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Don’t wait to be disrupted – disrupt now

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By Wilma I. Miranda

We are near the year-end of 2017 and for  this year, the noise about disruption seems getting bigger and bigger.  And  it looks  that there is no way to go but join in the bandwagon of digital transformation or digitalization.

So what is in store for the Business Process Service Delivery Automation (SDA)?.  In the Everest Research Market Report dated November 2017  there is a rapid growth in adoption at 80% compared to the same period last year and is expected to grow more in 2018.

In order not to be left behind, businesses are looking into making significant investments  in automation.  However, many businesses are also looking into outsourcing certain functions in the company to third party providers.  They must  have anticipated the big amount in investing in automation and though they are driven by process improvement rather than cost reduction nowadays, they cannot afford to chase technology at the fast trend of which technology changes.

The Business Process Services industry is therefore faced with a great challenge both on the supply and demand side.  They have to meet clients’ expectations for the need to have automation that will bring about next generation benefits not just labor arbitrage.

And the big service providers globally are not waiting to be disrupted.  They start being proactive by leading the disruption.  They have no choice and just have to meet clients’ demands and be able to deliver a spectrum of automation solutions and not just one.

Finance and Accounting Outsourcing ( F&A) and Contact Centers are the BPS areas that are leading in the application  and only 15% has an Artificial Intelligence (AI) component in the BPS deployment –  majority are in RPA deployment.   With call centers being slowly dominated by technology, F&A Outsourcing is growing at a rapid pace globally with more clients seeing the benefits of leveraging on SDA solutions of the providers.

By 2022 (according to the same Everest Report), the share of technology in contract value will significantly increased with the share of work managed by technology increasing on a significant level.  Rather, than becoming a threat, human intervention will become more sophisticated rather than routine, since work for humans will be raised to a more judgment-iintensive type of work.  But in order to achieve this, people skills on automation should be improved.  For instance, an accountant should not remain knowledgeable only on accounting and finance tasks but on how to run an automated solutions efficiently and effectively.

In an article in Forbes magazine dated October 11,2017 written by Peter Brendor-Samuel, it mentioned about small and medium sized enterprises or SMEs being faced with a challenge to shift to cloud-based Software as a Service (SaaS) systems ( such as Intacct or NetSuite) that provide the software and a more flexible set of reporting functions.  At present most SMEs are on legacy software packages with licenses or they have their own proprietary accounting system.  And in order to shift to cloud-based they have to retrain their people and are faced with a big learning curve for the new software packages that are run by the cloud.

And since many of these SMEs have multiple divisions or companies under one holding company, the problem of retraining so many people poses a challenge.  Not only that, there is also the problem of people turnover – meaning , after their people are  trained and gained new capabilities skills, they are in high-demand from other companies who also need the same type of skills.

Although with the new software, there is no longer a need for more people – from ten people the business can reduce it to five to six people – the problem of losing these few people to other SMEs or even larger companies poses a big threat to them.

That is where F&A Outsourcing providers becomes very useful to the company.  They can provide a fallback to SMEs in case they need people to run their systems or maintain their books in the new software packages or even run their whole accounting department. ( micro, small and medium-sized enterprises in the Philippines account  for 99.5% while only .5% are large companies).  Some companies resort to third party providers instead of investing in new software packages because aside from avoiding a big amount of investment on software and spending on the cost of retraining people and faced with attrition, these providers can provide the support and the services that SMEs will be needing.

The digital disruption is not only disrupting the large companies but the SMEs as well. The disruption should be seen as a challenge rather than a problem.  The benefits can far outweigh the challenges if managed properly.  There can be no denying, digital transformation is here to stay and continues to grow.  We should be prepared for the challenge, if not proactively meet it.  Let us not wait to be disrupted – start the process of disrupting as soon as possible. wilma_517@yahoo.com

(Wilma Miranda is the Managing Partner of Inventor, Miranda & Associates, CPAs, BOD Member of KPS Outsourcing, Inc. and Treasurer of Negros Outsourcing Services, Inc.  The opinions expressed herein are the views of the writer and do not necessarily reflect the views and opinions of these institutions)

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