Is the IT infrastructure similar to BPO

On-premises, SaaS or outsourcing: do we have a choice? Or are we not driven long ago?

Contents overview:

The outsourcing of services and software is booming and the advantages are obvious: cost savings, quality improvement and concentration on your own core competencies. Do companies still have a choice today?

The times in which decision-making processes for IT systems could take several years are over. Again and again there are external drivers that provoke a quick reaction or change - therefore there are all the more reasons to strategically align changes in your own company.

Business Process Outsourcing (BPO): What is an "outsourced operating process"?

Models for shared services, temporary work and »outsourcing« are nothing new. They have been around for more than 20 years. They are appropriately documented, described and scientifically illuminated. What is new, compared to back then, is the depth of the process integration in the IT landscape and the associated dependency on mapping it in the ERP system. Today, for example, incoming invoices no longer pass through the company in paper form, but are digitized and at least passed on by email.

In the next step, they end up in an IT system that combines digital storage systems, workflow technology and accounting systems. Processing, filing and search processes are optimized and lead times are shortened. At the same time, the operational IT effort increases: More and more systems have to be technically supported and professionally maintained. An IT landscape without faults or blame will remain a dream. This manifests itself in the concluded service and maintenance contracts as well as in the necessary training for the IT staff.

Ideally, there are three effects when partial or overall processes are outsourced:

  • New space for value-adding core competencies across departments: Instead of filing paper documents and searching them again, the accounting staff take care of the company's receivables management. IT resources are available, for example, for production-controlling projects. Using the example of incoming invoices, this applies to a large number of companies, if they are not just service providers in the accounting area and their business model is based precisely on these activities.
  • Processes are mapped more stable and reliable despite changes. Legal requirements are constantly changing, such as tax law or data protection regulations: Here the company can lean back and relax, because the service provider is required to ensure process quality.
  • Outsourcing processes makes sense above all if costs can be saved at the end of the day. Determining this in advance is not always entirely trivial: cost centers must be clearly separated, indirect effects assessed and included in a cost analysis. In addition, the expected duration of a BPO contract plays a significant role so that the initial expenses really pay off after a certain period of time.

Why BPO is not the model of the future - but the present: Read blog articles about it now!

In general, the outsourcing of sub-processes should not be viewed in deficit as a loss, but as an opportunity to focus on your core competencies - both by the project team and by the relevant departments.

Software as a Service (SaaS): What is the motivation behind it?

What motivates companies to no longer operate software in-house, but to purchase it as a service? There are essentially three essential requirements for the operation of IT systems:

  • Availability
  • Functionality
  • performance

Availability: Sensible cloud services in medium-sized companies manage at least mathematically to ensure better availability of their services compared to an on-premises installation. The systems are designed redundantly in their core function and planned maintenance work does not mean a service failure.

Functionality: New functionalities can be made available more easily and quickly in a cloud environment than in an on-premises installation. And best of all: companies don't have to worry about it themselves. The current functionality can be used immediately by the user. Something similar can be observed with SAP's cloud strategy: Certain functions of cloud services will no longer be made available on-premises in the future.

Applications and services that use artificial intelligence (AI), for example, would exceed the costs on-premises. However, their use is very worthwhile in environments that have to provide the appropriate computing power. Siri, Alexa, Cortana, SAP Conversational AI or other speech recognition systems are technologies that are primarily cloud-based, regardless of their expandability.

Performance: In particular, the dialog behavior of applications is a decisive factor for user acceptance of cloud-based services. Despite constantly increasing data rates and decreasing latency of Internet lines, this remains a real challenge in many cases. Not all providers have rearranged their services in such a way that the user experience «is correspondingly positive. The other side of performance is the computing power that can be accessed. Here again, a cloud provider has an advantage, as in case of doubt, significantly more dynamic and extensive services can simply be switched on. So performance is no longer an obstacle to the use of cloud-based solutions.

SaaS solutions and mobile working

The main reason for the introduction of SaaS solutions is the desire for mobile working. This applies to applications in the human resources area as well as to solutions in the customer relation management environment.

With on-premises applications, the existing IT infrastructure and the software version used often prevent mobile access. There are then two strands of action to enable the mobile application: An upgrade project combined with adjustments to the IT infrastructure or the change to a SaaS concept with the prospect of dealing with both topics sustainably.

Of course, initial and ongoing costs also play a role, as does the fact that a switch to a SaaS solution cannot be implemented without project effort. Here, however, it can be observed that external consulting efforts are lower than they have done in the past with on-premises installation.

Sven Schal explains very clearly whether companies now have a choice and what the use of SaaS and BPO can look like in practice in the second part of the blog article.