Service Delivery Automation: A Cure for Cost Savings Ennui?

For the last decade, outsourced and internal service delivery models for both IT and business processes have focused on labor arbitrage to generate cost savings. However, as organizations demand ever greater value from their services, and as enabling technologies mature, there is an emerging opportunity to reduce costs through automation. Everest Group research estimates cumulative cost savings of as much as 80% between automation and offshoring over pre-automated, onshore costs.

Demand for these services is ramping up quickly. An indicator of growth is third-party automation software vendor revenues and forecasts, which Everest Group conservatively estimates at 32% CAGR to 2015 for Business Process Service Deliver Automation (BPSDA).

Among others, report findings include:

  • Dominant sectors and geographies are banking and financial services in United States and United Kingdom
  • Buy-side deployments continue to be tactical, driven by specific requirements such as a major backlog of orders generated by system, staffing problems, or by external factors (e.g., a flood leading to peak in insurance claims or a change in regulation/legislation)
  • The approach typically involves building a Proof of Concept (POC) or a pilot, and if successful, extending to full rollout
  • Some service providers have embraced SDA as a competitive differentiator, while some are only just starting to increase visibility of their capabilities, or are yet to formalize a strategic approach in place of ongoing tactical deployments

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Everest Group’s recent report Service Delivery Automation (SDA) Market in 2014 – Moving Business Process Services Beyond Labor Arbitrage includes an overview of the service provider landscape.

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