759MKT Business Process Utilities: The Next Generation of Sourcing
Authors: Robert McNeill, Adam Weidenbaum
The world has never been as flat. Barriers to entry into the outsourcing market are getting lower. Providers can leverage cheaper IT provided by new cloud computing architectures. Regulations, standards and co-opetition are driving process maturation. The opening of global markets is allowing firms to access skilled labor and cheaper resources on an unprecedented basis. Meanwhile, traditional IT and BPO offerings are standardizing, benchmarking is common place and price is becoming the greatest factor in outsourcing selection.
Saugatuck’s research indicates that outsourcing providers need to change their business models to drive differentiation and embark on the next generation of sourcing. Business Process Utilities (BPUs) may very well be the vehicle upon which outsourcing providers drive the regeneration of their outsourcing portfolios. BPUs are “service platforms that provide relatively standardized business processes, delivered from a one-to-many architecture and have many customers subscribing to these services”. BPUs leverage shared platforms (both home grown and third party) to offer next-generation BPO services and solutions.
In this Strategic Perspective, we define what the characteristics of a BPU are and explain the drivers behind their emergence, and how service providers will give rise to BPU use.