BPO, Business Process Outsourcing, is the hot acronym of the week, the quarter or perhaps the year. See BPO Battle Heats Up this week for the latest details of what the providers have planned for you. What companies are discovering is that business process re-engineering, to rid themselves of outdated workflow architectures, can be done on the cheap if they let someone else do it for them. Back in the early 90s business process re-engineering meant multi-million dollar investments in applications like SAP. Today, BPOs are telling the enterprise that if they allow them to do HR, accounting, finance and call centers, they can do the transformation using best practices and the latest architectures. After all, whenever a BPO can reduce costs by automating business processes and improving performance a lot of the savings goes directly to the BPOs bottom line.One of the decisions that must be considered carefully is how much leeway the enterprise gives the BPOs in selecting applications. It is the application that that executes the process. The danger of application lock in is great. If you give the BPO a free hand to redo your platform, you might have difficulty changing BPOs or pulling out if it ever comes to that. At the same time, you don’t want to insist that they use all of your current applications and just make it work better. If you did that what is the point of using the expertise that the BPO purports to have.Another important issue is over vertical versus horizontal solution providers. True, if accounting is accounting then 90 percent of it will be the same or similar across industries, but what about the other 10 percent? Do you need a vertical solution provider or is an IBM or HP as outsourcer good enough?Business Process Outsourcing is no longer about “labor arbitrage” as an executive from Hewlett Packard told me. If you just want to reduce costs by paying people less per hour then that’s a merely a transition, with a small t. If, however, you want to change the way business is conducted, that is Transformation with a big T and it requires a great deal of thought. Technology Industry