BPO Opportunities in Energy & Utilities: 2012 ~~~

Transcription

1 BPO Opportunities in Energy & Utilities: 2012 ~~~ Market Assessment May 2012

2 About provides buy-side and sell-side organizations with deeper research and analyses in front office, mid-office and back office BPO than any other research firm in the world. The company s subscription-based model provides subscribers with robust market analyses, case studies, vendor assessments, contract analyses, market reports and access to a content-rich BPO contracts database. The firm covers a wide range of industries including financial services, government and utilities sectors, and tracks worldwide and regional BPO activity. s home page is The company tracks business services activity. In particular, focuses on the following business services and process areas: Front-office customer management services Middle office industry-specific processing services such as policy administration, claims processing services, and payment processing Back office support services such as HR services, finance & accounting services, and procurement services provides information to its clients in a variety of forms, including within: s BPO subscription services, to assist organizations in developing sourcing strategies and in supporting individual sourcing projects including vendor short-list development Workshops, to assist organizations in identifying the most appropriate areas of BPO for their organization Business case development, to assist organizations in deciding whether BPO is appropriate for individual processes For more details, contact: U.S: Riverside Center 275 Grove Street Suite Newton MA Phone: (617) U.K.: Atrium Court, The Ring Bracknell RG12 1BW Phone: +44 (0) France: 4 place Louis Armand Tour de l'horloge Paris France Phone: by. May 2012

3 Abstract The purpose of this study is to assist sourcing managers in understanding sourcing developments within the energy & utilities sector and to recommend options for vendors in addressing the business process outsourcing market in the energy & utilities sector. In particular the study uses senior executive interviewing to establish: Client requirements, in support of business initiatives Market drivers and inhibitors Planned BPO purchasing intentions. The study complements s earlier market assessments of Business Process Outsourcing in the energy & utilities sector by including an updated analysis of user expectations and attitudes towards use of business process outsourcing. s BPO Opportunities in the Energy & Utilities Sector market assessment report is designed for: Sourcing managers investigating sourcing developments within the energy & utilities sector Marketing, sales and business managers developing strategies to target service opportunities within the BPO market Financial analysts specializing in the support services sector. The term business process outsourcing (BPO) is defined as the outsourcing of business functions or processes. In order to qualify under this definition BPO contracts must involve the vendor taking responsibility for operational management of the business activity. Potential BPO activities include: Front-office services, including customer management services & billing services, and document management services Middle-office administration services Industry-specific processing services e.g. work management and MRO support Back-office support services Finance and accounting services HR Services including payroll services, HR administration services, managed recruitment services and training provision and administration Services for procurement of indirect goods and services Copyright 2012 by. All rights reserved. Printed in the United Kingdom. No part of the publication may be reproduced or distributed in any form, or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. The information provided in this report shall be used only by the employees of and within the current corporate structure of s clients, and will not be disclosed to any other organization or person including parent, subsidiary, or affiliated organization without prior written consent of. exercises its best efforts in preparation of the information provided in this report and believe the information contained herein to be accurate. However, shall have no liability for any loss or expense that may result from incompleteness or inaccuracy of the information provided by. May 2012

4 Table of Contents Chapter 1: Introduction 1 A. Objectives and Scope 1 B. Methodology 2 C. Structure of the Report 3 Chapter 2: Executive Summary 4 Chapter 3: Market Size & Growth 13 A. Market Forecast 13 Chapter 4: Key Business Issues & BPO Initiatives17 A. Key Business Issues 17 B Business Initiatives 31 Chapter 5: Need for New Operating Models 40 A. Need for Change in Operating Model 40 B. Operating Model Changes Planned 48 Chapter 6: Planned Use of BPO Services 51 A. Changes in BPO Expenditure Planned 51 B. BPO Purchasing Intentions 54 C. BPO Purchasing Objectives 55 D. BPO Purchasing Intentions by Process by. - i - May 2012

5 Chapter 7: Attitudes to BPO Service Delivery 61 A. Attitudes to Service Bundling 61 B. Attitudes to Gainsharing 65 C. Changes in Use of Offshoring 69 D. Sourcing Strategy Intentions by. - ii - May 2012

6 List of Exhibits Business Issues Faced: Energy...5 Business Issues Faced: Utilities...6 Operating Model Changes Planned: Energy...7 Operating Model Changes Planned: Utilities...8 Initiatives Planned: Energy...9 Initiatives Planned: Utilities...9 BPO Purchasing Intentions by Process: Energy BPO Purchasing Intentions by Process: Utilities Changes to Use of Offshore Third-Party BPO Services Sourcing Strategy Intentions: Energy Sourcing Strategy Intentions: Utilities BPO Market Forecast by Region Energy & Utilities: BPO Market Forecast by Region Energy: BPO Market Forecast by Region Utilities BPO in Energy & Utilities Sector Market Forecast by Service Type: BPO Market Forecast by Service Type: Energy BPO Market Forecast by Service Type: Utilities Business Issues Faced Business Issues Faced: Energy Business Issues Faced: Utilities Business Issues Faced: Asia Pacific Business Issues Faced: Continental Europe Business Issues Faced: U.K Business Issues Faced: U.S Importance of Business Metrics Importance of Business Metrics: Energy Importance of Business Metrics: Utilities Importance of Business Metrics: Asia Pacific Importance of Business Metrics: Continental Europe Importance of Business Metrics: U.K Importance of Business Metrics: U.S by. - iii - May 2012

7 Cost Reduction Initiatives by Sub-sector Cost Reduction Initiatives: Geography Customer Experience Improvement Initiatives by Sub-sector Customer Experience Improvement Initiatives by Geography Speed-to-Market Acceleration Initiatives by Sub-sector Speed-to-Market Acceleration Initiatives by Geography Emerging Markets Opportunity Initiatives by Sub-sector Emerging Markets Opportunities Initiatives by Geography Need for Change in Operating Model by Sub-sector Need for Change in Operating Model: Geography Intended Change to Operating Models by Sub-sector Intended Change to Operating Models by Geography Satisfaction with Operating Models Satisfaction with Operating Models: Energy Satisfaction with Operating Models: Utilities Satisfaction with Operating Models: Asia-Pacific Satisfaction with Operating Models: Continental Europe Satisfaction with Operating Models: U.K Satisfaction with Operating Models: U.S Operating Model Changes Planned Operating Model Changes Planned: Energy Operating Model Changes Planned: Utilities Operating Model Changes Planned: Asia-Pacific Areas of Operating Model Change: Continental Europe Operating Model Changes Planned: U.K Operating Model Changes Planned: U.S Changes in BPO Expenditure Planned Drivers for Decrease in BPO Expenditure Drivers for Increase in BPO Expenditure Changes in BPO Expenditure: Energy Drivers for Decrease in BPO Expenditure: Energy Drivers for Increase in BPO Expenditure: Energy Changes in BPO Expenditure: Utilities Drivers for Decrease in BPO Expenditure: Utilities Drivers for Increase in BPO Expenditure: Utilities BPO Purchasing Intentions by Sub-sector by. - iv - May 2012

8 BPO Purchasing Intentions by Geography BPO Purchasing Objectives BPO Purchasing Objectives: Energy BPO Purchasing Objectives: Utilities BPO Purchasing Objectives: Asia-Pacific BPO Purchasing Objectives: Continental Europe BPO Purchasing Objectives: U.K BPO Purchasing Objectives: U.S BPO Purchasing Intentions by Process BPO Purchasing Intentions by Process: Energy BPO Purchasing Intentions by Process: Utilities BPO Purchasing Intentions by Process: Asia-Pacific BPO Purchasing Intentions by Process: Continental Europe BPO Purchasing Intentions by Process: U.K BPO Purchasing Intentions by Process: U.S Business Environment Impact on Sourcing Attitudes Business Environment Impact on Sourcing Attitudes: Energy Business Environment Impact on Sourcing Attitudes: Utilities Business Environment Impact on Sourcing Attitudes: Asia Pacific Business Environment Impact on Sourcing Attitudes: Continental Europe Business Environment Impact on Sourcing Attitudes: U.K Business Environment Impact on Sourcing Attitudes: U.S Reasons for Increased Preference for Multi-Sourcing Reasons for Increased Preference for Multi-Sourcing: Energy Reasons for Increased Preference for Multi-Sourcing: Utilities Reasons for Increased Preference for Bundled Services Willingness to Adopt Gainsharing by Sub-sector Willingness to Adopt Gainsharing by Geography Reasons Against Adoption of Gainsharing Reasons Against Adoption of Gainsharing: Energy Reasons Against Adoption of Gainsharing: Utilities Reasons Against Adoption of Gainsharing: Asia Pacific Reasons Against Adoption of Gainsharing: Continental Europe Reasons Against Adoption of Gainsharing: U.K Reasons Against Adoption of Gainsharing: U.S by. - v - May 2012

9 Appropriate Value to Share by Sub-sector Appropriate Value to Share by Geography Changes to Use of Offshore Third-Party BPO Services by Sub-sector Changes to Offshore Third-Party BPO Services by Geography Reasons for Planned Increase in Level of Offshore Service Usage Reasons for Planned Decrease in Level of Offshore Service Usage Reasons for Increase in Level of Offshore Service Usage: Energy Reasons for Increase in Level of Offshore Service Usage: Utilities Reasons for Decrease in Level of Offshore Service Usage: Utilities Reasons for Increase in Level of Offshore Service Usage: Continental Europe Reasons for Decrease in Level of Offshore Service Usage: Continental Europe Reasons for Increase in Level of Offshore Service Usage: U.K Reasons for Increase in Level of Offshore Service Usage: U.S Sourcing Strategy Intentions Sourcing Strategy Intentions: Energy Sourcing Strategy Intentions: Utilities Sourcing Strategy Intentions: Asia Pacific Sourcing Strategy Intentions: Continental Europe Sourcing Strategy Intentions: U.K Sourcing Strategy Intentions: U.S by. - vi - May 2012

10 Chapter 1 Introduction A Objectives and Scope The purpose of this study is to assist sourcing managers in understanding sourcing developments within the energy & utilities sector and to recommend options for vendors in addressing the business process outsourcing market in the energy & utilities sector. In particular the study uses senior executive interviewing to establish: Client BPO requirements, in support of business initiatives The role of new operating models Planned BPO purchasing intentions Attitudes towards BPO service delivery. The study complements s earlier market assessments of Business Process Outsourcing in the energy & utilities sector by including an updated analysis of user expectations and attitudes towards use of business process outsourcing. s BPO Opportunities in the Energy & Utilities Sector market assessment report is designed for: Sourcing managers investigating sourcing developments within the Energy & Utilities sector Marketing, sales and business managers developing strategies to target service opportunities within the BPO market Financial analysts specializing in the support services sector. The term business process outsourcing (BPO) is defined as the outsourcing of business functions or processes. In order to qualify under this definition BPO contracts must involve the vendor taking responsibility for operational management of the business activity. For the purposes of this definition, IT services do not count as a business function by May 2012

11 Potential BPO activities include: Front-office services Customer management services including billing services Document management services Middle-office administration services Industry-specific processing services e.g. work management and MRO support Back-office support services Accounting services HR Services including payroll services, HR administration services, managed recruitment services and training provision and administration Services for procurement of indirect goods and services B Methodology Standalone IT outsourcing contracts, including application process outsourcing contracts, do not qualify as BPO regardless of the length of the contract or the degree of business process change involved. The approach taken to analyze this market is targeted user research to identify organizations business process outsourcing buying intentions. The user research of 80 interviews was carried out by interviewing senior executives in the energy & utilities sector to ascertain their attitudes towards: Key business issues and initiatives Level of need for new operating models Attitudes toward use of BPO service delivery Planned use of third-party BPO services. The breakdown of number of senior executives interviewed by geography was: U.S. (20) U.K. (20) Continental Europe (20) Asia Pacific (20). The breakdown of number of senior executives interviewed by sub-sector category was: Energy (40) Utilities (40) 2012 by May 2012

12 C Structure of the Report The report is structured into the following chapters: Chapter I: Introduction Chapter II: Executive Summary Chapter III: Market Size & Growth Chapter IV: Key Business Issues & Initiatives, covering the key business issues faced by energy & utilities companies, their business initiatives in response to these issues, and the extent to which BPO has a role in supporting these initiatives Chapter V: Need for New Operating Models, covering levels of satisfaction with current operating models and the extent to which operating model changes are planned by process Chapter VI: Planned Use of BPO Services, including BPO purchasing intentions by process Chapter VII: Attitudes towards BPO Service Delivery, including attitudes towards service bundling, gainsharing, and offshoring by May 2012