How to Manage the Relationship with Your BPaaS Provider

By Mark McWilliams

The enterprise world has become quite comfortable with the idea of working with managed services providers. As we enter the Business Process as a Service era, however, organisations are finding that relationships with BPaaS providers have their own special set of nuances.

The biggest obstacle businesses face in managing the relationship with their BPaaS providers is often themselves, and typically stems from a desire to retain control of the process rather than focus on the outcome and let the provider deploy their efficient processes. The critical thing to ask yourself is, “How do I set this relationship up to best ensure the delivery of the outcome I’m after?”

Thankfully, the majority of challenges that may arise during a relationship with the BPaaS provider are easy to manage and even avoid.

Process standardisation

You may feel a degree of anxiety in the beginning as your BPaaS provider wants to deploy processes that are differentfrom the way your business has traditionally done things. You may feel compelled to ask the provider to modify or change their proven processes to quell your anxiety. Try to avoid this if you can. Give your provider some latitude to run with their processes. You will likely find the new way of doing things more efficient than your traditional approach. Remember, what you are after is the business process, completed to a service level for a predictable low cost.

Systems disruption

It is likely that tensions will occur around timing of systems upgrades and enhancements from your BPaaS provider. You may find the timing inconvenient. Remember, though, that there are great benefits in operating within a shared, multi-tenanted environment such as lower cost, greater flexibility and “community involvement”. If the provider didn’t try and keep all of its tenants in this environment, then the cost of support would rise. Work with your supplier closely on forecasting and scheduling to minimise the chance of disruption to your business.

Supplier vetting

Even non-strategic business processes, if they are not executed well, could bring your business to its knees. For example, payroll is necessary in most businesses, but not strategic; it is also one of the most outsourced functions. What would happen if your payroll provider went out of business overnight? You should lessen the risk by incorporating the following into your supplier relationship:

  • Choose a provider with sound financials. Make sure their size and strength are commensurate to the risk your business wishes to take.
  • Make sure the software products your supplier deploys are non-proprietary so you can move to another supplier if need be.
  • If your supplier is using proprietary software, then make sure you have access to the software in the event of a failure. An escrow agreement might work for you here.
  • Ensure you operate a robust relationship management plan right up to senior executive level so business-to-business conversations can occur.

Knowledge of your business

You may be worried that the BPaaS provider doesn’t know your business or industry well enough. This is a valid concern, but remember that you are trying to buy a business outcome. In order to do a business function like payroll, the supplier needs to pay your people on time, accurately, every time. Specific knowledge of your business may not be necessary. If you think a better service would be delivered if they did know more, then bring them close. Incorporate into your quarterly review things like business updates, business challenges and innovation acceleration. It might be enlightening for you to have a fresh, motivated opinion on how to do things better.

Staying in touch

The key to any relationship is communication. From Day One, establish a consistent, open dialogue where both you and your provider can discuss expectations for the working dynamic. Build relationships with your BPaaS provider up through the C-suite to facilitate high-level conversations and help the provider become a true business partner.

Working with a BPaaS provider should alleviate burdens from your operations and staff, not add to them. Taking an active role in managing the relationship with your BPaaS provider, and instilling that relationship with trust, planning and clear communication, will set up both parties for a successful future together.

Mark McWilliams has 25 years experience in the technology sector and is a Director of Datacom Investments.

He has detailed knowledge across the IT spectrum from data centres through to governance, with everything in between. He has also worked with organisations that have varying needs from a security standpoint, including those with advanced requirements such as banks and government agencies. 

Transforming Payroll and Human Capital Management through BPaaS

By Mark McWilliams

Generally, businesses find their time and ROI are highly correlated; it is rare to find an opportunity to obtain significant returns without a large investment of time or resources. This rule is debunked, however, when you apply the Business Process as a Service (BPaaS) model in order to dramatically increase operational efficiency. By outsourcing processes that are expensive or inefficient to highly-specialised, third-party organisations, you can reduce total operating costs while putting time back into your employees’ days. In turn, you can invest these savings in important strategic goals, fostering company growth and attracting top talent.

BPaaS can be advantageous when used for both standardised and strategic processes, such as payroll and human capital management, respectively. While using BPaaS for standardised processes like payroll allows for greater savings, BPaaS brings greater efficiency to complex processes like HCM.

Managing payroll through BPaaS

Payroll is perhaps the best example of a function that can be revolutionised through BPaaS; it holds little strategic value, but is a necessary component of business operations. The primary goal of payroll, rather than to gain an advantage over a competitor or increase revenue, is to pay employees in a correct and timely manner. Especially for small businesses, the costs of operating a payroll department can be exceptionally high, and could be better served by a trained, external provider. Recent research shows that most organisations are unable to achieve best practice benchmarks in managing their payroll internally, with most delivering an efficiency rating less than half that of a well-run process. Further, the pricing difference between performing payroll in-house and using a BPaaS solution can be as high as 70 per cent.

Savings alone aren’t the only advantage of BPaaS, however. BPaaS is also an attractive option for businesses that otherwise struggle with certain aspects of their operations — be it due to a lack of technical expertise or training, small staff or outdated IT infrastructure.

Human capital management

As I noted in my last post, BPaaS can also successfully optimise strategic business operations. Take, for example, a business’s hiring and talent management operations. While these are typically functions over which organisations desire a high degree of control, they do not necessitate performing them completely in-house.

By using BPaaS to manage processes such as talent acquisition, organisations can tap into a much wider range of potential employees and establish a rigorous, yet standardised, recruitment process. From a talent management perspective, BPaaS providers can help an organisation set up and facilitate onboarding procedures, defining role competencies, regular performance and development reviews and succession planning. As a result, businesses may not only reduce hiring costs and attract talent faster, but also learn more about current employees’ strengths, weaknesses and untapped potential — making for a much more agile, thriving company.

With these advantages, businesses can expect to become more competitive, better-positioned to achieve their strategic goals and faster innovators. By outsourcing payroll and human capital management functions to specialised providers, organisations significantly reduce their overall expenditures while increasing operational efficiency. Through BPaaS, a business can remove its weakest link, eliminating the burden of tedious processes and strategically redirecting revenue streams.

Mark McWilliams has 25 years of experience in the technology sector and is Director of Datacom Investments.

He has detailed knowledge across the IT spectrum from data centres through to governance, with everything in between. He has also worked with organisations that have varying needs from a security standpoint, including those with advanced requirements such as banks and government agencies.

How to Define the Operational Processes Best-Suited for Business Process as a Service

By Mark McWilliams

There are staggering savings offered through the Business Process as a Service model, or BPaaS, compared with performing every business operation in-house. What your organisation may still be cloudy on are which functions would benefit the most from BPaaS. As a general rule, the best candidates for Business Process as a Service are critical, but non-strategic, operations vital to keeping a business running, but that can be effectively performed by a third party.

Focus on the resource-intensive and non-strategic for BPaaS

In identifying processes suitable for Business Process as a Service, some of the most obvious are those that do not hold particular strategic importance, but are resource-intensive and may benefit from the application of “best practice process” from an expert provider. These non-strategic yet necessary operations are often identical across organisations and even industries (such as payroll management) and can be better handled by a BPaaS provider without sacrificing competitive advantage. Competitive advantage can even be improved through Business Process as a Service due to lower cost and significantly improved business agility.

Similarly, processes demanding complex resources and that detract from employee time spent on more important projects are prime candidates for BPaaS. These tasks might already be underscored by inefficient processes, an inability to scale or legacy system lock-in — areas Business Process as a Service is designed to alleviate. BPaaS providers specialising in outsourcing these functions can alleviate traditional burdens, drastically reducing capital investment costs and freeing up resources to be used to fulfill more innovative objectives.

But don’t overlook some strategic processes, too

Given Business Process as a Service’s consumption pricing structure, even processes holding a degree of strategic value could be candidates for outsourcing, providing significant savings while allowing organisations to retain flexibility and control. BPaaS service providers with these specialist industry-specific or horizontal offerings can assume strategic responsibilities without detracting from businesses’ unique culture or competitive edge.

”Voice of the Customer” is a good example of applying Business Process as a Service to more strategic operations. This horizontal BPaaS offering providing customer feedback varies from organisation to organisation, making it incredibly strategic as it drives product development, service delivery, customer satisfaction and marketing. Within a BPaaS model,third-party providers can listen and communicate customer feedback in real-time (for which many businesses may not have the internal bandwidth or know-how) and more closely monitor customer sentiment. The Business Process as a Service provider may even provide suggestions as to how the business might respond to a shift in customer sentiment. And because the service is delivered as Business Process as a Service, you don’t have the risk and expense of large capital and operational investment to set up and run, instead opting to pay for the outcome as a measured service.

In both standardised and routine business functions, BPaaS can decrease expenses and shift time and resources to projects that move the business forward. While non-strategic processes are the most eligible candidates for Business Process as a Service, even components of highly strategic operations can benefit from third-party services where domain expertise is sought. Due to the tremendous advantages available with BPaaS, such as reduced cost and capital investment, those businesses that can effectively identify processes and implement change will quickly thrive in their respective industries.

Mark McWilliams has 25 years experience in the technology sector and is a Director of Datacom Investments.

He has detailed knowledge across the IT spectrum from data centres through to governance, with everything in between. He has also worked with organisations that have varying needs from a security standpoint, including those with advanced requirements such as banks and government agencies. 

Business Process as a Service – How It Emerged and Why Your Business Should Consider It Now

By Mark McWilliams

Business process outsourcing (BPO) is not a revelatory concept to the enterprise world. Organisations of all sizes have consistently increased their BPO contracts to preserve staff productivity and encourage internal innovation. With the advent of cloud computing, however, we’re on the brink of a “BPO 2.0”, otherwise known as “Business Process as a Service” (BPaaS).

In its simplest form, BPaaS delivers business processes through the cloud, streamlining back-office functions. BPaaS combines the individual strengths of cloud technology with the 30-year history of BPO to create an opportunity for businesses to purchase process outsourcing on a piecemeal, pay-as-you-go basis — making the technology more affordable and accessible to a wider audience.

The Rise of BPaaS

During the Global Financial Crisis, businesses faced the need to scale back significant enterprise costs in order to survive the economic downturn and set the stage for future growth. More and more companies chose to outsource non-critical business functions and processes to third-party service providers as a way to realise lower labor costs.

Over-reliance on traditional business models, outdated technologies and rigid contract and delivery structures, combined with the maturation of the BPO market, led customers to look for more flexibility, innovation and responsiveness from their outsourcing providers. The rapid evolution of cloud-based solutions, with their multi-tenancy, consumption-based use and pricing, has created a mass demand for BPaaS. This new model offers organisations the opportunity to get the business outcome they desire while paying only for the services they use.

Different types of outsourced services offered via the BPaaS model include HR functions like payroll and benefits administration, procurement, advertising, marketing and an array of other industry-specific operations.

Five Benefits of BPaaS

Organisations looking to optimise performance and free up staff to focus on their core responsibilities should start looking into capabilities they can leverage through BPaaS. Adopting business process management through a cloud solution offers companies several advantages, including:

1.       Lower costs

Traditionally, overseeing and coordinating business processes includes purchasing and maintaining servers to handle the large volume of computing involved in everyday operations management. With a BPaaS solution, business processes are uploaded to a cloud service that performs and monitors them, so companies don’t have to invest in superfluous hardware and maintenance, significantly decreasing costs.

 2.      Risk reduction

The pay-as-you-go pricing model offered by BPaaS lets organisations choose which functions they want to use and when they want to use them, versus spending capital for a major platform overhaul which can be expensive and ineffective. Through BPaaS, companies have the option to implement a fully integrated suite of services or test stand-alone offerings. The flexibility offered by the consumption-based model helps mitigate the risks associated with large-scale technology purchases and long-term contracts.

3.       Superior process efficiency

Uploading a business process to the cloud ensures that it is well-defined and consistent across the organisation. Within a BPaaS web-based platform, different processes can easily be linked and monitored as well. The BPaaS model providesautomation, standardisation and repeatability in the way the services are used and delivered, thus cutting down on task training and execution time.

4.       Organisational clarity of focus

Moving business processes to a cloud solution gives an enterprise more time and resources to focus on business growth, rather than having to worry about the completion of non-strategic activities. When implemented correctly, BPaaS creates a new sense of agility and innovation within a company, creating a higher-performing, more competitive business.

5.       Revenue growth

When business processes are hosted in the cloud, employees can access them anywhere, at any time; with BPaaS creating a more mobile workforce, businesses have the opportunity to expand at an accelerated rate. This portability gives organisations the breathing room to take on more business and produce quality results faster — making for a much healthier bottom line.

Business Process as a Service is still a rising star, but its adaptability and benefits are rapidly getting the business world’s attention. Datacom has already developed several BPaaS offerings, including solutions for payroll and talent management as well as case management for local authorities. As organisations continue to seek scale and cost efficiencies, we are committed to staying on the pulse of the ways BPaaS can help our future and present customers.

Mark McWilliams has 25 years experience in the technology sector and is a Director of Datacom Investments.

He has detailed knowledge across the IT spectrum from data centres through to governance, with everything in between. He has also worked with organisations that have varying needs from a security standpoint, including those with advanced requirements such as banks and government agencies.