HfS Network

Monthly Archives: Jun 2014

The new table-stakes: Fixing the Analog Present for a Digital Future

June 29, 2014 | Phil Fersht

As we digest the incredible dialog from the HfS Cambridge University blueprint summit this week, the overwhelming mood from enterprises is one of frustration to get beyond this tactical status quo of legacy operations, in which so many find themselves wedged.

And most services providers aren't going to come to the table with the technology and talent until their customers clearly dictate and demand what they need to cross this chasm. And those providers which simply do not have the Digital capabilities their clients demand to address these gaps, run the risk of being relegated to the class of legacy staff augmentation provider that performs only the low-value grunt work, or  ditched from many client provider rosters altogether.  And this is already happening with some ambitious determined clients.

When we surveyed 312 enterprise buyers on their two-year expectations from their current outsourcing relationships, it becomes abundantly clear that those desired business outcomes from yesterday's outsourcing era have quickly become today's table-stakes:

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Clients are rapidly losing patience with services providers that aren't working proactively with them to provide more value than the basic terms of the original contract.  I feel like we've had this conversation before, but this time many clients are doing a lot more than having a quiet moan that they aren't really getting value beyond very basic service provision. This time, many are actively

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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HfS Cambridge University Blueprint Sessions: In Good Company!

June 25, 2014 | Phil Fersht

Posted in: Outsourcing Events

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The HfS Cambridge University Blueprint sessions: Where "Rubber Chicken" and "Orlando" are foreign concepts...

June 25, 2014 | Phil Fersht

Posted in: Business Process Outsourcing (BPO)

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And the HfS roadshow hits Cambridge University

June 24, 2014 | Phil Fersht

Looking forward to a phenomenal couple of days... a great opening buyers session was enjoyed by all!

Posted in: Outsourcing Events

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Outsourcing and shared services investment intentions at record high as the Integrated Global Services model takes center stage

June 22, 2014 | Phil Fersht

It's official:  outsourcing is not dying - it's simply become a key part of a broader enterprise operations strategy: Integrated Global Services.  312 buyers recently shared their investment intentions over the next two years during our 2014 State of Outsourcing study, conducted with support from KPMG, and their operations strategy clear:  one in four are reinvesting heavily in their global shared services operations, while seven-out-of-ten are continuing to make (largely moderate) investments in their outsourcing delivery.

The long and short of this is that 93% of enterprises today have shared services and 96% are outsourcing some element of their back office IT and business operations, while 27% are actually reducing their investments in their own internal business units. What's more, 56% are already increasing investments in their centralized hybrid governance function to manage their mix of service delivery models. To this end, the increasing majority of enterprise buyers today are investing in an integrated global services model that orchestrates their process delivery across all available vehicles of sourcing:

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Let's delve a bit deeper here and view how these investment intentions have shifted over the last three years, comparing this with the 2011 and 2013 State of Outsourcing studies:

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Shared Services makes its strongest re-emergence as a delivery model for a decade.   While the broad number of firms increasing their focus on both the outsourcing and shared services models is relatively consistent over the past 3 years, the difference today is the intensity of investment.  Outsourcing has slowed to a more moderate pace, while a number of large-scale enterprises are focusing on moving more work into their internal shared services centers - the first time in a decade we are really seeing shared services making a reemergence of this magnitude.

Buyers are shifting more of their higher-value work into their offshore shared services operations.  It's become abundantly clear that buyers are now aggressively globalizing their

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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Parikh preaches, prophesizes and prognosticates… Part 2

June 18, 2014 | Phil Fersht

As with the airline industry, consulting firms have become highly commoditized with little client service and the willingness to serve others

 -Kevin Parikh, Avasant, June 2014

In Part 1, Avasant's CEO Kevin Parikh talked about his emerging advisory firm and how it intends to help its clients tackle digital transformation.  In Part II we warm up the talk to cogitate the impending talent crunch, the democratization of sourcing and the new levers enterprises can pull in their relentless quest to find new productivity…  so without further ado, here's Part 2:

Avasant CEO Kevin Parikh addresses some big industry issues with an ambitious consulting approach

Phil Fersht, CEO, HfS Research: Kevin, traditionally outsourcing advisors were focused primarily on reducing labor cost more than anything else. But now it looks like the decisions of driving out labor costs are democratized within companies. Let’s say they came out to look at Cloud; they can look at crowd sourcing type solutions. They can look at robotics. They can look at a lot of things and not just outsourcing. In fact, in many cases outsourcing is like a band-aid. Do you feel today’s advisors are really equipped to help their clients think through all these variables?

Kevin Parikh, CEO and Senior Partner, Avasant: Phil, I love how you put it—the democratization of sourcing selection. We all have a vote. We can take what we want.

Phil: Exactly...

Kevin: And I think Cloud has enabled us to do that. Are the typical advisors prepared to enter this market? Absolutely not. The traditional outsourcing advisor is focused on towers of service, offering templates and financial models. This really requires a strategy-oriented

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Cloud Computing

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Can Infovish disrupt the Indian services model and rediscover its mojo?

June 12, 2014 | Phil Fersht

Wow.  When the rumors leaked out about Vishal Sikka being tapped up for the Infosys CEO job, we thought this idle speculation, but a possibility that Vishal could have some role where he could absorb the nuances of the services business to potentially take over in a couple of years.

But - lo and behold - the old guard have decided it's time to make a dramatic change and a big bold statement to the world by placing the popular tech innovator, Vishal Sikka, in charge of rediscovering that elusive Infosys mojo that has been absent for some time now. So... is the Infosys monarchy behaving like a Premier League soccer club and making a panic play to stave off relegation to the second tier of providers, or is this the boldest move yet from one of the TWITCH* provider family to make a late run at the Champions League?

Infovish Pros

Vishal is a technologist and much admired by technology-driven executives.  His recent departure at SAP demonstrated how loved he was by the techno-purists and was seen by many as SAP

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Posted in: Business Process Outsourcing (BPO)Cloud ComputingCRM and Marketing

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The digital failure of today's operations talent: two-thirds of enterprises are falling short

June 10, 2014 | Phil Fersht

As we peruse the results of our soon-to-be-released State of Outsourcing 2014 study, one of the core elements that jumps out at us is the widespread dissatisfaction of enterprises in their own internal operations talent to change the processes, automate them, analyze them... or come up with creative thinking on how to improve things in general.  The talent dearth is so bad that barely a third of buyers from the 312 enterprises we surveyed has seen any positive impact on their own talent with their current outsourcing relationships using their own internal talent:

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Organizations clearly cannot reach their state of  Digital nirvana without professional help.  "Digital" capabilities, in this context, relate to the acumen of operational services talent to understand the interplay between their applications and processes to achieve better automation and more productive workflows that can ultimately lead to better analytics to base future business decisions.  In addition, these capabilities also relate to the creative flair of staff to align their services with the core business and come up with new ways of doing things to drive value, new ideas for business improvement and, in short, to behave more like a "front office" employee than transactional operator.

Bad IT can be even more culpable than bad BPO.  Let's not throw all the blame for this talent failure at the doorstep of the business operations staff. In so many cases, enterprises would have much more effective process capability if corporate IT wasn't so constipated with maintenance and infrastructure. In so many client cases, IT still can't figure out how to code without error, and they've done it for decades... at least processes change, but IT continues to be stuck in the dark ages for so many organizations.

The Bottom-line:  A Digital talent crunch is coming and this could get ugly for some

At HfS, we predict a major talent crunch coming to the vast majority of ambitious organizations who are struggling to find or retrain their back office staff to be more front office staff and "Digitally savvy" with their approach to services.  Two thirds of outsourcing clients are happy with how their internal teams manage costs, keep the basics ticking over ("lights on") and respond to compliance needs.  But, as these "light on" capabilities become increasingly commoditized through more sophisticated global delivery and standardized technology platforms, the need for these armies of back office operators is steadily decreasing.

What is clear is that technology has become a major component for future value of the enterprise (read our earlier study on this topic) and one avenue for operations staff to increase their future value is to train in areas like analytics and process automation where they can add whole new echelons of value to their organizations.  Sadly, many of the two-thirds we identify above are not going to make it, and others are simply not going to be needed - the relentless pursuit of increased value and decreased labor costs will see to that.  Less is more is the brutal rule for the future of the enterprise operations function.

For forward looking service providers and consultants, these clients are becoming rich hunting grounds for valuable partnerships in the future as the need for the Digital skills and new talent exacerbates.  Most clients will find their need to develop or acquire better talent a fruitless exercise and will look to their external partners to plug these operational gaps that will drive future value.

Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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Parikh preaches, prophesizes and prognosticates... Part 1

June 09, 2014 | Phil Fersht

Kevin Parikh is Global CEO and Senior Partner at Avasant (click here for bio)

Isn't is just so exciting to work in an industry where we are constantly seeing new competitors emerge, seemingly boundless innovation from enterprise clients pushing their capabilities to the limit... and all with such a refreshing lack of confusing verbiage.

OK - I was dreaming there for a moment, but one company we have seen emerge from the ground up in just a few short years to challenge the top advisory firms is Avasant. And most of this is credited to one man and the team he has built since he left Gartner, where he led the firm's sourcing practice:  Kevin Parikh.

So we managed to catch Kevin at his Manhattan Beach home, where he resides with his wife and two daughters, to talk to us about what makes him tick, how his firm is disrupting the advisor space (in dire need of disruption) and how he is intends to tackle clients needs around Digital transformation that is so high on enterprise agendas today...

Phil Fersht, CEO, HfS Research: Good afternoon, Kevin - thank you very much for your time today.  You've been quietly empire-building in the advisory space for a few years now - I think I first met you about seven years ago when you'd just left Gartner to set up your own shop.  Please share with our readers a little bit about your background, how you got into this space and the journey you are on today.

Kevin Parikh, CEO and Senior Partner, Avasant: Yes, we have known each other for several years now.  I started my career as an attorney in Washington, D.C., during the Clinton years. I was in the Clinton administration with the United States Environmental Protection Agency.  This is pre-Y2K, pre-IT outsourcing transactions, and in many cases, it was just the beginning of when the advisory space really started.

After the EPA, I moved to KPMG to join their LLP assurance practice, continuing my focus on contractual and litigation work that I had performed while at the EPA.  During the 1990s, I became increasingly engaged in KPMG consulting activities, including reviews of some of the very first outsourcing transactions.  I found myself sitting on panels with John Halvey and Bob Zaylor debating

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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Is a new breed of analyst finally arriving to disrupt the legacy model?

June 04, 2014 | Phil Fersht

Firms like HfS Research, Constellation and GigaOm have built their brands very quickly, in just a few years, and are now more visible than more established firms.

--Duncan Chapple, Influencer Relations, June, 2014

As if by some freak of nature, the very next day after we stirred the pot questioning whether analysts needed regulating (or self-regulating), the industry's leading analyst/influencer observer, the venerable Duncan Chapple of Influencer Relations and Kea Company fame, penned a blog that clearly demonstrates the sands are shifting in the analyst world when it comes to wielding influence over enterprise buying decisions:

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Several analyst boutiques are out-influencing their much larger competitors

As these results reveal from Analyst Equity and Kea's recent Analyst Value Survey of several hundred research consumers, Chapple states that "Firms like HfS Research, Constellation and GigaOm have built their brands very quickly, in just a few years, and are now more visible than more established firms. A great example of this is shown by the Net Influence Score from our survey, shown above."

The Net Influence Score shows, for each firm, the net percentage of the respondents mentioning a firm as having rising or falling influence. This chart shows the percentages for the firms about which the most respondents had an opinion. Chapple continues, "Newer firms like HfS and GigaOm are coming from a lower base of awareness: that makes it all the more remarkable that HfS was not

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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