The past decade has seen unprecedented changes in the way businesses are configuring themselves. Gone are the days of traditional asset-heavy corporations that run on centralized data-marts, server-based heavy platforms, and vanilla process/consulting-led labor arbitrage outsourcing. The new businesses are not the organizations running on legacy green-screen mainframes and clunky business processes that require high-touch human interventions and large customer service departments.
Innovative, Agile Strategies
The successful business of today – and tomorrow – will increasingly run on agile digital platforms virtualized on cloud, talking directly with customers’ mobile digital devices, creating distributed information islands where they are being generated. The effective Business Process Management (BPM) organizations no longer provide services on legacy platforms that run on centralized databases; rather, they innovate strategies, technologies and processes to merge these data islands into virtual data-marts on demand, and generate intelligence through highly automated processes. The proliferation of network-centric devices is resulting in tremendous growth in structured data while social media is providing unprecedented unstructured data. The role of BPM providers is shifting from operations to understanding of operations to predicting of business outcomes, partnering with their client at all levels – front, middle and back offices.
Service operations in the BPM domain has already moved away from resource-centric delivery to process-centric execution. The future will see this move to outcome-based partnerships necessitating BPM providers to understand the client’s business like never before. Industry thought experts will displace operations managers as tomorrow’s BPM leaders. Business analytics will displace operations analytics such as Six Sigma and Lean, and increasingly businesses will rely on their BPM partners to provide intelligence about their business outcome rather than operations performance.
The influence of the manufacturing factory model is evident throughout the BPM industry as the traditional services were indeed more industrial than information based. We have grown with analytics techniques that emphasize tact time, waste and critical paths. However, the rapid advent of automation is eroding this broad base of resource-centric services and making these analytic techniques obsolete. The need of the future is not operational analytics, but business analytics that will enable BPM organizations to deliver outcome-based services to their clients. These predictive analytics models are not necessarily much more complicated than the deterministic operations model, often running the gamut of multi-variant, non-linear stochastic domains requiring sophisticated solution techniques.
A highly relevant illustration of this is the evolution of Collection and Recovery business among Indian BPM providers. In the late 1990s and early 2000, a number of BPM providers, both large and small, set up Collection and Recovery Operations in India targeting the low margin late stage, charging off papers and leveraging labor arbitrage to make the margins viable. However, they soon realized that the clients were not looking for staff augmentation, or even transaction-based services; rather, the clients demanded outcome-based contracts pushing for contingency gain share revenue models. It soon became clear that this is not a labor-driven service, but rather is a knowledge-based delivery. Service providers started building complex collections models to maximize recovery. As collection follows socio-economic patterns, optimization strategies based on rigorous statistical analysis of population data are most effective. Both physical and psychological impacts of collection lifecycle activities needed to be incorporated in a predictive model employing statistical tools to help develop winning collections strategies. Complex multi-variant, non-linear models have now been pioneered by the service providers that correlate likelihood of recovery to parameters such as education, age, FICO score, social media activity and many more. These have transformed the business from service providers providing labor to the financial institutions to now advising these institutions on the type of paper they should invest in, segmentation and divestitures that directly affect the business outcomes.
Advanced Market and Consumer Analytics
Similarly in the life insurance and annuities space, we are seeing BPM Service providers increasingly being asked to take ownership of lines of businesses, rather than merely performing the traditional operations roles such as claims and payment processing. Service providers are jumping from back to middle and front office – providing advisory services for clients’ digital roadmap, actuarial as well as market analytics to jointly develop products and campaigns. BPM service providers will be expected to bring advanced market and big data analytics to the table to help clients gauge their consumers’ demands, while the traditional processing functions will all but capitulate to rapid automation.
The healthcare Insurance industry is transforming at an even more alarming pace. Traditionally, regulatory changes such as HIPAA and Obama-care reforms brought about major changes in the way BPM service providers engaged with the clients. However, a more subtle but seminal shift is being observed, driven directly by consumers. With the proliferation of direct digital access and easily available information over the social channel, the consumers are demanding highly customized policies, so much so that the traditional static products might soon be extinct. The next generation of healthcare platforms that are enabling this transformation is highly automated, requiring little by way of human touch throughout the lifecycle of the products, relegating the traditional BPM service support model to obsolescence. The future healthcare payers will be light, agile, and will demand full service support across the horizontal breadth from their BPM partners. It is a fair bet to say that market and consumer analytics will be a major part of it.
It therefore is not just prudent but a matter of survival for the Indian BPM industry to embrace business analytics and increasingly pioneer outcome-based service lines that add top-line value to our client. The next-gen Indian BPM industry truly needs to integrate into the larger fabric of digital automation and advanced business analytics if we are to maintain our pole position.
The author is Senior Vice President, Global Shared Services, NTT DATA Global Delivery Services