Nine Keys to World-Class BPO:

An illustration of practice-focused research

Dr. Mary Lacity, Dr. Leslie Willcocks
Curators’ Professor Professor of Technology
Work and Globalization
 Session Objective

Demonstrate the fluid, emergent, iterative

nature of our practice-based inquiries
Research Question

Design

Data Collection

Data Analysis

Research Output
 Research Inspiration Board

r i os i t y
Cu
Oppor
tunity

Acces
s Influence
 Research Inspiration Board

n
rch Q uestio
Resea

r i os i t y Data Analysis

Cu
Oppor
tunity
Desig
n
Research Output
Data C
ollecti
on
Acces
s Influence
 Research Overview

Based on the results of a five surveys, including a

survey of 263 business process outsourcing (BPO)
clients and 65 client-provider interviews, our research
identifies nine practices associated with best-in-class
BPO performance.

Since book was published, we are deeply

investigating one practice on technology called
Robotic Process Automation; surveys & case studies
& a book due October 10th!
 Sample Publications

Refereed Journals:

Lacity, M., and Willcocks, L. (2014), “Business Process Outsourcing and Dynamic
Innovation,” Strategic Outsourcing: An International Journal, Vol. 7, 1, pp. 66-92. Winner,
best paper award.

Lacity, M. and Willcocks, L. (2013), “Beyond Cost Savings: Outsourcing Business Processes
for Innovation,” Sloan Management Review, Vol. 54, 3, pp. 63-69.

Lacity, M., and Willcocks, L. (2014), “Nine Practices for Best-in-Class BPO Performance,”
MIS Quarterly Executive, Vol. 13, 3, pp. 131-146.

Revise and Resubmit:

Lacity, M., (2015), “Conflict Resolution in Business Services Outsourcing Relationships”,
Journal of Information Technology.

Non-refereed Journals:

Published multiple smaller articles in Pulse Magazine, Professional Outsourcing Magazine, and
Outlook Magazine
 Research Context:
Sourcing Back Office Services Vertical Specific BPO

Human Finance &

Transportation
Manufacturing
Procurement

Biotechnology
Resources Accounting

Healthcare
(Indirect materials)

Full service
BPO HR F&A S2P
strategy strategy strategy

Strategy
Internal audit Key processes
Budget/forecasting Spend data mgmt
Performance mgmt. Transactional services
Fixed assets/ Strategic sourcing
HR design capital budget
Regulatory & compliance Treasury & risk mgmt. Vendor mgmt.
Mgmt reporting & analysis Demand mgmt.

Transactional
Training & development Day-to-day purchasing
Recruitment & selection General accounting

BPO
Customer service
Compensation Accounts receivable Procurement systems
Benefits Accounts
Tax Performance mgmt.
Employment data mgmt. Payroll payable
Call Centers
Applications maintenance Voice & Data Networks Help desk Desktop
Data centers ERP Applications development
ITO

IT strategy

Source: Oracle Internal Training 7

 BPO Performance Varies

World-class
Cost savings/SLAs improved each year
Business benefits/Innovations delivered
n ce High client satisfaction
a
rm
Pe
r fo
Good
Cost savings delivered
Meeting SLAs
Good client satisfaction

Doing Okay
Marginal cost savings delivered
Acceptable service performance
Marginal client satisfaction

Poor
No cost savings; costs increased
Poor service performance
Low client satisfaction
 Nine Keys Research
Determinants of Outcomes

Access to Everest Group’s BPO survey

of 263 qualified BPO clients
 Nine Keys Research
Determinants of Outcomes

Survey identified 8 best-in-class practices:

Practice 1. Focus on benefits beyond cost reduction
Practice 2. Target strategic outcomes
Practice 3. Adopt a partnership-based approach to governance
Practice 4. Take a holistic approach to the scope of the BPO relationship
Practice 5. Align the retained organization with the outsourced processes
Practice 6. Drive strong transition, transformational and change management
capabilities
Practice 7. Contextualize data through domain expertise and analytics
Practice 8. Emphasize the benefits of technology in the BPO relationship
Nine Keys Research
Determinants of Outcomes

Qualitative Data Co lle c te d o n BPO Re latio ns hips

Numbe r
Numbe r o f
o f Ke y
Co nte xt Re latio ns hips S ample Cas e s
Info rmant
S tudie d
Inte rvie ws
Financial & Accounting
8 18 BP, Microsoft
Services (FAO)
Human Resources (learning, Telstra, Kimberly
3 6
recruiting, etc.) (HRO) Clark
Legal Process (LPO) 6 11 RadiantLaw, BT
Procurement/Supply Chain Givaudan,
5 10
Outsourcing Synopsis
Customer Care/ Call Center, TalkTalk, British
6 12
Outsourcing Gas, iiNet
Diesel Direct,
Cloud services 4 8
Dana Foundation
To tal 32 65

12
 Nine Keys Research
Determinants of Outcomes
1. Focus on benefits beyond cost
reduction
Practice 2. Target strategic outcomes
3. Adopt a partnership-based approach to
governance
4. Take a holistic approach to the scope of
the BPO relationship
5. Align the retained organization with the
outsourced processes
6. Drive strong transition,
transformational and change
management capabilities
7. Contextualize data through domain
expertise and analytics
8. Emphasize the benefits of technology in
the BPO relationship
1. Assign great leaderships pairs
2. Focus on business and strategic benefits
beyond cost efficiencies
3. Adopt a partnering approach to governance
4. Align the retained organization, outsourced
processes and provider staff
5. Drive strong transition, transformational and
change management capabilities
6. Deploy domain expertise and business
analytics
7. Resolve issues together and conflicts fairly
8. Prioritize and incentivize innovation
9. Use technology as enabler and accelerator
of performance
 Nine Keys

3 practices launch 3 practices keep the 3 practices explore

the BPO BPO relationship on new frontiers
relationship track
 1. Assign a Great Leadership Pair

An effective leadership pair—

one person from the client
organization and a
counterpart from the provider
organization—must work
collaboratively to implement
the practices associated with
best-in-class performance.
 1. Assign a Great Leadership Pair

TEN ATTRIBUTES OF EFFECTIVE LEADERSHIP PAIRS

1. Focus on the future

2. Transparent
3. Problem solve
4. Put the customer first
5. Spirit of togetherness
6. Clout
7. Action-oriented
8. Trustworthy
9. Empathetic
10. Chemistry with counterpart
 7. Use technology as an enabler and
accelerator of performance

Onsite Onshore Offshore Automate

Service Transformation
Through Automation
Dr. Mary Lacity,
Curators’ Professor

Copyright © Mary C. Lacity 2015 18

 What is Robotic Process
Automation?
Software that automates a process the way a Systems of Record
human does, by logging on and off systems
ERP
CRM
HRM
Legacy
“Knowledge” Worker
“Robotic” Worker
Copyright © Lacity, Willcocks, Craig 2015 19
Three Case Studies
# processes # RPA Business
automated transactions Value ROI
per month
35% of back Faster delivery
Better service 650% to
office 400,000 to
quality 800% 3-
(15 core 500,000
Higher YR
processes)
compliance
Unbeatable
35% of back scalability 200% 1-
office 1 million Strategic YR
enablement
FTE avoidance
FTE
redeployment
14 core 30% per
120,000 FTE savings
processes process

Copyright © Lacity, Willcocks, Craig 2015

 9. Prioritize and Incentivize
Innovation

Effec ve Leadership Pair

Innovation
Effects (t +2)
Incenting Delivering
Innovation Innovations Innovation
Effects (t +1)

Innovation
Effec ve Effec ve

Effects (t)
Productivity targets Acculturation
Most

Innovation days Inspiration

Gainsharing-project level Funding Operational efficiency
Injection Process effectiveness
Strategic impact
Threat of competition
Special governance

Innovation funds
Effec ve

Benchmarking
Least

Gainsharing–relationship level
Painsharing
Figure 10.1
Nine Keys

1. Assign great leaderships pairs

2. Focus on business and strategic benefits beyond cost
efficiencies
3. Adopt a partnering approach to governance

4. Align the retained organization, outsourced

processes and provider staff
5. Drive strong transition, transformational and change
management capabilities
6. Deploy domain expertise and business analytics

7. Resolve issues together and conflicts fairly

8. Prioritize and incentivize innovation
9. Use technology as enabler and accelerator of
performance
 Session Objective

Demonstrate the fluid, emergent, iterative

nature of our practice-based inquiries
Research Question

Design

Data Collection

Data Analysis

Research Output
Research Inspiration Board