1. Nine Keys to World-Class BPO:
An illustration of practice-focused research
Dr. Mary Lacity,
Curators’ Professor
Dr. Leslie Willcocks
Professor of Technology Work and Globalization

2. Session Objective
Demonstrate the fluid, emergent, iterative nature of our practice-based inquiries
Design
Data Collection
Data Analysis
Research Output
Research Question

3. Research Inspiration Board
Curiosity
Access
Opportunity
Influence

4. Research Inspiration Board
Research Question
Curiosity
Data Analysis
Access
Opportunity
Design
Research Output
Data Collection
Influence

5. 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!
The BPO survey. The Everest Group conducted the BPO survey in late 2011 and its findings are reported in Mindrum et al. (2012). Our role was to comment on survey design and we had access to the survey findings. Two hundred and sixty-three qualified BPO clients responded.
Mindrum, C., Hindle, J., Lacity,  M., Simonson, E., Sutherland, C., and Willcocks, L. (2012), “Achieving High Performance in BPO: Research available at 

6. 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 Winner, best paper award.
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
Lacity, M. and Willcocks, L. (2013), “Beyond Cost Savings: Outsourcing Business Processes for Innovation,” Sloan Management Review, Vol. 54, 3, pp
Lacity, M., and Willcocks, L. (2014), “Nine Practices for Best-in-Class BPO Performance,” MIS Quarterly Executive, Vol. 13, 3, pp

7. Sourcing Back Office Services
Research Context:
Sourcing Back Office Services
Strategy
Key processes
Transactional services
Biotechnology
Healthcare
Manufacturing
Transportation
Vertical Specific BPO
Human
Resources
Finance &
Accounting
Procurement
(Indirect materials)
Full service
BPO HR
strategy
F&A
strategy
S2P
strategy
Internal audit
Budget/forecasting
Fixed assets/ capital budget
Treasury & risk mgmt.
Mgmt reporting & analysis
Spend data mgmt
Strategic sourcing
Vendor mgmt.
Demand mgmt.
Performance mgmt.
HR design
Regulatory & compliance
Training & development
Recruitment & selection Compensation
Benefits
Employment data mgmt.
General accounting
Accounts receivable
Tax
Day-to-day purchasing
Customer service
Procurement systems
Performance mgmt.
Transactional
BPO
Payroll
Accounts
payable
Call Centers
Applications maintenance Voice & Data Networks Help desk Desktop
ITO
Data centers ERP Applications development
IT strategy
Source: Oracle Internal Training

9. BPO Performance Varies
World-class
Cost savings/SLAs improved each year
Business benefits/Innovations delivered
High client satisfaction
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

10. Access to Everest Group’s BPO survey of 263 qualified BPO clients
Nine Keys Research
Determinants of Outcomes
Access to Everest Group’s BPO survey of 263 qualified BPO clients

11. Determinants of Outcomes
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
The survey identified 20% of respondents as “best-in-class” scoring strongly on at least three must-have attributes and in the top quartile on seven additional attributes. The survey found that levels of performance were independent of industry, geography, size of deal, tenure of BPO relationship and business function outsourced. The survey research identified eight practices that strongly correlated with “best-in-class” performance. The initial set of eight practices was:

12. Nine Keys Research
Determinants of Outcomes

13. Determinants of Outcomes
Nine Keys Research
Determinants of Outcomes
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
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

14. Nine Keys 3 practices launch the BPO relationship
3 practices keep the BPO relationship on track
3 practices explore new frontiers

15. 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.

16. 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

17. Use technology as an enabler and accelerator of performance
We focus on six common technologies and what they enable:
Reduced headcount and accelerated service delivery through self-service portals
Reduced costs and standardization through automation
Optimized services by capturing and reporting on errors and waste using business analytical tools and improved product delivery rates using forecasting tools
Enhanced controls and compliance using workflow tools
Increased business value and collaboration between the client and provider organizations using governance tools
Reduced infrastructure costs and speedier enhancements through cloud-computing.
Onsite
Onshore
Offshore
Automate

18. Service Transformation Through Automation
Dr. Mary Lacity,
Curators’ Professor
Copyright © Mary C. Lacity 2015

19. ERP CRM HRM Legacy What is Robotic Process Automation?
Systems of Record
Software that automates a process the way a human does, by logging on and off systems
ERP
CRM
HRM
“Robotic” Worker
Legacy
Consider a human resource (HR) specialist in charge of recruitment and onboarding. The “thinking” part of his job entails working with business units to craft job descriptions, suggesting appropriate recruiting outlets, fielding calls from potential applicants, reviewing resumes, and calling references. Once a candidate is hired, the drudgery of “systemantics” begins for the HR specialist. The onboarding process could entail logging on and off a dozen systems for payroll, benefits, , voic , security clearance, office space, office furniture, computer, parking pass, expense account, identification badge, and business cards. Multiply that process by the thousands of employees who are onboarded each year in a typical large organizations. Now imagine a “robot” that does all this work just as the HR specialist does—by logging on and off systems to perform these routine tasks. The robot will do the work better, faster, and much cheaper than the HR specialist. That’s what Robotic Process Automation (RPA) does—interacts with other computers systems just like a human would.
“Knowledge” Worker
Copyright © Lacity, Willcocks, Craig 2015

20. # RPA transactions per month
Three Case Studies
# processes automated
# RPA transactions per month
Business
Value
ROI
35% of back office
(15 core processes)
400,000 to 500,000
Faster delivery
Better service quality
Higher compliance
Unbeatable scalability
Strategic enablement
FTE avoidance
FTE redeployment
FTE savings
650% to 800% 3-YR
1 million
200% 1-YR
14 core processes
120,000
30% per process
Copyright © Lacity, Willcocks, Craig 2015

21. 9. Prioritize and Incentivize Innovation

22. 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

23. Session Objective
Demonstrate the fluid, emergent, iterative nature of our practice-based inquiries
Design
Data Collection
Data Analysis
Research Output
Research Question

24. Research Inspiration Board