As Business Process Outsourcing matures, and it moves from pure cost reduction business decision to a collaboration of buyers and purveyors of services, the question facing customer and service providers alike is if they are ready for the paradigm shift? BPO collaboration has been accelerating, businesses continue to strive for increased profitability by pushing overall operational costs lower, and at the same time they are demanding higher quality and more sophisticated services from their vendors.
To be sure lower operating costs are a basic customer requirement; no one outsources a business process with the objective of paying more. The trend, however, is going beyond the purchase of basic “your mess for less service.” Buyers of outsourcing services are requiring much more from their vendors. They want and need collaborative relationships that transform the entire value stream, not just the piece managed by the vendor. To achieve optimization of a business processes requires the active collaboration across both organizations. To do this, the culture of continuous improvement needs to be instilled in the new organization’s culture. To be successful, the “new organization” requires the melding of customer and the service providers cultures; the needs of both must be understood and leveraged, they must strive for excellence together. Some organizations are turning to Lean, Six Sigma, and a host of other continuous improvement methodologies to guide the improvement effort. This is just a start, the bigger challenge is the boundaries established within BPO contracts that drive decisions based on functional objectives and priorities which hinder and prevent processes from being managed from “end-to-end.”
The focus needs to be on the external requirements of external customers; in this way processes are focused on delivering products and services with the highest quality, lowest cost, and shortest lead times. Service Level Agreements (SLAs) drive compliance; all too often they are not tied to the business’ operational requirements, and most importantly the external customer requirements. Too many times, SLAs require a 24 hour entry of an order request into an ERP system, and at the same time the customers manufacturing operations only establishes their production schedule once a week? The requirement of a 24 hour completion time-frame means extra staff and capacity for the vendor to meet the SLA; in the end orders entered into the ERP system sit in queue for days waiting for the factory to set its schedule. This sort of misalignment happens all the time, and in the end, both the external customer and outsourcing customers pay more for their services!
To overcome this misalignment, both the service provider and customer need to insure that the talent or skill sets necessary for collaboration, exist in both the customers’ and vendors’ organizations. Unfortunately, the basic skill sets that are needed for collaboration and continuous improvement are often not present in the staff of BPO customers. This means that the service providers need to be able to provide a collaborative road map, and have the skills necessary to improve business processes, and operations with their customers from end to end.
For the BPO service provider, this means having the capabilities to develop, deploy and be experts in:
- Strategy and change Management, developing the collaboration strategy, and executing change management activities is essential for deploying a successful collaborative improvement program.
- Collaborative infrastructure development, project selection, benefits calculations, project management, etc.
- Continuous improvement training and/or skill set development for both teams.
- Robust project execution in essence facilitating collaboration where the lines of responsibility are blurred.
- Industry and process experts who know and can facilitate improvement in the customers operations.
For the customer, this means a fundamental paradigm shift in the customer / vendor relationship. While continuous improvement can be purchased, a service provider cannot physically change the way people think, or how a process works, without the collaborative participation of the customers’process owners, staff, and the leadership team.
For the customer, collaboration means:
- A Leadership team who are willing to break the paradigm of the pure customer / service provider relationship.
- Creating a burning platform for change, business as usual cannot continue; customers must become experts in transforming their organizations, BPO vendors cannot and should not be solely responsible for the success of the partnership.
- Developing a continuous improvement infrastructure—if it does not already exist—to facilitate end to end continuous improvement.
- Training a cadre of staff with the skill sets in Lean, Six Sigma, project management, and change management to make operational changes.
Tying this effort together is the contract that the customer and vendor must know how to begin the collaborative dance. This agreement must be crafted with an eye towards collaboration; roles and responsibilities, acceptance criteria, benefit calculations, and gain sharing all need to be part of the original agreement. The contract must also be written with the recognition that business environment requires changes; the change request process must be robust enough to facilitate the changes that will need to occur. A successful collaborative relationship means give and take, and the understanding of what drives the interests of each partner for the relationship to be a win / win experience.