Fujitsu Consulting Canada has opened its first Fujitsu Consulting Business Services operations facility in Halifax in order to consolidate its business processes across North America. In doing so, the company is using itself as a guinea pig by implementing business process outsourcing (BPO) internally before offering it to customers.
BPO refers to contracting out or outsourcing what an organization would consider its non-core business processes to an outside firm in order to reduce costs and free up resources.
The facility went live in May, offering accounts payable services for Fujitsu’s U.S. operations. In the months ahead, the consulting house said it would extend internal functions to include billing management and accounts receivable, human resource (HR) administration, IT service management, payroll and travel. Currently, the facility is home to 15 employees, and that number is expected to hit 50 by fall.
Although what Fujitsu is doing – using itself to test its BPO model – is a strategy many vendors employ, the trial will be important in gauging whether the company does offer BPO services externally down the line, company officials said.
“If we can generate the business metrics out of the internal decision, we become a test case and demonstrable site for clients to come and see what is possible,” said Paul Kent, senior vice-president of strategic consulting for Fujitsu Canada in Halifax. In fact, there are even service level agreements in place to ensure quality and reliability standards are met, he added.
So far there are no IT workers among the facility’s staff. “It is a different kind of employee in many respects…these are financial and human resources management professionals. We have individuals here now that are certified chartered accountants (CA) or on their way to becoming a CA or senior clerical people. We are diversifying our professional capabilities,” Kent said.
When asked to compare BPO to traditional outsourcing, he said the risks and outcomes are virtually the same because BPO is still outsourcing. “At issue here is non-core but essential functions of an organization [that are] candidates for outsourcing.”
While similar to traditional IT outsourcing, BPO is more about finding functions that are not associated with that, such as data centre operations. Toronto-based BDP Business Data Services Ltd., a division of FirstService Corp. has been in the BPO game since the mid ’90s. The company has taken a horizontal BPO approach and it doesn’t consider itself to be an IT outsourcing shop.
“In our minds, BPO is more of a multi-functional outsourcing initiative versus, say, everyone outsourcing document management or data capture…. Then there’s the vertical approaches which would be the HR and IT plays. Our approach says the first group is completely commodity today,” said Luci Cudmore, senior vice-president of corporate development at BDP in Toronto. The company has four processing centres in Ottawa, Orangeville, Ont., and Toronto.
One BDP customer is the Bank of Nova Scotia. It manages the bank’s student loans because the financial institution didn’t want to do it internally. “[We’ve] taken our complete end-to-end solution and run the people, the process and the technology on our platform,” and at day’s end, BDP reports back to the bank on the transactions it processed on behalf of the bank, she said.
In the late ’90s, consultants said the BPO market was poised for take-off. Today, BPO has been downgraded to an emerging market. As one analyst said, part of the problem may be IT’s exclusion from BPO decisions, when organizations should instead be leveraging the experiences the IT sector has gained in outsourcing.
“The CIO is not really involved in the BPO decision-making process and there really hasn’t been good communication between IT and business process managers when it comes down to outsourcing,” said Rebecca Scholl, a principal analyst at Gartner Inc. in San Jose, Calif.
BPO vendors are divided into three camps: payroll processing companies, transactional processing outfits and strategic. This makes finding the right vendor a challenge. As a result, Gartner formulated a model describing the sector, called the BPO Market Model.
“We wanted a model that would represent all the functions that a company needs to operate independent of what industry they are in. In every company, whether it’s a hospital, a manufacturing or state and local government, you’re going to need three things – demand management that is going to link you to your customer base, supply management and enterprise services, to support and enable these processes,” she said. One certainty about the BPO market today is that it targets large enterprises across North America, Scholl noted.
Fujitsu’s Kent said the company plans to pilot its internal BPO services until the beginning of next year, and depending on its internal success, it will then decide if it is ready to go to market offering services.