For larger “Tier 1” organizations, F&A outsourcing is a given, a known quantity proven to be a worthwhile investment. Yet mid-market companies are traditionally reluctant to dip their toes in the water, largely due to concerns about high upfront costs, ROI and delayed payback periods.
Mid-market companies may not reap the benefits of scale that large companies enjoy, however, they are still often required to go head-to-head with their enterprise-level competitors. With that in mind, mid-market companies need something to help level the playing field.
That’s where BPaaS (Business Process as a Service) comes in. The model brings together BPO, SaaS and Cloud concepts, offering mid-market companies standardized business processes through access to a shared set of resources (people, application, infrastructure) from a single provider, like Sutherland.
Because of its pay-as-you-go basis, the BPaaS model gives mid-market companies the flexibility they need to access new technologies and processes that would otherwise be too costly to implement. With this leading approach, businesses can easily scale up or down according to their needs.
There are five main drivers to mid-market companies adopting the BPaaS model:
Reduced Total Cost of Ownership – With BPaaS, mid-market companies are spared the cost of investing in significant IT infrastructure, as well as paying for ongoing support, maintenance and software upgrades. Everest Group estimates that a BPaaS model reduces TCO by 30-40% when compared to a traditional FAO model and by 40-55% when compared to an in-house F&A model. By lowering TCO, BPaaS allows mid-market companies to enter into an FAO relationship that wouldn’t be possible on a stand-alone basis.
Better ROI – The BPaaS model provides a highly standardized solution for mid-market businesses. As a result, it significantly reduces time-to-market, because the transition time spent acquiring and deploying assets is brought down to months and weeks. With BPaaS, mid-market companies start realizing benefits quickly, minimizing the ROI period. This is especially important in today’s economic climate, because although prospects are looking up for mid-market companies, they still depend on a fast payback in order to remain competitive.
More Flexibility – Thanks to its flexible delivery structure, BPaaS creates a high degree of scalability to accommodate rapid growth and proactively manage downturns. The pay-as-you-go model means that price is driven by volume, not FTEs, which is ideal for mid-market companies; they’re able to quickly scale up or down as required, paying only for the services they use. As such, these companies can transform a cash-intensive capital expenditure (CapEx) into a more convenient operating expense (OpEx).
Best Practices – By packaging best-in-class process services with best-in-class technologies, BPaaS offers mid-market businesses access to a leading edge standardized solution that would otherwise be out of reach. With this model, mid-sized companies can benefit from expert knowledge and state-of-the-art systems, streamlining and optimizing their processes while focusing on core competencies.
Reduced Risk – All of the drivers listed above have the added benefit of minimizing risk for mid-market companies. Using a cloud-based solution reduces upfront investments in IT infrastructure, shifting from a CapEx to a more manageable monthly OpEx. Companies can quickly and easily dial up or dial down to accommodate peaks and valleys, and only pay for the services they use. As well, outsourcing providers take full responsibility for managing the underlying ERP system, the supporting infrastructure and any upgrades, offering an ideal solution for mid-market companies that don’t have the scale to regulate the ERP system and BPO services.
BPaaS – A Working Solution
Mid-market companies may be working with a different set of equipment than enterprise organizations, but at the end of the day, they still have to remain competitive in the marketplace. They need to address the universal challenges of doing business in today’s economic climate: reducing costs, maintaining margins and continually optimizing processes. A BPaaS outsourcing model can be the solution to all these things.
How do your F&A practices measure up? To arrange a free assessment of your current practices with one of our finance experts, schedule an appointment today.