Finding a needle in 20 million haystacks: CERN’s Computing Grid creates a vision for Cloud Business Services

In order to understand better the business potential of Cloud-esque environments to drive innovation, you could do a lot worse than have a look at the scientists who've been using their own version of Cloud for years:  Grid Computing.   When you get into areas such as particle physics, these folks need all the computing grunt and pooled brain-power they can muster to succeed. 

At HfS, we've partnered with the Outsourcing Unit at the London School of Economics (LSE) to determine the future potential of Cloud Business Services by studying the needs, concerns, intentions and views of business-line executives, and not solely the IT department. 

There's been so much noise focused on the technology implications of Cloud, and not enough attention placed on how business executives intend to apply Cloud services within their own business environments.  At the end of the day, some firms will succeed in driving down IT infrastructure costs using Cloud models, but the real momentum will come from the business processes that can be delivered to organizations that have all the associated application workflow and infrastructure already provisioned in the Cloud.    

We'll be launching a study very shortly with the LSE and will appreciate all of you taking part, but first we wanted to talk about the LSE's experiences with the Worldwide LHC Computing Grid (WLCG); a global collaboration phenomenon that links grid infrastructures and computer centres worldwide. 

The purpose is to distribute, store and analyse the immense amounts of data generated by  a gigantic scientific instrument on the Franco-Swiss border, called a Large Hadron Collider (LHC) at The European Organization for Nuclear Research (CERN), which is used by physicists to study the smallest known atomic particles .  This LHC is the largest scientific instrument on the planet, producing 15 Petabytes (15 million Gigabytes) of data annually, which thousands of scientists around the world access and analyse.

The idea is to provision a data storage and analysis infrastructure for the entire high-energy physics community - not too dissimilar from a Private Cloud environment where users can plug in to the shared environment and access the  applications they need, without stacks of IT hardware in the basement to house the data, or IT personnel on site needed to maintain and support the infrastructure.  Today, the WLCG combines the computing resources of more than 100,000 processors from over 130 sites in 34 countries, producing a massive distributed computing infrastructure that provides more than 8,000 physicists around the world with near real-time access to LHC data, and the power to process it.

OK - that's a lot of numbers, so we managed to grab the LSE's Dr Will Venters as he was venturing off the squash-court to his local pub, to explain more to us business philistines why this project is to relevant to Cloud services and outsourcing...

Dr. Will Venters, the London School of Economics

Phil Fersht: Will, you’re involved in a fascinating research study that focuses on how thousands of particle physicists around the world are collaboratively using the grid – a microcosm of the cloud – to capture, process and analyze huge volumes of data being produced by CERN, Europe’s particle physics laboratory in Geneva. For readers who aren’t well-versed in particle physics, would you please give us a brief overview so we can understand the importance of using the grid for the data the physicists are working with?

Dr. Will Venters:  Sure Phil. Particle physicists recreate the conditions just after the “big bang” and analyze particle collisions to discover the mechanisms by which the universe, and therefore the atoms and molecules that form all matter came into being. They reproduce these collisions in CERN’s Large Hadron Collider, or LHC, which produces vast numbers of three-dimensional pictures of particle collisions for the physicists to analyze for “new physics” events. One of the most interesting examples is to discover the Higgs Boson, the so-called “god particle,” which could provide an explanation for “mass” in the universe, hence linking gravity into the standard physics model. But finding one Higgs is like finding a needle in 20 million haystacks, so the physicists must analyze a massive number of pictures – which equates to 12 to 14 million gigabytes of data per year – if they are going to find enough evidence to prove it actually exists. So the LHC Computing Grid, which consists of many distributed computers, CPUs and disk servers at over 170 computer centers around the world, was created to give 8,000 physicists in 34 countries the ability to draw on very large amounts of computing power to collaboratively review and analyze all the particle collisions created in the LHC.

As a lecturer in information systems at the London School of Economics, I was fascinated by how they coordinate themselves and go about developing and managing this widely distributed resource. I therefore got a research grant and employed a team to follow the particle physics community in the UK and CERN as developed its grid for the LHC..

Phil Fersht: So what have you observed during your research?

Dr. Will Venters: The particle physics community has a long history of developing quite advanced prototype computer systems. It’s also a community with a long history of collaborative work practice. And they collectively understood the only way they were going to be able to realize the data from the LHC was to get the grid to work. One very interesting thing we observed is they didn’t go about it way normal project managers would do it. They approached it as scientists and as a scientific endeavor, rather than as developing a large-scale computer system the way a big systems integrator might. They have very informal organizational structures. There is a strong hierarchy in that somebody is the leader, but they don’t have the power or muscle to drive things. They just use more charisma and soft leadership type techniques in order to drive the project forward. But it’s a project being collectively driven by a very committed group of people. Interestingly, they use pretty un-advanced collaboration tools. They use blogs, wikis and very simple video conferencing – but they use them an awful lot. They’ve developed a way of working with these relatively simple web tools that not only helps pull the project together but also helps hold the sense of community together in a much different way than the formal control type management you might see elsewhere.

Phil Fersht:  The dynamics within this collaborative community sound fascinating. Can you talk a bit more about more about the scientists go about organizing discussions, learning from each other, sharing findings etc.?

Dr. Will Venters:  We developed a distinctive description of the physicists work practices based on the idea of paradox and tensions… the only way we can effectively describe what this community is doing is the idea of paradox. While they’re individually being quite fluid and flexible, they were also quite tightly focused on developing their grid and getting it to work so they could produce data. But there was tension coupled with anxious confidence due to the community’s long history of previous creative and successful work. One of the things we observed was the idea of learned improvisation – that you don’t improvise just because you can. You actually learn how to do it in the same way you learn play to jazz, and even though jazz is highly improvisational, there are actually themes running through it. Similarly, this community had themes running through it, and the members improvised based on many things they’d done and learned in the past. Another thing we observed was the tension between wanting to organize, control and have strong collaborative structures, versus the need to say, “We’re all clever individuals and work really hard, and so we should all be allowed to have individuality and the ability to work on our own.” When you visit CERN, you see the kind of rocket science side of things, this massive, great experiment. But parts of CERN are like a 1950’s university campus with drab offices and basements filled with old bits of rusting technology. I think that well describes how they are collectively comfortable with accepting bits of imperfection as long as the important parts are working.

Phil Fersht:  When you look at the project in its entirety and where it is today – what has been achieved that wouldn’t have been without the grid?

Dr. Will Venters: They wouldn’t be able to do the extremely high level of precision analysis required without access to the grid. The huge volume of data produced by the LHC needs something in the form of grid technology to allow the physicists to keep track of it and to do the analysis. They couldn’t do it with clusters of computers or individual computers – they would just get lost in a jumble of data.

This project has also driven forward the science agenda in other sciences. In some sense, they’ve shown leadership in how to develop grid computing which has led to new developments in other areas of science.

Phil Fersht: What’s next for this project? Do you think this grid will move into more of a Cloud-based environment, or do you think it’s going to build upon its own infrastructure?

Dr. Will Venters: There is a move to see if the National Grid Service (electrical power) in the U.K. should become more of a Cloud type of resource for supercomputing. They are looking at whether they should be using cloud for peak demand and when the demand outstrips the capacity of even their grid. They are also looking at whether they should be providing a cloud resource to other areas. But once they can do the data analysis out of the LHC, their interest in the development of the grid will start to wane as working with 12 to 14 million gigabytes of information will become a trivial challenge in the long term. Their experience on previous experiments, and their hope, suggests that 10 years down the line they could buy a commodity piece of hardware, sit it in a machine room and it will probably be able to do the analysis on the LHC data on its own. Then the next experiment will come along demanding something new and different, and they’ll start developing something new themselves.

Phil Fersht:   In terms of the business world and what we see going on commercially with the development of Cloud, etc., what do you think are going to be the key opportunities and challenges for businesses trying to move into these types of collaborative networks?

Dr. Will Venters:I think a huge benefit they have in working in distributed collaborative ways is a sense of working and collaborating together, being open rather than closed. But the challenge is learning how to coordinate a group of individuals who have individual aspirations and motivations to a higher goal or bigger aim. Another challenge is supporting an unstructured network – what we call a knowledge infrastructure – not only their website, the wikis, the blogs and the communication infrastructure but also their sense of history and their sense of organizing themselves, who they communicate with and how they organize themselves into clusters of competence around particular areas. But the benefit comes from understanding they don’t need to be constrained by how they organize what they’ve done in the past, and how they manage that history and culture alongside these things so they can capitalize on what they know, and develop new knowledge, new techniques and new technologies. I think that the knowledge infrastructure around their work is the key part of it, and perhaps something the businesses would benefit from learning. But I also think doing so would require a large amount of cultural change to achieve what the particle physicists have. There are dramatic differences in culture and history of collaboration.

Phil Fersht:  In many organizations, it can get a bit political when we dare to question the stranglehold that many IT departments have over managing these networks and their infrastructure. Do you think we’re still many years away from these types of Cloud networks  becoming a mainstream business reality, or do you think it is closer than we envision, given the speed in which the LHC grid was developed?

Dr. Will Venters: I think at some level it’s a big challenge for business. To put it into perspective, a person I know recently told me a story about when he was shown an amazing usage-based piece of computer software at CERN which was written by a post-doctorate. My friend asked, “What happens if the post-doc falls under a bus?” The physics professor didn’t even blink, and said, “Well, we would find another post-doc straight away and get him or her to do something different.” The particle physics community is accepting of the incredibly challenging and experimental nature of their work – they readily accept a good enough, kind of messy around the edges but ultimately very innovative, very new thing. The concern I have about the debate around cloud for business is that we get too bogged down around the safety, the belief that we must massively mitigate risks. The conservativeness you sometimes see in businesses, and particularly in IT departments, will cause impediments to speedy cloud adoption. But I think we’re seeing stuff with the cloud happening in innovative parts of businesses; they’re just not necessarily being led from the more conservative IT departments.  There is a serious risk that competitors and innovators will collaborate using cloud resources – this risk of competition is something we should consider in our cloud models alongside risks of security, cost, lock-in etc.

Phil Fersht.  Will - thanks for your time with us - we're excitied to be working on this upcoming study with you and the team!

Dr Will Venters (pictured) is a Lecturer for the Information Systems and Innovation Group  at the London School Economics. His research is centered on the development and use of IT technologies to support collaborative working. He is currently researching the development and use of Grid computing technology among experimental particle physicists for the LHC experiments at CERN.  More details on his publications can be accessed here.

The hunters and the hunted: Indian BPOs readying for a rebound

Reetika Joshi is a research analyst at ValueNotes Sourcing Practice

We recently debated how the nature of global service delivery is going to change in this climate of leveling prices, increasing buyer expectations and post-recession lethargy.  This is clearly a pivotal time for the industry.

We decided to get a flavor from India, where their BPO providers are eagerly ramping up for taking on new business, and asked our friends based in the beautiful university city of Pune, ValueNotes, to share some insights with us.  One of their lead analysts, Reetika Joshi, who can boast the Accenture prize for best student on her Marketing Management Masters course at Aston University (UK), has shared her insights with us.  Not sure what that prize actually was, so let's hear her views on the Indian BPO provider dynamics instead:

The hunters and the hunted: Indian BPOs readying for a rebound

As the world recovers from recession, the major Indian BPO providers eagerly await a return to the BPO boom, which has paused in the past 18 months as companies have sought to cope with riding out the tough-times.

As HfS Research recently revealed with a new study of enterprise BPO demand, many enterprises are seriously looking at outsourcing to solve many of their performance issues, however, it’s clear many are taking their time before jumping into large contracts.  In fact, we’re actually seeing more piecemeal engagements from companies making more tentative moves into BPO.  While the bounce-back has hardly been resurgent, BPO is clearly firmly on the corporate agenda and many of the leading Indian service providers  are expanding staff, acquiring competitors, and making new marketing plans to widen market share and penetrate new sectors, such as the mid-market.  Continue reading »

The Horses on National Public Radio: is this the age of homeshoring?

If you happened to be listening to National Public Radio yesterday afternoon, you would have heard an interesting discussion on the rise of homeshoring on their All Things Considered afternoon show. 

"So what's new, then", I hear you mutter over your espresso and boiled kippers...

In a bid to sound a bit clever, my good friend Philip Peters over at Zagada (which does some excellent analytics on the global sourcing space), pulled some data to discover that at least 110,000 home-based call center jobs have been created in the US in the last three years by companies such as Alpine Access, Working Solutions,LiveOps, Arise NA and West!@home.   Now that's more onshore jobs than the entire size of Cognizant's global workforce! 

Now while it's clear that homeshoring is not primed to replace offshore work anytime soon, it clearly is a viable option for front-line customer-facing services at competitive prices.  The removal of the bricks and mortar, telecom costs and use of Cloud-based applications to record/monitor calls is enabling the homeworking environment on a serious scale.  Other areas, such as medical coding, already rely heavily on homeshoring staff to work on administrative tasks with contextual needs. 

Running a business myself, which is entirely "in the Cloud" with folks working largely from their homes, you do start to wonder how quickly the homeshoring model with proliferate, especially with the amount of workers available to switch on their PCs from their houses and start work.  This is one dynamic emerging from the Recession that you can see gaining traction, as more and more people opt to work remotely (or have little choice but to).  Procurement/sourcing, accounting, medical writing, financial research... the number of possibilities for using homeshoring as adjunct delivery options in other BPO areas is clearly apparent.

Bidding on BPO with Abid, Part I

We've seen a significant shift in in the competitive landscape for BPO providers in the last two years - some of the leading Indian service providers have taken advantage of the Recession to steal a march on several of their incumbent competitors, pushing their own tenacious brand of offshore service delivery.  The change has been dramatic, with some of the traditional providers of recent years being knocked off their perch.  When HfS produces its new competitive landscape later this year, this market shift away from some of the "traditional" BPO engagements and momentum towards new approaches for pricing, engagement scope and IT-synergy will be apparent. 

Abid Ali Z Neemuchwala, Global Head for BPO Services and Process Excellence, Tata Consultancy Services

One of those providers which has evolved significantly into a major BPO provider, in its own right, is Tata Consultancy Services  (TCS).  Like a couple of the other major Indian IT services providers, TCS has quietly, but aggressively, developed a global operation of scale at a rapid clip, with its 2008 acquisition of Citigroup's banking captive adding significant offshore BPO scale and financial services competency to its $1.2 billion mammoth multi-tower IT-BPO-KPO engagement with Nielsen in 2007.  Quite simply, it's eye-opening how quickly the likes of Infosys, TCS and Wipro have muscled in on the business process game, as they branch out from their massive IT services businesses. 

To discuss this dynamic at length, we managed to grab some time with TCS's head BPO honcho, Abid Ali Neemuchwala - (more simply known in the business as "Abid") to talk about TCS's development, and his views for the future nature and development of global BPO service delivery.   

Abid has developed a 17 year tenure with TCS where he expanded the firm's operations in Mumbai, Pune and Gujarat (in India), the Midwest of the US and Japan, before moving his family over to sunny Dallas to lead the firm's global BPO surge.  Abid kindly relented from one of his evening city strolls to spend some time with us... 

Phil Fersht:   Good morning Abid.  Let’s start with where TCS is today, how things have changed in the last six months, where you see the majority of demand coming from and how the business is shaping up.  Continue reading »

Clarifying the Chucky chop shop issue: what should the US government do?

The US government: importing the right talent

I received a ton of email and blog comments this week from various people airing their views on Senator Schumer's visa-fee hike.   They tended to be in the form of one of the following:

  • "Right on - this guy is all about protectionism and has little idea how to create jobs"
  • "The policy is so toothless, it's barely worth talking about"
  • "It's only targeting firms who excessively use H1B staff, so what's wrong with that?"
  • "We have to protect American jobs"
  • "I never knew you were a Republican"

All fair comments - except the last one.  Firstly, my politics have always been left-of-center - I am merely a global realist and believe in intelligent, informed debate on these tough issues.  Secondly, it never ceases to amaze me how polarized people in the US are when it comes to politics.  You're either Democrat or Republican - there's now common ground on anything.  And thirdly, I'm not American anyway, so it's a moot point.

The other major point that needs to be made, is that this policy does nothing to create American jobs - it's merely political grandstanding from the protectionist lobby.  As we pointed out, the visa-hike will only encourage further offshoring, and the inflated fee is not enough to have any meaningful impact on altering current dynamics.  Moreover, it's pretty hard to couch these political actions as anything but protecti0nist politics when the Senator in the driving seat brands one of the leading Indian IT services firms a "chop shop" (detracted, or whatever - he said it).

What options, then, could the US government consider, if it wants to "stop" Indian IT services firms bringing temporary IT  staff over to the US, and create an environment for fostering onshore technology employment and innovation?

1) Give Indian services firms tax-incentives that would sufficiently motivate them to hire and train US IT employees.  Many of these firms provide a great training ground for new IT talent - now let's ensure they are motivated to train and develop talent in the US and not just offshore staff.  Many leading Indian firms have proved extremely good at training, developing and motivating young IT talent, so why not get us a piece of the action?

2) Give US enterprises tax-incentives for creating new onshore IT jobs.  This won't be any harder to administer that call center tariff etc.

3) Establish an oversight committee that will devise an immigration strategy to encourage top talent into the country and ensure it stays here.  Ensure immigration policies are focused on developing the talent pool in the country and not open to abuse;

4) Establish more dynamic partnerships between academic institutions and businesses.   We don't see enough involvement from the academic sectors in the global sourcing industry today - a few firms, such as Systems In Motion, are pushing the agenda, but these firms need  a lot more investment to get anything like the scale and execution capability to be effective in the global market place. 

We live in  global economy and we need to focus on being competitive for a larger piece of the pie, not trying to protect limply the dwindling one we have left.  The Chinese economy is the new powerhouse - we need to ensure we have the innovators, thinkers and operators to compete effectively.  Countries with developing talent, such as India, can help us be competitive, as long as we create smart entrepreneurial environments to work with them.

Why Chuck needs to get the chop

Chuck (center) and his selfless buddies strategizing how to stimulate the US economy

Senator Charles E. Schumer, not content with ludicrous attempts to tax the US consumer for taking an offshore call, has continued his personal tirade against the use of offshore services, by pushing through legislation to add a further $2,000 tax for an H-1B visa application, and $2,250 more for an L-1 visa application.  This CIO Magazine article by journalist Stephanie Overby does an excellent job discussing the situation.

You have to wonder about the motives of a US senator, who describes Infosys as a "chop shop" and pushes through legislation that is deigned to antagonize service providers, as opposed to what he should be doing: helping to make US service providers become more competitive, and US IT / BPO workers more attractive to be hired than those offshore. 

In terms of creating more US IT jobs, this is a further backward step in trying to re-energize the US IT industry for the following reasons:

1)      Indian IT services providers will attempt to conduct more IT work offshore / outside of the US, whereas in the past they would have conducted the work locally with either a US employee, or an Indian visa holder in the US.  Impact:  more work moves offshore as opposed to onshore work being created

2)      Indian IT service providers have been investing heavily in hiring onshore staff, and have been creating local employment.  However, the new visa taxes will only help to accelerate the movement of more complex IT work offshore. The Indian providers have a proven successful strategy of taking on complex IT projects and “learning on the job” with their offshore personnel.  This new fee will only encourage them to take bolder steps to take more work offshore.  Impact:  more work moves offshore as opposed to onshore work being created

3)      When Obama was elected and voiced potential moves to slowdown offshoring, several Indian IT providers made investments in locations such as Canada (especially Ontatio) and Latin America.  They will now look to leverage these investments more aggressively.  This is great news for the developing nearshore IT services markets.  Impact:  more work moves offshore and nearshore, as opposed to onshore work being created

4)      With the global IT services industry poised for consolidation, this may encourage several of the leading Indian IT giants to acquire onshore US firms, now they have more financial incentive to do so – which would likely have further negative ramifications for the US  IT job market.  When Indian firms acquire US IT services firms, they will seek to rationalize the existing onshore staff to support their offshore operations, while keeping salary costs at a minimum.  Impact:  more work moves offshore as opposed to onshore work being created

5)      The US IT and hi-tech industries grew up on bringing talent into the country that added new skills and ability – and was often more affordable.  By further discouraging bring the talent to the states, Schumer and co are driving the next wave of IT development out of the country.  Impact:  innovation moves offshore, and more vacant office-lots in Silicon Valley.

President Obama has set out to be a transformative president, who can elevate US competitiveness in a global economy and create jobs by intelligent fiscal stimulus.  He needs to drive policies that will stimulate employment, and stimulate innovation.  The economic wonder that became America, was centered on an immigrant society, and attracting talent to these shores.  My fear is that policies like Schumer's are moving the US further away from the very principals with made its economy what it once was.  The imperative word here is "was"...

Is it time for Western and Indian services cultures to blend?

we'll be happy to deliver that to your door for an additional $20...

Today's outsourcing industry is balanced on a knife-edge as costs continue to level-out across service providers for operational work.   Business leaders are demanding more innovation and productivity from their outsourcing endeavors, but their delivery teams tend to be more concerned with the work culture of their provider. 

So how can leading service providers deliver all the goodies CFOs and CIOs want, in addition to being really flexible and easy to work with?  Quite an ask, but those who can deliver both will win out.  So how did we arrive at this impasse?

During the early years of this Millennium, the onslaught of the Indian-headquartered outsourcing providers was centered on low-cost service provision, and a willingness to do whatever clients wanted to win the business.  This strategy has proved especially effective for the less-complex IT application development and maintenance work, and several operational business processes, such as invoice or claims processing. 

In today's market, the Western providers have been forced to bring their costs in line  to be competitive for the "lower-end" work, by expanding and optimizing their offshore/nearshore operations.  Once their prices are within 10-15% of the offshore-centric providers, the provider selection decision veers away from price, and towards one of  with whom do we actually want to work? 

Two different services cultures have defined today's outsourcing business

We’ve witnessed an incredible dichotomy of styles in the outsourcing business over the last decade -  one of top-down dictation from our traditional incumbents, in stark contract to the bottom-up tenacity from our growth machines from the sub-continent.  To put it quite simply, the Western incumbent providers show up at the CIO’s or CFO’s office and tell her/him how they can change their world to do things their way, while the Indian-headquartered providers have typically operated a rung or two down, offering to do whatever their clients need to get the job done – and make them look good in the process.

One set of providers has grown considerably over the recession years, and continues to outperform the industry, while the other is maintaining a status quo, with far more modest growth.  And, as we've mentioned, it’s not all about price anymore – several hundred thousand Indian and Philippines citizens are proudly showing up to work in an Accenture, Capgemini , Deloitte  or IBM polo-shirt.  Both the traditional providers and the newer Indian breed can offer low-cost services to take on new business.  So if it’s not really about cost anymore, and the Indian-headquartered providers continue to gain marketshare in this environment… the secret sauce must really be about work culture.  Let's examine further... Continue reading »

It really does roll downhill…

Leadership: a very fine line between love and nausea...

I got a few of emails today from people who claim you can't only blame Hurd for HP's current malaise, moreover it's the whole HP leadership that should be held accountable.  

I say it's all about the leader and the team he or she molds that drives the vision and instills passion down through their organization.

Today's winning services firms are being shaped by their leaders:

Accenture's Bill has charisma, is pragmatic, and has had the guts to bring in new blood and thinking to constantly break new ground; Cognizant's  Frank's incredible energy, youthful thinking and intellect defines his firm; Genpact's Pramod relentlessly drives his firm on with a consistent vision; Infosys' Kris has a determination to shape the industry; while Wipro's Suresh has stuck to his guns to deliver his own brand of global sourcing to clients.  These are just some examples of today's services leaders who define agendas for their firms and are prepared to adapt to change.  And one other thing - if a large deal was on the line, they would be personally involved.

Several other providers have forgotten their personalities, are lumbering along trying to meet certain metrics, but seem to be following trends, as opposed to leading and defining them.

Now, none of these providers are perfect - they all have their warts (hell, we all have warts), but what they do have are leaders with a vision and an understanding of how to position their firms in unique times like these, where there is no "set" way of doing things.   Today, there is no rule book.  Instead there is passion and energy, creativity and innovation.  Moreover, services companies need to forge an identity to survive.

Hurd's challenge was that HP was too big and too focused on hardware.  He needed 5% annual growth, which was about $6-7B a year.  He would much rather sell a hardware device to a business or a retailer with a service contract attached, than sell a more strategic and "sticky" business process contract.

HP doesn't have time to make a poor, or even an average, decision.  The firm needs a vision, it needs to detail specifically how it intends to service its customers, and how it intends to help them find new thresholds of performance.  It needs a leader who can step in to re-energize the firm, set out its agenda, nurture the cash-cows, while investing in the growth opportunities.  The industry is watching which direction HP takes - and this one's crucial.

Time for HP to shephurd its BPO business

It's not absurd, there's no more Mark...

When Mark Hurd took up the reins as HP's boss back in 2005, the company badly needed him to stabilize the business, drive up the stock price, while instilling discipline and cost-control into many of its global operations. 

Whatever the reason for his demise (and quite frankly, he's not Tiger Woods, so who cares?), he's done what HP needed him to do - and this is a good time to put someone else at the helm who can start closing the gap with IBM and others.  In fact, he should have gone sooner, because there's a lot of ground to be made up right across the board.

One of those is a flagging BPO business that had outperformed anyone's expectations before the EDS merger threw it into a confused shambles.  The addition of EDS should have been the cherry on the icing-on-the-cake to drive the emergence of a  major BPO powerhouse to challenge the likes of Accenture and IBM.

In pre-EDS days, HP was giving everyone a run for their money winning several mega F&A engagements, such as Nestle, P&G, Clorox and Molson-Coors, and were doing a great job bundling IT and ERP-enablement services around their BPO.  The firm was also discretely picking off payroll-centric HRO engagements and building an impressive competency for running multi-country SAP-based payroll services.  HP also boasts one of the world's largest supply chains it could have leveraged to drive its source-to-pay offerings. 

But Hurd rarely mentioned BPO in his speeches or strategy discussions - the business relied firmly on the determined leadership of some great individuals (you know who you are) who drove that business in spite of lacking much senior leadership support.  Consequently, since the EDS merger, more of the BPO leadership exited the business, the ExcellerateHRO business was sold to rivals Xerox(ACS) and the firm is rarely seen in major pursuits.  Instead, most of its BPO focus is polarized on the healthcare sector, which is smart, but not when the rest of the BPO areas are neglected.

Bottom-line, Hurd is one of those IT operations guys who didn't quite understand the value and stickiness BPO engagements can bring to a IT-BPO services provider - he's a dollar- and-cents guy, not a business transformation one.  Accenture and IBM have multi-billion dollar BPO businesses.   Infosys, TCS and Wipro are tenaciously growing BPO business that are threatening to surpass HP's.  Capgemini has also moved in front of HP in the pecking order in most deal pursuits - particularly in Europe.  And even in the verticals, such as healthcare, up-and-comers like Cognizant are edging in front.

HP is a great company and has a solid base of BPO from which to build.  But it's "lost years" in BPO need addressing quickly by whomever next takes the hot-seat.  And this time, there isn't much time, in a polarizing industry with twice as many competitors.  An acquisition or two will likely be needed to turnaround its stuggling BPO service lines... and we'll be hinting on where this should come from very soon.

Check out our monthly newsletter: “The Finish Line”

Like an '86 Margaux, some things just mature with age, and one of those is the good ol' newsletter.

Read the Finish Line, edited by HfS analyst Bruce McCracken

So we asked another fine vintage, HfS senior analyst, Bruce McCracken, (whose claim-to-fame is once receiving a fat check from the State of Texas), to pull one together for us.  

This month we've featured industry dignitaries such as Vinnie Mirchandani, Naomi Bloom, Ben Trowbridge and Mark Trepanier airing their views about Mahindra Satyam's re-emergence and AON's takeover of Hewitt. 

And don't miss a superb interview with EquaTerra's Stan Lepeak, discussing the latest Industry Pulse and its new findings on Cloud Computing adoption.  

YOU CAN DOWNLOAD YOUR COPY HERE 

Bruce McCracken (pictured center) is senior analyst at HfS Research, and editor of the Finish Line.  You can read his bio here. 

You can submit news and views that you deem appropriate for inclusion in future Finish Lines by emailing Bruce at bruce dot mccracken at horsesforsources dot com.

Meet the sourcing gangsters in Chicago

The Windy City will be injected with some additional hot air on 28th September for the ultimate finance and accounting shoot-em-up. 

Yes, HfS has teamed with its networking partner, SSON, to present a superior discussion across the 'hood of F&A and sourcing, with Northern Trust's Jay Desai, one of the buy-side's most respected voices on sourcing governance, Capgemini's own sourcing sheriff David Poole, the pontiff of procurement Jason Busch...  and bossed by HfS.    We'll be debating the burning topics in finance technology, shared services and outsourcing, waste management, and presenting some new research findings from our recent F&A studies.

As usual, we've haggled a blazing 15% discounts for hungry horses readers - just quote promo code "HfS_FT2010" when you register.

CLICK HERE FOR THE AGENDA

CLICK HERE TO REGISTER

Wang / Fersht uncut. Part II

During Part I, we talked about social media and marketing, a little bit about outsourcing, and touched upon the late-night cannoli scene in Baltimore.  

Rebels without causes?

Rebels without much pause...

In Part III,  we will discuss the merits of ricotta versus custard cream filling, but for now, let's dive into where the outsourcing business is heading... 

Phil Fersht:   I’ve observed, at several recent forums, that most software folks still don’t really understand the services market. They seem to think services people do the grunt work and it’s still all about the app. Do you agree that software people still don’t have their head around ITO, BPO and how it all fits together? 

Ray Wang: I think software people see that the value-add in the solution is what customers are looking for. And that last mile, which is still in services, is even harder to deliver as customers’ requirements continue get tougher. Flipping that around, do you think the service providers see that their solutions are increasingly differentiated by software or their own IP? 

Phil Fersht:  Let’s look at a growting BPO area like F&A (finance and accounting), where clients want service providers to handle their AP, procure to pay, payroll and other related processes. The providers can partner with a company like NetSuite or Workday and deliver to their clients the hosted application and the processing around it. But if you have 10 service providers offering NetSuite F&A, what’s differentiating them? Their ability to process invoices? No. For the service providers to gain competitive advantage, they need to develop their own IP and their own applications to add value for their clients. And when we’re talking about the coming together of SaaS/Cloud and BPO, it really becomes more of a business transformation issue than a technology transformation one. 

Continue reading »

Wang / Fersht uncut. Part I

Ray Wang is... er Ray Wang

There is only one Ray Wang.  Thank the Lord, because if there were two,  the Twitter servers would likely fall-over and the industry wouldn't need anymore analysts.

In all seriousness, Ray Wang is a true dynamo in the technology and social media world, having made his name as a superior analyst at Forrester Research, with spells at PeopleSoft, Oracle and E&Y, before co-founding research-based advisory firm Altimeter Group.   He also has an industry-standard blog "A Software Insider's Point of View".

I only ever seem to meet Ray at the oddest times of the day - most recently he took me on a midnight guided tour of his University town, Baltimore (Ray went to Johns Hopkins), and we also staged a late-night pool tournament at a vineyard somewhere in Georgia.  Anyhow, while I was sinking the winning black, we threatened to share some views together on the industry, and thought we'd air some recent discussions we had about the world of social media and the convergence of software delivery and outsourcing... here's Part I:

Phil Fersht:  Ray - you’ve been pretty immersed in the world of social media for quite a while now. As it seems to be having a major impact on the potential customer experience, how do you think enterprises and service providers need to approach embracing social media and tools and technologies?

Ray Wang:  Companies need to quickly start embracing social tools, because their customers are increasingly using them. But some organizations don’t even realize their customers have moved. For example, we met with a client about a month ago that had just discovered it could shift 20 percent of its marketing budget online and reach 40 percent of its audience. So the one thing we’ve really been focusing on is customer insights. Who is your customer? Where are your customers going? Facebook? Twitter? Where are your competitors going? To do this, companies need to start with the analytics and the insights, build a social media case and then work their way from there.

I also think there is a significant component when you think about BPO for the cloud. The reality is, we’re actually moving very quickly back to the old service bureau models from 1960. If you think about what you need to do on social media analytics, what you can do to tie social back to contact centers – all of this is going to come back to having efficient services and operations that are better connected to how people are using those services. So when people argue that social is just a channel, I would counter that social is a different manner of how people are going to be working. And that’s going to have an affect on all service providers. 

Continue reading »

Herding primadonnas… Welcome to Wendy’s world

Wendy Shlensky, Analyst Relations at Infosys Technologies

Imagine a job where good work is rarely praised and people can only complain that you somehow messed up?

Imagine a job where you had to spend all your time ensuring industry analysts (whom are all, of course, very nice humble people) had their facts straight and you hoped liked your firm enough to say good things?

Imagine a job where you had to constantly be nice to your executives, to make sure they showed up on time to all these analyst meetings, and didn't say anything stupid?

Welcome to the world of vendor analyst relations (or simply known as "AR" in the biz).  If I do some really bad things in my life (which, of course, I haven't yet, but may do so in the future), I will be brought back to this planet as an "AR pro".  This is a no-win profession - you have to be nice to absolutely everyone and pray you won't get fired because your firm somehow didn't make it far enough onto the right hand-side of some analyst's chart.

So we asked one truly unsung hero from this much-beleaguered profession to share with us how they actually succeed (avoid messing up).  Bring forth Wendy Shlensky, one of Infosys' lead AR folks, who somehow found a few stolen moments away from her 120-hour a week job to share her secrets with us.  Normally, at this stage, I introduce some hobby or past-time to add some color to our guest, but I've never assumed the poor girl has time to do anything beyond staring aghast at her email inbox...

Wendy's World

I am an AR (Industry Analyst Relations) professional. I succeed and fail based on my ability to maintain and leverage relationships between many different parties – Continue reading »

New HfS Report – Desperately Seeking Innovation in BPO: Enterprises Speak Out

Is that... is that what I think it is?

Innovation is now the critical ingredient for most buyers of Business Process Outsourcing (BPO) services –unequivocally proven by a new HfS Research study of 588 shared services and outsourcing executives, as  revealed in our new report  Desperately Seeking Innovation in Business Process Outsourcing: Enterprises Speak Out.

Most buyers of BPO services are initially delighted when they trim 30% of their costs on one process, and 50% on another, but once those costs disappear from the balance sheet, they are quickly looking at new  initiatives to help them attain new thresholds of productivity or revenue growth:  what HfS Research terms as “innovation”.

Moreover, while half of buyers are dissatisfied with the innovation they are currently achieving from their BPO endeavor, the majority are seeing significant potential to achieve it across certain processes within a two-year time-frame.

Essentially, once they have out-tasked as much of the feasible routine administrative work to service providers, they quickly discover that next tranche of productivity is not nearly as straightforward as documenting standard processes and training an offshore team to replicate them effectively (commonly termed in the BPO industry as “lift and shift”).  Those buyers realize they actually need to introduce new, creative methods to actually change the old way of managing processes to find improvement. This scenario continues to dominate the vast majority of large-scale BPO engagements today.

The answers lie with both BPO buyers and their service providers working together to achieve measurable business outcomes as part of organized and collaborative long-term partnerships.  However, too many enterprise buyers jump into a service provider relationship polarized on the initial cost take-out from the “lift and shift”, and gloss-over the future initiatives they will need to implement in a couple of years, when they seek to find new value through better processes, talent and technology.

We believe buyers need to put the innovation track-record of service providers high up the decision-making tree when they select make selection decisions. As earlier HfS Research has demonstrated, service provision is commoditizing and leveling the playing field, with several BPO service providers today pushing services within a similar price-band, and sufficient track record of successful “operational” delivery.

Most large enterprises have already experienced offshoring and outsourcing varying degrees of their operations for several years, and are smart enough to realize outsourcing provides an opportunity to deliver more than simply cost-savings through lower cost labor.  Consequently, the ability to provide outcome-based solutions that encompass helping BPO buyers achieve innovation, is fast becoming a crucial differentiator.

We'll be highlighing more snippets from our new report, entitled "Desperately Seeking Innovation in Business Process Outsourcing: Enterprises Speak Out" this week, but if you can't wait that long: Click to view. This report dives into the experiences and expectations of today’s enterprise BPO buyers when it comes to achieving innovation, and offers actionable recommendations for devising a strategy to improve their innovation agenda with their BPO endeavor.

HfS Research shows some analyst horsepower

Check out who's at 15th in the latest analyst "power rankings" by ARInsights, a dynamic content rich database that contains comprehensive information on 5,511 analysts from 694 different firms.

While our aim is (ahem) to be number one, for an analyst firm that's been in existence barely 4 months and competes with billion-dollar competitors, we'll take it.  And Ray Wang of fellow analyst newbies Altimeter Group made the top-ten.  Maybe says something about the power of social media?  Hmmmm...

ARchitect™ Power 100 analysts, 19th June 2010

The top 100 analysts ranked according to their activity level among all ARchitect™ users. These are the analysts with the most sustained "buzz" in the industry right now:

1 Allie Young Gartner Inc.

2 Eric Goodness Gartner Inc.

3 Alex Soejarto Gartner Inc.

4 Pascal Matzke Forrester Research, Inc.

5 Dane S. Anderson Gartner Inc.

6 Kimberly Harris-Ferrante Gartner Inc.

7 Brian Partridge Yankee Group

8 Rona Shuchat IDC

9 R Wang Altimeter Group

10 Susan Tan Gartner Inc.

11 William Martorelli Forrester Research, Inc.

12 Ken L. Dulaney Gartner Inc.

13 Matthew Goldman Gartner Inc.

14 Mike Cansfield Forrester Research, Inc.

15 Philip Fersht Horses for Sources

16 Sudin Apte Forrester Research, Inc.

17 Khalid Kark Forrester Research, Inc.

18 Elisabeth Rainge IDC

19 Frank E. Gillett Forrester Research, Inc.

20 Norbert J. Scholz Gartner Inc.

21 Ronni J. Colville Gartner Inc.

22 Frank Ridder Gartner Inc.

23 Euan Davis Forrester Research, Inc.

24 Arindam Banerjee Heavy Reading

25 Richard T. Matlus Gartner Inc.

26 Milind Govekar Gartner Inc.

27 Karl Whitelock Stratecast Partners

28 Ellen Daley Forrester Research, Inc.

29 Michele Pelino Forrester Research, Inc.

30 Liz Herbert Forrester Research, Inc.

31 Daniel O'Connell Gartner Inc.

32 Lydia Leong Gartner Inc.

33 Phil Sayer Forrester Research, Inc.

34 Chris Wolf Burton Group

35 Jonathan Penn Forrester Research, Inc.

36 Benjamin Gray Forrester Research, Inc.

37 James Staten Forrester Research, Inc.

38 Bhavish Sood Gartner Inc.

39 Frances Karamouzis Gartner Inc.

40 Peter Jarich Current Analysis, Inc.

41 Christopher Andrews Forrester Research, Inc.

42 John Madden Ovum Summit

43 Michele Cantara Gartner Inc.

44 Roger L. Kay Endpoint Technologies Associates, Inc.

45 Neil Chandler Gartner Inc.

46 Camille Mendler Yankee Group

47 Bob Hafner Gartner Inc.

48 Shira Levine Infonetics Research

49 Michael von Uechtritz Gartner Inc.

50 Rachael Stormonth NelsonHall

Continue reading »

A Cloudy Future for Microsoft?

and there's a bit of a mixed bag here, folks...

You'd have thought, having an analyst in Australia, we'd get contributions such as "How to outsource all your work and spend all day on the beach", or "Precautions to avoid business failure now the local pub has WiFi". 

But no.  What do we get? Endless reams of insight on the Cloud - I didn't think they had Clouds over there?  All jesting aside, Andrew Milroy poses some profound challenges for software giant Microsoft, which may be set to miss out with Cloud computing in a similar vein to its struggles with internet search market and mobility... 

A Cloudy Future for Microsoft? 

Microsoft urgently needs to address its approach to Cloud Computing, together with the closely related tablet and smart phone markets, if it wants to avoid falling further behind the likes of Google and Apple in these interrelated markets. Continue reading »

A mad, rad day for HR technology and outsourcing

Anyone in the HR industry knows the best show of the year - and always the most entertaining - is the HR Technology conference in Chicago each September.  And this year's effort promises to be the best so far.

And this year it's got the whole gamut:  big HR practitioners, big bloggers, big analysts, big technology vendors and big outsourcers.  And as most of my friends know - I'm being particularly choosy this year attending these types of events, now I'm chained to my desk actually doing some research, but the lure of the maddest, raddest HR shindig has proved too much this time.  Why not join us?  We've even got them to agree to a whopping $500 discount for HfS subscribers:  simply REGISTER HERE and use the code HORSES10 (case sensitive).

A mad, rad day for the HR industry...

The rumors are true – we’re actually doing some research

No more boondoggles for this fella...

As a few of you may have observed, we went through a minor identity transformation back in March, when we decided to start producing our own research and become a fully-fledged analyst advisory organization. Even industry observers believed us.

Contrary to rumor, analysts sometimes do more than get themselves inebriated at industry boondoggles (hmmm....).  And as much as we'd all like to spend our days being wined and dined at tennis tournaments and totting up our Starwoods points, we've had to knuckle-down and put pen to paper with our views and insights on where this market is heading.

We tried to explain to our sales chappy that clients don't care about research anymore, that they just wanted to hang out with us, but he wouldn't listen, signed up a bunch of them, and now we have to do some hard work.

So four months on, and we're beginning to sneak a few publications out to market.  We're developing a fully-fledged research agenda which we will be excited to announce in September, when we will also be announcing the arrival of some new analysts  (who also claim they will write some stuff).  So feel free to visit our sexy (ahem) new RESEARCH LIBRARY and check out what we're writing about.

Some stuff is freemium (I love that word), and some is premium for our subscribers, but there is plenty there for all to read, that is being regularly updated with new publications.  So spend a few minutes registering an ID and password with us, and enter our research world.  C'mon... do you have any better offers on a Thursday morning?

Hewitt into AON: a sad, bad day for HR Outsourcing?

AON - clearly recognizes a good invesment...

Waking up this morning to hear the news of Hewitt's acquisition by AON signalled a sad, bad day for HR Outsourcing.

The HRO industry is now consolidating faster than any of us imagined... forget ADP/Workscape, this is BIG - and leaves the global HRO market with three major global HRO enterprise-level providers - IBM, NGA and Xerox (ACS).  While there were some positive synergies with NGA / Convergys to create a global provider, Xerox / ACS was an odd match of two very different cultures and providers, and AON/Hewitt isn't far off in terms of a weird fit.

I am concerned with the impact on Hewitt's culture and brand, which is steeped in HR consulting culture over four decades.  While, on paper, we can see some minor synergies, in terms of scale, geographic presence and financial offerings, you have to question two very different cultures and the potential impact on Hewitt's consulting and managed services offerings, once the AON corporate machine gets its claws in. 

Hewitt needed to be acquired by a true enterprise global provider with real HR heritage, and global HR offerings (especially pan-Europe).  Moreover, a provider with deep technology integration expertise would have been hugely beneficial.  AON will not provide that, unless it hasn't finished its shopping excursion.  Let's hope AON's leadership has learned from it's earlier foray into multi-process HRO, which netted the firm a solitary client (AT&T) and an IT-integration partnership with CSC that achieved little, before beating a hasty retreat. 

This time, AON needs to figure out its HR technology services strategy - there are several willing partipants out there, with real HRIT acumen (for example Deloitte may be looking at new HRO partners since Convergys' HRO business was acquired), and there are several Indian providers with deepening HRIT capabilities (Infosys, TCS and Wipro all have developing practices).

Maybe this will provide the impetus for Accenture to make a renewed push into the market, with so much open space being created?  It's deep HR transformation experience, HRIT and HRO client engagement experience, put it in a strong position to up the ante - and we've see it winning some deals of late.  Let's hope so - the industry needs to be competitive and we are quickly reaching a situation where clients have limited choice.