HfS Network

So ISG bought Alsbridge. That happened

December 02, 2016 | Phil Fersht

Can these two newly-weds weather the storm of a stagnant outsourcing industry?

Yes - that happened.  We just had the biggest shakeup in the outsourcing advisory market since KPMG's acquisition of EquaTerra in 2011.

The last two large independent outsourcing advisors (outside of the management consulting firms) realized they needed to stop killing each other and would be far better off becoming one. So now we're left with an even bigger ISG and a few really small shops, like Avasant, Aecus and Everest, to scrap around for the remnants of demand for former EDS executives to negotiate a nice contract for them.

This is a really smart deal for both ISG and Alsbridge.  ISG takes out its prime competitor to monopolize its space, while Alsbridge's prime investor, LLR, makes out nicely on its 2013 investment within the typical 5-year window private equity firms give themselves.

This is a great deal for most the Alsbridge consultants.  Many are welcomed back into the loving arms of their former employer and they have a bigger brand, global scale and presence to hone their craft.

This is a great deal for most the ISG partners.  Now many of them will not have to suffer their fees eroded by a very aggressive competitor (or losing deals to it). They can still easily undercut the Management Consultants' fees, and have access to more talent to win deals, especially in areas like telecom and Robotic Process Automation (RPA), where ISG was previously struggling.

This is not a great deal for all the employees.  Large mergers of like companies always present rationalization opportunities.  The new ISG will surely look to retain the cream of the Alsbridge talent and hive off its lower performers. The outsourcing market is flat and advisory

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Posted in: Outsourcing Advisors

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Wipro bids for As-a-Service... with Abid

November 29, 2016 | Phil Fersht

One of the astutest CEO appointments in recent times was Abid Ali Neemuchwala (or simply "Abid" as most of us call him) being elevated to the hotseat at Wipro.  I, personally, have known Abid since his TCS days, when the firm acquired Citigroup's Indian banking operations in 2008, where Abid was instrumental in building a stellar BPO capability for the firm... and first interviewed him right here in 2010.  

Cutting to the chase, Abid was the perfect hire at the perfect time for Wipro. With the Indian-heritage service providers scratching their heads trying to figure out how to keep growing, as those legacy $500m IT infrastructure deals and $200m SAP roll-outs dry up, the only true way forward is to build out an As-a-Service delivery model that caters for the modern enterprise needing to access talent, technology, analytics and automation capability as part of an integrated solution, tied much more to outcomes and efforts, than headcount numbers. Being able to manage the traditional enterprise's needs, while investing in the emerging enterprise of the future, is the Holy Grail for the Indian-heritage majors seeking to get ahead of a market in transition. 

In my view, today's services providers need to be led by process people that understand technology and how to bring the two together effectively.  If you're just selling tech, you'll end up with a commodity service, and if you're just selling process, you'll end up with something completely unscalable and unprofitable.  So you need a CEO who gets right into the weeds of the operations and figures out how to technology-enable business services. You need someone who built a billion-dollar BPO business out of a tech-dominated service provider (TCS), where you had to train IT people to manage processes, and process people to understand how to enable them effectively with technology underpinnings. You need someone who's going to mastermind one of the potentially shrewdest acquisitions yet by an India-heritage major in Appirio.

You need someone who prefers to play chess than golf... you need Abid.  

Phil Fersht, Chief Analyst and CEO, HfS Research: Good afternoon Abid... it's been quite a journey for you to make it to the CEO role at Wipro. Maybe you can share a little bit about your background and career path just for our readers, so that they can learn a bit more about you...

Abid Ali Neemuchwala, CEO and Member of the Board, Wipro: Certainly. Phil. So I’ve been part of this industry since I came out of university at IIT, Mumbai, in 1992, and now, my goodness, that makes me feel old! I’ve spent 24 years in this industry, the last two at Wipro—as Chief Operating Officer, at first, and then as the CEO since the beginning of this year. The fun part of being in this industry was to be able to wear many different hats. I started as a developer, quickly moved into project management and then I got an opportunity to do some very strategic projects, especially as part of the financial services industry in India as it was just growing.

I also had the opportunity to live in multiple places around the world and experience various cultures. I went to work in South Africa immediately after Nelson Mandela was sworn in. At the time, the South Africa market was just beginning to emerge for Indian IT, and I was lucky to be one of the first IT people there. 

I lived in Japan as well which taught me a lot about program management and sales as we expanded our business. The Japanese market teaches you a lot. It is, in a way, the perfect training ground for sales guys because it not just teaches you perseverance, but also helps you learn the value of relationships and cultural diversities. Thereafter, I moved to the US and as a general manager in the US Midwest Operations I ran some key large accounts, before I moved back to India in a general management role. In my last stint at my previous employer, I was running the BPS business. There, I got a great opportunity to integrate a large acquisition, which exposed me to the need for being bold about acquisitions, all of which worked out well. And then, surprisingly, I got an opportunity to move to Wipro, which brought me in as the Chief Operating Officer. 

So, all along it has been a great ride and a journey of many opportunities. And throughout, I continued my passion and hobby for traveling to places. The industry helped me do that. I love walking on the streets of new cities that I visit because I think conference rooms, all around the world, are exactly the same. I ask my teams to do that as well. You’ve got to experience the culture, the people and the places. I have always been like that, meeting people, absorbing cultures and the world around us. 

My love for travel has taken me to cover about 100-plus executives amongst our top 100 customers, which helps me talk about Wipro’s strategy and understand what is most relevant to them. This also helps me get their feedback on the organization as I steer Wipro through this wonderful transformation.

Phil: So you acquired Appirio. That’s a company we know very well and what a very quick transaction that was! Can you talk about the core factors in this decision?

Abid: As I said, we're going to take bold strides as we rev up the engines for digital transformation. The future, which is going to be quite different, is already here in terms of Cloud, As-a-Service business models, Automation and Artificial Intelligence— not only Robotic Automation but also Cognitive, Machine Learning and Analytics. These, and also design thinking, of course, and user experience. 

We, at Wipro, believe in acquiring the right capabilities at the right time and, as part of that move, had been looking at assets that would be a strategic fit. Appirio is one such capability we've been very fortunate to get. The capability is essentially, as you know, around Cloud ERP

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Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesOutsourcing Heros

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Everything you ever wanted to know about the Energy sector but never dared to ask...

November 22, 2016 | Phil FershtDerk Erbé

We can obsess about losing our jobs to robots, our traditional industries being wiped out by digital transformation, our politicians losing the plot... but it'll all count for nothing if we abuse our valuable natural resources and pollute the air we breathe.  So without further ado, let's hear the real deal about on what's going on in the energy sector these days - and how it impacts our world of operations and technology.  And who better to talk to than HfS analyst Derk Erbé, who likes to take a long hard look at things...

So Derk...what do we need to know about the energy sector these days, with climate change, crazy oil prices etc?  What are the key issues we need to care about?

First off, it really is a perfect storm at the moment. We’ve seen the world coming together to curb global warming in Paris, only a year ago. Rising social and political pressure in conjunction with technology advances and economic shifts are combining to create a positive atmosphere to address one of the biggest challenges of the coming decades.

We’ve also seen the sharp fall of oil prices from above $100 per barrel to $27 per barrel in February 2016, currently stabilizing around $45. The reaction from Oil & Gas companies to the crazy oil prices has been focused on survival for much of the last 18 months. Cost cutting was the primary reaction, resulting in the loss of 250,000 oil workers’ jobs. Two out of three oil rigs has been decommissioned and many capital projects postponed and canceled. This was not enough to save many oil and gas companies from bankruptcy. The initial hope of short-term

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Posted in: EnergyPolicy and Regulations

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Chinmoy chats about that shift left

November 22, 2016 | Phil Fersht

This is the age of the mid-size, aggressive, feisty service provider that can scrap for the traditional business but also has the flexible cost-base and freedom from legacy to go after the new stuff.  There are so many exciting opportunities with clients that are simply too small, or too cannibalistic for the traditional services providers... many of whom are still waiting - in denial - for those $200m SAP rollouts that no one wants to do anymore, or those $500m infrastructure deals that will never, ever happen again.  Where better to be that at a service provider which can lead with automation-led offerings, where being disruptive is the business model - where all new opportunities are greenfield... and causing many of the traditional service providers to squirm in their boots, pretending their world isn't falling apart all around them.

So welcome to HfS to Chinmoy Banerjee (see bio) who heads business process services for Hexaware - whose entire go-to-market strategy is based on disrupting the legacy outsourcing model...

Phil Fersht, Chief Analyst and CEO, HfS Research: So, good morning, Chinmoy. It's great to get some time with you today. Perhaps you could start by telling us a bit about yourself?

Chinmoy Banerjee, Global Head of Business Process Services, Hexaware Technologies: Sure, Phil. So, I grew up in India and after finishing my MBA in Finance I joined a bank. I spent a few years there and the last job I did was as a Forex trader. I then moved to PwC Consulting for a few years, and in 2004 moved to the US in the BPO sector. Along the way in the US, I completed an Executive MBA from TRIUM as well—which is a combination of NYU Stern, London School of Economics and HEC Paris. I've been disrupting the industry for the last three years with Hexaware, running their BPO business.

Chinmoy Banerjee surrounded by members of his Hexaware team

Phil: For those of our readers who might not be that familiar with Hexaware, could you give us a very quick snapshot of the company and what it's doing today? What are the core areas where you feel that you win against the competition?

Chinmoy: Sure. Hexaware has been around for a while. This is our 26th year of existence, but in 2013 Baring Private Equity acquired about 70% of the company and Keech, our CEO (R Srikrishna or Sri, aka Keech), came in soon after that. Since then we have been going to market in two areas: Shrink IT and Grow Digital. Our view is that the industry is disrupting in a big way, and Shrink IT which is our major go to market as its name suggests, involves shrinking technology and the operations footprint.

It's largely applicable to full-service lines, including application managed services, which is support, infrastructure management services, testing and, of course, BPO. Essentially, we have

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Posted in: Business Process Outsourcing (BPO)Outsourcing HerosIntelligent Automation

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The information not-so-superhighway

November 20, 2016 | Phil Fersht

Remember all that wide-eyed excitement when we first started using the “Information Superhighway” known as the Internet? Remember how we were all going to use this amazing new media to share information, to learn from millions of new information sources, and – even more importantly – to learn from each other?

So what’s gone wrong? Why has the Internet also become a mechanism to block out information and promote factless discussion and news, often based on misinformation, lies, propaganda and emotion?

How have we managed to survive a year and a half of election campaigning, where we endured two sides obsessed with battering each other with insults, almost completely devoid of any smart new policies, practical debate and absolutely no ability to listen to each other. Our whole world of politics has become driven by emotions and personalities, not facts, ideas and policies.

I am sure I am among many of you who have fallen out with friends, unfriended people (or been unfriended) on Facebook, received abuse on Twitter and been sucked into nasty arguments with others who just refuse to listen. And if I had to dig deep into my conscience, I have to admit I may not have always listened to the rationale of the other side also.

But can we all get past this experience and learn to listen to each other again? Can we learn to have rational debate and conversation, where we can express our views, back them up with real facts and ideas – as opposed to this closed, angry style of discourse, that is threatening to divide entire nations?

I like the steps I am seeing from Facebook’s CEO Mark Zuckerberg to clamp down on “fake media”, especially when you consider that more Americans admitted to relying on Twitter and Facebook for their news sources, than any other media source. And can you blame them when the likes of Fox, CNN, the New York Times and many other outlets – all have their biases and did little to bring together real discourse and debate. All they did was whip up more hatred, panic and emotion to divide us further.

So... we all ended up take to social media to get our news and views away from the blurred lines…. and instead of sharing facts, all we are doing is winding ourselves up, blinding ourselves from finding compromise and hiving off social contacts we once considered “friends” (both the physical and electronic varieties).

The Bottom-line: It’s time for all the stakeholders in society to get meaningful and respectful again  

Whether we like it or not, we now have four years of President Trump – he got himself elected. He won – seemingly against all the odds. Now let’s sincerely hope he can work to bring together a divided nation and bring together people across this divide of hate which he helped create. If he is to be successful as a President, it’s healing this awful culture of factless, meaningless squabbling. The US doesn’t need it’s own half-Brexit, where the country can’t decide what it wants anymore and people have to move forward clouded in uncertainty and confusion.

In the last week, President Trump has made appointments to his cabinet that are concerning for many. But sensationalist reporting devoid of actual facts has also skewed the true merit for concern and the weight of the issue. We need our media to provide information so we as citizens can express our voice based on facts and not fear that may or may not be warranted. The last thing we need are our already-fractured social networks being further eroded by all this emotion, paranoia and hype.

We need decisive policies, politicians working together and (at least try) to develop some mutual respect with people, whose views may not be entirely aligned with us. I don’t like the way the world has become, and I think most of you here will agree that it’s time for our media, our politicians – and ourselves – to get meaningful and respectful again.

Posted in: Social NetworkingPolicy and RegulationsSocial Media

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In 2017 HfS is making research great again... and real again

November 13, 2016 | Phil Fersht

Fed up with the same old "digital transformation trends" about to turn our world upside down... based purely on those crusty old Uber and AirBnb examples?  Getting jaded by the tired old commentary about 20-year-old automation technology suddenly replacing labor... without any practical advice how to manage it all?  

And that annoying old yarn about IoT turning the whole world into some massive interconnected computer without aligning it to real business solutions, beyond making your coffee maker more intelligent? Oh... and the hype about Blockchain disrupting the whole world of money and commerce, without any sort of sensible roadmap on how the technology is evolving, and how enterprise-ready this stuff is (or ever will) become.

Are you just simply comatosed by analysts talking in riddles about generic, bland mush you've heard a zillion times already?  

The 2017 HfS Research Agenda:  "Making it Real"

Well, people, your agony is over as the analyst team at HfS is charged with "making it real"... where we're talking with hundreds of enterprises about how they are addressing all these changes to their world.  Technology is moving at warp speed and people, simply, are not. Our 2017 plan is to address this gap between innovation and reality and help our clients really feel this stuff... really kick those tyres to sample how it can be done and how it shouldn't be done.  

We won’t be hyping up automation and digital technology as the critical ‘disruptors’ of business operations - because they are already are past being disruptive - they are already here. Intelligent automation and digital technologies have become the fabric of operations for modern enterprises, immersed in new generation services and platforms. Instead, we are already talking about OneOffice, where integrated business operations have the digital prowess to enable the enterprise to meet customer demands - as and when those demands occur.

Our 2017 Blueprint Reports address all aspects of achieving the OneOffice endgame:

Why is the 2017 HfS Research Agenda Unique?

Since the introduction of the HfS Blueprint in 2013, HfS has published 44 of these highly influential reference guides (see link) for enterprise buyers—to assist in selecting the best service provider for their needs. In that time, HfS has expanded from Blueprints covering core BPO markets such as F&A, Contact Centers, Procurement and Healthcare Payer to a broad range of markets, including IT and Digital Services, IoT, SaaS Implementation, Security and Engineering Services. In 2016, HfS introduced our first ever Blueprints on Design Thinking, Energy Operations, Block Chain, Pharma BPO, ServiceNow services, SuccessFactors services and Mortgage-as-a-Service.

For 2017, HfS is focused on researching the experiences, dynamics, intentions, challenges and opportunities of thousands of enterprises in their quest to align their operations with the rapidly changing needs of their clients. This will include interviewing 300 of the Global 2000 enterprises and several thousand quantitative interviews on a rolling basis through the year with the HfS global community.  

Our Blueprint Reports focus on all key aspects of IT services and strategy, business operations and BPO, cognitive automation and the core industry-specific dynamics, namely banking, insurance, energy, utilities, manufacturing, healthcare, life sciences, travel and retail industries. HfS isn’t only focusing on the service provider performances within each industry. We are also helping clients take an “outside-in” approach to reaching a OneOfficeTM endgame, with a second annual Blueprint report on Design Thinking capabilities and a unique analysis of the deployment and enablement of cognitive virtual agents in the workplace.

This is an ambitious research agenda but something that we believe will provide real, unique, and substantial value for the industry in our effort to help enable more collaborative engagements for delivering business outcomes.

HfS subscribers can download their copy of the 2017 HfS Blueprint Agenda here.

If you have any questions on the HfS Blueprint Methodology or our 2017 Research Agenda, please reach out via email to [email protected].

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesService Provider Analysis

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President Trump is the death-knell for traditional offshore outsourcing... as we know it

November 09, 2016 | Phil Fersht

Addendum note:

Since I penned this blog, Senator Chuck Schumer has been made Senate Minority Leader.  Schumer has been the biggest opponent of offshore outsourcing for several years - we even wrote about his failed H1B bill back in 2010 after his infamous branding of Infosys as a "chop shop".  Net-net - with Trump's aggressive stance on protecting US jobs, massively raising the H1B minimum wage, combined with the determination of Schumer leading the Democratic faction, this does not bode well for the future of the offshore business for at least the next four years.

 

President Trump is the death-knell for traditional offshore outsourcing... as we know it

The traditional Indian-dominated offshore IT services market was already in the throes of desperation to find a new path for itself. Much of the global 2000 has already been pulling back on the traditional “mega deal”, amidst intense competition between a surplus of IT services providers and an increasingly desire to parse out smaller contracts to multiple suppliers.

The election of Mr Trump to the Oval pretty much just hammered in the final nail in the coffin for the traditional IT outsourcing market as we know it. The Republicans control the House, the Senate and Trump has a huge mandate to impose his will, not dissimilar from Obama and his healthcare reforms.  Change is going to happen and it will likely have a very significant impact on global IT and BPO service delivery.

Why is this bad news for offshore services industry? 

Temporary IT workers will likely be massively hit. Trump’s campaign has already outwardly promoted raising the H1B minimum salary to $100,000 per year (from $60K). This makes managing complex IT projects a lot more expensive and negate much of the cost advantage for complex engagement requiring “landed” IT staff. For the IT community of several hundred thousand H1Bs, L1s and B1 holders currently residing in the US, many of them will come under scrutiny if Trump holds true to his number one campaign promise – curbing immigration and protecting American jobs. So this doesn’t just spell bad news for the competitive of new IT services deals, it also threatens the viability of existing long-term engagements. 

Enterprises will increasingly look to cloud-based solutions. With the cost of maintaining legacy ERP systems likely to spiral, many enterprises will be forced to write off legacy sooner than they may have wished and invest in cloud-based enterprise solutions that require less offshore labor components. Much of the Indian IT services industry, for example, grew up on supporting and maintaining now-legacy IT environments, such as on-premise SAP systems. While many long-term engagements will have already be well past the "labor arbitrage stage" and hard for the Trump administration to police, all US businesses engaging with large numbers of offshore services will become under increasing scrutiny.  If there was ever a time to make investments in standardized IT solutions that do not have a heavy offshore dependence, this is it.

Automation is now the new labor arbitrage - and Donald just made it happen. Forget Brexit, Trump is now the new true friend of the fledgling automation industry (and he probably doesn't even realize it). One of his last speeches was centered on his berating of IBM for offshoring a bunch of jobs from Minneapolis.  Offshoring is often a prerequisite to automation... just look at the manufacturing industry where the work is initially moved to overseas factories, before being automated within those factories (or brought back on shore to factories employing a much smaller workforce).  Just look at many car plants today which may have employed thousands of workers just 20 years ago, which now only need to employ barely a hundred.  IT is no different and the tools are now in place to accelerate automation of IT and business processes faster than most people realize.  With the use of IT labor now under so much more scrutiny, the service providers can no longer ignore the fact they need to pivot their delivery models away from labor scale even faster than they had feared.  As we analyzed earlier this year, 9% of outsourcing jobs are likely to be displaced by automation over the next 5 years, but that number could be reached in two or three in this new climate.  

What can the offshore industry do to survive this?

Invest in US companies employing skilled US IT and consulting staff.  Wipro must be tickled pink it acquired US cloud services firm Appirio the other week.  The best way to protect - and upskill - Indian based IT workers is by making investments up the value chain to front end new generation IT projects.  Wipro can support many new engagements from this investment, where the client facing staff are all US natives, without the scrutiny of the offshore police.  Other Indian-heritage IT services majors need to follow suit with US investments, especially in

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Posted in: IT Outsourcing / IT ServicesPolicy and Regulations

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Yes, the system is rigged… and the only way to unrig it is by reeducating ourselves

November 07, 2016 | Phil Fersht

Thank the lord the worst election in living memory is only hours away from being done – whether a legacy politician or a dinosaur businessman wins, three outcomes are clear:

  • You need a couple of billion dollars in the bank before you can even contemplate a run (so much for “democracy”);
  • Neither candidate has any innovative policies to find a way forward for the country;
  • The system is “rigged” everywhere, but unrigging it requires a very difference approach.

So we can quickly avoid the first two issues – not much we can do about those right now, barring revolutions and assassinations. However, the third issue is something that we can associate within our very own industry of business operations.

 The "system" is all about maximizing margins without too much disruption

I recall working an outsourcing deal, about 5 years’ back, and I was informed by the client “all roles we are keeping are to be created in India, unless there is a clear business case to keep them onshore”. I was recently consulted to talk to the same client about the “next phase” of their “value journey”, which was simply “all processes are to be automated, unless there is a clear business case to have a person involved”.

Great – so we’ve moved from shifting work overseas simply to eliminating it altogether.   That is the “system”, where only money talks anymore – the same system that presented this poor US electorate with two awful candidates who have only been focused on outspending each other on negative commercials, rather than proposing anything sensible for the country to create jobs and drive new growth and innovation. Is this really the best “democracy” could come up with, in the richest country in the world posing as the “land of the free”.

It’s time for a big reset 

Most people have got lazier in the last 5+ years.  Virtual working, digital burnout, Millennials with a warped idea of what work actually is, new forms of adult ADD... whatever... something negative happened in the workplace and it's getting harder and harder to find people with that "go the extra mile" attitude these days.  So many people have a sense of entitlement we've never seen before.  It scares the sh*t out of me. Forget “new normal”… we need a whole new reality.

We're going to need a great big reset, driven by government, to get people relevant for this changing workplace.  At some future stage, we are going to have another downturn and these issues of worker apathy and irrelevance will magnify exponentially. People will actually have to take shitty jobs again... my god.  

The Bottom-line: It’s all about resetting, retraining and reeducating ourselves

Investments at a huge level must be made in training and education, not handouts to people who've just lost interest in working anymore and like to complain the system is rigged against them. This would also stimulate a much larger and more flourishing education sector that creates more jobs and innovation. We need less of the angry politicians playing on the increasingly disenfranchised population. We need leaders focused on inspiring people to reinvent themselves, re-educate themselves and find that zest for working again. And not only do we need people who can understand data, digital apps, robotics and artificial intelligence… we need people who can cook great cuisine, compose decent music, write great books, teach our kids, police our cities… we need to unrig this system that has lost itself somewhere between a balance sheet, social media soundbites and bad news coverage.

Posted in: Policy and Regulations

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Accenture, NTT, IBM, Cognizant and TCS making the early moves with Blockchain Services

November 03, 2016 | Phil Fersht

I love blockchain - all the hypesters think its the biggest thing since the Internet, primed to blow up the stranglehold banks and corporates have over the world and how we deal with money, while others are dismissive, viewing the tribalism of governments and their paranoia of loosening up cross-border regulations, as the ultimate impediment behind blockchain ever fulfilling its true potential.  And there are the techno gloomers who struggle to see how we can really make this thing enterprise ready and feasible in real world business situations.  

So why not read the first ever analyst view of how emerging blockchain capabilities are evolving with today's fleet of service providers:

Click to Enlarge

I wanted to share briefly some nuggets from report author Christine Ferrusi-Ross' great blog on the core recommendations:

Clients and their service providers are learning blockchain together. This is bad if you want someone to hold your hand and tell you everything is going to be ok, that they have the answer for you (by the way, no judgment from me on this – if there’s a well understood solution and you can hand it over to someone to get it done, go for it.) BUT it’s fantastic if you really want to take control of your own business destiny, be strategic and really work collaboratively with a partner to find the right opportunities and create solutions together. It’s a rare chance to be an equal intellectual partner with your services firm and in fact potentially for the provider to learn from you as your team researches opportunities and bring in the provider to help test some of those opportunities.

Find great storytellers. It’s really important to understand the technical aspects of blockchain, of course. You’ll have an easier time finding technical skills than you will finding people who can really dream with you and tell you stories of how blockchain can change the world. This isn’t just about looking for strategists, it’s about looking for providers who can clearly communicate a vision for what’s possible, so you in turn have an easier time digesting the different scenarios and selecting the right ones to move forward on to the proof-of-concept stage. 

Put more emphasis on service providers’ partnerships than usual. Spend more time understanding what criteria the providers are using to evaluate the technology vendors than you would normally, since this deep dive is going to be more important for you than in other more mature areas. 

Focus on service providers'  abilities to work in agile development environments. Yes, I know, you’re likely not even close to building anything right now. But keep in mind that you’re looking to find someone to co-create with you and that requires the ability to be iterative and flexible while still not losing sight of the original goals. Providers who have more rigid engagement methodologies will put more pressure on you to define your requirements probably even before you really know what those requirements are. So look for a player that has strong agile skills since those skills will transfer well to your blockchain exploration.

In the meantime, here’s a link to the full HfS Research Emerging Blockchain Services Blueprint Guide, with definitions and descriptions of the current activity (particularly in BFSI) and how service providers are approaching this inevitably integral part of the future fabric of any industry. 

Posted in: Financial Services Sourcing StrategiesSecurity and Risk

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You'll wake up on November 10th to a new president and the Great Roboboss Debate!

October 28, 2016 | Phil Fersht

Still confused about what robobosses are and why you may be working for one soon... according to some experts?  

Well, your confusion will soon be over, as we've assembled the ultimate interstellar panel consisting of client leaders, technologists, service providers, analysts and advisors to debate - once and for all - the true impact of cognitive computing, artificial intelligence, IT automation, robotic process automation software and smart algorithms are having - and will have - on our lives, our jobs, our enterprises, our politics and our  society.  

Your Robo-Host:
• Phil Fersht, CEO and Chief Roboboss, HfS Research


Robo-Participants should learn about:
• How should we define what a "Roboboss" is... and should be?
• How far from reality are today's viewpoints from other "experts" - what's real and what's fantasy?
• Do we need a Code of Ethics for Intelligent Automation and Cognitive?
• Where are we going to see “real Cognitive applications” in the short-medium term? 
• Where should we start our Intelligent Automation and Cognitive journey?
• Are today’s service providers really going to be the enablers of Intelligent Automation and Cognitive?
• Buyers - if you could start this all over again, what would you do differently?
• How can we develop “Cogno-boss” skills?
• What is the Real Endgame with Intelligent Automation and Cognitive?


Your Robo-Panelists:

• Lee Coulter, CEO Shared Services, Ascension Health
• Matthew Heffron, VP Innovation Initiatives, Wells Fargo
• Mary Lacity, Curators' Distinguished Professor, UMSL
• Cliff Justice, Partner and Innovation/Cognitive Lead, KPMG
• Dr. Thomas Reuner, Research VP, HfS Research
• Chitra Dorai, IBM Fellow & CTO Cognitive Services, IBM Watson
• Mihir Shukla, CEO, Automation Anywhere
• Chetan Dube, CEO, IPSoft
• Alastair Bathgate, CEO, Blue Prism

 

Posted in: Cognitive ComputingRobotic Process AutomationIntelligent Automation

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Accenture, IBM and Cognizant lead the industry's first Intelligent Automation Blueprint

October 23, 2016 | Phil Fersht

Finally... exactly four years after HfS introduced the concept of Robotic Process Automation (RPA) to the services industry, we can reveal to the world how our service provider and advisor friends are performing with the industry's inaugural HfS Blueprint report on Intelligent Automation.  

Back in 2012, HfS brought the topic of RPA (see link) to the attention of the sourcing industry by challenging its dependency on low cost labor made widely accessible through the ubiquity of global sourcing resources. The report, “Robotic automation emerges as a threat to traditional low‐cost outsourcing,” examined whether affordable, easy‐to‐develop software robots would eventually supplant many offshore FTEs to drive down the cost of outsourcing to an entirely new digital level. We concluded that robotic automation, or Robotistan as we affectionately called it nack then, had immense potential to be a highly disruptive and a transformative technology for buyers and service providers that would forge a whole new services industry landscape that incorporated truly global operating models that not only took advantage of globally available labor, but also accessible technology that could help digitize, streamline and standardize business processes. This wasn't only about making thing run more affordably, but this was about helping enterprises digitize their business operations more effectively to respond to their customers', partners' and employees' needs... as those needs arose.  That was then, and was just RPA.

Fast forward 4 years, and the broader notion of Intelligent Automation (IA) is not only top mind of BPO executives but across the whole industry as all the facets of IA are about decoupling routine service delivery from labor arbitrage. However, despite the high profile, the understanding of how IA is impacting the industry is at best blurred as the marketing communication is both scarce and often confusing. Normally, no topic is small enough to be hyped, to be shamelessly exaggerated. Yet, in the context of automation the usual suspects, the service providers, ISVs and sourcing advisor remain coy and largely on the sidelines. Probably the two key reasons for that are that the impact on revenue models is not well understood and the disruption among workforces, the fear factor, the connotations around the topic. As such as our own Lee Coulter aptly put it, in the context of IA we have something akin to the Tower of Babel. We have many languages but can’t understand each other. Enough reasons for our Intelligent Automation expert in residence, Tom Reuner, to take stock as to where the development of IA has advanced to.

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Tom, there appears to be a lot of noise around Intelligent Automation in the industry? Is the hype justified and where does it fit in strategically for buyers?

Noise is probably a good way of putting it, Phil. While many talk about automation or least refer to it, few actually provide insights about the market dynamics or even educate stakeholders about the many implications of IA. In my 20 years of being an analyst and consultant I can’t

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Posted in: Business Process Outsourcing (BPO)Cognitive ComputingDigital Transformation

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Wippirio could leave its Indian heritage competitors in the cold... if it gets this one right

October 20, 2016 | Phil FershtKhalda De Souza

Consolidation in the SaaS services market continues apace with the boldest move yet by an India-headquartered service provider into the SaaS services market to date. Wipro has announced its intention to acquire Appirio, one of the strongest and most respected independent cloud services brands in the world for $500m. 

This is a significant deal in a services industry struggling to find fresh paths for future growth, with revenues slowing and the traditional model of outsourcing around SAP and Oracle environments commoditizing.  This has especially been the case with the Indian majors, whose leaderships are starting to panic with their hyper-growth days now a thing of the past. In our view, Wipro is stepping up to the plate right where the future growth lies, by adding significant capabilities around Salesforce, Workday and ServiceNow platforms, in addition to bolstering its

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Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesSaaS, PaaS, IaaS and BPaaS

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HfS strikes HR tech gold with Steve

October 19, 2016 | Phil FershtSteve Goldberg

Steve Goldberg (click for bio) is Research Vice President, HR Technology and Workforce Strategies at HfS Research

Back when enterprise time began and God was handing out the technology dollars, why was the Chief HR Officer always seemingly at the back of the queue?  Why did so many of our beloved enterprises become plagued with the clunkiest, funkiest legacy systems we never could have dreamed up in our worst nightmares? Especially when you consider the data critically and sensitivity of one's employees - their profiles, their health records, their compensation, their performance etc...

So it's no surprise that the advent of the SaaS based HR suite has been embraced like manna from Infosys heaven. Suddenly, our HR-technology plagued enterprises can hatch a plan to rip out the cancerous legacy and slam in something that's standardized, has hire-to-retire process that are sort of adequate, and doesn't require that cobol transformation project each time you try to push through an exception payment. So what better timing than for HfS to bring aboard Steve Goldberg - a true veteran of the HR tech world - to lead our thinking in the space and is freshly returned to his desk from the HR Technology show (read his blogs here).

Welcome Steve!  Can you share a little about your background and why you have chosen research and strategy as your career path?  

Sure Phil.  I've basically operated on all sides of HR Technology, so a real diversity of experiences.  This includes HRIS and Talent Management practitioners in the U.S. and Europe,

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Posted in: HR OutsourcingHR StrategyOutsourcing Heros

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The Intelligent OneOffice - the endgame for the new generation enterprise

October 15, 2016 | Phil Fersht

We're rapidly evolving to an era where there is only "OneOffice" that matters 

The OneOffice paradigm is all about creating the digital customer experience and an intelligent, single office to enable and support it. In a few months, we won’t be talking nearly as much about automation and digital technology as the critical “value levers” for operations, as they become an embedded part of the fabric of the future operations platform for new generation enterprises. Instead, we will be talking a lot more about OneOffice, where an integrated support operation has the digital prowess to enable its enterprise to meet customer demand - as and when that demand happens.

OneOffice is when the needs and experiences of the customer are front and center to the entire business operations, where the old barriers between corporate operations functions (often referred to as “front” and “back office”) are eroded and the constraints of legacy ERP systems are minimized to allow the business to invest in digital technologies and capabilities that enable it to cater proactively for its customer needs at the forefront of its markets and be a very fast responder if these needs change unexpectedly.

In short, OneOffice is the endgame, where the digital enterprise can work in real time to cater for its clients. It’s where the intelligence, the processes and the infrastructure can come together as one integrated unit, with one set of unified business outcomes tied to delighting customers.

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 Why is digital the new language of business?

In a nutshell, people simply want to operate digitally these days, whether they are an employee, customer or partner. They want to use interactive technology, mobile apps, social media, text, online chat etc. to get things done. People are used to using sophisticated digital technologies in their personal lives, and now expect to use them in their professional lives. Whether they are buying products, groceries, renting accommodation, ordering Starbucks, takeout, applying for mortgages, insurances policies etc., digital technology is the new language of business.

The issue facing many traditional business today is the fact that while the consumer is increasingly digitally sophisticated, many enterprises are still beholden to legacy technologies

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Posted in: Digital TransformationOneOfficeThe As-a-Service Economy

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Dinner with Watson, Coulter and Holmes...what’s on the menu?

October 12, 2016 | Phil FershtLee Coulter

If there's one character, on the client side, who's really take on the mantel of "Chief of the Robo-Buyers" it's Lee Coulter, the year's Chairman for the HfS Sourcing Executive Council.  

He probably won't appreciate the moniker, as his standards group has already dropped the term "Robo", but we'll call him that anyway...  So without further ado, let's hear more from Lee as he gathers his thoughts after the recent HfS Cognition Summit: 

Server: “Hi there, my name is HAL, and I will be your server. Can I get you started with something to drink? Sparkling water or something else perhaps?”

Watson: “I’d like a Hadoop martini, Drilled not Dremeled.”

Holmes: “That’ll be fine for me, too, but with some Flume and a touch of Pig”

HAL: “Sure. And have you had a chance to look at the menu? Do you know what you’d like?”

Watson: “I’d like the Presto with Storm please. Can I get a side of Sqoop as well?”

Holmes: “I’d love some Oozie with the Mongo preparation and Thrift as a starter.”

Server: “Very good. I am putting myself to the fullest possible use, which is all I think that any conscious entity can ever hope to do.”

A few weeks ago, at Phil’s event in White Plains, I got to hang out with some of industry's best and brightest. Of course, as we have been doing at HfS for years, we looked to the future for trends, disruption, and new capabilities that will influence what the SSO industry will be facing. I also had the privilege to hang out with Gerd Leonhard for a couple hours over a drink. That was a real treat.

Not surprisingly, there was a lot of talk about automation, machine learning, AI, cloud, aaS, and so forth. I remarked to Phil that gone are the days when we were wrestling with how to do transitions well, how to contract for BPO, location strategies, and even the years-long discussion about why we aren’t getting innovation from our service providers. In the last three years, the conversation has totally changed. Whether you are a Utopian or a dystopian, the

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Posted in: Cognitive ComputingIntelligent Automation

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Bye bye bricklayers?

October 09, 2016 | Phil Fersht

When you see major advances in disruptive robotics, such as the soon-to-be-unveiled Hadrian X, which claims to build a house in two days, moving four times faster than human construction workers, you realize that making invoice process workflows more automated is small-time, when it comes to achieving real robotic efficiencies:

The robot, named Hadrian after the Roman emperor who built defence walls in England, is being primed to work day and night, lay 1,000 bricks per hour, and could potentially build 150 homes in a single year. That's a lot of construction workers who may just not be needed anymore... and where you get genuine hard cost savings because you're removing actual labor, not merely automating some annoying manual steps in a process chain.

Posted in: Robotic Process AutomationThe As-a-Service Economy

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Let’s make Outsourcing Great Again!

October 02, 2016 | Phil Fersht

What a September that was the industry formerly known as “outsourcing”!

An "industry" still searching endlessly for an identity, a purpose and a value proposition, founded on more than dredging up cost savings through lower wages, tortuous conferences for bored sourcing advisors and pompous analysts who ask idiotic “questions” which end up confusing themselves… but finally we finding some salvation for our industry! Finally outsourcing doesn't have to fester on the scrap heap of legacy commoditized business models, akin to what happened to the telecom industry...

The State of Denial is over in the States. In White Plains for the HfS Cognition Buyers’ Summit, the mood was the most upbeat I have experienced in a long time – clients were peeping above the bed covers and saying “I want real examples, I want to touch and feel this automation stuff… tell me what I need to know and how this is done”. There as a stark admission that “our kids will be alright, they live and breathe what is needed in organizations today, its us mid-career folks who need to be worried – we’re the ones who need to reinvest ourselves if we are to stay relevant”.

Many of the Indian providers want to extend their stay in Denial a while longer. Then we took the HfS team over to Bangalore, India for NASSCOM’s 19th BPM (BPO) Strategy Summit, where most of the local service provider dignitaries were firmly hiding under their bed covers asking the same old question: “How can we sell higher value deals to the same clunky big enterprises without doing anything differently since we started doing this stuff 19 years ago?”.  Clearly most of these guys won't change course while they're still enjoying a (diminishing) 5% revenue

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Posted in: Business Process Outsourcing (BPO)Digital TransformationThe As-a-Service Economy

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It's back... the industry's seminal study on outsourcing and shared services!

September 29, 2016 | Phil Fersht

Posted in: Business Process Outsourcing (BPO)HfS Surveys: All our Survey PostsIT Outsourcing / IT Services

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Accenture Acquires DayNine and positions itself at the forefront of the race for Workday services supremacy

September 26, 2016 | Phil Fersht

Why do the eyes of HR people always light up when you mention the word “Workday”?  Has Workday become the “complete suite” for the HR function, in a similar vein that SAP did with the CIO in the 1990s? 

Well, judging by the feverish excitement from the leading service providers to scoop up the best and brightest of the star niche players, the battle for Workday services supremacy has hit fever pitch, with Accenture following IBM’s and KPMG’s recent acquisitive forays in the space with the purchase of DayNine.

So over to HfS analyst, Khalda de Souza, author of our Workday Services Blueprint 2016 report to giver her take on what this means to the future of Workday services:

What did we tell you last week? Workday Services Blueprint 2016: Lots of Changes in this still Immature Market . Yes – this market is moving fast with even more consolidation in the Workday services market!

Accenture’s latest move in this competitive game has potentially check-mated its closest competitors, at least in the short-term. Instead of just acquiring a set of specific technical or geographical delivery capabilities, Accenture has targeted one of the leading Workday services partners in the market.  Both service providers did very well in the recently published Workday Services Blueprint 2016 report. We positioned Accenture and DayNine in the Winner’s Circle because they both demonstrated depth of experience and capabilities, impressive investment in tools and technologies to support deployments, and a focus on talent retention, all supported by strong client references. In fact, we positioned DayNine as the best executor in the Blueprint.

We estimate that the combined entity has a total of 1,275 people in the new Workday practice, including an estimated 1,152 certified Workday consultants. This is bigger than the largest Workday practice we have seen so far at Deloitte. Moreover, Accenture consultants hold an average of 2 Workday certifications each, and at DayNine this figure is 3.5, among the top 4 in the Blueprint.

Of course, it’s not all about pure scale. DayNine gains access to Accenture’s broader consulting capabilities and innovation around service development. Accenture gains access to medium sized enterprises and additional skills in Europe, which is a hot growth area for Workday services next year.  This initiative also aligns neatly with Accenture’s Cloud First growth agenda. It acquired Salesforce services partner, Cloud Sherpas last year (see: Why Accenture's acquisition of Cloud Sherpas is both an offensive and defensive move) and  more recently, Italy-based Salesforce solutions provider, New Energy Group.

The Bottom Line:  DayNine was one of the last "hidden Workday jewels" waiting to be snapped up... now Accenture needs to make 1+1=3 to deliver

By acquiring DayNine, Accenture will have the opportunity to create genuine synergy from this acquisition, if they can realise the ’1+1=3’ value proposition that this appears to be on paper. Yes, there is a lot of work to do as there always is when acquiring any IT services entity. But if the strategic alignment and energy from Accenture Cloud First Applications lead,  Saideep Raj,  Accenture Workday practice lead, Beth Boettcher,  and DayNine CEO and co-founder, Tim Ramos (who will lead the new Accenture DayNine group), is anything to go by, the main recommendation for competitors is to Watch Out!

 

Premium HfS subscribers can access the new HfS Blueprint Report: Workday Services 2016 here. 

Posted in: Business Process Outsourcing (BPO)HfSResearch.com HomepageSaaS, PaaS, IaaS and BPaaS

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Goodbye Denial… we’ll miss you!

September 18, 2016 | Phil Fersht

Don’t you just love being in Denial? That wonderful place where all you have to do is show up for work, do the same old, same old… and everything just keeps on ticking along. Isn’t it so cool to wake up in the morning and proclaim to the world that you’re just so excited to plonk your behind down in your tried and trusted swivel chair and keep those lovely green lights staying on?

Well, I have bad news for, Denial-lovers, because we finally all accepted, at the HfS Cognition Summit this week in Westchester New York, that we have to bid our fond farewells to that nice cosy place, where linear growth and green light happiness were taken for granted, where it was OK to have lots of manual workarounds to keep workflows going, when robots were visitors from the future, as opposed to appearing on your desktop to run repetitive loops on your invoice processing…

As our recent study of 371 major enterprise shows, well over half (56%) of senior leaders now expect to see major moves towards intelligent operations within two years. Compared to our 2015 study, where 70% were still looking at a 5 year horizon:

 

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Two years is real, it's a time span that impacts us all today, not one where we are procrastinating, or simply leaving the problem to someone else, once we have left our current job.  

By why now?  What's wrong with a few extra years wallowing peacefully in Denial?

Social media is leaving us with nowhere to hide. Let's face facts here - RPA technology, by and large, is nothing new - much of it has been around for the last decade and beyond.  "Cloud" has been around for so long, we've almost forgotten about it.  Cognitive tools are still largely smart macros and algorithms (again, nothing new), while Rolf Faste was harping on about Design Thinking to Stanford students in the 1980s. The reality, today, is that we're educating ourselves (and hyping ourselves) at a breathtaking daily pace and, suddenly, if you don't have an automation strategy, are tinkering with cognitive capability and have some clue how to make your enterprise behave more "digitally", then you are officially legacy. The way we think, operate, manage and communicate is becoming brutally exposed - in almost every business situation with which we deal. If you are behind the curve, everyone knows it very quickly and you are typecast as the walking corporate dead. There is nowhere to hide, people... it's time to purchase that one-way ticket out of Denial, before that long-awaited career move making sandwiches becomes your future.

Offshoring never was a permanent solution, it's part of the gearbox of value levers. Remember all those times we debated the accidental "career" that is outsourcing? When shifting back office work to cheaper labor pools around the world was a special skill, a unique capability that only a very select group of us, endowed with this blessed experience, could boast? What we weren't really considering, back in Denial-day, was that offshoring work was only the first phase in a quest for better efficiency and value. Just because you signed a five year deal to shift the work of 500 headcounts to a be carried out at lower cost elsewhere, didn't mean you weren't intending to search continually for new ways to innovate in the future?  Most enterprises that have outsourced IT and business process work today are already putting real pressure on their operations leadership to commit to new, identified value levers, with an automation strategy being the prime lever that is the natural sequential transformation phase for most operations, whether or not they are outsourced.

Digital disruption is driving more urgency and paranoia among enterprise leaders. In many industries today, digital business models can completely take established legacy enterprises out overnight. If you are (for example) an insurance firm with 10,000+ people processing claims onshore using green screen computers, a bank which still has hundreds of branches employing tellers from the 1970s, or a retail outlet with no mobile app strategy, you are at dire risk of competition coming at you with a completely app-ified, user friendly, intuitive and cognitive business model, supported by low-cost sourced operations. If you have failed to see what could be coming at you, and do not have that salvage plan already in play, where you are ripping out that costly, unnecessary legacy, with a plan to compete against your potential "uberized" new competitor, you really are doomed. If you are a highly paid enterprise leader who is not aware of what could happen, without a plan to counter it, you might not be in a job for much longer... 

The Bottom Line:  Leaving Denial is one thing, but make sure you arrive successfully in Optimistic Reality

If there's one thing that we all need to stamp out, it's the pessimism and fear-mongering - most of it's unwarranted, unfounded and irresponsibility created by people who should know better. The reality is, we are dealing with some disruption to jobs, as automation, when implemented well, can reduce some transactional headcount (which we predict as having a 9% negative impact over the next five years, and will be largely offset by natural attrition and workers evolving their skills into other areas).

In my view, the real threat comes in the form of disruptive competitors using digital platforms and cognitive computing that can wipe out your enterprise overnight. Imagine a new bank appearing, with a great mobile app, immediate customer service via chat / phone etc.  Or a rival insurance firm that delivered everything you needed at half the premiums, but twice the usability?  You'd switch in a heartbeat wouldn't you?  And these capabilities are here today, they're not coming tomorrow.

And also remember that the threat of legacy extinction is with mid/advanced career folks, not our kids... they'll always adapt and survive, as they have the digital skills and awareness to do what modern businesses need. It's the 35+ generation that needs to get with the program and grasp how to manage automation initiatives, how to understand a cognitive workflow, how to determine and execute a digital business model. It's the mature executives who have been basking far too long in the delights of Denial and must make a hasty exit to Optimistic Reality. 

Posted in: 2016 Intelligent Ops StudyHfSResearch.com HomepageSourcing Change Management

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