HfS Network

Monthly Archives: Jul 2008

The Book of Lists (revisited)

July 27, 2008 | Phil Fersht

There's been a lot of heated discussion in the outsourcing industry of late regarding the issue of lists, rankings, awards and proclamations of vendors, advisors, tought-leaders etc.  As per expected, emotions are strained when some come out looking good, and some not-so-good. 


However, with such a ramshackle swirl of information out there... from consultants, media, bloggers, analysts, associations, researchers, there has never been a more critical need for the ultimate target - the buyer - to have balanced, unbiased and accurate information and advice. The real issue here is that rankings or "best of" lists are only as valuable as the rigor and independence of the evaluation methodology.


Deborah Kops, who has guested here with some intriguing views on outsourcing issues, has offered to share her thoughts with us on this whole issue.  Deborah is widely recognized as one of the outsourcing industry's most experienced voices, having spent the majority of her career on the advisory and practitioner-side of global services, leading global transformation efforts at Deutsch Bank and Bank of America, before helping to establish PwC's outsourcing division.  Today, Deborah is Chief Marketing Officer for WNS Global Services, a leading offshore BPO and KPO provider, and has greater exposure than most people in the industry to these "lists", now she is leading marketing for a services provider with revenues of half-a-billion dollars. Over to you Deborah:


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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesFinance & Accounting BPO

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Good luck Lisa

July 26, 2008 | Phil Fersht

Fao Research, Inc I was a sad day this week then Lisa Ross announced that FAO Research is ceasing its operations.  I have known Lisa for several years as a good friend, and have rarely met such a talented industry networker and marketeer with a strong perspective on the industry.  Lisa has also guested here during the early days of Horses. 


Lisa's recent work bringing together the sourcing advisor and vendor communities in targeted forums created a platform for valuable industry interaction that only Lisa made possible.  All is not lost, however, as she will continue her recently launched blog.  Knowing Lisa, we will see her re-invented and re-energized in the not-too-distant future.

Posted in: Finance & Accounting BPOOutsourcing AdvisorsOutsourcing Heros

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The challenge of staying relevant in today's corporate climate

July 24, 2008 | Phil Fersht

Mark Stelzner recently posted some interesting statistics on the plummeting average tenure of C-suite executives:

  • CEO: A 2007 Harvard Law School study shows that a “manager CEO” of a S&P 500 firm averages 5.5 years of tenure.  Crist Associates’ 2007 Volatility Report also shows the majority of CEOs with less than 5 years of service.
  • CFOSpencer Stuart has CFO tenure at 4.3 years - and falling (Crist at 5 for all CFOs).
  • COO: Chief Operating Officer tenure is shrinking to just under 3 years, with the total number of Fortune and S&P 500 COOs diminishing at a perilous rate.  
  • CIO: According to the 2008 State of the CIO poll results, a Chief Information Officer’s average time in seat is about 4.4 years, down from 5.1 years in the prior period.
  • CMO: Spencer Stuart’s annual study shows Chief Marketing Officers at a mere 26.8 months, which is actually up from 23.2 months in the prior year.
  • CHRO:  Workforce Magazine’s analysis putting an average CHRO in their seat for approximately 3.1 years.  

    These stats got me thinking more about how organizations today are rethinking their organizational strategy in a challenging economy where talent management is ever-critical to the business, and non-core functions are becoming increasingly subjected to lower-cost outsourcing solutions.  So why are C-suite tenures all getting shorter? 

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    Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesFinance & Accounting BPO

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    How to make your boss look good

    July 23, 2008 | Phil Fersht

    SatyamI recently had the pleasure of meeting with Kulwinder Singh, who heads up marketing for SatyamBPO in Hyderabad. It's great to meet a marketing guy who generally get's it.  Check out how he placed a picture of Kishore Rao, SatyamBPO's Head of Quality, receiving a Six Sigma IQ Excellence Award on a giant billboard in New York's Times Square...

    Posted in: Business Process Outsourcing (BPO)

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    Preparing the new organization for life after outsourcing

    July 22, 2008 | Phil Fersht

    I wanted to share an article from last year that discusses how enterprises today can better prepare their key staff for life after outsourcing: 


    The outsourcing debate over recent years has been dominated by the operational ability of companies to transition processes to a third-party supplier to manage. Too many companies have presumed their business will carry on as it was pre-outsourcing, but with third-party staff managing some of the business functions. However, in the majority of outsourcing efforts there is a degree of employee transition, and when this happens there are leading practices for both transitioning and restructuring the retained organization.


    Experience demonstrates that those companies that proactively prepare their management effectively to:


    (1) Modify their roles, responsibilities, and management styles,


    (2) View outsourcing as a strategic tool,


    (3) Learn new skills, and


    (4) Change their daily routine...


    ...are those that are able to achieve value from an outsourced environment.


    The full article is featured in Crossing media's HROToday magazine, and can be accessed here


    '



     

    Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesFinance & Accounting BPO

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    The TSA awards its HRO engagement to Lockheed Martin - an overreaction?

    July 17, 2008 | Phil Fersht

    There's been a lot of noise in the market this week concerning the TSA's award or their HRO contract to Lockheed Martin.  While this is clearly a bold move into HRO for Lockheed, this isn't likely to prove a major loss for Accenture.  Why?

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

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    Process Optimization is the key to successful Procurement BPO

    July 16, 2008 | Phil Fersht
    Gianni Giacomelli, SAP

    Gianni Giacomelli, SAP

    I was recently engaged in an excellent conversation witn Gianni Giacommelli, who leads marketing strategy for SAP's BPO division, on the way forward for the Procurement BPO market.  One of the aspects about SAP that has impressed me, is their strong view of BPO as a opportunity, as opposed to a threat, to their business.  Gianni's boss, Christain Baader, has performed an excellent job driving this strategy in recent years, and made his case-in-point last year where he discussed why technology is an important key to BPO-sustainaility.   BPO is all about driving common strandards that can help service providers leverage their service staff and technology applications across multiple clients in a utility model.  So what better opportunity is there to encourage enterprises to standardize on a common ERP archtecture than when they evaluate BPO opportunities for their business?  And it's not solely about BPO, it's also about globalization: the more global enterprises can encourage their country-level businesses to operate within a global process template for functions such as finance, HR, sales and procurement, the quicker they can access critical data to make global business decisions.  Without digressing further, I asked Gianni to summarize our conversation regarding the development of procurement BPO solutions, where many of the leverage points for cost savings are driven through process and platform optimization, and not solely labor arbitrage.  Over to you Gianni:

    Procurement outsourcing burst onto the business process outsourcing scene with great promise, but it has changed of face in the last two years. While early deals delivered tactical benefits such as procurement operations cost savings, many companies are still not realizing the more substantial advantages that can be gained. In early procurement outsourcing deals, service providers did not consistently manage to deliver more substantial spend-related savings. With the cooperation of clients, they need to complete designing and deploy integrated, end-to-end, sourcing-to-settlement procurement processes – and be allowed to contribute experience and best practices. At the very least, the provider should be able to bring in an infrastructure (i.e. a pre-configured best practices platform, ideally with some procurement-specific services on top e.g. level-1 support and supplier onboarding) that would allow the client to focus on executing seamlessly. Technology utilization has a key role here and, while theoretically understood, is often a contentious ground - and in our experience requires more than a “business as usual” treatment.

    Realizing the Full Value of Procurement Outsourcing

    Basics first – and a home truth: procurement outsourcing success requires the CPO, COO and CFO to do their part - collegially. The only way theoretical savings negotiated at the sourcing level (which is where often CPOs incentives are confined) can be turned into actual savings is 1) ensuring compliance within the client company and 2) ensuring the results can loop back into strategic sourcing where the observation of the actual company behavior (what is bought, when, where, in what sizes) can provide additional levers to the category managers. Most of the remaining savings come from controlling one-off purchasing and vendor payments and from cost avoidance as a result of demand management and reduced costs of enterprise procurement activities (this is where the CFO and COO typically have a say).

    While companies can realize procurement outsourcing value by leveraging the provider’s economies of scale and labor arbitrage, process optimization (defined as processes and knowledge including securing category-specific knowledge and related usage) is the single most important lever. To maximize the impact of this lever a unified technology platform must support and consolidate sourcing and purchasing processes. A key aspect in securing procurement savings, compliance is ensured in the purchasing and ordering process. This can be accomplished by leveraging the use of procurement cards, approval and other workflows, as well as data analysis and reporting based on standard procurement reports within the business intelligence component. Strategic sourcing savings are obtained by enforcing stronger compliance, as the customer converts results from sourcing events into contracts and catalog items from which requisitioners can choose. Poor performance in activities such as one-off purchasing and problems like high costs of demand management and enterprise procurement activities (such as the cost of the procurement organization) can be addressed with internally hosted catalogs that contain only approved purchasing items (both goods and services) and respective vendor contracts.

    Four years of experience in procurement outsourcing, two simple views

    1) Providers that are striving to deliver optimum procurement outsourcing solutions typically offer processes based on best industry practices and – in order to achieve that - have realized the importance of strong relationships with the software suppliers underlying their offerings to ensure effective design and execution of service delivery. BPO-specific implementations are different from typical system-integration jobs (due to the search for replicability leading to heavier templatization and multi-client architectural choices). For this reason such collaboration must go beyond a simple joint go-to-market effort, and must encompass service delivery design – so that the solutions are deployed in a way that they address the business problem and they are cheaper to implement and run. As an example, SAP has signed such partnership agreements with Accenture, Hubwoo, IBM, Infosys and Quadrem and spends a significant amount of resources in those activities.

    2) Customers that have achieved long-term benefits from procurement outsourcing are shown to be consistently open to using their providers’ standard processes and platforms. By doing so, providers can achieve the economic model they need to deliver innovation. Again as an example SAP has a few dozen customers operating on the basis of the BPO program and we continuously collect learnings from such experiences. The learnings are exceedingly interesting, and the sad truth is that – in the absence of such program – those experiences would be lost between (and within) BPO provider and software vendor

    Gianni Giacomelli  (pictured) is Director of global strategy and marketing for SAP’s BPO business unit.  He previously worked as an outsourcing sourcing advisor for Everest Group in Europe..

    Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesOutsourcing Heros

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    Banned in China

    July 11, 2008 | Phil Fersht

    China-banned I discovered today that Horses for Sources is now inaccessible from China.  Maybe they got a bit upset when I posted Will China's Internet purges inhibit their knowledge services industry? Kind of proves my point...

    Posted in: Sourcing Locations

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    WNS enters the BPO big-time

    July 10, 2008 | Phil Fersht

    WNS So the long debated and much anticipated saga of the Aviva BOT (Build-Operate-Transfer) has finally been resolved, with WNS Global Services taking on a $1 billion contract to become the British insurance giant's BPO provider of choice for the next 8 years.  WNS will be assuming all of the current 24/7 Customer contact center work and some of EXL Service's F&A work, with the latter's contract remaining until 2012.  This contract follows a storming 2007 for WNS, where the Mumbai-headquartered firm has made significant inroads into both financial services and retail sectors, in addition to its already dominant position in the airline sector. 


    Some key points

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    Posted in: Business Process Outsourcing (BPO)Finance & Accounting BPO

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    What the hell is KPO and where is it going? Answer: PhDs on tap

    July 07, 2008 | Phil Fersht

    On-tapDuring this year's NASSCOM BPO summit, we were subjected to a deluge of three-lettered acronyms which (let's face it) aren't particularly relevant today - as Pramod Bhasin so eloquently opined.  And while "BPO" is clearly a broad and fluffy term that is now used to to describe any type of outsourced process solution that isn't IT, "KPO" is even more vague.  In fact, I discover a new firm daily which claims to have a "KPO" solution, ever since I invited every man and his dog to partake in my new research effort.  And when you have the Chairman of NASSCOM asking "what the hell is KPO?", you know there is a communication issue out there.


    So why should we care? 

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    Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesFinance & Accounting BPO

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    How to celebrate that contract win without rubbing it in...

    July 03, 2008 | Phil Fersht

    Apologies in advance to our German readers.. but you have to admit this is seriously funny :)

    Posted in: Absolutely Meaningless Comedy

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    Linked-off!

    July 02, 2008 | Phil Fersht

    Legendary technology columnist Bill Kutik ran an interesting piece today discussing the betrayal of LinkedIn members.  Basically, it's becoming a mammoth database of 23 million professionals, which can be sold en masse to advertisers wishing to peddle their services to targeted members;  it's a direct marketeer's dream.  Moroever,  Bill described LinkedIn as becoming a job board dressed in social-networking clothing.  He explains:

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    Posted in: Social Networking

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    The Legacy of Global Sourcing – What is (Y)our Legacy?

    July 01, 2008 | Phil Fersht

    David Kinnear My good friend David Kinnear has been working hard to drive the Global Sourcing Council over the last year, and has some passionate views on how today's industry should approach global sourcing.  David has submitted a compelling argument about how we should look at the longer-term remifications of the global outsourcing climate today.  Before I send you over to David, I'd also like to draw your attention to the next meeting for the GSC in New York's Down Town Association next Wednesday 18th June.  For more details click here.  Take it away David:


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    Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesIT Outsourcing / IT Services

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