HfS Network
Jamie Snowdon
 
Chief Data Officer 
Learn more about Jamie Snowdon
Digital, Cloud, SaaS and Automation Becoming Table Stakes When Choosing an IT Service Provider
April 18, 2017 | Jamie Snowdon

We just wanted share another finding from our “State of IT Services Survey 2017” – this survey has been conducted largely to support our IT Services blueprint process. We have interviewed 302 IT service decision makers to find out what they think of the IT services providers infrastructure management services, digital-focused consulting and their application management services.

We asked IT decision makers to pick their most important selection criteria for choosing an external service provider for IT Services generally, and specifically when choosing an infrastructure management, application management and consulting/IT strategy provider. The chart shows the difference between these main groups - displaying the proportion of buyers selecting each option for each type of provider.

 

Bottom Line – results count more than the method

Overall buyers are looking for Innovation, financial stability, quality of service. Consulting buyers care more about quality and skills (as well as innovation) - prior engagements are much less important. Buyers are starting to care less about the technology that drives the innovation - at least as dominant factors driving selection. Digital/SaaS/Cloud and automation are increasingly table stakes.

Familiarity breeds respect – for IT services firms…
April 14, 2017 | Jamie Snowdon

We are just analysing our “State of IT Services Survey 2017” at the moment – this survey is being conducted largely to support our IT Services blueprint process. We have interviewed 302 IT service decision makers to find out what they think of the IT services providers infrastructure management services, digital-focused consulting and their application management services.

We are hoping this will add an additional buyer perspective when we rate and review the global IT services companies – getting away from the usual marketing blurb and focus on what is important for the organizations buying external services.

As part of this work, we asked these business leaders to rate their familiarity with infrastructure management service providers and then rate them on, amongst other things, service quality. This gave us the opportunity to see whether familiarity with the providers has an impact on the ratings -the infographic chart shows the findings.

The Bottom Line – buyer respect is earned through good service delivery

The good news for the industry is that, except for a couple of notable exceptions, as buyers start to use a providers infrastructure services the rating for quality of service delivery increases. With a big leap from merely heard of a provider to extensive knowledge.

We are analysing and publishing more of this survey over the next few weeks.

DXC’s challenges represent a microcosm of a services industry in perilous transition
April 09, 2017 | Phil FershtJamie SnowdonTom Reuner

April 3rd saw the long-anticipated creation of a new IT and BPO powerhouse service provider – DXC.technology. However, DXC’s challenges represent a microcosm of a services industry in perilous transition.

This is a crucial event in the services industry, not only because it isn’t often a “new” $25 Billion services firm is created, but because of what it signifies about the uncertain state of the current market and the huge challenges facing service providers in the near future.

Read our complimentary analysis of the merger on the HfS Research website by clicking here.

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.

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 (%)

Comments

Accenture

6.3%

7.1%

15.6%

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%.

Atos

6.8%

9.7%

9.6%

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.

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Location, location, location
February 24, 2017 | Jamie Snowdon

HfS is about to publish our quarterly analysis of the service provider and shared service center location announcements by Hema Santosh. As a taster, we would like to post the highlights and the infographic from this work.

Highlights for the quarter:

  • We see expansion of jobs in both the US and India – of the estimated 9,000 jobs that these new locations will house, 4,350 will be in the US and 4,300 will be in India.
  • Industry specific BPO drives expansion with 3 new BPO sites in the US in Q4 2016.
  • Downsizing – we saw some down sizing of in-house centers with eBay, Standard Chartered and Verizon all shrinking some centers.

Bottom Line:

Check out the full document here in the growing market analysis section of the HfS Research site.

 

Click to enlarge

The offshore shift left part 3 - Q4 wasn’t that good…
February 13, 2017 | Jamie Snowdon

Back in August 2016, we wrote about the shift left with offshore providers – we were recently updated in January. Below is the new chart that updates to include Q4 revenues – we always include a full year of data it is the trailing twelve months - now it represents the full calendar year view for all of the years.

 

Click here to enlarge the image

Hopefully, the new charts show the shift even more clearly. With the top chart zooming out to show the whole of the y-axis – giving the full margin picture and demonstrates quite how close together the firms really are and highlights the convergence even more. As you can see Q4 hasn’t halted the shift and we see these companies cluster around the high single digit growth mark.

The Bottom Line – we’ll have the full roundup at the end of the month

This is just a taster of the results, once all of the quarterly results have been published we will collate them and produce our full quarterly roundup. We can then see the offshore shift left in the context of the other providers.

BPO Market Primer – Watch This Space For the Update in April
February 03, 2017 | Jamie Snowdon

As we mentioned in our recent blog on the IT Services Market we are looking to make our content more visually appealing. So we have below the companion primer cover the BPO market for 2015 to 2021. We will be doing a full update of the forecast at the end of Q1. When we have a chance to analyze all the vendor results for 2016.

Click Here to Enlarge

This chart gives our top level view of the BPO market in numbers – this provides a top level look at the market as a whole. We will be looking at producing a number of cuts of this data over the next few months, especially as we roll out our BPO Top 50 report and our updates to our market forecast.

The Bottom Line - Watch this Space

We are publishing a point of view on market conditions over the next few days, which presents these charts again with some additional commentary. Please find the piece at www.hfsresearch.com.

The year of the HfS Infographic begins... in earnest
January 23, 2017 | Jamie Snowdon

In our bid to make our research more visually appealing we would like to post the first version of our IT Services market primer. This shows the first round of the 2017 HfS market size and forecast for IT Services for 2015 to 2021. We will be doing a full update of the forecast at the end of Q1. When we have a chance to analyze all the vendor results for 2016.

This chart gives our top level view of the IT Services market in numbers - the market we focus on here is our high-value market - by this we mean the outsourcing/managed services and professional services markets - we exclude standalone support and training from these numbers.

 Click to enlarge

 

The Bottom Line - Watch this Space

We will be producing more graphics such as this, the next will be a top line view of the BPO market. We'll also be writing up our thoughts on both markets in a PoV by the end of the month. 

 

Offshore has become Walmart…as Outsourcing becomes more like Amazon
January 21, 2017 | Phil FershtJamie Snowdon

In the post-digital world, no one cares much about “offshore” as a strategy - it has become part of the fabric of managing a global operating model, where operations leaders just tap into whatever global resource they need to achieve their desired outcomes. This doesn’t mean that traditional “offshore” global delivery locations, such as India and the Philippines, are going bust overnight. But it does mean the playing field is leveling out as the need for emerging skills trumps the desire simply to reduce labor costs.

Our new State of Industry Study, conducted with KPMG (see above) of more that 450 major global enterprises – shows an increasing majority of customers of traditional shared services and outsourcing feel they have wrung most of the juice offshore has to offer from their existing operations, and aren’t looking to increase offshore investments.  When we compare enterprise aspirations for offshore use between the 2014 and 2017 State of the Industry studies, we see a significant drop, right across the board, with plans to offshore services. Organizations are now either looking to make their existing offshore operations more effective, or even reduce them where they can (especially in F&A and HR), using new technologies and smarter process management.

It’s all about future scalability without the linear resource investments

The difference between new style of automation-rich intelligent operations and offshore-centric traditional operations is growing. It’s a bit like comparing the growth of Walmart to that of Amazon – (although it has started to change with its belated online strategy and acquisition of Jet.com), for many decades, the success and growth of Walmart has largely been tied to

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