Why BPO is Broken and How BPaaS Could Be The Solution
Transcript of Why BPO is Broken and How BPaaS Could Be The Solution
Overall Most Innovative
Cloud Provider
7 patents in last year
Why BPO is Broken and
How BPaaS Could Be The Solution
Arijit Sengupta CEO, BeyondCore, Inc.
Chair, IAOP Cloud Computing Chapter
Co-Chair, IAOP Outsourcing Tools &Technology Innovation Chapter
Member, Cyber Security Advisory Group, India
©2011 BeyondCore, Inc. www.beyondcore.com
Eight patents related to Business Process Operations and BPaaS.
Previously worked at Oracle, Microsoft, Yankee Group and General Motors
Guest lectured at Stanford and other universities
Was written about in The World Is Flat release 3.0, the New York Times,
San Jose Mercury News, and other leading publications.
MBA with Distinction from the Harvard Business School
Bachelor degrees with Distinction in Computer Science and Economics
from Stanford University
Game changing solutions for
Business Process Operations
©2011 BeyondCore, Inc. www.beyondcore.com
Patented SaaS Advanced Analytics solution that delivers in
6 hours the quality benefits that Six Sigma delivers in 6 months
Patented Privacy / Security solution addresses insider theft
10% of the Fortune 100 and six of the ten largest outsourcing
providers have used BeyondCore
Chairs the IAOP Cloud Computing Chapter. Co-chairs include:
“In a matter of days, BeyondCore's unique solution
identified easy to-implement opportunities for improving
our quality by 30%” – Niraj Patel, CIO GMACCM
“BeyondCore developed a software algorithm able to detect and
reduce errors in outsourced back-office work.” – Tom Friedman in
and The World Is Flat Release 3.0
©2011 BeyondCore, Inc. www.beyondcore.com
Choose Partners
Align Incentives
Measure Outcomes
Handle Change
Scale Solutions
Five Key Activities
Focus on Total Cost of Ownership
Direct Cost of
Operations (DCO)
Total Cost of Errors
(TCE)
Cost of Control (CoC)
Total Cost of
Ownership (TCO)
Stanford student research suggests that US firms drastically underestimate
their TCO because they misunderstand, underestimate, and / or ignore many of
the hidden costs associated with the TCO for their business process.
Current
focus
of most
firms
Often overlooked sources of
savings
See www.totalcostoferrors.com for details
©2011 BeyondCore, Inc. www.beyondcore.com
Importance of TCE:
Which provider would you choose?
Provider 2 Provider 1
Price per transaction (DCO): $0.70 $1.00 30% lower
Simplified disguised example based on an US-based insurer:
10% increase in error rates wipes out a 30% DCO difference
% of transactions with errors: 1.0% 1.1% 10% higher
Downstream avg. cost per error: $300 $300
TCE per transaction: $3.00 $3.30
TCO/transaction (ignoring CoC): $4.00 $4.00
X
=
+
=
©2011 BeyondCore, Inc. www.beyondcore.com
Are you paying per headcount?
Are you doing value-sharing
contracts?
Does you contract demand
innovation but doesn’t pay for it?
Do you really want to know bad
news about your BPO contract?
Are you Incentives Aligned?
Are you measuring the right things?:
TCE can easily overwhelm DCO Simplified anonymized TCE example based on Global 1000 bank data
DCO:
$1
Customer Support calls caused by data entry errors:$2
Average error rate
Average cost of error
0.5%
$400
Downstream impact on Credit Card issuing process: $1.50
Average error rate
Average cost of error
2%
$75
Back-office Error Correction (Quality Control): $1
Average error rate
Average cost of error
5%
$20
Credit Card Data Entry: $1
Processing Cost $1
TCE:
$4.50
©2011 BeyondCore, Inc. www.beyondcore.com
Can you accurately measure quality?
©2011 BeyondCore, Inc. www.beyondcore.com
Manual
Audits
Rules Based
Software
Quality before BeyondCore
At Data Entry 1.09%
After Manual Quality Control (QC) 0.83%
Error rate reported by QC 0.26%
Percent of errors caught by QC 23%
Errors in Claims
FTQ Final
Can you accurately measure quality?
©2011 BeyondCore, Inc. www.beyondcore.com
In-house or outsourced process and
reported error rates (measured before quality control, *= measured after quality control)
Fortune 500 Financial Services firm 1-2% 26%
Fortune 500 Airline 3% 18%
S&P 500 Bank 2% 7%
Fortune 500 diverse conglomerate 4% 12%
Fortune 500 Consumer Products firm 4% 11%
Seven year old, top-quality process at leading Outsourcer * 1% 1.13%
Be
yon
dC
ore
an
alys
is
Pre
vio
usl
y R
ep
ort
ed
Humans catch between 25%-80% of errors. They also need to focus on a few
critical fields and may miss critical sources of errors that are not part of the SLA.
Rapid changes are a business reality
Process Flexibility
Competitive Advantage
Market Changes
Regulatory Changes
Process Inflexibility
Business Failure
©2011 BeyondCore, Inc. www.beyondcore.com
Are your Business Processes flexible?
©2011 BeyondCore, Inc. www.beyondcore.com
Process Inflexibility
Legacy Systems may not support
proposed changes
Six+ months required to
stabilize process changes (using manual methods like Six Sigma)
Operator training severely
constrains process changes
©2011 BeyondCore, Inc. www.beyondcore.com
Is BPO scalable?
Process
“Lift & Shift’ Process Transfer
Factory-style Operational Control
Manual Process Improvement
Manual Reaction to Process Changes
People
Manual Hiring
Management Through Constraints
Manual Training
High Employee Churn
©2011 BeyondCore, Inc. www.beyondcore.com
BPaaS: Just replace VPN with SaaS
Top 10 BPO
We love BPaaS. Now we can work on the
client process much faster than over VPN.
©2011 BeyondCore, Inc. www.beyondcore.com
BPaaS: Just add BPO to SaaS
Fortune 100
Software firm
We focus on SaaS/PaaS. We count on our
service partners to take care of BPaaS.
BPaaS: the obvious next step
Servers Software Business
User
Technology
Expert
Hosting
Packaged Software
IT Outsourcing (ITO)
BP Outsourcing (BPO)
PaaS
SaaS
BPaaS
25-50% of BPO moving to BPaaS (Gartner, Saugatuck)
©2011 BeyondCore, Inc. www.beyondcore.com
©2011 BeyondCore, Inc. www.beyondcore.com
The challenges are similar, not same
BPaaS PaaS/SaaS
Security
Quality
Scalability
Risk
Protect the border
Regulatory Compliance
Regulatory Compliance
Operational Risk
Privacy
Protect the interior
Information theft
Employee fraud
Infrastructure quality
Output quality
Prevent errors
Monitor / audit
Scalable technology
Scalable process
Process platform
Process transfer
Security: people are the problem
©2011 BeyondCore, Inc. www.beyondcore.com
“Technology professionals are getting cold feet about
moving more operations onto the cloud when poor
corporate security practices are exposing customers to
devastating identity theft and fraud.” – New York Times
“Nearly 90% of all security breaches at 13 small,
mid-sized and large IT/ITeS companies in 2009-10 was
an insider job” – PwC survey quoted in Times of India
Encryption and firewalls
can’t protect against insiders
If people don’t follow
security practices, existing
solutions can’t help
“Separating information to enable cloud-based processing has been around
for a while but having that process automated via a SaaS product is
fairly novel.” – BeyondCore Combines Compliance and the Cloud, 7/4/11
Technology like SplitSecure is the solution
BeyondCore’s ProcessFlexibility™ Vision
Operator specific
Process impact driven
Highly cost effective
6X faster training
enabled by BeyondCore
Rapid cycles of
focused improvement
Automated, accurate
root cause detection
10-30% improvement in weeks
enabled by BeyondCore
Flexible UI
Flexible Workflow
Flexible data storage
©2011 BeyondCore, Inc. www.beyondcore.com
Process Flexibility
Flexible Systems
Rapid Process
Stabilization
Highly Effective Training
©2011 BeyondCore, Inc. www.beyondcore.com
BPaaS done right vs. five key activities
Choose Partners
Align Incentives
Measure Outcomes
Handle Change
Scale Solutions
Copyright © 2009 IAOP. All Rights Reserved. Copyright © 2010 IAOP. All Rights Reserved. www.IAOP.org
A few BPaaS Case Studies
Cloud Computing
Chapter
Copyright © 2009 IAOP. All Rights Reserved. Copyright © 2010 IAOP. All Rights Reserved.
A Business Perspective on Cloud Computing
Execution as a Service
Mantra: Consolidate systems,
eliminate borders
Coordination as a Service
Mantra: Seek a global optimum
rather than local optima
Innovation as a Service
Mantra: The world of ideas always beats your best ideas
Technology as a Service
Mantra: Standardize my mess and run for less
Business
Process
as a Service
Work Product of the IAOP Cloud Computing Chapter
Copyright © 2009 IAOP. All Rights Reserved. Copyright © 2010 IAOP. All Rights Reserved.
In Search of Business Value
• Gartner frameworks for Cloud Services layers1
• Opportunities for Business Value2
– Process Redesign
– Business Innovation
Source 1: Mark P. McDonald, “Technology Goes Public and what it means for IT” (Gartner 6/3/2010).
Source 2: Cassio Dreyfuss, “Cloud-Computing Service Trends: Business Value Opportunities and Management Challenges, Part 2” (Gartner 2/23/2010 ID: G00173680)
Private
Public
Work Product of the IAOP Cloud Computing Chapter
System Infrastructure Services
Business Services
Information Services
Application Services
App. Infrastructure Services
Cloud
Enablers M
gm
t. a
nd S
ecurity
Copyright © 2009 IAOP. All Rights Reserved. Copyright © 2010 IAOP. All Rights Reserved.
System Infrastructure Services
Business Services
Information Services
Application Services
App. Infrastructure Services
Cloud Enablers Mgm
t. a
nd S
ecurity
Mapping Perspectives
Gartner frameworks for Cloud Services layers
Coordination
as a Service
Execution as
a Service
Technology
as a Service
Innovation as
a Service
Work Product of the IAOP Cloud Computing Chapter
Copyright © 2009 IAOP. All Rights Reserved. Copyright © 2010 IAOP. All Rights Reserved.
Execution as a Service: Case Study
•EIPP achieved 20% reduction in invoices
and associated costs of processing
•Self Service reduced operational costs by
20% and call centre volume by 35%
•Reduced DSO and accelerated cash flow
• Improved dispute handling
•Significant reduction in errors compared to
manual processing
• SaaS solution using Genpact’s Electronic
Invoice Presentation and Payment platform
• Consolidate all legacy billing systems
• Enable customer self service
• Allow customers to dispute part of a bill and
pay the rest
Implement a solution that removes the
inefficiencies of multiple legacy systems, enables
customer self service and allows part fulfillment
Leasing division of major office supplier looking for reducing operating costs in their Order-to-Cash process
ABOUT THE CUSTOMER
DELIVERED IMPACT BUSINESS CHALLENGE
GENPACT SOLUTION
Electronic invoicing for major office supplier
Work Product of the IAOP Cloud Computing Chapter
Copyright © 2009 IAOP. All Rights Reserved. Copyright © 2010 IAOP. All Rights Reserved.
SpeechCycle: EaaS & CaaS Case Study
Coordination as a Service • Complex business processes
• Span call center & ERP/CRM
• Flexible: modifiable & extendable
Execution as a Service • Routes to operator when needed
• Executes call center business process
• Operators interact with single system
wherever possible
Work Product of the IAOP Cloud Computing Chapter
Copyright © 2009 IAOP. All Rights Reserved. Copyright © 2010 IAOP. All Rights Reserved.
Innovation as a Service: Case Study
Before •2 data entry
screens
•Redundant,
duplicate
fields
•Operator
confusion
Single consistent
interface in Azure
Backend
systems
On the Cloud
Flexible
integration
BeyondCore Insight
automated error
root cause analytics
XML data
Execution as a Service
Innovation as a Service
Process:
Invoice Data Entry
Customer:
powered by Innovation by
Invoice data
in Azure
XML data
Analysis report
via Office Live
XML report
Work Product of the IAOP Cloud Computing Chapter
Copyright © 2009 IAOP. All Rights Reserved. Copyright © 2010 IAOP. All Rights Reserved.
Infosys POC: Putting it all together
XML
report
XML
data
Advanced algorithms for error root cause
analysis, identification and elimination
Raw data
to report in
minutes
Flexible
process or
UI changes
Operator
specific
training
Field name Incorrect Correct
Address 8557 Park Rd 8857 PARK RD
First Name Lindsey LINDSAY
SSN xxxxx1364 XXXXX1634
Age 36 35
Effective 1/12/2007 1/2/2007
Automated
Error
Detection
Data Entry
(UI on Azure)
Innovation as a Service Technology as a Service
Execution as a Service
Policy data
in Azure™
Analysis report
via Office Live
Error Rate,
Pattern and Root
Cause Reports
Work Product of the IAOP Cloud Computing Chapter
Pattern Example: Just three
out of 30 fields counted for
37% of overall errors
Copyright © 2009 IAOP. All Rights Reserved. Copyright © 2010 IAOP. All Rights Reserved.
The future of BPaaS
Work Product of the IAOP Cloud Computing Chapter
©2011 BeyondCore, Inc. www.beyondcore.com
Let’s build true BPaaS (not marketing balderdash)
Questions/comments: [email protected]