Welcome!

AJAX & REA Authors: Jason Bloomberg, Jaime Ryan, Kevin Benedict, Sandi Mappic, Matthew Lobas

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 Breaking News
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.
It’s time to face reality: "Americans are from Mars, Europeans are from Venus," and in today’s increasingly connected world, understanding “inter-planetary” alignments and deviations is mission-critical for cloud. In her session at 15th Cloud Expo, Evelyn de Souza, Data Privacy and Compliance Strategy Leader at Cisco Systems, will discuss cultural expectations of privacy based on new research across these elements.
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at Internet of @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, will discuss the underlying factors that are driving the economics of intelligent systems. Discover how hardware commoditization, the ubiquitous nature of connectivity, and the emergence of Big Data and analysis are providing the pull to meet customer expectations of a widely connected, multi-dimensional universe of people, things, and information.
SYS-CON Events announced today that Esri 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. Esri inspires and enables people to positively impact the future through a deeper, geographic understanding of the changing world around them. For more information, visit http://www.esri.com.
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.
There will be 50 billion Internet connected devices by 2020. Today, every manufacturer has a propriety protocol and an app. How do we securely integrate these "things" into our lives and businesses in a way that we can easily control and manage? Even better, how do we integrate these "things" so that they control and manage each other so our lives become more convenient or our businesses become more profitable and/or safe? We have heard that the best interface is no interface. In his session at Internet of @ThingsExpo, Chris Matthieu, Co-Founder & CTO at Octoblu, Inc., will discuss how these devices generate enough data to learn our behaviors and simplify/improve our lives. What if we could connect everything to everything? I'm not only talking about connecting things to things but also systems, cloud services, and people. Add in a little machine learning and artificial intelligence and now we have something interesting...
After a couple of false starts, cloud-based desktop solutions are picking up steam, driven by trends such as BYOD and pervasive high-speed connectivity. In his session at 15th Cloud Expo, Seth Bostock, CEO of IndependenceIT, cuts through the hype and the acronyms, and discusses the emergence of full-featured cloud workspaces that do for the desktop what cloud infrastructure did for the server. He’ll discuss VDI vs DaaS, implementation strategies and evaluation criteria.
Cloud computing started a technology revolution; now DevOps is driving that revolution forward. By enabling new approaches to service delivery, cloud and DevOps together are delivering even greater speed, agility, and efficiency. No wonder leading innovators are adopting DevOps and cloud together! In his session at DevOps Summit, Andi Mann, Vice President of Strategic Solutions at CA Technologies, will explore the synergies in these two approaches, with practical tips, techniques, research data, war stories, case studies, and recommendations.
Cloud Computing is evolving into a Big Three of Amazon Web Services, Google Cloud, and Microsoft Azure. Cloud 360: Multi-Cloud Bootcamp, being held Nov 4–5, 2014, in conjunction with 15th Cloud Expo in Santa Clara, CA, delivers a real-world demonstration of how to deploy and configure a scalable and available web application on all three platforms. The Cloud 360 Bootcamp, led by Janakiram MSV, an analyst with Gigaom Research, is the first bootcamp that introduces the core concepts of Infrastructure as a Service (IaaS) based on the workings of the Big Three platforms – Amazon EC2, Google Compute Engine, and Azure VMs. Bootcamp attendees will get to see the big picture and also receive the knowledge needed to make the best cloud decisions for their business applications and entire enterprise IT organization.
“Distrix fits into the overall cloud and IoT model around software-defined networking. There’s a broad category around software-defined networking that’s focused on data center, and we focus on the WAN,” explained Jay Friedman, President of Distrix, in this SYS-CON.tv interview at the Internet of @ThingsExpo, held June 10-12, 2014, at the Javits Center in New York City. Internet of @ThingsExpo 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading IoT industry players in the world.
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at 15th Internet of @ThingsExpo, Chad Jones, Vice President, Product Strategy of LogMeIn's Xively IoT Platform, will show you how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
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.
“The Internet of Things is a wave that has arrived and it’s growing really fast. The concern at Aria Systems is making sure that people understand the ramifications of their attempts to monetize whatever it is they build on the Internet of Things," explained C Brendan O’Brien, Co-founder and Chief Architect at Aria Systems, in this SYS-CON.tv interview at the Internet of @ThingsExpo, held June 10-12, 2014, at the Javits Center in New York City. Internet of @ThingsExpo 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading IoT industry players in the world.
The Internet of Things is a natural complement to the cloud and related technologies such as Big Data, analytics, and mobility. In his session at Internet of @ThingsExpo, Joe Weinman will lay out four generic strategies – digital disciplines – to exploit emerging digital technologies for strategic advantage. Joe Weinman has held executive leadership positions at Bell Labs, AT&T, Hewlett-Packard, and Telx, in areas such as corporate strategy, business development, product management, operations, and R&D.
SYS-CON Events announced today that DevOps.com has been named “Media Sponsor” of SYS-CON's “DevOps Summit at Cloud Expo,” which will take place on June 10–12, 2014, at the Javits Center in New York City, New York. DevOps.com is where the world meets DevOps. It is the largest collection of original content relating to DevOps on the web today Featuring up-to-the-minute news, feature stories, blogs, bylined articles and more, DevOps.com is where the thought leaders of the DevOps movement make their ideas known.