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Business Transformation in Action

Joe McKendrick

Is There Such an Animal as 'Cloud BPO'?

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Can business process outsourcing be leveraged from the cloud? Does this even make sense, or is it a case of buzzword overkill?

Phil Fersht observes that few commentators ever understood the concept of BPO, but with the advent of cloud computing, the two concepts are getting used in the same sentence:

"Yes, some IT knuckleheads are starting to use phrases like 'Cloud BPO players' and 'FAO in the Cloud,' or just plain 'Our Cloud BPO strategy.'  They've been dying to use the BPO term for years - and now they've seized their chance.  Oh my. Sadly for them, 'Cloud BPO' is, simply put, really a load of nonsense in today's environment."

Fersht believes that the BPO is difficult to move to the cloud. "Only the small-to-medium business sector is going to enjoy any modicum of success of moving genuine 'BPO' processes, such as finance and HR, into the cloud in the near-term." And this will only be accomplished with simple interfaces, nothing too sophisticated.

He cites a recent study with the Outsourcing Unit at the London School of Economics that finds enterprise core applications "are the toughest to move into a cloud environment." That's because the move to a cloud environment would require major and costly ripping and replacing.

"Core BPO functions, such a finance and HR, are typically serviced by creaking legacy software that is poorly integrated (if at all), or simply embedded into a complex ERP architecture that's wrenched into back-end systems and databases."

In this blog (formerly known as "SOA in Action"), Joe McKendrick examines how BPM and related business and IT approaches can promote business transformation.

Joe McKendrick

Joe McKendrick is an author and independent analyst who tracks the impact of information technology on management and markets. View more

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