In a hosted technology model, solutions are built from ground up on Service-oriented Architecture (SOA), utilizing a common set of code and data definitions consumed by customers in a one-to-many model. By simplifying the client’s business operations through an innovative combination of technology and services, thereby reducing turnaround time and improving the overall business process, firms deliver single window-knowledge driven services, offering comprehensive understanding of methodologies and competencies for specific business processes within the core sector of Business Process Utility (BPU). BPUs are gaining popularity because of repeatable and scalable delivery models that lead to predictable outcomes and significant cost benefits for the outsourcing organizations. BPUs offer standardized and typically technology enabled process outsourcing services, having a single strategic goal to leverage economies of scale. Effective deployment of technology drives down unit costs by aggregating common transactions across many companies in the same industry. Industry analysts such as Gartner predict that BPO will slowly give way to the BPU. It is said that as the BPO market continues to move toward mass customization, business processes will increasingly be accessed as utilities, offering common services to multiple clients, making way for the BPU. SDA India spoke to C.V.Prakash, CEO of Gradatim, a Business Process Utility (BPU) services provider, who uses platforms built using principles of SOA that encapsulate business functions into well defined modules, so the modules can be customized in quick time for customers. |
SDA: "Gradatim IT Ventures is the first mover in the emerging Business Process Utility Services Segment". Can you give us more information about the company and how you came to setting it up?
CV Prakash: Gradatim is becoming more a passion than anything else. We have been able to start a very interesting aspect of the business in India. We introduced the concept of Mark Sense Reading in the country, in all the entrance exams -- one of the first people to really make that into a different set of business. It was more a learning experience for me in trying to see how we can create a business entity. I did this in the late 90s with a couple of friends. But it led to my getting introduced into the world of data capture and it’s a phenomenon with the technologies, the processes, the way you can structure information flow, the way you can use knowledge management tools to improve productivity. Its a very niche and interesting area.
So I set up TRRS Imaging in 2000 and got involved in projects where we handled large amount of forms; paper based forms, that is. We did a project for SIDBI and another couple banks and then started developing a concept for ourselves about IT enabled services. BPO wasn’t a fashionable term in 2000, nobody had talked about BPO and IT enabled services.
What we do today is in terms of outsourcing is fundamentally make you IT-enabled. With a 2 Crore funding, we started a small technology enabled process center in Bangalore and that grew well because a lot of data entry was outsourced to India at the time and customers who asked “how long do you want to enter the data?” were told 48-72 hours by other providers, and we said 12-24 hours. Also, because we used technology we eliminated human error. And that was fundamentally why we were able to grow the best.
TRRS Imaging grew in the IT enabled business and in 2003 we rebranded ourselves. The BPU business was formally set up and Sequoia (formerly Westbridge Capital Partners) and Acer participated in our series A investment.
At that time Indecomm was a succesful BPO entity focusing a lot on US customers. The scenario has changed drastically since 2003. It has gone very strongly into the US mortgage business, made a lot of ventures and acquisitions along the way and I was fortunate enough to exit Indecomm sometime last year. At Gradatim I am using my learnings from previous ventures to implement the use of technology in content delivery, the use of process management. Somewhere along the line we realized that today as we are evolving a lot more into the outsourcing world, you don’t have to go out and sell outsourcing anymore. Most businesses today acknowledge the fact that they have to be closer to the customer. It doesn’t really matter who can deliver some part of the work or some part of the service. What fundamentally comes out of this is that we are today in a position to go to a customer and say that, “I have a set of best practices established for a certain services. Are you willing to buy?” So it’s about trying to sell a set of operational strategies or best practices in operation which you can take it for long term. We find that it is an area where people are willing to adapt and come in. So we decided to set up a Business Process Utility (BPU). Unlike a BPO in a BPU we determine how you run our processes -- we implement the technology, build platforms and, to some extent, also provide some infrastructure. So we actually run operations on behalf of customers and for that we have built an expert advisory group in our organization that helps the management as well the customers for development and addressing concerned issues.
SDA: How does a BPU segment differentiate from a BPO unit ? Is this concept familiar with India?
CV Prakash: You will find this concept to be more adapted in areas like bill payments and cheque processing. Banks give away the cheques for collection to a third party company. Such utility businesses existed till recently but they were not technology savvy. The big change that is causing the utility business now is that you can build on-demand solutions that you don’t have to run necessarily for an enterprise base, but you can actually open it up and run it.
Salesforce.com is a good example of a BPU company. They got into an area of business that was previously ignored -- customer management. Saleforce.com provided a host of plans, built an application that they took online on the Web and gave people administrative rights allowing them control to set up a workflow, manage the data etc. all with a license from Salesforce.com.
SDA: Gradatim has commenced its operations in India recently. What in India attracted Gradatim and what are your expansion plans?
CV Prakash: Micro finance is one of our areas of expertise and it is a relatively new emerging concept. There are so many success stories about micro finance emerging from India. So we wanted to have India as a base for our Micro finance strategy especially since the technology penetration in this industry today is relatively small So that’s an opportunity and we want to be a part of it.
SDA: As a niche industry player, both domain and strategic tie ups are required for the BPU model to be successful. What is Gradatim's approach on this?
CV Prakash: All our collaborations are aimed to help us grow up. Firstly we collaborate with our customers. On technology also we are on discussion with some companies. We are also introducing concepts like on-demand workflow. So you don’t need to have an internal workflow solution to build in a pure application. If you are logged in through us, you can create your own workflow. So the concept of manual is very very important and technologically speaking there are two or three important forms that we need to adopt to providing functionality.
We have to be involved in SOA because we have to talk to our customers at all points of time. Most banks are today moving into SOA based approach. So we have to be there from a connectivity point of view. We have to have partnerships with the IBMs and Suns of the world. By the end of 2007 we aim to be working with at least 8 to 10 large technology solutions.
SDA: Gradatim is tapping several pilot projects with banks and financial institutions in India and abroad as well. Why and which are the other verticals Gradatim intends to concentrate on in the near future?
CV Prakash: It will be fair to say that we have selected our customers and the reason is the development of the entire platform is an extremely complex process and even in the work we do today it takes about six months to get the platform ready for the process. So as a collaborative effort, we need customers who are willing to come with us and be a part of this development activity. We also need our customers to collaborate with us as we build projects. And that is the reason why we have been a little bit choosy with our initial set of customers because we want to get it right rather than just get the names or pat the number of clients, because I know that once we get it right then for us to be able to stay long is just a matter of finding and locking in a new customer.
SDA: The technology platform which underpin Gradatim's delivery model is built using the principles of SOA. Is it because SOA helps financial institutions become more nimble in responding to market pressures?
CV Prakash: It is becoming more important specially when you look at the financial sector. The reason is the business of managing somebody’s money is changing to a business of managing a customer. For instance, retail banks sell you not only housing loans but also have five to six other products. The base where a branch would handle all the operations is now changing. So branches are today more about building relationships with the people. The banks may not even know where my operations are been handled. For that you need to be able to track the services as you build your entire speed of services. Also banks are constantly launching new products at a rate that was unheard of five years ago. Architectures such as SOA help in responding to the market.
SDA: Would Gradatim want to explore the public sector vertical too?
CV Prakash: One of the verticals we focus on is micro finance. Since it is a vast area we focus on sub-sectors like micro commodity training, micro exchange and micro insurance. Additionally we have launched two services -- Electronic Litigation Support and Close Books.
People often mistake Electronic Litigation Support as part of Legal Process Outsourcing. We don’t think so because what litigation process does is it allows people/lawyers to collaborate. We focus on providing a single platform where you can have your evidences, supporting documents, case history, experts and non-legal experts coming together, and have forensic information being available. This is a relatively new field in India; in the US companies like FTI is a leader in the field.
Close Books is nothing but running policies which you buy from insurance companies. Our approach is again one where we can leverage technology as a means of delivering this service.
SDA: Gradatim runs business processeses and business utility services for customers on a Software as a Service (SaaS) model. Is the backbone for these infrastructure management services build ground up by Gradatim's IT team? Are there other products or solutions from the SOA or SaaS space that comes into play?
CV Prakash: SaaS is an emerging business concept. About 70-75% technology of software that will be developed over the next 5-10 yrs will be SaaS delivered. BPU is the SaaS within the service. So we do compete with technologies that are delivered online. Infact, there are many products that are available on the Web which is easier to launch. The faster SaaS grows the faster will be the development of BPU businesses.
SDA: How can SOA enable integration of core legacy services of Gradatim with future development ?
CV Prakash: I am not a technical person. But I can say is that in order to enable companies to have access to all their legacy operations we are including an ETL layer that is also a data transformation layer within our entire platform. Mining of information definitely uses legacy applications, legacy services. We are uncertain if we can go about it but insurance is one area where the applications are definitely legacy driven. We are uncertain if we will be online for some of our customers.
SDA: Can you provide us some insight into Gradatim’s clientele?
CV Prakash: Without disclosing any names, I’d like to say that we work with large development banks. We have selected these MFis based on their level of growth they have acheived. We will share information about this at a later stage just because we are going through a development stage now. We have about nine customers all put together.
SDA: Can you provide some information on the Gradatim ESP services and how it would help organizations who imbibe it ?
CV Prakash: We are very clear about the services we want to get into. We are clearly not going to be an outsourcing company and there is a risk of trying to do outsourcing the traditional way. We are talking about the services where we can use the industry domain and the knowledge that provide value add to products. Let me take micro finance as an example to explain where clients are asking us to do services for them.
Banks typically tend to give loans and there are institutions that manage the loans who need to look into those portfolio of loans and see if the compliances have been met with. Our services would be more in terms of underwriting within the insurance space. Actuarial services is one in which we believe we can tap over a period of time. The regulatory and audit requirements from a micro lending perspective, the compliance and related issues are also relevant to us.
It is not going to be a huge number of people but it would be more based on specialised resources. For customers who use the service, there is a platform and there are exceptions to handle this. We would also handle those exceptions but we wouldn’t want to get involved doing the actual processing. So it’s more exception driven, knowledge driven and it’s more where we can use the domain. I do not expect the services numbers to cross 1000 over the next three years.
SDA: What do you see as the future of BPUs ?
CV Prakash: The biggest challenge we will face as the BPU business grows is our ability to meet customer expectation which is extremely important for us. Its alright for us to say that we can set up a strategy but the best strategies are not built by a technology companies. We have technology products that are being used everywhere and these take time to evolve. Most successful technology products undergo a five to seven years cycle to grow. We need to be innovative to find ways to reduce this time.
Not all processes are well suited for a BPU process. There are certain characteristics that would fit in. Volumes are also important. We are introducing transaction clientele; so for us to make money the volumes have to be big. Whatever we do we should be able to get something out of it. So, you have to pick and choose the areas to grow high.
SDA: Are there any mergers or acquisitions on the anvil?
CV Prakash: I firmly believe that for Gradatim the first stage is when you start, the second stage is when you establish yourself and the third stage is when you think how you can perform and grow better. Fortunately, we have grown fast and we have been able to close customer acquisitions. Although it's early days we have also started looking at micro acquisitions.
To operate in certain regions we are looking at finding the right partner and see if we can acquire them. We are looking at organic growth right now. When you acquire a business you have to be sure how your team can support your acquisition. But because of the way our business has grown we are currently looking at making smaller acquisitions which will be fundamentally driven by the fact that the services rendered are still the best.
SDA: What are your plans for coming years to mark the presence of Gradatim in a big way in India ?
CV Prakash: India has a big advantage today. Our global footprints over the next couple of years would predominantly be seen in Asia and Australia. USA is the next place we want to focus on in a big way because microbanking and microinsurance is big there but it will take a while for us to get there. We have to emerge to get that advantage and the Indian market is growing fast and we know that there are channels available which we can try to leverage on. This is a market where you can test. Our services will be delivered from India with Bangalore as the base. We are very focused on the numbers than the clientele. Quality that matters to us more than the numbers. |
