Innovation Driven by Outsourcing

All large companies now outsource various components of their businesses, with each year seeing more and more business functions bequeathed to third-party vendors. While business process outsourcing (BPO) is often portrayed by industry through leadership as an endeavor that can transform various business activities into value-creating juggernauts, the empirical results of BPO all too often fall woefully short of its alluring promises. 

Common sense dictates that when a business process is outsourced, it provides the outsourcer and the outsourcee with a fortuitous opportunity to deeply dissect the process and change it for the better, injecting value and innovation into the process. After all, the expectation is that an external service provider or vendor will come to the table with seasoned expertise and infrastructure that exceeds what is found “in-house” - exploiting the core competencies of the service provider to achieve value and innovation. Far too often however, the reality is this: Once a business process is outsourced, both sides are concerned primarily about the stabilizing of the process (making it work as effectively as it did before it was outsourced); they are far less worried about process innovation. This acute mindfulness to stabilization is even more pronounced when the outsourced process involves direct customer contact. In this case, there is a well-founded risk that value and innovation may hinder the stabilization process and postpone much needed short-term cost savings (i.e., savings that will appear on next quarter’s balance sheet). Working against up-front innovation in BPO is a fact that organizations who engage in outsourcing are often most concerned about the cost savings that will accrue in the short and long-term.

Commonly, processes will be done in the same way as before — just with different resources (i.e., cheaper ones) — transformative deliberations on moving closer towards value and innovation will be absent. In such cases, cost advantages may very well be negated by the failure to innovate, as regressing toward commodity status becomes inevitable. (Remember that your competitors are leveraging the benefits of outsourcing as well.) On a positive note, because outsourcing contracts usually go down to low-level details about service relationships (such as addressing granular time frames--such minutes or seconds—where a given response or service needs to be completed or executed), they provide a golden opportunity for both parties to glean greater knowledge on internal workings of the business processes in question. The most common example is where the need for thorough legal documentation drives the opportunity for increased transparency. But buyer beware! As job cuts accelerate in just about every industry across the globe, companies looking to outsource business processes will quickly find that there will be a significant resistance to their plans. In a nutshell, workers at all levels are scared of loosing their jobs; for the near-term, no company should expect a high level of cooperation for when it comes to their BPO objectives.

Complex Event Processing (CEP)

Traditional business intelligence usually deals with data that has a high degree of latency, which makes it impossible to conduct performance management in real time and adjust business processes (handle exceptions) on a spit-second notice. BI analysis cycles—like regular business cycles--need to be quick and agile, not bogged down because of a slow moving data supply chain. Complex event processing (CEP) offers robust support to a wide variety of enterprise BI and process management tasks via the continuous extraction and analysis of information from a distributed message/service based system. In this way a BI dashboard can understand what is occurring in real time and execute dynamic queries and knowledge mining routines. CEP will become indispensible to business process innovation because of its ability to drive business process monitoring across all geographic regions, time zones and processes types. CEP can expediently examine the results of many different parallel business processes and their corresponding steps (“i.e., a process chain”) to form high-level conclusions based on the results output from each link in the chain. Complex and inferred states will be discovered in an overall complex activity cloud, where they can be correlated and classified into meaningful data buckets.

CEP software will to be deployed on an event-driven architecture where the software is able to continuously make decisions and take actions on data that is racing around enterprise message buses and networks. Event correlation and abstraction will be made possible by sophisticated rules and aided by hierarchical reference data and archived trend-oriented data. CEP rules can then digest complex interrelationships in an event chain such as causality, membership, cardinality, pattern matching and timing in order to deduce or infer various situations and states. Much of this heavy lifting is performed against mutually exclusive process streams that are occurring in a simultaneous fashion. Based on this information, new events can also be triggered and data can be sent to a BI platform in the form of alerts or breaking news with impressive sub-second response time.