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BPO: A Transformational Strategy . Chuck Clement, Andesa Services Rob Mattioda, The Life & Annuity Group, Inc. Definitions.

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BPO: A Transformational Strategy

Chuck Clement, Andesa Services

Rob Mattioda, The Life & Annuity Group, Inc.


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Definitions

  • DEFINITION: Business Process Outsourcing occurs when an organization turns over the management and optimization of a business function, such as accounts payable or purchasing, to a third party that conducts the activity based on a set of predetermined performance metrics. – Computer World

  • DEFINITION: - Transformation a : to change in composition or structure b : to change the outward form or appearance of c : to change in character or condition: - Webster’s

  • Trend: BPO Market will grow to 146 billion dollar industry by 2008 - Forrester


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Business Objectives Today Are

Increase Share Holder Value

Time To Market – New Products

Cost Containment – Delivering Lower Unit Cost

Processing Flexibility That Adapts to Business Direction & Strategy

IT solutions That Support And Deliver The Business

Adding Functionality Without Complexity

Growth – Organic and Mergers & Acquisitions

* Have These Really Changed Over The Years?


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Business Transformation

  • Transformation Is About Change, It’s About Business Improvement

    • Better Delivery – Products & Services

    • Better Processes – Streamlined & Clean

    • Lower Costs – Business & IT

    • Greater Flexibility To Grow The Business

    • Consolidation – Fewer Moving Parts

    • Increased Share Holder Value

  • Business First – Technology Second


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The Legacy Transformation Value Triangle

Application Software Platform

Time to market improvement

Consolidation = lower maintenance costs

Enables process improvement

Legacy /

Business

Transformation

Business Processes

Time to market improvement

Increased productivity

Lower cost per policy

Labor Costs

Greater degree of automation

Lower effort per transaction

Less training / fewer resource management issues

Outsourcing (BPO)


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BPO Is A Transformation Strategy

  • Transformation Is About Change, It’s Not Repeating Or Replicating Today’s Limitations & Issues

  • BPO Is Transformation

    • Delivers Better Processes – Facilitates Today's Business Objectives, Best Of Breed

    • Delivers Modern Applications – No More Piecing Together Disparate Packages

    • Delivers End To End Well Configured Components – Common Look and Feel Across All Products

    • Delivers Time To Market and Lower Cost


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Why BPO As A Transformation Strategy

  • BPO Is a Bundled Approach To Transformation – Processes, Technology, Service & People

  • Legacy Applications Are So Intertwined Within A Company’s Infrastructure That Change Becomes More Difficult And More Expensive

  • BPO Strategy Focuses On Core & Non Core Functions By Bundling Technology, Business Process Improvement, Re-Engineering And Productivity Improvements Implemented As A Program In One Box

  • BPO Transformation Is A fundamental Change From Legacy Business Problems And Legacy Applications To Best Of Breed Business Processes And Modern Technology Platforms


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Conventional BPO Vs. Transformational BPO

BPO Transformation

Conventional Outsourcing

Business Focus – Business Driven

Operations and Technology Focus

Benefits Derived From Labor Arbitrage

Process Improvement – Creates Value – Labor Arbitrage

Isolates – Delivers Some Degree Of Control

Deliver Confidence – Manages Risk

Modern Business Re-Alignment, Technology & Services

Executes Legacy Business Processes

Delivers Higher Performance – Specialized Company

Delivers Higher Performance & Economies Of Scale

Reduces Non Core Functions From The Business To Provide A Single Release Of Capitol

Business Transformed Enabling Sustained Savings & Sustained Value


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BPO Transformation

BPO Transforms When:

  • You Derive Value From Every Aspect Of The Business – Not Just An IT Solution

  • Deliver The Business Consistently Across Products – Fewer Resources Required

  • Business Processes Align With Business Objectives

  • Legacy Maintenance No Longer Stifles Business Growth

  • Business Results Are Improved

BPO Is Less Effective When:

  • Outsource The Business, Focused Only On The Savings From Labor Arbitrage

  • Haven’t Driven Savings From All Aspects Of The Business

  • Replicate The Deficiencies Under The Management Of Others

  • Viewed As A Technology Solution

  • You Haven’t Positioned Your Business For Growth And Business Results Are Not Self Evident


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BPO Transformation Components

  • Business Processes

  • Strategic Outsourcing

  • Technology

  • Infrastructure

  • Methodology

  • Systems

  • People

  • Management

  • Value

  • Cost Containment


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Business Growth Through Budget Transformation

  • The Current Budget Paradigm Does Not Support Growth

  • Budget Dollars Are Consumed By Maintaining The Business

Amortization Expense

10%

Discretionary

Spending

20%

Application Maintenance

70%


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Transformation Effects

Implement

BPO

Consolidate

Legacy Apps

Improve

Process

Re-Direct

Resources

Labor

Arbitrage

Maintenance Budget


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