Sales & Fulfillment BPO – The new face of traditional Order to Cash outsourcing

SSON:  Rajiv, thanks for joining us. Can you explain the term 'customer-side outsourcing' and how this is actually different to traditional order-to-cash as a business process?

Rajiv Raghunandan: Since starting out in the business we have come to realize that traditional order-to-cash largely focuses on certain aspects of the customer value chain, starting from when the sale happens. So it supports the execution of the sale, to some extent, and then largely manages the realization of cash. If you look at it from a service provider perspective, this comprises the enterprise finance processes which sit under this bucket, and some of the front-end CRM world within order-to-cash, either in the context of order taking in retail businesses or in the context of collections. 

But there is a whole world that sits between front-end customer service and  back-end enterprise finance processes, which is not included in the G&A cost line. This is in their cost of revenue; and then there are other processes that are more end-to-end, holistic, and go beyond order-to-cash. 

Typically, these process cycles include what happens before an order comes in, i.e you generate a query or quote and manage the conversion process, which forms the inquiry-to-order process or the cycle that extends from the time you make a sale to actually fulfilling the sale. This is the backend cycle that fulfills that order and is termed 'Plan to Van.' It involves the whole distribution and logistics planning.

So, picture a diagram that has multiple circles and intersections. Let's say order-to-cash is one circle, but you have all these different circles that are behind and after or above and below what is traditional order-to-cash. Each of these circles touches the customer in some form or another. So, in summary, we've tried to expand the definition of order-to-cash and as a result have discovered that we are not even in the realm of order-to-cash anymore.  It's almost a whole different offering with order-to-cash being only a small component of this. 

SSON: So this terminology considers the end-to-end process now in order-to-cash. Explain where this process begins and ends and how Infosys is accommodating that.

RR: I think the way we look at it in Sales & Fulfillment, the process really begins whenever any of our customers or clients engage in their sales cycle.  So it could begin from the time our client's sales team looks at next year's targets, figuring out what their target lists are -- so all forms of sales support before the actual sale is made, eg, account planning, research and customer profiling -- to when a customer request comes in, to when a report is generated,…until the time an order is actually received from the customer.  All of this is covered in this space and generally is not included in traditional order-to-cash, because these activities happen before an order is generated. 

The other aspects of this are related to upstream/downstream processes. Conventional order-to-cash is really focused on executing an order and then there's a 'black box,' where a lot of stuff happens, and an invoice is generated. That's how service providers have traditionally looked at it. But we are focusing on what that black box is.  You can feel that black box; it's all of this stuff around planning an order, fulfillment, inventory management, looking at whether material needs to be sourced on back order and how that is integrated with the sourcing engine.

It also includes the whole logistics and distribution planning activity; the after-sales work, which again conventional order-to-cash may not look at, specifically, in the technology and some of the manufacturing industries where there's a whole lot of service revenue. 
I think all of these activities are somewhere in and around order-to-cash.  Infosys has defined a more holistic, end-to-end offering that in a lot of ways is more meaningful to the customers. I think it's more transformational in nature because these areas are traditionally where a customer or a client would not look to outsource because they are considered strategic or core.  But I think we've been able to work with some of our customers to break that barrier and that's where we believe it's truly a transformation because it can open up a whole new market that conventionally did not exist. 

SSON: How does this shift industrialize the specific business process? 

RR: The fact that we industrialize these processes has enabled us to break open a market that possibly did not exist earlier.  What I mean by that is: the moment you get into stuff such as distribution planning, service contract management, warranty management or inventory management, you are getting into a very specific industry segment or a business. I think industrialization is an end-product in order to make this service meaningful and marketable. We picked a whole set of businesses where we had a certain amount of critical mass and experience and took what was a horizontal process and virtualized and industrialized that service. 

That has given us an opportunity to break open markets in each of these industry segments, so for example we have an offering within the sales space for television networks and media companies around traffic management and ad orders coming in for television stations and radio networks. Again, it's order-to-cash or order management, but it's very clearly different.  If we were to go with the standard order-to-cash solution to these businesses, we would possibly get thrown out of the room. 

Another example is around warranty management for a leading construction and mining equipment manufacturer. Again it's a very specific offering around that space. Advertising order management for newspapers, represents a whole new business because the industry is different, so that's something that we've worked on. Also, directory management could again be ad orders for space in telephone directories.   And of course on the software side, if you look at the pricing and licensing for software, the order-to-cash lifecycle is again a very different process. I could go on and on, but I think we've been able to take portions of the offering and industrialize them, which has added to the strength of the offering. 

SSON: That's interesting. You mentioned the different verticals you are working with -- can you name some clients who are currently applying these models?

RR: Well, I can't really name the clients due to confidentiality reasons but suffice to say that about 25% of the over 90 Infosys BPO clients have adopted this service. They range from global leaders in technology such as Cisco to CPG majors such as Procter & Gamble.
We do see a pattern in the types of customers that are adopting this service. Specifically, there are three types of customer segments that have adopted this service more than others:

• Mature industries that are significantly used to outsourcing; they have done the first wave of the classical horizontal BPO, whether it is finance, HR or procurement, and are looking at what's next and where they can drive greater value into the business.
• New clients that don't have that much experience in outsourcing, but are really growing in emerging markets, such as the Middle East,  Asia,  Eastern Europe and Latin America. These are generally consumer product companies, retail companies or even technology companies that are looking to expand. 
• Other customers that are not looking at outsourcing just as a means to cut their G&A costs, but  looking at outsourcing as a way to fundamentally change  their cost of goods sold or their cost of revenue.

End of part 1.

Second part of this interview to be published soon!