The Cloud’s Role in Standardizing Business Processes

A few months ago, I wrote a post about cloud computing’s possible impact on business process outsourcing, in which I mentioned Indian outsourcing giant Infosys’ introduction of Infosys Edge, a series of cloud-based platforms that address specific business processes. I included a quote from Samson David, VP and global head for business platforms at Infosys:

While it’s too early to say what impact cloud computing will ultimately have on business or IT, it’s clear that we’re starting to scratch the service of what is possible in the cloud. The question that still needs to be answered in the meantime is to what degree do companies really want to leverage discrete sets of processes that they would then have to orchestrate, versus trying to create some sort of competitive advantage by building those services themselves? Chances are that over time more companies are going to bet on the former rather than the latter simply because every time they reinvent a wheel, more often than not, they are just slowing their time to market.

Recent research from Horses for Sources seems to support the bet Infosys is making on BPO platforms. When HFS surveyed 534 buyers, advisors and providers about their sourcing strategies, 80 percent of buyers cited better access to standardized business processes as a motivating factor to outsource. Driving out immediate operating costs, named by 87 percent of respondents, was the only factor that earned a higher score.

That’s good to hear. While companies surely understand the cost and productivity benefits of standardizing processes, they tend to think their own processes are so, you know, special that they are somehow exempt from this logic. Also, some employees undermine standardization efforts because they fear they could lose their jobs.

As a recent post on the HFS blog points out, cloud-based BPO platforms should help ease the hassles associated with on-premise software and licensing and minimize the impact of resistant employees. The challenge for BPO providers will be to build closer relationships with their clients and to focus on long-term strategies instead of simple cost reduction. (That could be a big challenge indeed, given the large number of HFS survey respondents that identified lowering operating costs as a motivation to outsource.)

The post also lists four key characteristics of BPO platforms:

• They provision managed standardized business processes.
• They focus on business outputs or outcomes rather than inputs such as labor and physical assets.
• They service more than one client.
• Service providers manage the business processes associated with the platform and provision the people who operate them, the underlying software-as-a-service platform, and the supporting public or private cloud infrastructure.