Industry news

According to the Deloitte CFO Survey of January 2012, 70% of the UK’s CFOs expect to see corporate profit margins decline sharply after a period of strength. Inevitably, the ability to reduce operating costs is cited in the report as the major priority for large corporations. While CFOs still see an opportunity for carefully planned growth, they are more than ever going to be forced to see where they can realise cost reductions across their business in order to protect these margins. One of the resulting key areas of that focus is sourcing at best value.

Despite several years now of harsh trading conditions many organisations know that they still are not doing as well as they could when it comes to securing the best possible deal on the goods and services they purchase. This is particularly the case in regard to non-core operational expenditure – or the equipment and services required to run the business. But I believe there is good reason; it’s because much of the recent cost cutting effort has focused on sourcing the core materials and goods for resale that are considered to be at the centre, not the periphery, of an organisations’ revenue.

Non-core purchasing, despite having a significant impact on bottom line, is often seen as the poor relation of spend control and given correspondingly scant attention. Any action taken to achieve best value in these none-core spend areas is likely to have been restricted to the biggest ticket items. However there exists an extremely long tail of smaller lower spend categories, which when combined add up to a significant amount of inefficiency.

All that is changing. As a sourcing and procurement platform provider we are seeing a demand spike like never before for eSourcing tools and services focused on driving these operational savings. Every stone is being turned and every contract scrutinised, not just for pure price competitiveness but for best value in terms of pricing, scale, service delivery and the most advantageous contract terms. We’re finding that not only is eSourcing a tactical toolkit for organisations, it is also part of their strategy, as controlling organisational costs becomes a boardroom issue.

Suppliers have never had to pay such close heed to their service level performance, with areas such as delivery track record, payment terms for cash flow advantage, and their ability to follow customer’s efficiency automated processes, also under scrutiny.

But while organisations have realised that there is a ‘Special Source’ to be had across the full operational spending spectrum, they now have the job of putting the right building blocks in place to make this possible. This could be a challenging manoeuvre within the confines of economically trying times, which restrict the adoption of expensive skills and new technology. Procurement and finance professionals are faced with two contradictory priorities. On the one hand the business must lower costs wherever it can, yet on the other hand there may be no money available to fund cost saving initiatives. The result can be a paralysing inability for the organisation to change.

There is a solution to this problem however. For organisations in that Catch22 situation of wanting to make savings but not being able to afford the means of doing so, proven and immediate return on investment is essential. While this grates with the normally slow ROI projections from many business software solutions, it’s not the case with some eSourcing platforms. Granted, if you scope, select and choose to install an on-premise eSourcing platform the business will incur large capital costs long before any savings can be made from it in order to cover the budget. If however you select a managed and on-demand eSourcing service such as Wax Digital web3, savings can be realised through the tool right from the outset – savings that far outstrip the costs involved.

This is possible because such services can be used to run early stage sourcing events, such as supplier eAuctions, which then achieve savings on critical purchases and in doing so make the business and ROI case a done deal. Once these early savings have been realised the organisation can much more easily justify ongoing investment in such a service.

When selecting an eSourcing platform it is important to look at areas such as simplicity, intuitiveness and structure, as these all help to ensure that users will accept and make use of the tool without a high cost of training. But ease of use must not be a trade off for functionality. eSourcing platforms must also have broad shoulders. They must offer a veritable kitbag of sourcing automation, including RFP and RFI management, not to mention sophisticated eAuction options. In-built compliance is another must have, as it ensures a secure audit trail and watertight processes that follow industry and government mandated rules.

Of course, well equipped eSourcing services and technology are critical considerations, but they must also be balanced with the right skills. Larger organisations may well have a dedicated purchasing or sourcing function and people with strong category expertise and knowledge of sourcing processes. Smaller organisation might not. In both scenarios, bringing in management consultants to drive sourcing initiatives internally or support existing resources, or simply outsourcing the whole gamut, leads to costly and unquantifiable overheads. With these choices the bar for savings would have to be set extremely high, just to recoup the cost of engagement.

Most organisations’ sourcing initiatives can thrive however with a mix of internal skill, acquired from and supported by specialist sourcing consultants. These experts can advise on how best to approach, analyse and conduct sound sourcing projects in a range of categories. Bringing in practically focused consultants who have spent years in the field and have rich eSourcing event and category expertise is good practice. They know how to extract best value and understand the intricacies of setting up and running online sourcing events first hand.

Increasing the focus on best value sourcing across non-core spend categories is something that all cost and profit challenged organisations should consider. Finding your ‘Special Source’ through a combination of ROI focused eSourcing tools and consultants with their feet on the ground can help businesses to dramatically improve their financial performance and gain better control of what they spend in order to run effectively.

It is no secret that landing a job in today’s tough economic times is difficult. People often must commute many miles because their local community has limited opportunities.

With this in mind, more and more customer care call centers are initiating opportunities for agents to work from home. Rather than driving a long distance to sit at a desk, agents now have the luxury of doing their jobs and providing customer care from the comfort of their own home.

The main concern with agents working from home is security of the customer’s information. In a time when data breaches occur almost every week, customers are often uncomfortable giving out their personal information to an unknown voice on the phone.

1. Leverage managed thin client devices for the Work-at-Home agents.

First, ensure that agents do not use their home computers without additional software to protect data. Second, keep confidential customer information secure with a company-provided thin client device. These devices include technology and software already in place to keep the computer at the server-level. Third, with no further output options (printers, external storage, etc.), customer data cannot be extracted.

2. Deploy end-point encapsulation on the thin client device with a virtual desktop infrastructure (VDI).

Provide a completely secured environment through both hardware and software. The cloud-based VDI lockdown will prevent access to the Internet or private documents and will only allow the agent access to client-approved areas.

3. Only allow the device to unlock after two-factor authentication.

Implement a token generator and a user profile for access rights. Access to the network and support tools are only available when the agent enters the correct username and password and token.

4. Employ agent biometric profiling.

After the agent passes through the two-factor authentication, require a biometric validator such as a thumbprint or keystroke cadence snapshot as well to authenticate the agent. This validates that the agent is the right person and ensures authorized access.

5. Use technology to mask and distort confidential information.

Install software that garbles touch tones associated with customer-dialed numbers such as credit card or Social Security Numbers. This software shields the customer’s personal information from the end agent.

6. Install anti-virus and malware protection on every device as part of the Virtual Desktop.

Upon login, the agent must provide validation and verification of the end-point to confirm that there is no malware or virus that could breach the customer information. The cloud-based VDI environment will be securely locked down against malicious software.

7. Monitor and track activity to keep agents honest. First and foremost,

require prospective agents to pass background and criminal checks. Next, monitor and track agent activity. This activity includes screen shots, voice recordings and keystroke movements. Also, keep a log and report of who is logged in where, when and why. Then monitor for unusual behaviors or patterns. If the worst-case scenario happens and customer information is breached, the agent at fault can quickly be identified.

Keeping customer information locked down is key to a good reputation in the customer care industry.

A security breach can tarnish a company’s reputation, which could in turn damage the relationship with its call center. The above seven strategies protect both your customer’s information and your reputation.

The introduction of the new Government Procurement Service (GPS) in 2011 (previously known as Buying Solutions) was an important step for the UK Public Sector after calls to reduce spending across all departments and to implement tighter budgetary controls as well as increase efficiency and the quality of the overall projects.

The recent frameworks let by GPS now start to open up new opportunities for smaller suppliers to enter the tendering process for government contracts, increasing competition and choice for the public sector, subsequently bringing down overall spending.

Sir Philip Green’s ‘Efficiency Review’ published earlier last year highlighted the problem even further saying that the government was not making full use of its buying power. Even though his findings relating to direct supply may be better suited for the retail market, government bodies have done well to take the relevant points and adapt them to their advantage, enabling them to achieve greater savings by working together with SME’s, VARs (value-added resellers) and Solution providers as well as SIs (Systems Integrators) and the vendors direct.

The new approaches open up prospects for new entrants that were previously not eligible to bid for large government contracts. In the past these organisations were able to tender for these large contracts through a consortium – a feat that was considered extremely difficult and lengthy, when one considers the coordination and planning needed to bring the group of suppliers together. The new ‘tower’ based approach now being adopted by some of the large Govt departments changes this ‘old’ way of working, dividing the larger contracts into smaller, more manageable silos of work.

By opening up bidding opportunities to a larger pool of suppliers and increasing the competition, these new approaches tackle the current problems faced by government bodies, particularly in IT service /project delivery. In the current economic climate initiatives such as this are extremely important and are the way forward to more responsible spending and increase opportunities for IT organisations of all shapes and sizes.

Is customer service designed to meet the needs of the customer? Or only a strategy for improving cross selling and boosting revenue generation? Whilst the latter are, of course, important for any organisation, an endemic failure to deliver customer service that truly reflects customer requirements is undermining business value.

In reality, customers have one objective: get the problem solved, fast. Whether via self-service online tools or a customer services agent, a customer wants rapid, preferably first time, resolution.

Colin Gallick, CEO, Invu, explains that changing the way an organisation retains, finds and uses information is key to ensuring customer service reflects the needs of its customers first.

Customer Imperative

There is no doubt that investment in and attitudes towards customer service have changed radically over the past decade. Good customer service is a critical component of business success and according to the Institute of Customer Service, there is a direct link between high quality customer service and customer retention, reputation and business performance.

Most organisations accept that customer acquisition is far more expensive than retaining an existing customer. However, over a five year period, a typical business will lose as many as 50% of its customers according to Bain & Co., whilst businesses that boost retention rates by as little as 5% can see an increase in profits from 5% to an amazing 95%.

Yet in recent years, the concept of customer service has become blurred. While organisations recognise the importance of customer retention and have made clear efforts to become more efficient in handling queries and improving call resolution times, they are primarily focused on increasing revenue creation opportunities, leveraging customer service insight to drive up product quality, and cross selling. All solid, laudable objectives. In contrast, the customer has one, clear priority – if there is a problem, get it solved, quickly.

Tangible Improvement

Organisations need to understand and address the customer priority – not least because the current focus of most customer service activity is actively undermining customers’ trust. Indeed, the Institute of Customer Service has identified a number of areas of focus for business to improve business growth and deliver return on investment – at the heart of which are concepts of trust and confidence. Many of the changes are ‘soft’ and hence difficult to quantify, such as training and development of staff, empowering staff and gaining an understanding of customer viewpoint.

But these changes are meaningless unless backed up with the information required. How can staff be empowered if they do not have the full picture of the customer history in order to make effective decisions? What happens, for example, when a customer queries the fact an order has not arrived or is incomplete? However well trained the agent, if the information required to resolve the issue is scattered across emails, the ERP system, packing slips, even shipping documents or a third party courier, simply assessing the status of the order will require a significant amount of time and certainly cannot be resolved whilst the customer is on the phone.

Even the most common invoice queries cannot always be immediately addressed – irrespective of the level of staff training – due to the need to match paper-based invoices with purchase orders on the ERP system.

Information Completeness

There are several fundamental issues to be addressed to ensure the rapid, one time problem resolution customer’s demand. And the most essential requirement is speed of information access. Organisations need to provide customer service agents with rapid access to pertinent customer information – and that means overcoming the challenge of disparate information sources; including emails, invoices, orders, and letters.

This information also needs to be provided in context, in a way that can be simply searched to gain the full history of the customer interaction. A flexible approach to information management transforms the customer service process – searching on invoice numbers will provide specific order details; whereas the customer name will provide a full order and correspondence history; whilst searching on a stock unit will reveal who else has ordered the item, any related information such as product recall, or a copy of the instruction which the customer is missing.

With a complete 360 degree view of the customer, organisations can now begin to make these soft changes deliver real benefit. Rather than limit customer service staff to specific information, such as finance records, by instead providing each member of the team with a complete, searchable history of an entire customer relationship, the proportion of queries resolved first time can increase dramatically. Critically, when a service agent searches on a customer name or invoice number, the search will return not only the specific document but also any ancillary records, such as dispatch notes, outstanding invoices, contracts or email correspondence related to the order. With this depth of knowledge, the company can broaden the scope of each staff member and hence boost the chance of resolving problems first time.

There is also a clear cost benefit. Customer service staff are more effective and productive when customer call backs are radically reduced. Having created this complete searchable, information resource, it is also then far easier to build a self service option for customers that delivers problem resolution at a far lower cost.

It also provides that essential record of customer interaction that is critical to improving processes. Gathering and acting on customer feedback is one of the eight requirements cited by the Institute of Customer Service – by creating a full audit trail of customer interactions, organisations can not only analyse performance but also use automation to address recurring problems within the customer engagement processes to ensure proactive steps are taken to resolve them.

Conclusion

Organisations are striving for both greater efficiencies and growth opportunities. Yet the insistence on exploiting customer services ‘tools’ to focus on revenue generation is resulting in many businesses missing out on both. Rapid, ‘right first time’ resolution is at the heart of good customer service. It drives retention and therefore feeds directly into the bottom line. And whether it is achieved through self-service via online tools, or the completeness of a customer service form that can ensure the problem is solved quickly, organisations simply cannot achieve this objective without transforming the quality, depth, context and availability of customer information.

Jim Muir, director at AutoRek, examines how CFOs can successfully secure value from the process of business outsourcing.

With chief finance officers (CFOs) not wishing to undertake relocation exercises every few years to lower cost wage locations due to the inherent quality and risk issues associated with these moves, many are now doing smaller outsourcing projects focused on optimising specific finance activities of their business to third party providers to secure longer term stability.

By using Business Process Outsourcing (BPO), it is possible for finance executives to enhance flexibility, improve business processes and reduce costs for processes such as financial reconciliations, collections and cash allocations. However, many face a conundrum around whether to do the exercise quickly to minimise disruption from “expertise exodus” or to re-engineer processes before the transfer of work.

Embed best practice into the organisation before work is transferred

It may seem obvious that best practice should be embedded within the organisation before work is transferred, however many companies, due to time pressure or a lack of expertise, do not use this as a starting point. This can result in the baseline cost of service being higher and the service levels provided by the outsourcer not being optimised. This can take years to remedy.

Those CFOs considering a move to BPO, or even shared services, should examine what smaller process improvements can be made before outsourcing specialists start implementing plans to transfer work to new teams and locations. By implementing more automation and reducing baseline headcount (and cost!) before the transfer of work, the risk of process failure is reduced considerably as dependency on personal expertise is lessened and best practice can be built into the new service.

Streamline the transition to BPO

Since many outsourcing teams are located across multiple locations, introducing tools that help overcome difficulties in time or language can improve collaboration with new “colleagues”. The installation of more web based technology and common toolsets such as workflow and reconciliations software, which are platform independent, can allow common work queues and increase visibility of causes of process breaks and the required remedy.

The importance of choosing the right advisor

In the past many BPO providers adopted a template approach to new clients where an organisation’s processes were shoe-horned onto a standard service. Many of these providers are lower margin operations and have not invested in the newest technology. As a result, new clients had to make do with processes and IT infrastructure that potentially was less advanced than their current estate. Often “wages arbitrage” has compensated for such a compromise but this is not a longer term solution.

The choices available to the CFO are increasing though. In recent years there has been a number of new players enter the advisory market, as the industry expands in volume and moves into new spaces. This is good news for the CFO since there are more choices available to businesses and approaches evolve quicker. Now there is a marketplace which consists of BPO advisors, large service firms that have “captive” BPO advisory practices, and any number of niche businesses that focus on a particular industry or geography and functionally-focused firms who have deep expertise within a particular area.

As a result, finance executives should ensure that they take as much care as possible when choosing BPO advisors. A specialist CFO advisory firm brings granular expertise and sympathy for the CFO’s agenda which should always have a controls and risks agenda front and centre. Generic “slash and burn” approaches are unlikely to fulfil all of the medium term objectives of the CFO who will have a greater need than ever to demonstrate governance and compliance on a range of issues from Balance Sheet Certification to reconciliations.

In conclusion, in the hurly-burly of post implementation focus on service delivery, it is harder than ever to effect change to processes especially across multiple locations and multiple providers. The need for best practice to be built in to the transitioned activity set is greater than ever as the longevity of lower cost salary structures cannot be relied upon. Technology has a greater role to play in reducing the exposure to wage inflation and “localised” work-arounds. Only an expert BPO provider, with a strong CFO advisory focus, can sympathise with the finance executives need to balance short term cost reduction with stability and an enhanced controls framework.

Although many businesses and business owners still hold reservations about outsourcing IT and infrastructure to cloud providers, there is a noticeable shift towards increased confidence and adoption. Considering the spectrum of benefits available and the time-proven reliance of mature solutions, perhaps this is not surprising?

Quite apart from the obvious freedom from IT a cloud-hosted business application can offer, improved and intuitive interfaces make for more friendly and efficient work spaces. Business intelligence and portable device compatibility accommodate our ever increasing need to have good data on the go.

A good hosted business solution will be a single platform that develops organically at the same pace (or sometimes faster!) as the business environment that it facilitates and is designed to facilitate multiple “tenants” so that all the users can share the application without compromising speed or computing capacity.

Strong service level agreements and bullet proof data security means that the location of data is irrelevant and businesses are 100% detached from the physical devices and networks that deliver the service.

An annual subscription program with a single all-inclusive price allows for total predictability in expenditure. The ability for organisations to scale at will and to accommodate multi-company and multi-location organisations is dramatically improved in terms of timescales, cost and functionality.

Products such as NetSuite, Salesforce, Box and Google Apps are taking customer relationship management, enterprise resource planning, document management and storage and enterprise email directly into the cloud at an alarming rate.

Concerns about data security, hackers and exploits are proving unfounded in cloud-based business applications (not so for on-premise banking systems unfortunately). US data centres are providing hosting for an increasing number of non-US businesses without problems. For example, data centres and organisations that subscribe to SAS 70 Type II Certified Data Centre audit procedures are able to guarantee security and reliability.

The best cloud solutions reflect this guarantee in their terms of service or service level agreements. Although the cost of an annual subscription may seem artificially high at first glance, significant benefits manifest themselves in numerous ways.

First of all, the price really is the price with a reputable cloud based subscription solution. No more “hidden” costs for patches and upgrades and so on. A single solution means that all information comes from the same source via a simple to use interface. That’s great for creating, scheduling and distributing financial reports and sales intelligence. Training is much simplified with in-built training videos, detailed help guides and just one product for everyone to get to know how to use. Added to this is the obvious saving of removing dependence on hardware and IT resource.

The benefit I personally value most is how much time I can save because everything I need is made simple and efficient by my chosen system. This is slightly tempered by the ease of global visibility that I get with a system that can be run from an iPhone or android phone 24 hours a day, seven days a week, anywhere I can get internet access!

Start-up organisations consider a world class cloud-based solution as an essential component to their business and an important element when attracting investors at the time of resale.

Some plan to never own any infrastructure. Finally, I feel my sentiments are echoed by the leading analysts in the field, Gartner. One of their leading analysts predicts 19 per cent growth in cloud computing against a backdrop of 3 per cent increase in IT spend.

22 health boards have begun to employ the single shared services platform delivered by NHS Scotland. The new system from SAP is expected to streamline services and enhance the quality of service.

7 of the health boards have now moved to fully deploy a single, multi-company Advanced Business Solutions financial management system from SAP.

The remaining authorities are expected to be using the systems by the 1st Aril 2013.

Facebook shares fell to $20 yesterday after having fallen from the opening stock price of $38 a share.

The announcement comes after Facebook admitted that around 83 million of its users were duplicate or illegitimate profiles.

The popularity of mobile devices has limited Facebook’s advertising draw, the company said: "Growth in use of Facebook through our mobile products, where we do not currently display ads, as a substitute for use on personal computers may negatively affect our revenue and financial results," Facebook wrote in its IPO filing in May.

The Digital Policy Alliance (DPA) a industry group including companies such as Microsoft, Google, IBM and Cisco, has been formed in order to campaign for action regarding UK broadband.

The group has a history of providing industry expertise to governments. The forming of the DPA comes after a House of Lords Communications Committee report criticised broadband competition.

Secretary general of the DPA, Edward Phelps, said: “Government has failed to inject competition into the broadband market leaving many innovative providers unable to offer their services. The current approach would appear completely at odds with the localism agenda”.

BT have announced the completion of its Wi-Fi network in London for the Olympics with 500,000 Wi-Fi hotspots across the capital.

The network is free to BT broadband customers and available for access by purchase for non-customers.

Andy Baker, CEO of BT Wi-Fi, said: “We’re giving Londoners and visitors as many places as possible to get online, keep in touch, work and share their experiences of the exciting events happening across London.”