Following are three overarching categories of processes that include all functions in an organization. Midsize businesses can use this framework as the first step toward evaluating one or more business processes to delegate to external service providers. Within each category, several processes are candidates for BPO.

Demand management — All functions that link an organization with its clients or customers, defined as customer selection, customer acquisition, customer retention and customer extension.

Supply management — All functions that link an organization with the supply chain leading to the direct production of a good or service, defined as moving, storing, making and buying.

Enterprise services — All functions that support the organization and are not directly linked to the production of a good or service, defined as HR, finance and regulatory, IT and facilities/administration.

Both the demand management and the supply management categories include processes that are highly differentiated among each vertical industry. For example, the "make" process for a pharmaceutical manufacturer includes research and development, manufacturing and clinical trials, whereas the "make" process for an insurance company includes new policy issuance, policy administration and claims processing. In contrast, the enterprise services category includes functions that do not vary significantly from one vertical market to another.

Considering BPO? Get answers to your key questions. Send them to The Midmarket Report at midmarket@gartner.com.

Reference
Executive Summary
BPO Vendors Seek Clear Role in SMB Market
Published: July 25, 2003
Author: Robert H. Brown