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
Research Question
Design
Data Collection
Data Analysis
Research Output
Research Inspiration Board
Influence
Research Inspiration Board
Data Analysis
Research Output
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!
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.
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.
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
Research Context:
Sourcing Back Office Services
F&A
strategy
Performance mgmt.
HR design
Regulatory & compliance
Internal audit
Budget/forecasting
Fixed assets/
capital budget
Treasury & risk mgmt.
Mgmt reporting & analysis
Training & development
Recruitment & selection
Compensation
Benefits
Payroll
Employment data mgmt.
S2P
strategy
Spend data mgmt
Strategic sourcing
Vendor mgmt.
Demand mgmt.
Strategy
Key processes
Transactional services
Day-to-day purchasing
Customer service
Accounts receivable
Procurement systems
Accounts Performance mgmt.
Tax
payable
General accounting
Transportation
(Indirect materials)
Manufacturing
HR
strategy
Procurement
Transactional
BPO
Full service
BPO
Finance &
Accounting
Biotechnology
Human
Resources
Healthcare
Vertical Specific BPO
ITO
Call Centers
Applications maintenance
Data centers
Voice & Data Networks
ERP
Help desk
Desktop
Applications development
IT strategy
Source: Oracle Internal Training
7
BPO Performance Varies
Cost savings/SLAs improved each year
Business benefits/Innovations delivered
High client satisfaction
Cost savings delivered
Meeting SLAs
Good client satisfaction
Marginal cost savings delivered
Acceptable service performance
Marginal client satisfaction
No cost savings; costs increased
Poor service performance
Low client satisfaction
Nine
Keys Research
Determinants
of Outcomes
Access to Everest Group’s BPO survey
of 263 qualified BPO clients
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
Nine
Keys Research
Determinants
of Outcomes
Qualitative Data Collected on BPO Relationships
Number
Number of
of Key
Relationships
Informant
Studied
Interviews
Context
Financial & Accounting
Services (FAO)
Human Resources (learning,
recruiting, etc.) (HRO)
Legal Process (LPO)
Procurement/Supply Chain
Outsourcing
Customer Care/ Call Center,
Outsourcing
Cloud services
Total
8
18
3
6
6
11
5
10
6
12
4
8
32
65
Sample Cases
BP, Microsoft
Telstra, Kimberly
Clark
RadiantLaw, BT
Givaudan,
Synopsis
TalkTalk, British
Gas, iiNet
Diesel Direct,
Dana Foundation
12
Nine
Keys Research
Determinants
of Outcomes
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
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
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
7. Use technology as an enabler and
accelerator of performance
Onsite
Onshore
Offshore
Automate
Service Transformation
Through Automation
Dr. Mary Lacity,
Curators’ Professor
Copyright © Mary C. Lacity 2015
18
What is Robotic Process
Automation?
Software that automates a process the way a
human does, by logging on and off systems
Systems of Record
“Knowledge” Worker
“Robotic” Worker
Copyright © Lacity, Willcocks, Craig 2015
19
Three Case Studies
# processes
automated
35% of back
office
(15 core
processes)
35% of back
office
14 core
processes
# RPA
transactions
per month
400,000 to
500,000
1 million
120,000
Copyright © Lacity, Willcocks, Craig 2015
Business
Value
Faster delivery
Better service
quality
Higher
compliance
Unbeatable
scalability
Strategic
enablement
FTE avoidance
FTE
redeployment
FTE savings
ROI
650% to
800% 3YR
200% 1YR
30% per
process
9. Prioritize and Incentivize
Effec ve Leadership
Innovation
Pair
Innovation
Effects (t +2)
Least
Effec ve
Most
Effec ve Effec ve
Incenting
Innovation
Productivity targets
Innovation days
Gainsharing-project level
Delivering
Innovations
Acculturation
Inspiration
Funding
Injection
Innovation
Effects (t +1)
Innovation
Effects (t)
Operational efficiency
Process effectiveness
Strategic impact
Threat of competition
Special governance
Innovation funds
Benchmarking
Gainsharing–relationship level
Painsharing
Figure 10.1
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
Research Question
Design
Data Collection
Data Analysis
Research Output
Research Inspiration Board