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The three legged stool: People, Process and Technology

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By Craig Stevens

people process techIs the Concept of People, Process and Technology a Fallacy for Front-End BPO Services? For as long as I can remember, every primary front-end, customer facing BPO organisation and every major buyer of BPO services say their ultimate goal is to maximise the functionality and profitability of the service provided.

The method used to accomplish this is providing the best possible results in the three primary pillars of the industry (often called the three legged) stool of people, process and technology.

Unfortunately, rarely are desired results achieved on an ongoing basis. This concept was validated at a recent Gartner conference as their research showed in many sessions that close to 70% of organisations polled said they were looking to replace an existing vendor within one year. Firms are not looking for alternatives if happy with their current situation.

One leg of the stool

But how can this be possible? Vendors did not suddenly take a stupid pill and fail to understand that supporting their existing clientele is perhaps the most critical component to the ongoing success of their business. In fact, there are numerous reasons why the desired results are not being obtained. At the heart of the matter though is one rather simple concept – most often front end BPO firms are essentially providing only one leg of the three legged stool.

Think about it. Most large organisations have at least attempted to implement a multi-vendor strategy. The theory behind this is to minimise risk, have vendors be more cognizant of lowering costs, create competition by measuring multiple vendor’s statistics against one another, and so on. The highlight of this strategy is also its primary drawback; that it treats every vendor the same way and allows for little deviation. This stifles creativity and provides for few remedies to pre-existing internal client issues.

So what does that mean from a service delivery standpoint? Since by definition everything has to be the same regardless of agent or service provider, the client ultimately specifies two of the three components of the three legged stool.  The client decides upon and delivers the technologies to support their processes such as CRM systems, databases, applications, and so on.

Vendors may talk about their ability to accommodate multi-channel support, but most often it is the client who is actually providing all the tools. The vendor simply needs to establish connections to the client’s toolset.

Technology is the backbone

Technology is also the backbone for driving major process improvements. Even if a vendor was able to use their own technology backbone, what would motivate a vendor to invest in a technology knowing that if implemented and received well it would then be replicated to all their competitors supporting the same client? This would give their competition the ability to say they support the exact same project using the exact same tools without providing any of the initial added value.

In fact, the competitor could potentially use the money saved by not making the initial technology investments to provide even lower costs, frequently the bottom line component to many front end BPO contract negotiations.

Like technology, it is the client who defines the processes that must be followed. This is under the theory that the client’s structure, with no deviations, will be followed by any and all vendors. The service supplier must work under the client’s governance programs. They must do this regardless if the programs are well thought out, well-articulated and perhaps most important are actually able to accomplish the desired levels of customer interactions. This often becomes a point of contention when things are not going well and leads to serious finger pointing.

What this leaves for the service provider is delivering a more sophisticated version of labor arbitrage. Providers will discuss their technologies, but in essence the majority deal with the human resource side of their business such as recruiting, training/ongoing learning and workforce management.

There may be levels of analytics, but at most they are peanuts in comparison to the huge big data projects within most major firms today. Should anything fall short of the mark in terms of technology, process definition, governance programs, etc., service providers are in effect at the mercy of their clients.

Front-end BPO providers have been very successful at what is commonly known as “lift and shift” in the industry. This means that functions are changed from internal resources and placed with a service provider with locations that generally have lower labour rates, better accessibility to labour with the desired skill sets, have more specific expertise in BPO related HR functions and are better able to accommodate scalability requirements.

This does not mean that they are not capable of doing more as many vendors would offer more if they were able. Service providers simply are not given the ability to do so within most organisation’s vendor management framework. As stated previously, it is a tradeoff in that the best and the worst come in the same package.

Volumes could and have been written on how to fix this issue. Essentially though, it comes down to one key element: if clients want to maximise the results being obtained from their front end BPO providers then the core concept must change from one of client/vendor to being partners.

BPO partnerships are like a marriage

I spoke with Bryan Britz with Gartner about trying to change simply the wording of vendor management to partner management to accomplish the objectives firms were looking for. He could not have agreed with me more going on to say that he thought less than 10% of firms today actually view their vendors as partners.

A Gartner slide stated “You will only be fully successful at outsourcing business processes if you internally and externally contractually align them to business outcomes.”  Aligning combined targets with business goals certainly sounds more like a partnership to me.

Front end BPO contracts should not simply be based on service levels. Think of an SLA like a marriage contract….if you have to continually review that the terms of the agreement are being met then you already are heading down a path of inevitable doom. I can only imagine my wife’s response if even I suggested that we review the reasons why we got married 33 years ago and if we are both still living up to the terms of that agreement. Somehow I don’t think that discussion would go well. Yet that is the premise of most BPO relationships today. To make it work, both parties need to treat each other as partners, not as buyers and vendors.


September 23, 2014
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