HfS Network

Monthly Archives: Jun 2016

Enter the “Trust” Clause: The only way to contract for emerging Digital business models

June 30, 2016 | Derk Erbé

The rapid onset of Digital business models is having a number of implications for developing a service provider - client contract, including:

  • Lack of defined outcomes:Engagements are starting to have a more open ended nature: the end result is not clearly defined nor are the steps needed to get there. Experimentation and agility are key characteristics of many new engagements.;
  • Challenges of embracing new tech:Accelerating change driven by more and more emerging technologies that affect the operating environment of enterprises and service providers;
  • Setting future milestones:Plotting a detailed course of action (and relevant KPIs!) over multiple years has become virtually impossible: one simply cannot know what one needs in 2 years’ time, let alone look 5 years’ ahead

I see service providers and buyers struggle to deal with this new reality.

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Posted in: Design ThinkingDigital Transformation

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The Game of Digital Clones Will have a Radical Impact on Engineering

June 30, 2016 | Pareekh Jain

Imagine if you have a clone which can do less interesting work for you, such as attending events, dialing conference calls, sitting in meetings, visiting doctors, meeting social obligations, etc. and can be present at different places while you are doing real work (for me, that’s reading a book or writing research in my study), how much productive you can be.  Well, we don’t know whether we will have such human clones in our lifetime, but in engineering industry, digital clones are definitely beginning to appear.

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Posted in: Procurement, Engineering & Supply Chain Outsourcing

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Budgets? We don’t need no stinking budgets! Or do we? An interview with Accenture’s Bill Phelps

June 29, 2016 |

Earlier this year, HfS Research and Accenture surveyed over 200 cybersecurity professionals around the globe to better understand how enterprises are securing their digital assets and dealing with increasingly sophisticated, and all too frequent, cyber attacks.

I recently had the opportunity to sit down with Bill Phelps, Managing Director, Accenture Security, to discuss our report. Bill was one of my co-collaborators in this research effort, and I was curious to get his take on both the survey and its implications for the cybersecurity sector moving forward.

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Posted in: Security and Risk

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RPA is Dead. Long Live Intelligent Automation!

June 29, 2016 | Tom Reuner

I have been researching the notion of Intelligent Automation and, in particular, the rapid uptake of Robotic Process Automation (RPA) for more than 4 years. It was this work that eventually brought me to HfS. Over the years, I have made many good friends and acquantances in the automation community – and many of those good folks have graciously suggested I have become a spokesperson for this community. Yet, it is time to take a stance and declare: RPA is dead!

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Posted in: Robotic Process Automation

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Confessions of a market forecaster – we might not be real wizards, but let us at least pretend we are!

June 29, 2016 | Jamie Snowdon

This is a very odd confession, but I love market sizing and forecasting. Strong language, I know, but I just love it. I think it is the combination of attention to detail and precision calculation, coupled with the intellectual leaps of faith needed when assumption making. Starting with a blank sheet and a new market gives me the opportunity to spend hours on pure thought, and there are very few things that excite me that much (and only a couple of those are legal!) I just wanted to share a few of my thoughts about the market sizing and forecasting.

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Posted in: None

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Ever wondered what analysts do?

June 29, 2016 | Mike Cook

Being an industry analyst, our work differs greatly from day to day and as such, today more than ever, we are wearing an ever increasing number of hats and taking on more responsibilities. Although, rather like the transition to the As-a-Service Economy, which dominates our research at HfS, overcoming the specter of legacy is one our key concerns.

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Posted in: None

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Thinking Outside The Box To Support SaaS Applications

June 29, 2016 | Khalda De Souza

My husband and I have three children, including twins with autism. Over the past few years we have become accustomed to thinking outside of the box and trying different approaches as parents. We’ve learned the importance of good planning to meet a desired outcome (often the hard way!). We have also had to unlearn many parenting techniques employed with our eldest child to best support the twins.  Service providers have undergone a similar transition, as they battle with how best to support the high growth area of SaaS services compared with the requirements of the on premise world of yesteryear.

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Posted in: None

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Forget about Omnichannel hype when your Basic Customer Service Sucks

June 28, 2016 | Melissa O'Brien

Everyone is talking about how to get to the right strategy for omnichannel customer communications, yet no one really knows what it means. First of all, let’s just get it out there that omnichannel is one of those terms everyone loves to hate.  It’s ubiquitous, it’s vague, and it’s a misnomer-- “omni” is impossible and customers don’t think in terms of channels.  That said, omnichannel is an aspirational goal pointing many service providers and enterprises in the right direction toward really getting customer experience right.  So with that in mind, it has become my mission to dissect the subject, get past the hype, and figure out where the opportunities lie for the services industry.  

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Posted in: None

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Welcome to my blog: Berzerk with Derk

June 28, 2016 | Derk Erbé

This is my all new spot on Horses for Sources. The home of razor-sharp analysis and the place where hypes are crushed and real trends are born. Phil has set the bar incredibly high over the past decade. Inspired by the best analyst blogger around, my aim is to be as edgy as you are used to on Horses for Sources.

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Posted in: None

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Has Knowledge Process Outsourcing re-emerged as the future of BPO?

June 28, 2016 | Reetika Joshi

When I entered the industry in 2008, working for a boutique research firm in Pune, India, the research themes floating around were about “what’s next for BPO, because this recession changes everything.”

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Posted in: The As-a-Service Economy

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The dinosaur that is procurement: Get relevant to your business or become extinct

June 28, 2016 | Bram Weerts

Procurement’s very existence is in trouble. The function must be part of the whole negotiation process, not only to protect the company from making deals that do not benefit the firm but also ensure they are sensible, cordial and well-balanced - and both supplier and buyer realize the outcomes they both want to achieve. Sadly, this is so not the case with so many pivotal business deals today.

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Posted in: Design ThinkingOutsourcing HerosProcurement, Engineering & Supply Chain Outsourcing

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Watching out for the rapid evolution of core digital business changes

June 27, 2016 |

It’s easy to make a compelling case that ‘digital’ will ultimately replace what was once ‘IT’ at some point in the future as the former rapidly evolves and the latter become more and more associated with legacy technology and practices. hedging bets on what will happen and when however is a different matter entirely and hugely variable from business to business.

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Posted in: Digital Transformation

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How to Power Up and Re-think your Outsourcing Experience

June 27, 2016 | Barbra McGann

“They don’t bring us ideas.” 

“When we first outsourced, our service provider had the newest ideas, but now three years later, we have caught up to them and they’re treading water. So what’s next?”

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Posted in: Design ThinkingHealthcare and OutsourcingTalent in Sourcing

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Welcome to my blog: In Digital We Trust?

June 27, 2016 |

I don’t believe there is any digital business or consumer that can be 100 percent secure 100 percent of the time, unless they opt to abandon technology and live in an obsolete analog world. It’s as simple as that. 

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Posted in: Digital TransformationSecurity and Risk

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The broader issues behind Brexit send a frightening message to the services industry

June 26, 2016 | Phil Fersht

The vote for Brexit wasn't really about debating the finer points of EU membership - it was a big thumbs down for the establishment from over half the UK voters who feel disenfranchised.  This is a reflection of the ever-widening gap between the wealthy and the working classes, the educated and the uneducated, the socially-connected ambitious younger generation and the disconnected older generations, who've lost interest in the direction of the modern world that no longer represents their interests.

Moreover, this rebellion against the establishment can be clearly mirrored in many of our enterprises, where similar issues of disenfranchisement are rapidly permeating.

Rote jobs are being eliminated with limited reorientation and progression planning

We talk a lot about the new work and career opportunities being created by digital disruption and digital business models, but these require greater problem solving skills, critical thinking and creative capability, if the World Economic Forum's new jobs report is to be believed:

Click to Enlarge

And while we can complacently talk about all the exciting work creation the As-a-Service Economy is bringing, we've already precisely pinpointed that 30% of routine, low-value positions

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Posted in: Business Process Outsourcing (BPO)Digital TransformationHfSResearch.com Homepage

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Digital labor will trim 1.4 million global services jobs by 2021

June 24, 2016 | Phil Fersht

It’s time we dispelled the scaremongering and hype and gave you the true picture of how advances in automation tools and methodologies, such as RPA and autonomics, will impact the global IT services and BPO industry over the next five years.

The current debate on these issues is as polarizing as it is confusing. On the consumer-facing side of technology, we have a fervent and far-reaching debate about the ethics of artificial intelligence and automation, led by executives from the likes of Google and Facebook. On the enterprise side, we frequently see quotes from studies from firms such as McKinsey and Gartner predicting seismic job losses through the impact of disruptive technologies that could have a devastating impact on the global economy and society in the next few years.

Yet, many of the leading stakeholders much closer to the true deployment of emerging enterprise Intelligent Automation tools and platforms—namely the service providers, the ISVs and the sourcing advisors—remain on the sidelines when it comes to discussing the true impact of automation as it’s adopted by many enterprises today.

We’ve been talking, for the best part of two decades, about how to “transform” business and IT processes after the cost benefits of labor arbitrage have been maximized. Well, the simple fact is that much of these arbitrage costs are close to optimization for mature services providers that have well-honed global delivery machines. As enterprise clients demand further cost advantages, and as competitors become increasingly aggressive with their service pricing, the focus shifts toward clients attaining outcomes that are not always directly linked to lower headcount rates.

“Intelligent Automation-as-a-Service” is a genuine lever for enterprises to pull for further productivity gains beyond low-cost offshore labor

Consequently, many enterprises that have chosen to externalize their service delivery can enjoy even more cost effective services, as ambitious service providers further rationalize their delivery organizations by taking advantage of automation to standardize and scale service delivery to their clients.  In short, while many enterprises can invest directly in Intelligent Automation into their own processes, they can also simply outsource those processes to service providers, which can embed further productivity gains tied to automation, in addition to labor arbitrage.  “Intelligent Automation-as-a-Service” is quickly emerging as a significant productivity option for enterprises as part of their service delivery.

Sadly, greater productivity and effectiveness through “digital labor” comes at a societal cost—jobs that were once required are no longer needed. However, we would point out that the jobs that are being phased out are no longer being recreated in any case, and much of this shrinkage will likely come from natural attrition as some people leave the service industry for more relevant jobs in other industries.

The Impact of Automation on Services Jobs

The following graphic shows three Automation Impact Scenarios for the IT and BPO services industry, ranging from a modest/conservative prediction which is a continuation of current RPA use to a scenario we consider more likely where adoption of RPA and more Intelligent Automation increases to an aggressive scenario, where automation adoption hits a broader range of the skills. If we examine the most likely outcome, Scenario 2, we see strong growth for highly and medium skilled personnel—with highly skilled positions in our industry increasing by 56%, and medium-skilled by 8%. However, low skilled, routine jobs drop 30% as many of these roles get phased out over the next 5 years, resulting in a net loss of 9% of jobs, totaling 1.4 million:

Click to Enlarge

Click to Enlarge

The following graphics shows Scenario 2, the Likely Scenario, in more detail, outlining the number

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Posted in: Business Process Outsourcing (BPO)Cognitive ComputingDigital Transformation

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Can HPE + CSC dominate the digital underbelly, or has that ship sailed?

June 19, 2016 | Phil Fersht
Digital Underbelly

Just stare at that digital underbelly... there's a lot of work needed down there!

When the news broke last month about the second largest IT services merger of all time (after the 2008 HP-EDS whopper), the reaction among the services cognoscenti was - and has continued to be - one of confusion.  Big services mergers have just not done very well over the years. HP/EDS was a culture clash of immense proportions - and occurred right before the great recession, while other mergers, like Dell's acquisition of Perot, has resulted in the old Perot business being flipped over to NTT Data at a significant loss, and the Xerox/ACS merger has been shaken up and spun off and needs a major reinvention under new CEO Ashok Vemuri to get the company back on track.  Meanwhile, Capgemini and IGATE are still figuring out the best pieces of each other to mesh together, while not taking their eye off the ball, during the services industries' most cut-throat transition phase.

We heard HPE CEO, Meg Whitman, excitedly address the firm’s key clients and industry analysts at HP’s recent Discover event in Las Vegas, with an obsessive focus on “digital transformation” and the impending impact of “digital disruption”.  However, the real opportunity for HPE isn’t really in the design of digital business models for clients, it’s the enablement of them – it’s the provision of the agile “digital underbelly” to make digital change really happen for enterprises.

It's easy to be cynical about legacy IT services, but there's an awful lot of it to scrap over as enterprises are forced to fix their plumbing

Digesting the merger of these two struggling services giants has resulted in more rumination than most, considering the timing, sheer scale, transitional uncertain market and motivation. This is not a time when most traditional service providers are looking to add more global delivery scale to already large foundations – most are trying to slim down their delivery armies and sales forces,

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

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Accenture, TCS, Wipro, Tech Mahindra and Infosys lead the 2016 Telecom Operations As-a-Service Blueprint

June 13, 2016 | Phil Fersht

HfS Telecom guru, Pareekh Jain, is back with his second blueprint looking at service provider capability delivering telecoms business services, following his debut analysis at the end of 2014:

Click to enlarge.

Click to enlarge.

Pareekh, how would you describe the current state of Telecom Operations As-a-Service?

We describe this market as a under-penetrated market. Our research suggests the current global telecom operations market (i.e., business processes under network, fulfillment, assurance, and billing) is perhaps one-third of $10 billion potential.

The telecom market is perhaps only vertical market with the dubious distinction of both enabler and victim of the digital transformation. Telcos have enabled cost-effective communication with likes of WhatsApp, Skype and in turn, they have eaten telco's lunch. Telcos worldwide are struggling to find their right place in the digital world. As-a-Service solutions can enable service providers to help telcos to prepare for the digital era.  The As-a-Service is the model today and for the future in telecom operations services.

Tier 1 telcos have generally been early adopters of telecom operations services. Now, there is an opportunity to provide services to Tier 2 and Tier 3 telcos, too leveraging As-a-Service solutions. As-a-Service solutions are driving growth in this market.

The eight service providers we evaluated for this Blueprint approach this market in essentially two ways. Service providers with strong IT offerings focus more on non-voice solutions whereas pure-play BPO service providers focus more on voice-based solutions. Service providers with strong IT offerings have taken the lead in platforms replacing legacy stack, plug and play business solutions, intelligent automation, holistic security, design thinking, and collaborative solutions while analytics and social is on the agenda of all telecom operations service providers.

How has that changed since our inaugural Telecom Operations Blueprint in 2014?

Pareekh Jain is Research Director, HfS (Click for Bio)

Even back in 2014, we could see many ideals of As-a-Service present in service providers’ offerings. In the last two years, As-a-Service momentum has accelerated.

Compare to our analysis couple of years back, we see the rise in collaborative engagements driving business outcomes. Analytics is now embedded in most of the engagements. Service providers are launching new services incorporating design thinking. We see more examples and use cases of automation. Also, telecom operations service providers are becoming effective brokers of capability by partnering with IT, platforms, local construction companies and telecom domain experts.

We see industrialization of few new service offerings such as network rollout management, revenue assurance in last two years. Also, service providers are constantly innovating with

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Posted in: Business Process Outsourcing (BPO)HfS Blueprint ResultsIT Outsourcing / IT Services

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Futurist Gerd Leonhard to keynote at HfS Cognition this September

June 09, 2016 | Phil Fersht
Futuring Gerd Leonhard will keynote at HfS' Cognition Summit this September

Futuring Gerd Leonhard will keynote at HfS' Cognition Summit this September

Now we have finally managed to get past that frightfully riveting conversation about doing some rudimentary process automation with our invoice processing and customer collections (aka RPA 1.0), we can finally get to the heart of what new technology capability  - much of which is already here - is really doing to our world.

With human brain power and computing power on collision course to become one, the enmeshing of human behaviour and thought processes with self-learning and self-remediating cognitive systems is set to confuse, frighten and - ultimately -  inspire us to change our whole approach to managing our technology investments, making data meaningful, collaborating with work colleagues and creating new business models.

This is our goal, this September, in White Plains, New York, where we are, once again, bringing together the diverse stakeholders of the operations and services industry to get past the fear, and find the inspiration to drag us out of this transition phase, in which we currently find ourselves.

To this end, at HfS we are thrilled to have persuaded Gerd Leonhard, CEO of The Futures Agency, to keynote our HfS Summit, "Cognition: Welcome to the Future of Services", September 14 – 16, 2016 in White Plains, New York. So we sat down with Gerd to get his critique of the future of technology, the emerging quagmire surrounding Digital Ethics and the true potential of Artificial Intelligence..o and how this will all potentially impact our jobs, our societies, our lives, and our humanity...

Phil Fersht, CEO and Chief Analyst, HfS: Good evening, Gerd. Great to have you on the HfS platform today! We're very excited to have you join us at Cognition, our coming flagship event in New York this September. But maybe before we start, could you give me just a little bit about your background and how you've ended up as such a visionary in the Artificial Intelligence (AI) Space these days?

Gerd Leonhard: CEO of The Futures Agency: It's a long story. I'm a futurist. But I started as a musician and producer, and then in the late '90s I went on the Internet and I did a bunch of music startups. It was an interesting time, but I was too early and ahead of my days. I think I realized in

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

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HfS adds a new twist to Digital and IoT coverage with Oliver Marks

June 06, 2016 | Phil Fersht
Oliver Marks is Research Vice President, Digital and Internet of Things, HfS (Click for bio)

Oliver Marks is Research Vice President, Digital and Internet of Things, HfS (Click for bio)

You may have seen we've been busy expanding our research team to make sure we can help executives pull all the right value levers to take their enterprises into the As-a-Service Economy. In the old days we put a lot of focus into outsourcing services, until we really made a statement being the first analyst to introduce Robotic Process Automation to the analyst and advisory industry in 2012, before priming the Digital transformation services pump in 2014 and IoT in 2015.

So, we thought it high time we recruited one of the industry's most respected authorities on the digi and IoT topics, Oliver Marks... so without further ado, let's hear a bit more about HfS' newest recruit...

Welcome Oliver!  Can you share a little about your background and why you have chosen research and strategy as your career path? 

Thanks Phil! I’ve got quite an interesting past: I started out in the UK design and advertising business having done a graphic design degree which was remarkably similar conceptually to the current vogue for 'design thinking’ in the tech world. We ran a ‘concepts & copy’ creative shop on

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Posted in: Digital TransformationHfSResearch.com HomepageIT Outsourcing / IT Services

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