HfS Network

Monthly Archives: May 2013

156 billion reasons why Lars and SAP were never meant to be

May 28, 2013 | Phil Fersht

Barely more than a year since SAP made its bold move into the cloud with the very expensive acquisition of Successfactors, does the hotshot visionary and symbol of the attempted "new look SAP" leaves the firm... Lars Dalgaard.

Lars Dalgaard... sporting a fine red tie to an SAP event

Anyone who has met Lars over the last decade has been drawn to his incredible passion and vision for the future of enterprise software with the shifting sands away from legacy on-premise software and expensive lock-in licenses.

Lars joining SAP was the acid test as to whether old-world ERP vendors could find a rapid path into the shiny new world of cloud and multitenant delivery models for enabling global business operations. He was a true visionary who had almost single-handedly taken on the legacy enterprise software firms, building up Successfactors from nothing to something, that would entice SAP to part with $3.4 billion to take it out.

The stark reality is there's just so much vested in today's legacy enterprise model

Lars leaving so quickly symbolizes SAP's struggle, in my mind, to change its culture and approach to disruptive business models. The economics of the cloud cannot print anywhere near as much money for our German friends as the current legacy ecosystem of clunky enterprises, whose IT managers simply do not want to invite change or disruption.  If your clients don't want to change, why should you?

Net-net, SAP has created a nice cosy industry around itself that has created, literally, millions of careers.  What are all these developers and project managers going to do if companies suddenly had single instances of SAP available in the cloud?  What are many of the service providers going to do if they can't earn tens of billions trying to stitch all this stuff together?  And what would SAP do if it can't command such incredible revenues from its consulting, services and multiple-license revenues?

The startling truth is that there is a $255 billion industry (Source, HfS Research) that feeds off this ERP chaos and dysfunction centered around both SAP and Oracle, and and estimated $156 billion of this is purely the annual cost of keeping enterprises' SAP worlds ticking over in 2013; the external services, the licenses, the hosting, the internal staff to maintain and develop the software etc.

Why do you think these little upstarts, such as Successfactors, Workday, Netsuite and SFDC command up to 40 times their annual sales income in valuation?  Because they threaten the status quo of a much, much larger industry that is scared stiff of being blown out of the water by disruptive technology:

Click to Enlarge

While the decrepit old enterprises stick to their legacy IT infrastructures, the evolving mid-market firms are breaking the mold

I recently spoke to a senior executive at a legacy software vendor stuck in multi-instance and fake-cloud land, who confided "we're purely in the protection business now.  All the new logos are going into Workday.  Fortunately our existing clients still spend enough to keep us solvent."

This pretty much confirmed my viewpoint that it's the small to middle-market organizations (under $5bn in revenues) seeking technology and sourcing solutions that can drive nimbleness and cost-effectiveness, as they simply do not have the people and technology resources within their IT, finance, HR, marketing and supply chain operations to manage their evolving needs.  Moreover, many of these organizations are moving from prehistoric infrastructures to cloud-based ones... bypassing much of the painful inch-by-inch transformation where so many of today's high-end enterprises are stuck.

As the existing high-end business opportunities slowly shrivel up, the new logo opportunities are springing up in the mid-tier, will the likes of SAP and Oracle be equipped to take them on, when compared with the evolving array of developing cloud solutions from the upstarts?  Remember, many of these new mid-tier logos will make up a significant chunk of the F500 in the future... so clearly the failure to evolve to true cloud models is eventually going to come back and bite the incumbents. Surely they can't keep spending billions and billions on new acquisitions to control them when they start to hurt their business?

The Bottom-line:  The evolution to the cloud for firms likes SAP is simply way, way to slow for a guy like Lars

SAP's enterprise customers, and many of the services giants which feed off the beast, are still many, many years from being forced to evolve, but one thing is clear... eventually they will be forced to comply.  The big question is whether it's still another 5, 10 or 15 years away...

Simply put, SAP was never a place for the likes of Lars...  and won't be for many years to come. There is no burning platform for SAP to really jump into the cloud just yet, and guys like Lars do not work in the slow-change business. When that burning platform does come, it will need people to change the mindset a lot more aggressively than they are prepared to in today's market. Maybe then, they'll wish they had a Lars to call on.

Let's just hope, for SAP's sake, he doesn't pop up at one of these other cloudy upstarts anytime soon...

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



Welcome to Gautam's city

May 26, 2013 | Phil Fersht

I always like it when the nice guys get the top jobs.  Too frequently providers put in a suit with good P&L skills, an upwardly mobile corporate persona, amazing PPT builds, is always "selling" and never letting any cracks appear in the glossy façade.

Gautam Thakkar is Chief Executive Officer and Managing Director, Infosys BPO (Click for bio)

What's wrong with a down-to-earth guy who'll sit down and share a beer with you to give you the no-frills run down on his challenges and opportunities? What's wrong with an executive who has shed blood dealing with a decade-plus of transitions and tackling real client pain-points? So I was pleasantly surprised when my good pal Gautam Thakkar got the nod to take on the reins at InfosysBPO last month.

Gautam has actually sat himself through one of our HfS sourcing executive council meetings to hear close-up how clients are dealing with the world post-transaction.  What's more, Gautam doesn't live in a world of PowerPoint - he lives in the world of the tough realities of the business we are in - long decision cycles, complex change issues, challenging economics...

So we managed to "drag" Gautam away from the squash court and his collection of Malbecs (which is probably fairly pitiful at the rate he drinks it) to learn a bit more about how he intends to take on the next chapter of the InfosysBPO story...

Phil Fersht, CEO HfS: Good morning Gautam! Could you share some background on yourself, where you came from and how you got into what you’re doing today?

Gautam Thakkar, CEO InfosysBPO: Hi Phil... I’ve been working with Infosys for about 13 years. At that time the company was trying to grow an upsteam business - hiring consultants to work with

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Posted in: Business Process Outsourcing (BPO)Finance & Accounting BPOFinancial Services Sourcing Strategies



Congratulations and welcome to Christa, Ned, Tom and Jamie!

May 22, 2013 | Phil Fersht

Amigos - it gives me great pleasure to announce some imminent new analyst arrivals at HfS, in addition to announcing the promotion of a couple of guys who've been instrumental in the development of this business, which has literately sprung from nowhere in three years to the monstrosity it has become today...

Christa Degnan Manning joins HfS Research as Vice President to lead the firm's Human Capital Management Strategies research practice addressing both technology and services dynamics. Christa joins from American Express where she was a leader with the firm's managed business travel services. Prior to AMEX, she led the Human Capital Management Practice at AMR Research (Gartner), and the Procurement and Category Management Practice at Aberdeen Group.  She was one of the few analysts at AMR who never took any crap from me... she is feisty, smart and fearless.

Ned May joins HfS Research as Senior Vice President to spearhead the firm's research coverage of Technology Enabled Business Services, where he will research the impact of mobility, big data and cloud technologies on business and IT services. Ned previously led worldwide IT services research for analyst IDC and most recently worked in the new media industry covering the impact of new technologies on publishing and information.  His official name is "Edward" and is known as the "Frat Boy" by his former UK IDC colleagues.   He is also a great writer, thinker and all round guy.

Tom Ivory is promoted to Chief Operating Officer of HfS Research, where he will oversee the company's commercial operations, events and marketing functions, in addition to contributing to the overall research strategy. Tom has overseen 300% growth in HfS revenue performance in his two-and-a-half year tenure. He previously worked in senior commercial roles at OpenText (Metastorm) software and the Corporate Executive Board.  Tom has thrown himself hook, line and sinker into HfS and been a real part of our growth story.  Just don't be fooled by the angelic features...

Jamie Snowdon is promoted to Executive Vice President, Research Operations, where he will manage the core HfS research analyst team, oversee the HfS Blueprint supplier evaluation methodology, price benchmarking service, market sizing and forecasting, and research processes. Jamie has successfully overseen the firm's establishment of its Market Index forecasting during his 18-month tenure, in addition to developing the firm's PriceIndicator benchmarking service that focuses on IT services and BPO pricing. He previously worked in research leadership roles at NelsonHall, IDC and Input.  Jamie is knows in business as the "Ginger Ninja"... the quiet research assassin who can produce research from practically anything.  He has also promised he will finally get a mugshot done which involves a collar and tie... however I'll believe it when I see it.

Being able to attract and develop this level of talent is critical to supporting our growth plans. The research industry has been both disrupted and transformed by the whirlwind availability of information and data in recent years, and maintaining a distinct voice above the noise has never been so critical.  Research must be more about talent with a unique vision than dull reports and mass-produced trends, if the analyst industry is to thrive and prosper in today's environment.

Finally, we wouldn't be anywhere near close to where we are today without the support from YOU. So thanks :)

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



Ensure you keep calm during transition...

May 18, 2013 | Phil Fersht

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Posted in: Absolutely Meaningless ComedySourcing Change Management



Corsello OnDemand... on talent management, modern marketing and a little bit more

May 16, 2013 | Phil Fersht

"It's not all about social media, it's about everything we do being very integrated". Jason Corsello is VP, Strategy at Cornerstone OnDemand

About a decade ago, when I was chugging along in the old-school analyst business, I hired a kid from the West Coast to learn the ropes.

I think he was just looking for any old job to get him to the East Coast, but, hell, he seemed smart and was willing to work for a lousy wage.  After a glamorous relocation (I recall we put him up at the Holiday Inn at Logan Airport for 2 weeks), I threw him some god-awful analyst report on HR technology platforms and said, “can you write something better than this crap”.  He’s never looked back.

Jason Corsello didn’t just turn out to be a great analyst and one of the original HR bloggers, but he’s now honing his knowledge to be a real strategist in modern marketing plying his trade for leading strategy and marketing for Cornerstone OnDemand, one of the hottest Cloud-based HR tech firms on the Nasdaq today, specializing in talent management.

I asked Adam Luciano, HfS analyst covering customer experience management, to connect with Jason just to discover how he approaches marketing strategy in today’s environment, and learn a little about Jason’s too…

Adam Luciano (HfS Research): You’ve had a very colorful career to date – can you share the highlights?  How did you end up doing marketing at Cornerstone?

Jason Corsello (Cornerstone OnDemand): Phil and I worked together as analysts at Yankee Group (back in the day) and I spent a lot of time researching technology and – more specifically – the HR technology market. I left Yankee and joined a top consulting firm [now part of Appirio] servicing the Fortune 1000 companies, like Starbucks, Nike and Dell with helping create their whole HR and talent management strategy. Essentially we looked at the best ways to recruit, manage and train employees by leveraging technology.

Then, two years ago, I decided to join Cornerstone OnDemand. At the time, Cornerstone had just gone public, and was one of the top three vendors in talent management. In the last year, two of the top competitors have been acquired by Oracle and SAP, now making us the leader on the best-of-breed side in talent management. I joined Cornerstone in the role of  VP of strategy and corporate development – meaning figuring out the three-year plan for the business and the buy-build-partner perspective. In year one, we did an acquisition, launched a number of new products and initiatives and formed some very unique partnerships. In the last year I’ve now taken on responsibility for marketing for the sole reason to better articulate our strategy and then communicating that to the marketplace of customers and key influencers. I have been leading our global marketing efforts for about six months now and am really trying to change and embrace all of the new models of marketing today.

Adam: Why the human capital management industry? What’s the appeal?

Jason: I probably never would’ve thought I would be in some sort of HR-related field, but I think most people would probably agree that it’s [HR] not very efficiently run at most companies. From the way HR recruits, to the way they manage performance, to the way they train people is still very inefficient. A number of companies typically spend anywhere from 60-70% of their overall capital expenditure on salaries, so to me there is a lot of inefficiency today that technology can have a huge impact on. Technology is drastically changing the HR industry, much the way it did in the past with the CRM industry.

Ten years ago, Cornerstone was focused on delivering online learning and training via virtual and online classrooms.  Today, Cornerstone helps organizations do everything from recruiting and sourcing the best talent, to training and developing employees and partners, to managing the performance of individuals and teams.

What we are now seeing is that the market is shifting once again. There’s so much embedded data in

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Posted in: Cloud ComputingCRM and MarketingHfSResearch.com Homepage



So... are these the world's best outsourcing advisors?

May 08, 2013 | Phil Fersht

The IAOP has announced its 2013 "best outsourcing advisors", and kudos to my former employer, Deloitte, for coming top.  Credit has to go out to Peter Lowes and his Outsourcing Advisory Services group for their achievement.  In addition, KPMG's Shared Services and Advisory Group, led by Cliff Justice, finished in second place - a strong showing and justification of their 2011 acquisition of EquaTerra.

Click to Enlarge

The biggest surprises, however, are the absences of ISG (formerly TPI), the largest transaction advisor of outsourcing contracts, and PwC, one of the leading management consulting firms actively operating in the sourcing industry.  I asked both firms how they had managed to miss the "Top 20" and they simply responded that they had declined to participate.

In addition, I am still trying to figure out how a firm can call itself "Elix-IRR" (and who, exactly, is Elix-IRR?).  Am also curious how Avasant can finish third - they seem like nice guys, but are they really ahead of the likes of Alsbridge and E&Y?

And why does the rest of the list seem to be made up largely of law firms?  Do these guys actually advise on outsourcing, or just do the legal stuff?

Oh questions, questions, questions...

Posted in: Absolutely Meaningless ComedyBusiness Process Outsourcing (BPO)Confusing Outsourcing Information



Replay of last week's webinar: A Tour of Robotistan Outsourcing's Cheapest Destination

May 05, 2013 | Phil Fersht

The premise of utilizing software robots running on virtual machines has become more of a reality than you might think. As seen in the print edition of The Economist and also discussed during last week's HfS webinar, the attraction of employing robots is on the rise and HfS Research is paying attention...

Check out the replay of our recent HfS webinar here:  view the recorded Webinar

Want access to just the slides? Here you go: blue prism webinar slides.

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesKnowledge Process Outsourcing & Analytics



The dreamSource files… There are too many kings of bullsh*t who still sail through these training certifications

May 03, 2013 | Phil Fersht

And over at dreamSource, where everyone needs training…


Posted in: Business Process Outsourcing (BPO)dreamSource 2013Global Business Services



The dreamSource files… Gartner only focuses on "step 1" for outsourcing. We're all way beyond that

May 02, 2013 | Phil Fersht

And over at dreamSource, where 82% of the buyers have never completed a training class for outsourcing or shared services governance…

How could you fail to trust these gentlemen? Infosys' Vivek Sharma and Ashu Tandon

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



The dreamSource files… I can train my people to have technical skills, but I can't give them a personality transplant

May 02, 2013 | Phil Fersht

And over at dreamSource, where 48% of the buyers have experienced strategic skills becoming more important than tactical skills for managing their outsourcing engagements, since they embarked on their initiative...

Rajesh Bhutani (Coventry Healthcare) and Debbie Polishook (Accenture)

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



The dreamSource files… it's not fair to place the change management onus onto the provider, it's our accountability to change

May 01, 2013 | Phil Fersht

And over at dreamSource, where 72% of the buyers work in company's where the CEO on down focus predominantly on cost...

Gianni Giacomelli (Genpact): with beerTim Madderom (Axis Capital): with redwineStephen Dubner (Freakonomics author): gesticulating

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



The dreamSource files... you really think, in three months, you can transform what took us 30 years to build?

May 01, 2013 | Phil Fersht

Welcome to dreamSource, where 73% of providers worry they may get fired for only delivering what was agreed in the contract...

Posted in: Business Process Outsourcing (BPO)dreamSource 2013IT Outsourcing / IT Services