The Next Wave in Business Process Outsourcing (BPO)
The next wave in business process outsourcing (BPO) is coming, driven by the numerous advantages of the public cloud, and global enterprise needs to be prepared for it. Finance and accounting processes will be the next target of global systems integrators (GSIs), but this market will develop very differently than previous BPO arrangements. The lessons enterprises learned over the last couple of decades of BPO engagements will significantly shift the power dynamic between GSIs and clients, because the public cloud levels the playing field and eliminates the "throw it over the wall" and management-by-SLA approach which characterized BPO for so many years.
Here's what you should know about the coming opportunities in finance and accounting BPO:
The days of BPO as strictly a labor arbitrage game are over. Enterprises got the cost reductions they were promised, but lost too much control of the business processes and never received any additional business value. Costs were contained, but the relationship between enterprise and GSI soured, so there were no long-term benefits apart from the costs.
Enterprises will no longer face the worst of both worlds when it comes to infrastructure. Old-school BPO arrangements turned the processes over to the GSI, but the enterprise remained on the hook, directly or indirectly, to maintain the infrastructure and manage upgrades and other software tasks. Even when GSIs started rolling infrastructure-as-a-service into their agreements, the enterprise still lost out, because the outsourced process now became even more opaque.
The next wave of BPO activity will be built around partnerships and transparency. The old contracts were built around client/vendor engagements, not partnerships. As a result, the only real tool most enterprises had to control in the GSI was system-wide service level agreements. SLAs are blunt instruments and don't provide enterprises with the level of visibility and control they need to ensure that their brand is being protected.
The public cloud will give enterprise the visibility they have wanted for so long. Because everyone has access to the same data and workflow, the enterprise is no longer in the dark as to how the GSI is achieving its contracted goals. Moreover, business leaders can collaborate on even terms with the GSI to revise and improve business value after the efficiencies are gained.
The standard contract length in the public cloud is significantly shorter than in the traditional BPO world. GSIs will be forced to provide more elasticity to the enterprise and make it possible to shrink or grow the relationship based on the changing business climate, rather than forcing a five- or 10-year lock-in at the start of the agreement.
Is there any future in BPO?
The next wave in BPO is participatory, transparent, and flexible. And it will happen in the public cloud.