Month: January 2021

Business process outsourcing (BPO) and information technology outsourcing (ITO) both represent ways that a business can reach beyond its own capabilities and introduce another provider for support. Each of these providers have unique roles, but there is some overlap as well. Essentially, a company turns to ITO and BPO providers to create more efficient work flows. An ITO provider should create cost savings tied to computer networks and other information technology systems, while a BPO provider’s services should lead to greater operational efficiencies in most all areas of a business.

A business may turn to hire both ITO and BPO providers. The scope of services offered by both of these providers is different, and one does not eliminate the need for the other. Also, on average, there is no rivalry between the types of services offered by BPO and ITO providers.

Unless financial savings are uncovered relating to technology systems and procedures, an ITO provider has not made a difference. Once a BPO provider has been hired, improvements in business processes that may lead to greater financial results at a business must be realized in order for that service to be deemed a success. The efficiencies attained through a BPO provider could be tied to human resources, finance, or really any operational area of an organization that is part of a company’s core business.

Although ITO and BPO services are designed to complement one another, it may make sense for an organization to adopt one before the other. Introducing an ITO provider first can lead to the quickest financial savings, which is a good place to begin. An ITO provider does not need to remain engaged over the long term, as after potential cost savings are identified, those changes can be appropriated by the business. Once any cost savings are realized, the conditions may be ripe for a BPO provider to enter the scenario and create greater operational efficiencies throughout the organization.

Other differentiating factors between ITO and BPO firms include the expertise behind each provider. ITO professionals are skilled to recognize the types of technology capabilities that are needed at an organization, ranging from storage to support to wireless services. Providers should be able to negotiate costs and terms or streamline services based on the knowledge that these industry professionals possess. BPO providers perform specific tasks on behalf of an organization, such as customer service, accounting, or personnel management.

Outsourcing is contracting with another company or person to do a particular function. It means some companies may enter into an agreement with other companies to perform their activities at an agreed cost. Here the contracting companies may be benefited from the experience of the outsourcing company.

Outsourcing is an agreement in which one company hires another company to be responsible for a planned or existing activity that is or could be done internally, and sometimes involves transferring employees and assets from one firm to another.

The term outsourcing, which came from the phrase outside resourcing, originated no later than 1981. The concept, which The Economist says has “made its presence felt since the time of the Second World War”,[6] often involves the contracting of a business process (e.g., payroll processing, claims processing), operational, and/or non-core functions, such as manufacturing, facility management, call center/call centre support).

The practice of handing over control of public services to private enterprises, even if on a short-term limited basis, may also be described as “outsourcing“.

Outsourcing includes both foreign and domestic contracting, and sometimes includes offshoring (relocating a business function to a distant country) or nearshoring (transferring a business process to a nearby country).

Offshoring and outsourcing are not mutually inclusive: there can be one without the other. They can be intertwined (offshore outsourcing), and can be individually or jointly, partially or completely reversed, involving terms such as reshoring, inshoring, and insourcing.

Needs for outsourcing

In this troubled economy every rupee is precious. The business needs to control costs wherever possible.  Outsourcing certain aspects of the business to third parties, can be a powerful cost cutting move that also frees up for more important tasks such as finding new clients and product development.

Cost and efficiency Savings

Back-office functions that are complicated in nature, but outsourcing enable the business to perform it at a consistent and reasonable cost.

Expansion and growth

Outsourcing helps to reduce the investment in backend activities. Hence the firm can use its resources for its further expansion and developmental activities.

Customer support

Having a live person to deal with customer questions and concerns is an important part of building the business’ credibility.  When it is outsourced the call professionals can represent the business with authority.

Benefits of latest development

The outsourcer generally maintains a world class information technology and techniques. Therefore, the client company is also benefitted from the technical expertise of the outsourcing company

Focus on Core Activities

In rapid growth periods, the back-office operations of a company will expand also. Outsourcing those activities will allow refocusing on those business activities that are important without sacrificing quality or service in the back-office.

Scope of Outsourcing

The term outsourcing has more popularly come to be associated with I T enabled services or Business Process Outsourcing (BPO). We can classify the scope of Outsourcing into 4 major areas.

Advertising

Business firms generally depend on advertising agencies for designing developing and disseminating their products and services. Under the agreement the advertising agencies agrees to provide all the services associated with advertisement.

Financial Services

The firm may outsource various financial services like payroll preparation, Underwriting, Merchant banking etc.

Customer support Services

Customer service is the major area were outsourcing applicable. Almost all the companies outsource its after sale services and customer services. Call centers are the best example for the customer service outsourcing.

Courier service

Big firms generally depend on the courier agencies to dispatch their large amount of parcels.

Knowledge Process Outsourcing (KPO) means information related business task or knowledge-based processes such as research, analysis, consultancy or any other high-level task are outsourced i.e. done by the workers of another company or allocated to the subsidiary of the same organization.

These subsidiaries can be in different countries or geographical location. This is done in order to save resources and costs. KPO firms can take decisions of businesses on the behalf of the parent companies. KPO is nothing but the subset of Business Process Outsourcing (BPO).

Cost-effectiveness, access to the best talent, focus, better utilization of the resources are the advantages of Knowledge Process Outsourcing (KPO).

List of KPO Companies in India

• Sutherland Global Services
• WNS
• Boston Analytics
• SG Analytic
• Eclerx
• Syntel
• CRISIL
• iGate
• McKc (Mckinsey Knowledge Centre)
• Deloitte

Types of KPO Services

Some common example of KPO outsourcing domains include:

• Financial consultants
• Research and development (R&D)
• Business operations (management consulting)
• Technical analysis
• Investments
• Legal
• Medical & Healthcare
• Data analysis and interpretation

Advantages of KPO

• Cost-effectiveness: One of the biggest advantages of a KPO is obviously the cost advantage. The company does not have to set up any infrastructure or bear any operational or running costs. And it gets effective, expertizes services at a fraction of the cost.
• Access to the best talent: KPO’s provide the company with the best, most knowledgeable and skilled professionals available in the global talent pool. And if the KPO is in a developing country like India or Philippines then the cost of such talent is also relatively low.
• Focus: Outsourcing some of the processes, allows the company to focus on its core functions. The KPO handles the peripheral functions, and the company can better focus on its core functions and improve their efficiency and results.
• Better Utilization of Resources: If the company outsources the process that is not at the core of their business strategy, it can use the resources it saves in better places. Say a company outsources its supply chain management. Then the resources it saves on this can be utilized to streamline the manufacturing process, R&D activities, better marketing etc.

Advantages and Disadvantages of KPO

KPO can help companies reduce operational or production costs by creating new processes or streamlining efficiency. KPO also fills the gap or need for skilled employees in a particular field. KPO also frees up existing staff, including management, to do other work boosting efficiency and productivity.

The flexibility that comes with KPO allows a company to increase or reduce staff easily. For example, if economic conditions worsen, a company can easily reduce its KPO staff to cut costs. Conversely, a company can quickly hire specialized staff to boost profits or revenue. KPO helps a company to be more nimble and adapt to the changes in its industry and competitive landscape.

However, disadvantages do exist with KPO. Privacy of intellectual property and business security can be compromised if classified or proprietary information is lost, copied, or brought to a competitor. Companies have less control over the hiring process of outsourced workers. As a result, a company might not be able to ensure the character of its outsourced employees or the quality of their work.

Implementing KPO can be time and resource intensive to establish a successful operation. Moreover, communication can be a concern and a challenge, due to legal, language, and cultural barriers. Another disadvantage might be that existing employees might feel threatened by the hiring of outsourced workers and feel their jobs are at risk.

ERP technical architecture basically defines layout of layers of application deployment between servers and desktops, interfaces and software objects. ERP architecture is no more meant to just provide technical functionality, user interface and platform support but should be able to absorb emerging technologies. It should be expandable and maintainable to meet future business needs such as business process changes, merger and acquisitions, compatibility with future regulations etc.

Design of an integrated enterprise model is a complicated task as it involves mapping of all the functions, information flow, decision process, material flow, and several other aspects, that govern the dynamic process of the enterprise. Several approaches exist to do this. A generic model may comprise two building blocks: hierarchical IDEF model and object oriental model. Some of other models adopt structural modelling or system approach with support from object-oriented approach to analyse and design the software (Ng. et al. 1999). A general understanding of ERP is as follows:

Enterprise Resource Planning (ERP) is a game plan for planning and monitoring all of the resources of a manufacturing company, involving the functions of manufacturing, finance marketing & engineering. ERP is recognized as being an effectual management system that contains an outstanding planning and scheduling capability offering significant achievement in productivity, dramatic enhance in customer service, much higher inventory turns, and larger reduction in material costs. These technology innovations involved the move to relational database management systems (RDBMS), the utilization of a graphical user interface (GUI), open systems and a client/server architecture.

The generic design of ERP involves development of a tree structure, depicting different functional nodes of enterprise. A simplified generic model of ERP system is depicted in Figure. All of the generic representations of this figure might further be exploded to develop the exploded generic representation.

The successful implementation of an ERP system will have many advantages, as indicated below:

Business integration and Improved Data Accuracy: ERP system is composed of various modules/ sub modules where a module represents a particular business component. If data is entered in one module such as receiving, it automatically updates other related modules such as accounts payable and inventory. This updating occurs at real time i.e. at the time a transaction occurs. Since, data needs to be entered only once at the origin of transaction, the need of multiple entries of the same data is eliminated. Likelihood of duplicate/ erroneous data is, therefore, minimized. The centralized structure of the data base also enable better administration and security provisions, which minimizes loss of sensitive data.

Real-time information with Decision Support Tools: The various decision support tools like planning engines and simulations functions, form integral part of an ERP system which helps in proper utilization of resources like materials, human resources and tools. Without an ERP system, your team is flying blind. They make decisions based on guesswork and rules of thumb because they don’t have the data they need. Sometimes they are the right decisions, but more often, they are sub-optimum decisions that can cost you money and customer goodwill. Constrained based planning help in drawing appropriate production schedules, thereby improving operation of plant and equipment. As a part of MIS, an ERP system, contains many inbuilt standard reports and also a report writer which produce ad hoc reports, as and when needed.

Improved visibility, Boost Efficiency and Productivity: In addition to provision of improved planning, ERP system provides a tremendous boost to the efficiency of day to day and routine transactions such as order fulfilment, on time shipment, vendor performance, quality management, invoice reconciliation, sales realization, and cash management. Cycle time is reduced for sales to cash and procurement to pay sequences. If customers want to know when their order will ship or if you need to know whether you have enough of a critical component to accept a rush order, an ERP system gives you instant visibility into your operations and your supply chain.

Establishment of Standardized Procedures: ERP system is based on processes of international best practices, which are adopted by the organizations during implementation. The uniformity of record data that an ERP system instance will help ensure that your records are more accurate, which will increase process accuracy across the board.

Flexibility and technology: Due to global environment, where production units, distribution centres and corporate offices reside in different countries, organizations need multi company, multi-currency, multi-language and multi accounting modes, in an integrated manner. These provisions are available in the Odoo ERP systems.

Faster periods end close and cost control: ERP systems automatically process transactions and generate audit trails and financial reports that can simplify period-end closings. They flag anomalies so you can investigate quickly, and they simplify repetitive journal entries and other activities that make closing so complex and time consuming. Faster closes mean you know the health of your business sooner. ERP systems calculate and collect costs so you always have an accurate picture of your product cost and margins.

Make Customer Happy with Balance of Supply and Demand: Customers like accurate delivery dates, and ERP can help you provide them with improved inventory and shop floor visibility. In addition, the increased visibility and accuracy will help you improve your delivery in full on time, MRP, a component of ERP systems, will help you balance supply and demand so you can reduce inventory while keeping customers happy.

Reduced lead times and increased operational efficiency: Better scheduling and accurate records ensure that your schedules focus on priorities, leading to shorter lead times. Since you won’t have as many orders waiting for tooling or parts, your throughput will increase. By helping you to plan production more effectively, your operational efficiency will improve as you reduce set-ups and tear downs or unnecessary downtime.

ERP Modules: Traditional Types 

An ERP system is a modular application that contains various tools for different business processes. Let’s see the most important ERP system modules:  

• Supply chain management (SCM). It helps employees to control all the processes related to chain supply. For example, there is always a need to plan the amount of material and calculate the commission; 
• Product lifecycle management (PLM). This module may be helpful for companies that have their own production. Starting with the control of the project’s design and its quality, ending with the costs and spends, it optimizes the consumption of the components and materials;  
• Supplier relationship management (SRM). The unfortunate reality is that suppliers can sometimes be unscrupulous or forgetful. The SRM allows scheduling business meetings, calculating the budget, and billing the suppliers;  
• Customer relationship management (CRM). This module is one of the most important functions, since it establishes the connection between your marketing specialists and the customers;  
• Human resources. If you have a medium-size company, a huge enterprise, or one that you plan to grow, this module will help your HR department. In such companies, it is difficult to keep every staff member in mind. The module contains a database with all the contact and salary information, employee’s attendance and engagement; 
• Finance module. A machine is much more accurate than a person, which makes it the best tool for assets management, including any types of arrears. It also gathers all the financial data from the other modules and departments, analyses the information, and creates reports.  

As you can see, the ERP system is a vital tool for your company’s growth. It processes many operations such as supply, delivery, finance, and much more. You may find the platform helpful at each step of the product’s lifecycle, from its production to its sale. 

Now let’s take a closer look at ERP architectures.  

Types of ERP Architecture  

The two main ERP software architecture categories are the monolithic system and the postmodern system. It is already clear from the name which of the types is the newer one. But newer does not necessarily mean better. What are the differences between the systems? 

Monolithic architecture of ERP system  

• The monolithic type of ERP systems has a single technology stack and supplier design; 
• To improve the system, you will have to update it;  
• It is not flexible and cannot be scaled with business growth. 

Postmodern architecture of ERP system 

• The system is oriented on customers since it is convenient to use; 
• The set of products also includes social media and a cloud; 
• The postmodern type is flexible and simplified. It does not have tables or other complex things that were used for scaling in previous ERP products. 

The postmodern option is easier to use and is much more customer-oriented.

The aim of the ERP software is to optimize processes, improve the communication between departments and their efficiency. But the main reason entrepreneurs choose these solutions is an opportunity to save their time and money while making a profit and growing. ERP applications can cost higher than you expected, but it is worth every single cent. Let’s see the benefits you can get by implementing ERP.

Operating costs reduction

ERP helps to unite all the business processes in a holistic system. It leads to the improvement of coordination and raises the company’s efficiency. After the implementation, you will be able to see the crucial difference. The employees will have more time to devote to other tasks, or you will even be able to cut the staff because some manual processes will be fully or partly automated. You will be able to reduce the cost of marketing and production as well as the cost of office maintaining.   

Facilitation of day-to-day management

The application provides better corporate planning and easier data access. It helps the employees to make decisions based on the available information. ERP can also control the actual operations’ costs and calculate the spendings.

Strategic planning support

Such processes determine the goals, tasks, needs, assets, and results that entrepreneurs use for analysis. It helps to plan the company’s opportunities and future actions.

An ERP system doesn’t always eliminate inefficiencies within the business. The company needs to rethink the way it’s organized, or else it will end up with incompatible technology.

ERP systems usually fail to achieve the objectives that influenced their installation because of a company’s reluctance to abandon old working processes that are incompatible with the software. Some companies are also reluctant to let go of old software that worked well in the past. The key is to prevent ERP projects from being split into many smaller projects, which can result in cost overruns.

ERP systems can be extended with third–party software, often via vendor-supplied interfaces.

Companies use enterprise resource planning (ERP) systems to assist management with decision making as well as to automate common business processes to save the company time and money. While core ERP focuses on internal business operations like finance and human resources, extended ERP focuses on external operations to make it easier to manage relationships with customers, suppliers, transporters and other parties.

Common extended ERP modules your business might use include those for supply chain management, business intelligence, e-commerce and customer relationship management.

Extensions offer features such as:

• Customer Relations Management

Customer Relationship Management (CRM) includes software related to business processes for sales teams and call centres to function more autonomously. ERP and CRM require minimal integration and can come packaged as part and parcel of an extended ERP.

Supply Chain Management

Supply Chain Management (SCM) may include software for planning and controlling any step in the manufacturing and distribution process, including tracking external companies’ handling of products. Many different processes are involved in this progression, which essentially deals with the co-ordination of supply chains within and among various businesses.

Many supply networks and channels are involved in the production and delivery of products and services. Before goods reach the customer, they go through a chain of processes that could include anything from operations management to logistics, procurement, IT and warehousing. SCM can be defined as the integrated and efficient management of supply chain activities.

E-Procurement/E-Commerce

More and more businesses require an online presence to leverage new markets. The seamless integration of ERP systems to e-commerce websites via an API (Application Programming Interface) is becoming an essential requirement.

Product Lifecycle Management

Product Lifecycle Management (PLM) software may include design, regulation, manufacturing, distribution and field service activities having to do with how a product changes over its life span. Depending on the industry, PLM software may cover more business processes or be restricted to design and engineering.

Data Mining

Data mining is a term from computer science. Sometimes it is also called Knowledge Discovery in Databases (KDD). Data mining is about finding new information in a lot of data. In many cases, data is stored so it can be used later.

For example, a store wants to save what has been bought. They want to do this to know how much they should buy themselves, to have enough to sell later. Saving this information makes a lot of data. The data is usually saved in a database. The reason why data is saved is called the first use.

Product Data Management

Product Data Management (PDM) systems capture and manage product information, ensuring that information is delivered to users throughout the product lifecycle. File ownership, version control (check-in and check-out of files), revision management, and information status (ie In Progress/Generated/Pending Approval/Released) are all managed by the PDM system. Security and administrative functionality protect intellectual property rights through role management, project-based security as well as the relevant access rights.

A CRM capability is an abstraction of the underlying functionality and process and captures what CRM does and can do.  A capability is a business architecture term, and a CRM capabilities model is an integral part of the business architecture deliverables.

A CRM capability is a foundational building block, and it establishes a common language between business and IT. Instead of focusing on systems or processes, which are volatile and transient, leveraging CRM business capabilities will help in understanding the current state and envisioning the future state and crafting a capability-centric CRM transformation roadmap.

1. Contact Management

Stores contact information such as names, addresses, and social media accounts in a searchable database.

2. Interaction Tracking

Add notes and track interaction history to document conversations with specific contacts.

3. Lead Management

Manage the process of converting prospects into potential customers (leads) by identifying, scoring, and moving leads through the sales pipeline.

4. Email integration

Integrate with email such as Gmail, Outlook, Yahoo, etc., allowing for management and segmentation of contact lists, as well as a centralized hub for internal cross-collaboration.

5. Document management

Collect, upload, store, and share documents in a centralized location, making it easier for everyone involved to access information.

6. Quotes/proposal management

Create and send quotes or proposals to customers.

7. Pipeline management

See an overview of your entire sales pipeline as well as the status/progress of each individual stage in the sales funnel.

8. Workflow automation

Automate repetitive tasks by creating workflows that trigger actions or send follow-up reminders for next actions.

9. Reporting/analytics

Get routine summary reports of sales figures or sales rep performance (e.g., on a daily, weekly, monthly, etc., basis).

10. Forecasting

Generate predictions for future sales figures or projected revenue based on past and present data/trends.

CRM software offers three major benefits for your business:

• Easy access to customer data. Customer relationship management systems include searchable databases that allow users to access client and prospect information during meetings. Some solutions let users sync information across multiple devices, providing the most up-to-date customer information from any access point.
• Streamlined processes through automation. CRM software lets users standardize workflows and processes associated with sales, marketing, and customer support to improve coordination between these teams.
• Actionable insights into business performance and customer behavior. Some CRM software vendors offer analytics functionality, where users can create customizable dashboards and reports based on customer data. These reports help in segmenting customers, tracking revenue, and managing personalized campaigns.

Needs a CRM Capabilities Model:

• Hyper-competition, rising customer expectations, and digital technologies are putting more demands on the CRM function. So, to succeed in this era of mega shifts, a CRM business capabilities map will help in getting your arms around what CRM does and have a structural basis to deal with change.
• A CRM capabilities model can help in translating the CRM strategy into action at the process, people, and technology level.
• CRM is the epicenter of the customer-centric revolution. Having a detailed understanding of all capabilities and an assessment and prioritization can help in securing funding for the projects.
• We are in the era of a real-time enterprise. Knowing what CRM capabilities and Value Streams need to be real time or near real time will allow adequate technology enablement and process improvements.
• If the business and technology teams do not speak a common language, a CRM business capability map can be the common lingua franca bridging the communication gap.
• CRM transformation projects without a capability model as a foundation tend to veer toward a bunch of projects with a disparate set of requirements. A capability-based transformation roadmap helps provide the guard rails and guideposts for the implementation.
• A CRM capability model helps in conducting a capability-based vendor evaluation for the CRM functions.

Modern customer relationship management (CRM) workflow automation has provided both small and enterprise-level businesses to operate at scale. Today the software as a service (SaaS) driven CRM market is a $35 billion industry.

CRM workflow automation options allow businesses to run manual tasks, activities, and processes through a centralized system with less human involvement. Companies are able to achieve more with fewer resources using workflow automation.

CRM workflow automation requires maturity of business processes. If the business processes are inefficient or wasteful, the automation might worsen the situation. So, businesses should first evaluate that their processes are optimized before trying to automate them. However, automating mature and optimized processes can help organizations gain speed and cost advantages over their competitors.

When businesses start investigating CRM workflow automation, they are often wondering about where to begin their journey. Here are some key areas:

Sales and Marketing Automation: Every day sales and marketing departments have to deal with large amounts of data. They need to analyze the information, find possible leads. and follow up on those leads with email or phone contacts. They have to align their media campaigns. The data analysis, lead generation, and follow-ups can become quite chaotic.

CRM workflow automation can help in multiple ways. Automated data monitoring can trigger reminders to sales and marketing teams to complete certain tasks. It can keep track of leads statuses. For example, if a lead status changes, it can automatically update the databases. The automations can lead to faster turnaround times.

Customer Service Automation: Customer support can take a lot of time from an organization. Companies have to answer the same questions again and again. They have to keep track of complaints submitted to the ticketing system to ensure high-quality customer service.

Companies can use CRM systems to automate manual support processes. They can send customers automatically to certain pages for known problems. The notification process can be automated to alert salespeople or the IT support staff. Such CRM workflow automation can lead to higher customer satisfaction.

Document and Process Automation: Account managers have to deal with a lot of mundane tasks like updating client addresses, rates, payment methods, expiration dates and other customer information. Some of these documentation processes don’t need human intervention.

CRM workflow automation allows account managers to set up reminders and processes to let clients know about payment due dates or service expirations. It can create automated renewal and address update processes and save time for both the account managers and the clients.

Benefits of CRM Workflow Automation

Organizations have to put in conscious effort to automate their workflows. It requires planning and time commitment. However, companies are investing their time and resources because CRM workflow automation is quite beneficial. Here are some workflow automation benefits:

Eliminates Human Errors: Human beings are not good at repetitive tasks. Tasks like data entry or migration, reminders, and keeping track of assets can fall prey to human errors. CRM workflow automation can decrease the errors in these tasks.

Improves Work Satisfaction: Cumbersome and monotonous tasks produce stress. When employees don’t have to perform these duties due to CRM software automation, they are more likely to have a more satisfactory work experience. They can be more productive and concentrate on creative work. It can reduce employee attrition.

Increases Productivity through Integration: As organizations grow larger, teams and departments get isolated from each other and start working in their own bubbles. CRM workflow automation can create bridges that keep the organizations running smoothly by keeping data and systems integrated between different teams and departments.

Reduces Costs: CRM sales workflow automation can save businesses in labor costs. Companies can reduce the time-to-market of products and run sales and marketing more efficiently. It can also automate product support tasks.

Improves Scalability: Hiring new employees was the proven method to scale a business. But companies are realizing that CRM workflow automation can provide them with a low-cost alternative.