Tuesday, 19 June 2007

First use of term Business Process Outsourcing/BPO

19th June 07
First use of term Business Process Outsourcing/BPO
Response from Nelson Hall to the BPO piece below
I thought you might be interested to read the response I got from John Willmott who heads the Outsourcing consulting - Nelson Hall. (I hope John doesn't mind me publishing it. But I don't think it contains anything he would be ashamed of!)

He writes:-


You are ahead of me. BPO was common parlance in 1992 when I wrote the first of far too many reports on the subject. I think INPUT was using the term outsourcing in 1990 when I joined and did my first IT outsourcing report: a segmentation into IT infrastructure management, full scope IT outsourcing, and the transitional contracts (can't remember the term I used for these) that Hoskyns had at the time where you outsourced the legacy systems to allow the client to concentrate on building the new (typically ERP) systems. My wife has cleared out all my old hard-back reports so I can't be entirely sure about terminology, but I'm reasonably sure the INPUT subscription programme was called the Outsourcing Programme as early as 1990 when I picked it up.

I'd probably disagree with you about BPO being necessary to win IT outsourcing contracts, though. The two disciplines remain quite separate. The systems integrators continue to make the mistake of over-estimating the importance of new platform implementation and neglect day-to-day operational capability, which makes them ill-positioned to win against Capita or leads to some spectacular failures. Similarly a BPO capability isn't going to help you win a datacenter management or desktop services contract. While platform implementation is now important in some areas e.g. HR, it remains largely irrelevant in others e.g. F&A, and it is always dangerous unless there is a really solid operational need. Overall systems integration is arguably the biggest risk factor in BPO and has a high (adverse) impact on both profitability and client satisfaction.

Growth is also a difficult concept in BPO. The multi-process BPO markets, e.g. complex multi-process HR outsourcing, probably are growing at 20%+ while established single process markets, e.g. payroll services, are growing in low single digit figures. There are lots of different types of apples and pears in BPO, with each having different growth rates and success criteria, some established for 40 years plus and others, e.g. the current form of multi-process HR outsourcing, approx two years old.


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