HfS Network
Derk Erbé
 
Research Vice President, Supply Chain, Procurement and Energy 
Learn more about Derk Erbé
The Rise of Supplier Relationship Management
February 14, 2017 | Derk ErbéBarbra McGann

A smarter business operation is one that uses the right combination of talent and technology to impact business outcomes. Third party suppliers are an inevitable part of that right combination, and most effective when managed according to their potential impact on business results. There is, therefore, an increasing focus on the relationships with suppliers and investment across industries to standardize contract management and governance, centralize management of strategic suppliers, recruit and engage talent that has relationship building and critical thinking skills, and better leverage self-service platforms and automation in procurement and supplier management.

Based on our research, including discussions at the HfS Summit, our annual Shared Services and Outsourcing survey with KPMG, and 10 interviews with executives from financial services, healthcare, logistics, high tech and other industries, we’ve put together this picture of the “state of supplier and partner management” in the IT and business process services industry:

  • As organizations grow the business, they are increasingly standardizing and centralizing business operations functions, often incorporating outsourcing in hybrid / global business services models. IT has been the first mover here, with business functions following – F&A, Procurement, and HR as well as industry specific support. We expect centralization and shared services to continue, with selective and targeted use of outsourcing (on and offshore) and RPA in a model many are calling “no-shore.”
  • In the same way, there is a move to centralize supplier/partner management – if not the complete set of activities, then at least the governance and contract management separate from the relationship management. Relationship management is more difficult to centralize and typically happens when the suppliers are providing IT or BPO through a shared services unit. Once centralized, governance and contract management is increasingly automated; and relationship management gets more focus.
  • More mature or forward thinking Procurement / Sourcing leaders are working to position themselves as advisors – partnering with the business to define strategy; coordinating across business units, IT, and legal; defining standards for governance (reinforced through templates and automation); using training to ensure the more distributed relationship management is active and following a framework.

Exhibit 1: Top 3 Desired – and Hardest to Find – Capabilties for Business Operations

Source: HfS Research in Conjunction with KPMG, State of Business Operations 2017 N=454 Enterprise Buyers

Click to enlarge

  • Talent for supplier management (and procurement/ sourcing in general) is increasingly oriented toward relationship building, decision-making, and analytical skills. Subject matter knowledge of the function is a basic capability that’s needed; negotiation and contract management “can be taught.” Executives are also increasingly interested in candidates with technical skills (or interest) in determining the right mix of talent and technology for managing optimal business results.
  • Procurement is setting the pace for evaluating and implementing robotic process automation and cloud-enabled platforms for more self-service. Some interviewees mentioned that processes, especially those associated with managing commodity or transaction-based activities and suppliers, are candidates for RPA.
  • Across the board, we found a move to consolidate, reduce, and prioritize/tier suppliers for better negotiation capability, more effective and compliant oversight, and a more collaborative and engaged approach to partnering versus managing “off the side of the desk.”
  • Talent will either enable or hinder your ability to have supplier relationships that support business objectives. It doesn’t matter what your operating model is if you don’t have the right talent. If you have the right talent, they will make the relationship with the supplier effective for the business.

The bottom line: There are three critical components to effective supplier management that stand out in our research

  1. Alignment and tiering of suppliers with business objectives
  2. Standardized and coordinated supplier relationship management and contract management and governance
  3. The “right” talent to broker and manage relationships and results

In general, companies are on a journey to have a more strategic approach to supplier management and believe it will take a matter of years to get there because of the cultural shifts required. We explore these themes further in our recently published POV, “The Rise of Supplier Relationship Management,” available for download (free with site registration).

No more denial for WNS as it makes its concerted procurement play
January 12, 2017 | Phil FershtDerk Erbé

This is era of the emerging BPO provider, as IT services stagnate and clients demand greater personalization and attention from business services firms that have the scale, resources, hunger and technology enablement skills to take on increasing complexity and make sense out of the dataswamps plaguing so many of today's businesses.  

One such stalwart of BPO, quietly going about its business over the years with steady growth and increasing reputation for solid delivery, is WNS (yes, the one that was spawned out of the British Airways captive back in the day).  WNS has performed well over the years, growing business streams in knowledge process domains, finance and accounting, insurance, travel, mid-size banks, contact center and some other areas.  It has oft-threatened to make a grander procurement BPO play, but mostly opted to partner with the likes of Denali when the need arised.

In my view, having solid procurement delivery capabilities goes hand in hand with F&A, so it's refreshing to see WNS snap up one of the best pureplay strategic sourcing providers left in the market, which should make the merged entity a Winner's Circle contender later this year when we rerun the Procurement-as-a-Service blueprint:

Click to view

So let's hear from our Procurement and Supply Chain analyst, Derk Erbé, who's recently emerged from a major analysis of the procurement services market:

WNS + Denali - The Details

To start the New Year with a bang, WNS announced the $40 million acquisition of Denali Sourcing Services. We have covered both WNS and Denali in our December 2016 Procurement As-a-Service Blueprint. WNS is ranked as an Execution Powerhouse, while Denali is a High Performer in the Procurement As-a-Service market.

The acquisition of Denali Sourcing Services is a good move from WNS, and effectively bolsters

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Musings on the Future of Procurement
December 11, 2016 | Derk Erbé

As we dived deep into procurement for the Procurement As-a-Service 2016 Blueprint, we had a lot of almost philosophical conversations about the future of procurement.
About the fun stuff, not the procurement grunt work like invoice processing, PO matching, accounts payable. No, about cognitive procurement, predictive analytics, procurement being completely automated and invisible.

Amara’s Law concluded about the future and our estimations thereof: We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.
Bill Gates famously paraphrased: "We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

So, here are our overestimations and underestimations for procurement in two and ten years’ time:

Overestimations … within two years:
* Service providers successfully scale the knowledge of their scarce category experts with brilliant cognitive solutions.
* P2P platforms completely automate away manual transactional procurement.
* Suppliers are completely digitized on what we used to call Supplier Networks or Business Networks and now know as collaboration platforms.
* Service providers have adopted on-demand As-a-Service to the extreme – they don’t talk about multi-year contracts or total contract value anymore - just about number of subscribers, active users, churn, annual and monthly recurring revenue (ARR / MRR) growth.
* Amazon takes over the B2B Marketplace (if in Asia - Alibaba). Amazon Business is the de facto marketplace in B2B.
* If you’re looking for the Procurement department, follow the signs: Brokers of Capability.
* Competition from outside outsourcing or procurement disrupts outsourcing of specific categories - like DHL in logistics.
* With Blockchain cemented into the core processes, we also pay in Bitcoin.

Underestimations, or what we’ll see (!) in 10 years:
* Algorithms will decide the preferred supplier du jour.
* Algorithms will determine what, how, where and when to buy, show you options and recommendations.
* No one touches an invoice or a purchase order. Blockchain and smart contracts take care of transactions.
* Some categories disappear (probably office supplies - as we go paperless, you can bring your own pen or pencil (BYOP).
* Connected assets (IoT) in value chains will tell algorithms what to buy and when.
* No need for approvals, the algorithm got it.
* Predictive analytics decide what you need – the system knows our needs better than we do.
* When I want to buy something algorithms, and analytics didn’t figure out already, I just tell Alexa to get it for me.
* Stuff will unexpectedly appear on your desk or doorstep.
* Fedex and UPS will help return stuff you, after all, didn’t need….by a drone or an Uber.

Bottom Line: The future is already here – it's just not evenly distributed yet
To end with the famous quote from William Gibson. All the forces impacting procurement and driving our overestimations and underestimations are here today. Some very nascent and aspirational – cognitive procurement, IoT, Blockchain, true predictive analytics. Others have been embraced by the market and broadly implemented into procurement and Procurement As-a-Service offerings – procurement platforms, supplier networks, intelligent automation. Ask yourself; will you be on the overestimated or the underestimated side of this transformation? Figure out what the future looks like for your procurement function and start preparing now or risk becoming obsolete.

Everything you ever wanted to know about the Energy sector but never dared to ask...
November 22, 2016 | Phil FershtDerk Erbé

We can obsess about losing our jobs to robots, our traditional industries being wiped out by digital transformation, our politicians losing the plot... but it'll all count for nothing if we abuse our valuable natural resources and pollute the air we breathe.  So without further ado, let's hear the real deal about on what's going on in the energy sector these days - and how it impacts our world of operations and technology.  And who better to talk to than HfS analyst Derk Erbé, who likes to take a long hard look at things...

So Derk...what do we need to know about the energy sector these days, with climate change, crazy oil prices etc?  What are the key issues we need to care about?

First off, it really is a perfect storm at the moment. We’ve seen the world coming together to curb global warming in Paris, only a year ago. Rising social and political pressure in conjunction with technology advances and economic shifts are combining to create a positive atmosphere to address one of the biggest challenges of the coming decades.

We’ve also seen the sharp fall of oil prices from above $100 per barrel to $27 per barrel in February 2016, currently stabilizing around $45. The reaction from Oil & Gas companies to the crazy oil prices has been focused on survival for much of the last 18 months. Cost cutting was the primary reaction, resulting in the loss of 250,000 oil workers’ jobs. Two out of three oil rigs has been decommissioned and many capital projects postponed and canceled. This was not enough to save many oil and gas companies from bankruptcy. The initial hope of short-term

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How As-a-Service Coming of Age Changes the Dynamics in the Procurement BPO market
November 07, 2016 | Derk Erbé

Procurement BPO has seen a more rapid move to “As-a-Service” — agile and on-demand — than other horizontal offerings. At the center of this movement is the maturity of procurement platforms and networks such as Ariba, Coupa, and GEP, the high degree of automation due to the transactional nature of large parts of the outsourced work, and increasingly strategic use of talent with subject matter expertise. These elements have led to more productive and “intelligent” operations. And at the same time…procurement outsourcing has become cheaper.

The increasingly common use of technology platforms, as well as maturity and confidence in service delivery, has driven down the contract value of procurement BPO deals. In the early days of procurement outsourcing labor-based deals often exceeded $100 million, this number dropped steadily to $50-60 million (five years ago) and currently sits between $25-30 million over five years. Growth dropped in five years to single digits from 12-15%.

Service providers have needed to develop and invest in a strong vision for procurement to drive change on themselves, or risk getting stuck in labor arbitrage. Bringing together an understanding of clients and technology plays a role of paramount importance in continuing to deliver on rising expectations.

A recent HfS Study on Intelligent Operations found the most important driver outsourcing is to drive up productivity. One in six respondents at the SVP level or higher, sees replacing their current (legacy) provider with one that is driven by As-a-Service (they’re more flexible, employ better use of technology and talent) as the way to get to this Intelligent Operations end-state. In this service engagement users in the enterprise get a better user experience—potentially resulting in more compliance, better stakeholder relationships, and stronger business alignment. We are currently exploring these stories and examples in our current research to be published later this month in the HfS Research Blueprint on Procurement Operations.

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So, how can you actually get more “As-a-Service”? 5 Key Elements from Procurement Services
October 25, 2016 | Derk Erbé

Procurement BPO has changed substantially over the last decade. Growing maturity of procurement technology and commodification of significant parts of the procurement value change altered the value proposition of procurement BPO: From very large lift and shift outsourcing deals, heavily dependent on labor arbitrage, to smaller (about a fifth the size of ‘legacy’ deals) engagements leveraging procurement platforms, advanced analytics and intelligent automation. This exemplary of the shift in services we call the “As-a-Service Economy”. As we interview service buyers and service providers for the 2016 Procurement As-a-Service Blueprint, we home in on five facets representing Procurement As-a-Service:

 

  1. Continued use of automation and robotics in services. Transactional procurement has changed tremendously. Not only by better platforms (see #5) leading to fewer and fewer exceptions in processes, and processes and exceptions that can’t be handled on a platform can be done with Robotic Process Automation. As an illustration: in spend analytics automation is used to automatically aggregate, cleanse, validate, classify and report spend data. Further areas with lots of intelligent automation potential are invoice processing, purchase order management, contract management, auto-routing of exceptions to stakeholders, invoice matching procedures, payment status and tracking.

    Traditionally, the 'higher value' activities in contract management, category management and strategic sourcing have been consultancy driven. Skills are scarce and hard to repeat and scale.

    It's about knowledge and expertise and labor intensive processes. The market sees an accelerating talent issue, as category and sourcing experience is scarce and you can't buy experience. Really good sourcing or category experience is built over a minimum of 10 years and many experts are retiring at a higher rate than new talent can be brought on. So there is a need for knowledge management and an opportunity with cognitive and AI becoming more mature to solve a part of this puzzle.

    With cognitive platforms maturing, we will see a change in the more strategic parts of procurement.

  2. Strategic sourcing and category management expertise and capabilities. Sourcing and category management drive a lot of value for clients, for instance in tail spend. There are many small categories, small sourcing events and potentially poorly sourced products in enterprises, which don’t warrant building in house category expertise. Procurement As-a-Service providers are expanding internal category management and sourcing capabilities by attracting and retaining more sourcing talent, arming sourcing and category talent with more and better analytics, insights and market intelligence and nurturing an ecosystem of partners, growing in the role of brokers of capability.

  3. End-to-end capabilities. Service providers increasingly bring in traditional sourcing consulting skills into Procurement As-a-Service delivery, opening new doors to buyers looking for consulting skills at lower (BPO) costs, enhancing capabilities across the value chain. Procurement As-a-Service covers the entire Source to pay (S2P) Value Chain. The growing role of technology is enabling closed loop processes, with advanced analytics creating continuous feedback loops. New value creation in transactional procurement hinges on one to many solutions and services, deriving data and bundling insights across multiple client engagements. The game in procurement business services is scale, being able to deploy limited skilled resources across multiple clients, not on the project basis but on concurrent, day to day, shared basis.

    Providers’ ability to bring sustainable change to the client organization is key to Procurement As-a-Service. Traditional challenges are compliance with procurement policy, contributing to transforming the procurement function and stakeholder management as part of continuous change management, beyond the transition period.

  4. Commercial models. HfS’ research shows that while As-a-Service delivery is gaining ground in many horizontal and vertical offerings, the adoption of As-a-Service commercial models is lagging behind. Gain-share was popular in the early days of procurement outsourcing, but its popularity seems to have faded since in many cases the wrong behavior was incentivized. Determining actual savings and which part of the savings should be contributed to whom proved a nightmare. We are having a good look at how service providers supporting the As-a-Service vision introduce new commercial constructs and if they are bringing those into existing client engagements.

  5. Platforms. Procurement technology is now much more integrated in platforms, where much of the technology of the past was separate, heavily customized and bespoke (point) solutions.  SaaS enabled technology platforms such as Ariba, Coupa, SMART by GEP, Tradeshift, Accenture’s Radix and Capgemini’s IBX have taken a significant role at the core of procurement. In a nutshell, platforms consolidate a set of suppliers, automate most processes and put (commoditized) processes at the fingertips of buyers.

    Platforms are eating into the traditional procurement outsourcing model. The mega deals of the past slimmed down due to the degree of technology being sourced, reducing human labor dependency in procurement. Key ingredients of Procurement As-a-Service are usage of platforms, services with embedded platforms, services around platforms and integration of platforms in service delivery.

 

What To Watch

Winners in Procurement As-a-Service are those providers going beyond merely providing a replacement or extension of existing procurement, by providing a vision and strategy for the future of procurement.

This vision includes:

  • Leveraging multi client insights, experience and buying power
  • Models for Customer management 
  • Providing smart solutions for indirect (tail) spend
  • Expanding expertise in strategic sourcing and category mgmt
  • Putting Intelligent Automation at the core of (digital) procurement operating models
  • Leveraging procurement platforms (proprietary and 3rd party) in engagements and the ability to provide technology management across clients in a one to many model
  • Building closed loop processes
  • Data and information foundations
  • Using advanced analytics for (near) real time information and insights 
  • Skills in consulting, technology and relationship management
  • End to end supply management
  • Creating communities for clients

The 2016  HfS Procurement As-a-Service Blueprint will investigate the progression service providers have made on the As-a-Service Journey, their vision for the future of procurement and their ability to bring this vision into the real world of procurement.

Cognizant splashes out $128 million to bolster Oil & Gas practice
October 03, 2016 | Derk Erbé

 

With the realization firmly sinking that the new normal in Oil & Gas is "lower for longer," it is hard to find service providers investing heavily to build out their Oil & Gas Practice. That is, until Cognizant announced plans to acquire Frontica’s IT outsourcing and BPO business for $128 million, a service provider born in the Oil & Gas industry.

 
Frontica hails from one of the largest hydrocarbon rich areas in Europe—Norway—and specializes in ITO and BPO services for Oil & Gas. Frontica has been on a transformative journey the last couple of years, reorienting itself from the internally focused shared services unit of oilfield service company Aker Solutions until 2014. At that time it started operating as a separate ITO and BPO service provider in Oil & Gas. It has a healthy portfolio of contracts such as the 5 year deal signed in February 2016 with former parent Aker Solutions, which is valued at between $ 116 million and $ 145 million annually. 

Frontica's ITO services are focused on SAP consulting, application maintenance and development, IT infrastructure, implementation services, IT support for mergers and demergers (good business in Oil & Gas). BPO services focus on HR and payroll, F&A, operational procurement, category management and sourcing. 

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How Energy firms and their Service Providers must embrace change to survive
September 01, 2016 | Derk Erbé

Refusing to change our ways in today’s energy sector is a certain recipe for failure. There are a lot of inefficiencies in Oil & Gas, which in times of high oil prices and high margins, are largely hidden and/or ignored. In today’s continued low oil price environment with low margins and profitability—what we believe to be the new normal—Oil & Gas companies need to take out inefficiencies and find new ways to optimize production and bring down operating costs like never before. Our Energy Operations Blueprint highlights the way Oil & Gas companies are looking at digital technologies, automation and outsourcing as avenues for change, and levers to pull to drive new efficiencies and value creation.

Sustaining the current momentum of change in today’s environment is a huge challenge for Oil & Gas companies and their service providers. Changing for new results requires progressive change from within, not just rearranging the deck chairs hoping for a different result. The Blueprint identifies eleven trends that are currently taking place, and while they all serve a purpose to address the trends impacting their world, there are a few that bubble to the top.

Four trends that we see as an opportunity for focus by service buyers and providers to increase the value of their engagement over time:

  • Evolve analytics capabilities to cater for energy-specific applications. Analytics offerings have started to progress from being based largely on access to data science talent and unique algorithms to include
industry specific analytical applications delivered by service providers that deeply understand a client’s enterprise and marketplace. We see good progress in analytics that improve the drilling process and analytics capabilities underpinning the 24/7/365 monitoring of thousands of units of critical equipment from a central support center in Exploration & Production.
  • Leverage data to look into the future, not the past. Predictive and prescriptive analytics are starting to enable more real-time decision-making and continue to have a huge impact on the operating models in the industry. The industries’ strict requirements for safety, reliability and uptime in operations, often in harsh circumstances and remote locations can be better met with advanced analytics capabilities offering real-time and actionable insights. Knowing what went wrong through descriptive analytics simply doesn’t cut it.
  • Put IoT at the heart of your planning. The (Industrial) Internet of Things holds tremendous promise and we expect adoption to accelerate as there are already huge numbers of connected assets in the industry and providers and Oil & Gas companies have to focus on connecting those assets to the internet to bring tremendous value. Think about how in Midstream, pipeline sensors providing data on transportation of product and the health of the pipes replaces the need for field workers to get sensor readings in person. And using drones and connected sensors to inspect the gigantic stretches of pipeline in difficult terrain instead of visual inspections by field workers. 
  • For future effectiveness, focus on IT/OT integration and the Digital Oilfield. The digital footprint is increasing in Energy Operations, bridging the gap between Information Technology and Operations Technology. In Upstream, advanced analytics improve operations in drilling, reservoir modeling and engineering and remote monitoring.

Bottom Line: It’s time to dare the industry to build—not inhibit—momentum for change

Here are two dares I want to put forward to Oil & Gas executives and service providers respectively, both of them critical to sustain the change momentum and achieve the innovation that is so desperately needed: 

Energy Buyers - Dare To Reinvest Cost Savings into Innovation Funds: It is very attractive to put cost savings achieved by outsourcing in the hands of the CFO.  However the CFO isn’t going to turn around and say “great job, let’s all sit back and celebrate that 20% off the bottom line”. We recommend to reinvest these savings in further innovation, perhaps make it a part of a Collaborative Engagement arrangement: “Service provider, save us 20% and we can both reinvest the 20% as next year’s innovation budget”.  For example, saving driven through the offshoring of application development and accounting work could be funneled into a digital oilfield project.

Energy Service Providers - Put Your Money Where Your Mouth Is: Pro-actively and aggressively push the innovation agenda around automation, analytics, drones, 3D printing for MRO, simulating with digital twins, machine learning, deep learning, cognitive computing. Present clients with use cases, examples and capabilities to “unfreeze,” inspire and build credibility in innovation.

Who Are the As-a-Service Winners in Energy Operations? HfS’ inaugural Energy Operations Blueprint reveals frontrunners Accenture, EPAM, Infosys, Wipro and TCS
August 24, 2016 | Derk Erbé

Why An HfS Research Blueprint for the Oil & Gas Industry?

Tumultuous times in the Oil & Gas industry. Understatement of the day I hear you say… Time for a rigorous look at the role service providers play to help Oil & Gas clients battle adversity. 

The Oil & Gas industry is on the cusp of a significant transformation. Economic, societal, market, political and regulatory pressures are coming together bringing immense challenges for companies to solve through more effective and lower cost operations.

HfS sees a significant role for next generation services providing flexibility to scale up and down, agility to deal with a volatile environment and fully leverage digital technologies and digital enabled business and operating models now and in the future. 

What does this Blueprint cover?

This is not a beauty contest about size, revenue and global scale. There is a place for smaller providers that excel in a niche and help clients on their As-a-Service journey. 

One of the key attributes we looked for in this Blueprint process was if the service provider has a real Oil & Gas practice, not a collection of contracts with a sign “Oil & Gas Practice” slapped onto it. In this light we are interested in the way service delivery is organized, the availability of industry domain expertise, investments in industry talent, acquisitions of companies with industry specific capabilities and partner ecosystems. Another point of emphasis in our research is the move to As-a-Service, how service providers are enabling new ways of working, how automation and analytics are used to tackle industry specific challenges and the level of innovation brought to clients.  

Key Market Dynamics

 Two dynamics jumped out at us during the Energy Operations Blueprint process:

Oil & Gas Companies Looking for New Levers: As the focus of the industry is on cost reduction, production optimization and operational efficiency, automation and outsourcing are two principal levers available to the industry. The name of the game for Oil & Gas is: Fix the basics and leverage new technologies. Oil & Gas executives are forced to have a good look at their strategy. Key questions include:

  • What is the core of our enterprise?
  • What do we need to do internally, what differentiates us from the competition?
  • What parts of our processes can we automate?
  • Can we outsource what we can’t automate?

 Buyers Perception of Service Provider Becoming More Strategic: A pivotal changing dynamic in the market is how buyers look at their service providers. With the renewed focus on outsourcing as a lever to deal with the pressures in the volatile business environment, Oil & Gas clients tell us they look beyond labor arbitrage and see service providers as an extension of their organization. They want deeper relationships with their providers and forge stronger ties between internal and external staff. They look at their service provider(s) to help the organization become more flexible and scalable, ramping up and down in the cyclical business of Oil & Gas.

Who is Standing Out? The Service Provider Landscape and Blueprint Grid Performance

All of the 13 service providers that participated in this Blueprint share the conviction that innovation is crucial to helping their Oil & Gas clients through this volatile environment. Most of them have a unique set of offerings and capabilities. There are a couple of clusters of expertise. For example, KPIT and HCL, focus on a specific area of the value chain; TCS, Infosys, Wipro, Accenture, IBM and Cognizant, focus on strong domain expertise and consulting-led delivery; and EPAM, Atos, Luxoft, Harman and Tech Mahindra, lead with engineering or Digital Transformation with credible experience from other industries.

As-a-Service Winners are service providers that are in collaborative engagements with clients, and making recognizable investments in future capabilities in talent and technology. These providers are also leading in incorporating analytics and BPaaS to deliver insight driven services: Accenture, EPAM, Infosys, TCS and Wipro. I’ll highlight two Winners here: 

Accenture has tremendous breadth and depth in its capabilities and experience serving the oil and gas industry. Its commitment to innovation in technology and service delivery and bringing digital platforms to the industry make it one of the leading service providers in the move to the As-a-Service Economy. 

Wipro’s Oil & Gas practice holds a lot of domain expertise, which Wipro combines with innovation in digital, cognitive computing and automation (Holmes) and commercial models. What stands out is Wipro's ability to bring valuable, new As-a-Service propositions to the market, enabling the introduction of clients' new reimagined digital business models, a crucial capability for success in Energy Operations.

 High Performers show solid performance in either technical execution or services innovation but may not show an innovative services vision or lack execution momentum against what is potentially possible: Atos, Cognizant, HCL, KPIT and Tech Mahindra. Atos impressed us with their vision on Holistic Security and Industry 4.0 experience, two key areas for the future of Oil & Gas. 

Harman, IBM and Luxoft are ranked as High Potentials, emerging players bringing highly innovative approaches and overall vision to the market, but lacking in the complete build-out.
IBM is struggling to transition from being firmly entrenched in ‘traditional' services, and has been on the wrong end of consolidations in the industry. However, what caught our attention is IBM's capability that puts it on the forefront of advanced analytics services, with heavy investment in cognitive capabilities. We have seen a number of interesting applications of Watson with Oil & Gas clients, for instance using predictive data science to leverage more than 30 years of collective knowledge and experience in a cloud based knowledge platform. With the Big Crew change firmly underway, this an important area for Oil & Gas companies. 

What is Next? Sustaining the Momentum of Change

The downturn in the Oil & Gas industry and sustained low oil price has created a momentum for change in the industry. But will it continue if the oil price goes up again—what happens when it hits $60 per barrel? Many industry executives shared a concern that without the economic necessity of cost cutting, the industry will return to a complacency that will slow the pace of innovation and change.

This Blueprint shows that, in addition to cost reductions, the industry needs to be focused on business outcomes relating to talent, operational efficiency, organizational flexibility and scalability and time to market. The way forward is through more collaborative engagements that incorporate the achievement of these business outcomes. The Energy Operations Blueprint provides a comprehensive overview of the industry and identifies ingredients for long-term business value along the As-a-Service Journey.

I’ll wrap this up by emphasizing again the importance of true partnerships. To survive the oil price slump and come out stronger Oil & Gas companies need partners that proactively bring innovation and are willing to co-invest in technology, collaboration and talent.

HfS Premium Subscribers can click here to download their copy of the new 2016 Energy Operations Blueprint Report.

Why We Should Love Procurement
August 11, 2016 | Derk Erbé

Last month, my colleague Bram Weerts declared the procurement function at risk of extinction.

But all is not lost! I see some very powerful paths Procurement can take to become a more appreciated and valuable business function in enterprises.

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