A Beginner's guide - BPaaS - Business Process as a Service : Pick or Pass ?!

In late eighties when outsourcing was formally recognized as business strategy; it has seen as cost-saving measure and companies started outsourcing those function which were not mission critical. This gave companies competitive advantage in terms of cost.

IT was one of major cost drivers for many companies and companies started outsourcing their IT services. This is how lot of ERP products came into being. The biggest cost driver of IT services was servers/hardware. To save this huge fixed cost, cloud computing, aka Pay-per-Use, came into mainstream offering. The next big thing was to offer standardize services to companies and hence evolved the concept of Business Process as a Service (BPaaS). 

Gartner defines business process as a service (BPaaS) as the delivery of business process outsourcing (BPO) services that are sourced from the cloud and constructed for multi-tenancy. Services are often automated, and where human process actors are required, there is no overtly dedicated labor pool per client. The pricing models are consumption-based or subscription-based commercial terms. As a cloud service, the BPaaS model is accessed via Internet-based technologies. [1]

Characteristics of BPaaS:

The following characteristics define BPaaS:

• The BPaaS sits on top of the other three foundational cloud services: SaaS, PaaS, and IaaS.
• A BPaaS service is configurable based on the process being designed.
• A BPaaS service must have well-defined APIs so it can be easily connected to related services.
• A BPaaS must be able to support multiple languages and multiple deployment environments because a business cannot predict how a business process will be leveraged in the future.

• A BPaaS environment must be able to handle massive scaling. The service must be able to go from managing a few processes for a couple of customers to being able to support hundreds if not thousands of customers and processes. The service accomplishes that objective by optimizing the underlying cloud services to support this type of elasticity and scaling. [2]

These are main advantages of BPaaS over conventional service:

·         Process standardization: Company strives to get competitive advantage by process standardization across their value chain. BPaaS provides industry standard process processes by best-in-class technology. Many companies cannot afford to bear such a high fixed cost to develop and run IT services. This model offers consumer-based pricing where you’re charged only what you use. The entry and exit barrier have reduced drastically due to this kind of change in offering.

·         IT Integration: BPaaS utilizes all three foundational cloud services; SaaS, PaaS and IaaS.

·         Low Cost & Less Risky: ‘Pay as you go’ pricing model – avoid the cost of expensive server infrastructure and software licenses.

·         Scalability: like all cloud services, not having to worry about the IT costs of upgrading software and server infrastructure means you can massively scale your operations up or down to match your business size. This means a service that manages a few operations having the capacity to manage hundreds (even thousands!).

·         Process Integration: BPaaS services must be easily integrated with related services through an easy to use application user interface (API).

Is this model for you?

This is an amazing comparison between three different approaches. It may help you in evaluating whether the BPaaS model is there for you or not.

Source

Some interesting examples:

• Rubicon Project: It is online advertising technology firm. It provides a platform to advertisers to optimize their Ad reach. For more details
• Alfresco: It is the open platform for social content management. Its recent launch of Activiti Business Process Management (BPM) has sparked lot of interest in the industry. For more details
• Workday: solution includes HR Process Consulting & change management consulting for effective HR Transformation. For more details
• FinancialForce: FinancialForce.com is a cloud applications company that provides business applications for Force.com, a cloud computing platform from salesforce.com. FinancialForce.com supplies Accounting, Billing, Professional Services Automation (PSA) and Services Resource Planning (SRP) applications. For more details

Facts:

• The study, conducted by marketing company Research and Markets, said the services would grow by 45.55% CAGR from $1.09bn this year to $7.12bn in 2018.[3]
• Gartner is predicting that BPaaS will grow from $84.1B in 2012 to $144.7B in 2016, generating a global compound annual growth rate of 15%.
• Of the eight subsegments Gartner is tracking in their BPaaS forecast, Cloud Payments (17.8%) Cloud Advertising (17.1%) and Industry Operations (15.1%) are expected to have the greatest compound annual growth rates (CAGR) in revenues generated by 2016. 
•  In terms of revenue generated, Cloud Advertising is projected to grow from  $43.1B in 2011 to $95B in 2016, generating 17.1% CAGR in revenue growth through 2016.
•  E-Commerce Enablement using BPaaS-based platforms is expected to grow from $4.7B in 2011 to $9B in 2016, generating a 13.6% CAGR in revenue globally”.