{"id":1670,"date":"2010-05-28T04:51:00","date_gmt":"2010-05-28T04:51:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/innovation-purgatory-part-ii-052810\/"},"modified":"2010-05-28T04:51:00","modified_gmt":"2010-05-28T04:51:00","slug":"innovation-purgatory-part-ii-052810","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/innovation-purgatory-part-ii-052810\/","title":{"rendered":"Innovation in BPO purgatory, Part II: Enterprise buyers are blaming themselves for innovation failure"},"content":{"rendered":"<div id=\"attachment_3760\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-3760\" title=\"Governance\" src=\"http:\/\/www.horsesforsources.com\/wp-content\/uploads\/2010\/05\/governance.jpg\" alt=\"\" width=\"180\" height=\"198\" \/><\/p>\n<p class=\"wp-caption-text\">Time to demonstrate real governance&#8230;<\/p>\n<\/div>\n<p><strong>In Part I of <\/strong><a href=\"http:\/\/www.horsesforsources.com\/innovation-purgatory1-051710\" target=\"_blank\" rel=\"noopener\"><strong>Innovation? \u00a0The BPO industry needs to escape from purgatory<\/strong><\/a><strong>, our latest survey reveals a few crucial aspects about innovation* in BPO endeavors:<\/strong>\u00a0<\/p>\n<ul>\n<li>43% of decision-makers now see it as a critical element of BPO<\/li>\n<li>Half of today&#8217;s enterprise buyers are disappointed with the innovation they have currently achieved<\/li>\n<li>The potential to achieve innovation across many core business processes is <strong>huge<\/strong>.\u00a0 This was notably cited in industry-specific process and analytics areas, in addition to some maturing BPO domains, namely procure-to-pay, supply chain and recruitment<\/li>\n<\/ul>\n<p><span style=\"font-size: medium;\"><strong>So why aren&#8217;t half of today&#8217;s enterprise buyers achieving innovation<\/strong>?\u00a0<\/span><\/p>\n<p>When we asked those executives with significant influence over BPO decisions their prime concerns for\u00a0failing to\u00a0achieve innovation in BPO, they cited the following reasons:\u00a0<\/p>\n<p style=\"text-align: center;\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-3756 aligncenter\" title=\"Innovation impediments\" src=\"http:\/\/www.horsesforsources.com\/wp-content\/uploads\/2010\/05\/Unempowered-governance.jpg\" alt=\"\" width=\"583\" height=\"411\" \/><\/p>\n<p>It is abundantly clear that enterprises\u00a0buyers recognize that the\u00a0blame lies a lot more in <em>their<\/em> camp than their provider&#8217;s, with well over a third citing poor change management and communications as a great concern,\u00a0coupled with\u00a0the fact that their current governance team has little juice internally to drive an innovation agenda.\u00a0 If they were going to blame primarily\u00a0their provider&#8217;s lack of\u00a0innovation prowess,\u00a0much more than a fifth of buyers would\u00a0have cited &#8220;the wrong composition of skills among their governance team and the provider&#8217;s relationship team&#8221; as a major concern.\u00a0<!-- pagebreak --><\/p>\n<p>In the next installment of this innovation saga, we will reveal what buyers are planning to do to achieve innovation, but here are a few clear areas they can work on:\u00a0<\/p>\n<ul>\n<li><strong>Create a aggressive\u00a0innovation agenda and a plan to keep that agenda <em>fresh<\/em> over time.<\/strong>\u00a0 Buyers need to stipulate the need to explore new and creative ways to improve productivity and top-line growth as a <em>core element<\/em> of their BPO endeavor and communicate this aggressively, on a repeated basis,\u00a0to their entire\u00a0retained operations organization.\u00a0\u00a0<\/li>\n<li><strong>Communicate this innovation agenda\u00a0to both governance and provider teams.<\/strong>\u00a0 Talk to any buyer beginning to achieve some innovation\u00a0success with their engagement, and they will tell you the same thing:\u00a0 &#8220;We recognized what we needed to do internally, and communicated aggressively with our provider to start delivering it with us&#8221;.\u00a0 Until buyers take the bull by the horns internally and communicate to their partners the new direction they are taking, they will <em>never<\/em> escape from innovation purgatory.\u00a0<\/li>\n<li><strong>Create an innovative contract with their provider.<\/strong>\u00a0 Buyers need to incentivize their provider\u00a0financially\u00a0to help them achieve gains\u00a0in both\u00a0productivity and growth.\u00a0 This is already beginning to happen with several recent BPO engagements, where the provider has demonstrated the confidence to insert productivity incentives as high as 20%\u00a0in some of today&#8217;s recent contracts.\u00a0 Providers will step up to the plate with the right approach, if they have the financial incentive to do so.\u00a0\u00a0<\/li>\n<li><strong>Stop playing providers off in a low-cost bake-off. <\/strong>\u00a0If the buyer simply squeezes the life out of their provider with a cost bake-off, they are unlikely to get much in return beyond operational delivery to meet the contracted service levels.\u00a0 Some of the leading BPO providers are now inserting gain-sharing elements into their deals in order to beat off competitors dropping their prices, because it is desperate to win the deal.\u00a0 The better providers now have the advantage of knowing where they can offer innovation incentives to gain ground in tough pursuits.\u00a0 In any case, most of the providers are now operating within a similar price band, so focus needs to move away from simply price, and more to which ones\u00a0are\u00a0better prepared to be\u00a0incentivized financially\u00a0for driving innovative results.\u00a0<\/li>\n<\/ul>\n<p>All-in-all,\u00a0we are\u00a0encouraged that many enterprise buyers have recognized the need to get their act together and start driving the innovation agenda.\u00a0 The future for innovation is bright, and many of today&#8217;s enteprises are\u00a0figuring out how to make some progress towards it.\u00a0<\/p>\n<p><em>*For the purposes of this study, Innovation was defined as &#8220;the customer going beyond transactional \/ operational work to achieve new productivity gains and \/or new revenue streams by implementing new practices through unique, creative methods.&#8221;<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Time to demonstrate real governance&#8230; In Part I of Innovation? \u00a0The BPO industry needs to escape from purgatory, our latest&#8230;<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,838,830],"tags":[442],"organization":[],"ppma_author":[19],"class_list":["post-1670","post","type-post","status-publish","format-standard","hentry","category-business-process-outsourcing-bpo","category-kpo-analytics","category-sourcing-change","tag-innovation"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Innovation in BPO purgatory, Part II: Enterprise buyers are blaming themselves for innovation failure - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/innovation-purgatory-part-ii-052810\/\" \/>\n<meta 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