From stability to transformation

It’s a key part of human nature to look for hope at times of hardship: we would probably not have evolved beyond a certain stage without a large dose of optimism in our make-up. So during times when almost everyone seems to be a loser, it is traditional to see if we can find one or two winners, as well, and these may prove to be the more innovative players in the BPO market.

Reinventing BPO
The economic melt-down is fuelling a major re-evaluation of BPO, leading to the emergence of a new concept: “Collaborative BPO”, which is likely to have a profound and long-lasting impact on the market. That’s because, once you start to put these two ideas together (BPO and Collaboration) all kinds of interesting possibilities start to emerge for real transformation.

Enterprises that want to change their cost base and balance sheet profoundly and permanently can do it, if they can find the right partners and the right level of courage round their board room tables. They can shrink their corporate firewalls, establish a tighter definition of what constitutes core business, rely more on collaborative working with a network of specialists and transfer responsibility for innovation in defined areas to external partners.

The difference between this collaborative definition of BPO and the traditional kind is the way it brings innovative thinking about processes into the client’s strategic decision-making. Traditional BPO tends to preserve existing processes more or less as they are, or consolidates them into a “process factory” that enables standardisation and cost reduction. The focus is normally on efficiency and containment: the supplier does not, as a rule, have any incentive to innovate, while each new client acquired actually reduces the possibility of doing something new. Collaborative BPO, by contrast, will make an active contribution to the transformation of the client enterprise. It will be an engine for reconfiguration, restructuring and redefinition of core business.

Platforms and service
Successful enterprises contain a core source of value that is theirs and theirs alone: unique to them, special and inalienable. We think this all-important kernel is, in fact, already quite small and likely to become smaller still under the impact of economic hardship. In the world of Collaborative BPO, the corporate firewall will be drawn tightly around this core, but almost everything else could be open to continuous, almost day by day negotiation, with services bought in as needed on a “commodity trading” model.

The “everything else” will certainly include traditional shared services, such as payments, people management, ICT and other forms of transaction management. Increasingly, however, it will also cover research and development (often managed collaboratively in the life sciences industry already) and key aspects of customer service.

Technology convergence and the emergence of the “cloud” will enable bolder changes to take place. Some of the outcomes will be truly surprising. Traditional, long-term strategic partnerships for technology services, for example, may become increasingly redundant in a world where a growing number of services can be bought in from the cloud on a more flexible basis.

> part 2