Sal-sourcing in the real world, Part II

Mike Salvino, Group Chief Executive for Business Process Outsourcing, Accenture

Many of you were wondering what happened to Sal since we kicked off our discussion last month.  Well, he’s been on a shopping trip for Ariba’s services organization, in between his tour of the North Carolina junior basketball circuit.

Anyhow, we caught a time-out from Accenture’s BPO overlord to get a glimpse of his vision for the future of the BPO industry..

Phil Fersht: Picking up from where we left off last time, how are you seeing this kind of cross-over between this thinking around Cloud and companies pushing forward with business-focused offerings – what we’re calling business-process-as-a-service, (BPaaS)? If you take out your crystal ball, how do you see this ultimately coming together when you to look at the way this industry is going to be in a couple of years time? Do you think we are going to see deals happening where business processes are literally running in the Cloud?

Mike Salvino: I think it’s going to be longer than a couple of years. Everybody wants to throw away the existing offerings and talk about the future, but the existing offerings still work. There will still be a lot of demand for core horizontal offerings, and there are still companies that are doing it at a scale. Now, having said that, you can’t ignore the cloud. It’s going to be like the Internet. Somebody is going to figure out how to exploit it, and it’s going to give people increased computing power.

So look at our premium technology support business. We’ve hired very smart resources in our offshore delivery locations, given them access to information, and within a 24 to 48 hour period we can start debugging calls for clients. That’s compared to saying to clients, “Yes, I can put in a little call center business, here is what we are going to do and here is your six-month transition plan.” That’s a game changer. Not all processes can be on-demand, but invoice processing, sourcing, e-auctions, debugging computers and mobile devices, answering customer complaints all can be on-demand. Now, how you actually get there, or what kind of service to provide, that’s what we as an industry need to very quickly sort out.

Again, this will evolve over the next several years. Some niche plays, like premium technology support, will really take off. But the old reliables, such as F&A, procurement and HR, will still be around. And I don’t think you can look at the future without really understanding the past. You can make all the promises you want, but if you are not delivering on the client’s business case it will be a short-lived contract.

Phil: Looking to the future, I think in a relatively short time we’ll be able to bracket the innovators and the operators in this space. And the winners will be those who can really do both well. Right now, several providers in the market are clearly pushing a very operational agenda, but they are also pushing a thin veil of innovation. Do you think that’s going to continue, or do you think that clients are wising up now and looking much more realistically at what can happen? How do you see that playing out?

Mike: This game is no longer just about cost reduction and better processing transactions using Six Sigma. You have to do both of those, but assuming past data will help you predict the future, you also have to analyze the transactions, analyze the data, and then take what we call “industry insights” and help the client to change its business so it can run its business better.

If we can say to a client, “Based on what we’ve seen processing your invoices, or based on doing your procurement, we can tell you where to make more money in the next two quarters,” they will love us. I’m pushing my team to combine this type of data along with their industry knowledge and have the “past history will tell you a story” discussion with their clients, which is a very rare occurrence in this industry.

When contracts come up for renewal, we’re always asked, “Were you guys innovative enough?” What this really means is, “Did you press us to do something we couldn’t have done ourselves, and couldn’t have seen ourselves?” As providers, we need to be able to find ways to help our clients generate revenue based on the processing we are doing today.

There’s a whole bucket of providers trying to get into the cost savings and Six Sigma game. There’s another set of providers in the middle ground who’ve figured out the cost savings and Six Sigma game, and are now trying to figure out what the next step is.  Many of them talking are about analytics, which is fine, but if you don’t have industry insights on top of those analytics, the data’s not going to be any good. And then there is a group of providers who are delivering the insights and have referenceable clients around them.

Phil: So where are you folks are placing your bets for the future of your BPO business?

Mike: We’re focusing on three things: industry wrappers, alternative delivery models and technology.

First, we’re wrapping industry flavors around our horizontal offerings to make them more relevant to a specific sector. For example, F&A for the retail or telecommunications industry.

Second, we’re coming up with hybrid models to help clients get things going quicker and faster by moving consulting projects into small BPO projects. It could be processing invoices to help a client deal with its backlog, or turning a sourcing project into a multi-year commitment – essentially making it easier for our consulting clients to buy BPO.

We’re also putting all of our self-service, metrics and analytics under one tool to show how HR, F&A and procurement can all play together to drive insights. While many of our competitors are going even deeper in one area, we’re trying to push the areas together to see what kinds of insights this provides us. And in terms of the cloud, I’m getting to see all the neat things Kevin Campbell, our Group Chief Executive of Technology, and his group are working on, and then working with my team to figure out how to apply this to BPO. Clients love sharp and innovative technology.

Mike Salvino (pictured) is Group Chief Executive for Business Process Outsourcing at Accenture.  He is responsible for the firm’s BPO growth platform, and its comprehensive portfolio of cross-industry and industry-specific business process outsourcing (BPO) services globally.  He rejoined Accenture in 2006 from Hewitt, where he served as global sales and accounts co-leader for Hewitt’s HR outsourcing group. He also served as president of the Americas region for Exult Inc., responsible for the company’s business in the United States, Canada and Latin America, prior to that company’s acquisition by Hewitt.  You can access his full bio here.

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3 Comments

  1. Rahul Sethi
    Posted October 21, 2010 at 9:29 am | Permalink

    Great interview, Phil and Mike.

    Mike’s comments about “industry insights” are extremely important. The real differentiators between innovators and operators are when the provider can find new ways of doing things better to drive new business value for clients – not solely driving standard six sigma into processes flows to find a few pocket of waste-elimination. That’s the future of BPO – operations are just table stakes these days,

    Rahul

  2. Amanda Hare
    Posted October 21, 2010 at 10:09 am | Permalink

    “You can make all the promises you want, but if you are not delivering on the client’s business case it will be a short-lived contract.”

    Thank you – that’s the most common-sensical thing I’ve heard in ages!

    Amanda

  3. Warren Clarke
    Posted October 21, 2010 at 7:54 pm | Permalink

    Mike,

    Refreshing to hear a much more realistic and down-to-earth view of outsourcing than all the puff and fluff we get fed these days!

    Nice interview,

    Warren Clarke

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