Time – This is another aspect that often has broad ramifications for the rest of the business case.
Constraints and risk are primary areas of interdependence, such as meeting deadlines for business performance or regulatory compliance and the associated impact of non-performance or non-compliance. However, organizations can often miss the favorable aspects of time when developing their business case.
A potential BPO initiative’s ability to accelerate benefits can have a significant effect on the business case. For example, I have seen organizations provide early retirement to highly-skilled staff, develop a captive subsidiary for those who wanted to continue their roles, and then outsource these skills to that organization. This positively affects operational costs, increasing revenue and reducing risk.
Although situational, this example should make organizations think about ways to creatively sell and leverage BPO.
Risk – Risk is very often the differentiator whether to implement a potential BPO initiative—which provider to choose, how to structure and manage the relationship and many other downstream aspects.
Identifying risk elements, their probability of occurrence and their associated impacts relative to other aspects of the business case is an obvious place to start. There are many good sources for risk management theory and application, but it’s also an area where I’ve seen organizations become too involved in analysis, leading to indecisiveness and even negatively affecting potential benefits.
It’s important to focus on identifying those factors and resources that can either reduce risk and/or enable success, then manage them appropriately because predicting all of them might be unrealistic. Each organization’s tolerance for risk is different but I think Pareto is our friend, and assuming the business case team is competent we should aim to move forward at an 80% level of certainty and course-correct as we go.
So, we have a business case. Now, what’s next? I’ll save the details for future columns, but a solid business case should help an organization make an informed, holistic business decision about a potential BPO investment, as opposed to over-focusing on the cost savings, a new technological capability or other singular factors. It should also become the compass for managing the realization of the anticipated benefits.
Mark Cioni, president of MV Cioni Associates, has been helping global businesses improve their decisions, operations and performance for over 25 years. He can be reached at [email protected].