BP shares insights on becoming a Global Market Leader
SSON: The BP Business Service Center is working off a global hybrid model, can you explain how this operates?
Philip Whelan: We have put together a very clear governance structure, which operates at three different levels - a strategic level, a tactical level and an operational level. Each of these levels is a three way combination which includes business, the transition team, and the service center. In addition to those stakeholders we have also designed the structure in such a way as to also include the Outsourcing Partners with whom BP is engaged in order to have the full end to end process view. This allows us to create one single forum where we drive behavior to look at process outcomes as opposed to where or who is delivering the services. Typically this includes discussing how I am delivering processes for your business, what’s the performance, what’s the operating hygiene and what’s the value-add.
SSON: During the last session, you spoke of an interesting concept at BP; you mentioned that you now consider your BPO partners to be designers - can you explain how this works at BP, and is this just a BP concept?
PW: I hope that it is just a BP concept, although we are not necessarily rushing to IP it! The idea here is we want people to look at the outsourcing partners and the captive centers that we are setting up as being the people that have the right combination of business understanding, domain expertise, and basically business acumen to really decide what is the appropriate process design that adds the best value for BP and its customers.
In order to enable that concept and really bring it to life, we’re saying it isn’t about which center an activity comes out of and nor is it about whether you are captive or outsourcing partner. It is about who has the right design expertise to really maximize the value out of that process. The key as we move forward to achieving optimization is how best to unlock "value" whether that is through technology, process simplification or domain expertise. By enabling a hybrid model approach, we are increasing significantly our chances of success by aligning processes where we believe the best value can be achieved. We are trying to do this in a very structured and controlled manner, we won't always get it right but we believe firmly that this is the right direction for our company.
This becomes reality when for example you establish what a gold standard looks like for a specific end to end process and you then execute it. And how you execute it isn’t going to be differentiated if you happen to have more activities in Asia versus India versus Europe - it is about who delivers the best value. I would say that the whole idea of the reference to the term designer, and maybe this is the best way to articulate it is; when you talk about process transformation what do you mean? In my world it means that I expect a process to be more efficient, I expect the cycle time to be better, I expect the quality to be the same if not better, but most importantly I expect the outcome of that process to become a competitive advantage for me. Therefore you need to have the best possible process design to achieve this outcome.
SSON: You made another interesting point about unit price and gaining unit value in the session; is this concept unique to BP and how is that being implemented in the organization?
PW: I don’t think the terminology is relatively unique but perhaps what is unique is that we are really trying to live the concept of unit value. At BP we are passionate about customers, our people, our business and our products. Some of this passion comes from our desire to be the best at what we do in whatever sector we are competing in. So our desire to optimize costs, improve service and overall quality is for us an enduring concept. For BP, unit value is a combination of everything from cycle time to quality, to unit price, to end to end value. This does not mean we are not obsessive in cost efficiency and effectiveness because we are. So unit cost is also important but where we get the competitive advantage is when you focus on improving more than just the cost to deliver a service or product.
This is why we’re saying, don’t always think about unit cost, but also think about unit value. Many people sometimes get too wrapped up in the concept of "I must offshore everything because if I offshore I get the lowest labor costs" - but it’s more than labor arbitrage and that’s not a new concept for people and nor is it the true measure of value that a BPO partner/captive set up can bring to your company. Perhaps if we start to start think about it from the other end, understand what the value is that you’re striving to achieve, and once you understand that, then you can start to make better deployment decisions.
Our market, although still young in business terms, is now maturing at a rapid rate. Many of the characteristics that distinguished captives or BPO partners a few years ago are now becoming the norm, not differentiators but tickets to the ballgame.
In my opinion, in order to achieve Unit Value, you will need a model that really delivers execution of services with the lowest cycle time, the best quality, and I personally believe the only way that you demonstrate that is with this design mentality. This is because every company suffers from the common challenges of "my systems are fragmented, my processes are fragmented, I have lots of different stakeholders and resistance to change etc." Your captive or your outsourcing partners must be the catalyst to change that, but we must also be pragmatic about it and the level of unit value that can be achieved, it’s not possible to change the world over night and at BP, we’re not trying to boil the ocean either. So even when I talk about process design and re-engineering efforts, that will be very focused, it will be very targeted and it will be with the participation of the business in deciding what we work on.
SSON: As a global network what are your goals for the next five years?
PW: First of all we want to have an operating structure that meets our health and safety operating standards, because that is always our core principle. Secondly, we want to have a fully integrated network so that would mean that in five years time, people don’t worry about where a service comes out of, they worry about the value that service is giving to their business. That will be a huge challenge because today of course natural human instinct is to look at what comes out of IBM in India, what comes out of Kuala Lumpur BP captive etc. And I think that the third remit will be that when you go to your businesses and you go to the voice of customer survey - the first response to give back will be more about "this center has helped me to transform the way I serve my customer", as opposed to the traditional, "I have improved my headcount by fifteen percent, I have saved money."
If you’re asking me what success looks like in five years time - it shouldn’t be that I do the job with ten percent less people as the only measure of success. This is what people expect, it should be that for example I have taken fifteen days out of my inventory pipeline which actually means on a commodity product I am able to give a better service response to the customer which means that I can gain market share. Our ability to transform our service to customers, improve our overall quality of offering and portfolio and deliver this in a sustainable cost efficient manner……these are the yardsticks by which success will be measured.
SSON: Your current project at the moment is in Budapest, your shared services center went live there in November. What is your vision for the center?
PW: It is still very immature compared to other more established centers. We have approximately 200 people, but we will grow in excess of a thousand people, and also part of our remit is to bring part of the outsourcing partners in India under the same operating framework. In this way we will present the full process cycle view to our customers while building the right competencies at a process and product level in the right centers.
SSON: How important is it for BP to win the hearts and minds of the employees before outsourcing?
PW: It is the most single important management task and challenge that we face today in terms of establishing our center. If you look at the average tenurity in BP, for processes that we are considering for transfer, you are usually starting at a minimum of fifteen to twenty years. So, this means that these are the people that firstly built up BP, so they deserve a huge amount of respect for what they have done and achieved.
Secondly and most importantly we can’t do it without them. Because today we have a lot of people dependency, we also have some fantastic processes and excellent technology but the knowledge transfer challenge is significant and should not be under-estimated. It is very important that we engage effectively and efficiently with our employees and the way that you do that is to ensure that we’re very structured around communication. We are also very focused on what we call MoC - management of change. This MoC process is designed to ensure that we work with dedicated resources in each of the countries in the areas of communication, engagement and change management.
It’s important to explain to our people what we are doing, why, how and the role that they have to play. To achieve this can be as simple as dedicated intranet sites where people can log on and see what is happening in the BSC. We also utilize e-communications, and print communications telling them how the transitions are progressing. And we also have something we call business stakeholder visits. So for example in the last six months we hosted four hundred people in Budapest from the various businesses. The reason for doing this is that for the previous year and a half this was a concept, it was a strategy whereas now this strategy is becoming real.
No matter what you do on websites and things like that, there is nothing as powerful as bringing in four hundred people over a six month period. They in turn go back and they will talk to another eight or ten people, now suddenly you have talked to three or four thousand people. Most of the feedback has been very positive, but not all of it is positive, some people may not necessarily agree with the strategy or they have very legitimate business concerns as well. The key to overcoming this is communication and engagement.All of the above is very difficult to achieve in any company if you don’t get the support of the people. Thankfully in BP we have outstanding people and talent who always support each other not matter how difficult the challenge. I truly believe this is one of the reasons why we are a Global Market Leader.