2005 davenport the coming commoditization

Business processes-from making a mousetrap to hiring

a CEO-are being analyzed, standardized, and quality checked.

That work, as it progresses, will lead to commoditization

and outsourcing on a massive scale.

The Conning Commoditization of

PROCESS

JUNE 2005

Throughout the history of business, most firms havebuilt their own processes for almost everything thatneeded to be done. Producing widgets. Paying vendors.Administering payroll. Whether tbe processes involvedwere critical to the organization's strategy or incidental toit, tbey were generally performed by people within tbe or-ganization. Sometimes tbey were done well, sometimestbey were done badly-but since a company bad no wayof determining how well an outside business migbt per-form tbese processes, they were kept in-house.

in the 1970s and 1980s, companies improved their pro-cesses with total quality management. In tbe 1990s, theyattempted to radically advance them through businessprocess reengineering. In the current decade, many firmshave returned to process improvement with Six Sigmaprograms. Yet the process improvements often don't de-liver quick cost reductions or balance-sheet enhance-ments. Toward tbe end of tbe twentietb century, the ideaof outsourcing processes and capabilities began to gaincurrency as a means to achieve more rapid benefits. Com-panies may have previously outsourced a few ancillary

by Thomas H.Davenport

101

The Coming Commoditization of Processes

activities like building maintenance or specialized legalwork, but now they were beginning to outsource majorcapabilities involving tbousands of people. Tbe first stepin this evolution occurred when firms such as Kodak andDuPont outsourced tbeir information technology man-agement. Later came business process outsourcing whencompanies such as AT&T and BT outsourced human re-source administration processes like payroll, pensions,and benefits management; recruiting; and HR advisoryand information services. Companies such as BP andProcter & Gamble outsourced major pieces of their fi-nance and accounting functions, and Nike and Hewlett-Packard outsourced their manufacturing to a substantialdegree, often sending it overseas. These companies weredrawn to tbe idea of outsourcing processes largeiy be-cause of the potential for reduced costs and leaner bal-ance sheets, but tbey gained greater fiexibiiity and accessto specialized expertise as well. Most recently, companiesbave begun to internationalize much of their outsourc-ing, sending not just manufacturing but also service workto India, Cbina, the Philippines, and other countries withlow labor costs.

Despite the trend toward outsourcing, however, mostcompanies have remained in do-it-yourself mode for mostprocesses. (Huge multinationals are the most likely totake advantage of outsourcing, but even tben, only forbigbly transactional and administrative activities.) Be-cause of a paucity of process standards, it would be riskyto do otherwise. Witb tbe exception of !T system devel-opment, there is generally no clear basis by which com-panies can compare the capabilities provided by externalorganizations v^itb tbose offered in-house, or to compareservices among multiple outside providers. As a result,firms that choose to outsource their capabilities have toproceed on two criteria: faith that the extemal providerwill do a good job, and cost. Given tbe lack of compara-bility, it's almost surprising that anyone outsources today.But it isn't surprising that cost is by far the primary crite-rion that companies apply in evaluating outsourcers, andthat cost reduction is their primary objective. The lack ofstandards may also explain why, in tbe few broad studiesof satisfaction with outsourcing, many companies - up tobalf insome studies-are dissatisfied with their outsourc-ing relationships.

However, a new world is coming, and it will lead to dra-matic changes in the shape and structure of corporations.

Thomas H. Davenport ([email protected]) is a pro-fessor of information technology and management and theacademic director of the Process Management ResearchCenter at Babson CoUege in Weliesley, Massachusetts. He isalso an Accenture Fellow and the author of Tbinking for aLiving: How to Get Better Performance and Results fromKnowledge Workers, to be published by Harvard BusinessSchool Press in September.

A broad set of process standards will soon make it easy todetermine whether a business capability can be improvedby outsourcing it. Such standards will also make it easierto compare service providers and evaluate the costs versusthe benefits of outsourcing. Eventually these costs andbenefits will be so visible to buyers tbat outsourced pro-cesses will become a commodity, and prices will fall dra-matically. The low costs and low risk of outsourcing willaccelerate the flow of jobs offsbore, force companies tolook differently at their strategies, and change the basis ofcompetition. Tbese cbanges are already happening insome process domains, and there are many indicationsthat they will spread across virtually all commonly per-formed processes.

Three Types of ProcessStandardsA business process is simply how an organization does itswork-the set of activities it pursues to accomplish a par-ticular objective for a particular customer, either intemaior external. Processes may be large and cross-functional,such as order management, or relatively narrow, likeorder entry (which could be considered a process in itselfor a subprocess of order management). Tbe variability inbow organizations define processes makes it more diffi-cult to contract for and communicate about them acrosscompanies.

Firms seek to standardize processes for several impor-tant reasons. Within a company, standardization can fa-cilitate communications about how the business operates,enable smootb handoffs across process boundaries, andmake possible comparative measures of performance.Across companies, standard processes can make commerceeasier for tbe same reasons - better communications,more efficient bandoffs, and performance bencbmarking.Since information systems support processes, standard-ization allows uniform information systems witbin com-panies as well as standard systems interfaces among dif-ferent firms.

Standard processes also allow easier outsourcing ofprocess capabilities. In order to effectively outsource pro-cesses, organizations need a means of evaluating threethings in addition to cost. First is the extemal provider'sset of activities and how they fiow. Since companies bavenot reached consensus on just what comprises cost ac-counting or HR benefits management, for example, it re-mains ambiguous what services should be performed be-tween buyers and providers. Therefore, organizationsneed a set of standards for process activities so that theycan communicate easily and efficiently when discussingoutsourced processes.

These process activity and flow standards are begin-ning to emerge in a variety of businesses and industries.Some are the result of efforts by process groups sucb as

102 HARVARD BUSINESS REVIEW


iiven the lack of comparability acrosscompanies, it's almost surprising thatanyone outsources.

iat •

the Supply-Chain Council, which has more than 800 busi-nesses as members. It has developed the Supply-ChainOperations Reference (SCOR) model, which lays out atop-level supply chain process in five key steps: plan,source, make, deliver, and return. Tbe model also specifiestypical activities for second-, third-, and fourtb-level sub-processes with increasing levels of detail. For many activ-ities, the council also has defined key metrics (but notbenchmarks)sucbas"fill rate" or"retums processing cost."Hundreds of organizations (from Alcatel to the U.S. Navy)have begun to use tbe SCOR model to evaluate tbeir ownprocesses; software vendors sucb as SAP have begun to in-corporate SCOR fiows and metrics into their supply chainsoftware packages. Some companies have already bene-fited greatly from a SCOR-based analysis of tbeir supplychain processes:

• Alcatel increased its on-time de-livery from 10% to 50% in ninemonths and reduced its materialacquisition costs by a third.

• Mitsubishi Motors reduced tbenumber of vehicles in ports from45,000 to zero, saving tbe orga-nization more than $ioo millionin costs.

• United Space Alliance, a partner-ship between Boeing and Lock-heed Martin, improved severalaspects of its parachute refurbish-ment process, including its on-time delivery performance andproductivity.

Of course, a process standard byitself doesn't achieve such benefits.The SCOR model is only a catalyst forchange and a framework for analy-sis. As with any approach to processimprovement, firms must still makedifficult cbanges in how they do tbeirwork and to associated systems andbebaviors.

Some process activity and flowmodels are for multiple processes. Forexample, a few years ago a group ofresearcbers at MIT created the Pro-

cess Handbook, an online library ofmore tban 5,000 processes and activi-ties. Several companies have appliedMiT's model to their own operations.Dow Corning, for instance, used tbehandbook to model its own processesduring a large SAP implementation andtben added its own new process fiowsto a repository (and also created a DowComing-specific version of the SCOR

model). Tbe APQC (American Productivity and QualityCenter) created a Process Classification Framework thatdescribes all processes in an organization; the group basused tbis framework to organize the process benchmarksit bas collected for more tban a decade. A number of tele-communications companies around the world, organizedas the TeleManagement Forum, bave created the eTOMprocess fiow standard for business processes in telecomfirms. Following on tbe success ofthe SCOR model, a num-ber of organizations (including representatives from theProduct Development Management Association, firmssuch as Hewlett-Packard and Intel, and several consultingfirms) are together attempting to create a SCOR-1 ike mode!for all major processes in organizations. In addition to tbesupply chain, it will address processes for product develop-ment, customer relationship management, and customer

JUNE 2005 103


service, as well as support processessuch as finance, accounting, and HRmanagement.

A second set of needed processevaluation approaches are processperformance standards. Once compa-nies in a particular industry achieveconsensus about which activitiesand flows constitute a given process,tbey can begin to measure their ownprocesses and compare tbeir resultswitb tbose of extemal providers. Ifthere is agreement, for example, onwhat it means to "process a new em-ployee," managers can analyze howmuch it costs the intemai HR func-tion to provide that service, on av-erage, and how long it takes. Theycan also bave an informed discus-sion witb extemal service providersabout tbeir process performancemeasures.

Again, this sort of performancebenchmarking is beginning to oc-cur. Benchmarks for the SCORmodel are already available, andmore are being gatbered. Tbe APQCis working with a consortium ofcompanies called the Open Stan-dards Benchmarking Collaborativeto create one standard public database of process defini-tions, measures, and bencbmarks to help organizationsworldwide quickly assess and improve tbeir performance.Organizations as diverse as Bank of America, Cemex, IBM,Shell Oil, and tbe World Bank are participating. It's clearthat there will eventually be good performance bench-marks for each major process in an organization.

Finally, organizations need a set of process managementstandards that indicate how well their processes are man-aged and measured and whether they're on course forcontinuous improvement. Because this third type of pro-cess standard doesn't require consensus on process activ-ities and fiows, it is the easiest to create and the mostwidely available today. Process management standardsare based on the assumption that good process manage-ment will eventually result in good process flows and per-formance. In some domains such as information technol-ogy and manufacturing, these standards are already in wideuse (via the Software Engineering Institute's CapabilityMaturity Model and tbe ISO 9000 series, respectively).Tbey are beginning to lead to the commoditization of ca-pabilities that will eventually transform organizations.

As an example of tbe differences between types of pro-cess standards, let's consider order management, an im-portant process for many organizations. Process activity

The SEI's CapabilityMaturity ModelThe Software Engineering insti-

tute's Capability Maturity Model

(CMM), nowa worldwide pro-

cess management standard for

software development, moves

from Level i-where a company

has a very ad hoc development

environment-up to Level 5,

where the organization has re-

peatable project management

routines, quality and engineer-

ing standards,detailed measures

of performance, and an environ-

ment that encourages continu-

ous improvement

Continuously improveprocesses through changemanagement.

Control variationthrough quantitativemanageTient.

Develop commonprocesses throughengineeringmanagement.

Stabilize environmentthrough processmanagement

lepeatabw

and flow standards for order management (which havenot yet been agreed upon) would address what the key ac-tivities in order management should be-perhaps begin-ning witb order entry and concluding witb the receipt ofcash. Process performance standards for order manage-ment would posit bow much time, money, and other re-sources it should take to perform the order managementprocess and its key subprocesses-suggesting, maybe, thata company should bave a certain number of full-time em-ployees per million dollars of revenue who are dedicatedto entering, processing, and tracking orders. A processmanagement standard for order management wouldspecify what constitutes good handling ofthe order man-agement process, including bow it is measured, controlled,and documented.

The Standards-DrivenCommoditization of SoftwareDevelopmentSoftware development is a good example of a process thatneeds an overhaul. Whether done internally or externally,software development is error-prone, expensive, and time-consuming. The overall level of software quality is low;



a 2002 study from the U.S. National Institute for Stan-dards and Technology estimated that software bugs costthe U.S. economy almost $60 billion a year. Software qual-ity is particularly unpredictable when purchased from aprovider-and virtually every organization buys software.There are many providers of software-package vendors,consultants, and lower-cost "body shops"-each with un-certain quality levels.

One reason for quality and cost problems is the way-or ways - in which software is usually developed. Therehas been no standard method or approach for softwaredevelopment or engineering; it is normally a "craft" pro-cess. Some individual software developers are much moreproductive and offer much higher quality than others.Some development shops have standard methods andtools, but most don't The variations in both practice andoutcome are enormous, in part because no process activ-ity and flow standards or process performance standardsexist. In addition to the quality problems with software,poorly managed processes often result in late projectsand high costs. The Standish Group estimated in 2003that only 34% of software projects were implemented ontime and within budget.

Carnegie Mellon's Soft- , ^ ^ ^ ^ ^ ^ware Engineering Institute(SEI) has developed the Capa-bility Maturity Model (CMM)to address a number of theseproblems. (See the exhibit"The SEI's Capability Matu-rity Model.") The model, cre-ated in 1987, has become aworldwide standard for soft-ware development processes and is now embeddedwithin many government and industry organizations. Ithas provided an objective basis for measuring progress insoftware engineering and for comparing one softwareprovider's processes to another's. This in turn has facili-tated the growth of offshore providers in India and Chinaby commoditizing software development processes andmaking them more transparent to buyers.

The CMM is a process management standard, not aprocess flow or process performance standard. It doesn'trequire that organizations follow a particular process forsoftware deveiopment or that they achieve a certain num-ber of "lines of code per day" or other metric-only thatthey have processes in place for addressing quality issues.Each ofthe five levels (initial, repeatable, defined, man-aged, and optimizing) defines greater degrees of manage-ment control and sophistication. Level 1 describes a veryad hoc software organization that has few defined pro-cesses. Organizations tbat reach Level 2 have basic, re-peatable approaches to project management that trackcosts, schedules, and functionality. Level 3 organizationsembed basic tenets of both good management and good

software engineering, such as quality assurance, into astandard software process. Level 4 organizations collectdetailed measures of software process and quality. AndLevel 5 organizations have all ofthe previous capabilitiesbut also an environment that encourages continuous im-provement, with learning from quantitative feedback andcontrolled experiments.

The SEI offers training courses on the Capability Ma-turity Model and its derivatives and has created processesto authorize appraisers (though the SEI does not conductappraisals itself). Since 1987, more than 2,700 certified ap-praisals have been performed on organizations in 51countries-from Argentina to Latvia to Vietnam. Indeed,the number of appraisals in a particular country is a goodmeasure of its ambitions in the software industry. TheUnited States has had the largest number of appraisalssince 1987 with 1,896. India is second witb 359. China isthird with 182. The UK is fourth with 135, and japan fifthwith 131.

it's clear that both Indian and Chinese companies seeCMM certification as key to tbeir software industry ob-jectives. Indian companies dominate the list of published

Of course, a process standard by itself doesn'tachieve anything. Firms must still make difficultchanges in how they do their work.

Level 5 appraisals, with more than twice as many as U.S.-based organizations. (The SEI in 2003 stopped publishinga list of organizations achieving certain CMM levels, butdata show that U.S. defense contractors bave come onstrong in recent years.)

If a country wants to establish sufficient credentials insoftware development so that global customers might hireits programmers unseen, there are few better ways to dothis tban to qualify for Level 5 ofthe CMM. In India, CMMLevel 5 certification is becoming so common that soft-ware providers say they typically compete only witb otherLevel 5 providers for software outsourcing business - asure sign of commoditization.

SEI's appraisal data on tbe CMM also suggest that therehas been global progress in the software industry. Thenumber of appraisals has increased from fewer than 50 in1990 to more than 500 in 2003. Ofthe organizations thatreported their maturity levels to SEI before 1992, 80%were appraised at Level 1, and only 0.3% were at Level 5.In 2004, only 26% of appraisals were at Level 1, and 6.6%were at Level 5. Eighty-five percent of tbe more tban 500organizations tbat have been reappraised moved up in

JUNE 2005 105


their CMM level, and over 25% moved up more than onelevel. This is clear evidence that using the CMM leads toimprovement in software development processes andthat this once-chaotic process is becoming more pre-dictable and commodity-like. As other evidence, softwareused by the U.S. military, for which CMM Level 3 compli-ance is required, has error rates one-sixth to one-tenththat of commercial software.

How Does a Process StandardBecome Successful?A process standard has impact only if the world adopts it.Therefore, it's important to understand why a processmodel like the CMM has been so influential in improvingsoftware processes around the world.

One major factor in the CMM's success is the simplic-ity of tbe idea. The five-level rating system is easily un-derstood and offers a clear indication of progress, or lackthereof. Of course, there is some complexity beneath thefive levels - for example, there are 18 key process areas,such as software quality assurance and software subcon-tract management, that can be evaluated with respect totheir maturity. But the simplicity ofthe overall modelmakes it possible for nontechnical workers and managersto understand and apply it.

Another factor in the CMM's growing influence andsuccess is the support ofthe U.S. govemment and defensesectors. Certain divisions within the Defense Departmentadvanced the CMM further by making it a requirementamong contractors. A major player in another industry,such as Wal-Mart in consumer products, could mandatecompliance with a process in a similar fashion.

Various aspects of the CMM's governance structurehave also been important factors in its success. The SEI issomewhat evangelistic; it produces a large amount of doc-umentation around the standard and its application andalso facilitates a number of software process improve-ment networks around the world. In addition, the inde-pendence ofthe SEI and Camegie Mellon has aided theCMM by keeping the standard free of ties to any particu-lar company. A third governance-related factor in theCMM's growth has been tbe network that has grown uparound the SEI and the standard. A variety of large andsmall companies offer consulting, education, and ap-praisal services that support the CMM.

Finally, a key reason for the popularity of tbe CMM isthe flexibility of its use and application within organiza-tions. It provides a framework for improvement butdoesn't specify how an organization should improve. TheCMM supports both process-heavy methods, in whichthere are detailed specifications for each aspect of soft-ware engineering, and agile process methods such as ex-treme programming, in which the process is largely leftup to developers.

Generalizing ProcessManagement StandardsThe successful adoption and implementation of processstandards in software development seems to be providinginspiration in other business domains. The five-level ma-turity model has been modified by the SEI, for example,to assess HR management practices, software acquisition,and other forms of engineering. At one point, the SEI wassupporting five different types of CMMs. Brett Champlin,a process improvement manager at Allstate, has recentlyidentified more than i8o versions of capability maturitymodels. Some, such as one from the IEEE (Institute forElectronic and Electrical Engineers), employ alternativecapability models for software development. Others, sucbas one from the Electronics Industries Association, focuson development of software-intensive products. Othershave nothing to do with software and deal witb processmanagement maturity in general. Several academics, con-sultants, and process-oriented companies are attemptingto establish a standard for process management maturity.

The SEI has decided to implement a broader approachto process standards that can be used for any engineeringprocess, not just software development. Called CMMI (the"I" stands for integration), the new model is a suite ofstandards tbat allows for the addition of new processes ina modular fashion. For example, the SEI is currently work-ing on adding a module for the Department of Defenseacquisition community. CMMI already includes standardsfor software development and engineering, systems engi-neering, software product development, and suppliersourcing. There is, of course, a risk to broadening theCMM; its clear focus on software development processeswas a key element of its appeal. Thus far, however, adop-tion rates for the CMMI are ten times as rapid as those forthe software CMM, so in practice this broader applicationappears to be working.

Other Process ManagementStandardsThe CMM is not the only process management standardthat bas transformed its industry. A variety of such stan-dards are now in use around the world. Perhaps mostprominent among them are the ISO 9000 family of qual-ity standards for product manufacturing. These standardsprimarily assess whether certain processes and systemsare in place. Tbe broadest ISO quality standard, ISO 9000,involves the design, development, production, installa-tion, and servicing of products. Unlike the CMM five-levelstandard, the ISO 9000 standards are binary-an organi-zation either passes or it doesn't.

The ISO 9000-9003 were created by the IntemationaiOrganization for Standardization, a global consortiumof national standards bodies. These criteria have been



applied and certified in more than 130,000 firms aroundthe world. The ISO has created more than 14,000 stan-dards-for manufacturing everything from screw threadsto telephone and bank card formats-since its founding in1947. The SEI has been collaborating with the ISO to cre-ate an intemational standard for software developmentquality, called ISO 15504.

Certain industries have created tailored versions ofthese ISO standards. For example, the U.S. automotiveindustry has created the QS-9000 standard for the certifi-cation of supplier quality. If anautomotive supplier wants tosell to GM, Ford, or Daimler-Chrysler, it must meet the QSstandards. Virtually all suppli-ers have qualified, which meansgreater commoditization ofthe automotive supply indus-try. As another example, the ^^^^m^^im^^^K^m,U.S. Food and Drug Adminis-tration requires that makers of medical devices meet stan-dards called the Quality System Regulation, which isbased on ISO 9000 approaches.

Other standards focus less on the management processitself and more on the output of the process. The well-known Six Sigma standard, for example, focuses on defectreduction to a high level of statistical reliability. Unlikethe CMM and the ISO standards, however, organizationscertify themselves as meeting Six Sigma standards; thereare no external certifiers. Therefore, Six Sigma is lesslikely to lead to changes in how organizations buy and sellprocess capabilities to each other.

Where Will Process StandardsLead Us?Process standards could revolutionize how businesseswork. They could dramatically increase the level andbreadth of outsourcing and reduce the number of pro-cesses that organizations decide to perform for them-selves. With objective criteria to evaluate whether a com-pany can save money or get better process performanceby outsourcing, it's likely that more firms will take advan-tage of extemal capabilities. As the global market for pro-cess services matures and providers learn what it takesto succeed with a process according to the standard, thenumber of providers will undoubtedly increase, and theprices of their services will likely drop. In tum, this exter-nal market for capabilities will force companies to lookmore closely at their own strategies. What processes aretmly core to our organization? If another firm has beencertified as doing the work better, why not let that firmdo the work? And if our company can't certify a particu-lar capability as being world-class, what is the value ofthat capability to customers?

Once process capabilities have become commoditized,providers of process outsourcing services will have to findother sources of differentiation. Perhaps they'll begin tosupply not only the efficient execution of business pro-cesses but ideas, insights, and innovations for how to per-form them better. It's increasingly common, for example,for IT outsourcers to be evaluated not just on their CMMlevel or their costs but on their ability to identify and im-plement innovative IT-enabled business initiatives fortheir clients.

The external market for capabilities will forcecompanies to ask themselves, What processesare truly core to our organization?

The standardization and commoditization of processeswill also require changes in strategy. As an increasing num-ber of processes become common within and across in-dustries, executives will need to revisit the basis for com-petition in their businesses. They'll have to decide whichoftheir processes need to be distinctive in order to maketheir strategies succeed and which can be performed ina relatively generic and low-cost fashion. Even in today'senvironment, most executives have yet to decide whatprocesses are core and noncore, but doing so will becomemuch more critical in the future. Process standardizationmay also mean that it's feasible to combine certain pro-cesses with competitors'; if these processes offer no com-petitive advantage, why not? Creating shared-servicesprocesses across companies can offer scale efficiencies. BPand several other oil firms have already combined andoutsourced certain finance and accounting processes fortheir North Sea exploration activities. When process stan-dards take off, we're likely to see more collaboration amongcompetitors.

Process standards will also change how information sys-tems are bought and implemented (and not just because ofthe CMM). Today, many systems are custom-built to sup-port local and idiosyncratic processes. Even when a com-pany buys a packaged system, it often has to customizeit or adapt its processes to suit the package. In a world ofwidespread process activity and flow standards, softwarevendors can make available standard packages that sup-port processes that customers have already adopted. Un-less a process needs to be unique to a company for strate-gic reasons, it will become much easier to buy and employsystems in the future. In fact, it makes a lot of sense to askkey software vendors to get involved in standard-settinginitiatives at an early stage; a process design is far lessvaluable without software to enable it.

JUNE 2005 107


Though I've described several areas of business whereprocess standards are emerging, many other areas stillconspicuously lack them. The growth ofthe business pro-cess outsourcing industry has been inhibited by the factthat there are virtually no standards for how most busi-ness processes should be performed. An organization wish-ing to outsource human resource management, billingand collections, or a call center would like to ensure thatproviders have well-honed capabilities in these domainsthat exceed their internal capabilities. Yet there is no de-fined approach for evaluating or certifying potential pro-viders of those services. The speed at which some busi-nesses have adopted process standards suggests that manypreviously unscrutinized areas are ripe for change. Just asthe CMM has made it possible for organizations needingsoftware services to contract with confidence from pro-viders all over the world, the development of new processstandards wil! facilitate-and eventually commoditize-awide variety of business process outsourcing services.

Process standards will undoubtedly proliferate intomost domains of business operations. If there isn't one forthe processes your organization performs, it makes senseto begin working with customers, competitors, softwareproviders, potential providers ofthe processes, and objec-

tive researchers and standards-setters to create a newstandard. As with the CMM, setting standards is likely tolead to the improvement ofthe process both within yourorganization and from extemal providers.

If there is a firm or organization that can accelerate theadoption process, such as the Department of Defense insoftware processes or Wal-Mart in supply chain processes,be sure to get it involved in your standard-setting efforts.If your processes are world-class, you may have an oppor-tunity to begin providing the service to others. Fidelity In-vestments, for example, moved from offering mutualfunds to company retirement plans to broad outsourcingof benefits administration.

If your organization provides process services, you mayhave mixed feelings about the development of processstandards. Standards will lead to commoditization, morecompetitors, and lower prices for the services you offer.However, the move to process standards makes so mucheconomic sense that it is probably inexorable-whether ornot your company gets involved. It's better to help shapea standard than to be put out of business by i t ^

Reprint R0506FTo order, see page 151.

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2005 davenport the coming commoditization

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