Process Mining in BPO - New clarity and control for outsourcing users

Business Process Outsourcing (BPO) for activities like Finance, HR, Procurement and Operations is integral for many businesses. But once outsourced, understanding what is going on inside these processes can become impossible. Process mining solutions offer BPO clients a strong new tool, enabling them to address this information deficit, and supporting more informed, proactive client engagement with their outsourcing partners.

The Challenge

BPO is a ‘no-brainer’ strategy for many businesses, across all regions and sectors. Why waste your energy and focus on re-engineering accounts payable, payroll or HR admin – when you can get a specialist to run these activities, potentially at a discount to current costs?

However, once the ink is dry on the contract, many outsourcing customers wake up to a paradox – their operations are being run by a capable specialist outsourcer, but as a result they have much less insight into what is really going on. They find it difficult to answer key questions such as: Are productivity levels improving? How many people are required to deliver the service? How are our systems being used? Are user access and other operational controls being observed? Where do we go next to find new efficiencies? ?We live in an age where insight is power, but outsourcing users lose too much visibility of their operations.

A big part of this problem flows from the way that BPO relationships are defined. Good BPO relies on a strong contract that clearly sets out how the outsourcer and client will do. This involves giving the outsourcer space to get on with their work free from client micromanagement, and delivering the services along stable, pre-defined lines. Clear governance, scope and service levels determine these agreed ways of working, including how systems, data and reporting are to be managed. ?

But these ways of working can become too rigid. Customers find themselves in a strategic and valued relationship with a long-term services partner, along with a serious information deficit. Proservartner CEO Rakesh Sangani has seen this situation frequently: “All too often the drivers of BPO performance are impenetrable. The service becomes static, dialogue between the parties gets blocked and innovation is suffocated.”

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Introducing Process Mining

Process mining is an emerging technology that companies are using to quickly generate new operational insights. By structuring and visualising transactional data from system log files, it provides an ‘x-ray’ of the work that is being done – for example precisely how invoices and cash are flowing through the accounts receivable process, or how payroll and HR data gets converted into accurate payslips (or not).

Process mining has been around for a few years now, and it has grown from unproven tool to a tried and tested approach for unlocking hidden insights from data. Proservartner Director Paul Morrison: “Process mining is a next generation tool for making sense of massive amounts of data. It sees through the ‘spaghetti’ of operations to highlight the main sources of delay, waste and rework - and the opportunities for improvement.” ?

Process mining can add value in different ways. In a BPO context, the most obvious use case is providing the visibility to answer the dashboarding and visibility questions of the types set out above. Beyond that it can be used to diagnose and prioritise performance problems for improvement; it can be used later in the process to segment and design the approach; it can be used later still to monitor after implementation. For example, process mining can be used on an ongoing basis, to bring together data for dashboards for SLAs and KPIs or to monitor for operational anomalies in areas such as user access or controls compliance.

Significantly the major BPO providers are already major users of process mining – they deploy it increasingly to cut through the operational noise on their many client accounts to highlight efficiency opportunities and meet their contractual and commercials objectives.

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Recommendations

Proservartner’s view is that what is good enough for BPO providers is good enough for BPO clients – Outsourcing users should not wait for process mining to be deployed by their outsourcer, they should be proactive users of process mining. The good news is that process mining can be very quick to set up and see results. But to realise the full potential, it needs to be part of a broader innovation and transformation approach – implementing the tool alone will not be enough. Here are the key points to factor in:

1.??????Don’t surrender control of your data – The surprising truth is that lots of companies allow their BPO provider to lock out the client with a combination of poor reporting and loss of rights to access the data. This may work for low value, highly commoditised activities, but for core business operations it shouldn’t be tolerated. Companies must avoid the opposite sin of micromanagement - but there should be clear governance and rights that enable reasonable access to data and systems information. ?

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2.??????Make the case – Successful BPO relies on strong relationships and trust, and for this reason it is key to bring the BPO provider with you – in other words, they need to understand why you are interested process mining, and how they will benefit. If process mining becomes seen as just another stick to beat them, either contractually or through other means they will push back on process mining. Ultimately an informed BPO client is seeking better visibility of the process - and an informed client and process owner should be a great asset for a mature BPO provider.

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3.??????Establish an innovative relationship – Building on this, the most successful BPO relationships are those where both parties collaboratively seek improvement and innovation, and where the contract, commercials and ethos of the outsourcing point in this direction. Historically much outsourcing was characterised very differently - as ‘your mess for less’, in which the outsourcer simply couldn’t afford to do more than turn the handle and deliver cheap services. Process mining and the collaborate working that this entails will prosper most where the relationship has ambition.

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4.??????Develop mutually beneficial use cases – Use process mining to diagnose and illustrate the benefits of major changes for both outsourcer and client. For example, as an enterprise you may want the flexibility provided by a new platform like Ariba or Coupa in Purchase-to-Pay, or SideTrade or High Radius for Order-to-Cash. Traditionally such major system improvements get bogged down in BPO relationships. Process mining can support a sensible fact-based conversation – it can help diagnose and design the future process, on which a mutually-benefit use case can be built.

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5.??????Build an internal capability – Process mining can be up and running in days. But it takes time for an organisation to develop the deeper skills and experience to deliver benefits at scale. The most sophisticated companies have been building these capabilities into a specific capability, sometimes in the form of a process mining specialist, or on a larger scale as part of a ‘digital centre of excellence’ to support the whole enterprise, shared services or GBS organisation.

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6.??????Don’t forget core systems – Process mining is only part of your wider data and information arsenal. Your ERP and core systems will provide dashboards and tools that should be the first port of call for operational insights, and this will not change with process mining. You should see process mining as the flashlight to shine where your core systems don’t work, or where they are unable to provide a simple, joined up picture across many parts of the process.

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7.??????Provide an end-to-end picture – Process mining can provide insights into what is going on inside a BPO operation, but there are bigger benefits where it is used to diagnose and model what happens across the entire end-to-end process, e.g. from order management to cash. Use process mining to build a clear end-to-end flow even it cuts across retained and BPO control.

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Ultimately process mining can help both the client and the BPO to look into the outsourced work and see how it can be optimised – in other words process mining can be a catalyst for innovation. Increasingly Proservartner see process mining as a standard best practice for well run and successful BPO relationships.

About Proservartner

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