Chief procurement officers have long viewed business process outsourcing (BPO) as a way to streamline operations, enhance efficiency and reduce costs.
BPO, however, can do so much more than that. Today, leaders in this space are increasingly looking at BPO as a way of adding value, enabling their procurement functions to play a more strategic role in the business. This involves using their BPO relationships to provide business insight, innovation, and solutions, not just cost cut.
So, where is this value derived from, and what separates the best performing BPO relationships from the rest? In recent research, Accenture, partnering with the Everest Group and The Outsourcing Unit at LSE, looked into the characteristics of “high performance BPO.” The study found that 60 percent of respondents continue to view BPO as little more than a tactical cost-reduction tool, whilst only 20 per cent fully grasp its potential.
High performers demonstrated best practices across eight areas:
- Holistic approach to BPO.
High performers take a holistic approach to services, whether within the enterprise or external. Provider and user receive a snapshot of the whole process – even if the provider is only accountable for a sub-process. 89 per cent of high performers consider process excellence a priority, compared to only 63 per cent of the rest.
- Collaborative approach to BPO governance.
Good BPO governance is all about collaboration and the attitudes that make this possible. Nearly 85 per cent of high performers consider their provider a strategic partner, understanding their objectives and issues.
- Change management.
Change management is key in a good BPO relationship. An organisation’s
transition from its old operations to a new outsourcing environment needs to be carefully managed, and continuous adaptation must be embedded in an organisation.
- Value beyond cost reduction.
Two-thirds of high performers focus on the potential value of business benefits beyond cost when creating their business case, compared to 26 per cent of the rest.
- Business outcomes.
High performers (56 per cent) focus on achieving measurable business results from their BPO relationships, looking to generate real competitive advantage.
- Domain expertise and analytics.
Analytics is a key tool for 42 per cent of high performers, who see it as a priority in a BPO relationship. Expertise in particular procurement categories, like marketing spend across geographies, is also a must.
- Retained organisation transformation.
High performers look to align and modify their retained agency to optimise their BPO operating model. These modifications can be in the form of roles, responsibilities and requisite skills.
- Technology as a business enabler.
High performers embrace the potential of technology to enable business. They seek to streamline systems through technology, leading to more efficient operations and cost reductions.
As the research reveals, the opportunity exists today for the procurement function to drive far greater business value from BPO and, as a result, provide more competitive advantages than simply cost reduction. Businesses need to embrace this more strategic approach to outsourcing to distinguish themselves from their competitors.
☛ David Conte is Global BPO Procurement Lead at Accenture