Accenture Quick Scan

8/13/2019 Accenture Quick Scan

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Business Process Outsourcing

Finding the Right Business

Process OutsourcingOpportunities to AchieveHigh Performance


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Between 2011 and 2013 the global BusinessProcess Outsourcing (BPO) market is projectedto grow at a compound annual rate of 9percent.1This growth is no surprise. BPO hasevolved to become a recognized ingredient

of high performance businesses.And, the growth has been for good reasons:The right use of business process outsourcingcan lead to new products, differentiatedstrategies, higher revenues, more profitablecustomer relationships and continuous operationalimprovements. But, identifying and focusing onthe most important BPO opportunities for yourbusiness is not easy. It requires a systematic andobjective assessment of outsourcing potential.Gaining business advantage from BPO requiresan outsourcing relationship that not only bringsindustrialized and cost-effective delivery but alsoenables analytics-based innovation and insight.

1IDC, Gartner and Accenture analysis.

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Evolving the value of BPO

Improve working capital by quickly collecting payments and paying invoiceson time thus reducing penalty payments

Leverage our category management expertise, market insight and economiesof scale

Leverage supply chain activities in order to deliver faster in new markets,perform better in the current markets and increase of customer satisfactionwhich ultimately is driving top line growth

Supporting the growing online activities and increasing agility, websiteperformance and online sales

Integrate back office functions following M&A to help support inorganicGrowth for the business

Improve productivity / revenue growth through training and expression intonew markets

Drive growth while helping HR organizations become more scale able andable to address business requirements

Help clients address skill shortages, allowing them to launch new products,Outpace the competition, and ultimately achieve growth aspirations

Priority Needs Target Areas Opportunities

Managing cash

Finance & Accounting

Procurement

Driving growth

Supply Chain

Digital Marketing

Finance & Accounting(Post Merger Integration)

Talent

Learning BPO

HR BPO

Engineering

Figure 1: Driving growth through outsourcing

In the 1990s BPO consisted primarily

of taking over business functions,people and platforms, using existingdelivery locations. In an effort tofind cost savings, rather quickly theBPO providers began to tap offshorelabor arbitrage. But while processeswere taken offshore, and savingswere generated, the processeswerent necessarily improved.

This led to a second generation ofBPO where Lean, Six Sigma and

Industrialization were incorporatedto create operational excellence(OPEX) through process improvement.Many companies have had successwith OPEX-driven BPO. In Accenturesrecent Global Delivery Study 70 percentof respondents indicated they

have experienced productivity

increase and 48 percent haverealized improved quality throughtheir outsourced services.

But leading companies are recognizingthat outsourcing holds significantlygreater opportunity to achievebusiness goals ranging from optimizingtalent to managing cash and drivinggrowth (Figure 1). Expectations foroutsourcing now include targetssuch as increased revenue, faster

speed to market, improved customerexperience, increased customerloyalty, margin improvement, greaterflexibility, access to world-classskills, and re-assignment of internalresources to more strategic needs.

Recent research by the International

Association of OutsourcingProfessionals (IAOP)2with assistancefrom Accenture, reports that only50 percent of survey respondentsindicate that cost reduction hadbecome more important as a factor foroutsourcing. Flexibility and preparingfor future growth were judged to be asimportant as near-term cost savings.

2International Association of OutsourcingProfessionals, Outsourcing 2010: Summary of Findingsfrom IAOPs State of the Industry Survey, April 2010

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1. Labor Arbitrage

Non-Core

Capabilities

New & EOL

Capabilities

Core

Capabilities

4. Revenue Growth

2. Continuous Cost

Improvement

3. Continuous Process

Improvement

Va

lue

focus

BPO Services

Figure 2: BPO value shift to enable revenue growth

This value-driven focus has ledto important shifts in the BPOmarketplace. First, companies are nowoutsourcing operations previouslythought too important to consider. Notlong ago, business functions that arecommonly outsourced today were seenas areas for competitive advantage andtoo critical to outsource. Now, back-office functions, such as finance andaccounting, are routinely outsourcedin many cases as commoditized

services. And, organizations areincreasingly leveraging outsourcingin middle and front office operations,across multiple functions and end-to-end processes (Figure 2).

Indeed, outsourcing has maturedconsiderably. Outsourced operationsare more frequently industry specificand client specific arrangements.And, outsourcers offer well-proven,structured delivery models across

multiple domains and geographies.

In addition, companies are demandingand receiving more value fromoutsourcing as those relationshipsevolve to a third generation, insights-driven, BPO. Today BPO providers cantake advantage of mining huge volumesof transactional data being processedto deliver better business outcomes.

Through data-driven analyticsand shared goals outsourcers canprovide insights and innovation to

help companies operate their ownbusiness better. Sometimes theseinsights are descriptive in nature,helping clients understand what hashappened already in their business.And sometimes they are predictive,helping clients to not just understandwhat could happen in the future, butalso to anticipate likely scenarios andplan accordingly. By using technologyand analytical tools outsourcerscan move beyond transaction

processing to deliver significantprocess insight to their clients.

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Finding the right BPO opportunities

Any outsourcing provider can offer a long

list of outsourcing services from whicha company can pick. Each has vendor-specific and niche outsourcing solutionsand a case for why it will benefit yourcompany. But do they all make equalsense to your business? As a customer,how do you know what is best suited foryour organization? Where are the biggestgains to be made? How do companiessort through the multitude of outsourcingopportunities to identify and focus onthose most important to their business?

For organizations with limited experiencein outsourcing, the opportunityassessment and decision process canoften be perceived as a mission impossible(Figure 3). And, in light of the manycompany and industry-specific businessprocess outsourcing options available,even those companies with some

outsourcing experience may miss out on

new strategic outsourcing opportunitiessimply because of the magnitude andcomplexity of choices available.

Based on over 20 years of outsourcingand consulting experience, Accenturehas created a systematic and objectiveapproach to assess outsourcing potentialand provide guidance to organizationsthroughout their outsourcing journey.Such an assessment enables organizationsto better understand and confirmwhat business process outsourcing

truly makes sense for their specificsituation. Companies are then ableto structure an accelerated approachto focus on those opportunities mostproductive for the organization andtest the feasibility of outsourcingat the process and activity level.

These Accenture methods are also

designed to prevent ill-designed BPOdeals that will fail or become a burden tothe organization rather than somethingthat will help simplify their operations.

There are two, complementary approachescompanies could undertake to conductan outsourcing analysis: a Quick Scanand a Feasibility Assessment, each ofwhich is described further below. Theseapproaches are modular, as the QuickScan seamlessly flows into the FeasibilityAssessment if and when desired.

Figure 3: Common questions companies ask regarding outsourcing feasibility

How, exactly, do I begin the process? What do I do first?

What can I outsource given my specific context andcompetitive environment?

What elements are important to consider when evaluatingoutsourcing options?

When is it worthwhile to offshore operations versusoutsourcing them onshore?

How do I build a business case?

How do I transition and stabilize the business and howlong does it take?

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The Quick Scan

Accentures Quick Scan approach is atop down assessment of outsourcing

potential across the enterprise or ona selected set of functional domains,executed in close collaboration withan organizations senior management.

This Quick Scan methodology makessure that during a short timeframe(typically three weeks) a group ofbusiness processes are systematicallyand objectively analyzed in order tooptimize the operating model of acompany. The approach is used to

provide guidance on which processesshould be kept in-house, which onesshould be outsourced, which onesshould be transformed and whichshould stay as is. For instance, insome cases companies can benefitfrom pure "out-tasking", which simplyconsists of shifting the execution ofa task to outside resources, withoutchanging the process itself. Stillother business processes shouldnot only be executed by a third

party, but also require substantialimprovements. For these processes,full outsourcing is the best solution.

For each recommended area, theassessment provides a business case

in which not only the cost savings aretaken into account, but also the topline growth and quality improvementssuch as lead time reductions. A QuickScan is particularly useful to:

Confirm outsourcing scope and size

Gain insight into the businesscase to outsource

Create a realistic roadmap

Use experts as a sounding board

for education and questions

Structure and confirm the return oninvestment for decision-making

When conducting a Quick Scan,Accenture outsourcing specialistsand business specialists work withthe company to understand its overallbusiness and the skills required for eachprocess. The Quick Scan team assessescriteria that include the companysoperating model, business skill

requirements for each process, strategicimportance, transaction volumes, socialimpact, cash-flow requirements forimplementation and first year benefits.

The team looks at flexibility needs,such as seasonality, and how offshoring

can help the company obtain growthplans. It then identifies what couldbe offshored based on its knowledgeof offshore resources (such as whatresources are in which areas, whatlanguage skills one can expect (andnot expect)) and its knowledge ofhow activities and resources canbe decoupled most effectively.

The Quick Scan provides companieswith a summary of each process and

its full-time equivalent resources, askills inventory for each domain, abusiness case for the recommendedoutsourcing areas, an operatingmodel recommendation and aroadmap for how to proceedon the outsourcing journey.

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The Feasibility Assessment

If the organization has a specific

focus area identified as having thepotential for outsourcing, a detailedFeasibility Assessment may be the mostappropriate path to take. AccenturesFeasibility Assessment is a detailedexercise to confirm outsourcingfeasibility, create organizational supportat an operational level, and preparefor transitioning to a third-party. TheFeasibility Assessment is also used asa natural next step after a Quick Scan,to dive into the details and further

prepare for outsourcing. Dependingon the business scope, the assessmenttypically spans over 6 to 12 weeks.

Such a feasibility assessment is

recognized by companies to help them:

Confirm outsourcing feasibility andcreate buy-in at an operational level

Confirm the business case witha bottom-up approach

Refine priorities, transition wavesand detailed transition planning

Gather required input, prepare andgain confidence towards afinal outsourcing decision

Obtain arguments and insightto start discussions with socialpartners and other stakeholders

Create awareness, gain managementattention, and trigger seniorleadership discussions

Criteria considered in the Feasibility

Assessment include: Strategicalignment, cost savings potential,quality needs, risk profile, potentialcompliancy requirements and offshore-ability. Recommendations are presentedat a summary level (Figure 4) andmore detailed level. Through the visualrepresentation, the results show clearlythe domains including FTE size thatare most suitable for bringing offshorethrough an outsourced model, andthe ones that should be kept in-house

onsite. Drilling down, the rationalebehind the recommendations theweighing and rating of the importanceof the criteria is easily retrievable.

Figure 4: Recommended actions towards operating model changes

Onshore

Keep In House Outsource

Offshore

Function 1

Function 2

Function 4Function 5

Function 6

Function 7

Function 3

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Client managed offshore

Client managed nearshore

Client managed onsite

Keep as is

Reengineer

Outtask

Outsource

Outsourced offshore

Outsourced nearshore

Outsourced onsite

Sourcing model

Tra

nsformation

Delivery

location

Figure 5: Accenture Business Operations Model

At the core of the approach forboth the Quick Scan and FeasibilityAssessment lies the patented AccentureBusiness Operations Modeling (ABOM)framework and workbench (Figure 5).

The framework is the product ofyears of consulting and outsourcingwork. It offers established decisioncriteria that have been tested andapplied to a long list of companies

and outsourcing opportunities. Theseexplicit criteria answer the question ofwhether a function should or shouldnot be outsourced and, if so, how.Next to leveraging this framework, ablended team with industry, domain,local geography and, outsourcingexpertise work in tandem with companyexecutives to conduct the assessment.

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Client Successes

Companies that have taken a holisticapproach to assessing business process

outsourcing feasibility have foundsignificant and previously unidentifiedbenefit potential. In addition, theseassessments mitigate the risk of enteringinto a poorly designed BPO arrangementthat results in increased burden to theorganization or failure.

A cross functionQuick Scan for

a EuropeanTelecommunicationsCompanyA European telecommunicationscompany competes on operationalexcellence and, thus, cost managementand margin protection are criticalto success. The company wanted toassess what parts of the organization

at the process and activity levelmight make sense to outsource.

Accenture worked with the company tocreate two major quick scans of variousparts of the business. The first assessedsales and marketing, corporate functionsand customer delivery, includingsupporting IT services. The quick scanidentified offshore potential of over 800FTE on an addressed scope covering 3000FTE, saving 150 million euro. Accenturethen helped the company create the

high level business case and investmentprofile to take the outsourcing decisionfurther within the company.

A Supply Chain Quick

Scan for a GlobalHigh Tech CompanyDriven by continuously growingbusiness, increased customer demandand increased focus on year on yearimprovements, this company turned toAccenture to assess opportunities tochange its operating model leveragingoutsourcing within its supply chain andlogistics operations.

Leveraging the Quick Scan method,Accenture experts worked with thecompany to come to a clear view on whatcould be outsourced and additionally,which key initiatives would furtheraccelerate the transformation soughtafter.

Through this transformationaloutsourcing program, the company willmake a step change towards year onyear quality and cost improvements,

while freeing up key resources for openpositions throughout the organization.

An Iterative FeasibilityAssessment inTelecommunicationsThe Dutch telecommunication companyKPN has taken an iterative approach toits feasibility studies and offshoring.

The telecommunications industrywas, and still is, going througha period of dramatic change. Inparticular, the emergence of richInternet Protocol-based serviceshas created both opportunities and

challenges for carriers: Opportunitiesto provide exciting, profitable new

subscriber services, and challengesbuilding new network capabilitieswhile maintaining the current ones .

KPN analyzed its options for buildinghigher-bandwidth networks andupgrading its operations support systewhile concurrently maintaining its legnetworks and offerings. The companyidentified an opportunity to achievebetter focus on new developments byoutsourcing some of its legacy netwo

operational requirements to Accenturin particular, its narrowband service.

Leveraging the skills, experience andassets from its global outsourcingorganization, as well as the AccentureGlobal Delivery Network, Accenture wable to demonstrate that outsourcingprovisioning services would generateimmediate cost savings to KPN whilealso improving service quality. Thisrepresented a new departure for KPN,it was KPNs first network outsourcinarrangement and its first businessprocess offshoring arrangement.

Accenture worked with KPN to condudetailed assessment of which processcould be outsourced and which proceshould remain onshore. This extensivedue diligence helped reduce businessrisks and supported the successfultransition of efficient processes.

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The recent phases of KPNs outsourcingjourney with Accenture have continuedto deliver stellar results. The run ratesaving is 50 percent, meaning that

breakeven was achieved within the firstfull year

The recent phases of KPNs outsourcingjourney with Accenture have continuedto deliver stellar results. The runrate saving is 50 percent, meaningthat breakeven was achieved withinthe first full year. Under Accenturescontinuous improvement of the business

processes, efficiencies continue to begained, allowing the number of full-time equivalents to be reduced overtime. These efficiencies are also makingthemselves felt across the total KPNvalue chain, with rework droppingby some 80 percent. The substantialcost savings delivered thus far havenot come at the expense of customerservicefar from it. In fact, the scorefor first-time-right resolution is 95percent and even higher for all services

in scope. The dramatic decline in theamount of rework will also have abeneficial effect on the experience ofKPNs customers.

European IT &CommunicationServices CompanyAs the company needed to engage

into a large transformation toimprove its EBITDA, Accentureproposed to launch a Quick Scanto help structuring a program thatcould significantly contribute tothe company's EBIDTA objectives.

The Quick Scan was conducted in 4weeks, assessing the whole company,from Finance, HR, Procurement, Salesto its Customer, Products and ServiceDelivery entities. The scan embedded

a scope of 7000 FTE and resultedinto a proposed potential of 1900outsourceable FTEs, with a businesscase of 80M yearly net savings.

Though language and proximity toclients and client operations werestrong requirements, the Quick Scanshowed that, with minor adjustmentsin the way the services were delivered,the company could bring off-shorea significant portion of its labor

intensive activities. The Quick Scanalso helped the company realize thatsuch a large transformation would helpthem develop over the following twoyears a competitive advantage, witha more flexible, robust and secureddelivery engine, that could result insignificant market share gains, whilefreeing up its local workforce andresources for the introduction of newservices, such as their cloud offering.

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There is a new period of growth inthe BPO industry: one that creates

business advantage for companiesthrough insights from long-termclient relationships, unique industry-specific platforms and solutions,industrialized solutions, cost-effective delivery methods andanalytics-based innovations.

Accenture uses its business insights,extensive experience and analytics

capabilities to help our clients identifyoutsourcing opportunities that canlead to differentiated strategies, higherrevenues and margins, more profitablecustomer relationships and continuousimprovement. Through a holistic analysisof BPO opportunities, companies canfind ways to speed time to value,reduce costs and risks, and multiply thebusiness value of outsourced services.Uncovering the right opportunities touse business process outsourcing takes

companies a significant step further intheir journey toward high performance.

Conclusion

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Contacts:

Christophe PeynaudExecutive Partner, for Communications,Media & Technology withinFrance and [email protected]+33 472831628

Gretel Vanseer

Sales Director BPO solutions,France and [email protected]+32 2-2267254

About Accenture

Accenture is a global managementconsulting, technology services andoutsourcing company, with approximately236,000 people serving clients in morethan 120 countries. Combining unparalleledexperience, comprehensive capabilitiesacross all industries and business functions,and extensive research on the worldsmost successful companies, Accenturecollaborates with clients to help thembecome high-performance businesses andgovernments. The company generated netrevenues of US$25.5 billion for the fiscalyear ended Aug. 31, 2011. Its home page iswww.accenture.com.

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