Tuesday, 18 October 2005 10:00

CIO role in BPO to grow says IDC

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A new report predicts that IT executives will have an increasing say in business processing outsourcing (BPO) decisions within enterprises as the technology component of BPO increases.

The BPO wave is rapidly rising in Australia and New Zealand. According to IDC, BPO spending in Australia is expected to grow at a rate of 11.4%. Australia and New Zealand had a combined BPO spending of $2.38 billion last year and were two of the biggest contributors of the total Asia Pacific (excluding Japan) BPO spending.

However for organisations looking at riding this BPO wave, it is important for CIOs to understand the impact this would have on their internal IT divisions, says IDC. According to the latest IDC report titled "Who Let the Processes Out?" CIOs need to take charge from the very beginning if their organisation is looking to outsource its business processes. They need to understand the intricacies involved and ensure that IT is considered as a key stakeholder in the BPO arrangement.

According to the IDC report, as business processes become increasingly reliant on technology, the IT component of BPO is set to increase. IDC expects that by 2008, 23% of BPO spending will consist of IT-related services, an increase of nearly 100%. As a result, outsourcing these business processes will have an increasing impact on information technology departments.

The report highlights how CIOs can use BPO to change the perception of IT from merely a support function to an effective business enabler. As IT executives typically work across different departments, they are probably in the best position to understand the different business processes and the underlying interdependencies. This results in IT executives playing a critical role in the outsourcing arrangement and an increasing possibility of IT being seen as a source of competitive advantage, according to IDC.

"There is little doubt that BPO has an increasing impact on IT. To gain maximum efficiency, CIO's need to ensure they maintain control over strategic areas whilst adapting to these changes," said Vipul Bhargava, analyst, IT Management Programme for IDC Australia and New Zealand.

Improved business continuity/disaster recovery and assistance with regulatory compliance are some of the other benefits identified by the IDC report that IT executives can derive from BPO depending on the model chosen. Whilst maximising the benefits, the report cautions that IT executives need to be careful with some of the challenges such as increased complexity of information management that BPO can bring along with it.

IDC concludes that IT executives will have a greater than ever role in facilitating a BPO decision and/or the implementation. But in order to ensure that they are not dealing with terms they cannot abide by, IT executives need to take the lead in BPO discussions.

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Stan Beer

 

Stan Beer co-founded iTWire in 2005. With 30 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications.

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