HfS Network

Monthly Archives: Jul 2014

Yes, it's true... one in three Apple engineers is really Indian

July 28, 2014 | Phil Fersht

We have heard a lot about Apple's manufacturing outsourcing, where the firm has ~500,000 people subcontracted via Foxconn in China to crank out its iPhones, but very little about its IT outsourcing habits.

So... does Apple also leverage large scale IT outsourcing? If answer is yes, then what kind of IT outsourcing is done by Apple, and how it has been changing with time?

With these questions in mind, our ever-curious India-based analyst (note: also keen novelist now seemingly developing a penchant for investigative journalism), Pareekh Jain, started studying Apple's IT outsourcing initiatives, and the results surprised us: Apple doesn't outsource its core software technologies that go into its products, but it does outsource Enterprise Applications, Business Intelligence, ADM and other software initiatives to a combination of TCS, Infosys, Wipro, TechMahindra and Exilant (which we know of). Quite simply, as Apple is growing, so is the scope of its Indian-centric IT outsourcing to support it's ever-increasing needs.

Another related aspect that cropped up during Pareekh's research, is the increasing use of global engineering talent by Apple. According to our estimates, Apple leverages Indian engineering talent heavily as indicated from its sizable H1B and GreenCard applications.

We shared our research findings with Times Of India (The World's largest English daily newspaper), which went as far as a story on this interesting little topic on today's front page.

We'll be sharing our research report on Apple's outsourcing  strategy with our readers shortly....

Posted in: HfSResearch.com HomepageHR StrategyIT Outsourcing / IT Services

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The Digital Transformation Services Blueprint Primer is unveiled: Accenture, Cognizant, IBM, Infosys and TCS are the front runners

July 27, 2014 | Phil Fersht

2014 has shaped up to be the year Digital Transformation took root as a unifying theme for IT and business services. What's been exciting about Digital is much of the technology is already available, and it's the digitization of business processes to enable plug-and-play services, more meaningful data and more seamless business models designed for mobile and cloud business environments.

Digital is not really about digitizing the way we've always done things, it's about digitizing the way things need to be done to be more competitive and effective in the future. Digital is also about progressing our talent to operate with digital mindsets, by adopting analytical, creative approaches to help their enterprises progress from creaking, legacy business practices.

Nearly every major IT and business services provider is now using the term Digital in its go-to-market messaging today. But that level of activity and interest means the phrase has taken on an extraordinary breadth of meaning. So much so, perhaps, that one might argue it is becoming increasingly meaningless as a descriptor of activity.

HfS’ Ned May recently set out to clarify our definition of Digital Transformation and to explore the positioning of the leading IT and business services providers in the today. Rather than narrowly define and coral the topic, he cast a wide net with the goal of highlighting the full range of activity currently underway. His rationale for this approach being that Digital Transformation does not merely represent a new external market opportunity for service providers, but it is also a major catalyst to reconfigure the very markets in which they are operating.

To this end, we have published what we are calling a Blueprint Primer Report that evaluates this emerging Digital Transformation services landscape, the significant participants and their early positioning and achievements as they vie to take many of their clients into this digital dimension of service delivery and capability.  So how did the early front runners shake out?

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Ned, let’s start with what you mean by Digital Transformation. Can you elaborate?

Thanks, Phil. As you are aware, it can mean many things but in its purest sense we see Digital Transformation as the changes that must occur when a business moves away from a physical task. For example, the shifts that occur in underlying processes and infrastructure when one sells goods

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

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Accenture makes significant As-a-Service play by bringing together Operations, Cloud and Infrastructure

July 20, 2014 | Phil Fersht

It's time to wake up and smell the roses, people. The services industry is going through its most seismic challenge as increasingly sophisticated enterprise clients are looking to reduce their reliance on labor-based services and clunking archaic on-premise technology.  While some services and consulting firms have their heads buried in the sand, clearly in denial that the services model has already entered into a fundamental shift, others are recognizing that they need to get ahead of this - and fast.

The services industry is going through a secular change and it will never be like it was, where trillions of dollars were spent maintaining dysfunctional systems and funding huge armies of staff to fumble their way through managing non-standard and often obsolete processes. Those days are fading fast and that pie is shrinking for providers and consultants still feeding off the legacy enterprise operations beast.

We ran a study earlier this year that explored the role of technology when enterprises outsource their business operations, and the findings from almost 200 major enterprises couldn't be clearer: half of today's enterprises are expecting to take the leap to enable their business operations with new technology tools and platforms in barely a two-year time-frame.

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Operations leaders don’t have the luxury of ten-year improvement programs anymore – corporate leadership expects to see tangible results in much shorter timeframes. You only have to look at the growing number of unemployed CIOs to understand what happens when functions become overly-operational and limited value and innovation is achieved.

It’s the same for CFOs, CPOs, supply chain heads and other function leaders – most are under a renewed pressure to continue driving out costs, while delivering ongoing improvements to data quality and having greater alignment with front-office activities.  The old "we need to fix our ERP first" excuse just isn't cutting it as much these days.

This is why 49% of today’s enterprise buyers expect to move to a “wide-scale transformation of

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

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Apple goes all corporate on us

July 17, 2014 | Phil Fersht

Ned May, SVP Enterprise Mobility and Digital Services Research, HfS

Remember the days when standard corporate issue to enterprise staff was the monster-sized Dell laptop that only seemed to be made for the mass-market corporate crowd and needed a huge ugly Targus case to lug it around...  and a low-end Blackberry, where the only redeeming feature was brickbreaker that could keep your brain amused for hours on those middle seats at the back of coach?

In fact, it was for these very reasons that executives slowly came around to realizing that the only cool technology they could get access to would come from their own personal investments, which is how Apple crept into the executive suite. Apple was just so anti-enterprise; YOU were in control and YOU could develop you whole digital persona using your iPad and iPhone.

There have been some insightful pieces penned on the landmark IBM/Apple alliance signed this week - notably from Larry Dignan and Peter Allen that go into the far-reaching potential consequences of this deal, notably the potential of providing iOS apps and embedded analytics tools to enterprises and disrupting traditional services models, potentially not too different from Workday's impact on HR.

However, I wanted to draw your attention to HfS' enterprise mobility analyst, Ned May, who focused on the simple fact that this alliance finally gets Apple into the enterprise through the front door...

"Apple has never understood the enterprise very well. While it has attempted to become ‘more friendly’ over the years and extended a few fig leafs in the terms of iOS updates that address enterprise grade concerns like security, Apple’s success in the enterprise has mostly been driven by its success as a consumer device. It has largely entered the enterprise through the front door in an executive’s purse or pocket not via a box on the loading dock that was backed up to IT. Further, Apple has been notoriously difficult to work with often to the frustration of a CIO. In short, while Apple’s support might be “legendary” it has not been the type of story that ends with someone riding off into the sunset. Which brings us back to the impetus behind this deal. At its core, it is about Apple realizing it will never understand the enterprise and that there is no better partner to get them over that challenge than IBM.

"In exchange, IBM gets to offer a message of safety to anxious IT departments who nervously watched iOS devices sweep into their formerly locked down playgrounds and ultimately opened them up to the chaos known as BYOD. As we pointed out in our Enterprise Mobility Services Blueprint (see link), the market is now reaching a stage of maturity where IT departments are being asked to rationalize the disparate mobile activities underway around the enterprise. As they do, many are looking to apply their traditional approaches to managing the challenges these new environments brings."

Click here to access the full complimentary POV "The Day Apple’s Enterprise Strategy Came in from the Cold" 

Posted in: Analytics and Big DataCloud ComputingDigital Transformation

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Capgemini, Accenture, HAVI and Entercoms make up the first-ever Winner's Circle for Supply Chain BPO

July 12, 2014 | Phil Fersht

When we look at the future potential of BPO, one of the markets with the most untapped potential is that of supply chain services, which could be as large as $300 Billion in annual expenditure when today's emerging offerings really begin to mature, and an increasing number of buyers have to tap into third party technology and services specialization.

When you think about the scope of this space, we're talking about the management of orders, inventory, manufacturing and transport to get products to market, and then the whole additional services tied to after market needs, master data management and sustainability management:

The need for supply chain process, domain and analytics expertise, supported by the necessary technology tools platforms - at a global scale and depth - has never been as intense it today's buoyant and globalized market place, where decisions needs to made faster than ever to keep many companies in business.  So HfS analysts Pareekh Jain and Charles Sutherland set about the analyst industry's first-ever attempt to flesh out the leading providers in this market with the 2014 Blueprint Report in Supply Chain Management BPO Services:

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So, Charles and Pareekh, what is driving buyer interest in Supply Chain Management BPO today?

For most enterprises the costs of goods sold is the vast majority of their income statement and the with SG&A having in many cases being squeezed extensively over the last decade they are looking for new ways to both reduce COGS but also to improve performance of their supply chains as well. As the world continues to globalize and both suppliers and customers become more distributed and

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

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Sometimes the best strategies are the most obvious...

July 12, 2014 | Phil Fersht

This was an actual bank robbery in Detroit...

[embedplusvideo height="345" width="578" editlink="http://bit.ly/U8lGer" standard="http://www.youtube.com/v/nWRVvF_pkhc?fs=1" vars="ytid=nWRVvF_pkhc&width=854&height=510&start=&stop=&rs=w&hd=0&autoplay=0&react=1&chapters=&notes=" id="ep8857" /]

Posted in: Absolutely Meaningless Comedy

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Isn't it time individuals stopped pretending they're companies?

July 10, 2014 | Phil Fersht

Buy my stuff!

One of the trends we've been seeing with the proliferation of independent analysts, bloggers, consultants, journalists and other pundits, is for many of these characters to launch their own "firms", when the product is, really, just them.  Or them and a few freelancers they could tack on to their website to make them look like an actual company of people.

Now, if an individual was actually planning to grow a company over time - and genuinely adding real staff which does more than organize their mailshots, calendar or spell-check their reports, they can be forgiven, however, there are far too many people out there masquerading as company CEOs

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Posted in: Buyers' Sourcing Best PracticesSocial NetworkingTalent in Sourcing

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Steps the outsourcing industry needs to take to survive

July 04, 2014 | Phil Fersht

Outsourcing: Making the same mistakes over and over and expecting people to stop moaning

One of the the core issues we discussed at last week's Blueprint Sessions was the frustrating and seemingly never-ending issue of providers over-promising delights to clients to win engagements and then failing to deliver on them.  However, the group of 45 industry stakeholders all agreed that all of the entities are at fault in setting up too many of these engagements to fail:

Buyers:  Thinking that they are going to get wads of free transformational consulting that will miraculously appear from the provider - even thought they haven't actually paid for any;

Providers:  Promising wads of free transformation consulting to augment their operational obligations, even though they probably will not really give the client any (but who cares, as it'll be too late for the client to back out in two years' time and they aren't contractually obliged to provide it);

Advisors:  Strong-arming providers to respond to RFPs in three weeks and allowing very little (if any) interaction time for providers to interact with their clients in advance to develop the right solution and get a stronger balance between delivery capability and desired outcomes.

So what happens when you look at a culmination of many buyers' first five years' experiences after signing a contract?  Let's take a look at some collective journeys:

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Four steps this industry needs to take to avoid engagement failure in the future

1) Less focus on the deal, more on the relationship. Providers are all-too-frequently being forced in the position of saying what they need to win the deal, as opposed to having a  structure to propose a realistic partnership that works for both sides, with specific milestones and balanced delivery expectations.

Possible Solutions: Advisors need to create a more collaborative RFP process that allows for more interaction between the buyer and interested providers. Advisors also need to set better expectations for their clients and potentially get their governance consultants involved earlier in the

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesHfSResearch.com Homepage

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