Welcome!

AJAX & REA Authors: Rajesh Lain, Sebastian Kruk, RealWire News Distribution, Harald Zeitlhofer

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

Cloud Expo Latest Stories
With the explosion of the cloud, more businesses are transitioning to a recurring revenue model to generate reliable sales, grow profits, and open new markets. This opportunity requires businesses to get to market quickly with the pricing and packaging options customers want. In addition, you will want to take advantage of the ensuing tidal wave of data to more effectively upsell, cross-sell and manage your customers. All of this is possible, but only with the right approach. At 15th Cloud Expo, Brendan O'Brien, Co-founder at Aria Systems and the inventor of cloud billing panelists, will lead a panel discussion on what it takes to launch and manage a successful recurring revenue business. The panelists will offer their insights about what each department will need to consider, from financial management to line of business and IT. The panelists will also offer examples from their success in recurring revenue with companies such as Audi, Constant Contact, Experian, Pitney-Bowes, Teleko...
Planning scalable environments isn't terribly difficult, but it does require a change of perspective. In his session at 15th Cloud Expo, Phil Jackson, Development Community Advocate for SoftLayer, will broaden your views to think on an Internet scale by dissecting a video publishing application built with The SoftLayer Platform, Message Queuing, Object Storage, and Drupal. By examining a scalable modular application build that can handle unpredictable traffic, attendees will able to grow your development arsenal and pick up a few strategies to apply to your own projects.
Come learn about what you need to consider when moving your data to the cloud. In her session at 15th Cloud Expo, Skyla Loomis, a Program Director of Cloudant Development at Cloudant, will discuss the security, performance, and operational implications of keeping your data on premise, moving it to the cloud, or taking a hybrid approach. She will use real customer examples to illustrate the tradeoffs, key decision points, and how to be successful with a cloud or hybrid cloud solution.
The cloud provides an easy onramp to building and deploying Big Data solutions. Transitioning from initial deployment to large-scale, highly performant operations may not be as easy. In his session at 15th Cloud Expo, Harold Hannon, Sr. Software Architect at SoftLayer, will discuss the benefits, weaknesses, and performance characteristics of public and bare metal cloud deployments that can help you make the right decisions.
Over the last few years the healthcare ecosystem has revolved around innovations in Electronic Health Record (HER) based systems. This evolution has helped us achieve much desired interoperability. Now the focus is shifting to other equally important aspects – scalability and performance. While applying cloud computing environments to the EHR systems, a special consideration needs to be given to the cloud enablement of Veterans Health Information Systems and Technology Architecture (VistA), i.e., the largest single medical system in the United States.
Cloud and Big Data present unique dilemmas: embracing the benefits of these new technologies while maintaining the security of your organization’s assets. When an outside party owns, controls and manages your infrastructure and computational resources, how can you be assured that sensitive data remains private and secure? How do you best protect data in mixed use cloud and big data infrastructure sets? Can you still satisfy the full range of reporting, compliance and regulatory requirements? In his session at 15th Cloud Expo, Derek Tumulak, Vice President of Product Management at Vormetric, will discuss how to address data security in cloud and Big Data environments so that your organization isn’t next week’s data breach headline.
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using the URL as a basic building block, we open this up and get the same resilience that the web enjoys.
Is your organization struggling to deal with skyrocketing volumes of digital assets? The amount of data is growing exponentially and organizations are having a hard time managing this growth. In his session at 15th Cloud Expo, Amar Kapadia, Senior Director of Open Cloud Strategy at Seagate, will walk through the essential considerations when developing a cloud storage strategy. In this discussion, you will understand the challenges IT is facing, why companies need to move to cloud, and how the right cloud model can help your business economically overcome the data struggle.
If cloud computing benefits are so clear, why have so few enterprises migrated their mission-critical apps? The answer is often inertia and FUD. No one ever got fired for not moving to the cloud – not yet. In his session at 15th Cloud Expo, Michael Hoch, SVP, Cloud Advisory Service at Virtustream, will discuss the six key steps to justify and execute your MCA cloud migration.
The 16th International Cloud Expo announces that its Call for Papers is now open. 16th International Cloud Expo, to be held June 9–11, 2015, at the Javits Center in New York City brings together Cloud Computing, APM, APIs, Security, Big Data, Internet of Things, DevOps and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal today!
Most of today’s hardware manufacturers are building servers with at least one SATA Port, but not every systems engineer utilizes them. This is considered a loss in the game of maximizing potential storage space in a fixed unit. The SATADOM Series was created by Innodisk as a high-performance, small form factor boot drive with low power consumption to be plugged into the unused SATA port on your server board as an alternative to hard drive or USB boot-up. Built for 1U systems, this powerful device is smaller than a one dollar coin, and frees up otherwise dead space on your motherboard. To meet the requirements of tomorrow’s cloud hardware, Innodisk invested internal R&D resources to develop our SATA III series of products. The SATA III SATADOM boasts 500/180MBs R/W Speeds respectively, or double R/W Speed of SATA II products.
In today's application economy, enterprise organizations realize that it's their applications that are the heart and soul of their business. If their application users have a bad experience, their revenue and reputation are at stake. In his session at 15th Cloud Expo, Anand Akela, Senior Director of Product Marketing for Application Performance Management at CA Technologies, will discuss how a user-centric Application Performance Management solution can help inspire your users with every application transaction.
SYS-CON Events announced today that Gridstore™, the leader in software-defined storage (SDS) purpose-built for Windows Servers and Hyper-V, 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. Gridstore™ is the leader in software-defined storage purpose built for virtualization that is designed to accelerate applications in virtualized environments. Using its patented Server-Side Virtual Controller™ Technology (SVCT) to eliminate the I/O blender effect and accelerate applications Gridstore delivers vmOptimized™ Storage that self-optimizes to each application or VM across both virtual and physical environments. Leveraging a grid architecture, Gridstore delivers the first end-to-end storage QoS to ensure the most important App or VM performance is never compromised. The storage grid, that uses Gridstore’s performance optimized nodes or capacity optimized nodes, starts with as few a...
SYS-CON Events announced today that Cloudian, Inc., the leading provider of hybrid cloud storage solutions, 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. Cloudian is a Foster City, Calif.-based software company specializing in cloud storage. Cloudian HyperStore® is an S3-compatible cloud object storage platform that enables service providers and enterprises to build reliable, affordable and scalable hybrid cloud storage solutions. Cloudian actively partners with leading cloud computing environments including Amazon Web Services, Citrix Cloud Platform, Apache CloudStack, OpenStack and the vast ecosystem of S3 compatible tools and applications. Cloudian's customers include Vodafone, Nextel, NTT, Nifty, and LunaCloud. The company has additional offices in China and Japan.
SYS-CON Events announced today that TechXtend (formerly Programmer’s Paradise), a leading value-added provider of server and storage virtualization, and r-evolution 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. TechXtend (formerly Programmer’s Paradise) is a leading value-added provider of software, systems and solutions for corporations, government organizations, and academic institutions across the United States and Canada. TechXtend is the Exclusive Reseller in the United States for r-evolution