Nine Keys to World-Class BPO: An illustration of practice-focused research Dr. Mary Lacity, Curators’ Professor Dr. Leslie Willcocks Professor of Technology Work and Globalization

Session Objective Demonstrate the fluid, emergent, iterative nature of our practice-based inquiries Design Data Collection Data Analysis Research Output Research Question

Research Inspiration Board Curiosity Access Opportunity Influence

Research Inspiration Board Research Question Curiosity Data Analysis Access Opportunity Design Research Output Data Collection Influence

Research Overview Based on the results of a five surveys, including a survey of 263 business process outsourcing (BPO) clients and 65 client-provider interviews, our research identifies nine practices associated with best-in-class BPO performance. Since book was published, we are deeply investigating one practice on technology called Robotic Process Automation; surveys & case studies & a book due October 10th! The BPO survey. The Everest Group conducted the BPO survey in late 2011 and its findings are reported in Mindrum et al. (2012). Our role was to comment on survey design and we had access to the survey findings. Two hundred and sixty-three qualified BPO clients responded.   Mindrum, C., Hindle, J., Lacity,  M., Simonson, E., Sutherland, C., and Willcocks, L. (2012), “Achieving High Performance in BPO: Research available at http://www.accenture.com/Microsites/highperfbpo/Pages/home.aspx

Sample Publications Refereed Journals: Lacity, M., and Willcocks, L. (2014), “Business Process Outsourcing and Dynamic Innovation,” Strategic Outsourcing: An International Journal, Vol. 7, 1, pp. 66-92. Winner, best paper award. Revise and Resubmit: Lacity, M., (2015), “Conflict Resolution in Business Services Outsourcing Relationships”, Journal of Information Technology. Non-refereed Journals: Published multiple smaller articles in Pulse Magazine, Professional Outsourcing Magazine, and Outlook Magazine Lacity, M. and Willcocks, L. (2013), “Beyond Cost Savings: Outsourcing Business Processes for Innovation,” Sloan Management Review, Vol. 54, 3, pp. 63-69. Lacity, M., and Willcocks, L. (2014), “Nine Practices for Best-in-Class BPO Performance,” MIS Quarterly Executive, Vol. 13, 3, pp. 131-146.

Sourcing Back Office Services Research Context: Sourcing Back Office Services Strategy Key processes Transactional services Biotechnology Healthcare Manufacturing Transportation Vertical Specific BPO Human Resources Finance & Accounting Procurement (Indirect materials) Full service BPO HR strategy F&A strategy S2P strategy Internal audit Budget/forecasting Fixed assets/ capital budget Treasury & risk mgmt. Mgmt reporting & analysis Spend data mgmt Strategic sourcing Vendor mgmt. Demand mgmt. Performance mgmt. HR design Regulatory & compliance Training & development Recruitment & selection Compensation Benefits Employment data mgmt. General accounting Accounts receivable Tax Day-to-day purchasing Customer service Procurement systems Performance mgmt. Transactional BPO Payroll Accounts payable Call Centers Applications maintenance Voice & Data Networks Help desk Desktop ITO Data centers ERP Applications development IT strategy Source: Oracle Internal Training

BPO Performance Varies World-class Cost savings/SLAs improved each year Business benefits/Innovations delivered High client satisfaction Good Cost savings delivered Meeting SLAs Good client satisfaction Doing Okay Marginal cost savings delivered Acceptable service performance Marginal client satisfaction Poor No cost savings; costs increased Poor service performance Low client satisfaction

Access to Everest Group’s BPO survey of 263 qualified BPO clients Nine Keys Research Determinants of Outcomes Access to Everest Group’s BPO survey of 263 qualified BPO clients

Determinants of Outcomes Nine Keys Research Determinants of Outcomes Survey identified 8 best-in-class practices: Practice 1. Focus on benefits beyond cost reduction Practice 2. Target strategic outcomes Practice 3. Adopt a partnership-based approach to governance Practice 4. Take a holistic approach to the scope of the BPO relationship Practice 5. Align the retained organization with the outsourced processes Practice 6. Drive strong transition, transformational and change management capabilities Practice 7. Contextualize data through domain expertise and analytics Practice 8. Emphasize the benefits of technology in the BPO relationship The survey identified 20% of respondents as “best-in-class” scoring strongly on at least three must-have attributes and in the top quartile on seven additional attributes. The survey found that levels of performance were independent of industry, geography, size of deal, tenure of BPO relationship and business function outsourced. The survey research identified eight practices that strongly correlated with “best-in-class” performance. The initial set of eight practices was:  

Nine Keys Research Determinants of Outcomes

Determinants of Outcomes Nine Keys Research Determinants of Outcomes 1. Assign great leaderships pairs 2. Focus on business and strategic benefits beyond cost efficiencies 3. Adopt a partnering approach to governance 4. Align the retained organization, outsourced processes and provider staff 5. Drive strong transition, transformational and change management capabilities 6. Deploy domain expertise and business analytics 7. Resolve issues together and conflicts fairly 8. Prioritize and incentivize innovation 9. Use technology as enabler and accelerator of performance 1. Focus on benefits beyond cost reduction Practice 2. Target strategic outcomes 3. Adopt a partnership-based approach to governance 4. Take a holistic approach to the scope of the BPO relationship 5. Align the retained organization with the outsourced processes 6. Drive strong transition, transformational and change management capabilities 7. Contextualize data through domain expertise and analytics 8. Emphasize the benefits of technology in the BPO relationship

Nine Keys 3 practices launch the BPO relationship 3 practices keep the BPO relationship on track 3 practices explore new frontiers

1. Assign a Great Leadership Pair An effective leadership pair—one person from the client organization and a counterpart from the provider organization—must work collaboratively to implement the practices associated with best-in-class performance.

1. Assign a Great Leadership Pair TEN ATTRIBUTES OF EFFECTIVE LEADERSHIP PAIRS 1. Focus on the future 2. Transparent 3. Problem solve 4. Put the customer first 5. Spirit of togetherness 6. Clout 7. Action-oriented 8. Trustworthy 9. Empathetic 10. Chemistry with counterpart

Use technology as an enabler and accelerator of performance We focus on six common technologies and what they enable: Reduced headcount and accelerated service delivery through self-service portals Reduced costs and standardization through automation Optimized services by capturing and reporting on errors and waste using business analytical tools and improved product delivery rates using forecasting tools Enhanced controls and compliance using workflow tools Increased business value and collaboration between the client and provider organizations using governance tools Reduced infrastructure costs and speedier enhancements through cloud-computing. Onsite Onshore Offshore Automate

Service Transformation Through Automation Dr. Mary Lacity, Curators’ Professor Copyright © Mary C. Lacity 2015

ERP CRM HRM Legacy What is Robotic Process Automation? Systems of Record Software that automates a process the way a human does, by logging on and off systems ERP CRM HRM “Robotic” Worker Legacy Consider a human resource (HR) specialist in charge of recruitment and onboarding. The “thinking” part of his job entails working with business units to craft job descriptions, suggesting appropriate recruiting outlets, fielding calls from potential applicants, reviewing resumes, and calling references. Once a candidate is hired, the drudgery of “systemantics” begins for the HR specialist. The onboarding process could entail logging on and off a dozen systems for payroll, benefits, email, voicemail, security clearance, office space, office furniture, computer, parking pass, expense account, identification badge, and business cards. Multiply that process by the thousands of employees who are onboarded each year in a typical large organizations. Now imagine a “robot” that does all this work just as the HR specialist does—by logging on and off systems to perform these routine tasks. The robot will do the work better, faster, and much cheaper than the HR specialist. That’s what Robotic Process Automation (RPA) does—interacts with other computers systems just like a human would. “Knowledge” Worker Copyright © Lacity, Willcocks, Craig 2015

# RPA transactions per month Three Case Studies # processes automated # RPA transactions per month Business Value ROI 35% of back office (15 core processes) 400,000 to 500,000 Faster delivery Better service quality Higher compliance Unbeatable scalability Strategic enablement FTE avoidance FTE redeployment FTE savings 650% to 800% 3-YR 1 million 200% 1-YR 14 core processes 120,000 30% per process Copyright © Lacity, Willcocks, Craig 2015

9. Prioritize and Incentivize Innovation

Nine Keys 1. Assign great leaderships pairs 2. Focus on business and strategic benefits beyond cost efficiencies 3. Adopt a partnering approach to governance 4. Align the retained organization, outsourced processes and provider staff 5. Drive strong transition, transformational and change management capabilities 6. Deploy domain expertise and business analytics 7. Resolve issues together and conflicts fairly 8. Prioritize and incentivize innovation 9. Use technology as enabler and accelerator of performance

Session Objective Demonstrate the fluid, emergent, iterative nature of our practice-based inquiries Design Data Collection Data Analysis Research Output Research Question

Research Inspiration Board