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Merry Christmas and a Happy New Year!!

The future for UK Business Process Outsourcing

It is with great interest that we read TechMarketView’s 2013 predictions for UK Business Process Services. Having recognised the developing trend for BPS/BPO (business process services/outsourcing) we also see 2013 as the year which will determine which models are more likely to succeed. It is for this reason that ReadSoft has been driving the agenda for shared services and BPOs.

TechMarketView makes five key predictions in the UK BPO space:

1. Outcome-based BPS deals, where suppliers are paid according to agreed service outcomes, will become mainstream
2. Payments by results (PBR), a version of outcome-based BPS, will become commonplace in the public sector
3. There will be an increasing use of hybrid delivery approaches involving both SaaS and BPaaS for self service front end applications
4. Business process analytics support will rise up the agenda
5. B2B2C convergence will open up new markets across multiple channels including mobile, social media and self-service

It also asks which suppliers are most likely to succeed. From ReadSoft’s perspective it is the providers of input automation platforms that will provide much of the underpinning to these predictions and will be the critical toolset to deliver success.

ReadSoft XBOUND is a single integration platform for all input management related applications and processes,  including production scheduling and control across multiple clients, based on a standard software framework, guaranteeing highest scalability and reliability. This platform helps mitigate the risks to revenue and margin expectations which are the major threats to outcome based and PBR BPS deals.

After digitisation, documents are handed over to the ReadSoft platform for text recognition and classification. The extracted information is then prepared for other systems to carry out production data capture, accounting, billing and Track&Trace, as well as for export to the customers. Of course the data doesn’t have to just come from paper – virtually any format, file or database can input a data stream in to the processing.  This versatility makes the platform perfect for developing front end processes, such as filling pension or insurance policy applications, which as seen as typical offerings for Hybrid SaaS/BPaaS delivery.  The automatic extraction and tagging of metadata and delivery into integrated workflow also makes XBOUND an important element in the delivery of relevant and timely data for analytics applications within the business process management system.

With its modular processes XBOUND enables BPOs to develop and test standard activities to be used with any customer, whether B2B or B2C. Entire processes can be copied, or derived from templates, and essential modules can be used in every single process.This increases the BPOs competitiveness, and enables them to bring new services to market faster and more cost effectively, with improved quality of service, control and visibility over all document-driven processes.

Many suppliers have simply left it too late to meet the complex needs of BPOs in the UK, but with ReadSoft’s consultation and leading experience from successful implementations of XBOUND throughout Europe, our prediction is that a single integration platform for all input management related applications and processes will be a winner in 2013.

 

Moving to the cloud isn’t just about costs…

With strong, extremely positive reaction from buyers to Cloud, the expectations placed on the benefits now and in the future is high according to market analyst Everest Group.

The results of the company’s Enterprise Cloud Adoption Survey confirms cloud computing as a fast emerging market, with adoption expanding beyond “low hanging fruit” such as email and custom applications to include disaster recovery, storage and archiving, business intelligence and analytics to support Big Data initiatives.

The growing need for data intensive applications, quicker time to market, flexible infrastructure, and data management is driving this transformation. The survey indicates that over 85% of enterprise buyers have already deployed or plan to deploy cloud-based infrastructure solutions, with 57% of enterprises already utilising Software as a Service (SaaS) models.

Enterprises are increasingly viewing Cloud as an enabler of top line growth, increasing productivity and reducing the time to market for applications, solutions and products, with 54% having adopted, or in the process of adopting Cloud models for their application development/test environments. Despite this, Cloud providers continue to sell with a cost reduction value proposition, yet according to the survey total cost of ownership is not the prime driver.

Though security and integration challenges top the list of reasons to adopt a Cloud based strategy, 45% of enterprises have, or are in the process of adopting Cloud models for disaster recovery and storage infrastructure; whilst 35% have, or are in the process of adopting cloud models for their business intelligence and analytics workloads.

This means a considerable portion of IT budget is increasingly getting allocated to Cloud based business processes. Individual business leaders (including C-level executives) are having more say in Cloud decisions, as opposed to the IT, procurement, or finance teams. Many buyers believed that their management is more than willing to deploy Cloud solutions, countering the received wisdom amongst Cloud providers who cite a lack of management buy-in as one of Cloud’s key barriers to broad adoption.

For those who have adopted Cloud, especially Cloud infrastructure solutions, almost 65% have already met their objectives from the deployment and around 90% of decision makers believe that their Cloud adoption will increase in the future.

Click here to view our whitepaper: Processing invoices in the cloud or on premise – pros and cons

Does Cloud computing still constitute a security risk for your business?

Gartner has recently conducted research of 425 IT risk managers and similar in the UK, US, Germany and Canada into the take up of Cloud and SaaS services.  Unsurprisingly the key drivers of take up were still around cost and agility, whilst the primary concerns expressed by respondents were based around an immature ecosystem, licensing and integration between localised and Cloud services.

Speaking at Gartner’s Catalyst Conference, analyst Guy Creese commented that SaaS or cloud applications still need to offer reassurances to customers around security issues.  Security is bound to be one of the most important concerns for companies using Cloud services.  To illustrate this, consider two examples: one of a small business looking to increase business efficiencies through Cloud and a large company looking to outsource back office functionality to a Cloud-based BPO.

For the smaller company security may actually be enhanced by moving to a Cloud-based system.  How many small companies can afford the levels of security and redundancy that a SaaS or Cloud Service Provider will have in place?  In this case moving from a local it infrastructure set up to a Cloud-based service may well enhance security as well as driving business efficiencies.

For the larger company, the issues will be more complex.  But most large businesses would recognise that a move from internally resourcing the back office to a BPO will need to be properly scoped, with security being one of the factors (along with reliability, backup, support, integration and a host of others) that will need to be considered when  choosing the right BPO partner.

There is no reason why Cloud or SaaS services need to be less secure than an internal solution – just as long as those scoping the requirements from a third party fully consider the provider’s capabilities, service levels, track record and brand values.

Moving to Cloud and SaaS services should save a business time and money, but not at the cost of a reduced level of security.  Businesses, large and small, looking at Cloud solutions will need to reassure themselves  that the third party provider will deliver a service at least as effective as their own before committing to the Cloud.

Related articles

• Which Cloud Model is Right for Your Company? (datacenterknowledge.com)
• Survey Says: Buyers Love the Cloud (servicesangle.com)
• Cloud Computing: BPM Solutions (cloudcomputing.sys-con.com)

UK local government finance departments bloated and underperforming

 

According to the industry benchmark established by the Hackett Group, every full time equivalent (FTE) post should be processing at least 35,147 invoices per annum. ReadSoft’s research, based upon freedom of information requests made to 404 UK district and county councils, indicated that during 2010-11, more than 30.6 million invoices where processed by local government authorities. Local government should be able to process this level of documentation with a total of 871 full time employees. In fact the research indicated 2,291 people were employed within council financial departments to process these invoices.

Many authorities struggle with manual processes across a mixture of paper and electronic formats resulting in poor levels of invoice process efficiency (92.6% fail to meet industry standards). Only 6% of responding authorities achieved or bettered the Hackett Group’s benchmark. 54.7% fell below the lowest performance benchmark (11,786 invoices processed per FTE per annum), while the remaining 39.3% of authorities need to improve.

Simon Shorthose, Managing Director, ReadSoft UK says: “The average amount of invoice processing compared to finance staff within local government is less than half the industry benchmark, and the majority show below average performance. This suggests staff are engaging in time consuming and mundane manual processing work, which is inefficient, costly and prone to error.”

Automation of invoice processing within business is a widely accepted response to the issues of poor efficiency. ReadSoft back office automation products represent fast to deploy, flexible alternatives to expensive manual invoice management. The new ReadSoft Online suite of tools deliver a fully scalable, professional Cloud based invoice and document processing solution that provides councils with a simple, no cost to set up alternative.

“With 65% of respondents recording below average efficiency, staff will be drawn in from other departments to fight end of month fires, balance the books and try to retain control of cashflow. At a time when frontline services are massively threatened, drawing council staff from other, more forward looking service delivery activities and the costs this incurs, is simply unacceptable,” notes Shorthose.

According to the Audit Commission*, UK councils are facing a reduction in government funding and local income leading to a cutting of services, the raising of charges and a clear need for increased efficiency.

If you’re reading this, are from a local authority and would like a calculation of your current level of efficiency please contact us at info-UK@readsoft.co.uk

About the research:

Employing freedom of information, ReadSoft compared local government financial processes in the fiscal year 2010-2011. Of the 404 UK authorities which responded to the requests, 285 authorities supplied viable data for assessment. To benchmark the authorities’ data the average cost of employing a finance officer in an accounts payable role was calculated to equate to £25,000 per annum

*Source: Tough Times, Council’s responses to a challenging financial climate – The Audit Commission November 2011

 

Are you an FD? Are you concerned about corporate spending?

A report released recently by Deloitte has shown that finance directors in the UK are concerned about corporate spending in 2012.

Ian Stewart, Deloitte’s chief economist said “The results illustrate the corrosive effect of uncertainty on corporate spending:  87% of finance directors believe this is a bad time to be taking additional risk on to their balance sheet.”  Deloitte also said that firms are “entering 2012 with a focus on cutting costs and increasing cash flow.”

At ReadSoft we understand that this is a problem, but we also think that there’s a huge opportunity here for people who are still ready to invest and take a lead in their industry.  Even if capex looks like a dangerous move at the moment, if that investment reduces cost over the following years then not only are you protecting yourself today, but when the market eases you’ll be ahead of your competitors.

This is also a good time to be looking at a SaaS, or cloud, solution such as ReadSoft Online.  By having a smaller cost in a subscription type format you can not only lower the barrier to entry, but you can move the expenditure from opex to capex.

Finally, if costs are the overriding factor, then by automating your business processes you could still reduce those costs – but retain the talented and valued staff in your organisation and avoid having to make cuts in personnel.  Again, this will put you ahead of your competitors.  While they race to the bottom, you’ll have better customer service and retention, and increase your market share in these turbulent times.  Surely a great win!

Watch more commentary on this piece in a 90 second video snippet here: http://ow.ly/8qG5g

Risky Business

Risky Business

Finding the right suppliers can is an important business decision. Get saddled with an unreliable supplier – one that cuts corners or cannot keep up with demand – and it might not only affect the bottom line, it could well ruin a business.

There are clear decision making factors: a potential supplier should offer quality product; be reliable; be cost effective whilst adhering to regulations; be able to meet demands; and, where necessary, be industry standard compliant.

But given the global economic climate, you should also increase due diligence when it comes to assessing risk. Understanding the risk of getting into bed with a potential supplier should be a key decision factor.

To put this into perspective, recent research by Plimsoll rated 233 companies in the UK computer software market as a “danger”. Furthermore, 206 UK computer companies failed to grow in the past year, highlighting a worrying trend where too many businesses are seen to be chasing too little market. Beyond the pressures of the economy itself, the failure to grow is often tied to a business’ inability to adjust strategy to adapt to quickly changing markets.

So how can you better gauge the sustainability of a potential supplier and identify those which are bucking the trend and delivering success in a difficult market space?

Rumour is always a dangerous bedfellow, but do look at what a potential supplier is saying in the media or reporting, especially if the company is listed. What may look like a great deal in the short term could be catastrophic if that supplier is not around in nine months time. Don’t take marketing noise at face value, check to see if there is real substance to any announcements: is a supplier expanding its portfolio of products? Is it innovating? Is it increasing its sales and customer base? These are all good signs. If its downsizing, reducing product portfolio, relocating, or making redundancies then these are all potential red flags.

Also ensure that what a potential supplier is saying about itself actually applies to your locality. You will often see this with US based organisations, where the European operation is at best a satellite arm, and simply does not have the same clout as the parent company. So if you are looking at operating within a local geography, consider those businesses which can offer a home field advantage, with regional offices, sales and support on tap. The same applies if you want a supplier which can deliver global reach. Do they have the level of business investment and experience irrelevant of location?

If you want to mitigate such risk then also use suppliers of independent commercial information. There are organisations, such as Plimsoll and Dun & Bradstreet, which specialise in collating highly relevant information. D&B, for example, monitors more than 200 million businesses in over 200 countries enabling it to assess the financial strength of a business and so mitigate credit and supplier risk.

D&B observes trading within organisations such as ReadSoft UK, where its analysis not only highlighted prompt payment as a particular facet of working with the company, but that ReadSoft UK represented a minimal risk to other businesses which wished to do business with the company. In fact, ReadSoft UK was recently upgraded by D&B, placing it into the UK’s top 14% of companies to work with. Choosing the right supplier should be seen as a resource that you are investing in, so plan for the long term, and select a stable, strong and secure supplier.

www.readsoft.co.uk

Relaxed regulations shouldn’t mean a relaxed business approach

Very thought provoking article on Purchasing Insight regarding the relaxation of the regulations on electronic invoicing in Europe, including commentary from Ernst & Young on why the new regulations do not mean “anything goes”.

Ernst & Young points out that electronic invoicing enables relevant authorities to generate enhanced means by which to audit through data mining. Hence electronic invoicing cannot be viewed on its own without being considered as part of a larger and more significant issue: how best to ensure an organisation’s reporting and compliance is best in class, not only for today’s regulations but for the future.

Organisations need to consider electronic invoicing not as a short cut but as part of a wider strategy – one that saves cost but also ensures that reporting and compliance are both demonstrably world class and future proof.

“Back office” fraud needs risk mitigation and compliance controls

Great article on Reuters a few days ago that’s just come to my attention about how “Back office” fraud is on the rise after a peak in the recession.

The Reuters article states that this fraud is draining corporate treasuries of billions of dollars a year, and the risk is growing as companies and employees struggle in the wake of the recession. Fraud schemes in company finance departments include the creation of fake vendors, billings for nonexistent goods, checks written to dummy companies and kickbacks from vendors.

“Most companies are weak in the area of back office and vendor fraud and that poses a significant threat to them,” Michele Edwards, a fraud expert, told Reuters this week on the sidelines of a corporate finance professionals’ conference. Typically, it takes 18 months to detect a fraud, Edwards said.

In an informal poll of 622 finance managers during a May conference, 72 percent reported seeing an increase in cases of back office fraud, Tom Bohn, president of the Institute of Financial Operations, said on Friday.

It feels like one of those obvious things that hard times personally means that some people try to reduce that impact. And it feels all the more pertinent that there are systems for control, risk management and compliance in place, all the way through the financial eco-system of a company. Where things can be automated to avoid potentially corruptable manual input, they should be – as well as increasing the speed of business and lowering costs. Workflow exceptions and validation should all but eliminate these issues.