HfS Network

Monthly Archives: Jul 2013

Accenture, Xerox and Cognizant make the Winners Circle to support October's healthcare chaos

July 30, 2013 | Phil Fersht

This October, the Affordable Care Act is poised to disrupt the healthcare industry in seismic fashion, whereupon the entire world of the healthcare payers will be turned on its head:

*The traditional B2B model is switching to a B2C model:  Payers now now have to cater for millions of individuals, in addition to thousands of companies with "cookie-cutter" solutions.  In effect, they now have to sell to, market to and manage consumers, in addition to their traditional corporate clients.

*Health plans must now being priced very, very differently differently:  The only variable inputs will be age, geography, family size, and tobacco use, while past history will and pre-existing conditions will no longer be taken into account.  Millions of new people will be entering the health insurance market, with vastly increased regulation on how payers ' revenues can be allocated.

This will matter for everyone – service providers, buyers, and pretty much anyone living in the United States.  These reforms will affect the healthcare payers the most, as they seek to cope with the monumental challenges needed to improve product operations, engage with the customer differently, optimize processes, and contain not only administrative costs, but medical costs too.  The three service providers that we found best placed currently to service the healthcare payers are Accenture, Xerox, and Cognizant:

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The Healthcare Payer Blueprint utilizes our Blueprint Methodology, which measures both execution and innovation against a set of crowdsourced criteria derived from the State of the Outsourcing Survey 2013. We assessed data from over 155 live multi-process healthcare payor BPO engagements to ascertain provider market shares, depth of client base, breath of execution and geographic scope of delivery. We examined the healthcare payer value chain (claims, service, marketing and sales, medical management, etc.) and interlaced what we know will be important to Healthcare Payers in the dramatically evolving healthcare industry with the capabilities and vision of the service providers in our assessment.

Our analyst team conducted exhaustive interviews with multiple buyers and market advisors to help score providers against each other across all the sub-categories of the Blueprint using ExpertChoice, an advanced statistical analytics platform. We also received a tremendous amount of cooperation from (almost) all of the providers above, as we went through this exhaustive process to understand their concrete plans for the future, get really deep with their current client relationships, their overall vision and their appetite to evolve and invest into higher-value areas of Healthcare Payer BPO.

HfS Subscribers can download their full copy of the 2013 Healthcare Payer Competitive Analysis Blueprint

Posted in: Business Process Outsourcing (BPO)Healthcare and OutsourcingHfS Blueprint Results

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Join HfS for some serious onshore Momentum this September

July 29, 2013 | Phil Fersht

Momentum 2013 is the inaugural industry event dedicated to one of the most politically-charged and compelling issues in the services business today – domestic sourcing of IT and BPO services in America.

And - as you would suspect - HfS will be there stirring things up!  Phil Fersht will be leading the plenary buyers' panel, while HfS' Mike Beals, who leads training programs for the HfS Governance Academy, will also be there.  Oh - and you can download our report on the topic here for some advanced reading so you can turn up sounding clever...

This two-day event includes discussions and debates from industry leaders on topics such as:

  • Domestic IT and BPO Sourcing Can Generate Good American Jobs: The Role for Policy
  • After years of Offshoring, Why is Domestic Sourcing Now Viable?
  • Trends in Domestic Sourcing
  • Global Sourcing 101: A Primer for EDAs and Government Agencies
  • Operations Best Practices: Recruitment & Training Strategies for Domestic Sourcing
  • How State Governments and Local Agencies Can Attract IT/BPO Service Providers and Shared Services Centers
  • Building the Business Case for Domestic Sourcing
  • The Domestic Sourcing Model: Key Considerations in Location Assessment
  • A Compelling Argument: The Cost Analysis of Domestic Sourcing
  • Domestic Sourcing: A Key Component of a Global Service Delivery Strategy

And for all you savings-savvy sourcing sentinels, we have secured a 20% discount for HfS readers: Enter the promo code HfS421 when you register here.

 We hope to see you there!

Posted in: Business Process Outsourcing (BPO)HfSResearch.com HomepageIT Outsourcing / IT Services

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And here's the 2013 Procurement Outsourcing Blueprint...

July 24, 2013 | Phil Fersht

Ever wondered which providers are driving the world of procurement outsourcing?  Well, the wait is finally over, with the first ever Blueprint in this space... and a big congrats to Accenture, IBM, Procurian, Infosys and GEP for making the Winners Circle:

Click to Enlarge

So what's the skinny on this market...

What's hot about procurement BPO right now - why are firms suddenly jumping into the space?

The Procurement Outsourcing (PO) market has quickly become one of the fastest growing BPO segments in the market, growing at an annual rate of 12% over the next 5 years, and expected to reach $3.4 Billion in expenditure this year. Our research has shown this is the result of procurement deals piggybacking on a maturing and established Finance and Accounting BPO market, with the close linkages between F&A and procure-to-pay. While many CFOs have become more accustomed to the BPO model, they are increasingly confident in taking advantage of provider skill-sets in procurement where category expertise, spend management and technology provide the core value, as opposed to merely lower cost labor.

So what processes are people looking at? Is it still mainly P2P, or are there higher value processes being evaluated?

As growth continues, the scope of PO services has grown from the more transactional P2P elements of the value chain, to one where more strategic processes are being outsourced, such as strategic sourcing, vendor governance and spend analytics, which is redefining the market differentiators among providers. Vertical expertise as well as geographic market sourcing presence have also aided the leading procurement market providers to offer distinguishable characteristics compared to the more “generalist” BPO body shops.

What differentiated the Winners Circle providers from the others?

Accenture, IBM, Procurian, GEP and Infosys have been selected this year as part of HfS’ “Winner’s Circle” for their ability to provide a strong encompassing Procurement value chain offering, both for the transactional and strategic processes. These providers offer strategic support communities for procurement professionals and can align to many vertical industries requiring unique sourcing expertise, such for Retail and CPG, or cater to niche category sourcing such as marketing, consulting, and other professional services. These providers have also gone above and beyond others with the incorporation of consultative procurement capabilities, such as helping enterprises discover value through redefining and transforming their procurement organizations, and incorporating global compliance standardization.  In short, they are servicing customers more as strategic partners than mere outsourcing providers.

And, for all you HfS subscribers, you can download your copy of the...

HfS Blueprint Report for 2013 Procurement Outsourcing Services here 

Unlike other quadrants and matrices, the HfS Blueprint identifies the relevant differentials between service provider performance and capability across a number of facets actually meaningful to the delivery of services: how all the providers are genuinely innovating and how effectively they are executing.  Moreover, HfS Blueprint Report criteria are dependent on a broad range of stakeholders with specific weightings, based on 1,355 crowd-sourced responses from our 2013 State of Outsourcing study, conducted with the support of KPMG. You can download a detailed methodology of the Blueprint concept and process here.

Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesHfS Blueprint Results

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Is it time to de-social our lives?

July 21, 2013 | Phil Fersht

Shall we go home and tweet each other instead?

The hype over social media is over.  While most of us - as individuals - have found the right uses for social media in our personal and professional lives, its potential has, for now, been pretty much realized.

We can network like never before, communicating electronically with girlfriends we haven't seen since our teens, with people with whom we once worked, forgot about, and probably will never see again, and with people we were subjected to at college and never really liked, whose Facebook pics of their kids seem mildly more than interesting than the presentation we are supposed to be reviewing.

Not only that, we are being deluged with crap from people we really don't need - or want - to hear from, and will never acknowledge or respond to.  How important is it that someone I barely know just updated her LinkedIn profile, or someone I once fired just endorsed me for my management skills (seriously)?  How critical is it that my competitors are tweeting their own yawn-inducing PR at a faster rate than my firm... to no-one in particular?

If your life is anything like mine, you simply cannot cope with the velocity of electronic bullish*t surrounding your day. Let's face facts here, folks... social media has become a distraction - and, (I hate to admit it), probably a big fat waste of time. It has also dragged me into having ridiculously superficial relationships with people I probably do not need to invest my time with, being ridiculously superficial.

While social has played a great purpose in expanding my electronic database and reconnecting me with all these people my life didn't really need back in it, it's now reached a point where I am trying to figure out how to de-social myself from some of this rubbish.

And to prove that "social" really doesn't count for much when it comes to enterprise strategy, this is where it ranked as an enterprise priority, in our recent state of industry study conducted with KPMG:

Click to Enlarge

While people will argue that it's still "early days" for social media, it's already been years since the whole world (seemingly) started using it.  It's here and it matters, but is it really enabling new business innovations and dominating corporate thinking?  I don't think so - and neither do most of the 400 enterprises we spoke to. I would argue that it's actually time to "de-social" our behavior to regain the effectiveness and quality of our interactions and relationships.

So here are some top-of-mind ideas on how to improve the quality of our real social lives:

1) Kill the PowerPoint in conference calls.  PPT gives everyone, bar the presenter, the opportunity to zone out and do mindless tasks - and you can only guess how many of the folks on the call are checking their Facebook updates or tweeting some mindless crap to noone in-particular.  Surprise your conference call comrades by engaging them in a (gasp) conversation.  They will actually have to listen and respond.

2) Remove the Twitter/LI/FB apps from your mobile device.  These apps will find a way to give you a notification update every 5 minutes, which I guarantee will have a meaningless impact on your life.  Go in and check your updates once or twice a day manually - you'll save those hours of wasted time and energy nervously checking your phone like a reflex action that you just can't control...

3) Start calling people up just to "chat".  This may freak people out, but what happened to the days when you could call people and just talk about stuff?  It seems we spend more time trying to create a freaking appointment to talk for 30 mins in three weeks' time, when you could have just called each other up there and then.

4) Make efforts to have more in-person meetings.  My word, the quality of interaction in a face-to-face meeting, versus a conference call or web-session, is eons higher.  You talk, you listen, you exchange ideas...

5) Go to more conferences.  Everyone's just so "busy" these days, but what happened to those days when we went to conferences, met people, had a few beers with them etc?  Haven't you noticed how "sanitized" some of your relationships have become?  It's because you're restricting your interactions to freaking LI messages, "likes" in facebook chats and re-bloody-tweets.  Take it from me - nothing beats a pint of beer, a glass of wine or a decent single malt to have a real conversation with someone.

To prove my point, I will buy anyone a drink who shows up at my office over the next two weeks... but hurry while stocks last :)

Posted in: Absolutely Meaningless ComedyBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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Dr Charlie airs the BPO potential of East Africa, Part 1

July 20, 2013 | Phil Fersht

Charlie Aird contemplates process transformation outside of Mukono, Uganda

There's been so much talk the past couple of years about which levers need to be pulled next to squeeze more value and efficiency from BPO services, with many firms fearing they've hit a wall beyond shifting as much labor arbitrage as they can to India, Philippines, Mexico and Eastern Europe.

Yes, you can standardize and automate more processes to reduce your reliance on manual labor inputs, and even re-invent your processes to eliminate unnecessary tasks.  And yes, you can replace legacy on-premise software with modern SaaS solutions that negate the need for so many IT and process administrators to keep your workflows ticking along.

But how about exploring an entirely new continent for talent availability that can pull an entirely new lever of efficiency and potential value for your business:  East Africa. And who better than a veteran global services luminary, in his fifth decade of experiencing global sourcing,  to take a sabbatical from advisory work to get up close and personal with the potential of this region? Without further ado, over to you, Charlie Aird...

East Africa – BPO Diamond in the Rough

“Dr. Charlie”, PwC’s Global Leader of Shared Services and Outsourcing was recently awarded a 5 week sabbatical by his firm. He volunteered to do mission work in Uganda. He and his wife are sponsors of Debbi Hobbs, his sister-in-law, with the International Justice Mission. Charlie was providing services to a not for profit, micro-financing organization that is focused on IT startups. Since he was not busy enough, Charlie provided pro bono consulting services through PwC in Uganda

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

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Are you ready for a real Governance Academy?

July 18, 2013 | Phil Fersht

After years of coaxing and nagging from so many of you, we've finally got our act together to get an all-singing and dancing governance training and certification program off the ground. And not only that, we've acquired the Selah Group to help us do this, with Mr Governance Training Maestro himself, Mike Beals, as our lead instructor.

What on earth has HfS gone and done now?

With the acquisition, we've officially launched the HfS Governance Academy; an advanced series of instructor-led online and classroom-based training services designed to help HfS Research's global enterprise clients across the Americas, Europe and Asia/Pacific regions govern their outsourcing and shared services environments more effectively.  As we have bleated on about here for god-knows how long, the only genuine path to achieving more value from outsourcing and shared services initiatives is through the development of more progressive and collaborative enterprise buyer/service provider relationships.

Why are we doing this?

Over the past four years, the HfS Sourcing Executive Council members have bitterly bemoaned the absence of a relevant, up-to-date and sophisticated governance training and certification program in the sourcing industry.

What form will the training take?

The HfS Governance Academy is uniquely primed to address this need with eight phases of instructor-led and online training based on the following modules:

Relationship Management Modules
  • Understanding the Value of Business-to-Business Relationships
  • Provider Selection and Relationship Establishment
  • Realignment and Remediation
  • Achieving Innovation by Collaborative Partnering
Governance Training Modules
  • Governance Functionality and Design
  • Contractual Levers to Improve Performance
  • Multi-provider Portfolio Management
  • Sourcing Governance Effectiveness across the vendor management office and shared service centers

Is there a certification involved?

Yes. Participants in the training will be awarded the HfS Governance Academy Certification for Advanced Services Governance, upon successful completion of the eight modules.

What do HfS Sourcing Exec Council members also get?

In addition to the HfS Governance Academy courses, members of the HfS Sourcing Council also receive ongoing access to published HfS Research and analyst experts, HfS' PriceIndicator benchmarking tool for services pricing across application management and BPO, and access to HfS' flagship "Blueprint Sessions" events. Onsite training and facilitated workshops are also available for HfS clients.

And why is Mike Beals such a dude?

Mike Beals is Managing Director, Governance Training Services at HfS (click for bio)

As part of the merger, Mike Beals, who founded and previously led governance training for the Selah Group, joins HfS as Managing Director for Governance Training Services. Beals brings to HfS 20 years of ITO, BPO, relationship management, and outsourcing governance experience and is widely-recognized across the services industry as a leading innovator and corporate instructor for outsourcing and shared services governance. His full bio can be viewed by clicking here.

And where can you lean more?

Simply email us here and we'll probably get back to you.... if we don't, send another one with "xxxxxxxg respond please" in the subject line...

Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesGlobal Business Services

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Vicki Phelan, pharma fanatic

July 14, 2013 | Phil Fersht

Vicki Phelan has run 6 marathons... in between pharma projects at KPMG

Next time your mom gives you a hard time, ask her if she does triathlons and brokers mega-outsourcing deals for big pharma giants.  Oh, and that's while putting two girls through college, one of whom is a Varsity pole-vaulter. And apparently she has dinner on the table every night too...

OK, I made up that last part, but meet Vicki Phelan, one of the sourcing industry's leading advisors in the pharmaceutical and life sciences industry. These days, Vicki plies her trade with KPMG's Shared Services and Outsourcing Advisory group, having come across with the 2011 EquaTerra acquisition, having earned her stripes in the pharmaceutical, chemicals and life sciences industry with IBM during her earlier career.

So, let's hear more about what's happening in the sector...

Phil Fersht (HfS Research): Hi Vicki, we’d love to learn more about your background and how you've come around to doing what you are doing today

Vicki Phelan (KPMG): Hi Phil - I feel as if I was born and raised in, and certainly live and breathe, the life sciences and pharma industry. I started my career on the service provider side, working in IBM’s pharmaceutical and chemicals practice. After many years there, I went to a start-up focused on ITO advisory services, primarily for healthcare organizations. I joined sourcing advisory firm EquaTerra pretty much at its inception to establish and grow its pharma and life sciences practice. When KPMG’s shared services and outsourcing advisory group acquired EquaTerra, I was named its life sciences practice leader. In that role, I focus on everything life sciences, with the exception of the provider and payor segments. I am also married to a pharmaceutical company executive, so I’m surrounded by pharma all day, everyday, and that helps me gain different perspectives of the marketplace.

Phil: One of the most fascinating things about pharma is that it was one of the industries, decades ago, to outsource major elements of its core business (contract bio-tech, clinical trials, research, etc.), but has also been one of the laggards to move administrative functions to shared services / outsourcing. Why do you think that has been the case and do you see this shifting now?

Vicki: From an evolutionary standpoint, per a study we conducted a few years ago on which firms outsourced what and when, the path was pretty clear - it started with IT, and then expanded into different aspects of the SG&A processes, driven by the need to address patent expirations, M&A,

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

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Countdown to commodization: Why the Indians need to get on the acquisition trail

July 06, 2013 | Phil Fersht

Celebrating Cognizant's latest acquisition

Trying to analyze why one Indian service provider had a better quarter vis-à-vis another is becoming pretty moot.

Yes, there are various nuances clearly helping or hindering some of the W-I-T-C-H firms with certain deals, such as TCS' flexibility to win selective large complex deals, Cognizant's savvy US leadership team, HCL's price aggressiveness to pillage legacy EDS contracts, and the fact that Wipro and Infosys somehow "lost their mojoes" in the kerfuffle. However, the bottom-line is clear:  The Indian services business is hurtling toward commodotization, and there needs to be a much more radical play from their ambitious leaders to alter the game.

In order to highlight this dynamic, we took quarterly revenue and growth performances over the last 4 years and created a predictive revenue forecast for each of the W-I-T-C-H providers, based on the past four-year historical variances:

What this data tells us, is that the growth trajectory is now declining at such a clip that none of these providers may make the HfS IT Services Top Ten if they continue with their current growth strategies.

Why the WITCH providers can either fight for the old dollars, or revamp for the new

Essentially, what these five great firms have achieved is to create huge factories of (predominantly) young talent that can service operational technology and business process work that can be standardized, externalized and run from their Indian centers.  The simple fact that their

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

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