HfS Network

Monthly Archives: Mar 2017

The spreading outsourcing disease: barely a third of buyers see real value in their current provider relationships

March 30, 2017 | Phil Fersht

Oh dear - here are the private views of about 60 outsourcing clients we polled today at the HfS Summit in New York.  Close to half the room are either feeling let down by their provider over-promising, or merely feel they are only really getting cheap labor from their relationship. Moreover, barely a third of them actually believe their provider can come up with the goods, provided they pay for them via the legacy FTE pricing model. Now, these buyers are highly experienced and sophisticated, so this data is particularly hard for the outsourcing industry to digest.

So a few simple takeaways from this:

Service providers have to stop the over-promising and start over-delivering.  Over-promising may result in some short-term wins, but the implications of long-term damage caused by missing client expectations are much more hazardous. Sadly, investor pressures to sustain unrealistic growth is forcing several service providers to over-sell without the talent resources to deliver anything beyond low grade offshore delivery.

Many providers are proving their competency, but failing as proactive co-innovators.  As we recently revealed, a third of senior management does see real potential in their service providers to become genuine co-innovation partners, but there is a stark difference between fantasy and reality.  Providers need to prove they are willing to share risks, really roll up their sleeves with their clients - and clients need to work harder to create an environment of trust that they'll stick with their providers, provided they are willing to co-invest with them. Design Thinking anyone?  Maybe it's time to get in a room together and figure this whole thing out.  

Bottom-line: We're going to see a lot of chopping and changing of service providers in this volatile environment.  

Several buyers cited they felt their providers were too comfortable with them and were not worried they would get ejected from long-term outsourcing relationships.  However, with advisors, competitive providers and RPA vendors all touting the magic 40% of cost savings through automation, the leadership layers are exerting unprecedented pressures on outsourcing governance leads to demand change. In many cases, buyers are simply bringing in advisors and RPA tools vendors themselves and running their own pilots, but eventually, they are likely to put their existing deals out for rebid to find providers willing to guarantee the RPA savings.  And that is where the market is going - lots of cut-throat rebids, higher degrees of risk-taking to win business and more clients being over-promised.  We're in a vicious cycle where desperation is trumping good, pragmatic partnerships where both buyers and providers can figure out how to work together in trusted, risk/reward sharing environments.  

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



RPA is finally growing up, though custody is not settled yet

March 29, 2017 | Tom Reuner

Having opened a fair few presentations and blogs with the dramatic proclamation “RPA is dead”, this title of “RPA is growing up” might sound a tad contradictory to some.  Forgive me, I’m analyst and some days my glass is half full, others it’s half empty.

I am consistently trying to hammer home my plea that we approach RPA in the context of quality service delivery in all its naked complexity – not simply this obsession with individual tools, not looking for some sort of silver bullet, not looking for simple answers.

That is what our research and this blog itself are all about. Yet, for many, RPA is code for short term, guaranteed cost take out of headcount. For others, RPA is a broader placeholder, more similar to what I would term Intelligent Automation. Despite a lot of noise in the industry, RPA and Intelligent Automation are still a very nascent market. Thus, we continue to have a blurred perception around RPA that gets aggravated by the amount of smoke and mirrors spawned out by some tool providers and well as service providers.

Against this background of #RPAfakenews, I had the pleasure of sitting down with the management team of RPA solution provider upstart UiPath in Bucharest to discuss all those implications as well as getting a sneak preview of their development roadmap.

Culture, both internally and externally, underpins UiPath’ growth trajectory

Before I dive into the details, what struck me in Bucharest was the energy and togetherness of the UiPath team. Romania might not be the obvious location for an innovative start-up, but the country has been seeing a rise shared service centers, BPO delivery centers, and their entrepreneurs are part of the global village over the last few years. UiPath’ founder and CEO Daniel Dines, one of the smartest, humblest and nicest guys in the automation community, spent years coding for Microsoft in Seattle before embarking on building his own company. And this varied experience is showing, with UiPath being one of the fast-growing RPA providers and perceived by most buyers as a mandatory inclusion in RFPs next to the likes of AutomationAnywhere and Blue Prism. Clients reference the company culture, sincerity, lack of arrogance and the flexibility in commercial terms as a key reason for partnering with UiPath. From a capability side, the stability operating in Citrix environments and the expansiveness of it recorder function – features so critical to the effectiveness of RPA - is often added to those reasons. But the growth is also underpinned and enabled by smart hires. The most recent example is Boris Krumrey, UiPath’ new Chief Robotics Officer, who was won over from Atos where he had built out compelling automation capabilities around the notion of service orchestration.

Service orchestration is underpinned by operational analytics and cognitive computing

Service orchestration is the segway to understanding UiPath’s strategy. Aligned with the notion of service orchestration, UiPath is driving towards an integrated platform approach with end-to-end business process automation in mind. To achieve this, the company aspires to be an RPA eco-system player that integrates capabilities, in particular around operational analytics and the broader notion of cognitive computing. Examples include the integration of Google and Microsoft libraries, and also partnerships with providers, such as AABBYY and Elastic Search and Kibana for OCR integration and Data Analytics.

The capabilities of Elastic Search and Kibana will also underpin UiPath’s effort to advance to robot orchestration. However, the journey toward service orchestration goes beyond just tools and technologies. UiPath is trying to change the mindset in many RPA discussions and the notion of knowledge transfer is central in that regard. Consequently, UiPath is working on enhancements and tools to overcome the knowledge transfer challenges to create RPAs on robots quicker, but also in technical complex settings. At the same time, the company is beefing up partner support, training and certifications to put the evolving partner ecosystem on a much more solid platform. In a nutshell, UiPath’s platform strategy mirrors the orchestration efforts of the leading service providers that we have covered at great length at HfS. (link to the RPL)

UiPath’ platform strategy embraces the principles of the Digital OneOffice

Boris’ experiences at Atos can clearly be seen in other elements of UiPath’ roadmap and are aligned with HfS’ Intelligent Automation Continuum. Two examples for that: On the one hand, the integration of broad cognitive capabilities into the platform not least to lower maintenance costs. On the other hand, the extension of integrating automation capabilities to notions of a Virtual Agents akin to Atos AVA which Boris introduced there during his tenure. This extension to digital channels and intelligent sensor aligns UiPath strongly with our Digital OneOffice framework that suggests provider must enable customers to connect their back, middle and front offices. Thus, it is not about individual tools but about enabling a Digital Underbelly. As my esteemed colleague, Phil Fersht puts it, “Digitally-driven enterprises must create a Digital Underbelly to support the front office by automating manual processes, digitizing manual documents and leveraging smart devices and IoT where they are present in the value chain.  Enterprises simply cannot be effective with a digital strategy without automating processes intelligently.”

Bottom-line: Service providers must educate, not obfuscate the market

The discussions with UiPath reference the increasing maturity in the market with a shift away from rudimentary process automation towards enabling higher value transformation projects. Yet, for those discussions to become the benchmark for the broader industry, the stakeholders and in particular the service providers, have to start properly educating the market, rather than continue to obfuscate it with smoke and mirrors. RPA clearly is growing up and maturing. But the marketing and broader discussions are not yet reflecting this reality. We urgently need a new set of custodians to translate these insights into publicly available best practices. To support exactly that, we would love to extend these discussions with other RPA providers about their roadmaps and insights.

Posted in: Robotic Process Automation



Placing HCM Stewardship Where it Belongs: Outside of HR

March 29, 2017 | Steve Goldberg

In retail, capturing data in real-time at the Point of Sale (POS) leads to better stock replenishment and more informed customer interactions and experiences. Now take that same concept into business operations with HR and employees, where transaction or event participants similarly have the biggest vested interest in achieving maximum data accuracy and transaction processing speed.

The principles of real-time data updates and logical transaction ownership led to a lot of new Employee and Manager Self Service functionality in the early days of HCM systems. Let’s also remember, though, that self-sufficiency -- as in not having to deal with the occasional black hole that some HR Departments are identified with -- is also directly correlated with stakeholder or customer satisfaction.

All of this “transactional mumbo jumbo” can be boiled down to one phrase: Human Capital Management stewardship … and also perhaps one question: Where should primary HCM ownership lie? The “HR as necessary interloper to keep the company out of trouble” model hasn’t really endeared itself to many outside of those running professional HR organizations. So why keep “workforce management activities to drive enterprise value,” aka HCM, strictly in the hands of the HR Department?  No reason. It’s a stupid waste of resources – both financial and human.


HR adds the most value, by far, when it enables line managers to be effective stewards of HCM  

How do you as an HR professional accomplish this?

(1) by truly understanding the business of your internal line manager customers
(2) by being a trusted advisor when it comes to HCM-related opportunities and risks (both -- not just risks!)
(3) by syndicating best practices, tools, standards and innovations related to HCM across the organization … whether an HR-borne idea, an internal customer’s idea or something learned at a professional HR organization’s conference.

Business leaders don’t just have P&L responsibility. They interact with their teams every day, in all situations, and they ideally have the “HCM acumen” to know what will drive employee engagement, retention and productivity … or conversely, what will impede these outcomes and how to mitigate those impediments.

Bottom Line: HR Departments must place a huge emphasis on line manager enablement, thereby shifting HCM stewardship to where it belongs – to team leaders, department managers, and senior executives. HR Departments should enable, or get out of the way.

Posted in: Digital TransformationHR Strategy



Digital Means Customers Don’t Need to Like You….

March 28, 2017 | Jamie Snowdon


I've been to a couple of events and listened to a number of presentations recently from IT and business service providers talking about digital strategies -  and how they can help their clients engage better with “digital customers”.

Part of this strategy has included building greater empathy and emotion with customers – superficially this sounds fantastic, but when I think of digital, it’s not about being nice or building an emotional attachment to customers – it’s about speed, efficacy, and awareness – these things trump everything else.

Understanding customer needs and behavior is important – as it helps to build an efficient and speedy process, but they don’t need to like you they just need to believe that they will get the goods or service when they are told and it is what they asked/paid for. If you think about successful retail organizations Tesco, Amazon, Walmart – I’m not sure too many people like them, they like the convenience of them (Fanboys - I am generalizing so please don’t troll me, of course, some people love them.) People will buy from you and like you if you are cheap, if you deliver when you say you do and will stop when you mess up (for a bit.)

Digital businesses historically had awful customer service and many still do. Amazon in the U.K. when it first started was terrible at dealing with problems -  in 2003 when I ordered a book (remember when they just did books/CDs) which didn't turn up and they basically said that it was the couriers fault and after trying for a while I just gave up - they more or less told me to sod off. Incidentally, by 2010 they had gone the other way - if you said it didn't turn up they'd send 3 replacements (I exaggerate). I suspect the balance has now been struck.

However, customer service is still bad with many digital firms -  or digital services to consumers. Particularly when the app business is an intermediary an affiliate based - I have had checkered service from JustEat, Deliveroo, Hungryhouse and Burger King food delivery - don't judge me I am a hungry early adopter and have a teenage daughter with friends... Usually, something missing from the order and I haven’t had refunds – but I tend to return because the convenience (and my laziness) never goes away. Even poor service won’t kill a digital company if the core proposition is sound and the number of exceptions is low.

Bottom Line – Sell speed and efficiency – people don’t need to feel special and cared for unless you mess up.

So when I hear a service provider try to portray digital experience in terms of empathy or emotion I lose interest. Speed, efficiency, and real-time information make a service digital – this doesn’t need to deliver an emotional response, – the core proposition needs to be good and it needs to work most of the time.

Posted in: Digital TransformationCustomer Experience Management



Genpact earns its CFO Consulting stripes as it seeks to pioneer disruptive F&A services in the digital era

March 28, 2017 | Reetika Joshi

The Business Process Outsourcing industry is going through a significant evolution from a labour-led business model to one that is now a blend of global talent combined with automation, artificial intelligence, and digital technologies.  This is especially the case with the financial function, where CFOs are under immense pressure to deliver the next wave of productivity and value from automation and richer data. 

Genpact as a pioneering BPO provider in the era of Digital Finance

Genpact has always been ahead of the disruption curve in the finance and accounting function, being the first to disrupt the market with aggressively affordable and effective offshore solutions in the mid-2000s, taking a significant stake in the market in its journey to becoming one of the largest pure-play BPO providers to service the CFO’s office today.

In recent years, the firm has quietly developed its own consulting capabilities, which now account for close to 10% of its revenues, where it is supporting clients with its unique flavour of digital design consulting with its Lean Digital offering, its robust operational and process consulting capabilities and a sizeable focus in robotic process automation and artificial intelligence, including touchless machine learning, which is bolstered by its new acquisition of artificial intelligence platform Rage Frameworks.  In addition, its CFO Services consulting line is now involved in piloting some Blockchain implementations and an increasing involvement in Supply chain, risk management and order management transformation initiatives.

Moving beyond the table stakes

The most progressive service buyers consider process standardization, quality levels and cost savings as table stakes. As our recent study, Finance In The Digital Age shows, finance executives are challenged to better manage regulatory compliance and financial reporting, better use financial and non-financial data, make the close cycle more efficient, and have paperless audit trails. Further, at the top of the finance and accounting function, today’s CFOs are more ambitious than ever to become more involved in driving future growth for their organizations, beyond oversight on controllership and bookkeeping.

So it is unsurprising that our last analysis, the HfS F&A As-a-Service Blueprint, focused on As-a-Service design and delivery in finance among 18 leading F&A service providers. The resulting Winners Circle service providers have collaborative engagements with clients and are making recognizable investments in future capabilities in talent and technology to continue to increase the value over time. These providers are also leading in incorporating analytics as a service into Finance contracts.

Making the shift to being a consultative BPO provider

In the Blueprint report, we positioned Genpact as a part of this As-a-Service Winners Circle category. Compared with the other service providers in the Blueprint, Genpact is one of the top two, leading in both the Execution of actual services and client management and Innovation to drive future value in the form through the use of talent and technology. With 18 years in the market, Genpact has evolved its traditional Lean Six Sigma process excellence methodologies into what it calls Lean Digital, a framework for working with clients to use design thinking for identifying, aligning and addressing issues and opportunities. It’s a transformative approach to align digital technology and talent with desired business outcomes from F&A delivery. HfS hears encouraging feedback from early client work.

Furthermore, Genpact has developed vertical-specific strengths in pharma, CPG, and manufacturing. Its “CFO and Transformation Services” approach is addressing the key needs of CFOs, which is in line with the market needs we outlined earlier.

The combination of Genpact’s Lean Digital, CFO, and transformation services has helped its sales teams take a consultative approach with F&A, particularly with new clients.

This has accelerated Genpact’s market performance in F&A, reaching double-digit growth in 2016. Clients in our Blueprint research ultimately point to Genpact’s “feel good” culture, where through extensive interactions with practice leaders, SMEs, and delivery teams, the service provider drives cultural alignment with its clients. HfS believes that Genpact is a good fit for enterprises that are considering operational redesign in their finance and accounting function, particularly in CPG, pharma, and manufacturing.

Genpact was rated highly in the Blueprint for the following criteria:

  • Collaborative Engagement 
  • Incorporating Feedback 
  • Delivering Industry-Specific Solutions 
  • Investing in Future Talent & Technology 
  • Use of Technology to Support Business Processes

Posted in: Digital TransformationFinance & Accounting BPO



WNS and Its HealthHelp Acquisition “Will Not Deny” Health Care

March 27, 2017 | Barbra McGannReetika Joshi

“Denial is not an option.” Contrary to the typical (and here, oversimplified) pre-certification, “approve” or “deny” approach to utilization of services in health care, HealthHelp launched a new model of utilization review based on the premise of non-denial procedures, and that utilization management is about collaboration and education. HealthHelp taps into its evidence-based database and network of physicians and academics to review and approve or to recommend alternatives to procedure requests. In tandem, HealthHelp drives studies and education opportunities to lead to better medical and financial outcomes when providing or using health care services. In short, the company that WNS just acquired is building out a patient- and healthcare provider-centric approach to utilization management designed to match procedure and treatment to the patient’s needs and network.

HealthHelp took roots in the founder’s own pain 

The HealthHelp approach is tied to the experience of its founder, Cherrill Farnsworth, who found the number of denials and appeals she managed for radiology procedures discouraging and painful. Thinking about “how to do this differently… why do we have to deny”? Cherrill tapped into her network of people at medical centers and universities, creating a collaborative model on the premise of using data, insights, and education. Instead of a review, approve/deny, the approach is review, approve and/or educate and/or recommend. The approach uses an increasingly sophisticated system of data, digital technology, and relationships. HealthHelp is taking product development further into the realm of machine learning and artificial intelligence, as well.

What gives HealthHelp the “right” to make recommendations to healthcare providers and patients?

An approach like this one—essentially, a break from the norm—depends on the credibility of the data, technology, and people involved. HealthHelp faced the challenge in the early days of people not being sure that a “non-denial” approach would be effective for containing costs. With 15 years of data, though, the company has been able to ingrain a lot of experience and knowledge into the approach and platform, to the extent that now 75% of prior authorization requests get approved for providers or are responded to with recommended changes that are approved by providers, without any human intervention. In about 25% of the cases, it goes to nurses for review; 6-7% of which are forwarded to doctors, and after that, the provider has the option to and can still disagree and go with treatment, which happens in under 0.5% of cases.

Results to date show improvement in the quality of care, which impacts Star and HEDIS ratings and reduces the cost of care by making sure the right kind of care is provided versus the lowest transaction cost at a point in time.  Also, in a fee-for-service model, a healthcare provider gets paid for the procedure regardless of the result. As the industry shifts to value based care with payments tied to outcomes, approval based on evidence or alternatives becomes more strategic to positively impacting outcomes (and payments). This approach, therefore, seems to have further credibility in the value-based care model and can help healthcare providers move into the new world of healthcare.  HealthHelp worked with CMS to get approval to qualify this program under provider education/quality improvement initiative and thus be included in the 85% Medical Loss Ratio for health plans.

The acquisition by WNS brings a complement of resources to both organizations and its client base

The healthcare industry is so ingrained in a yes/no approach that it took a few years before the model got adoption, primarily with mid-tier healthcare organizations. Joining with WNS gives HealthHelp the opportunity to scale and support a broader range of payers and providers. WNS also has a wealth of analytics capability, talent development and industrialization expertise that is complementary to HealthHelp, with resources that can help expand and develop the services and technology platforms to impact healthcare outcomes more broadly.

The acquisition of HealthHelp is part of the WNS strategy to shift attention from the cost of transactions to the cost of quality care and support—towards patient centricity. To date, WNS’ work in healthcare has been mostly analytical and transactional services: billing, collections, provider network services, and claims processing. HealthHelp brings in clinical and operational expertise to impact medical, as well as administrative outcomes, thus closing the loop. It also brings a human-centered (aka design thinking) approach to solving problems and developing a new business capability that the healthcare industry needs.

Posted in: Healthcare



Welcome to Judgement Day, where the real future of Outsourcing and the Digital OneOffice will be decided in NY this week!

March 26, 2017 | Phil Fersht

Dear Friends,

Our day of judgment is upon us! Can we really “unlearn” the last two decades and change how we buy, sell, behave and operate? Do we really have what it takes - deep down inside - to get ahead of this maelstrom of change and come out the other side with wealth, happiness and another two decades of double-digit growth?

Of course we can! But only if you book your last-minute spot to the services event of the year, in Midtown Manhattan next week… Join me, my colleagues and the industry’s finest as we engage in the richest dialog yet on how to tackle the most crucial transition our industry has ever faced, and how to come out the other side re-energized and happy to go to work again.

Service Buyers get complimentary access - only a few seats left, so apply now!

To name a few companies which will be represented...

And a few of the power brokers debating the big outsourcing reset in New York...

Find the full line-up here. See you in New York this Thursday, I hope!


Posted in: Digital OneOfficeOutsourcing Events



Ariba And Everledger Want Blockchain To Help Supply Chains Become More Ethical And Make The World Better

March 23, 2017 | Christine Ferrusi Ross

Last summer I wrote about my desire to be a superhero –to help companies buy IT products and services ethically and help suppliers create new opportunities for themselves and their people. When people source ethically they can reduce a lot of bad in the world – child labor, human trafficking, working conditions that harm and kill people, and a host of other problems.

Yesterday at SAP Ariba Live, the software company announced that it was partnering with blockchain provenance firm Everledger to explore the use of blockchain across Ariba’s suite of applications. As a first step, the two companies are working on a track and trace (provenance) application.


Everledger CEO Leanne Kemp and SAP Ariba Senior Vice President Joe Fox discussed the application and broader blockchain implications at the event, talking about empowering an ethical supply chain. They see a future where using blockchain to track goods from their raw materials through their final delivery would help companies have visibility into the entire supply chain. This would then allow companies to avoid problems such as:

  • Counterfeit goods being swapped in for the original goods at some point in the journey
  • Unintentionally supporting illegal and unethical conduct by suppliers and other third parties involved in conflict minerals like blood diamonds because you couldn’t tell where the diamond originated
  • Being out of compliance with government or industry regulations because related to the point above, you couldn’t prove that the product was made without conflict minerals or other illegal inputs

Undoubtedly, this announcement is a huge win for blockchain technology. It’s a major software company investing in a specific commercial application. It also reinforces the importance of provenance as a key blockchain “killer app,” coming soon after IBM’s announcement with Maersk that the two firms would work together to trace shipping containers. We’ve written before that provenance will get adopted faster than many fintech blockchain applications. These two deals show movement in that direction.

Even more powerful is the business and human story about making the world a better place. SAP Ariba’s and Everledger’s message of using blockchain to help business work more effectively AND to improve the lives of people is inspiring. It’s what technology is supposed to do, and we’re hoping to see more companies explicitly make corporate social responsibility a key factor in their technology decisions.

Posted in: Supply Chain ManagementBlockchain



#Traveldiaries2017 – Are you creating memorable service experiences for your travel customers?

March 21, 2017 | Melissa O'Brien

In order to prepare for the upcoming travel and hospitality Blueprint, I decided I needed to do some “field research” (ahem) by taking a vacation of my own to sunny Puerto Rico to get the experience of an end consumer.  This was fortuitous timing as RFI responses were trickling in, and I couldn’t help but relate my experiences to what I’m hearing from the service providers and buyers in this space.  As analysts, we tend to travel a bit here and there, but often have the luxury of travel plans being made for us with group coordinators.  Having planned this trip out myself with the help of some great references, I thought about travel in a more selfish way—one that made me think very much about all the things T&H service buyers and service providers could be doing better to think of ME, the traveler, at the core of their operations.

As a consumer, these themes resonated with me the most:

  • Word of mouth matters more than ever: So many decisions to make; where to stay, eat and what to do.  Review sites like Yelp and TripAdvisor are ubiquitous, and travelers really rely on these sites for decision making.  The downside is information overload and credibility; I read scores of reviews with a skeptical mind, thinking this could have been written by someone with totally different vacation priorities or motivations.  Now if a good friend recommends a tour, combined with a raving review on TripAdvisor, I’m sold!  Service providers should be thinking about how to help hospitality clients maximize loyalty and advocacy among visiting customers. Those who represent the travel intermediaries and review sites should think about how to make the personas more “real” – think of the possibilities for gamification (i.e. giving people badges or discounts if their reviews are well liked or validated.) This could go a long way to make these review sites and intermediaries more valuable for customers. Intermediaries are also more important than ever for local tour companies whose websites are wildly out of date and impossible to navigate—so knowing the local businesses is more important than ever.  
  • Self-service is fantastic—but make sure you have the processes and training to bring it all together. It’s pretty cool that JetBlue has started a system of printing and applying your own tags to baggage.  But, as someone who doesn’t normally check a bag, this caught me by surprise at Boston Logan as I was reluctantly checking my vacation + business attire luggage to accommodate all the shoes I needed for these two incongruous journeys.  I was confused, but all that the woman at the kiosk could do was repeat in a saccharine cheerful voice, “You need to print out a tag at the kiosk.”  Literally, that’s all she could say.  I would have felt more comfortable with a robot.  When there are process and technology changes, especially those that affect your loyal customers, make sure your employees are trained to be empathetic and helpful and that you use all the relevant communication channels to update customers. Plus, preemptive outreach can prevent incoming calls to customer service and confusion in the field. 
  • It all comes back to making it easier for the customer. This is true in every business model, but the hotel industry seems to be closer to cracking the code on seamless experiences despite juggling many balls in the air at the same time—dealing with disgruntled, tired travelers, unexpected issues like broken elevators, cancelled flights or storms closing the coveted beach, and handling countless travel intermediaries like Expedia and the like.  This requires a lot of connection between front, middle and back office—as we describe in our OneOffice framework—it seems that hotels are getting closer to connecting these siloes to create omnichannel experiences, but what I’m hearing from buyers and service providers is that there’s a lot of disconnect behind the scenes and making up for it at the front end.  Despite sometimes glossy front end experiences (think the swanky hotel lobby with fantastic, quick check-in service), there is still much opportunity to streamline processes behind the scenes.   The notions of service experiences are also evolving, keeping T&H clients on their toes. Today you introduced mobile self-check-ins; do you need to integrate tours & activities scheduling into your app next? 

The Bottom Line: competition has pushed the travel and hospitality industry to live and breathe the “customer-first” mentality, but the fast-paced nature of the industry and customer expectations will continue to create opportunity and challenge services buyers to think about “what’s next?” 

Differentiation is the name of the game--- and more than anything, services buyers in the travel and hospitality space need flexibility and innovation from their providers.  Between M&A activity, regulatory and compliance changes, disruptors from the “sharing economy” and the volatile nature of travel itself, having the customer constantly at the center of the universe is no easy feat. Always being that step ahead, with automation and innovation, is where service providers can step in to support those memorable experiences. 

Posted in: Customer Experience Management



The traditional outsourcing model is officially out of value, but the future is bright for co-innovation partnerships

March 19, 2017 | Phil Fersht

Remember all those juicy reasons why companies jumped into outsourcing? Like driving out cost, standardizing processes, perhaps even finding a few nuggets of innovation along the way with better access to talent and technology? Well our new 2017 State of Operations and Outsourcing Study of 454 major enterprise buyers gives a pretty gloomy picture of the current value impact of today’s outsourcing engagements:


Click to Enlarge

What made us happy in the past no longer passes muster

If there was ever one home-banker benefit from outsourcing, it was always the ability to take 30%+ off the bottom line cost of running a process or set of processes.

The VPs and below are those who are managing the engagements – and not even a third of them view their engagements as being very effective at driving out significant cost or making their operations more flexible and scalable. Their bosses are slightly less cynical, but still the vast majority is underwhelmed.

"But how can they be unhappy, we saved them so much money?" I hear frustrated providers cry… 

Well, the answer is quite simply that those costs have been removed from the balance sheet – they no longer exist. Managing operations in a global environment is now the new normal – money that was saved was a onetime experience in the past. It’s like trading in your Hummer for a Prius… you don’t think to yourself, everytime you fill up with gas, “Wow, I’m saving $50 per tank”, but you might even think, “Hmmm… maybe I’ll get a fully electric car next and save even more on my running costs”.

We can go on to bemoan the disappointing lack of effectiveness from analytics, automation and cognitive from over four-fifths of outsourcing engagements, but we know clients are unlikely to have invested actual funds in these areas as part of most of these engagements today – they are getting what they have paid for in the past.

All is not lost as many operations leaders want their service providers to change with them

However, the next wave of engagements have to be set up in a very different way to bring back delights to these jaded customers, which is where the brighter news appears:

Click to Enlarge

What's encouraging here is that buyers, by and large, do not view their service providers as mere efficient cost take-out vehicles, which was how well over half viewed them a couple of years ago. While 43% of SVPs and above see service providers as competent partners who can deliver the goods, another 35% actually view them as real innovation partners who can work with them to achieve co-defined business outcomes.  This is a breakthrough for the services industry.

The Bottom-line: The door is wide open for ambitious providers willing to invest in developing their talent, but closing firmly shut for those perpetuating what worked in the past

There has never been a time in the history of services where we've arrived at such a pivotal turning point - what used to work for clients is now commodity, and those service providers wanting to avoid this drain-circling spiral into transactional insignificance must make serious investments in their internal capabilities to partner with their clients.  This means more people who can work in close proximity to their clients with real capabilities rolling out automation roadmaps, designing digital business models, working with clients to develop predictive data models and smart cognitive strategies.  Sadly, there isn't much of an available pool of eager college graduates ready to leap into these roles at low wage rates, so providers need to reinvent themselves radically as true learning establishments and universities for their emerging talent... ambitious people will want to invest their careers with firms who are prepared to invest in their talent.  The future isn't about buying packaged consulting, it's about partnering with services firms whose stakeholders want to co-invest in themselves and their clients with a long-term vision and definitive plan.  The model has changed forever... and we can only watch, learn and work with it as it unravels piece by piece.  

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT Services2017 State of Industry Study



What will The Procurement As-a-Service Provider Landscape look like in 2020?

March 17, 2017 | Derk Erbé

We have ranked the major service providers in the Procurement As-a-Service market in our 2016 Blueprint grid, see Exhibit 1. 

Exhibit 1: HfS Procurement As-a-Service 2016 Blueprint Grid

Click to enlarge

Looking further into the future, who will dominate the space in 2020? Three providers are set to remain at the helm for the foreseeable future: Accenture, IBM, and GEP.

IBM has a massive supply chain, which it smartly leverages in its procurement offerings. IBM is bullish on cognitive procurement. IBM BPS is morphing into Cognitive Business Solutions. Its own procurement provides a great playground for applying and road testing all the new cognitive procurement solutions, giving it an advantage over providers who don't manage procurement for their own organization or have less 'cognitive savvy' clients.

Towards 2020 IBM will be leading in the cognitive procurement services space. Underpinned by a strong BPaaS platform, most clients will look at IBM first when it comes to new cognitive technology-driven services with vastly improved data analytics capabilities. The biggest challenge for IBM to succeed with cognitive procurement is to bring clients along this journey. The vast majority of procurement organizations perceive itself as far removed from advanced innovative procurement capabilities – they are fixing the basics, getting procurement technology to work and pondering the opportunities RPA could bring the procurement function. The gap between cognitive procurement and the (perceived) level of maturity and change readiness of procurement is the hurdle IBM needs to take to make its cognitive ambitions reality or be at risk of running too far ahead of the game.  

Accenture has a significant head start to all other providers, having invested and developed capabilities through acquisitions like Procurian and putting technology into every procurement engagement, leveraging one-to-many advantages for years. Now Accenture is betting on modularity to give them sustained advantage with current clients. And opening markets with medium-sized enterprises, for whom the business case of outsourcing procurement never added up.

Accenture seems to have a more 'wait and see' stance when it comes to cognitive procurement, investing in capabilities and use cases, but not willing to bet the farm just yet. Be confident they’ll pounce when the time is right and gobble up any procurement related cognitive and artificial intelligence capabilities they might lack. We expect via acquisition, maybe not of the magnitude of Procurian, but an inorganic technology growth strategy makes sense.

GEP plays in an increasingly contentious market, with its procurement BPO brethren gobbling up smaller niche firms, investing heavily in technology and partnerships. As the largest pure play procurement service provider and a pioneer in procurement technology, the onus is on GEP to continue its leading position and ‘best in class’ technology. We expect technology and services to converge more and GEP may emerge as an acquirer of cognitive capabilities as cognitive and AI in procurement are on the rise. 

Which are the providers emerging to challenge the leaders?

The early 2017 activity is driven by Indian heritage providers WNS and Wipro. They show their ambitions and make steps to move up the strategic value chain and incorporate more procurement technology into their service delivery and offerings.

WNS, with the Denali brand as a strategic procurement services arm, will have moved into the As-a-Service Winner's Circle by 2020. The strong vision and upstream procurement capabilities from Denali put together with the execution prowess of WNS leads to cross-selling opportunities and investments in tech-enabled new services. The downstream procurement side of the business will have moved to procurement platforms of WNS' partners, with WNS managing the platforms.

Wipro announced an investment and strategic partnership with Tradeshift, which is emerging as a top 3 digital procurement platform and arguably the only real “platform” in the space. This will turn out to be a smart move for Wipro, addressing a technology gap in its procurement offerings and developing on top of the proven platform that is Tradeshift, leveraging an existing and expanding network and adding Wipro Holmes capabilities. On top of this, the partnership with Tradeshift has the potential to help Wipro move up the strategic value chain, with more upstream services and shifting technology-based services to new commercial models faster.

Genpact continues to move up the strategic value chain, and between now and 2020 will have sought to bolster the technology layer in its Procurement As-a-Service offerings, something it lacks compared to other As-a-Service Winner's Circle providers in 2016. Genpact’s conundrum is choosing between organic growth to add technology prowess to its BPO capabilities and acquisitions to get there faster. With a poor track record with acquisitions – Headstrong comes to mind -  we will follow their ability to make the RAGE Frameworks acquisition work and how the newly obtained Artificial Intelligence capabilities are transferred to procurement solutions.

Infosys builds out the procurement practice on AI, analytics and platform technology. ProcureEdge and Mana will continue to converge and bring innovation in downstream and upstream procurement. The lack of enthusiasm for BPO from Infosys’ top brass is a big concern. To make a concerted move in the Procurement As-a-Service space, Infosys needs a bigger commitment to BPO in general and more focus on bringing all the pieces (Mana, ProcureEdge, category management and strategic sourcing talent and capabilities) together.

Proxima leapfrogged incumbent legacy procurement BPO providers with high value, on-demand As-a-Service services, leveraging technology and expertise. Building out technology led point solutions (beyond current offering in Commercial Management) and marketing pure subscription-based services, a fairly new area for Proxima, will be a major effort to cement a leadership position in Procurement As-a-Service.

All signs point to buyers looking for more modular services – fitting well with Proxima’s focused approach and offerings. However, if the market would shift back to demanding end-to-end procurement services, Proxima would have to quickly acquire more end-to-end capabilities.

Fading into Obscurity?

In an earlier version, I wrote: “Capgemini will have lost most of its appetite for the BPO side of procurement, while IBX remains a technology asset in the increasing tech-focused procurement services market”. Reality caught up, and Capgemini sold IBX to Tradeshift last week - essentially selling its biggest asset in procurement. Combined with the seeming lack of focus for BPO in Capgemini’s C-suite post iGate acquisition, we can conclude it exited the Procurement As-a-Service market in early 2017, well before 2020. IBX needed significant attention and investment from its parent to compete in the procurement platform market, and Capgemini decided it wouldn’t stomach this.

HPE is now the home of Xchanging, once a force to reckon with in procurement outsourcing. Xchanging dropped from the As-a-Service Winner's Circle in the 2016 Procurement As-a-Service Blueprint and are in danger of sliding down further in this space. Neither 'interim-owner' CSC nor HPE are big on procurement outsourcing, a market HP neglected in the last decade, although it had the biggest supply chain in the world to service and leverage.

The Bottom Line – From Cost Obsession to Value Creation

Looking into the glass bowl, we expect the procurement As-a-Service market to continue to build value for providers and service buyers as the value of digital solutions, analytics, procurement tech platforms and cognitive automation takes hold. Albeit with a smaller number of providers, which have a full stack approach ranging from upstream strategic capabilities to platform-based execution of transactional procurement – delivering business outcomes on a subscription model.

In 2020 the market will be bifurcated into the ‘Haves’ and ‘Have-nots’, the ‘Haves’ being those providers with technology, platform based delivery and upstream procurement capabilities, offering flexibility, agility, modularity and superior digital customer experience. 

With affordable, modular services making procurement services accessible to midmarket enterprises, a new hunting ground for service providers is gradually emerging. Moreover, emerging digital clients, which may be less than $50m in revenues, but have high volume transaction needs, will need to access procurement services.  It’s not going to be all about size and scale, but also profitability and transaction volume.

Providers will be venturing, more and more, into direct spend delivery models, supporting clients to drive value and efficiency with cognitive, AI capabilities. As enterprises like to keep control of sourcing of direct materials and services, this will be a collaborative, partnership approach as opposed to full-blown outsourcing.


Posted in: Procurement, Engineering & Supply Chain Outsourcing



Whatever the fate of the ACA, Consumerism in Healthcare is here to stay

March 16, 2017 | Barbra McGannMelissa O'Brien

While we wait for the new Obamacare “replacement” bill to sink or swim, we can’t help but ponder the implications of whatever outcome on the healthcare industry and the services ecosystem that supports it (especially since we get asked!). Amid all this uncertainty, one thing that is sure not to change is the consumerism that has taken a strong hold within the healthcare industry, which would be the case with or without the ACA. As consumers, we are wondering, if I can order merchandise from many different suppliers on amazon and pay in one place, why can’t I see all my clinical data and lab images and send them from one doctor or clinic to another? If I can send the record of my dog’s shots to a boarding kennel electronically, why not send my children’s immunization record to schools and summer camps just as easily? Yes, we know about interoperability and security issues. However, we have come to expect the same access and convenience in our healthcare experiences as we do in all the other aspects of our lives. 

Healthcare providers and payers are challenged to meet these increasing expectations—and are investing accordingly in digital enablement. HfS’ recent state of business operations survey indicated that 42% of healthcare companies are planning a significant investment in analytics to better understand what are the issues for whom, what are the opportunities to interact and impact members and patients and administrative support; and 36% are investing in social/mobile/interactive enablement to redefine, “modernize,” or create the customer experience. Despite all this planning and rhetoric, dealing with the healthcare system often feels like the dark ages rather than a modern customer experience. Our recent research found several examples of service providers and buyers working together that are hopeful of experiences to come:

  • Creating the digital customer experience by connecting front and back office: Due to ACA regulations, healthcare payers have needed to adjust to dealing with consumers (versus employers’ HR departments.) Many have set up retail storefronts including mobile centers where people can come in for enrollment (majority), questions and paying bills.  Teleperformance uses a proprietary software, TLSContact, to manage the process and workflow of the customer retail journey.  Representatives are able to access the initial app that the customer started online, and the workflow software helps identify the bottlenecks and how to better staff these centers.  For example, they can look at and analyze the processes to find out why there are long wait times—enabling clients to improve the process and better staff to meet demand.  
  • Developing customer journeys that look “outside the hospital walls” and building solutions that support the journey: Approaching healthcare in a consumer-centric economy drives healthcare organizations to look at how to initiate and keep the customer relationship over an extended period of time, not a point in time. Emergency rooms are designed to address a “point in time,” but we know that a health incident starts before a person arrives at the ER. VCU Health neurologist Dr. Sherita Chapman Smith is championing an effort to use telemedicine as a way to do assessments on stroke patients while they are in the ambulance, on their way to the hospital. (link).  In pilot simulations underway, the hospital is using trained actors to simulate stroke symptoms to test out the platform during ambulance rides to the hospital. “Patients” are picked up in an ambulance and connected via teleconference to the neurologist in the hospital, who conducts a remote assessment; and when they get to the hospital, they are quickly advanced to the next stage of treatment. The approach creates faster interactions between the points of care and speeds the time to treatment.
  • Using digital technology to make the users life easier and more real-time interactive with support systems: A healthcare organization that has partnered with NTT DATA Services described a consulting-led project which was aimed at the total redesign of the patient’s journey in various medical use cases (i.e. bariatric surgery, knee or hip replacement) in order to personalize that patient’s journey whenever he/she logs into the mobile app or accesses the website.  This means drawing together an understanding of that patient’s journey from start to finish, and knowing what stages they are in throughout their course of treatment, and what their needs might be. This hospital relied on the provider’s experience mapping expertise.  

It’s clear that healthcare isn’t getting less complicated any time soon. Whatever the fate of the ACA, the current political tone is foreshadowing more complexity and anxiety. Whether people are going to be uninsured or underinsured as critics of the current bill claim, or need to switch plans or providers, we can be sure that activity in the healthcare systems will increase. We can also be sure that that emotion will be at an all-time high, with the anxiety and fear that comes with people uncertain about what the changes mean for their lives and their loved ones: all the more reason that healthcare organizations need to be more nimble, intuitive and empathetic to that customer experience. Unfortunately, examples like the ones we highlighted above are the exception rather than the norm.

Bottom line: It’s time to think of and treat patients and members as customers you want to attract and retain, whether you are a health care provider or payer or a third party service provider partnering with a healthcare organization. Now we need to roll up our sleeves and partner in the effort to create a healthcare experience that puts the customer at its center.



Posted in: Healthcare



Time to go fishing for Fintech in Boston?

March 16, 2017 | Reetika Joshi

"We're driving this community as we try to figure out how to make our over-150-years-old financial institution relevant to the digital age and beyond," said an executive from John Hancock last Monday, as they opened the inaugural Boston Fintech Showcase event. With 16+ startups in attendance, the Showcase was held at John Hancock’s Seaport district location, home to its Lab of Forward Thinking (LOFT) innovation group. The Boston community has growing influence in how modern technologies are making their way to various BFSI segments including payments, capital markets, insurance, mortgage, financial reporting, and taxation. Within the diversity at the showcase, what struck me were two common threads that bound the majority of the showcase participants and their value propositions to the legacy banking, financial services and insurance industry.

  • Reducing customer effort using technology: Driving better customer experiences is usually outlined by most large financial institutions as one of their key focus areas - with just cause, as customer ratings continue to fluctuate for this industry. A large part of financial services experience has to do with the level of effort it takes for end customers to interact with their banks and complete any transaction. Using more straight-through processing, automating redundant interactions, reducing the legalese required, and overall easing of the customer effort was a big theme at the Boston Fintech Showcase. For example:
    • Quilt is trying to streamline the life insurance segment for the new generation of millennial policyholders that want 100% online transactions/interactions with lower legal ease.
    • Rate Gravity is simplifying the home mortgage industry by eliminating salespeople and providing a single source for potential customers to compare lenders and complete their loan process more efficiently using technology.
    • Circle is a social payments platform that is using the open internet to offer secure and fast payments globally all from your mobile device, without any lengthy data entry/form filling (think Venmo for cross-border payments).
  • Leveraging data for new ways of working: A large number of the startups showcased, including the examples mentioned above, have focused on simplified data entry and making more efficient use of external data sources through automation. While this in itself adds to reducing the customer effort, we see ways in which some fintech startups are developing new businesses on the back of big data and analytics. For example:
    • Prattle is a text analysis specialist that offers sentiment data that predicts the market impact of central bank and corporate communications to help traders spot macroeconomic trends and improve their predictive models.
    • Finomial automates aspects of investor services by providing a single platform for fund administrators to process inflows/outflows, track transactions, get compliance dashboards (FATCA) and performance reports, as well as giving investors access to data and documents.
    • Finmason provides independent investment analytics to help customers make better decisions on their portfolio.

Partnering on fintech will drive new results for financial services

From our research, these examples and use cases are aligned with investment intentions that large financial institutions have expressed to advance their digital journey. They are also problem areas that IT and business services providers that run operations for banking clients are trying to solve.

While these startups have a head start with building out solutions, the next step for them is critical market exposure to scale solutions and drive adoption, partnering with clients, technology and service providers to the industry.

The corporate strategy head of a large financial institution brought up during our conversation at the event, "We are trying to prioritize which of these initiatives we really want to double down on in the next two years. We might have to look outside because we cannot create incubators for everything." It is an opportunity for partnerships/acquisitions for service providers looking for innovative solutions, and at the same time, an opportunity to bring their strengths together. Part of the Fintech Sandbox initiative is giving startups free access to financial data to help them develop their offerings. This is another area where service providers could step up, with valuable operational data and expertise.

Overall, we see a strong need for the industry to work together to solve these critical challenges - lowering customer effort to create better service experiences, and making better use of data and analyses available to financial institutions. The event was a great example; many BFSI firms had internal strategy and innovation groups exploring fintech internally and supporting startups with incubator-like capabilities. With that kind of support, the Boston fintech community is quickly becoming a hub for smart enterprises on that journey.

Posted in: BFSI



How Design Thinking plays an integral role in increasing the value of outsourcing, service design, and delivery

March 14, 2017 | Barbra McGann

In business operations, global shared services, and outsourcing, the mantra has been: centralize, standardize, industrialize, globalize. Traditional shared services and outsourcing contracts have been developed to focus on “lift and shift” and how to make processes increasingly more efficient and effective, measured by service level agreements. But what happens when the SLAs are green but customer or stakeholder satisfaction is level, stale, or down? When you feel that “innovation” is lacking? That the world is shifting to become faster, more flexible, and in-touch—but your business delivery isn’t and you just don’t have the time to think about it?

The answers to those questions are more and more often to use Design Thinking as a catalyst for innovation and continuous change. And it is the reason we explored the integration of Design Thinking into business operations and outsourcing design and delivery. Insights on how Design Thinking plays a role in creating a different experience—a different way of working and new insights for operational excellence and expansion—and 11 service providers are profiled in the recently published HfS Blueprint: Design Thinking in the As-a-Service Economy.

All of the service providers in the blueprint we’ve just published, Design Thinking in the As-a-Service Economy, are increasingly incorporating the principles of Design Thinking—human-centered, collaborative, action-oriented—into the way they work. Just like the increasing attention to robotic process automation and cognitive computing, experimentation has been going on for a while now… and so it is no longer “new” to many of them.

Design Thinking is a complement to, not a replacement for, operational excellence and solutioning for service design and delivery

You can use Design Thinking to understand what’s really causing problems or issues or expenses, by better understanding what people are actually doing –or not—and feeling. What is their experience? And then working through ideas that may revise, or replace, or eliminate process; that may change what people are doing and how; and could use current technology better, or new technology.  As one shared services executive told us, “we already know how to make something efficient [with Lean Six Sigma] and we required a new way of thinking in some specific areas.” Along these lines, we are not anticipating an end or replacement to Lean Six Sigma or “operational excellence” but adding a way of stepping outside the process to identify trouble spots and new solutions.

With Design Thinking you focus on understanding who is involved in whatever process or problem you are looking to address, and what are their expectations and needs (the “human” side)? And what is the industry and corporate context, the business outcomes to impact (the “business” side)? And what are the technology enablers? Then bringing it all together in a solution through a series of prototypes and tests. (See Exhibit 1: Incorporating Design Thinking Into Business Context for Shared Services and Outsourcing) Sometimes the solution is a quick fix, like changing the day of the week or where a request from a consumer is directed in a system; and sometimes it will help you identify a new way of working or a new service or solution.

Exhibit 1:


Bottom line: By using Design Thinking, we are moving a more human-centered, business-outcome oriented, and questioning approach to defining and delivering services in consulting and outsourcing, just the way the world is doing in general.

Using Design Thinking “was helpful because we make assumptions about people,” said an insurance executive interviewed in our study.  Taking the time to empathize with the end user through interviews and observations “helped us to make sure we understand not just what we do for the consumer but how it makes them feel.”  In other words, it’s not just about what you’re doing but the relevance of it to your end user. If you want your customers and your stakeholders to work with you to reach your business outcomes, then look for ways to make it easier for them to do it – and that means understanding them better, and that’s a role that Design Thinking can play.

Where is the outsourcing services industry on the path to integrate Design Thinking?

We want to help you, through our blueprints, to make the right match for a services engagement – short or long term. While that effort used to be about “we as a buyer post a list of requirements and look for cost reduction” and “we as a service provider will tap into our best practices, tell you about our features and functions, and hire or assign people who can process transactions” … times are changing.

Now, engaging a service provider or providing services to a business means understanding the context, the challenges, the outcomes desired, and how to broker and define a solution that can be flexible and change as the market changes.  We’ve been calling this movement the “As-a-Service Economy.” Design Thinking can play a role in this movement towards a new way of working as partners. But because it is a new way of working, it does take time – trial and error and willingness to work in a new way. It impacts roles, governance, budgets, and contracts. And equally important, you need to have alignment in the expectations and cultures of the partners involved in order to feel as though this way of working can work – to deliver results. 

In the Design Thinking in the As-a-Service Economy Blueprint, we look at the relevance, use and impact of Design Thinking in services engagements as it takes shape as an integral part of business operations and outsourcing solution and service design and delivery.  It includes coverage of the following service providers in terms of Design Thinking integration into the way service buyers and service providers are working together: Accenture, Capgemini, Cognizant, Concentrix, EXL, Genpact, Infosys, Sutherland, Tech Mahindra/BIO Agency, Wipro

Posted in: Business Process Outsourcing (BPO)Design Thinking



Genpact becomes the first provider to acquire an AI platform

March 14, 2017 | Phil FershtReetika JoshiTom Reuner

While most of the services and operations industry obsesses with Robotic Process Automation to streamline its rudimentary back office processes, one provider that’s never shied away from making bold moves to disrupt illustrious competitors is Genpact, with an imaginative move to integrate true artificial intelligence with its business process service offerings by acquiring the impressive Boston-based Rage Frameworks.

It's almost history repeating itself from a decade ago, when the (then privately held) Genpact turned the BPO model on its head with its disruptive virtual captive proposition that significantly challenged the pricing models and ability to integrate offshore capabilities into the old BPO model. Now, the firm is breaking the mold, yet again, by making real inroads into infusing AI into business processes and introducing these concepts to its huge global community of finance leaders.  

Let’s get to the rub: RPA is all about digitizing the back office, but Artificial Intelligence is where we see the true marriage of business processes with clever technology and self-developing algorithms. We’ve danced for years trying to prophesize when BPO will truly integrate with IT, but we’ve now had reality unveiled: RPA platforms streamline the back office, while AI brings the middle and front together to create that true Digital OneOffice experience. The Digital OneOffice is not about collecting and archiving historical data simply to discover what went wrong, it's about being able to predict when things will go wrong and devising smart strategies to get ahead of them. The Digital OneOffice is about embedding smart cognitive applications into process chains and workflows, it’s about learning from mistakes and new experiences along the way. This is the emerging “organization neural system”, where the needs of the customer can be intelligently supported by real-time, self-learning intelligent operations:


Click to Enlarge

Why is this acquisition significant?

In a nascent market where stakeholders stumble through smoke and mirrors to make any sense of the many claims around Intelligent Automation, M&A is a clear indicator that the market is starting to mature. When in December 2016 ISG bought Alsbridge and CA acquired Automic, HfS suggested that Intelligent Automation was at an inflection point and that the focus on automation tools will shift toward the likes of Google, Amazon, and Facebook around deep learning and the integration of unstructured data. While we have not yet seen the Internet giants play their hand, Genpact’s acquisition of Rage Frameworks is underlining exactly these market dynamics. And this is the first time that a service provider is driving automation capabilities through M&A.

Rage Frameworks drives pre-built automation engines deep into unstructured territory

Whereas the broader market remains misguidedly focused on the intricacies of RPA, Rage’s focus is not on automating specific process steps, often on sub-process level, but on developing a broad ranging platform (RAGE Enterprise) for custom solutions with a deep vertical footprint. While RPA is largely focused on structured information, Rage will take Genpact deeper into integrating semi and unstructured data. Their development effort over the last two years to build enterprise applications for financial industry processes (wealth management, commercial loan processing and financial statement spreading) is shifting the focus from automation tools and capabilities to providing an end-to-end process leveraging a model driven business transformation platform.

In our view, the value proposition of Rage Frameworks is centred on leveraging Machine Learning and Natural Language Processing to build out highly vertical engines in Financial Services, Capital Markets, and Supply-Chain. The functionality of these engines ranges from managing business rules to real-time integrating content to data access and NLP all built around a process assembly engine. These engine building blocks can then be assembled for custom solutions that automate business processes or can be used as one of three pre-assembled financial services industry applications: LiveWealth, LiveCredit, and LiveSpread. In addition, broader capabilities including front desk automation, real-time intelligence, and pricing are transforming how commercial lending, policy underwriting, financial statement analysis, investment research, and multi-system reconciliation can be performed.

RAGE’s industry applications are a big part of the allure for Genpact, which has spent the last few years going deeper into its commercial banking and capital markets operations accounts with data and analytics solutions trying to solve the same client operational challenges as Rage. In our recent HfS Capital Markets Operations Blueprint, Genpact placed in the Winner’s Circle, with an HfS callout about its need to bring more technology enablement to capital markets. The service provider has examples of using emerging technologies such as machine learning, automation, dynamic data extraction, etc., in LOBs as retail banking. What Rage brings to the table for Genpact is a more strategic approach for impacting client operations through technology-led change.

Genpact continues to lead the automation discussion from the front

From Genpact’s perspective, the acquisition is reinforcing the perception of being a pioneer in Intelligent Automation. Having led the market with the first publicly announced partnerships with AutomationAnywhere, Exilant, and Automic around its Rapid Automation program, Rage Frameworks fits in well with Genpact’s holistic approach to automation. Within that context, Rage’ assets will further advance the integration of unstructured data: Genpact has invested heavily in analytics and big data with a dedicated research lab in Bangalore, India. They have developed a Data Engagement Platform using big data technologies, in order to be able to harness structured and unstructured data from multiple sources. Thus, its Lean Digital strategy is aligned with HfS OneOffice concept. But the company has to demonstrate that it is starting to link up back, middle and front-office.

The broader market will follow with accelerated M&A activity

Regulations and risk management requirements are forcing banks to rethink the way in which they capture, store, manage, and distribute the growing volumes of transactional and trade data. Structured data from multiple departments and asset classes are maintained in silos, and unstructured data present new challenges as well as opportunities for automation and analytics.

Despite the continuing noise around RPA, we believe the market will shift toward operational analytics and the broader notion of AI. Not only are the leading RPA tool providers expanding in that direction, but we expect the investment focus to progress toward Deep Learning, Neural Networks, and broad NLP capabilities. While it might sound trite, data really is becoming the new currency. But this currency needs to be integrated into delivery backbones on an industrial scale. Thus, service providers need to reinforce their efforts on service orchestration. We haven’t seen many proof points for a successful expansion into data-centric scenarios, but those deployments will be a clear demarcation between the leaders and the also-runs.

Central to this will be the articulation and delivery of business outcomes for specific industry functions through the use of operational analytics, RPA, BPO and AI. Can Genpact put together a financial spreading function by leveraging its operational expertise in BPO and RPA, the RAGE LiveSpread application and analytics interventions to deliver more efficient and effective credit risk management?

Bottom-line: Genpact is progressing toward True Digital OneOffice capabilities

Genpact’s announcement can be crystalized to its ambition of blending RPA in the back-office with AI in the middle-office, which is why the firm, still regarded by many as a "pureplay BPO" managed to break the top 10 in the recent Digital OneOffice Premier League, despite not dragging a multi-billion dollar IT services business around.

Thus, BPO is ever more changing to becoming technology-led. We expect that this strategy will be increasingly underpinned by neural networks and notions of self-remediation to enhance the Digital Underbelly and the Intelligent Digital Processes of the OneOffice concept. While Rage Frameworks is one of the superior suppliers across the Intelligent Automation Continuum, the more providers that are progressing toward the notion of AI, the more inflated the valuations for M&A will become. Against this background, valuations for RPA providers could look like peanuts very quickly. But then again, M&A is rarely rational in today's foggy market.

Posted in: Business Process Outsourcing (BPO)Cognitive ComputingFinance & Accounting BPO



Interview: Meet Sunayana Hazarika; The passionate marketing voice from Bangalore

March 13, 2017 | Bram Weerts

At HfS Research, we’re growing fast in a very competitive and volatile market… and with growth comes change - but change is always good if you ask me! The most fun in jobs is when you have changes - you learn new things, get new ideas, and you meet new people to help accommodate the change.

HfS is always on the lookout for serious talent that can help our clients become even more successful. So happy days when I heard that some serious quality was on the lookout for some new chapter in her life. Sunayana Hazarika has joined per January, and today I wanted to give you a little more background about her.

Bram Weerts, Chief Commercial Officer, HfS:

Bram Weerts, Chief Operating Officer, HfS Research: Sunayana, can you share a little about your background and why you have chosen Marketing and Brand Reputation as your career path?

Sunayana Hazarika, Senior Brand Strategist at HfS Research: As the saying goes” Everything happens for a reason,” the economic recession in 2008 changed my career path. From an engineering graduate to a remote executive, my first job in TTK Services introduced me to the world of marketing. I was facing global clients- the who’s who of the business world from renowned bloggers to technology founders, and helping them in doing Digital marketing (web marketing is what it was called then). The varied requests from clients opened the door for understanding SEO, content marketing, social media promotions, brand messaging, to even executing fundraising events. This inspired me to pursue my MBA in marketing and soon after explored both services marketing and product marketing of software enterprise solutions. 

What draws me towards Marketing is the very nature of it – dynamic, fast paced and the fact that it is centered around the relationship between People’s awareness, product/service innovations and the value generation. I am intrigued by how brands impact the market. To me, Brand Management is like nurturing a sapling to grow and proliferate into a forest. The right and proper projection of the organization is the heart of Brand Reputation. A big and serious task, but with the passion and right intention, we can see the results. All this put together has compelled me to make marketing a career and more so in brand management.

Bram: Why did you choose to join HfS?

Sunayana: HfS Research is an industry leading research and data analytics firm, renowned as a trusted voice with edgy insights and disruptive viewpoints. They do not shy away from raising real issues even if it bruises some egos. I echo the same spirit. The organization has an impressive and matured outlook focusing on fostering an optimized business function, fully empowered team and delivers maximum value for the global community of clients. This provides me an opportunity to unearth optimum potentials to scale heights of success. Moreover, the fact that it analyzes cutting-edge technology and services like Digitization of business processes and Design Thinking, Intelligent Automation and Outsourcing makes it even more viable for a marketer to be on top of latest market trends. And to top it up is the pleasure of working with some of the most intelligent and good people on earth. Trust me; I have never been more content.     

Bram: What are the areas of focus for driving success in your current role?

Sunayana: The success of marketing in a Research, Data Analytics, and Strategy firm lies in enabling the “informed decision making” by providing the right information at the right time to the right set of people. For this, it is crucial for Marketing to merge into the organization’s core objective and culture. This enables outlining the appropriate value proposition to the audience. It is also equally important for marketing to connect with the audience to know their expectations and be abreast with the market. The focus on maintaining a symmetry between the two approach creates a two-way network for shared experiences and true value projection.

Bram: What trends and developments are capturing your attention today?

Sunayana: The world is moving towards digitalization and the marketing function of an organization, as a harbinger is expected to lead the way. Mobile, Social Media, Analytics, and cognitive automation are breaking the path for an individualistic approach towards interacting with the target audience. We as marketers should harness these technology enablers to increase market reach and have personalized engagement with the audience directly. These innovations can be used to evade distractions, garner relevance and bridge the gap between insights and actions.

Bram: And what would you like to see different in the research/services industries?

Sunayana: “Change is inevitable” and occurs sooner than ever. Information, opinions, trends, technology and processes have an expiry date, so it makes sense for the industry to keep ahead and have control of this transformation through continued innovation and research. Even if it requires challenging or superseding conventions, proven methodologies, tested services, recommended solutions, wealthy analysis or rich offerings.

Bram: And, what do you do with your spare time?

Sunayana: I love to explore nature and my husband partners with me, we go hiking in the forest and hills, trek to mountains, swim in natural water sources, to get out of comfort zone and appreciate the basics. I love to travel and go on backpacking trips to live life in a million different ways, with people from various regions and enjoy a variety of cuisines.

I also play racquet sports regularly and enjoy watching good movies and reading books.

Bram: If you could change one thing in Marketing what would that be?

Sunayana: Marketing has often been looked at as a function that projects the magnified and exaggerated image of the values provided by an organization. This need not be the truth anymore. Marketing is an integral part of an organization aligning to its goals and objective. Marketing enables organizations to stay in touch with their target audience, understand them and relate to their unique and different needs. Now in this new age with the availability of instant information in one’s fingertip, the audience is gravitating towards facts and authenticity of every promotion and do not get allured by the shine. Therefore, it is time marketing reflects the true image of the organization and value of the offerings to its clients.

Bram: Thank you for your time Sunayana, it’s a real delight to have you onboard and work with you in these fascinating times!

Posted in: About Us



Saba's Acquisition of Halogen Software Helps Their Customers Achieve the Illusory 'A' Word

March 10, 2017 | Steve Goldberg

This roughly $300M deal, expected to close end of June, doesn’t only have the potential to positively impact the HCM agendas of 4,000 combined customers worldwide between the two talent management players. It also has the potential to lift the HR Tech domain overall. How can this deal possibly achieve something that the much larger HR Tech deals done by SAP and Oracle didn’t?

For one thing, SAP buying SuccessFactors and Oracle acquiring Taleo were motivated in large part by accelerating a transition to the cloud, and secondarily, by the ability to leverage best-in-class Performance Management (SuccessFactors) and Recruiting Technology (Taleo) at the time. Elsewhere, IBM acquiring Kenexa gave it a nice beachhead from which to eventually launch other HR services and solutions. In short, these deals arguably benefited vendors more than they helped customers achieve better HCM-dependent business outcomes.

The Saba - Halogen Software deal opens new routes to HCM optimization

We suspect many forward-thinking HR technology customers will want to take advantage of the combination of a world-class LMS (Saba) and a top-tier Performance Management solution (Halogen) in ways that extend beyond performance review and coaching outputs feeding employee learning and development plans. These talent management “meat and potatoes” capabilities are there. The “kicker” is the combined ability to address today’s unprecedented rate of change, the explosion of corporate social tools, and just-in-time learning.

And this leads to the often-illusory goal of “organizational agility.”  

Saba + Halogen together could enable a bottom-up, employee-owned and initiated way of quickly addressing whatever performance, behavioral or skill gaps are most relevant at any point in time. Saba has robust capabilities around informal learning and social collaboration tools (even social network analysis functionality). Put it together with Halogen Software’s flexibility to support many different performance management models, and you go beyond that “meat and potatoes” passing of performance management process outputs to actionable learning plans. It’s a whole new level of execution that ties together professional development, employee engagement, individual / team performance and business results that include improved organizational agility.

Take the example of a mid-level professional being moved from an individual contributor role to one of managing a project team, add-in that the vacancy was unexpected, the project is behind schedule, and there aren’t many other resourcing options. The new project manager can immediately start marshaling peer and team member feedback, coaching and mentoring, broader community or social network support plus other internal and external resources to make this resourcing dilemma a much more manageable issue. Now multiply this unexpected, unplanned scenario by dozens company-wide.

When you can mitigate risk to sustain momentum on key initiatives this way, you have the essence of organizational agility.

Bottom Line: This new pairing of HR Tech players might be the answer for many organizations that are too often held back by their lack of organizational agility.

Posted in: HR Strategy



Deconstructing Q4 2016 – Growth in the Traditional Services Model close to Flatlining

March 10, 2017 | Phil FershtJamie Snowdon

The traumatic Q4 results season has finally ended and our Chief Data Officer, Jamie Snowdon, is able to report on the final Q4 standings...

We’ve visualised the latest set of results for Q4 in the diagram, the top chart shows our usual margin v growth view (excluding AWS). With a chart showing the quarterly growth for Q4, an estimation of the annual (calendar) growth and the Q4 operating margin.

Click to enlarge

For each of the providers the results look like this:


Growth Q4 (%)

Growth 2016 Calendar Year (%)

Margin Q4 (%)






Good quarter for Accenture with plenty of success stories around digital, cloud and security. Constant currency growth around a percentage point above the actual growth for the quarter. Annual services growth is 7.1%.





Coming down from the highs of its recent acquisition-fuelled growth of the last couple years - Atos remains solid with organic growth at 1.8% for the year and 1.9% for the quarter. Benefiting from strong execution and its investments in analytics, security and automation.

Read More »

Posted in: IT Outsourcing / IT ServicesTrends Analysis



Watson and Einstein Sitting In A Tree: IBM-Salesforce join forces to give you more ways to buy AI

March 10, 2017 | Phil FershtReetika JoshiTom ReunerKhalda De Souza

The time for smart partnerships to drive real innovation and new thinking in Artificial Intelligence (AI) and cognitive computing is now. This means we need to see the industry’s deep-pocketed innovators become increasingly open – and eager - to working together to help the services industry make the shift to true digital, intelligent, cognitive capabilities.

Recent HfS research shows adoption of Artificial Intelligence (AI) and cognitive computing to enhance operational analytics and Machine Learning is strongly accelerating, with 72% of senior operations executives citing cognitive as becoming a critical component of the future operations strategy:

Digital and Cognitive are Driving Enterprise Operations

Click to enlarge

Source: “Intelligent Operations" Study, HfS Research 2016; Sample: Buyers = 371

While the market perception around these topics remains refreshingly blurred, AI is a critical building block as organizations increasingly look to progress from legacy labor-driven service delivery to progress toward notions the As-a-Service Economy and the Digital OneOffice (see link). While AI is capturing the imagination of many PE investors and VCs and is being used to hype up media reporting and conference circuits, the market dynamics are far from clear.

Against this background, the fundamental question being posed is “Who will be in the driving

Read More »

Posted in: Analytics and Big DataCognitive ComputingIntelligent Automation



Procurement’s Survival Manifesto on a Knife-Edge as the As-A-Service Model takes hold

March 09, 2017 | Derk Erbé

We're witnessing the most far-reaching evolution in Procurement’s existence with ambitious procurement professionals desperate to elevate the profession to a much more strategic level aligned with the needs of the business or face irrelevance in the wake of emerging digital procurement solutions and rapid automation of transactional procurement processes. This means procurement leaders need to reposition procurement as a strategic ally that supports the business stakeholders it is designed to serve.

The evolution of Procurement As-a-Service solutions is making day-to-day procurement needs become increasingly easy at access in an affordable on-demand model. Our Procurement As-a-Service Blueprint shows the steps service providers have made in morphing their service offerings to combine people, technology, and processes into these on-demand, flexible services, with pay-as-you-go, As-a-Service pricing, and subscription based models.

Procurement As-a-Service delivery models are already having a significant impact on the market thus far; with the expectations of procurement services buyers rapidly changing. The average size and length of outsourcing engagements have plummeted from large ($50-100 million) and long (8-10 years) to small ($3-6 million) and short (1-3 years). This greatly impacts ambitious service providers’ revenue models once they have realized the ability to scale modular, agile services delivered via a utility model and increase their overall profitability. This is in addition to delivering high-value upstream procurement activities in strategic sourcing and category management to build out their end-to-end procurement capabilities.

Customer Demands and Technology Drivers will relentlessly continue to Disrupt Procurement

Let’s explores how the landscape will evolve and who we expect to rule the Procurement As-a-Service space.

The big survival challenge for procurement is threefold;

  1. Redefining Talent: The old-school procurement professional has become legacy and needs to be completely reoriented or retired. Focusing on (transactional) procurement with the sole purpose of saving as many costs as possible is a dead end - it's counter-productive in the new business world, especially when it’s increasingly easy to leverage digital procurement solutions to source purchases at the lowest prices and conduct most transactions digitally without the need for human interaction. The name of the survival game for procurement is relationship management; becoming the spider in the web that consists of internal business stakeholders, suppliers, service providers, partners. Next to relationship skills like empathy and business acumen, the new skills that need developing are critical thinking, creativity, and complex problem-solving. And being able to use technology to improve processes and ultimately experiences.
  2. Embracing Technology is Critical: Standardized procurement platforms combined with cognitive automation is the only way forward. Procurement tech platforms like Ariba, SMART by GEP, Coupa, Tradeshift have demanded a lot of attention the past few years and have emerged at the core of procurement. Processes are clustered, integrated and delivered by platforms. Processes that are not suitable to be on these platforms are the focus of robotic process automation. The next wave of technology affecting procurement and sourcing is cognitive and artificial intelligence.
  3. Delivering the customer experience must be embedded into all procurement activities. The pièce de resistance is creating better experiences for customers, being end-customers, buyers within the internal organization, suppliers, partners and your customers' customers. It's about creating buying experiences that meet the needs of more mature internal buyers, underpinned by seamless, straight through transactional processes. Effective procurement is all about enabling much more collaboration and innovation to take place with suppliers, providers, partners and customers and amongst them.

Posted in: Procurement, Engineering & Supply Chain OutsourcingProcurement