Business Process Management is the “Next Big Thing” for Shared Services and BPO
There’s been a lot of discussion on the LinkedIn groups for Shared Services and Business Process Outsourcing (BPO) companies of late on the topic of “what’s the next big thing?” People believe the low-hanging fruit is gone. Customers still expect improvements in service and cost reductions, but how? I’ll make my case for the answer in a minute, but first some background.
The idea behind a shared services center is simple – pull together similar work that’s being done in different parts of an organization. BPO companies do the same thing, just on an outsourced basis. Finance is the classic example. Combine the financial operations of several business units such as order-to-cash, purchase-to-pay, and record-to-report into a single shared services center. That center provides services to its clients – the businesses from which they came. The economic rationale is strong and the initial steps clear. Gain scale through combining similar operations, relocate work to lower wage geographies, and further enhance savings by finding process improvements.
What do you do to drive enhancements after those moves? Further improvements have to come from automating and streamlining the process which requires technology and great software. This is a greater challenge than combining and relocating work, made all the harder now that the staff is a half-world away from the clients. But the rewards are worth the investment as those who execute this next phase well stand to gain lasting competitive advantage.
Where do you look to improve your processes? Start with what people complain about most as that is an area where things are clearly broken. I came across a great example this week in the PayStream Advisor’s Benchmarking Survey. They asked leaders of purchase-to-pay processes to rate what causes them the most pain. The answers in order are:
- Manual data entry
- Resolving exceptions and errors
- Routing of invoices for approval
- Lack of visibility across purchase to pay process
- Lost or missing invoices
- Inability to accurately forecast liabilities
These pains are indicative of a largely manual process relying on paper printouts, spreadsheets to manually track the status of work, and e-mail to communicate and collaborate. Automation is the answer and it comes in many flavors. The first place most people go to is automated image capture to get rid of the paper. That helps, but only addresses a few of the chief pains. Specialized software products exist to help companies fully automate the purchase-to-pay process. These are better as they are comprehensive solutions, but all suffer from the fact that they are designed for an “average” customer. The software companies behind these products have to maximize overall customer happiness and prioritize their product roadmap appropriately. That means changes you want to fit your unique business are low priority for them. It is also hard to gain competitive advantage if you’re using the same software as your competitors. You could offer to pay for customization, or hire a company to develop a custom package, but those are dangerous roads as I explained in a prior blog post.
Business process management (BPM) software offers the best of all possible solutions. Shared services groups and BPO companies who use BPM software have their business users create and modify process applications with minimal support from IT. They enjoy the ability to rapidly change their applications to fit evolving client needs and identify additional areas for process improvement as I noted in another prior blog post. BPM also has the great advantage of easily working with existing systems, allowing you to avoid “rip and replace”. And those who work with Appian can take advantage of our built-in mobile and social capabilities which are unique among BPM software companies.
Shared services leaders and BPO organizations should look to BPM software to help improve their offerings and competitive positioning. Several Appian clients are already leading the way. See our website for examples from financial operations and IT service management.
Vice President of Solutions