HfS Network

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



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 digital and mobility capabilities in the retail and media spaces. Our concerns are whether Wipro can truly integrate the two firms effectively, with a poor track record of Indian-US acquisitions (Lodestone/Infosys and Genpact/Headstrong are example of mergers which struggled from both a business and cultural fit.)

Adding SaaS consultants to compensate for declining legacy ERP services revenues is the new enterprise services game

The traditional Western service providers have been hard at it picking up the niche "As-a-Service" providers, most notably Accenture's acquisition of DayNine last month, IBM picking up Meteorix and KPMG's acquisition of Towers Watson's Workday practice in the Workday services ecosphere, and Accenture/Cloud Sherpas, IBM/Bluewolf and Capgemini/Oinio in the Salesforce market.  While the Accentures, IBMs and Capgeminis et al have been in a hurry to replace declining ERP services revenues with the implementation and consulting dollars around the hot enterprise SaaS platforms, the Indian heritage majors have been notably absent in the SaaS services space.  Until now.  

The acquisition strengthens Wipro’s position in the Salesforce services market and gains it access to the fast-growing Workday services market. Appirio gains important global scale, particularly to boost delivery capability in Europe, and strengthened offshore capabilities (Appirio already has a delivery location in Jaipur).

Consulting + IT integration + BPO + Global Delivery Scale = Huge potential for Wippirio

Based on the data collected for the HfS Blueprint Report: Salesforce Services 2015, we estimate the combined Salesforce certified consultant pool to be 957, which places it just behind market leaders, Accenture, Cognizant and Deloitte. In Workday, Appirio has approximately 210 certified consultants and a wealth of experience with a total of approximately 419 projects and ongoing engagements, based on our HfS Blueprint Report: Workday Services 2016.  With Wipro's massive scale in IT services and its  $720m dollar BPO business, the combined entity has huge potential if its leadership can get the integration right. Moreover, the merged entity is one of a very small band of BPO providers which has a massive call center scale and client depth and a worldclass Salesforce implementation capability. There is also future opportunity to bring together the firm's strong F&A BPO presence with the nascent uptake of the Workday Financial Management suite, in addition to supporting HRO engagements based on the Workday HRMS and HCM platform.

Both providers are known for strong technical skills and have invested heavily in tools and technologies. Wipro has developed a wide range of Salesforce1 platform based solutions, including industry sector focused offerings, such as its Physician Relationship Management solution.  In addition, Appirio's web development services around Salesforce and Heroku have led to some very impressive work for clients such as Eli Lilly is a major plus for Wipro. Appirio, for its part, has the industry renowned Appirio Topcoder Platform, its proprietary crowdsourcing development platform, which now has nearly a million members. Moreover, Wipro’s focus on management services complements Appirio’s clear strengths in implementation services. Both providers offer consulting services, but this remains an area to strengthen and market to prospective clients.

Despite Wipro’s investment in Wipro Digital, it is still known predominantly as a technology services partner which enables the digital experience, as opposed to designing it from the customer end. Appirio's digital and mobility focus, especially with retail and media clients, should benefit the merged entity considerably. Wipro should also benefit significantly from Appirio’s Worker Experience approach, which helps organizations transform their employee experience, to gain additional credibility in the HCM and CRM markets. Aligned to this are also Appirio's expertise in servicing popular SaaS solutions Cornerstone-on-Demand (talent management) and Medallia (customer experience management), not to mention acumen in servicing corporate Google environments

Depending on the success of the merger, clients can potentially look forward to a full service suite offering around Workday, Salesforce and ServiceNow, with a focus on business outcomes. Wipro and Appirio clients we have spoken to in these markets are already pretty satisfied, highlighting Wipro’s ability to provide proactive advice, and Appirio’s focus on customer satisfaction. A smooth merger in the services industry is, however, seldom possible and a lot hinges on Wipro’s ability to hold on to the best talent at Appirio (there will be several hungry Workday partners ready to pounce) and integrate offerings. More importantly, the challenge of integrating cultures and business could be massive, especially since Wipro has to change mindsets, working attitudes and break down its internal business silos, to take full advantage of the potential here. If it pulls it off, Wipro will be joining the front-runners of the SaaS services market, and develop a strong differentiation from the other India-headquartered service providers.

Bottom Line:  Wipro muscles its way to the front the SaaS services market, with few left worth buying. Does this leave the other Indian majors out in the cold?

With this acquisition, Wipro is officially the leading Indian major in the SaaS services space, boasting significant Salesforce resources, a decent sized ServiceNow practice and, perhaps most excitingly, a Winners Circle caliber Workday practice:

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When you consider DayNine is now part of Accenture, you could argue that only OneSource Virtual and Collaborative Solutions are the last two "pureplay" As-a-Service providers left in the Workday ecosphere worth acquiring to come close to matching Wippirio's combined strengths.  So does this leave the likes of Infosys, TCS, HCL, Cognizant, Tech Mahindra et al out in the cold when it comes to being serious enterprise SaaS providers?  Surely one has to make a move soon to add expertise and depth to compete effectively.

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



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



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 expectantly.

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



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



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



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



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



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



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



Whoever said the omnichannel was a myth?

September 09, 2016 | Phil Fersht

Posted in: Absolutely Meaningless ComedyContact Center and Omni-Channel



Why is Gartner spewing such irresponsible and unsubstantiated data about "robobosses"?

August 29, 2016 | Phil Fersht

Clients are being subjected to such a load of nonsense about the impending impact of robotics and cognitive computing on enterprise jobs, many are literally terrified. Conversing with the "head of automation" for a F500 organization today, is akin to meeting a Secret Service agent in a clandestine alleyway. These people do actually exist, but most have to conduct their work under a veil of secrecy, due to the level of discomfort and panic our robo-commentators are making in the presses.  

Remember the panic about jobs getting shipped offshore?  Well, that is child's play compared to the emerging tumult of fear being generated by jobs being completely eliminated by robotics. Net-net, people are frozen stiff with fear, and it's the responsibility of respected analysts, consultants, academics and journalists alike to educate and world using real, substantiated facts. Sadly, the likes of Gartner, McKinsey, Oxford University and our beloved Stephen Hawking, all seem hell-bent on capitalizing on the panic to grab the headlines (read my post earlier this year) as opposed to dispelling much of the ridiculous scaremongering about the impact of automation on job losses.  

At HfS, we published a very thorough analysis on the impact of automation on global services jobs, showing there is likely to be modest downsizing of ~9% over the next five years as low-end tasks are increasingly automated across major service delivery locations.  And this 9% will be immersed in natural attrition and redeployment of workers to other industries, as global services streamlines and matures as an industry. Yes, there will be impact, and it will be somewhat painful to absorb for some enterprises, but it's not the impending workforce apocalypse these people are predicting. 

So why, pray tell, is Gartner, a respected voice in IT research, continually pounding us with continual scaremongering that we're all doomed to the will of the robot, and we may as well start preparing for a life of unemployment, or sandwich making? Oh wait, robots can even make sandwiches, right?

Peter Sondergaard, Gartner's Head of Research, predicted one in three jobs will be converted to software, robots and smart machines by 2025.  OK, that's so far out in the future, I think Peter's on pretty safe ground here - he's probably going to have cashed in his Gartner stocks long before then, in any case, and be on a golf cart somewhere, when one very earnest soul decides to dig into the Gartner archives of previous decades to read very old research, with very dodgy predictions, that absolutely noone care about anymore.  So we'll let Peter off the hook here - he wanted to make a splash at his Symposium and he achieved exactly that.

But then we get treated to this almighty whopper from Fran Karamouzis, a vice president and distinguished analyst at Gartner...

By 2018, more than three million workers globally will be supervised by "robo-bosses".  Wow - isn't this barely more than a year away? Excellent, so Fran's going to be around to declare automation glory when global employment goes through a robo-geddon so seismic, it'll be like all three terminators visited from the future at once  to change the world? My god - what is going on here? The suggestion that an employee will be supervised by a machine simply cannot be corroborated by any meaningful research...

So why do we, at HfS, view claims like this as factually incorrect and irresponsible? 

There is only one very shaky example of "robo advisors" in the industry. The most cynical implementations of automation that HfS has come across, thus far, where direct replacement of human labor by robots is the declared outcome, are examples such as Royal Bank of Scotland, where virtual agents, deployed as “robo advisors” are solely deployed to replace FTEs.  We've also witnessed a service provider radically downsizing some delivery staff claiming success of its robotics strategy (only to find out later these staff were simply redeployed elsewhere).  Let's be honest here, the onus so far seems to be about firing people and using "robotics" as the smokescreen. While Intelligent Automation decision-making will undoubtedly increase (view our Continuum here), we see no examples of employees being supervised by bots. At HfS, we are covering every deployment in the industry, and are just not seeing it.

We still haven't had a real debate on the ethics of automation and cognitive computing in the B2B environment. Suggestions that employees will be supervised by bots can be traced to the broader discourse on Artificial Intelligence, where more consumer-facing technologies are discussed with undercurrents of movies, such as the Matrix. These discussions tend to focus on technology capabilities of providers like Google and Facebook. However, we haven’t seen a similar debate in the B2B space. If anything, the B2B urgently needs a debate on the ethics of automation, in light of these nascent cognitive capabilities. But to surmise that robobosses will be so prevalent in barely over a year before we've even had these debates is quite absurd.

The speed of internal organizational change is painfully slow. The tendency from clients with automation is to pilot first, rather than to go full scale, and every ambitious forecast is always waylaid by the reality of interacting with legacy systems.  Most of today's Robotic Process Automation(RPA) tools are simply being retrofitted into smoothing over manual processes within legacy technology environments with obsolete processes. They are adding efficiency to broken operations, which may, in the future, lead to a lesser need for headcount in low value work areas.  Talking about today's enterprises being so close to investing in Robo bosses is just very wide of the mark.  What's more, much of this RPA technology has been around for more than a decade - this stuff isn't exactly revolutionary, it's just becoming more popular as enterprises figure out further efficiencies beyond initiatives such as offshore outsourcing and shared services

Cognitive tools are only just emerging. While IBM has done a stellar job aligning its Watson capabilities with the healthcare industry (read our report here) and software experts such as IPSoft's Amelia and Celaton have some compelling client stories to tell, the focus on self-learning and intuitive cognitive solutions are mainly confined to customer service technology and virtual assistant chatboxes.  Talk to the call center BPO providers and they're really only just figuring this out.... forget robobosses, we're still just trying to figure out some basic software to make chatboxes work better these days. Moreover, with Watson, our research shows it's best application today in the medical field is helping flesh out the bad science and saving scientists serious amounts of time doing their research.  Meanwhile Celaton, in the UK, has created a really cool tool to help Virgin trains handle emailed customer queries.  But the long and short, here, is that Intelligent Automation solutions today are great at augmenting processes and unstructured data pools, not replacing real people who make real decisions doing real jobs.  

The definition of robo bosses, and the potential value, of robobosses is missing. There is, however, something to be said for the value of increased automation combined with analytics to better understand the impact — measured by targeted business outcomes — in a more realtime way during a contract with a “gig economy” worker (or any worker).  Such knowledge can help us intervene and train/coach a project “going south” sooner, or catch fraud fastest, or identify a worker to “gets it faster”. Along these lines, we see value in "robo advice", but the point also needs to be made that these "robobosses" (give me a break) do not work alone, such as with Watson and health / medical diagnosis and treatment, they work in tandem with doctors / clinicians, changing and refining the dr/clinician job (freeing up that person to be more targeted and more of a coach than a statistician) with the intent of better medical results.  These robo tools (or whatever we call them) do not replace the doctor / clinician. 

Monitoring software has existed for decades... so when does it become a "Roboboss"? Currently, there are probably a million or more workers just in the UK (for example) managed by extreme monitoring of some kind. The Amazon style warehouse pickers, fast food cooks, many call center agents, delivery drivers, assembly line factory workers are subject to time monitoring and computers giving them tasks. We're just not sure when this turns into a roboboss?  

Bottom Line: The real "roboboss" is the human worker who can use Intelligent Automation tools effectively

It today's swirl of gibbering noise around the social media presses, it's the responsibility of leading analysts, advisors and academics to be the voices of sanity and reason, when it comes to topics as critical as the future of work elimination through Intelligent Automation technology.  The vendors love the hype as it gets them attention with clients, but analysts who like to take money from these vendors have a responsibility to articulate the realities of these technologies to their clients. They are great at augmenting work flows, and even aiding medical discoveries, but this is the real value - it's not about sacking people.  It's about making operations function better so people can do their jobs better.  The real "roboboss" is the human enterprise operator who can use smart Intelligent Automation tools to enhance the quality of their work.

Net-net, industry analysts, advisors, robotics vendors, academics and service providers need to engage with clients around how all these disruptive approaches will affect talent management as well as organizational structures. Even without these apocalyptic scenarios, some job functions are likely to either disappear or be significantly diminished (as our 9% forecast reveals). Equally, we need to talk about governance of these new environments, touching upon ethical, but also practical, issues. This is not only a necessity for the broader adoption, but also offers high value opportunities. 

I'll probably get a few nasty messages as a result of this piece, but I sincerely hope this has the outcome of steering our industry conversation in a more realistic direction, backed up by real data and experts who prefer realistic conversation that mere headline-grabbing and panic creation.  

A special shout out to Cartoonist and Innovation evangelist Matt Heffron for penning this little gem:

Click to Enlarge

Posted in: Cognitive ComputingConfusing Outsourcing InformationRobotic Process Automation



Beware men in gray suits: Clients want more senior women, more real client stories and less automation hype

August 27, 2016 | Phil Fersht

We set out a few weeks' ago, with support from NASSCOM, to test the views of service buyers, advisors and providers on what the BPO industry needs to do to make the leap from delivering mere efficiency to one that can provide genuine strategic value to clients (if this is indeed possible).  

As we filter through the first results, what immediately leaped out at me was the following:


Clients want more women leaders and real case studies... more than anything else

"Why are these providers and advisors dominated by boring men in gray suits?"  bemoaned several clients at one of our HfS Summits recently (where more than half the buyers executives present were actually female).  This is a serious issue, folks. Our industry has - somehow - become dominated by too many dinosaur service provider executives with their lavish air-miles accounts and two iPhones* (why do some people insist on having more than one iPhone?  Are they really that popular?), who have, at the same time, somehow lost all records of actual client success stories that justify their new vernacular around "digital transformation" and "automation".

In fact, during one service provider briefing last week (which will remain nameless), we asked an executive to explain how he defined "Digital Transformation" (after many utterances of said phrase) and the poor chap was positively floored that he was asked to define what he was talking about. These people seem to be obsessed with recanting the vogue buzz phrases, without the need anymore to know what they really are. Can we just call it "technology" again and go back to sharing real examples of how technology can enable and transform client performance? Can we just explain what all this hype is surrounding automation and emphasize that most of today's RPA technology has actually been around for more than a decade in many shapes and forms?

Here, it's abundantly clear that we need to see more women - and, dare I say it, more youthful executives, who can simply connect better with the clients.  Everything has become so dominated by the men in gray suits, who talk in increasingly more impressive riddles that are becoming increasingly distant from reality.  Moreover, we need to dispel much of the hype surrounding automation and jobs impact:  Gartner's unsubstantiated claim that "more than three million workers globally will be supervised by robobosses in just 18 months' time", is simply irresponsible and unprofessional. It's time to make it real and drop the hype and scaremongering...

The Bottom Line: It's time for progressive change from within to break ourselves out of this legacy holding pattern 

The industry has spoken, and it's not pretty - clients are fed up with the same old selling, the same old unsubstantiated hype and the same old cronies dishing it out. Change only comes when we look at progressive change, not successive change. This means we must stop making the same old mistakes by replacing jaded middle managers with more faceless middle managers with a hype-upgrade; this means we must stop plastering out turgid marketing that was really a rip-off of the other ten competitors, with a different logo slapped on it.

We need real people selling and delivering our solutions, who can listen to what clients need and can really empathize with them, who are diverse across the genders, the age groups and the ethic backgrounds. We need to start talking real English again, and less of the manifested garbage we can't resist spewing out to mask our insecurities. As our whole 2017 research theme at HfS is centered on... it's simply time to start making everything real again and redefine our industry as something that is geared up for our clients' real needs, not needs we are trying to convince them they have! 

*In full disclosure, the author of this article has been seen once sporting a gray suit and did possess two iPhones for a brief period of time.  He has since changed his ways...

Posted in: Business Process Outsourcing (BPO)HfS Surveys: All our Survey PostsHfSResearch.com Homepage



You can bet your mortgage-as-a-service on Accenture, Wipro, Cognizant and TCS

August 24, 2016 | Phil Fersht

Perhaps the best example of the evolving As-a-Service delivery model that immerses all the value levers of global delivery; namely offshore talent, cognitive automation tools, analytics and the digital customer experience, can be found in the burgeoning mortgage processing industry.  With banks going all out to sell highly competitive mortgages at record low interest rates, the onus to manage the whole process both efficiently and intelligently, while battling all the regulatory demons, has never been so great.

Two years after our inaugural Blueprint in Mortgage BPO Services, we took a fresh look at this industry… here’s announcing the findings of the HfS 2016 Mortgage As-a-Service Blueprint, led by HfS banking analyst, Reetika Joshi.

The concept of delivering mortgage As-a-Service, using plug and play digital business services is still in its infancy. We’re not quite at “push button, get mortgage” as an industry – and the verdict is out on whether this is the right message to send for a lending environment that is still rebuilding itself, seven years after the 2008 housing crash. How do you do this without raising eyebrows? You’ll have to ask Quicken Loans, as they learn from the backlash of their Super Bowl campaign with that very slogan.

Reetika, how do you view the 2016 Service Provider Landscape?

Our HfS Blueprint methodology assesses service providers based on two critical axes: Execution and Innovation. We gather data to support our analysis from client reference interviews, market interviews, RFI submissions and exhaustive service provider briefings.

In this Blueprint, we identified four As-a-Service Winners: Accenture, Cognizant, TCS and Wipro. These service providers have the strongest vision for As-a-Service delivery in the mortgage industry, and are driving collaborative engagements with clients to bring this vision to life. They are making significant investments in future capabilities in automation, technology and borrower experience to continue to increase the value over time. 

The High Performers in this year’s Blueprint are a highly competitive set of service providers:  Genpact, Infosys, ISGN/Firstsource, Sutherland Global Services and WNS. They have high execution capabilities and are growing their client bases as a result of investments in future capabilities and innovation. These service providers have the pieces in place for As-a-Service delivery, and need to focus on consistently bringing these capabilities to clients and scaling up with broad, multi-client solutions. We expect them to challenge the Winner’s Circle leaders in the next couple of years, with each building on unique strengths and assets in this vertical. 

We see Unisys and Xerox as the Execution Powerhouses. These service providers are strong in operational excellence with ubiquitous technology platforms in their respective markets, and need to focus on value chain expansion and innovation in their services stack:

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Why does mortgage needs to have a different approach and response to “digital disruption”?

Despite this sensitivity, other industry forces still march on; regulation, homebuyers and a new breed of disruptive fintech firms are steadily shifting the entire mortgage industry towards generally being more digitally enabled. Lenders have this big ask today: how to carefully balance their investments in new technologies, with changing consumer needs, volatile rate

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Posted in: Financial Services Sourcing StrategiesHfS Blueprint ResultsHfSResearch.com Homepage



Social media has turned us into a society of gibbering digital morons

August 19, 2016 | Phil Fersht

As someone who has profited very nicely from social media (I helped build an analyst company with blogging and social at the heart of our culture), I am probably not the most appropriate person to speak out against the negative side of social media’s impact.  But, as Gerald Ronson once famously espoused to the editor of the Guardian newspaper, “Opinions are like arseholes, everyone has one”, I just can’t help myself, so I’ll give you mine…

2008 was a financial disaster fueled by greedy bankers; 2016 a political disaster fueled by social media wankers.  Opinions on politics.  My god – back in the day, people pretty much kept quiet on their views until they had some facts to back them up.  Today, they just have a bloody opinion and want to get it out there, regardless of whether they can justify it or not. When they get into an argument, they just try and shout louder, rather than listening to reason.  David Cameron has been guilty of one of the biggest political snafus of modern times, where he went to the public with a complex decision to be made.   Instead, all he succeeded in doing was allowing every opinionated idiot with a twitter account to air his or her views on society at large, until the vote become one about him and the establishment and not whether Britain should remain in the EU. (And you wonder why Hitler loved referenda…)

All social media has achieved is providing a platform for people to spout off unsubstantiated rubbish, as opposed to a collaborative opportunity for them to learn more about what’s truly going on in the world.  Then we advance to the lovely US media and the most insufferable election in history, where reality got somehow lost in a maelstrom of hype, tweets and many unsubstantiated facts that really dumb people actually believe.  All I can say is that I cannot wait for the election to be over so we can actually get back to some normalcy of running a country again.

The tech and services industry has complete lost itself in the socially-driven hype. So let’s reflect on what happened to our industry over the last couple of years.  For a while, social media was fun – we could debate the trials and tribulations of real services and real technology and how to improve ourselves.  Suddenly, the facts have got lost somewhere are we’ve arrived at this dark place where it’s more about who’s making the loudest noise than who’s talking the most sense.  Every supplier of tech and services talks up “Digital” but never defines it – with few to no clients to reference their capabilities.  They talk “automation” with little clue how to do it, with (again) no clients as reference points. Myself and my team have sat through hours and hours of deathly dull briefings where we’ve actually had analysts bemoaning the fact that the providers failed to brief them on the subject at hand.  It’s really that bad. 

The Bottom-line:  It’s time to find our way (somehow) back to reality

Let’s be brutally honest - we’ve all lost the plot.  Why are tech and service providers so obsessed with sounding the best as opposed to proving they’re the best?  Why do so many analysts and consultants just parrot each other, as opposed to having real opinions and real substantiated viewpoints?  Why have so many enterprise buyers buried their heads under the bedcovers, scared to come out until someone dared to explain to them what this new bullxxxt was all about?

It’s time to make things real again… we owe it to ourselves and our clients to talk about how buyers/end-users adopt these emerging solutions - what are they doing, which processes are being impacted, what outcomes are being achieved. We need to focus on real industry dynamics to learn why is digital so relevant to retail; omni-channel to travel; block chain to banking; cognitive to healthcare etc. We need truly to understand and articulate how today's workforce grasps these emerging concepts and drives them in practice - how can experienced professionals reorient their capabilities, and the younger generation be embraced into the workforce? What are the career progression plans in these areas?  While technologies advance, how are staff advancing (or failing to advance) with them?

Unless we really dig deep to stop using our social foghorns to spout the loudest and start focusing on being the more real, we are truly doomed to a future of increased stupidity, naiveté and confusion.  It’s time we all broke form these habits and refocused on what is really happening in the world.

Posted in: HfSResearch.com HomepageHR Strategy



Meet the HfS team in Bangalore next month for NASSCOM BPM Strategy Summit!

August 18, 2016 | Phil Fersht

We're excited to fly over some of the HfS star analysts to meet with the delegates at this year's NASSCOM BPM Strategy Summit, where HfS is the exclusive content partner with the theme "The Next Big Goal - From Effective to Strategic, can BPM get this one Right?".  And the more discerning of you will notice that the theme is centered on HfS' own Eight Ideals of the As-a-Service Economy.

So what are you waiting for?  Book your flight and place now!

Venue:  Hotel Leela Bangalore

Date: 22-23 September 2016

And if you'd like to meet with some of the HfS team, drop us a quick note and we'll see what we can do.

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



I'm going through an analog transformation...

August 17, 2016 | Phil Fersht

For the first time since Al Gore and Donald Trump founded the Internet, I am braving a few days in the analog world on a camp-site up in Canada somewhere.  In fact, I don't think this place has even undergone analog disruption yet... 


Posted in: Absolutely Meaningless Comedy



Welcome to the era of outsourcing stability. Now let’s automate stuff

August 10, 2016 | Phil Fersht

Question: Why are we becoming so obsessed with Automation and As-a-Service relationships?

Answer: Because outsourcing has worked so effectively, we can now look to new levers to pull to find that next threshold of value 

Question: Will the next person who says “Outsourcing is just so Passé" get a punch in the face?

Answer: Yes

Barely three years’ ago, we were still lamenting that nagging lack of innovation in outsourcing relationships and the inability of service providers to deliver those transformational delights to their clients after they had come through with their promised cost savings. But let’s face it, the FTE-based labor arbitrage model has really worked – and a lot better than we thought it would, during those heady days of offshore screw-ups. I can barely remember the last time I sat on the receiving end of a group of clients throwing their service providers under the bus because they couldn’t get the procure-to-pay transition right, or got caught sneaking through change-orders to fix their dodgy coding.

Service relationships are more stable than ever, but focus is shifting to As-a-Service delivery and Intelligent Automation

You only need to look at the intentions of 371 major enterprise buyers towards their outsourcing contract renewals from our new Intelligent Operations Study to get the picture that this isn’t an industry in delivery turmoil, about to self-combust because deal flow isn’t growing at quite the clip it was a couple of years’ ago. In fact, only one-in-four IT services clients today are even considering ditching their current partner, and a even lesser proportion with their BPO provider.  However, many do want to make the switch to As-a-Service contracts:

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The focus on automation is the logical next phase of value once stability of global service delivery has been reached. 

The availability of smart automation tools and platforms from the likes of Automation Anywhere, BluePrism, IPSoft, Nice, UIPath, WorkFusion and Redwood have really been conversation catalysts to get the automation conversation to the table. In fact, most of the buyers we’ve been interviewing in our current Intelligent Automation blueprint are still in the

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Posted in: 2016 Intelligent Ops StudyRobotic Process AutomationThe As-a-Service Economy



Did Randstad just pay $429m too much for Monster?

August 09, 2016 | Phil FershtMike Cook

Usually when there is an acquisition in the tech/services space, you can always appreciate why the deal was done; no matter how cynical you try to be, there is always some gold in there to dig out. 

However, in the case of Dutch staffing giant Ranstad buying the shriveled remains of a legacy resumé-based online recruitment firm that made its name during the dot-com days, my reaction is simply one of “Why? Just why?”  The business was cratering (albeit slowly, but steadily) in a world where most people just don’t use Monster anymore to do their recruiting and job hunting—it’s a business from a bygone era. But there’s always someone out there ready and willing with the ego to resurrect a dinosaur (or a Monster in this case).  So I asked the question to our HR-as-a-Service analyst, Mike Cook, to give us the answer...

Mike, Is there a Monet in the Monster or has LinkedIn already Rinsed the Shop?

Phil, Once Randstad blows off the dust from Monster, will it like what it finds? In the thrift shop of the recruitment market there are treasures to be found but in a market that has been turned on its head by the LinkedIn juggernaut, there isn’t much left. 

In its strategic priorities for 2015-2016 Randstad aimed to capture positive growth opportunities as well as be in the top 3 scale positions in each market it participates in. Over the last 12 months this strategy has been bearing fruit—following the acquisitions of twago, Careo Group, Obiettivo Lavoro and RiseSmart.

However, these acquisitions have just been dwarfed with Randstad announcing the acquisition of one of the true veterans of the online recruitment market—Monster, for $429 million in cash. This represents a sale price of $3.40 per share, a premium of 63.7% over Monday's closing stock price. But it's worlds away from Monster's $8 billion market cap achieved in early 2000. With much of the market questioning the 47% premium Microsoft paid for (a still extremely relevant) LinkedIn (see post), one should wonder about the wisdom of paying such a price for a site that is declining in popularity.

Monster was one of the original online recruitment leaders but has struggled to stay ahead of the pack and has lost significant market share in recent years. Direct competition is fierce in this industry and recent acquisitions, such as Indeed.com taking over Simply Hired, have highlighted this.

So what does this acquisition mean for Randstad?

  • Bolsters Randstad’s staffing and RPO capabilities: The increased footprint this acquisition gives Randstad should prove beneficial and provide improved service delivery to the provider's staffing and RPO clients. However, the value of Monster's candidate database is questionable. Unlike LinkedIn, which users update regularly, job seekers usually abandon job search site profiles when they're not actively searching for a role.
  • Raise Randstad’s profile, particularly in the US: Currently Randstad’s US operation accounts for around 20% of its revenue. Considering its aim to be in the top 3 of each of its markets, the acquisition of Monster with its US-heavy revenue model (70% revenues from North American operations in 2015) may make sense.

Outside of these takeaways, it is difficult to see the value for Randstad in this deal. Monster looks to be the pensioner still wearing high tops, shades and a tank top, with its platform now largely outdated and its market share no longer what it once was. The likes of LinkedIn have disrupted this market to such a degree that legacy online recruitment sites are struggling to survive. This bid for survival is being played out in the massive consolidation currently taking place in this market. The one card that online recruitment sites still have to play is in the contingent workforce market, but with Microsoft is looking to steamroll its way into this area, through LinkedIn—and the forecast looks less than sunny.

Posted in: Business Process Outsourcing (BPO)HR OutsourcingHR Strategy



HfS unveils the first ServiceNow Services Blueprint report, with CSC, Cognizant and Accenture leading the pack

August 08, 2016 | Phil FershtTom Reuner

HfS readers are used to us relentlessly preaching the inexorable journey toward the As-a-Service Economy. And you still aren't get familiar with the Eight Ideals, then you must have locked in solitary confinement for the last year...

But there are many missing pieces in that big jigsaw. Service management, while unspectacular, is a critical component of the digital underbelly of the OneOffice as HfS has termed it. As ServiceNow is aiming to expand the notion of service management to evolving into the “third estate between CRM and ERP,” providing a new cloud-based level of efficiency between front and back office, we have asked our Intelligent Automation expert in residence, Tom Reuner, to take stock as to where the ServiceNow ecosystem has advanced to.

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Tom, there appears to be a buzz around ServiceNow in the industry? Is the hype justified and where does it fit in strategically for buyers?

Amidst the marketing noise in our industry, ServiceNow still stands out. And that, Phil, is quite an achievement as service management is really not among the sexiest of topics. You can see that in thousands of developers and partners having made their pilgrimage to Knowledge 16, ServiceNow’s customer event in Las Vegas this year. Crucially though, ServiceNow has

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Posted in: HfS Blueprint ResultsSaaS, PaaS, IaaS and BPaaS