Are you getting enough value from your business process outsourcing arrangement these days?

An important recent development amongst Australian industries has been the increase in both IT outsourcing and business process outsourcing. It would be difficult to find a company anywhere in the Australian business ecosystem not using outsourcing in some form. But as with any business or IT capability, the bar of expectations keeps being raised. Outsourcing providers and their clients alike need to be looking for ways to increase the value they achieve and deliver together.

Australian Companies have come to expect the cost savings, improved efficiencies and decreased compliance risks that accompany a solid BPO relationship. But those benefits are just table stakes now. Use offshore labor for data entry or resolution of simple edits? Been there. Outsource basic back-office functionality? Done that.

Staying ahead of the game today requires working at a higher level of insight and performance. A new generation of BPO solutions is drawing on the power of the best service providers to deploy analytics that can extract actionable business insights from the immense stores of transactional data they accumulate during long-term client engagements. Businesses can use those insights to generate higher-impact business outcomes—results ranging from accelerated speed to market to enhanced innovativeness, stronger customer loyalty and top-line growth.

Embedding analytics successfully in a BPO solution depends on several factors, including ongoing alignment to business goals, having the right incentives in place and making sure the provider has sufficient visibility across an entire function or process.

Climbing the ladder Several industry trends are leading to a new generation of BPO solutions. One is that companies are becoming comfortable outsourcing more mission- critical functions and activities. As companies see external providers perform an increasing number of business functions better than they can themselves, they are looking for ways to leverage that success more broadly across their organisations.

Another important trend is the amount of data being generated across the Australian business ecosystem. Companies know that data holds important keys to improving operations, developing innovative products and serving customers more effectively. But few of them have the resources or capabilities to spin their data-straw into insight-gold.

A final relevant trend is the increased sophistication and applicability of analytics solutions, and the growing realisation by companies that they are not tapping into all the possibilities analytics presents them.

Improving data quality

A Melbourne based organisation as an example found that its automated eligibility team was processing about 250,000 “fallouts” per month—system errors amounting to about 2.5 percent of overall automated enrolment volume. Average time to resolve those fallouts was five business days, a significant drag on efficiency and service.

The organisation’s BPO provider applied analytics to identify errors within the mass of transaction data. The team leveraged their operational expertise to segment the transactions and identify key error trends along with the system components responsible. By addressing the root causes of the fallouts through system fixes and by making changes to upstream data entry procedures, the organisation eliminated 25 percent of the bad transactions at their source—about a $1 million savings.

Understanding and attracting customers

Another suite of solutions that moves BPO deeper in the value chain focuses on consumer analytics. Succeeding in an environment of increased consumer power and choice is a major challenge in the Australian industry.

Predicting and preventing

BPO solutions at the top rung of the analytics ladder can leverage predictive capabilities to optimise process responses continuously, in real time. One such BPO solution is designed to eliminate manual work within an organisations operational core. The solution leverages machine learning to detect patterns in data and then take action on segmented prioritised queued actions. 

The solution also goes a step further and systematically adjusts to trends in the data, predicting sources of errors and directing actions in real time, thus continuously improving the process and the benefits delivered.

A pilot of the solution was able to reduce preventable financial rework for a company from 40 percent to 50 percent of the time. The results showed that prevented errors through the predictive analytics solution would:

  • Reduce administrative costs associated with data rework by 10 percent to 20 percent.
  • Reduce medical costs savings by 5 percent to 15 percent of all recoveries by preventing overpayments (e.g., paying duplicate claims).
  • Improve provider and member satisfaction by increasing first-time payment accuracy.

Making BPO analytics happen

The new generation of BPO in the Australian industry is business-outcome driven. Thus, the most important set of questions executives need to ask is: What are our business goals, and is the relationship with our BPO partner set up to drive those goals? Are the proper incentives in place to produce the desired outcomes? Cost savings and operational efficiencies are vital, but what else is the relationship providing in terms of helping the organisation leverage information to serve customers better and drive new and innovative solutions?

Another important success factor is having access to data and workflows across an entire process. Australian organisations are now becoming more comfortable with outsourcing a process from end-to-end because of the synergies that result from a holistic approach, eliminating the inefficiencies of having different parts of the same process run by different providers.

Winning the new game

Today’s BPO market demands that providers deliver value by synthesising massive amounts of data, analysing it and then applying industry experience to drive improved outcomes. Organisations that get the most value from BPO choose providers that bring sophisticated analytics and industry knowledge to the relationship, and they enable their partners to go broader and deeper to deliver insights and innovative solutions.