HfS Network

Monthly Archives: May 2016

Robotic Process Automation has now penetrated a third of enterprises. Time to advance the conversation...

May 30, 2016 | Phil Fersht

RPA 1.0 is a done discussion. We know what it is, we know what it can do, we know how it can augment operations and help digitize broken processes.  To this end, our brand new study on Intelligent Operations, which canvassed the dynamics of 371 global enterprises, already shows a third of them are very active with RPA within their IT and finance and accounting processes:

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RPA is here and being adopted at a fast clip

All the incessant RPA hype has done its job - it has literally dominated IT services and BPO conversations at every conference, provider strategy deck, advisor "new practice" press release and many buyer converations.  Indeed, we can even forgive those cheesy sales presentations from guys who suddenly claimed to have 20 years' experience as automation pioneers and talked about bot farms as if they were actually hand-raised on one...

The overwhelming conclusion is that a large chunk of enterprises are actively implementing it, and

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Posted in: 2015 As-a-Service StudyAnalytics and Big DataBusiness Process Outsourcing (BPO)

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The new HP Enterprise is now the #3 high value IT services provider

May 25, 2016 | Phil Fersht

Love this merger or loathe it, the marriage of HPE and CSC has just spawned the third-largest high value IT services provider in the world - and happened just in the nick of time for our 2016 HfS IT Services Top 25:

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So, let's ask HfS' lead analyst for market sizing and forecasting, Jamie Snowdon (bio), how we fleshed out "High Value IT Services" from the general morasse of IT services:

We estimated all this data from services provider financials. Revenues are fitted to nearest calendar year. We attempt to make the IT services numbers as close to HfS definition as possible—as part of this exercise we exclude revenues from subcontracting, we don’t include BPO or business services revenues in this definition and some product services revenues were classified out of scope, if the equipment serviced is not IT – for example, telephony related equipment. These numbers do not include software-as-a-service, unless included within a broader managed services agreement.

Jamie, how did you come up with the $26 Billion number for the new HPE?

The merger of HPE Enterprise Services and CSC, brings together the high value services of HPE and the commercial revenues of the old CSC business. The $26 Billion revenue figure takes $8 Billion as CSC without the hived-off public sector business, and $18 Billion from HPE Enterprise Services division, much of which was the acquired EDS business unit.

And what's your initial take on the merger, before we get deep into the weeds of the broader implications?

This deal brings together two of the original outsourcing behemoths EDS and old rivals CSC. The reasons for the merger given by management focus on the scale of the new company. Certainly scale was an important requirement for IT outsourcing providers in the past, as it gave flexibility and economies to these asset and labor intensive businesses. However, in asset light world of modern IT managed services and the increased use of automation – scale is not a vital component. It does give them access to the very largest of global deals, but HPE, and depending on location, CSC, would have been able to handle anything that crossed its desk. What we have is two large services businesses that have spent the last 3 years hemorrhaging revenues, because they weren’t offering what many enterprise clients wanted or there was another provider able to do the same task cheaper and more nimbly. This issue is not going to be resolved by this merger. The two firms have to reinvent themselves as a modern services firm when contracts are more open-ended, value is counted in revenue growth, not just cost savings and scale is replaced by other features such as agility and innovation as the key differentiators.

Well, good timing indeed, Jamie, with the new Top 25. Interested readers can download their complimentary POV on the HfS website here.

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

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When did employees become "costs"?

May 21, 2016 | Phil Fersht

Stapler - Office MovieIt suddenly dawned on me what the core issue is with the future of the workplace: the simple fact that company leaders and their stakeholders started viewing employees as walking costs at some stage over the last 30 years, and have devoted a huge amount of focus and energy trying to figure out how to remove as many of them from their business as possible... without it impacting the top line.

Surely, people, human labor should be viewed as a valuable commodity that adds value to a business, not some burden on the profit margin that needs to be eliminated at all costs?  So what's really gone amiss here?

Enterprises hired people into jobs they no longer value. Over the decades, our enterprises have ballooned with staff hired to provide inputs into process chains to keep them ticking over - whether they were writing lines of spaghetti code to make processes flow from one subtask to the next, or producing reports out of SAP for a historical view of the business some manager will archive away

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Posted in: HfSResearch.com HomepageHR StrategySourcing Change Management

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Accenture, Xerox, NGA HR, Aon Hewitt and ADP make the HR Operations-as-a-Service Winner's Circle

May 19, 2016 | Phil Fersht

The market for talent has seen massive fluctuations over the last eight years. The 2008-9 global recession caused massive employment contractions across all major regions, however, the tide has really turned to turn after one of the longest sustained periods of economic growth in the last 200 years, with  the need for fresh talent is on the rise.

Coupled with the rise of the intelligent digital business, these dynamics have forever changed the way organizations have to approach their HR function as seek new expertise and mindsets. As such, optimization and smart thinking across the entire HR stack is a critical requirement to attract, onboard and nurture talent within organizations.

As more and more millennials enter the workplace (now making up a third or staff), employee interaction has to change. The always-on, always-connected workforce is here. Organizations need to adapt HR functions accordingly and embrace mobile and cloud technology that can be accessed anyway and anytime.

Cloud HCM platforms have developed user interfaces that speak to this new workforce, but with ~50% of buyer organizations still using on premise legacy HCM systems, there is still a long way to go for many organizations. By partnering with proven service providers, organizations can now make the migration to the cloud quickly and efficiently. Also by leveraging the managed service expertise of these providers, organizations are more enabled to focus on key moments of truth with employees thereby reducing employee churn and having a more aligned, motivated and focused workforce. 

Knowing the importance of these solutions for the very future of HR, we put our best and brightest on this. And the result is HfS Human Resource Services Research Director Mike Cook's first Blueprint for HfS: HfS Blueprint: HR Operations As-a-Service 2016. So we invited him in to tell us all about it.

HR Ops_Axis

How did this Blueprint take shape, Mike?

In this HR Operations HfS Blueprint, we take a look at the evolution of MPHRO to “As-A-Service”--a services market that is increasingly agile, collaborative and employee-centric. HfS considers this transition in outsourcing a move to the As-a-Service Economy, placing increasing value on diverse

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Posted in: Business Process Outsourcing (BPO)Digital TransformationHfS Blueprint Results

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The back office is dead... long live OneOffice

May 13, 2016 | Phil Fersht

Intelligent OneOfficeIf someone called you "back office", I'd imagine you'd be a little bit offended.  It's probably not much worse than being called "useless", or "about to be automated out of existence"...

But I have good news for you back-office rebels - your time spent festering in the backend of yonder is finally coming to an end. Why?  Because the onset of digital and emerging automation solutions, coupled with the dire need to access meaningful data in real-time, is forcing the back and middle to support the customer experience needs of the front.

Our soon-to-be released study on achieving Intelligent Operations, which canvassed 371 major buyside enterprises, reveals two key dynamics that are unifying the front, middle and back offices:

  1. A "customer first mindset" is the leading business driver driving operations strategies.  Over half of upper management (51%) view their customers' experiences as impacting sourcing model change and strategy, which is placing the relevance and value of the back office in the spotlight.
  2. Three quarters of enterprises (75%) claim digital is having a radical impact. We can debate the meaning and relevance of digital forever, but the bottom line is that enterprise leaders need to (be seen) to have a digital strategy - and a support function which can facilitate these digital interactions and data needs. The old barriers where staff in the back office don't need to think and merely oversee operational process delivery, and those in the middle, which only venture a part of the way to aligning processes to customer needs, are fading away.

Consequently, we're evolving to an era where there is only "OneOffice" that matters anymore,

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Posted in: 2016 Intelligent Ops StudyAnalytics and Big DataBusiness Process Outsourcing (BPO)

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Buyers perceive Accenture, Deloitte and KPMG as the most trusted consultants for achieving Intelligent Operations

May 06, 2016 | Phil Fersht

john-lylyIn 1588, the English dramatist John Lyly, in his Euphues and his England, wrote:

"...As neere is Fancie to Beautie, as the pricke to the Rose, as the stalke to the rynde, as the earth to the roote."

In other words, "Beauty is in the eye of the Beholder", which just about sums up how buyers perceive consultants when they need some serious rethinking and rewiring done to their operations to make them more intelligent:

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So what's actually surprising here?

In the past, you may have expected to see the pureplay strategy houses rule the roost, however, when we break down the Change Management and Solution Ideals enterprises need to achieve more Intelligent Operations, the focus shifts much more to using consultants with real change management, process transformation, analytics and automation chops... this is less about strategy, and more about just driving through the changes. Most company leaders know where they want to go - it's now more about executing a plan to get there:

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The Bottom-line: We're moving to a world where the expertise enterprises need to be successful is really changing 

One of the above firms asked me recently if it should start an automation practice.  My response was "If you're only asking me this now, then you're already too late to the game".  In a nutshell, enterprise operations functions need genuine expertise in adopting a mindset to write off their legacy systems and obsolete processes - and a real understanding of how to approach automation and embrace digital opportunities.

A lot of this is about prioritizing what not to automate and learning where digital transformation actually makes business sense. This is about creating an operations function that can pivot and support the rapid changing needs of the front office with actionable data, that is secure and available in real-time.  This is about defining and devising a digital strategy that has the customer at the forefront of the business and an operational support function that has the customer experience at its core.

Hence, consultants need talent that can not only think creatively with their clients, but also create an ongoing environment for writing off legacy, embracing change and being smart and proactive about leveraging automation and real digital strategies effectively. The speed at which some of these advisors must make the pivot from merely brokering transactional contracts, or spouting off some high level fluffy strategy, to supporting real change is critical - I'd imagine we'll know in the next 9-12 months which ones will genuinely be helping their clients achieve these ambitious ideals.

Posted in: 2016 Intelligent Ops StudyBusiness Process Outsourcing (BPO)Design Thinking

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Teleperformance, Concentrix and Sutherland lead the HfS Contact Center Operations Blueprint

May 03, 2016 | Phil Fersht

Our latest research into intelligent operations reveals a customer first strategy is the biggest driver for C-Suite leaders today, so where more important to focus than what's going on at the call center?  Has there ever been a more compelling time for call center service providers to step up and prove to their clients they can do a whole lot more than execute basic customer services?

Call center services have matured significantly in recent years, where you can find a plethora of providers doing a masterful job managing resources all over the world to deliver affordable voice services - but choosing between them has often never been so difficult.  However, with the need for so many enterprises to focus on the omnichannel customer experience to differentiate themselves, we're now in a critical bake-off between those call center providers delivering real customer value versus those still walking the treadmill of proving legacy voice services at ever-cheaper rates.  Plus, we still have many enterprise buyers who squeeze the life out of their providers on cost, and then expect the provider's A team to show up. Hence, there is a fine balance between the value clients need, the investments they are prepared to make to achieve this value, and the ability of smart providers to invest in As-a-Service models that take advantage of talent, digital technology and automation to deliver high value, without huge increases in headcount investments. Sounds easy, right?

In this vein, we're excited to announce the release of our first Contact Center Operations Blueprint, authored by HfS Research Director and contact center veteran, Melissa O’Brien, the only contact center analyst who's actually lived in the Philippines running a call center operation herself. Melissa's been exploring the cluttered competitive landscape, talking to a huge number of clients and leading providers, to help shed some light on the competitive landscape and where this market is truly heading:

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Melissa, please give us a flavor for the current state of the contact center operations market

This is a market undergoing a pretty dramatic transformation, in part due to increasing end-customer expectations - ambitious service providers are looking

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

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The future of work is about capabilities you (should) already have

April 30, 2016 | Phil Fersht

Fries with that?Soon there will be nowhere left to hide. Everyone’s value is under the microscope from colleagues and management alike.  Whether you turn widgets, manage a process, a set of processes, lead teams or manage team leaders leading teams… or run a whole division… or even an entire organization, you are under constant scrutiny in today’s open workplace.

Everyone has to prove they are useful, add real value and are worth their salaries… or they are toast.  But most importantly, people need to prove they can be trusted.  Employee trust in today’s workplace is about proving you are doing more than just enough not to get fired.

Loyalty is legacy

Most heritage enterprises no longer want to give out gold watches for your turning up everyday for last 30 years… I mean, “thanks for showing up and coasting here for 30 bloody years and making it really hard to fire you”.  I don’t think so… Loyalty means little, but value means everything. The more legacy work we automate/digitize, outsource, replace with software, or just write-off, the more we have to focus on our human skills to justify our existence in today’s workplace.

Tomorrow’s successful workers are those who use their initiative to perform activities, on their own volition, to find new value for their enterprises.  You can’t get any progress or value from methods like Design Thinking if your staff are only checking the boxes to perform their rudimentary employment functions. Design Thinking is about going beyond the norm to challenge the status quo, to think outside the boxes, not just checking them.

You are who you are – your reputation is everything, your ability to forge relationships with colleagues, peers, industry influencers and company leaders who appreciate your value, your perspective and your personality is, really, all you have.  The days when you could get away with hopping from job to job because you were great at bullshitting your way through interviews are dying – any employer with half a brain isn’t recruiting through traditional channels any more.  It’s all about people engaging with people who have established a reputation for adding value, going beyond the basics, and being great to work with.

You need to find new problems, not just solve old ones

But adding value is not just about solving known existing problems, it’s about finding new ones to solve in the future.  You can always find a contractor or an outsourcer to fix a broken set of processes, or correct lines of badly written code. But finding people which can challenge whether those processes or lines of code are even still relevant to meeting your desired outcomes… people who care enough about their jobs and their company’s success to go beyond performing “just adequately enough not to get fired” is the secret sauce for future value.   And that is what new workforce trust is all about – initiative, attitude, personality and trust.

The Bottom-line: There is no secret sauce to staying relevant – it’s about putting our egos aside and becoming students again 

Frankly, I’m sick and tired hearing about “Digital Skills” and “Creative Capabilities” being some far-flung capabilities which you need to go to Millennial school to develop (whatever that is). Digital skills are about understanding your customers’ current experiences and intelligently leveraging every traditional, social and mobile channel touching your business to make them richer. Creative capabilities come from collaborating and challenging yourself with your colleagues and partners.

So correct me if I am wrong, but being successful today is about using capabilities we already have. It’s simply making ourselves students again, finding that hunger to learn about what’s out there and engaging with everyone around us to prove and challenge our theories.  We must ditch this sense of entitlement that dictates we don't need to go back to basics and force ourselves to think, collaborate and learn all over again - or we're going to be done before we know it.

Enterprises need to behave like start-ups, where their people group together for the common cause of making their collective group successful - only willing collaborators with a desire to learn and challenge need apply. We're all part of the Digital Generation - we just need put our egos to one side and own up to the fact we're all students rediscovering what we're all about and what we're capable of...

Posted in: Design ThinkingDigital TransformationHfSResearch.com Homepage

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