BPM + Outsourcing not = BPO

Howard Smith says it well in Business Process Management – The Third Wave “What BPM adds to BPO is the capability it gives to partners to retain control of business processes even if they reside partly or wholly with others.”

BPM gives companies a different option for outsourcing.  Traditional outsourcing was one of several flavors – task oriented, project oriented, or total process.  In general, the runaway successes have been around things like payroll processing which companies like ADP do very well and is not a core competency for many companies.  The other successes have been around IT development or call centers where offshore labor is much cheaper (something that is beginning to change).

As companies have outsourced parts of their IT function – development, QA – or some of the customer service functions – help desk, call center, the challenge has always been letting go while maintaining control.  I know right now that one of the biggest companies in the US is looking at bringing their call centers back onshore to better manage customer service.  I know another company that has outsourced all their billing and most of the customer touch points.  Their service is so bad and so different by geography that it is impossible to manage.

Using Business Process Management (BPM), companies can create an overriding process architecture which connects internal processes and external processes.  This allows a company to outsource tasks or multiple process steps or subprocesses while maintaining control.  Using their BPM technology, the company manages the process flow and the rules while having total process visibility using metrics.  This allows them the flexibility to change process as needed.  It allows them to manage workload.  It allows them to provide an exception process (which is where most things break down).  And, it allows the company outsourcing to keep the hard tasks or critical path items internally based on rules-based logic.

So is this really different.  I believe so.  In most outsourcing deals that I have done, we set expectations and outcome based performance metrics, but we did not control the process steps nor have detailed data on how the company performed each step.  Additionally, changing how they did something was difficult because they were lowering our costs by offering a standardized framework across several companies (or simply using lower cost labor).  Using BPM for outsourcing, makes the outsourcer more like an internal entity and having an SLA dashboard with system reported data that you can mine.  (In some cases, this may be the same as having your functional silos within your company only with process control and management data.)

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