“The reality, from Marriott’s perspective, is that we have one cost, and
that cost is entirely transparent to us.”
—Karim Rasched, Business Change Manager, Marriott Hotels, Ltd.
or even another platform.
“We had to consider what the overall impact would be on
the hotels, after they had just gone through the implementation of the new Oracle applications,” Rasched says. “We had
just gone from a very centralized infrastructure to one that
was significantly more reliant on self-service applications.”
Rasched’s group decided to stay with Oracle E-Business
Suite and capitalize on the training and data mapping it had
completed for the implementation. “Hewitt made the recommendation that we look at reimplementing the Oracle platform for HR and payroll because we’d just developed a good
solution for our business, and it was working successfully,”
Rasched says. “The processes were already well defined. From
a technical perspective, moving to the Oracle On Demand
environment was relatively simple because all we had to
do was figure out the network connections among Hewitt,
Oracle, and Marriott and design a new interface to Marriott’s
PeopleSoft-based general ledger [GL]. This was relatively easy
to achieve due to Marriott’s extensive in-house expertise at
operating and maintaining various GL solutions for its global
financial processing requirements.”
The HR and payroll applications now run within the
Oracle On Demand data center, located in Austin, Texas.
During the one-year transition phase, Marriott Hotels had
to move to Marriott’s GL system, a new expenses solution,
and the new payroll application, as well as a new networking infrastructure to allow desktop PCs to communicate. “All
of that had to happen at the same time, so we had to find
ways of minimizing impact where we could,” Rasched recalls.
“In the HR and payroll areas, we had the opportunity to
effectively do a ‘lift and shift,’” thanks to the preceding work
Marriott had done.
Third, BPO can give enterprises
cost savings of 15 to 35 percent,
or higher, compared to internal
operations, Williams adds. The
reason? “As BPO providers specialize
in certain niches and provide similar
services to a large number of global
companies, they become process
champions in those areas,” says Tibor
Beles, vice president for business
process outsourcing at Oracle.
“They can bring to the table the best
practices in each process area to
gain greater process efficiencies.”
A fourth driver is derived from
a related form of cost avoidance—
enterprises don’t have to invest
already-tight resources for new
infrastructure and staffing in response
to business realignment.
Fifth, the growing number of
regulations facing companies
throughout the world is spurring
organizations to consider BPO as
a part of their compliance strategy.
By centralizing services, enterprises
can ensure that regulatory policies
are being applied consistently
throughout all of the various divisions.
“A service provider can streamline
processes across geographies and
then document these processes
accurately,” Beles explains. “These
are all factors that contribute to
effectively maintaining compliance.”
Finally, and perhaps the most
significant growth area for the future,
BPO can help organizations undergo
fundamental business transformation.
Because BPO providers are experts
at engineering efficient business
processes, they can perform a
consultancy role for optimizing
internal operations. “It is not enough
just to take a broken process and get
the BPO provider to run it for you,”
Beles points out. “That may prove
cheaper in the short term, but it’s
certainly not better over time.”
Instead, an enterprise may need
a process expert to take a high-level view of the entire business
system and suggest fundamental
revisions. “The change is driven by
the expertise of the third party that
runs the process assessment, that
designs the future process flows and
takes the client company through the
transition phase,” Beles says. “That
enables a company to go beyond
what was possible in the past. That’s
when BPO becomes a strategic
tool.” A merger or acquisition is often
a catalyst for BPO transformation
to streamline process between
the parent company and the new
divisions, Beles adds.
The return on investment
depends on which of these business
challenges an organization is
addressing with BPO. The relatively
straightforward outsourcing of
HR or finance operations could
bring a return in about 24 months,
Williams says. Other areas, such as
procurement, may see even faster
returns once the client and BPO
provider consolidate information from
disparate divisions and suppliers and
centralize purchasing. “We had one
consumer goods client that spent
about [US]$2 million in transition
costs to pull everything into one
place, and it saved [US]$14 million in
media buying alone in the first year,”
Williams says. “The payback occurred
within months.”
