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Navigating the BPaaS landscape

With the growth of the cloud has come an explosion of BPaaS offerings. Will they help solve business problems?

The availability of business process as a service (BPaaS) product offerings from IT consultancies has exploded in the past year with the growth of the cloud. In addition, a number of startup companies have emerged with BPaaS offerings for solving new business problems. Enterprise architects should consider how this new class of cloud infrastructure can cost-effectively solve business problems while meeting governance, security and risk requirements.

BPaaS offerings go beyond traditional software as a service (SaaS) offerings by providing service-level agreements for business services rather than simple uptime and application performance levels, said Michele Cantara, vice president of research at Gartner. Leading BPaaS providers include Accenture, Cognizant, Genpact, Sungard Financial Systems, Tata Consultancy Services and Wipro. BPaaS is being widely adopted in enterprise services like human resources, customer relations, and in industry-specific processes such as core banking, insurance policy and claims administration, pharmaceutical data management and pharmacovigilance.

BPaaS products come with one bundled price point for technology, people and process. This means that the enterprise always has industry-best operations; gets a predictable and scalable (up/down) total cost per unit of operation, allowing them to be more agile in responding to market changes; and need not invest in capital expenses to build the technology and physical infrastructure. The cost is converted to operational expense, allowing for better fiscal management.

Best practices in the cloud

Leading consultancy firms and business outsourcing services are beginning to bundle their best practices into cloud applications. This approach leverages their work in traditional IT consulting to do much of the heavy lifting and integration work required to get BPaaS products off the ground. The BPaaS offerings also can benefit from their expertise in solving a specific class of business problems. The cloud enables these outsourcers to scale applications more cost effectively.

Over the past year, BPaaS offerings have evolved in four key ways, said Abid Ali Neemuchwala, vice president and global head for BPO services and process excellence at Tata Consultancy Services:

  • From voice-based services to data processing services
  • From front-office/back-office services to core industry-specific mid-office services
  • From merely "services" to a BPaaS model for delivering services on a provider cloud
  • From business processing to operational and business analytics

In 2014 new BPaaS capabilities and industry-specific services added up to a Total Contract Value (TCV) greater than that of traditional front-office, voice-based services, Neemuchwala said. This can be considered more a change in the appetite of customers than a change in the portfolio of offerings. There has also been a growth in demand for multichannel customer interaction (social, chat, mobile apps) to replace traditional voice-based services.

Another major trend has been the emergence of Robotic Process Automation (RPA) as a key value creator offered by leading business process services providers. RPA provides operations efficiencies without requiring changes in underlying systems and processes, which reduces the change management that a traditional transformation would have entailed.

Every leading business process outsourcing firm will offer some flavor of RPA in 2015, Neemuchwala said. These offerings will begin weaving in social, mobile, cloud, big data and AI components as well. Enterprise architects should consider short-listing offerings with predictive and risk analytics, and integrated accounting, supply chain and HR for better integration capabilities.

Managing the connectors

The rise of BPaaS products also means that enterprise architects need to consider the easiest and most cost-effective ways for integrating with the existing IT infrastructure. Typically, BPaaS offerings from IT consulting firms include some level of integration support. But the enterprise could run into challenges when dealing with smaller BPaaS providers that have not provided connectors for the organization's legacy IT systems.

"One of the most interesting evolutions in BPaaS has been the rapid expansion and inevitable overcrowding in the area of PaaS connector companies," said Brian Reale, CEO of Colosa, an open source BPM tools provider. These connector-as-a-service suites make it possible to connect various SaaS and BPaaS services with the Internet of Things. These solutions promise greater flexibility for the enterprise that must be weighed against security and compliance risks.

Enterprise architects need to consider whether these solutions will solve real business problems or improve their customer relationships. "It seems like every day a new company enters the space with the story of how they will be the company that will automate our lives and connect the Internet of Things to our lives," Reale said. "The classic example of this automation is the ability to make our phones beep before we leave home in the morning to remind us to take an umbrella because is predicting rain."

Look for substance rather than fluff

It's also important to consider whether new features are merely satisfying checkbox requirements like social integration or are offered in a way that provides the enterprise value. For example, social integration with BPaaS products was getting a lot of buzz last year, but Reale said it has almost completely disappeared from most enterprises' radar.

A better approach might be to look at making employee and customer workflows smoother. This year, many organizations are looking at improving capabilities for personal automation, Reale said. Enterprise architects need to do so in a way that increases organizational productivity or drives sales. Even if the gains from the tools don't provide immediate value, they may still provide a purpose in getting more of the organization on board with the cultural shift required for a better process.

"Enterprise architects and business managers should study and test these personal trends and take careful note," Reale said. "They will appear in the corporate environments sooner than they think."

Next Steps

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