Overview on Business Process Outsourcing

Business process outsourcing (BPO) is an outsourcing tactic in which a company sub-contracts its non-core activities to another company for services that it holds competitive advantage. Firms have been investing in many areas but only a few of these areas are of competitive advantage to them. Such firms would spend much of their resources on all these areas while only a handful of them are of competitive significance. The BPO concept shows these companies that it is only sensible to focus on the processes that it has competitive advantage. BPO implements specialization in that it encourages businesses to maximally indulge in activities that are of economic worth and leave the rest to other concerned parties. In a company's structure, there are three main segments in which business processes can be divided into:

• Core processes - Refers to processes that are of immense importance to a company and are competitively significant.

• Non-core, critical processes - These are important processes that lack competitive significance.

• Non-core, non-critical processes - Such processes are only required by the company because they are vital for the business environment to thrive.

BPO has two main categories:

· Front office outsourcing. Mainly includes customer-related services such as technical support.

· Back office outsourcing. Deals with internal functions of the business such as purchases.

Apart from the above mentioned categories, BPO can also be categorized into onshore, near shore and off shore outsourcing. Onshore outsourcing refers to businesses that have been contracted within the company's country. At times, contracting businesses to a firm neighboring the company is alternatively referred to as near shore outsourcing or it may still be regarded as onshore outsourcing. Offshore outsourcing refers to business activities that have been contracted outside the company's country.

There are a number of benefits that befall a company once it has outsourced its business activities, but I will state a few:

· BPO helps the business concentrate and invest its resources on its core business sectors. The company saves on its resources such as money, labor and time.

· It is likely to lead to increased revenue. A company is more likely to be efficient when it concentrates on its core processes. This will lead to production of better quality goods and services resulting in higher returns.

· BPO helps businesses use outside expertise. In off shore and near shore outsourcing the business is able to tap into the market of the destination country instead of recruiting experts and sending them to the country where the company operates from.

A country experiences a variety of advantages when business activities are outsourced within its territories:

· The infiltration of BPO activities in a country results in increased employment opportunities. Most businesses are outsourced to developing countries. This is good news bearing in mind that most developing countries have a high rate of unemployment. The influx in outsourced businesses creates a whole new sector that provides employment. These companies tap into the local skill market, reducing the rate of unemployment.

· Continued indulgence in BPO activities may lead to greater reserves of foreign currency. The more a country attracts BPO activities, the greater its chances of having an influx in foreign exchange. This is good news particularly if the US Dollar is involved because it is the reserve currency of the world economy. Increase in US Dollar reserves increase the financial muscle of an economy especially when engaging in international trade.

· It has mended relations and prior perceptions about developing countries. Most developed countries had bad perceptions regarding developing countries. They didn't think that these countries had the skill to match their labor force. The ill prior perception has greatly changed with the impressive results and tremendous progress of BPO. It is even improving relations among these countries.

· It is a chance for the country to scale the various levels of outsourcing. There are different aspects of outsourcing and they have an order. They are mainly categorized in reference to their degree of complexity. BPO is of a lower rank. If BPO companies are set up in a country and they are successful, that may be used as an indicator that the country is able to handle a much more complex form of outsourcing such as knowledge process outsourcing (KPO).

Business Process Modeling

Lets start with some definitions first :

Business : The occupation, work, or trade in which a person is engaged: e.g. the wholesale food business.

Process : A series of actions, changes, or functions bringing about a result: e.g. the process of digestion; the process of obtaining a driver's license.

Model : A schematic description of a system, theory, or phenomenon that accounts for its known or inferred properties and may be used for further study of its characteristics: e.g. a model of generative grammar;

"cited from : process. (n.d.). The American Heritage® Dictionary of the English Language, Fourth Edition. Retrieved April 30, 2007, from Dictionary.com website"

So Business Process Modelling can be defined as a schematic representation of activities and functions performed by an organization to achieve success in their trade and services offered to the market and customers.

I am sure that there would be a lot of gaps in above definition, if we attempt to make it complete but one thing can be inferred clearly : For a Business to go about doing its business and provide the right services and products to its customer, its understanding and control on how they perform and operate is essential and infact in current age, a competitive edge.

Hence, Business Process Modeling can be viewed as a very critical activity both from a business and technology perspective. The reasons for doing process modelling can be many, but we can outline the same into following:

Process Documentation : Need for organization to document their business processes Process Improvement Exercise: Organizations looking for performing an analysis of current processes and how the same can be improved. Process modeling here would be just a part of the approach in this case. Typically a BPI activity would involve analysis of current as-is process, refinement of processes based on six sigma, lean etc. and coming out with a revise To-BE process. Enterprise Systems Implementation : Though some might call it a myopic view to process modeling, however traditionally and even today many organizations have carry out process modeling work before implementation of major IT system for e.g. ERP, CRM, Order Management systems etc. This definetely is a wise choice considering that most of the enterprise systems being deployed has an impact on how you perform your business going forward. Again details of best practices in this space can be a separate discussion itself. Especially the discussion around need for doing process modeling/analysis first or choosing the systems and then pursuing process modeling. I had a discussion with one of my clients once in which it was latter and my fundamental question was now will you change your process for the system or vice versa and whether the whole choice of the system would have been different if they already had an idea of their processes which needed automation help. Anyways there are pitfalls both sides.

Enterprise Architecture : Many organizations have a separate Enterprise Architecture practices and one area of EA is Process/Business Architecture. So organizations do carry out process modeling work as a standalone aspect to achieve a decent view. However in this case process modeling could be a very abstract representation of processes due to the high level view typically required from EA viewpoint. Organizations could go into details, but in my experience its not easy to get funding for doing Process modeling work just as a project without linking it to some specific business related project/budget. Thats a pity, sometimes as EA teams can add real value given the resources to do detailed analysis of Enterprise's architecture. Infact with SOA becoming essential approach within many EA teams, I think process modeling in detail provide greater value and help in identifying the correct service mapping.

BPM : Process modeling is also the starting point for a Business Process Management projects. Typically BPM tools will provide their own modeling tools, so care must be taken to identify the need for process modeling. Whether it should be only for the particular BPM projects or its maintained in some bigger/central process repository. I prefer a central Process repository for all process models for e.g. in tools like Telelogic system architect, aris, case wise etc. and picking out process for BPM implementations from central repository or better still create BPEL from the process models directly. However this aspect of product integration is not the most mature and care is needed before use.

Ok, I am sure there are many more benefits of process modeling and I would get time later to elaborate in other articles/blogs. Lets move into some aspects of how to build better process models. Some of the pre-requisites for process modeling are as follows:

1) People: You need to have good skills within the team from various perspectives, you need good business analysts to undertand what needs to be modeled and engage with business users accordingly. You also need a good scribe or modeler who understands how to map the requirements into models. As we are limiting it to modeling space, you may not require people with six sigma, lean,simulation skills though they would take part at appropriate phase in analysis.

2) Tools : you would need appropriate tools to model the business processes. It could start with basic word processing tools like word, move into graphic tools like visio to sophisticated tools like aris, system architect. Choice of tools would depend on requirements and objectives for modeling and obviously other factors like cost, skill sets etc. I personally feel that modeling efforts in tools like word and visio is a myopic view to modeling and processes are assets of any organizations and should be available centrally to be updated constantly. You should consider a repository based tool which supports standard modeling and reporting techniques to provide long term benefits.

3) Standards : Its very essential for an organization to choose and follow a common methodology for process modelling. We have over the years used multiple methods for process modeling like flow charts, petri-nets, Event based process charts and now with new standards like Business Process Modeling notations, the choice is much simpler. A standard based approach allows a common ground for process understanding and discussion which can be a nightmare otherwise. In my experience I have seen companies using a pot-pouri of process techniques, some which are home grown with different symbols and color combinations meaning different things to different departments in the same company. The issues become manifold when you try to come out with cross-functional process maps based on proprietary notations. So in my opinion organizations should consider formalizing on a process modeling standard before starting any major modeling exercise.

So as we can see its process modeling is an important step in providing a clearer picture to a business regarding the activities they perform and also through analysis the impact it has on its business and underlying infrastructure. The business has to play an important role in sponsoring initiatives supporting process modeling and architecture especially when embarking on a BPM/SOA journey.

Advantages of Business Process Outsourcing Services

BPO or Business Process Outsourcing is a form of easy task management available to big and small companies whereby the parent company leverages on the technical expertise provided by service providers in various third world countries in order to fulfill a job or task that was once undertaken by the parent company itself. In simpler words, it is the process of shifting a job to an external company that might have a totally different physical address.

Generally, services that are most suited for business process outsourcing include billing, data entry, payroll processing, call center and so on. These are tasks that are vital to the survival of the organization but they do not contribute to the overall productivity. But they do need special training and expertise.

Typically, a good part of the total outsourcing volume is coming from developed economies like the US, UK and other nations. Third world nations like India, Philippines, Malaysia and China take up the outsourcing work. The reason for this is simple. These countries have a large pool of educated people who can speak fluent English. These people receive accent and technical training needed to handle multinational requirements. The youth here can take up work for a much lower salary than their counterparts in developed nations.

Business process outsourcing services provide a win-win situation for both parties in the deal. The parent company can utilize their resources for development activities. They can book higher profits as their operational costs are down. At the same time, they can still boast of very high quality in work because service providers are well educated and trained. They can also afford to recruit more labor as the cost is low and can thus offer much better quality of work than they could otherwise. On the other hand, service providers can trade their technical expertise for a steady stream of work and decent pay. A large volume of much needed jobs are generated.

Business process outsourcing services are evolving as time goes by. In the early days, jobs like payroll processing were outsourced. Soon, more complicated, non-core tasks like benefits management, cataloging, indexing and media analysis were included. Many administrational and financial processes are also being outsourced. Certain tasks relating to the HR department too are being outsourced. In the coming years, more and more repetitive tasks are likely to be outsourced as companies utilize maximum resources to improving their core competencies.

Skilled professionals are necessary for the success of any outsourcing partnership. Competent service providers generally have the backing of world-class infrastructure, knowledge and expertise. If you choose an experienced and reported service provider, you can be sure of receiving services that are carried out in the most professional manner.

Business Process Improvement - Eliminating Bureaucracy

You can use several different techniques to improve a business process and you should put eliminating bureaucracy at the top of the list. Do you remember Jack Welch calling bureaucracy "productivity's enemy?" Seems very fitting!

In a business process, bureaucracy requires following a complex series of activities that hinder the process. We have all seen bureaucracy and red tape continually added to a business process. Bureaucracy does not happen all at once, but rather incrementally over time. The process can easily become bloated, making it ineffective, inefficient, and inflexible.

You might wonder, because bureaucracy seems so counterproductive, how it can have any advocates. You can normally trace the cause of bureaucracy to either the need for excess control, the fear of making a mistake, the desire to cover our backs in case something goes wrong, or simply something that grew over time.

Even though no one outwardly admits to supporting bureaucracy, you will run into resistance as you work to eliminate it because of the fear of the unknown and the inclination of human nature to just carry on doing things in the same old way.

So, how do you go about eliminating bureaucracy? After drawing a process map of the current state, walk the project team through the map activity-by-activity and ask if bureaucracy exists in each step. If it does exist, use a blue highlighter to color the box on the map to denote bureaucracy. You should move slowly through this step. If everyone immediately says that no bureaucracy exists in a step and you think it does, you may have to force the project team to feel uncomfortable. Hesitate. Do not say anything for a few minutes. You will start to see the project team squirming, but eventually someone will talk. You have to possess good facilitation skills to feel comfortable challenging a group, but you have to do it if you want to improve the process.

Think of the case where a process requires multiple approval levels. Are they needed? Could you reduce the number of approvals by fifty percent? If one of your goals is to reduce the time a process takes, then you should challenge the number of approvals required because this will shorten the cycle time (the time required to complete a process from its first to last step). Ask simple questions like, what would happen if the company eliminated some levels of approvals, would the world fall apart, is a particular employee incompetent, or would the next approval level not catch any possible errors?

Another filter you can use to eliminate bureaucracy is evaluating whether an activity supports a statutory, audit, legal, or tax requirement. If it does, then it may have to stay. You have to show a little caution with "audit" though because sometimes we audit too frequently. Validate the reason for the audit to determine whether it should continue. If it does remain, still ask if you can use a "spot" audit, instead of a full audit, where you only examine a subset of the data.

Bill Gates wrote in his book Business @ the Speed of Thought: Succeeding in the Digital Economy that "A rule of thumb is that a lousy process will consume ten times as many hours as the work itself requires."

Eliminating bureaucracy is one of the steps to improving a business process so that you can make it more effective, efficient, and adaptable.

Business Process Management

Business process management is the process of designing and maintaining an environment in which individuals, working together in groups, efficiently accomplish selected aims. This basic definition needs to be expanded as manager's carry out the managerial functions of planning, organizing, staffing, leading and controlling. Management applies to any kind of organization. It applies to managers at all organizational levels. The aim of all managers is to create a surplus. Managing is concerned with productivity implying effectiveness and efficiency.

Many scholars and managers have found that the analysis of business process management is facilitated by a useful and clear organization of knowledge. In studying management, it is helpful to break it down into five managerial functions involving planning, organizing, staffing, leading and controlling. The knowledge that underlies those functions is organized around these five functions.

Managers are charged with the responsibility of taking actions that will make it possible for individuals to make their best contributions to group objectives. Management applies to small and large organizations, to profit and not-for-profit enterprises, to manufacturing as well as service industries. The term enterprise refers to businesses, government agencies, hospitals, universities and other organizations. In business process management, all managers carry out managerial functions. However, the time spent for each function may differ. Top-level managers spend more time on planning and organizing than do lower level managers. Leading, on the other hand, takes a great deal of time for first-line supervisors. The difference in the amount of time spent on controlling varies only slightly for managers at various levels.

Business process management, like all other practices such as medicine, engineering or baseball, is an art. It is know-how. It is doing things in light of the realities of a situation. Yet managers can work better by using organized knowledge about management. It is this knowledge that constitutes a science. Thus, managing as practice is an art; the organized knowledge underlying the practice may be referred to as a science.

Key Benefits of Business Process Management Software

BPM Software is one of the powerful business tool for managers to document, control and monitor critical processes and then improve them. It also offers IT staff an easy and simple way to deliver highly complex process management for changing business needs. This enterprise-class software allows companies to leverage the Internet by deploying extended enterprise processes that link partners, suppliers and customers.

Key benefits of business process management software are:

Enforce business decisions by specifying them in processes  Ensure processes are constant and repetitive, not ad-hoc  Track tasks, monitor performance, and optimize performance  Shorten process lifecycles and seamlessly manage exceptions  Document and formalize business processes, tasks and rules  Accelerate return on investment by realizing significant cost savings on integration projects  Leverage technology investments by extending functionality of existing systems  Generate new revenue opportunities by bringing products and services to market faster than competitors.  Enhance customer relationships by making it easier to do business with your organization  Business managers can document and model process flows and hand them-off to IT for automation.  Business users can utilize workflow capabilities to interact with processes, view business information and make decisions all via a web-browser.  Full-featured integration functionality for the enterprise includes message transport, data transformation and transaction scheduling.  Complete management, reporting and auditing capabilities to track and monitor transactions.  Software should have Comprehensive web services capabilities

The BPM software has been successful in providing proven advantage to a range of service provider across the globe, both in terms of business process improvements and benefits to the organization's top-line / bottom-line.

Workflow Management and Business Process Management

The workflow management and business process management is quite similar but not equal. Most of the people associated with the business firm are quite confuse about these two. Here I will try to resolve the problem occurs to differentiate between workflow management and business process management.

What is Workflow: The workflow first came in the software industry in 1980's. The Workflow is a series of connected steps or we can say that it is a set of procedural rule by which a document, information or task transform from one place to another for action. For example if we consider the publication firm the document automatically routed to Writer to Editor to Proofreader to Production. Workflow is a route for any information travel within the organization. At each step of the workflow a single person or a group of people responsible for a specific task.

What is Workflow Management: Workflow management is a well known process to manage the workflow (series of steps) for improving the productivity, efficiency and control the process. Workflow management helps to employee to improve their performance. It is associated with B2B (Business to Business), B2C (Business to Customer) information management. It provides the solution to firms to track the error easily during the workflow of information and finally get the quality data. The workflow management has different capability and the features vary from industry to industry. There are so many softwares available to manage the workflow of a particular organization. The Oracle, IBM, Microsoft, Collaborative Technology Solutions (CTS) are few brand name which provide such type of solution.

What is Business Process: A business process is a series or connection of different activity to achieve a common goal. These processes are very critical for each organization and it affect both efficiency and cost of an organization. The companies always try to follow a right business process for improving their services for client as well as to customers.

What is Business Process Management: A business process management sometimes BPM is a management approach to solve both the client and customer needs in an efficient manner. There are certain lifecycle by which the business process management governs. These are the following steps Design to Modeling to Execute to Manage. The BPM is playing a very important role in the enterprise business solution market. There are so many software introduce in the market to achieve the target of the business. It is very useful to document management, records management and more. It supports all level of management during the business flow.

Tips for a Worthwhile Business Travel

When you are traveling for business, it is best to iron out the basics-such as packing, hotel reservations, car services, plane tickets and what not-so that it is not another task that you have to do on top of the business that you have to take care of. If business plans are important, then planning your trip merits planning as well. If all these are mapped out smoothly, not only will you be able to have a worry free business trip, but it is also possible for you to have a fun time during your trip. 1. Research about the place beforehand. Knowing more about the city you are visiting could help you manage your time or maximize the vacant time that you have while you are there. Let's say you are going to a convention. Knowing about the other events that will take place will help you go to as much events or conferences as you can during your stay there. 2. Packing light in a carry-on bag gives you one thing less to worry about. Not having to fret about your luggage check in does not just make your trip less worry-some, but it also saves you time both upon your arrival and departure. This gives you more time to prepare for your trip's agenda, or some last-minute shopping before your departure. 3. Be nice to the locals. This rule is not exclusive to business travels only, but it will do you a great favor if you are nice to everyone, especially the locals, or pretty much everyone else. If you exude camaraderie, people tend to become more helpful to you. The front desk staff will be more forgiving if you lose your hotel key, you'll breeze through security easily, and you can event gets a few tips from the locus about the best places to visit for leisure if you are on a tight schedule. 4. Meet with people you have connections with through social media. These days, meet ups, (or to use a term that is more localized on social media) are very common. This serves as a mini-convention for people who share the same interest of line of business. Sometimes, new business ideas come up during these meet ups. It helps you know more about the industry, widen your network, or simply make new friends. If you are frequently our for business, whether it's for a business plan, a convention, or a simple meet and greet with clients, make sure that you make it worthwhile, and you take home more than what the original agenda is.

How to Successfully Do Business Overseas

I used to work with Tom. Tom was promoted as our business development manager in charge of expanding our business in Africa. Tom had only operated in western countries and he was at ease with the western culture and its customs. For his first international business trip, he was sent to Nigeria to meet our current clients and new prospects. As we all know business development is not about selling but rather about building relationships to consequently offer services to fulfil the needs of your clients. Tom's first business lunch was with Franklin, the managing director of an international oil and gas firm. Franklin was used to working with Phil as our company representative, and this lunch was an opportunity to pass over the management of Franklin's account. It is customary with some countries to give to your client a traditional gift from your country, such as chocolate from Harrods or Scottish shortbread; anything that represents the British culture. These little details show that you care about the foundation of long-term business relationships. Unaware of this custom, Tom didn't bring anything to the lunch. To show his discontent, Franklin used Tom's business as a toothpick. This was so embarrassing. The business relationship was damaged and it took a while to reposition it back to where it was previously. I have travelled across the world during my international career. I studied cross cultural differences with fascination and I learned a great deal through my business experience. I have seen managers failing to sign deals just based on their lack of cultural awareness. In my previous business article, I taught the importance of personal branding. In this article, I will reveal to you a few tips you need to know to break challenging markets such as Asia. 1 - Dress for Business Professionalism begins with your brand persona. So always dress professionally to make a positive impact and satisfactory business impression. Acknowledging cultural differences whilst looking and acting prepared will always be received positively and will help you seal the deal. Take the time to study the cultural norms of the country that you are doing business in, and find out how they dress. A particular flower for example, may be acceptable in your country, but in another country, it could be used for mourning which would be totally unacceptable in a business situation. Attention to detail is essential and will help you to avoid causing any upset. 2 - Time Punctuality is also valued differently, so be aware that some cultures are more time conscious than others. In South America and Africa, scheduled appointments are considered as a time guideline rather than something they need to stick by. In Europe, they are always punctual and being late is perceived as unprofessional. Take this into consideration and consequently allow your schedule some time flexibility. 3 - Greeting In western countries, a hand shake is the commonly accepted form of greeting. In Saudi Arabia, women should wait for a man to offer his hand first. If she offers her hand first, he may not shake it. So save yourself the embarrassment. In Japan, people bow to greet each other. In Italy and Egypt, don't be surprised if your client or partner offers a kiss on the cheek. The best way to start on a good note is to offer a traditional present from your country. This is not bribery but rather a good gesture. However in Asia, this might be perceived as bribery and they are quiet likely to refuse your present. Always address and greet your business partners or your clients by their last names and titles unless you are invited to do otherwise. 4 - Communication Business people in different countries communicate differently. In Nigeria or Germany, people tend to speak loudly when sharing ideas. In Ghana or Japan, they speak softly and don't interrupt each other. Don't forget to watch your body language when interacting as it could be distracting in countries that are not accommodated to so much body movements to emphasise an idea. To conclude, always do your research when working in business and in markets that you are not familiar with. Ask advice from colleagues who have experienced working with certain countries. Their knowledge and experience are great values for your own success. Observe and adjust to the ways that your clients or business partners communicate. The more information you know, the more you are in control and capable of signing the deal.