BPO VALUE: THE ANALYTICS ADVANTAGE
As business process outsourcing (BPO) moves up the value chain, focusing more on delivering strategic business impact rather than simply reducing costs, analytics have become critical components to deliver this increased value.
BPO providers and their clients are sitting on huge volumes of transactional data, amassed from their day-to-day operations. The ability to deploy analytics to extract usable insights from this data is a differentiator, helping to generate new kinds of business outcomes – outcomes not traditionally associated with BPO. These can range from accelerated speed to market and stronger customer loyalty to savvier talent management and top-line growth.
The value of analytics
Analytics can provide a single source of high-quality data about the performance of a process or function—data that is measured and recorded consistently. By analyzing a process’s or function’s end-to-end performance and discovering inefficiencies and risks, time and waste can be driven out. And managing data, from the front office, back office or both, can generate process innovations or improve time to market.
For instance, a health and life sciences company established an outsourced center for “pharmacovigilance” in order to better detect, assess and prevent adverse drug effects. The outsourced analytics capability enabled the company to collect and analyze data faster, shave time off the approval cycle, more easily identify drugs with no marketplace potential and get approved drugs to market faster.
As capabilities mature, analytics are moving beyond being descriptive in nature to being predictive. While descriptive analytics that provide standard and ad hoc reports and alerts help executives gain an immediate understanding of what is happening with their businesses, they describe what has already occurred. Advanced predictive analytics, on the other hand, provide a clear picture of what might happen in the near or even distant future. They provide statistical analysis, predictive modeling, forecasting and optimization to help clients anticipate—and plan for— likely scenarios.
While an outsourcing arrangement isn’t the only way to make business process analytics effective, the data and processes an outsourcing provider draws upon, using highly sophisticated tools and talent, is hard to duplicate using internal resources alone. With a view across entire industries and an intimate knowledge of their clients’ operations – including customers, global supply chains, business units and decision-making structures – outsourcing providers can use their analytics capabilities and acumen to drive better decision making, continuous operational improvements, enhanced product development processes and more profitable customer relationships.
Take as an example the finance function. Here, the provider has the ability to use leading-edge technologies to analyze invoices and other financial data, right down to individual line items. An accounts payable analytics tool may enable detailed transaction monitoring, automatically flagging some occurrences as duplicative or improperly documented invoices. Meanwhile, a procure-to-pay analytics tool may help shed light on the client’s working capital efficiency and process effectiveness.
It’s clear that analytics can empower clients to become more insightful decision-makers by providing key business performance information and identifying opportunities to address issues and improve business outcomes. As found in the highest performing BPO relationships, leveraging large volumes of data and analytical technologies alongside industry and functional knowledge has been shown to be an efficient route to driving new levels of insight and innovation that are essential for gaining—and sustaining—competitive advantage.