BPO with business intelligence

The India-US partnership to create higher value in information technology (IT) is finding significant expression in a new venture, B2K Corp.

The Indian value proposition is delivered by, among others, Vivek Kulkarni, the former IT secretary of Karnataka who quit with his developmental experience to become chairman and CEO of B2K.

The high end US value is delivered by another promoter, Prof Madhukar Angur, an international authority in business analytics who has been consulting for a range of global companies from the US.

B2K, like other Indian third party BPO operators (those who serve a range of clients as opposed to captive units that serve one customer, often the parent), has a dual challenge before it.

First, how to keep pace with the rapid ramping up that is taking place in the sector, so as to remain a viable player in terms of scale. As this is a volume and rapidly commoditising business, scale matters.

But upscaling mainly by multiplying seats and agents throws up a second challenge: how to ensure differentiation, both as a company and in services offered, and how to go up the value chain?

The second challenge is usually answered by seeking to transit from handling individual transactions like customer calls to handling entire processes which are made up of a range of transactions.

The catch is that the paths of the two branches of the industry seldom meet. Those who are in the volume business tend to remain there and those who are in transaction processing, which requires deep domain knowledge, tend to become the techies of the trade. Such businesses do not grow anywhere as fast as the business of transaction handling.

B2K seeks to bridge the gap in a somewhat novel way. It is claiming to be in the business of transforming 'bytes to knowledge' and towards that end is offering an add on as an integral part of its business model "� business analytics or business intelligence.

For this it is programming its training practices in such a way that just as the quality imperative is drilled into employees as a basic mindset, they are also simultaneously sensitised to the requirements of being able to offer standard services shrink wrapped with business analytics add-ons.

Professor Angur, David M French distinguished professor at the Flint School of Management at Michigan University, has done substantial work on how firms can use business analytics to maximise the return on their IT investments.

Business analytics or business intelligence is not terribly new. Through it a company mines the data that it generates and transforms it into, first, information and, then, knowledge.

This is done by using the underlying distribution of the data and bringing it within the framework of certain assumptions. The knowledge provides the company business insights which help reduce costs and make for more targeted marketing, thereby helping the bottomline.

"Outsourcing of services, within a country or overseas, so far has been primarily on consideration of costs," says Angur.

"Companies offering outsourcing business have tried to ensure quality and reliability. The added attraction India has is that it has been able to offer higher skills (compared to what was available for such jobs in the home country), along with low costs. Every transaction generates a data point. As companies now seek to get more out of this data, an Indian company offering higher skills via business analytics add-ons has a differentiator."

When business processes get outsourced, a lot of data are generated at the end of the BPO host.

Instead of being a BPO company which simply conducts the transactions or processes, B2K additionally offers business analytics capabilities to mine the data generated every time it handles a call or a query and come up with bottomline enhancing insights for the company.

One simple way in which business analytics can enhance the utility of BPO operations is to use the analytics to shape the BPO operations themselves.

A pattern can be generated from the queries customers make on their purchases. There is usually a quick rise in customer queries that a newly launched product generates as people begin to buy it.

This is in contrast to the slower growth in actual sales as a product takes time to take off. But as customers become familiar with the product and the market gets to know it better, sales growth picks up but the proportion of customer queries declines.

This knowledge, gleaned from business analytics applied to BPO operations, can help a company optimise the deployment at its BPO service provider, thus shaving costs.

"Business analytics allows us to predict the level of product knowledge among the customer base at given points in time," says Angur.

Business analytics delivers by using tools like fuzzy logic, fuzzy control, machine intelligence and complexity science. A robot uses classical logic, humans use rules of thumb based on experience, a fuzzy controller uses linguistic reasoning to beat both robots and humans.

Angur offers a couple of case studies to illustrate the significance of business analytics. A company was disappointed by the low sales of a new product.

The brand manager advocated more advertising as the data indicated that low sales coincided with territories which received low advertising.

But through the application of machine intelligence it was discovered that low advertising was merely the result of low population density and customers, in fact, were well aware of the product. The culprit was absent repeat orders. The problem was eventually narrowed down to product quality.

"Markov models, a staple of machine intelligence technology, helped us discover these facts."

Another key area is efficient complaint management which sits at the heart of customer relationship management.

Research shows, says Angur, that most companies have extremely poor complaint management systems and the few companies that have paid attention to this aspect "realised 100 per cent improvements in profits and doubled their growth rates."

By using appropriate business analytics systems a company can achieve an optimum balance between too much service deployment, which is costly and a waste, and too little, which produces dissatisfied customers.

"Use of our system is very promising and indicates cost savings of up to 75 per cent of the company's existing cost structure," Angur says.

B2K is somewhat new among Indian companies in offering business analytics as a part of BPO services. By use of business analytics offerings, the company, which is barely two months old, proposes to earn an additional 15 per cent revenue once its business model settles down.