High Performance BPO and the Value Multiplier Effect. Cras venenatis, est ac euismod viverra

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1 High Performance BPO and the Value Multiplier Effect Cras venenatis, est ac euismod viverra 1

2 Automation, analytics and talent are driving greater value in today s BPO. The Accenture 2015 High Performance BPO Report highlights a select group of companies and providers who, together, are delivering greater long-term value from their BPO relationships. 2

3 About one in five companies, according to our research, have found the key to extracting the most benefits from their outsourcing engagements. What are the secrets of these high performers? Those that are experiencing transformational value share a common mindset that sees BPO as a value multiplier rather than a process substitute. In addition to traits such as partnering and leadership (see Sidebar, page 9) two traits rose to the top in this year s survey: technology and talent. Technology Advanced technologies are now distinguishing the best BPO relationships from typical ones. Highperformance BPO will increasingly be digital BPO, leveraging the latest advancements in automation, analytics, cloud and mobility. In this environment, a provider s technology-enabled processes are BPO value multipliers a critical factor in unlocking new forms of value from BPO. Talent Similarly, BPO providers and buyers alike are finding that talent both in the retained organization and among providers is also becoming a value multiplier in BPO. Companies are awakening to the fact that insufficient investment in people is hampering the value delivered from their BPO initiatives. Our research confirms that focusing on talent is now a distinguishing feature of high-performance BPO. The Role of Technology and Talent in High Performance BPO The digital technology revolution is dramatically transforming every industry. Digital is changing the way companies serve customers, drive innovation, manage operations, support the workforce, and more. Digital and cloud technologies are enabling a new as-a-service economy that is allowing enterprises to (see Figure 1) improve the agility and scalability of their global operating model through plug-andplay services; (see Figure 2) innovate at greater pace and take new capabilities to market faster; and (see Figure 3) reinvent cost models by moving on-premise technologies to the cloud and paying based only on use. BPO providers and buyers can focus on achieving positive business outcomes, not just cost savings. 3

4 Advancements such as automation and analytics are altering the balance between talent and technology in the top-performing BPO relationships. The new as-a-service economy will help enterprises to not only be more agile through plug and play services, but will also help deliver it faster, for less money (pay for only what you use), and provide the ability to start small and scale fast. But most importantly, BPO providers will be able to focus on delivering business outcomes, not just cost savings. This year s study highlights technology s growing importance in successful BPO. Sixty-nine percent of high performers said gaining access to technology in a BPO relationship was important, while only 27 percent of typical performers agreed a wide, 42 point differential (see Figure 1). The advantage to high performers: bringing specialized technology solutions and expertise from the provider into the relationship. Similarly, talent has risen to the fore as a prime differentiator. Seventy-eight percent of high performers said their BPO relationship allowed them to augment their talent pool and gain access to scarce skills (see Figure 2). And more than half noted that the BPO relationship had far-reaching effects beyond just adding new talent; it gave them impetus to transform their retained talent model as well, acquiring new capabilities and re-skilling existing staff to focus more on business outcomes than process management. Overall, more than 75 percent of high performers cited the importance of the provider s BPO expertise as critical to their success, compared to only 38 percent of typical performers (see Figure 3). What is critical to understand, however, is how technology advancements such as automation and analytics are altering the balance between talent and technology in the top-performing BPO relationships and thus driving better value from BPO. 4

5 FIGURE 1. FIGURE 2. FIGURE 3. High performers believe that access to technology is an important priority High performers say that the BPO relationship enabled the augmentation of the talent pool Access to industry and process expertise is an important priority for high performers 69% 78% 76% 27% 19% 38% High Performers Typical Performers 5

6 The Pyramid of Work Human involvement is still needed 6

7 Technology is not removing the need for human involvement. Rather, it is clarifying how and when distinctive human skills of discernment and judgment can be true BPO value multipliers. Here we need to look at what we call the pyramid of work (see Figure 4). FIGURE 4. The Pyramid of Work Transaction Processing and Automation At the first layer of the work pyramid are repetitive, task-based transactions. Here, automation technologies can eliminate some of that transactional work, drive significant process improvements, reduce the need for labor and increase quality. The benefits of taking an automation approach to transaction-based work are considerable: Talent Deliver industry insight and expertise Increases speed: Supports faster employee setup for HR, reduces times for claim settlements speeds the month-end close process, and so forth. Analytics Identify trends and opportunities Automation Automate repetitive transaction processing Increases accuracy: Automates computations or updates from multiple sources. Increases standardization: Creates a single source of truth, removing subjectivity and enabling repeatability. Increases productivity: Eliminates process steps and enables operators to process 100s of transactions per day rather than 10s of them. For example, one financial services company is automating routine transactional processes relating to account maintenance, debt management and collections. This work translated into an 80 percent reduction in time and costs. Another company, in the utilities industry, used automation technologies to streamline its customer mailings dramatically reducing the need for manual labor and increasing the quality of customer communications. This work freed up almost two dozen people to drive value in new ways for the company. 7

8 Analytics In the middle of the pyramid is the critical spectrum of analytics capabilities. Unlike typical performers, the high performers in our research use data and information from the services of a BPO engagement to capture additional business benefits: 75 percent affirm its importance (see Figure 5). Similarly, 65 percent consider the analytics provided by the service provider as an important component of the BPO relationship. Outsourcing providers are uniquely positioned with lines of sight across entire industries as well as across their clients operations, including customers, global supply chains, business units and decision-making structures. They accumulate a wealth of data and information as they run business process or IT services for a client over the course of a multi-year contract. Providers with a mature analytics capability can deploy algorithms, models and statistical analysis to measure the right key process indicators, identify process weaknesses and opportunities, and redesign processes to deliver measurable business outcomes. They can also use those same tools to analyze data flows to spot patterns and exceptions that offer insight into customer behaviors and preferences to help identify new market opportunities. Talent: Insights and Expertise At the top of the pyramid are insights and expertise. It s clear that new technologies and innovations are changing the current BPO model. They re also changing the kind of talent that providers need in order to deliver the greatest value to clients. As automation and cognitive computing are more widely deployed, labor arbitrage of repetitive tasks will diminish in importance as a source of value BPO. Our research confirms that companies who focus on talent are distinguishing their BPO relationships as high performance. Buyers and providers should focus on the skills that higher-value BPO talent can deliver: industry expertise and high-demand analytics skills that are in short supply. At the speed of business today, it is nearly impossible for enterprises to keep up with the rapidly changing advancements and ultimately it s too costly and not a good use of resources. BPO can be the means to fill that gap. FIGURE 5. High performers identify ways to use data from the service provider to capture additional benefits 75% 22% High Performers Typical Performers 8

9 Partnering & leadership: keys to high-performance BPO A commitment to working based on a partnering attitude in effect, multiplying the value of the relationship distinguishes high-performance BPO according to our research. This ability to partner and collaborate is about both mindsets and behaviors. Refine objectives Resolve conflicts Importance of strategy team Governance team value 75% 75% 51% 55% 33% 24% 34% 41% High Performers Strategic partners. In terms of mindsets, 87 percent of high-performance BPO buyers, according to our 2015 survey, consider the service provider to be a strategic partner, compared to only 32 percent of typical performers. As a client commercial director for a resources company put it, I m not interested in being a recipient of service. I want us to be strategic partners. It is a word that is tossed around in a clichéd way. But for me, strategic partner means: let s talk about my five most important objectives and how that overlaps with the things that the provider does. Working together. In terms of behaviors that amplify relationships, 47 percent of highperformance BPO relationships consider the service provider s ability to work effectively with the organization as an important source of value. These collaborative mindsets and behaviors become critically important at two times in particular: when objectives of the BPO relationship need to be reset and when conflicts arise. Seventy-five percent of high-performance BPO relationships are able to proactively refine objectives compared to 33 percent of typical performers. Seventy-five percent of high performers are able to productively resolve conflicts compared to just 24 percent of typical performers. Typical Performers Leadership. Involvement of senior leadership in the BPO relationship is another way value is generated in high-performance BPO. Seventy-eight percent of high performers feel that senior leadership from both parties should work together to understand each other s objectives, compared with just 20 percent of typical performers. Other leadership-related highlights from the new survey reinforce this point: Involvement of corporate strategy team: More than half of high performers (51 percent) say that their corporate strategy team critically influences the direction of the BPO relationship, compared to only 34 percent of typical performers. Influence from the governance team: In 55 percent of high-performance BPO relationships, the governance team managing the provider critically influences the direction of the BPO relationship, compared to only 41 percent of typical performers. Our research indicates that high-performance BPO relationships are driven by transformational leaders. Such leaders focus on the future on where they want to be rather than on where they are. They are open and honest about all operational issues. They diagnose and fix problems rather than assign blame. And they act swiftly to remove or work around obstructions stemming from people, processes, or contracts. 9

10 Creating value In high-performance BPO relationships, the company and its service provider work together to multiply the potential business value of the relationship. For example, 67 percent of high performers include business benefits beyond cost in making their BPO business case. 10

11 Typical performers, on the other hand, focus primarily on lowering the cost of service. Sixty-five percent of typical performers consider low cost of service to be among their top three sources of value compared to 40 percent of high performers, who seek other benefits. High performers also target more strategic outcomes than their peers. Sixty-five percent of high-performance BPO relationships consider competitive advantage to be an important priority compared to just 23 percent of typical performers. BPO is in the midst of a dramatic and rapid evolution from a commodity and transactionbased focus to one centered on insights and business outcomes. The key to a value-based approach is not just capturing the data, but using automation, analytics and deep industry expertise to generate insights and foresight which then enable companies to make better business decisions, reduce costs and increase revenues. 67% of high performers include business benefits beyond cost in making their business case 65% of typical performers consider low cost of service among the top 3 sources of value Ultimately, it is the right blend of technology and talent that will separate the winners from the alsorans in the rapidly changing arena of BPO. 11

12 About the Everest Accenture Research The Accenture High Performance BPO Report for 2015 is based on a survey, conducted by the Everest Group, of 296 respondents representing BPO buyer organizations with revenues over $500 million. Details of the survey group include: All respondents were in mid- to senior-level roles. Fifty-two percent were Vice President or above. Sixty-one percent of respondents were from organizations with revenues greater than $5 billion. About Accenture Accenture is a global management consulting, technology services and outsourcing company, with more than 323,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, Its home page is Respondents were from diverse industries including banking, consumer packaged goods, automotive, energy, media and entertainment. All major functional areas were represented including finance and administration, HR, procurement, sales, marketing, operations, IT and legal. All respondents had strong involvement in managing a BPO initiative either as a manager, administrator or executive owner. This year s findings also compared current results with the survey results from Accenture s 2012 High Performance BPO Report, enabling analysis of general trends in the marketplace. #BPO This document makes descriptive reference to trademarks that may be owned by others. The use of such trademarks herein is not an assertion of ownership of such trademarks by Accenture and is not intended to represent or imply the existence of an association between Accenture and the lawful owners of such trademarks. Copyright 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. 12