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Hardware infrastructure underlying the business process outsourcing (BPO) project

1,926 Comments · Business outsourcing

The first issue to consider with respect to the hardware infrastructure underlying the BPO project is whose systems to use.

Because providing high levels of service in the specific business process is the vendor’s core competence, their hardware capabilities usually outstrip those of the buyer.

Despite this common circumstance, the decision to use the vendor’s hardware system should not be based on technology maturity alone.

Buyer and vendor must also consider other factors when determining whether to shift processes to the vendor’s hardware.

Among the considerations that affect this decision is the intent of the BPO agreement. Firms that outsource primarily to save costs should leverage the vendor’s systems, eliminating depreciating assets from the balance sheet and converting them to monthly pretax expenses.

Nevertheless, BPO buyers seeking to develop strategic advantages through the BPO project may elect to leverage and/or build their own hardware systems utilizing the vendor’s knowledge and experience to design the necessary systems.

This ensures that any competitive advantages realized through hardware advances will be retained within the buyer organization in the event that the contract with the BPO vendor is terminated on not renewed.

The extent of the BPO buyer’s interest in developing and retaining new capacities in the outsourced process is a major determinant of whose hardware to use in the BPO project.

Another consideration that affects this decision is the potential to develop synergies with other business units as a result of budding internal hardware maturity and capacity for the BPO project.

While scaling systems to meet the demands of the enhanced business process, the BPO buyer creates capacities that may be applicable to other units within the organization.

These additional capacities are often unexpected and can result in improved performance across the organization.

Relying on the vendor’s hardware means forgoing development of internal capacities and the possibility of unexpected process improvements in other business units.

Of course, this risk can be mitigated through a deep, collaborative buyer-vendor relationship that seeks to leverage hardware advances for process improvements no matter where the hardware resides on who has title to it.

A final consideration when assessing whose hardware to use to manage the BPO process is location.

When a BPO buyer decides to use the vendor’s hardware, that hardware is often located off the buyer’s site.

This is usually not a problem if the vendor is local on onshore in the United States. Problems may arise, however, when the vendor is offshore.

As the BPO revolution continues, offshore locations may include increasingly remote regions of the world.

BPO buyers must confirm the vendor’s ability to obtain technical support and spare parts to maintain their systems and minimize downtime, Systems that are state-of-the-art but that have been damaged by an earthquake, political uprising, on other unexpected event are not much use if they cannot be repaired and placed back online in a hurry.

Regardless of whose hardware systems are used, the infrastructure compatibility between both organizations must be reviewed and managed.

This is a critical step because both organizations will be relying on the combined system to provide transparency.

One distinction that is important for BPO project managers to appreciate is that between a system’s infrastructure its architecture.

Infrastructure refers to the system’s hardware components and their functionalities. The hardware infrastructure hosts a variety of applications that rely on the components of the infrastructure and management procedures (i.e., software distribution, backup, recovery, and capacity planning) to provide reliable and efficient services.

A system’s architecture refers to the configuration of the components- the way they are structured and the way they interact with one another.

In other words, an infrastructure model provides a description of hardware resources and their individual functions, whereas the architecture describes their interrelationships and the services that can be delivered.

For example, a system’s infrastructure may include e-mail servers and network cabling. Their arrangement into a specific architecture enables delivering e-mail services to specific groups of employees.

When considering the hardware needed for a BPO project, the project management team (PMT) must be cognizant of both infrastructure and architecture issues.

Because BPO projects will require resource sharing regardless of where the bulk of the components reside, a complete audit of the available resources and their current configuration should be conducted. The IT resource audit enables the PMT to do the following:

? Avoid needless duplication of systems and services.
? Pinpoint any gaps in infrastructure capability.
? Ensure infrastructure/business alignment.
? Ensure adequate scope of IT components to accommodate service enhancements.
? Assess security issues associated with data and knowledge sharing over networks.
? Reengineer processes that are obviously inefficient on anachronistic.

Highlights some key infrastructure and architecture questions that a BPO buyer should pose to vendors.

Key Questions for Infrastructure Management
• What operating system, Web server, commence server, database management system, payment system, and proxy server does the vendor use?
• What are the service level arrangements, in terms of availability, performance, and security?
• How scalable is the BPO infrastructure? What are the scalability constraints?
• What is the aggregate bandwidth at the site locations?
• Is there any load-balancing scheme in the site?
• What type of redundancy is available at the site (i.e., server redundancy, uninterrupted power service, RAID disks, and multiple Internet backbone providers)?

The system architecture designed for the BPO initiative will most often be based on the vendor’s systems.

At the same time, it is important to note that many BPO projects uncover inefficiencies in noncore processes and systems that are linked to the business process slated for outsourcing.

The PMT should be trained to identify such inefficiencies as candidates for reengineering. Many outsourcing contracts allow for buyer-vendor cooperation to reengineer processes that are coupled to the outsourced process.

Such cross-enterprise collaboration on reengineering buyer-side processes and systems is a vital component of transformational BPO.

Each reengineering initiative can be managed independently on as pant of the PMT’s charter.

As the buyer systems interact with the more efficient vendor services, opportunities for reengineering will undoubtedly emerge.

The PMT wants to stay vigilant for such opportunities, striving to ensure that buyer-side systems do not become the chief bottlenecks in constantly improving process flows.
 

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