HfS Network

Monthly Archives: Mar 2010

A thundering week in Orlando!

March 30, 2010 | Phil Fersht

Thanks for all of you who helped support the first "public" appearance of the Horses for Sources research organization in the lovely Orlando last week for SSON's "Shared Services and Outsourcing Week" event, which achieved over 900 delegates.  (And yes, I was symbolically middle-seated on my journey home...).

Our "Thundering Hooves" session, which was based on the Family Fued game show (Family Fortunes in the UK) was highly entertaining and we're excited to stage this again (with real sound effects) in Edinburgh in May.  Thanks to Lee Coulter (HfS), Deborah Kops (WNS), Tiger (Genpact), Graham Russell (Astrazeneca), Jay Desai (Northern Trust), Rick Arpin (MGM Mirage), Joe Hogan (Alsbridge) and Mike Fraley (Everest Group) for being good sports.  And a special thanks to Emma Beaumont and Sarah Clayton at SSON for making this happen.  Now who, on earth, is this grinning idiot?

You cannot be serious...

Posted in: Outsourcing Events

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Coulter tackles Justice

March 30, 2010 | Phil Fersht

Cliff Justice, National Leader, Shared Services and Outsourcing Advisory at KPMG

Horses for Sources Research Fellow Lee Coulter distinguished himself at the Shared Services and Outsourcing Week event last week, where he steered clear of the golf course and his evil bar-propping companions, to facilitate a number of sessions at the show.  

And one character who stood out this year was Cliff Justice, who last year elected to experience the management consulting delights of KMPG after an exemplary long-time career with sourcing advisor, Equaterra.   Lee managed to grab some time with Cliff at the show.  Here are his thoughts... 

Shared Services Advice from KPMG? – On Cliff’s Edge

 Orlando in March is supposed to be a great boondoggle destination. Fortunately for Shared Services Week, the Shared Services and Outsourcing Network’s (SSON) annual event, the ‘winter that wouldn’t let go’ down south meant more people were actually in the seats rather than in the fairways of the many good golf courses in the area.

One of the conference’s anchor events is the G8 panel. This is a panel of the industries leading providers and advisors that get together to discuss things pertinent to the whole industry. They are organized by region and this year was the first meeting for the US Chapter. Among the regulars we all expect to see such as IBM, Accenture and CapGemini, was KPMG. KPMG? Yes, and represented by Cliff Justice. Cliff is KPMG’s new US Leader, Shared Services and Advisory. This isn’t the first time that a major accounting services firm has placed a bet on getting into the shared services and outsourcing advisory business, and I was interested to find out more about how KPMG is moving into this space.

I caught up with Cliff later in the evening to get a little more insight. Cliff, who has been a leader in this industry for more than a decade with NeoIT (led their alliance with TPI) and then Equaterra, came over  late in 2008 to build this practice for KPMG. In a pretty short period of time, Cliff has managed to get a name most often associated with audit and tax - KPMG - named one of the World’s Best Advisors by IAOP, and now shows up next to IBM and Accenture on the G8 panel. Hmmm.

I had a lot of questions for Cliff. The theme linking them all together was: “are you really doing this and is KPMG really committed to it?†The answer: a resounding yes. Despite my only-a-little exaggerated description of the challenges a newcomer to this space faces with solid competition, dynamic industry shifts, volatile political dimension, and uncertain economics; Cliff remained unfazed. I probed at the firm’s willingness to invest in the long sales cycle and time it takes to build a stable pipeline. Cliff assured me that KPMG was solidly behind him and this practice. I gave him my best “surely, you didn’t tell them everything†look, and he went on to tell me KPMG believes their strong CFO and C-suite relationships are a natural entre into the world of shared services and outsourcing advisory. Inevitably, the CFO has a strong voice in these initiatives. In many organizations, administrative and technological functions report directly into the CFO, and where the CFO doesn’t have direct control, there is usually a business case that passes the CFOs desk.

Beyond the conversation I had with Cliff, I talked to a lot of other folks at the conference that told me about KPMG hiring talent, responding to RFPs, and building shared services recommendations into their conversations with their existing clients. Does KPMG have what it takes to be a major player in this space? The jury is still out, but they do have a strong cliff hold, and appear determined to scale the peak.

Cliff Justice (pictured) is National Leader, Shared Services and Outsourcing Advisory at KPMG LLP

Posted in: Outsourcing AdvisorsOutsourcing EventsOutsourcing Heros

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Is a "private cloud" an oxymoron?

March 30, 2010 | Phil Fersht

What on earth's an "oxymoron"?

You've undoubtedly heard the terms "public" and "private" cloud being bandied around quite loosely by every IT services provider trying to hitch themselves to the new trend towards the use of computing resources that reside outside of the enterprise and are delivered to multiple customers by a cloud services provider (read Bruce McCracken's new article ).

A very old friend and former analyst colleague of mine, Andy Milroy, who leads the Australasian IT and Communications practice for research and consulting giant Frost and Sullivan, poses an excellent question to those service providers today who may be confusing hosting services with cloud:

"To me, the term private cloud is a misleading way of describing hosted services.  In fact, it is an oxymoron. It is a term that is used by providers of hosted services in order to hold onto lucrative contracts and prevent the loss of customers to companies that provide public cloud services."

So we dragged Andy away from his didgeridoo class to explain further...

Is a Private Cloud an Oxymoron?

The IT community is now strongly focusing on the impact of cloud computing on their businesses.  This can largely be explained by the fact that the rapid growth in the use of cloud services in recent years, massively disrupts traditional IT delivery models.  But, there remains much confusion regarding the nature, scope and definition of cloud computing. The situation is becoming cloudier (excuse the pun) as major IT suppliers start to re-brand existing offerings as ‘private clouds’.

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Posted in: Cloud ComputingIT Outsourcing / IT ServicesOutsourcing Advisors

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What's that noise? Is it Donald Sutherland... or the delicate sound of thunder?

March 29, 2010 | Phil Fersht

Bruce McCracken, Senior Research Analyst

So you may have picked up that we just love the Cloud at the Horses.  As we've discussed at length, we see Cloud Computing as the coming-together of business process and IT delivery in a fully outsourced model ( see earlier post ).

Cloud's not simply about outsourcing the heavy-duty computing grunt - it's about the delivery of real business services, enabled by the applications needed to support them, and powered by the requisite computing and network infrastructure to host and deliver them.  Moreover, Cloud computing represents a crucial next layer of cost-elimination from the corporate infrastructure.  While many moons off being actual reality, the seeds have been planted and we see entire industries scurrying to develop applications, datacenters and managed services to support it. 

So we asked our new senior research analyst, Bruce McCracken (sorry Bruce...) to investigate some new trends, based on an interesting study recently conducted by Cloud based SaaS email management provider Mimecast, involving 565 respondents from the US and Canada.  Over to you, Mr S...

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Posted in: Cloud ComputingIT Outsourcing / IT ServicesSaaS, PaaS, IaaS and BPaaS

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Why innovation in global business operations is critical for survival

March 27, 2010 | Phil Fersht

There was a suggestion recently (see "Busting the Innovation myth" ) that innovation in back office operations wasn’t important and it’s all about the "front" office.  We would argue that achieving innovation in the global support operations of businesses, is often the only lever most firms can pull to remain competitive in this economy. 

In most cases, it’s not enterprises' products and services that have to change, but the speed and efficiency with which they can adapt to the changing environment, that now provides the competitive edge.   Here's an overview of the secular changes impacting the very core of today's industries:

Can BPO engagement models broaden to help businesses stay ahead of secular changes?

Our research delves into the heart of major industries, to understand how sourcing engagement models can enable firms up and down their entire supply chains.  Let's take a closer look at a few examples:

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCaptives and Shared Services Strategies

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The sourcerers of Savannah

March 26, 2010 | Phil Fersht
Come meet the sourcers at SIG next week

Folks - it's not too late to make the trip to the charming Georgian town of Savannah for next week's Global Sourcing Summit.   The Horses will also be present, co-leading session on Cloud Computing Delivery with Mayer-Brown, in addition to hosting an all-star panel entitled "The Future State of the Sourcing Industry: what the future holds, and how on earth we can manage it better" (hmm, who could have thought that one up?).

Featured guests (pictured above, left-to-right) include Michael Koontz (Aditya Birla Minacs), Mike Atwood (Horses for Sources), Ben Trowbridge (Alsbridge), Cindy Morrell (Clorox) and Dan Masur (Mayer Brown LLP).

As usual, we've twisted their arm to offer a discount to Horses readers.

Please contact [email protected] for further details

Posted in: Business Process Outsourcing (BPO)Cloud ComputingIT Outsourcing / IT Services

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We're letting our research do the talking - see for yourself

March 24, 2010 | Phil Fersht

Just another Dog and Pony show... or is it?

We would like to thank so many of you for the fantastic support since we've launched the Horses for Sources research organization and are giving away three of our new research pieces in response to such a warm welcome into the analyst industry.

While we thought this was  going to be a quiet little venture, where we sneaked onto the analyst circuit virtually unnoticed, it's been the total opposite, with so many people wanting to know what we're doing, why we're doing it and - most importantly - why we're different from the regular dog-and-pony analyst thing. 

So why do we think we're a little bit different?  

Read More »

Posted in: Business Process Outsourcing (BPO)Captives and Shared Services StrategiesCloud Computing

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Surviving the Aftermath of a Lift and Shift Transition

March 22, 2010 | Phil Fersht
Did you think it would get any easier?

Did you hear about that lame analyst firm which uses the first ever anonymous analyst ? Apparently, they convinced the outsourcing governance leader of a Fortune 100 healthcare organization to write for them. Yes, it just had to be us didn't it? So bloody predictable...  

Over to you, Mr. Anthony Calabrese for a sensational debut as the "Mark Twain" of the analyst world...  

Surviving the Aftermath of a Lift and Shift Transition

Well, now you’ve done it.  Instead of fixing things first, you outsourced your processes almost completely intact.  The result?  Your junky processes are now in the (hopefully) capable hands of your lower cost vendor and, not surprisingly, the outcomes are the same.  While it is quite possible that you took the time to image and digitally distribute your previously paper-based processes, there’s nothing remarkable about a digitized bandage hiding a poorly performing, wounded process.  Worse yet, there are few things more restrictive than your IT organization’s standard prioritization process – and one of those “things†happens to be your 300-page multi-year outsourcing contract.  What can you do you?  

You Are Not Alone – Misery Loves Company

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

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The myth-busting continues

March 18, 2010 | Phil Fersht

Equaterra's COO, Mark Robinson, shows us how to innovate

In case you missed it, there's been another scintillating debate on the "I" topic.  If you have a few minutes, we suggest you visit the recent piece entitled "Busting the innovation myth" submitted to us by a top cabernet-infused advisor choosing to remain anonymous (for obvious reasons...).

A couple of insightful and accurate views worth highlighting were contributed by Equaterra's enigmatic COO Mark Robinson (pictured innovating) and CSC's President of the United States of global sales and marketing, Peter Allen:

Mark Robinson:

In 'mainstream' outsourcing, innovation is often external to the process (i.e. it does not take place within the bounds of the contracted services, but rather as an add-in contracted on a case-by-case basis, either by the incumbent provider of base services, or by other service providers. There are many reasons for this, but they boil down to three primary factors:

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

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Bill and Phil... uncensored, unfettered, unrestrained

March 17, 2010 | Phil Fersht

One industry legend transformed by the world of social media is HR software columnist, host of   The HR Technology Conference  (which you must come to by the way), sailing enthusiast and all round entertainer on all things HR technology related:  Mr Bill Kutik.  All you need these days is a Skype headset and a blog, and you're ready to play...

Anyhow, I was privileged to get the chance to plug shamelessly the new Horses for Sources research organization in exchange for airing some unrestrained views on the HR outsourcing industry and where things are headed.  So, before I get slapped with a lawsuit or carted off to a secure facility somewhere, have a listen to the show which is aired today at noon Eastern Standard time.  You can still listen to the recording if you miss the initial airing.  Just click below to get transported to the Bill Kutik Radio Show:

Click here to listen

I look forward to having you listen in,

Phil.

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

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Professor Atwood saddles up to the ITO podium

March 16, 2010 | Phil Fersht

Mike Atwood

So for those of you accusing us of glossing over our ITO coverage... do we have news for you :)

Today, we're delighted to announce that we've managed to persuade one of the services industry's true veterans of sourcing advisory to put aside his executive platinum card, don an analyst cap,  and impart his years of experience into some actionable research-based advice, for our quickly-expanding base of unsuspecting clients.  Without any further ado, let me introduce Mike Atwood as the Horses' own Expert Contributor for IT Outsourcing strategies. 

Mike's experience with outsourcing spans 35 years, much of which was spent leading three major divisions at EDS, before turning his hand to sourcing advisory work in recent years, where he's served as a Principal with Everest Group, and leading Hackett's ventures into the advisory space.  Mike has also worked extensively in Tehran (during the Shah's days), Jeddah and Mexico.  

I caught up with Mike earlier to get his views on the state of the outsourcing business, and to tee up his new role as the Professor of ITO:

Read More »

Posted in: Captives and Shared Services StrategiesCloud ComputingIT Outsourcing / IT Services

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Busting the innovation myth

March 14, 2010 | Phil Fersht
Would you like to pay now, or when we have a measurable outcome?

The "I" discussion has certainly dominated debate on the Horses these past few weeks, and one of the finest outsourcing advisors in the business has anonymously volunteered us his thoughts.

This fellow has been working on some of the largest and most challenging outsourcing engagements in recent years and lives on a plane somewhere between London, Bangalore and the US (take your pick where he was when he wrote this, and whatever fine brand of fine screw-cap Merlot he was supping). 

What I find most interesting about his anonymous submission is this following statement: 

"I’d argue that innovation has been a massive distraction in outsourcing.  Any client that pushes innovation dollars towards the back office rather than their differentiating, market-facing offerings probably needs to re-connect with its shareholders"  

Interesting point of view - some would argue that outsourcing their back office is an enabler for clients to focus innovation investment in market-facing offerings, while others hold the view that innovation in the back office isn't an investment - it's simply a quest to find new and creative ways to improve performance.  And then there are businesses who shun market-facing innovation and simply want to churn out their profitable products quicker, faster, cheaper... the argument goes on. 

Personally, I'd question whether innovation should even be deemed an "investment", but more of a culture and mentality enterprises should simply have embedded in their DNA to be constantly trying to be unique and creative in their respective business.    Anyhow, take some time out to read this piece and weigh in with your views:

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

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Seeking a New Normal in Outsourcing Delivery (Recorded webcast)

March 13, 2010 | Phil Fersht

HfS Webcast: Seeking a New Normal in Outsourcing Delivery (recorded) | March 2010
[emember_protected] Click to view[/emember_protected]

Posted in: Uncategorized

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Seeking the "Normal Normal"... here's the re-run

March 13, 2010 | Phil Fersht

"I'd like to know if it's ever been normal"

If anyone here has managed to sit through a vendor presentation lately and not heard "New Normal" being uttered, we want to hear from you.  And we'd like to know when Normals stop becoming New and just become, well, simply Normal Normals.

Anyhow, as we approach this Normal Normal (note, no longer New), here's the re-run of the webcast we conducted with or friends over at Global Services Media and SSON, where we surveyed the intentions of 1,055 buyers, intermediaries and vendors on current outsourcing industry dynamics:

Click here to hear the re-run  of "Seeking a New Normal in Outsourcing Delivery"

Stay tuned for out next webcast entitled "Did we ever find a New Normal, and was it really any different from the Old Normal".  Actually, I kinda like that...

Posted in: Business Process Outsourcing (BPO)Cloud ComputingIT Outsourcing / IT Services

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Can Recruitment Process Outsourcing empower a more flexible, scalable workforce?

March 11, 2010 | Phil Fersht

Mindy Blodgett, Research Director, Horses for Sources

One of the facets of outsourcing that always challenges industry observers is fuguring out the timing of when (or if) companies will take the plunge.  Delivering a value proposition for outsourcing isn't enough - it's proving that those processes can benefit a company's competitive position if they are externalized in a managed services environment. 

For example, most companies would never have dared move the management of their entire recruiting function over to a third party, but the squeeze of this post-recession economy, combined with fresh thinking from company leaders and a willingness to explore global sourcing models in business functions that can benefit from added expertise and flexibility, is moving services such as Recruitment Process Outsourcing (RPO) up the corporate agenda for many firms.  

We've decided to take a deeper-dive into the RPO market, and have asked our new research director for HRO, Mindy Blodgett, to tee up her research into this area for us.  In fact, taking a closer look at Mindy's bio, I see she likes "eating at expensive restaurants", so hopefully you'll like what she's working on enough to sign up for our research program and help her maintain this past-time... over to you Mindy:

Read More »

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

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Horses for Sources and the Shared Services & Outsourcing Network (SSON) Create Alliance to Provide Unique Analyst Insight and C-suite Forums for Senior Operations Executives

March 09, 2010 | Phil Fersht
Horses & SSON
Horses for Sources to provide research for SSON's buyer community

So you may have noticed a few changes around here over the past week... not only did we retire those rather plump horses on the old site, but we went out and turned ourselves into a fully-fledged research analyst firm .

We'll be introducing you to several of this motley crew who are feverishly working on their new research schedules over the coming days and weeks, but we did want to talk some more about why we're doing this and why we believe we're significantly different. 

Essentially, we are providing the customer of outsourcing services with rapid, engaging, no-holds-barred insight into what BPO and global sourcing is all about, how they need to think about governing it, and how they should go about selecting service partners that can actually help them do more than merely cut costs doing operational work. What's more, we're using our social networking capability to keep us close to the industry and engage you all so quickly and readily. 

For example, our little piece on the NorthgateArinso/ConvergysHRO deal received 14,000 web-visits in the space of 24 hours. That was caused either by NorthgateArinso's CEO Mark Ettling repeatedly admiring his handsome features, or it may have simply been the fact that we have found unique ways to engage our industry, via our Digest, via our LinkedIn Group, via our Subscribers and via RSS feeds. 

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCaptives and Shared Services Strategies

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Avoiding sourcing catastrophes, Part II

March 08, 2010 | Phil Fersht

Polarized on Cost

In Part I, cabinet-maker, gentleman and Fellow of Research, Lee Coulter, spoke about the misalignment of the sourcing relationship when the business objective and strategy becomes polarized on one aspect:  cost.  

Everyone loves to save some money, and often the misalignment isn’t felt for the first couple of years. Striking a deal that optimizes cost generally sub-optimizes other aspects. As I like to say, you can have speed, quality or cost; pick any two. This principle applies to the balancing of business objectives in an outsourcing relationship as well. 

A study was released last year showing that more than half of the largest 2000 companies in India actually outsource parts of their back office to other Indian service providers, often at a slight price premium. Why? Top answer is focus. Sure, these companies have access to the same low cost labor and could keep the processes in-house, but chose to do so because their business objective is focus. The message here is to spend the time to build strong linkage from the business objective to the business strategy to the outsourcing strategy and finally to the deal structure with an outsourcer.

Avoiding sourcing catastrophes, continued...

Catastrophe strikes when the strategic misalignment becomes profound enough for the client business to suffer strategic restrictions because their outsourcing relationship was optimized for a different business objective and can’t change fast enough to meet the needs of the business.

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

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NorthgateArinso buys its way to top spot in Enterprise HRO - and it only cost them $100m

March 04, 2010 | Phil Fersht

Mike Ettling, NorthgateArinso CEO

So one of the worst-kept secrets in the HRO business finally came to fruition today, when the British HR services provider NorthgateArinso acquired Convergys' HRO business for $100m. 

By our calculations, that gives the newly-formed entity a 15% market share of the enterprise HRO market (engagements with firms greater that 15,000 staff).  We'll confirm this fact when we update our HRO market landscape in a couple of months. 

The merger effectively moves them above IBM, Accenture, ACS and Hewitt into the leading position in the market from an employees-served perspective; not a bad day's work from a British payroll firm that acquired an upstart Belgian SAP-payroll integration shop.  This also elevates NorthgateArinso firmly into the high-end of the enterprise HRO business, in addition to the mid-market scrap with the likes of ADP and Ceridian.

Why this merger makes a whole load of sense

Payroll-centric HRO is in high demand.    As we revealed in our industry study last month, there is renewed appetite for HR services as businesses limp their way out of recession.  This is especially the case where payroll is at the heart of the customer requirement and customers need a solid mix of software implementations expertise, backed up by low-cost processing capability (near shore and offshore) and HR domain expertise.  So this acquisition is timely.  It's also been a long time in the works, and NorthgateArinso has clearly thought long and hard before making the plunge.

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

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Avoiding sourcing catastrophes, Part I

March 03, 2010 | Phil Fersht

Lee Coulter, Research Fellow, Horses for Sources

We received a few messages yesterday requesting we stay "provocative and edgy", now that we've declared that we should be taken seriously as a cohesive group of professional analysts. 

So without further ado, I went and dragged our new Research Fellow, Mr Lee Coulter , out of his woodwork shed to lay it on large with some strong words on sourcing catastrophes, and some steps enterprises can take to try and avoid them... over to you, Mr Coulter:

Avoiding sourcing catastrophes

An event resulting in great loss or misfortune. That’s how Webster defines catastrophe. In the world of outsourcing, the stories of catastrophe are legendary, and the statistics on how often it occurs are not very reassuring. What is it about the strategic services sourcing space that makes it so prone to issues? Even if things don’t end in public catastrophe, the stories of mutual success are just not that numerous. The question remains: how does one avoid catastrophe?

To use Six Sigma jargon, my own analysis tells me there are a “vital few†contributors to catastrophe. When I analyze the laundry list of visible symptoms of outsourcing catastrophes, I keep coming back to two root causes. Not surprisingly, these same factors, when included in the process, are often the elements that advantage an outsourcing relationship for success. So what are they?

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCaptives and Shared Services Strategies

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Why we've formed an analyst organization

March 02, 2010 | Phil Fersht
Analyst Doggy

Ready for H Day

So H-Day has arrived, and we can finally reveal what it actually means.  It's the day Horses for Sources became more than a blog... today it becomes an advisory analyst organization focused exclusively on researching global outsourcing strategy. 

So why on earth do this?

A natural and logical progression.  Simply put, it's a natural progression for Horses.  Having developed such an effective community for collecting so many opinions, having such strong outreach to all the key stakeholders in the outsourcing business (buyers, vendors, intermediaries, investors, academics etc), leveraging the three-year development of Horses as the platform for a new research organization is the logical next-step. 

The outsourcing buyer needs a pure analyst organization.  While there's tons of great content floating around out there, there really isn't one entity that has brought together researchers and real practitioners, with real experience, to focus purely on researching BPO and global sourcing as a pure analyst organization, that doesn't broker deals or write vendor white papers.  Some of the sourcing advisors deliver excellent thought-leadership, and they deserve credit for driving the sourcing industry over the last few years.  The large analyst shops have stuck to their IT knitting and have largely overlooked BPO - they service IT vendors and IT users.  Investing heavily in sales and research to service finance, HR, procurement and other operations professionals desperate to learn more about outsourcing (not solely IT), is not something any of the large traditional analyst firms have done.  You can read, in detail, the challenges and opportunies we face over at SageCircle. 

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCloud Computing

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