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The Connected Web

Phil Wainewright

Where SaaS Meets BPO

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Listen to my interview with Michael Custers, VP of marketing at NorthgateArinso, a global human resources (HR) software and services provider. The company was recently named as an early collaborator in SAP's on-demand strategy, for its work in developing an on-demand offering based on SAP HCM (human capital management) software.

In this podcast, hear how the on-demand service has been designed to integrate smoothly with customers' existing installed SAP applications, and learn how the software-as-a-service model interacts with business process outsourcing (BPO).

Listen to or download the 8:30 minute podcast below:

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PW: So Michael, NorthgateArinso was actually cited by SAP's John Wookey the other week, when he was outlining SAP's on-demand strategy. NorthgateArinso is a partner that's developing on-demand HR applications for [SAP] Business Suite customers which I believe is called euHReka. And perhaps, just to start off, can you tell us what sort of an HR application is that? Is it the sort of talent management application we see quite a lot of in the software-as-a-service arena, or does it extend into online transactional HR as well?

MC: Well, euHReka, which means 'I've found it!' in Greek by the way, is the sort of HR solution which encompasses both the administrative HR processes — which you know are personnel administration, payroll, organizational management and time management — and it combines that with talent management functions such as recruitment, learning and development and succession planning, in order to deliver an integrated HR solution, which combines both HR administration with talent management. It can also be deployed on-demand and as a BPO service.

Right, okay. So you've got this hybrid on-demand or on-premise deployment model?

Yeah, correct. So basically, we first deployed euHReka in 2002 as a BPO service and then we moved — last year we started developing this and we released euHReka on the market earlier this year as an on-demand service, as a software-as-a-service application — which is a very interesting angle because we actually are very used to the whole service aspect of delivering HR services and HR transactions. So we've —


— got a combined business model of BPO and on-demand.

Yes, I think that's one of the things that's interesting about what you've done, because this on-demand software functionality really was originally built out as an extension to the BPO offerings. So you've come from a business services background, whereas a lot of software-as-a-service vendors are actually software people who really started to offer the software as a service and have to start to get used to the whole services business model, whereas it's one that you're very familiar with.

Absolutely. And the whole playing field of statements of works and SLAs is really in the DNA of our company, so we're very much used to that. There are a couple of differences between BPO and on-demand. You could very easily define BPO as outsourcing technology and the complete process, including the responsibility for the end result, whereas on-demand is really about outsourcing technology only. And if you can really play around with those two models, you get a very interesting picture, because you can actually fulfill different customer needs using different technology deployment models.

Right. And does that mean you can have customers that might be using different deployment models in different parts of their business or in different territories?

Yeah, absolutely. So you could actually say, I have geography #1 where I want to deploy the solution on-demand and another geography where I want to deploy it as a BPO service, or you could even switch it around and divide it per process level. So, say, we want to do payroll and personnel administration from the BPO perspective, and deploy the talent management functionality as a service. So this flexibility is really built into the solution.

Well, and of course, integration between the on-premise and the on-demand is an issue, and it's something that John Wookey talked about in his presentation as part of SAP's on-demand strategy: the concept of people being able to turn on an on-demand application, but [without having to configure it] it's already inheriting all of the policy and the setup from the on-premise implementation, so that they don't have to reconfigure everything in order to get started in using the software application.

Yeah, and the interesting thing there is that we actually took the core data model and the core functionality of SAP HCM — which is very rich and very elaborate, which is a wealth of — or a very long track record, basically — and we enrich that with multi-tenancy capabilities and pre-configuration, with an interaction layer and various deployment options. So basically, that allows us to bridge this gap between on-premise, on-demand, BPO, and be really flexible, and almost play around with various deployment options of a single technology backbone in order to come to this very hybrid environment.

And is this — I mean, how do you see this product? Do you see this product as really extending what you offer into the software business and being a software product in its own right, or is it more really an on-ramp for your BPO services?

Well, it can basically be both. Some of our customers could look at it as an extension. Suppose you've got a good basis of administrative HR services on an SAP platform — suppose that's just personnel administration and payroll — and you want to extend it towards talent management, and that is an option. Another option is actually to just start from scratch and use on-demand in order to apply a more uniform technology layer and replace different buckets of technology which you already would have in the business. Both options are really clear possibilities.

Now, of course, one of the things we associate with the on-demand model is this concept of pay-as-you-go, and almost being able to use on-demand capabilities as a top-up. That's a slightly different setup from the traditional contract environment of BPO, where it's, typically it's multi-year contracts people are talking about. So does this — I mean do you think companies are going to start being a little bit more flexible in the way that they use BPO services or is it not going to go into the pay-by-the-drink model that we're seeing in some of the software-as-a-service applications?

Well, I think there — if you compare in terms of payment models — if you compare BPO with on-demand, there's a big similarity; there's a big difference. The big similarity is that both BPO and on-demand support the pay-as-you-go or the top-up model, where you actually have a payment model or an invoicing model which is based on a per-employee basis. A difference BPO and on-demand is that typically with on-demand contracts, the contract length would be a bit shorter compared to BPO. So there's a difference, there's a similarity.

Right, okay. So there is the ability to effectively scale up and scale down the extent to which you're using the service in relation to the number of employees that you've got on staff, for example, but within the context of a more long-term contract.

Yes, exactly. So imagine you've got a BPO arrangement in place for five to seven years, and you can actually add on recruitment functionality on a two- to three-year basis onto that — and imagine you would even have a very special assignment where you want to onboard an additional 200 factory workers for a factory in China, that can be even an additional RPO service (recruitment process outsourcing service) on top of that. So basically, the combination of these different delivery models, and by combining these, you get into a very, very interesting world when it comes to delivering HR services.

1 Comment


amazing interview. nice it could help us and there is possibility that maybe someday we will encounter interview like this nice post.Have a great day!

Phil Wainewright blogs about how businesses are using the Web to get better plugged into today's fast-moving, digital economy.

Phil Wainewright

Phil Wainewright specializes in on-demand services View more

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