the success for Business Process Outsourcing. The internet and the low cost of data and voice communication, in addition to the move to standardized applications, flexible IT platforms, and more integrated systems give BPOs the tools needed to advance and spread. Adoption of technologies like Workflow and collaborative solutions built on SharePoint reduces operational risk, increase accessibility and transparency, all the while improving process quality and lowering costs

When considered collectively, SSC's combined with BPO's seem to suggest a perfect opportunity for cost savings and business process optimization.  When a business shifts SSC operations to a BPO the Terra survey indicated that 53% felt that they were able to focus their attention on more critical business issues than daily data processing. In addition, using a BPO meant that businesses could be assured of a more predictable (45%) and reduced (44%) operational cost structure for back office data processing.

Additional Reading:

http://www.cbi.eu/download/mid_preview/5077.pdf

http://www.prnewswire.com/news-releases/study-on-bpo-satisfaction-conducted-by-equaterra-managing-offshore-and-informationweek-54579607.html

http://www.drdobbs.com/architecture-and-design/outsourcing-not-slowing-down-study/197005853?cid=RSSfeed_DDJ_All

http://www.deloitte.com/view/en_GB/uk/services/consulting/33c0d2889eb13310VgnVCM3000001c56f00aRCRD.htm

http://www.informationweek.com/news/10818086

More Stories By Clinton Jones

Clinton Jones is a Product Manager at Winshuttle. He is experienced in international technology and business process with a focus on integrated business technologies. Clinton also services a technical consultant on technology and quality management as it relates to data and process management and governance. Before coming to Winshuttle, Clinton served as a Technical Quality Manager at SAP. Twitter @winshuttle

@CloudExpo Stories
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic • Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff hap...
SYS-CON Events announced today that Utimaco will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Utimaco is a leading manufacturer of hardware based security solutions that provide the root of trust to keep cryptographic keys safe, secure critical digital infrastructures and protect high value data assets. Only Utimaco delivers a general-purpose hardware security module (HSM) as a customiz...
SYS-CON Events announced today that SOA Software, an API management leader, will exhibit at SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. SOA Software is a leading provider of API Management and SOA Governance products that equip business to deliver APIs and SOA together to drive their company to meet its business strategy quickly and effectively. SOA Software’s technology helps businesses to accel...
Almost everyone sees the potential of Internet of Things but how can businesses truly unlock that potential. The key will be in the ability to discover business insight in the midst of an ocean of Big Data generated from billions of embedded devices via Systems of Discover. Businesses will also need to ensure that they can sustain that insight by leveraging the cloud for global reach, scale and elasticity.
SYS-CON Events announced today that ElasticBox is holding a Hackathon at DevOps Summit, November 6 from 12 pm -4 pm at the Santa Clara Convention Center in Santa Clara, CA. You can enter as an individual or team of up to 10 developers. A New Star Is Born Every Month! All completed ElasticBoxes will then be sent to a judging panel - 12 winners will be featured on the ElasticBox website in 2015. All entrants will receive five full enterprise licenses for one year + ElasticBox headphones + Elasti...
Once the decision has been made to move part or all of a workload to the cloud, a methodology for selecting that workload needs to be established. How do you move to the cloud? What does the discovery, assessment and planning look like? What workloads make sense? Which cloud model makes sense for each workload? What are the considerations for how to select the right cloud model? And how does that fit in with the overall IT tranformation? In his session at 15th Cloud Expo, John Hatem, head of V...
Cloud services are the newest tool in the arsenal of IT products in the market today. These cloud services integrate process and tools. In order to use these products effectively, organizations must have a good understanding of themselves and their business requirements. In his session at 15th Cloud Expo, Brian Lewis, Principal Architect at Verizon Cloud, will outline key areas of organizational focus, and how to formalize an actionable plan when migrating applications and internal services to...
SAP is delivering break-through innovation combined with fantastic user experience powered by the market-leading in-memory technology, SAP HANA. In his General Session at 15th Cloud Expo, Thorsten Leiduck, VP ISVs & Digital Commerce, SAP, will discuss how SAP and partners provide cloud and hybrid cloud solutions as well as real-time Big Data offerings that help companies of all sizes and industries run better. SAP launched an application challenge to award the most innovative SAP HANA and SAP ...
Ixia develops amazing products so its customers can connect the world. Ixia helps its customers provide an always-on user experience through fast, secure delivery of dynamic connected technologies and services. Through actionable insights that accelerate and secure application and service delivery, Ixia's customers benefit from faster time to market, optimized application performance and higher-quality deployments.
SYS-CON Events announced today that Calm.io has been named “Bronze Sponsor” of DevOps Summit Silicon Valley, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Calm.io is a cloud orchestration platform for AWS, vCenter, OpenStack, or bare metal, that runs your CL tools puppet, Chef, shell, git, Jenkins, nagios, and will soon support New Relic and Docker. It can run hosted, or on premise and provides VM automation / expiry, self-service portals,...
In her General Session at 15th Cloud Expo, Anne Plese, Senior Consultant, Cloud Product Marketing, at Verizon Enterprise, will focus on finding the right mix of renting vs. buying Oracle capacity to scale to meet business demands, and offer validated Oracle database TCO models for Oracle development and testing environments. Anne Plese is a marketing and technology enthusiast/realist with over 19+ years in high tech. At Verizon Enterprise, she focuses on driving growth for the Verizon Cloud pla...
SYS-CON Events announced today that Aria Systems, the recurring revenue expert, has been named "Bronze Sponsor" of SYS-CON's 15th International Cloud Expo®, which will take place on November 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Aria Systems helps leading businesses connect their customers with the products and services they love. Industry leaders like Pitney Bowes, Experian, AAA NCNU, VMware, HootSuite and many others choose Aria to power their recurring revenue bu...
The Internet of Things (IoT) is going to require a new way of thinking and of developing software for speed, security and innovation. This requires IT leaders to balance business as usual while anticipating for the next market and technology trends. Cloud provides the right IT asset portfolio to help today’s IT leaders manage the old and prepare for the new. Today the cloud conversation is evolving from private and public to hybrid. This session will provide use cases and insights to reinforce t...
As Platform as a Service (PaaS) matures as a category, developers should have the ability to use the programming language of their choice to build applications and have access to a wide array of services. Bluemix is IBM's open cloud development platform that enables users to easily build cloud-based, creative mobile and web applications without having to spend large amounts of time and resources on configuring infrastructure and multiple software licenses. In this track, you will learn about the...
Blue Box has closed a $10 million Series B financing. The round was led by a strategic investor and included participation from prior investors including Voyager Capital and Founders Collective, as well as the Blue Box executive team. This round follows a $4.3 million Series A closed in December of 2012 and led by Voyager Capital. In May of this year, the company announced general availability of its private cloud as a service offering, Blue Box Cloud. Since that release, the company has dem...
SYS-CON Events announced today that Verizon has been named "Gold Sponsor" of SYS-CON's 15th International Cloud Expo®, which will take place on November 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Verizon Enterprise Solutions creates global connections that generate growth, drive business innovation and move society forward. With industry-specific solutions and a full range of global wholesale offerings provided over the company's secure mobility, cloud, strategic network...
SimpleECM is the only platform to offer a powerful combination of enterprise content management (ECM) services, capture solutions, and third-party business services providing simplified integrations and workflow development for solution providers. SimpleECM is opening the market to businesses of all sizes by reinventing the delivery of ECM services. Our APIs make the development of ECM services simple with the use of familiar technologies for a frictionless integration directly into web applicat...
The only place to be June 9-11 is Cloud Expo & @ThingsExpo 2015 East at the Javits Center in New York City. Join us there as delegates from all over the world come to listen to and engage with speakers & sponsors from the leading Cloud Computing, IoT & Big Data companies. Cloud Expo & @ThingsExpo are the leading events covering the booming market of Cloud Computing, IoT & Big Data for the enterprise. Speakers from all over the world will be hand-picked for their ability to explore the economic...
Cloudwick, the leading big data DevOps service and solution provider to the Fortune 1000, announced Big Loop, its multi-vendor operations platform. Cloudwick Big Loop creates greater collaboration between Fortune 1000 IT staff, developers and their database management systems as well as big data vendors. This allows customers to comprehensively manage and oversee their entire infrastructure, which leads to more successful production cluster operations, and scale-out. Cloudwick Big Loop supports ...
To manage complex web services with lots of calls to the cloud, many businesses have invested in Application Performance Management (APM) and Network Performance Management (NPM) tools. Together APM and NPM tools are essential aids in improving a business’s infrastructure required to support an effective web experience… but they are missing a critical component – Internet visibility. Internet connectivity has always played a role in customer access to web presence, but in the past few years use...