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01-25-2018 Blog: An SOS for BPO: Part Two

An SOS for BPO: Part Two

January 25, 2018

In the first post in this series, we described the inevitable evolutionary transition of BPO (business process outsourcing) to SOS (strategic operations support). And we attributed the transition to the fact that insurers have come to realize the tactical utility of BPO presaged and precipitated the strategic utility of SOS.

More specifically, BPO allowed companies to outsource only repetitive administrative functions of the back office. SOS, on the other hand, allows those same companies to employ insurance-specialist partners for core operational functions across the insurance lifecycle, while accruing the same beneficial conservation of time, resources, and operating costs.

Is This Progress?

Well… yes and no. While the pragmatic value and operational and financial benefits of SOS are self-evident, the fundamental arguments in favor of SOS — and the progress SOS enables — almost inevitably collide with another p word: proprietary.

While this is understandable and justifiable in an industry as rightly conservative as insurance, insurers are frequently reluctant to relinquish the reins, particularly to their core operations and their data. This can be self-confounding in three ways:

  1. By assuming they have to keep all of the required strategic responsibilities and activities in-house, they pile needless cost on top of needless complication.
  2. By that assumption, they trap themselves in a vicious circle at the expense of their businesses and their business objectives. As soon as they adopt that assumption, requirements change, knowledge changes, practices change, and technology changes. As keeping up with those changes requires more time, attention, and resources, the game becomes a cost/benefit equation, prompting two questions:
    • Are the time, attention, and resources justifiable?
    • In how many directions and races can insurers run and still be competitive?
  3. By assuming their essential operations and their data are always and necessarily at risk, insurers preclude themselves from opportunities to improve operational efficiency and reduce operational time and cost. They apparently never think about the service-level and accountability agreements into which any SOS vendor worth its salt would enter and by which any SOS vendor of integrity would comply.

Is There a Cure?

The antidote for the proprietary is a two-part prescription: (1) It’s more important for insurers to optimize their operations strategically than it is to keep them in-house – to focus on outcomes, rather than on output and infrastructure. (2) It’s more important for insurers to have their operations effectively managed and their data effectively collected, analyzed, and meaningfully acted on than it is to fear exposure.

The bottom line is this: The only ROI is results. Without them, there is no foundational (let alone actual) value. And that’s the real value of SOS.

We’ll have more to say about value in the next post in this series.

See you then.