As Accenture’s Executive Director Business Process Outsourcing in the Netherlands, I am leading a team of outsourcing professionals in a mission of growth and entrepreneurship. Bianca is a senior executive at Accenture’s Business Process Outsourcing practice. She has led multiple global mobilization programs, transitioning clients’ business processes to Accenture’s near- and off-shore delivery centers. She is currently the Business Process Outsourcing Lead for the Communications, Media & Technology practice in the Benelux and France.

Over the years Business Process Outsourcing has proven itself as a valuable strategy for organizations seeking new ways to achieve high performance while controlling costs, reducing risk, fostering collaboration and increasing transparency. Now beginning its third decade of existence, business process outsourcing has become an accepted management practice across most companies and industries. At the same time, it is becoming a more complex endeavor, going deeper into the value chains of companies. That means that the bar is being raised in terms of what companies are expecting from their BPO providers.

We are on the verge of an era in which BPO is moving to a “cost-plus” value proposition and will increasingly be part of the global operating model of large companies. But what is the business impact and value of this new proposition? In an effort to define this greater value and understand how it can be achieved, we will kick-off this series of blog posts with discussing the key insights of Accenture’s research on the status of BPO in the Netherlands. Questions debated are “How mature and well established is BPO in business?” and “What are the main reasons to practice BPO?”. And (perhaps) even more importantly: “What BPO can do for client organizations now and tomorrow.”

After discussing the status of Business Process Outsourcing in The Netherlands we will talk about how BPO evolved to date, from cost saving through to driving real business value using analytics, on-demand services and communities based on social-media platforms. Like every business BPO has also seen an evolution over last 15-20 years and today we believe that outsourcing can add even more value to our businesses, particularly in the form of innovation. So how can BPO be a catalyst for Innovation? By understanding how BPO has evolved to date and where it’s headed in the future, businesses in every industry, across every sector, can position themselves to maximize value.

Bianca and I hope to inspire you, evoke discussion and debate, and hear your opinions, experiences and ideas. We look forward to taking you on a journey into the continuously developing world of BPO.

If you don’t want to miss the upcoming posts in this series, make sure to subscribe by clicking on this hyperlink. Please feel free to contact us for more information about BPO via below email addresses.

Barend van Doorn
Lead Business Process Outsourcing
Accenture Netherlands
barend.van.doorn@accenture.com

Bianca den Elsen
Managing Director – Business Process Outsourcing
Accenture Netherlands
bianca.den.elsen@accenture.com

Foremost among the positive aspects is convenience. Equipped with a smartphone, employees literally have everything they need in the palm of their hand. The ability to access data wherever work takes them means employees can not only get closer to customers, without the physical barriers. This is a distinct plus.

BYOD Trends and Trade-offs
For enterprises the bring-your-own-device (BYOD) boom can be traced to two converging trends: the desire for employees to be responsive to customers and colleagues in a global, always-connected world still wrestling with time zones; and the desire to save money by not replicating a device that employees may already own. Mobility brings a significant advantage to productivity, but as with many advantages, there are certain trade-offs.

First, there’s the issue of users’ expectations. They expect a mobile device to be reliability and then, encountering frustration with some of its features, expect IT to solve the problems on a device with which it may have little experience. Then there’s the fragmentation of the smartphone marketplace. It’s not just the plethora of operating systems and devices (Apple iOS, Android, Windows Mobile etc.) it’s the permutations. For instance, the open source character of Google’s Android operating system allows manufacturers to tweak it, adding security or connectivity capabilities that may not appear in other Android devices. Furthermore, to truly support BYOD, IT must be able to accommodate the very latest versions of these operating system as well as the earlier ones. This leads to complexities in technical support issues.

From interim solutions to standard capabilities
One of the major concerns regards the data on mobile devices: How do you make sure employees are using proper security measures when they access public sites and applications, so as to avoid infecting the device with malware that in turn impacts corporate data? And how do you make sure that, when employees leave the company, IT can erase all vestiges of corporate data without affecting personal data? Add to that security and connectivity issues, the major challenge when it comes to wireless and mobile access to back-end corporate data.

Device manufacturers, software developers and companies like Accenture are working on solutions to overcome BYOD’s biggest drawbacks. Users are already bringing mobile devices into the organization (just as they have done with laptops years ago), demand connectivity and support. Therefore I will discuss the 7 ways BYOD may work for your organization in my upcoming blog post. From creating Enterprise Application Catalogs to narrowing the set of devices to support by offering designated Supported Devices. Some of them may be interim solutions; others may be long-term advances that become industry-standard capabilities.

Accenture’s 2011 Global Risk Study, indicated that insurers see improving risk measurement and modeling, reducing the cost of risk management compliance, and integrating risk and finance information and processes within the organization as the most significant challenges they face. New regulatory requirements have contributed greatly to these challenges.

While this can pose a significant challenge, it can also provide an opportunity to review the existing process landscape and can serve as a way to remodel existing process or design new ones.

Risk-Adjusted Operating Model
The major driver of cost in risk management is inconsistent execution of risk management in key business processes. This creates a situation in which individuals involved in different processes do not use the same standards and data for how to identify and assess risks, and how to respond to these risks once they are identified. A standardized, integrated approach to risk management for all business processes–avoiding duplicative processes and unnecessary activities—can help minimize the costs associated with inconsistent execution.

Accenture’s approach, which we have termed the Risk-Adjusted Operating Model, seeks to align organizations, processes and architecture to ensure the development of robust risk management capabilities and to generate benefits for the business as a whole.

This is a step-by-step effort based on client specifics:

• Targeting and delivering value. The Risk-Adjusted Operating Model begins with a high-level strategic assessment, designed to gain an understanding of the client’s situation.
• Diagnosis, exploration and blueprint development. The next step is an in-depth assessment of the client’s market, business model and operating model to identify areas for improvement.
• Blueprint. Once options have been selected, they are translated into concrete, detailed and actionable recommendations, including adjustments to the existing operating model and processes, to allow execution teams to implement them and capture identified value.
• Execution. Implementation of the Model takes place on several levels, including organization and governance, processes and technology architecture. Training and adjusting based on feedback also form part of this stage.

In order to implement the Risk-Adjusted Operating Model successfully, organizations need to develop a formal statement of risk appetite. This needs to be approved by all board members and then promoted internally as a guide for decision-making. The risk management department should also ensure that all functions are supported by dedicated processes to ensure that the boundaries established by the risk appetite statement are respected.

We believe that the multiple challenges inherent in integrating and improving risk management are best addressed through a structured yet flexible approach. This allows for adaptation to the individual situation of each company and recognizes the maturity level of each company’s risk management capabilities.

Digital disruption is adding to insurance industry challenges. The digital era is set to radically transform the insurance industry, not only changing existing business models, but also creating new opportunities for profitable growth. So can insurers really afford not to play this game?

Players outside the industry
Insurers need to learn the lessons from the disruptions in the industry; digital increases competitive threats and if they fail to innovate players from other industries can enter this market, and press home their advantages in customer proximity, retailing experience and market responsiveness. Twice in recent history new entrants proved that incumbency and supposed scale are no barrier to entry. First it was the explosion of the direct channel, and then the more recent emergence of aggregators.

The Digital Insurer’ is Accenture’s template for high performance in the future. To be a high performer in the digital age, insurers will need to innovate on three fronts.

• The ‘Connected’ Insurer: Reinventing the customer experience in which the customer is put at the heart of the business. Multi-channel sales and service as a standard offering, fully integrating ‘old’ channels with a new digital core. Embracing and actively engaging through relevant media, such as social and mobile platforms
• The ‘Analytic’ Insurer: Richer insights and smarter decisions to enable better outcomes. Tapping into and exploiting value from the explosion of data by harnessing the power of next generation predictive tools and techniques.
• The ‘Agile’ Insurer: Staying one step ahead by fostering a culture of innovation and entrepreneurship. Breaking free from the oppressive constraints of legacy. Operational excellence built around lean core business processes and strong process management disciplines.

The future of Digital
On the whole, many core products and processes are still very recognizable from 10–20 years ago and it is generally accepted that the pace of change is much faster in other industries, which are shaping and meeting consumer perceptions and expectations. The danger is that a real gap emerges between consumer demand and insurers’ capability to deliver. Winning in digital therefore requires a fundamentally different mindset as well as new capabilities.

The convergence of new technologies, combined with the pace of change and the accessibility to both consumers and industry, is underpinning a cycle of continuous innovation and dynamic change. This change is allowing insurance companies to completely rethink the way they go to market. Digital is more than simply a new distribution channel. More fundamentally, the digital era offers an entirely new way of doing business – affecting all strategic and functional areas across the entire insurance value chain, including interaction with customers, distributors, suppliers and employees.

We believe the winners will be those that apply digital technologies to be connected, analytic and agile. And if the incumbents cannot get this right then new entrants will.

With changing consumer expectations, it is no longer appropriate for organizations to ask clients to only come to them (office, web site, etc.). Instead, advisors also need to be where their clients are—in the mobile and social spaces. The daily life of advisors will still revolve around many of the rituals that take place today, such as preparing for client and prospect meetings, and building relationships. However advisors are now able to use social networks to create additional touch points with clients and referral sources and when applied consistently (as they are in offline channels) social touch points become part of the whole customer experience.

For example, an advisor might review a client’s updates and posts from Facebook, LinkedIn, or Twitter prior to a client meeting. This may signal changes in lifestyles, major milestones, or common interests. This could then help tailor the next interaction with a client or prospect, especially when matched with existing customer information held by the firm. On the flip side of the equation, clients and prospects can learn more about their advisors and those they trust for financial guidance.

Early experimenters understand many of these challenges and are taking calculated steps to train, enable, and support their advisor channels. While these firms might take different paths to achieve success at scale, we believe all firms should base their efforts on these 6 key principles:

• Customer Experience Strategy comes first: Firms need to understand how new touch points and information from social networks affect the desired customer experience and how social networks influence the customer journey.
• Social Media requires an architecture, Not a software solution: There is no doubt that technology solutions need to be employed in the process of enabling advisors to use social media. New technologies and existing platforms must work harmoniously with each other and any broader technology architectures already in place.
• New processes and procedures are needed: Allowing advisors to use social media requires new guidelines and procedures. These include processes for the creation of new content, moderating dialogue, and managing compliance and risk.
• Provide initial and ongoing education: Education is needed to understand new risks, learn how to use new tools, adopt new processes for content development, and follow practical guides for operating within social networks.
• Content is still King: Content needs to not only reflect the voice of the firm, but the character of the advisor and the person they are communicating with. Firms need to develop content themes, content style, and specific content supporting specific outcomes.
• Analytics and Data Integration are fundamental: Analytics will be the key to maximizing the return on investment for advisors. With proper data collected and then distributed across applications, firms can begin attributing social interactions to business outcomes.

In 2013, most organizations continue the process of incorporating social media into their marketing and sales channels while dealing with a variety of issues and challenges. Leaders will focus on the customer journey and how social networking will become part of the advisor and client DNA rather than a challenge to the existing order. Today’s wealth management advisors need to be increasingly in front of their customers with both standard touch points and those now available from social networks. Success will hinge on implementing social media as a new capability, and not just another channel. Only then social media will lead to new opportunities while helping position firms for the next generation of wealth.

In a recent Accenture survey, 26 percent of insurance customers said they had no loyalty to their insurer, and 76 percent said they saw no significant difference in the products and services offered by insurance companies. Therefore industry players need to better personalize their products, services and interactions.

Looming mismatch
Novel solutions to face these challenges can be found in advanced analytics, providing powerful new tools for insight-driven decision making. But as stated in one of my previous blog posts insurance ranks as one of the least-attractive industries for graduates to enter. And to excel at extracting and acting on data insights, insurers need legions of analytics talent to use statistics, quantitative analysis and information-modeling techniques.

Just when insurers everywhere need to ramp up their analytic capabilities, many will experience major shortages of the analytics scientists, experts and specialists. Insurers will have to compete fiercely for the analytics talent they need to convert data into valuable insights about customers, agents and markets. As more organizations everywhere step up their analytical prowess, analytics talent is already in high demand in industries from information technology to pharmaceuticals—not just insurance.

Closing the Gap
In many countries, analytics talent supplies will not keep pace with new job growth, and there simply won’t be enough talent to go around. For example, the US could encounter a sizeable shortfall of more than 260,000 analysts by 2015, and the UK encounters a shortfall of over 40,000 analysts. To address this issue, insurers, educators, employers and policymakers will have to work together to increase the analytics talent pool in a few different ways including:

• Raise awareness among students and university recruiters: Insurers can and should work with universities to make students aware of the bright career opportunities in analytics.
• Get the most out of the talent you already have. find hidden talent across the organization: employees with strong quantitative skills who are not working in analytics roles. Provide them with training to prepare them to take on analytics specialist roles.
• Work with labor market intermediaries: Employers who must compete for talent in countries where there are shortages can work with labor market intermediaries to find and access the analytics talent they need.

The ability to find the analytics talent that they need is a critical imperative for insurers everywhere. Employers will need innovative skills and sourcing strategies to overcome the looming analytics talent gap. Each company, and every industry, faces unique talent challenges in different markets. Insurance companies should begin now to plot out their strategy for finding the talent they need to compete and win. But one thing is clear: sourcing analytics talent will be tough everywhere. Demand is rising and supply is not keeping up—nor will it be able to keep up in the foreseeable future.

The oil and gas landscape generally continues to show signs of rapid change which brings up particular trends as the industry adapts. In this blog post I will highlight the 5 key trends industry players need to take in consideration in this continually changing environment.

Key trend 1: Oil supply
Oil supply has been growing in 2012 as compared to 2011. The oil market currently looks well supplied, with production running at around 91 million barrels per day (b/d). In the medium term, supply capacity is expected to grow to 102 million b/d by 2017. Eighty percent of the increase in oil supply up to 2017 is expected to come from North American unconventional oil (tight oil, shale oil and oil sands). The rising US oil production, which is leading to estimates that by the end of this decade, the US will become the largest global oil producer, overtaking Saudi Arabia.

Key trend 2: Oil prices
Oil prices are expected to remain range bound between $105-112/bbl. for Brent and $85-$92/bbl. for WTI. The oil market continues to watch for resolutions to broader market issues like the US fiscal cliff and Eurozone debt crisis which had a bearish impact on the oil price despite continued geopolitical instability. The instability in the Middle East is not (so far) causing oil prices to surge, primarily due to the fact that most of the instability is in countries that are not large crude exporters and that no significant supply disruptions have yet occurred.

Key trend 3: Gas supply and demand
Global gas supply continues to increase, driven in the short term by the US, Russia and Qatar. Unconventional gas supply is also increasing and currently represents around 16 percent of global gas supplies. Global gas demand is expected to increase up to 17 percent by 2017. In the shorter term, European and US gas demand looks flat while Asian gas demand continues to be robust due to the situation in Japan, which continues to support liquefied natural gas (LNG) demand. Given the renewables agenda in many countries, can all these new gas supplies be absorbed?

Key trend 4: Gas prices
Gas prices are weaker in all markets, with milder weather and a good supply and inventory picture supporting prices generally. Asian spot LNG prices had risen to their biggest increase in more than six months in early December 2012, as cold weather saw buyers in Japan, South Korea and China increase their demand for spot LNG cargoes. Weak natural gas prices are stimulating the US economy, and there continues to be considerable opposition to the fact that domestic natural gas prices might rise if the US starts to export LNG.

Key trend 5: Mergers and acquisitions (M&A)
M&A activities are witnessing a slowdown driven by commodity price volatility and economic uncertainty. The market continues to be driven by North America, which is witnessing an increase in oil and liquids deals. Despite relatively favorable financial market conditions and low interest rates, there was not a corresponding rise in M&A activity in 2012. However, some recovery occurs in the Gulf of Mexico, and infrastructure and refining deals pick up in Europe (particularly for assets in the North Sea).

In 2013 high performing oil companies will focus on reducing their exposure to the continued risks associated with the uncertain outlook, as well as trying to time critical decisions against a dramatically changing political, and economic landscape complicated by an upstream industry environment that is becoming increasingly high cost.

Social media is not about campaigns. Social media is a continuous force which needs to be relevant and up-to-date each and every day. But how do you take care of your content and how do you organize it?

Creating content is not as easy as it seems. To publish a daily average of two posts (which fit brand values, are suitable for global use, and are engaging and very shareable) is quite hard. To make the job easier, Coca Cola developed two key principles for content creation. The soft drink company developed a content strategy for all its external social communications which helps them in developing new content; it is called ‘Linked and Liquid’ and these two pillars can be put in good use by every brand.

“Linked” means that all content must relate to the core brand values and the content must relate to the company’s strategic goals, for example selling more soft drinks and increase the market share. This helps in having one brand voice and to keep the focus on the ultimate goal of social media; doing more business by building a long term relationship with your (potential and) loyal customers. This keeps brands on track, avoiding the pitfall of putting effort and resources in creating content which not relates to the strategic goals.

“Liquid” refers to the fact that content needs to be sticky; people need to love it in order to share it. Or, as Peter Kim (Chief Solutions Architect at Dachis Group) pointed out at the Social Conference 2013: content has to “make me laugh, make me cry or make me famous”. Content at scale has the advantage that the more content you have, the more you can analyze it. Via social content management tools and other software, you can measure which content resonates well on a very detailed level, for example with Accenture’s SNAP tool, Unmetric or SocialBakers. You could find out that for your brand polls work best in Asia on Wednesday afternoon. Or that localized content in Portuguese works best for your Brazil market. Or that historic pictures work very well for your retail brand, while technology updates work better for a car brand.

These insights helps content managers create (new) compelling content. In large organizations, where multiple content contributors develop the content, it is very useful to share these insights on a regular basis, for example via internal collaboration tools or via ‘old fashioned’ newsletters/content calls. This helps in developing and transferring internal knowledge from the Social media Hub or Center of Excellence to the content contributors. Although agencies might be very useful in content development, it is important to develop the social capability in-house.

In the end insights must find its way back into the business by improving products, or creating new product and services. Nike is an example of an organization that recently decided to develop all social media activities in-house for that reason. And next to creating your own content, fans are eager to create content for you too! Coca Cola explicitly mention this in its Liquid strategy; think of the fan pictures KLM shares each month with its Facebook fans; or the American brand that used Instagram for its cover image.  And once again, software (Accenture SNAP, eValue) can help you promote your best performing posts automatically in social advertisements to engage your fans and friends of fans even more.

The past decade has witnessed a huge technological revolution, precipitating the mass adoption of consumer technologies. The proportion of the world’s population using the internet quadrupled from 2001 to 2011. The use of consumer technologies in the consumption process has been seized upon by businesses. E-commerce, m-commerce, and social media all play an important role in the strategies of most consumer-facing companies, and many new entrants have built successful business models on just one strand of this.

Online consumption is more than just a niche, and it’s more than just transactional. Our research points towards the rise of a “networked consumer” – one who is continuously in a retail channel, never far from an internet connection; one who is ever more social in their online interactions; and one who is more than just a reactive consumer, instead being a proactive participant in the production process. Consider these data points: compared to three years ago, 65 percent of developed-market consumers are using the internet more to research products and services. Over a third (34 percent) of developed-market consumers are using social media more often to interact with friends and family. And 30 percent of developed-market consumers are providing more online feedback to companies about their products and services.

Businesses are adapting their offerings to the networked consumer. Pearson, a publishing company, anticipated consumer expectations for digital content, and switched the majority of its offline titles into online versions. Tech-based education services replaced textbooks as the company’s primary breadwinner. Seattle-based RealSelf is a fast-growing business based on a social network for people wishing to share their elective surgery desires and experiences. RealSelf users review different cosmetic procedures by price, doctor ratings and value for money. Netflix, an online video streaming service, incorporates user data in the form of prior download histories into its future recommendations, providing a tailored set of recommendations. The consumer is filtering and curating his or her own content.

It’s not just how we buy that’s changing – it’s why. Consumers are increasingly involving others in their buying habits. They are becoming increasingly “co-operative”, placing a strong emphasis on responsible production and consumption. They are devoting time and money to social causes; buying local or making when they could be buying; and re-using, re-cycling or sharing products that previously they might have owned outright. There are many potential reasons for this trend – a shared sense of responsibility, for example, borne out of increasing awareness of environmental problems. Or, it could be a need to re-connect with others in an increasingly fragmented society. Recessionary pressures may also play their part, by making shared ownership the wallet-savvy option.

These developments have crossed over from the few to become mass-market. One in three (32 percent) of developed-market consumers are considering the environmental impacts of purchases more often now than three years ago. Thirty-five percent are buying locally sourced or made products more often. One in four (25 percent) are buying or using things more often that were previously owned by someone else.

Whilst these trends are revolutionary, some businesses have been quick to respond. eBay is the engine of the exchange economy, having founded its business model on connecting buyers and sellers of pre-used goods. A crop of companies has emerged to distribute under-utilised assets – be it cars (such as Zipcar and others), office space (Loosecubes), accommodation (Air BnB), or human capital (for example, Mechanical Turk and Fiverr). Other companies have intertwined social and environmental good with the economic bottom line – Whole Foods Market, an organic supermarket chain, provides customers with environmental ratings for its groceries as well as health education programmes; and US-based jewellery maker Alex and Ani has experienced 151 percent revenue growth over the past three years, using eco-friendly, locally sourced metals for its materials, while promoting charitable giving through its products.

During our research, we found three common traits that fast-growing consumer-facing companies exhibit, that help them capture the opportunity presented by consumer change. These companies:

• Develop a cutting-edge analytical toolkit that enables them to continuously assess and respond to changes in consumer behaviour.
• Instil an adaptive mindset that helps them anticipate or respond quickly to disruptive market forces.
• Create an agile organization to introduce the right capabilities to act on fast-developing opportunities.

Executives will find that incorporating these capabilities into their businesses requires investment, and in today’s constrained world it may be difficult to justify such expenditure. However, targeting the changing consumer, and the opportunities that presents, represents the most likely route to growth for businesses in developed markets.

- Paul Nunes and Sam Yardley

For more information, please contact paul.f.nunes@accenture.com or samuel.yardley@accenture.com

These are testing times for business leaders in developed markets. 2008’s Great Recession ushered in a period characterised by narrowly-averted crises – most recently fiscal cliffs and Eurozone break-ups – and on-going uncertainty. The prevailing mood seems to be one of “cautious optimism”, but businesses still seem to be walking a tightrope towards growth.

The economic outlook for many developed markets will do little to whet the appetite of business leaders: fewer than half the OECD economies are expected to grow by more than 1 percent in 2013. Unsurprisingly, consumer-facing companies in these economies are troubled. The downturn has eroded lines of consumer credit that were integral in spurring prior growth. As such, consumer expenditure has struggled to regain prior highs, only recently doing so in the US and Germany, with levels in the UK still down on 2007’s peak. In Southern Europe, the situation is worse. Absolute growth in private consumption between 2010 and 2020 is forecast to be higher in Sudan than Italy, and higher in Chad than Spain.

The economic malaise is translating into an unwillingness to spend. As part of our study into global consumer behaviour, we surveyed 10,000 consumers from four developed and six emerging economies. Only 21 percent of developed-market consumers felt they had more money to spend on discretionary purchases than three years ago. In emerging markets, this figure was 49 percent.

One might expect businesses to be feeling the strain in these conditions. Our survey of 600 business leaders, however, found that optimism abounds – and not just in emerging economies. Nearly three in four (73 percent) of business leaders in developed economies were confident in achieving profitable growth in the next two to three years. Such confidence, though, is out of step with past performance – nearly half (48 percent) of the world’s 2300 largest listed companies based in developed markets failed to grow both profits and revenues in the last three years.

However, just because a market isn’t growing doesn’t mean that it’s not changing. In developed markets, much of the change is being brought about by consumers themselves – the way they buy, and why they buy. Our research, in the recent report “Energizing Global Growth: Understanding the Changing Consumer”, categorises some of the ways in which we see consumers changing. The “networked consumer” has an array of digital devices at their fingertips, and is never far from a purchase channel. The “independent consumer” exercises their individualism in their buying behaviour, expecting tailored offerings and new experiences. And the “co-operative consumer” is cognizant of their social and environmental impact, working with others to achieve common goals.

During the course of our research we studied 20 industries or sectors that best represent these types of consumer change – from video-on-demand to fair trade goods – and found that, on average, these markets are growing at a compound rate of 22 percent per year from 2012 to 2016, more than 10 times the anticipated growth rate of developed economies over the same period.

With change comes opportunity; and those businesses that have the best understanding of consumer behaviour will prosper, no matter the top-line economic growth numbers.

- Paul Nunes and Sam Yardley

In the second article in this series we will explore the nature of consumer change in more detail, and discuss what defines the successful companies active in these areas.

For more information, please contact paul.f.nunes@accenture.com or samuel.yardley@accenture.com.