Airbus, Lufthansa, Ryanair, BPO and a little sprinkle of SaaS

FaaS. Flight as a service.

Like many of my fellow SAP Walldorfites, I spend too much time in Terminal 1 at Frankfurt Airport.  I used to think that queuing was something done in communist countries to get bread, but now I realize that queuing is what we in the western world now do to earn our bread. 

 I fly with Lufthansa a lot, and I’m a fan.  They are mainly on time, and I collect the rock hard bread rolls one gets in economy class and I’m using them to build an ecofriendly house.   Lufthansa works for me because they have more direct flights from Frankfurt than anyone else.  I also get to read the FAZ and improve my  German.

I have a German colleague, who, when he gets on the plane, can tell me what model of Airbus it is, its range and even who made the engines and their thrust.  I try to avoid sitting next to him.

Most of us want to get from A to B as quickly and safely as possible. If the lounge is nice, that’s  a bonus.

Software is pretty much the same most people just want to get something done for them. If software can do it quicker or better, great. As vendors, we are often a bit like my colleague in 13D. We talk about details that bore normal people.

Designing, building and delivering  an aeroplane is damn difficult. Ask Airbus at the moment. 

You need lots of clever aeronautical engineers (what a cool job that must be), Experts in composite materials and wiring (whoops), and project managers.  It is a massive capital  and intellectual undertaking to build a machine that can lift people into the air and whiz them around the planet. 

Running an airline, on the other hand, is a service. It is also difficult, but it is  a different kind of difficult. You need to focus on punctuality, service and cost.  Customers demand the service at the lowest cost. The personnel are focused on serving the customer, at least in theory.

It is a service business,  run on tight margins.

That is why Lufthansa and Ryanair just buy or if they are really clever lease planes, they don’t make them.

what has this got to do with BPO and SaaS?

I’ve been thinking about BPO and SaaS alot lately.  They aren’t exactly the same, but they have a lot in common.  Jim from Gartner has provided some definitions in response to the SaaSquisition.

The BPO sector has matured a lot over the last  couple of years, and we have seen several trends emerge.

1. Standardization is king. BPO providers don’t want to take over messy bespoke processes and run them for you. They are pushing standardization.

2. BPO providers want a single platform to run. Like Ryanair, they want to fly one type of plane.

3. Many BPO providers have realized that they are in the business of selling a service, not building software. Building scalable, standard software to handle complex business processes is not easy.

4. Managing Risk is important. BPO sometimes fails.

5. Winning the deal is the easy bit.

6. Managing what isn’t outsourced is vital to outsourcing success

I’ve mentioned ADP  alot here on Vendorprisey, but I’d like to point you to another BPO provider who is doing well too. Arinso.  Business is good for them.  They use SAP software to run HR services to a number of major global players, and they have an excellent relationship with SAP.  I saw  a demo at the SAP UK user group of some cool Ajaxy front end stuff they have done for their on-demand offering, which they call EuHReka- thanks Alex and Liz.  Arinso has a new GM in Australia, a long lost friend,  Caroline Duvoisin, she is ex-SAP and ADP.

 (There was a webcast with SAP yesterday, but the recording isn’t online yet I’ll update this when it is. I’ve taken the slides below from the presentation that Rudy did)

I’m often asked why SAP doesn’t offer “BPO”, it is the same reason why Airbus don’t run airlines.  ADP, Arinso, Convergys, ACS and others are thinking the same way.  They are in the service business, not the software business.

There is some good stuff on SAP and  BPO over on the SAP site  Check out this webcast with Gianni Giacomelli from SAP, and Stephen Dunn from the Everest group discussing Risk in BPO, and technology’s role.  I think I’ll ask Gianni to do a guest post or maybe even a podcast. He knows lots about BPO.

BPO is normally about outsourcing big multi-process operations like HR, or F&A, or bits of those.  The customer buys a service, not the software.  That doesn’t mean that the software isn’t important. Like the plane, it needs to be safe, and Singapore airlines use the newness of the fleet as a competitive edge.  Ryanair standardized to cut cost.  Airlines are looking to the planemakers for more fuel efficiency. There is  a real  partnership between the airlines and the planemakers, even though there are many more airlines than planemakers…

 This is the model we want to achieve with BPO.  We want to provide the software that powers the BPO industry, and we are on the way to succeeding.  If you are planning to outsource your HR processing, odds are it will be onto an SAP platform.  We have been investing in this for the last few years, and it is now starting to pay off handsomely.  

Vinnie has come up with SACS. The concept is good, but I think this has been happening now for some time.  In the comments on a recent post he asked why wasn’t SAP doing more to help the ecosystem. I’d suggest he have a look at what we are doing with folks like Arinso.

This is how Arinso read the customer demand, and their response.

And these are the delivery options.

As you can see the HR outsourcing model has moved on. The configuration is dramatically reduced through template, preconfiguration and serivce catalogues.


Recent wins for Arinso include Repsol and Bank of America’s European operations. 

I’ll see if Rudy can send me a demo and I’ll link to it here.

I was going to extend this metaphor to SaaS, but I couldn’t face another visit from the Spanish Inquisition.  I’ll pose a question instead.

What would happen if big software vendor  was to build a fabulous platform, with 1000’s of preconfigured services ranging from HR to CRM, that met all the technical SaaS purity laws (SOA, MT and so on). Then it had several service vendors who really understand running a service profitably run them?


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4 thoughts on “Airbus, Lufthansa, Ryanair, BPO and a little sprinkle of SaaS”

  1. I enjoyed this post a lot (the playmobil … perfect).

    But I don’t see the software as the airplane. I would say the computers are the airplanes. If a small team in 6-12 months can make the technology that the SaaS sells as a service, it makes sense to go that way. It’s the way to have control and to make something new.

    I always thought that SAP could easily be the Google of web business 2.0. But from your post I understand better why that is not happening.

  2. Pedro,
    I’m enjoying your blog… keep it up.
    The hidden messages in the ABAP are very cool.

    I think lots of folks underestimate the challenge in designing good software. Coding has got a lot easier, but figuring out what and how to build something is still tough.

    Enterprise 2.o is still in its infancy, so Walldorf may surprise you yet.

  3. “What would happen if big software vendor was to build a fabulous platform, with 1000’s of preconfigured services ranging from HR to CRM, that met all the technical SaaS purity laws (SOA, MT and so on). Then it had several service vendors who really understand running a service profitably run them?”

    Let me know when it happens. 2010?

  4. Heya i am for the first time here. I found this board and I to find It really useful & it helped me out much. I hope to offer one thing back and aid others such as you aided me.

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