Integration - The Forgotten BPO Process

Every BPO relationship requires some level of integration. Consider, for example, a range of BPO transactions considered 'simple': arranging for temporary staff augmentation through any number of well-know recruiting companies, having an experienced and trained entity provide third party administration of a company health insurance plan, or arranging for a security firm to provide 24-hour monitoring at a business location. In each instance, the customer will likely enter into a relatively straight-forward contract to procure the standard set of services from its provider. These contracts, and the relationships formed by them, are often referred to as out-tasking or even subcontracting, but in reality they involve the transfer of some business activity to a third party that meets the typical definition of a BPO relationship. In each case, the customer likely will assign one person (or possibly a small group of its staff) to administer the contract. This administration function is often viewed as contract management. The assignment is to monitor or manage the provider to ensure that the contracted services are delivered at the agreed to time and with the agreed to level of quality. In return, this same contract management group will review the provider's invoices and arrange for proper payment to the provider for the services delivered. All relatively straight-forward.

However, lurking beneath the covers is a potentially important function that will be provided by this contract management group almost implicitly. The group likely will be charged with responsibility to ensure that the services delivered by the subcontractor satisfy the customer's needs. In the case of the temporary staff augmentation provider, this probably means that the right numbers of temporary staff with the right level of experience and seniority are provided when needed at the right corporate locations. Each one of these characteristics (numbers, experience, timing and location) will change over time as the business and staffing needs of the customer change to satisfy its own internal requirements. Identifying when these changes occur and communicating those changes to the temporary staffing provider is a level of integration absolutely essential to the success of this rather straight-forward relationship. In the absence of knowing what types of personnel, with what types of experience, and how many and where, the provider has little chance of successfully delivering its services.

Interestingly, how the customer is to identify its own changing requirements and notify the service provider is often unstated in the relationship documents. That is, the manner in which the integration function is to be delivered, a process that requires input and reaction from both customer and provider, is often left for the parties to work out during actual contract performance. That is a fundamental mistake in developing the BPO relationship. In the simple cases discussed so far, this failing may not be critical. The services are well-defined and mature; customers have been receiving them for many years and providers have been delivering them for an equally long time. It is well-understood in the context of temporary staff augmentation how characteristics like numbers, experience, timing and location should be communicated and what the likely consequences are if the information provided is either inaccurate or not timely.

Unfortunately, if one moves form these simple cases to more complex BPO relationships neither the characteristics that must be communicated from customer to provider, nor the implications of not providing that information, are similarly obvious. For example, if one focuses on outsourcing on an end-to-end, comprehensive basis a customer's human resources recruiting function (and not just temporary staff augmentation), successful performance by the provider is likely to depend on a wide range of factors such as how the company positions itself in the workforce marketplace, the efforts the company undertakes to brand itself at colleges and universities, the types and levels of benefits it offers, the awards (or lack of awards) it garners for the quality of its workplace environment, the nature of the company's interviewing and recruitment process, and on and on. In many cases, a company may have decided to outsource this recruitment function precisely because internally it was unable to properly address these and other related factors, resulting in an unsuccessful recruiting program, and believed that an experienced third-party outsource provider could do a better job. But, in the absence of established methods for identifying what the important criteria are for a successful recruiting program, and developing the necessary information to establish a corporate position on each criteria, a third-party provider is no more likely to be successful than was the internal group charged with recruiting.

What is missing is the integration function. How does the recruiting process relate to the business needs? How do those business needs impact the recruiting process? What are the impacts of business change on recruitment? How will such business changes be communicated to those responsible for recruiting (whether an internal group or a third-party BPO provider)? How will those responsible for recruiting respond back to the business about the impacts proposed business change may have on the success of their recruiting mission? These, and other similar type questions, are all very important issues that must be addressed to assure the success of the recruiting function. The act of outsourcing that function to a third party puts a premium on making more explicit and more formal the process to be used for addressing these questions. But, as noted previously, these types of questions (and the issues implicit in such questions) hardly ever are addressed in the relationship documents that form the outsourcing contract.

Now complicate the situation one further step: assume as is true in many situations today, that rather than have a simple customer-provider relationship, the responsibility for the human resource domain has been divided among a number of third-party providers, as well as a set of retained customer functions. In this scenario, the end-to-end recruiting function may be just one human resource process outsourced to a third party. The customer may have a different provider delivering health and welfare benefits, or payroll and HR administration or, potentially even more important to recruiting, talent management or learning and career development services. In this case, it not only is necessary for each actor responsible for delivering some piece of the overall service to understand what the other is doing (a classic roles and responsibility matrix), but also to know how changes in each of these functions may impact the other, and how information about such changes will be identified and communicated among the group of actors responsible for service delivery.

The integration processes required to properly coordinate this group of disparate service delivery actors is no different than the integration functions already discussed in the simple temporary staff augmentation example, just more complex because the activities now being outsourced are not as simple, mature and straight-forward as the temporary staffing example and because there are now multiple service delivery providers involved. It is this combination of more comprehensive services with less well-defined boundaries and the multiplicity of service providers that makes the integration process both crucially important and difficult to achieve.

So, how might one address this integration issue? At Pillsbury Global Sourcing we have expanded our ValueChain methodology, an approach based on using a standard repeatable set of business process definitions for the various BPO service domains, to include a set of so-called "integration processes." There are three main groups of such integration processes:

• First are a set of processes related to how one specifies the integration obligations. These include processes associated with identifying the integration requirements, actually developing the integration procedures, methods, tools, etc. that will be used to satisfy the identified integration requirements, gaining approval of the integration approach reflected in the procedures, methods and tools, and finally putting a place a process for handling change to approved integration approach.
• Second are a set of processes related to what we call "service" integration. These processes broadly address relationships among multiple service delivery actors, both external third party providers and internal resources. These relationship issues consist of the processes necessary for service coordination among delivery actors, service implementation (meaning the actual transfer among delivery actors of information about service levels, performance reports, policy standards, etc.), and issue management to address escalation procedures and disputes by and between delivery actors.
• Third are a set of processes relating to "technical" integration. These processes deal with subjects like knowledge management and knowledge transfer among delivery actors, technical coordination to confirm that all delivery actors are producing work product and taking actions consistent with the overall technical solution for the BPO domain, and the actual technical implementation which often involves "hand-offs" from one delivery actor to another (for example, from one third-party to another third-party or from a third-party to a retained internal resource).

These standard integration processes are then shared with all delivery actors (both external and internal) and roles and responsibilities for each particular process are unambiguously defined. Pillsbury's ValueChain method is sufficiently robust so that different responsibilities can be assigned depending on geographic locations, lines of business, facility types (e.g., sales office, warehouse, retail store, etc.), or any other applicable factor. Using such a process-oriented definition of integration responsibilities is not a complete solution to the integration issue, but it does provide a good first step and it starts to bring some structure and discipline to an area that has been overlooked too long within the BPO industry.

About the author

Robert Zahler is a Partner with Pillsbury Global Sourcing.