Predictions 2013: UK Business Process Services

We see 2013 being a decisive year for many UK BPS/BPO (business process services/outsourcing) providers as disruptive trends around platform-based BPS, Business Process-as-a-Service (BPaaS) and Software-as-a-Service (SaaS) come of age.

These trends, largely driven by the cloud, demand suppliers respond with new services, partnerships and contracting models to meet client expectations for increased delivery flexibility, cost transparency, and elasticity of consumption.

We see suppliers now delivering such propositions to market, but those further behind could well have left it too late. Even so, big questions remain as to how suppliers will make these new models profitable. 2013 will be the test-bed for this and determine which models and suppliers are likely to succeed or fail.

Outcome-based BPS deals become mainstream

We expect ‘outcome-based BPS’ deals (where suppliers are paid according to agreed service outcomes) to become widespread in 2013 as organisations seek to minimise upfront costs and ensure maximum accountability from their suppliers. Numerous models have been emerging in recent years, such as per transaction pricing, and per process per person per month, but they are now becoming more mature and embedded in to platforms that enable the measurement and monitoring of these metrics. Outcome-based BPS deals represent real opportunities for new business, but without careful planning, also big risks to revenue and margin expectations.

Payment-by-results in UK public sector

‘Payment by results’ (PBR), a version of outcome-based BPS, will become commonplace in the public sector in 2013, as Government looks to further shift the risk to its BPS and support services partners. PBR means that suppliers only get paid if they deliver the ‘results’ or outcomes,  but this is a high risk contracting mechanism as there is little if no room for manoeuvre on either side. We expect suppliers to push back against PBR, and seek more equitable contracting that is underscored by a base fee and/or milestone payments. Those deals which remain solely PBR-based, or where risk is skewed too far onto the private sector, will cause many supplier/Government relationships to reach breaking point in 2013.

Hybrid SaaS/BPaaS delivery

We expect to see more hybrid delivery approaches involving both SaaS and BPaaS options that allow clients to adopt self-service around front end applications such as pensions and insurance policy applications (SaaS), backed up by human intervention around more complex mid-and-back office business processes (BPaaS). For suppliers that offer both approaches the risks are going to be lower, but for those providers that offer only SaaS, or only BPaaS, they risk losing out without new partnering models in place to mitigate the threat.

Business process analytics opportunity

Business process analytics (BPA) will become an increasingly hot area of opportunity for BPS suppliers as they seek to use their people and analytics technology to interpret information sets and big data siloes. BPS providers have a strong hand to play in analytics services, since large data sets are often created within business process management systems, providing hugely valuable information on operational performance. Providing analysis and actionable insights for customers can unlock this value and provide clients with a quantifiable value-add. Those suppliers that have built up big data repositories through long-term IT/BP deals will have a head start on selling BP analytics, as will those with expertise in industry-focused data analysis, knowledge services, and risk and compliance.

B2B2C convergence opening up new markets

We are seeing new markets opening up to BPS as a result of the blurring lines between B2B and B2C. Vertical markets like retail, general insurance, and pensions and horizontals like marketing and communications, which touch on the end customer (i.e. B2B2C), are now taking BPS very seriously as they seek help in reaching new customers across multiple channels - mobile, social media and self-service. BPS is an enabler here helping to transform process and operational models and deliver innovative new ways of interacting with the end customer. Global giants and new suppliers alike are emerging offering BPaaS and platform-based BPS to capitalise on this nascent opportunity. Established UK BPS players could find themselves out-manoeuvred.

More to come in the new year on UK BPS Predictions 2013, for subscribers to BusinessProcessViews.

Posted by John O'Brien at '00:00' - Tagged: bpo   bpaas   bps