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BPaaS: Finding the Optimal Industry Position to Ensure Success in a World of Cloud Services

BPaaS: Finding the Optimal Industry Position to Ensure Success in a World of Cloud Services

This IDC study begins by introducing BPaaS as part of the history of "platform based" BPO of which BPaaS is the most current incarnation of a "shared" services business processes that dates back decades. One of the forerunners of this model is ADP, which leased its first computer, an IBM 1401, in 1961. Since then, there have been many providers of outsourced "shared" services for business processes. In 2007, IDC did a study on the current phenomenon of platform-based BPO services that included a look at current service providers and outsourcers that managed a shared services environment to deliver business process services. Today, the BPO industry is facing a shift to a new model referred to as BPaaS. While the fundamentals of BPaaS is similar to traditional BPO in managing a business process (e.g., F&A, HR, and industry-specific) on behalf of a client, there are fundamental differences that traditional providers of business process services and new players will be required to implement.This study then provides an overview of IDC's view of the emerging space referred to as business process as a service (BPaaS). Using a combination of recent feedback from buyer studies and ongoing research on the topic of cloud services, business process outsourcing (BPO), and platform-based services, this study highlights key factors that service providers competing in the BPO market need to consider in shifting to BPaaS — a very disruptive business model. These factors include linking business process to cloud services/SaaS, identifying key drivers that will shape BPO provider transformation, defining buyer adoption patterns of BPaaS, and understanding information requirements as well as buyer perceptions and business model expectations of cloud services. Finally, this study offers an executive summary and essential guidance on critical investments that providers need to make to ensure success."While the world of IT services is undergoing a fundamental change from the traditional delivery models centered on a more labor-based approach to a much more highly automated set of IT services referred to as cloud services (e.g., PaaS, IaaS, and SaaS), the world of BPO is facing a similar shift though in a more interesting way," says David Tapper, VP of Outsourcing, Managed and Offshore Services at IDC. "Success for players looking to compete in the BPaaS market will require that they establish an ecosystem structure and industry position, develop a blueprint of a cloud business model and road map of transformation, consider new disruptive BPaaS business model options for new markets (e.g., franchise and crowdsourcing), build horizontal first, then vertical, and design a BPaaS business model in relation to the community of cloud/Web-based service providers.

Please Note: Extended description available upon request.

IDC Opinion
In This Study
Executive Summary
Ecosystem Positioning
Value Proposition
Key Business Model Requirements
Disruptive BPaaS Options as a Means to New Markets
Situation Overview
From Past to Present
Linking Business Process to Cloud Services/SaaS: BPO Versus BPaaS
Drivers of BPO Provider Business Model Transformation
Volume, Velocity, and Variability
Information and Analytics
Buyer Adoption Patterns of BPaaS
Acceleration in Shift to BPaaS
Need for Hybrid BPO
Enterprise Information-Based Needs: The Source of Analytics for Business Process
Time to Market
Information Resource Requirements
Value Chain of Information
Buyer Perceptions and Business Model Expectations of Cloud Services: Technology Service Delivery Requirements
Drivers and Inhibitors for Cloud
Value Perception of "Cloud Service"
Cloud Services Deal Engagement Attributes
Cloud Service Provider Business Model Criteria
Cloud Service Life-Cycle Requirements
Cloud Service Sourcing Model Evolution
Shifting Provider Types
Need for "Broker" Capabilities: From IT to Business Process
Future Outlook
Value of Cloud Services
Ecosystem of Virtual Providers and Connecting the Dots: Intersecting Cloud Services Business Models
End-State View of BPaaS
Need for Automation and the Productivity Impact
Aligning Ownership with Responsibility
Vertically Integrated Providers Versus Specialized Providers: Pros and Cons
Integrated Management and Analytics: Optimizing Business Value
"Broker" or Multiprovider Management Capabilities
Information and Analytics
Essential Guidance
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