HfS Network

Monthly Archives: Jul 2017

Getting into the Top 50!

July 13, 2017 | Jamie Snowdon

Another year another top 50 list of service providers can be found on HfSresearch.com. We have included some new providers – including a couple of interesting BPO firms in Japan and adjusted for the recent wave of consolidation in the market.

I just wanted to repeat the advice I gave out last year about the report and the list – this report is all about the money. Being on the list or not, doesn’t make a service provider good or bad – hopefully market forces mean that better/cheaper providers rise through the ranks, but it isn’t necessarily so. 

The Top BPO FAQ:

You’ve made a mistake can you correct it?

We are human and from time to time this happens – just send me an email and with your thoughts and we’ll correct. By all means, call me names on Twitter – but I may shout back…

We can miss companies from time to time and define where revenues go incorrectly. And, occasionally, spell your name incorrectly ;) Also we may define things differently from you – we are trying to compare like with like as close as possible. Remember this is an estimate – so if you have further guidance, I’d be happy to have a conversation to let you know how we came up with any of the numbers.

I should be on the list / What do you have to do to get on the list?

Sending us evidence (a financial report or two, would help) that shows latest annual revenues. We use calendar years for our lists usually, so something that shows the relevant quarters would work. But happy to have a discussion with any private firms – just so we can properly establish position. I am not a miracle worker so private companies that don’t publish results and don’t provide guidance may not make the list.

How much do I need to bribe you to change my position?

It (still) pains me to say it but no – we just can’t. The pesky tax man (and our boring accountant) frown on it ;)

That said it is also free to be on the list – you just need to demonstrate that you have the revenues to make it. But I will check against public sources and validate.

I really want to be part of this but I just don’t have the revenues yet – is there anything I can do?

We are happy to engage regardless of the absolute market share if a vendor has an interesting service – we are interested in up and coming providers. And we may profile interesting firms.

Posted in: Business Process Outsourcing (BPO)

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Blockchain still not enterprise ready, but the Hyperledger Fabric 1.0 release can show the way

July 12, 2017 | Saurabh Gupta

Tired of the Blockchain hype? You should be, but the emergence of Hyperledger Fabric 1.0 gives us a sense of the reality to come and where this is all heading.  Let’s dive in...

Hyperledger announced the release of Hyperledger Fabric 1.0 yesterday (see press release). Hyperledger Fabric is an open-source platform, hosted by the Linux Foundation that allows organizations to develop Blockchain applications. Version 1.0 marks the release of a production-ready platform that goes beyond pilots and proof of concepts. 159 engineers from 28 organizations collaborated over a 16-month period to make this happen.

There are multiple Blockchain platforms that exist today. Ethereum is the most mature public platform (besides Bitcoin) with tremendous potential and over 500 use-cases in various stages of development. There are multiple other private or semi-private platforms such as Ripple and Chain. Hyperledger Fabric is younger than many others, but there are three characteristics that make it important for enterprises that want to solve business pain points, leveraging Blockchain:

  1. Flexible. The architecture of Hyperledger Fabric can run like a private or hybrid or public platform, making it potentially more secure from a data-privacy standpoint thus rendering itself enterprise ready
  2. Open-Source. Hyperledger is an open source collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration, hosted by The Linux Foundation, including leaders in finance, banking, Internet of Things, supply chains, manufacturing, and Technology. This structure gives it the potential to become the de-facto standard which will become an important adoption criterion going forward
  3. Not crypto-currency based. Hyperledger does not have a crypto-currency (such as Bitcoin or Ether) which potentially renders it more usable for business applications as not every potential use case needs a currency

The announcement marks a significant move forward to leverage Blockchain for business use cases. The Hyperledger Fabric project started in March 2016 based on merged codebases from IBM and Digital Assets Holding. It moved out of incubation 12 months later and was ready for pilots and POCs. Now four months later, they have released Hyperledger Fabric 1.0 – a production ready version.

Does this mean that Blockchain can now become mainstream for enterprise adoption? No.

These are the three challenges the Blockchain pioneers must address to make the technology truly enterprise ready:

1) Technical challenges. Blockchains by design will never be able to complete thousands of transactions in a second, but the technologies do need to be able to scale up for enterprise-grade performance, efficiency, and costs. Hyperledger Fabric promises to solve this by not using consensus-driven Proof of Work (PoW) that most other Blockchains are built upon and requires major computing power

2) Policy challenges. There are no Blockchain standards, there exist multiple platforms with no interoperability, and there are no regulations in this space. And these are not easy questions to solve. For example, given that all Blockchains are Distributed Ledgers, which geographical jurisdiction will be applicable?

3) Nascency challenges. Several challenges stem from its nascency and novelty. Lack of proven use cases, limited understanding of technology and its potential, limited talent and skill-sets shortage across IT and business, etc. The inherent power and potential of the concept with the help of some pioneering risk-takers will help pull it through such nascency challenges, but it will take time

Bottom-line: There is still a long road ahead for Blockchain, but real progress is being made.

Notwithstanding these challenges, the advancements in Blockchain technology are happening at a frenetic pace. Market developments such as this Hyperledger Fabric 1.0 release are important milestones in the development of this space. It’s important for enterprises to take notice and start investigating. 

Posted in: Blockchain

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HCL's CEO CVK talks three lane growth strategy: Mode 1-2-3

July 12, 2017 | Phil Fersht

One of the leading service providers is also one of the most understated:  Hindustan Computers Limited, or its better-known abbreviation, HCL. This company has grown its revenues by more than 75% in the last 5 years and maintained its profitability to surpass $7 billion this year, while running Wipro close to being the 4th largest Indian heritage IT services firm. Its reputation is one of having a very strong engineering pedigree, a "roll the sleeves up" attitude and a no-nonsense approach to business. The fact it has never bothered to spend millions on a fancy new logo, or glitzy marketing posturing, speaks volumes for this determined, humble and very focused firm, quietly - but aggressively - going about its business as becoming one of the heavyweights of the IT services industry, and one of the best positioned to weather the current malaise caused by flagging demand, too many competitors, and creeping automation. 

So when I got a chance to spend some time with its new, young dynamic CEO, C Vijayakumar, or "CVK" as everyone calls him, I just had to share some of our conversation with the HfS community...

Phil Fersht, CEO and Chief Analyst, HfS Research: CVK, tell us about your journey to becoming the CEO of HCL Technologies? What is your secret sauce?

C Vijayakumar (CVK), President and Chief Executive Officer, HCL: More than the secret sauce that I bring to the table, the question is, what is really special about HCL, and what is that secret sauce that has developed a range of leaders within the company. They may seem different and diverse on the surface, but all our leaders embody a core culture within, and that’s fairly constant. I have had the good fortune to be part of some great milestones and worked with some excellent teams at HCL. I have also worked across multiple business functions - strategy, practice, product management, sales, business development and delivery. This has helped me to get a well-rounded view and brought me to this position today.

Phil: So what is the number one issue with HCL and the business... what is keeping you up at night?

Read More »

Posted in: Outsourcing Heros

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136 enterprise RPA users have spoken and 58% are positive about the business value

July 08, 2017 | Phil Fersht

When we revealed Gartner's bullish 96% of clients are getting real value from RPA bombshell (see post) six weeks ago, everyone close to the action was incredulous:

 

Now we have the real data to prove where satisfaction levels currently sit, where we interviewed 136 major enterprises currently experiencing RPA installs:

 

My personal experience has tended to be about half of enterprise RPA clients today are experiencing positive progress, while the other half are struggling or aborting RPA projects altogether, so this data is pretty positive, especially when you consider that the same number are positive about both the cost and business impact of RPA.  

The Bottom-line: RPA is making sense in this era of renovation and the current satisfaction results reflect this

What I love about RPA is the fact it's making us fix a lot of the systems we're currently stuck with, using sensible, affordable technology. We spent years bemoaning the fact that enterprises couldn't just "saw off" their broken processes and replace with costly new systems and services, but the reality is that most enterprises are not ready to write off their technical debt and invest in change, especially when the outcome is not particularly clear. What is clear

Read More »

Posted in: Cognitive ComputingHfS Surveys: All our Survey PostsRobotic Process Automation

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Want to avoid a PR Disaster à la the legacy Airline Industry? Then fix your DumbOffice asap

July 07, 2017 | Melissa O'Brien

It seems everywhere we turn there’s a new story about airlines behaving badly, and these stories are illuminating examples of a complete breakdown across people, process and technology: a classic “DumbOffice” fail.  No industry is immune from digital disruption and operating on siloed legacy operational models is a surefire recipe for disaster for legacy brands, such as these monolithic airlines, unwilling to invest in a OneOffice operating backbone.

You may be out of business before you know it in this unforgiving digital world

These DumbOffice failures could seriously take some airlines over the edge and put them out of business. Today’s digital business environment is an unforgiving place and the customer experience can make or break a business at a speed we’ve never seen before. 

This year’s biggest DumbOffice culprit, United Airlines, was in the news again recently, and not in a good way. This time, it was the story of a mom being forced to fly with a two-year-old on her lap so his (ticketed) seat could be given to another passenger, one which the beleaguered airline only responded to once she contacted the media. The airlines are having a rough time from a PR standpoint right now, and it’s just going to keep getting worse when every single snafu on every single flight is so easily picked up on social media. 

There is a decreasing margin for error when it comes to the customer experience

In reality, today’s shenanigans aren’t really anything unique, it’s more the fact that the media is lying in wait to take down the next airline that just can’t deliver a flawless customer experience. With the availability of real-time interactive technologies, sophisticated global services and much more incisive analytics, there really is no excuse for these repeated DumbOffice failures. The key is to get smart about predicting customer events, not reacting to them, if you want to win their trust and avoid these PR nightmares that are causing significant brand damage in cut-throat markets, with aggressive low-cost competitors lurking. You only need to look at the European airline industry, where the stranglehold of the legacy airlines, such as British Airways, Lufthansa and Air France had been decimated by low-cost alternatives and the luxury petrodollar brands. Fortunately for the US airline brands, they seem to have enjoyed a greater degree of customer loyalty than the Europeans, but customer tolerance is surely close to breaking point in the changing media-infested business environment.

This means today’s legacy airlines need to break down the silos that exist across their front and back offices integrating the customer experience into all business processes that touch the customer.

The latest frenzy was kicked off a couple months ago with the infamous passenger dragging incident, and since there have been numerous other tales of disgrace with American Airlines and Delta joining the ranks.  Although the subsequent events weren’t as outrageous as Dr. Dao’s sad tale, it’s safe to say the airline industry is under intense scrutiny for customer experience (or lack thereof). Passengers increasingly feel like herded cattle, crammed into smaller seats, given decreasing quality refreshments and entertainment, while being charged for practically everything but using the restroom. While airlines suffered for years with a reputation for nickel and diming customers and providing sub-par customer service, it seems the last couple of months have seen the biggest fever pitch since “United Breaks Guitars” in 2009 – and media, both social and traditional are salivating over every story.

Am effective OneOffice strategy creates the ability to stay ahead of impending disaster

While the very nature of travel assures that mishaps will never go away completely, there are a myriad of customer-focused alternatives for dealing with, and preventing the situations that occurred, in particular, those related to seats being overbooked or boarding passes accidentally “not scanning.”  A connected, customer-centric, digital enterprise that is able to cater to its customers in real time would be able to prevent these problems and set apart any airline that moved quickly in this direction. A smart OneOffice enterprise would use digital connections to engage with customers in this type of situation - for example, instead of making a blanket announcement at the gate (while half the passengers are still at the food court), sending a notification to the passengers’ app well in advance, offering credit for giving up their seats.  If it got to the point where passengers were already on board, using the in-flight entertainment system to make a similar request might get some folks to stand up and take the offer (although it seems that a true OneOffice organization wouldn’t allow boarding to happen under those circumstances).  Or how about thinking outside the box for alternative solutions?  Could those crew members who so desperately needed to get to St Louis instead of Dr. Dao have been comfortably bussed or Uber’ed in the same amount of time and reasonable cost? At a very last resort, in the unfortunate case that something like this happens, a company should at least be quick, empathetic and customer-centric in the response to the customer and the public.  Everything about United’s late, half-assed responses screams that this company has no appropriate contingency plans.… every step of the way, United has floundered and failed to respond to these problems.

The fact these issues continue to arise begs the question, what is the airline industry’s motivation to change? Despite these PR disasters, the airlines are doing better than they have in years. Perhaps the hubris of their recent spike in profitability has created a lack of concern for customers and loyalty. Customers perceive the success of these businesses as squeezing out every possible penny for additional comforts being sold as luxuries, like a couple of extra inches of legroom or a blanket - yet the majority of airline customers shop based on price. Despite a lot of lip service about experience being the differentiator, airlines’ actions show that they’re really more about how to make the most profit while providing the lowest level of service acceptable. But…. it’s not sustainable. 

No industry is immune to disruption, and the recent uptick in financial performance won’t last, while the underlying complete dysfunction and lack of people-centric values will continue to pervade these toxic companies. At the very core of these PR disasters is a lack of integrated data, and a company culture that completely lacks empowerment for decision making and empathy.    

Bottom-line: Any company reliant on omnichannel must have converged data sets so well-trained employees can access real-time information to avoid these disasters. 

The airline industry needs to find a way to appropriately give their front line staff the autonomy and the infrastructure to make appropriate decisions that will help impact and also “protect” the business results e.g. customer loyalty and positive brand image that impact short and long term revenues. It also requires a talent strategy and culture to support it. What is the right balance between rules-based and autonomy/flexibility to make appropriate customer service oriented decisions? Design Thinking is one ideal which can play a role here to design the business operation to meet the needs of the customer within a business context; using journey mapping integrate the needs of people with the possibilities of technology and requirements for business success. Give the “front line” the autonomy to make decisions by having accessible and actionable data at their fingertips with some built-in rules for guidance and standards. 

As we will discuss in the forthcoming Travel and Hospitality Blueprint, airlines can only fix this by embracing the the 5 fundamentals of OneOffice. The only way to turn around these systematic issues is to look closely at how to implement these fundamentals as part of your organization - finding ways for employees to better use technology and information, focus on impactful outcomes and integrating data, and creating urgency for short-term plans to create a long-term vision for more intelligent operations. 

Posted in: Contact Center and Omni-ChannelCRM and MarketingDigital OneOffice

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Accenture Expands its Digital Frontier with Intrepid – Another Pearl in the String of Acquisitions

July 04, 2017 | Melissa O'Brien

Last week, Accenture announced the latest in its 2017 $1.8 B shopping spree with Boston-based mobile design and development company Intrepid. This is a part of Accenture’s strategy to dominate the Digitally-driven Front Office with the vision to offer its clients a model with no business silos where the barriers between the front and back office are removed forever; as described in HfS’ Digital OneOfficeTM. Accenture’s strategy goes beyond the ambitions of growing and maintaining the largest digital agency in the world. It’s about building capabilities to impact its clients’ transformation, finding unique capabilities in opportunistic Geos, opportunities for pull-through with its other services, and a keen focus on impacting the customer experience. 

Intrepid’s 150 employees will join Accenture Digital, the division where many of Accenture’s customer experience focused services reside.  Intrepid’s engineering talent and capabilities, such as it’s work with Saucony Stride lab -- an app that helps runners analyze their stride for better performance--  falls right in line with the kind of digitally-driven customer experiences Accenture is looking to help its clients achieve.  There are also great client synergies between Accenture and Intrepid, in particular around P&G, Accenture’s marquee client for front office services and an organization which is at the forefront of value creation from front office services. 

Accenture was recently placed in the Winner’s Circle of our Digital Marketing Operations Blueprint. This acquisition will further solidify its position, in a space where Accenture’s ability to replicate its Digital Front Office services across industries is also emerging as a competitive differentiator. The ‘string of pearls’ M&A strategy across the core pieces of digital transformation is illustrative of the service provider’s forward thinking vision for the evolution of this market. These acquisitions span across various core pieces of digital transformation, such as include aVVenta for content, Cimation for IoT consulting and Chaotic Moon for digital technology design and prototyping, complementing customer experience services and helping the service provider double its digital marketing operations business over the last two years.

Accenture is putting together a differentiated and bold story for the digitally-driven front office. In fact, Accenture accounts for approximately 50% of the M&A activity since January 2017. Let’s look at some of the more recent Accenture recent acquisitions in 2017:

  • MediaHive, May: Digital commerce strategy and design to platform delivery and managed services
  • Monkeys and Maud, May: Creative ad agency, Australia and New Zealand
  • Kuntsmaan, April: Belgian communication agency focused on customer experience
  • SinnerSchrader, February: German digital agency

What is the common theme in each of these selections?  A clear focus on digital customer experience and design. Accenture also stands apart from the competition in the sense that it seems to avoid falling to the temptation of talking immediately about technology and software (in spite of the strength of its technology assets and partnerships), and instead focuses on the business value.  This management consulting legacy and mindset is part of the company’s DNA and a big part of how it builds trust with its clients. 

This flurry of M&A activity is bold, but not without risks and potential problems.  One of the greatest potential issues is addressing the clashes of so many disparate and vastly varying organizations both operationally and from a cultural perspective.  Accenture’s culture is built on thought leadership, delivering operational excellence, and not necessarily in sync with more “creative type” cultures that will inevitably come with the acquisitions, it’s been targeting.  For now, the strategy seems to be running these entities independently, almost using them as R&D centers wherein their original cultures remain intact.  But inevitably over time, some cultural transformation will occur, morphing the digital giant and its entities into something new-the question is whether legacy Accenture becomes a more creative, innovative organization-or it’s subsidiaries turn more corporate, potentially snuffing out some of the creative fire and losing key talent in the process.  It also risks its size becoming a deterrent for buyers who prefer the niche specialized agencies and the attention, flexibility, and experience they receive from a smaller player.

Another potential threat is that Accenture might become complacent in delivery and execution given its dominance from a capability perspective in this space. This acquisition moves it up on our innovation versus execution grid, but will Accenture also move toward the right? We will be watching that as Accenture continues to enhance its capabilities with these innovative firms.

 

As Anatoly Roytman, head of Accenture Interactive for Europe, Africa, Middle East and Latin America said (of the Kuntsmaan acquisition): “Together, we’re bringing our unique model to the market: part creative agency, part business consultancy and part technology powerhouse – all laser-focused on creating the best customer experiences on the planet.”  The refrain we hear constantly from service buyers — Accenture’s included—is “more innovation!”  Accenture has certainly amassed an array of building blocks to address this demand globally; now the hard work begins to pull these pieces together – a ~$10B digital agency with many moving pieces, specialized skills and domain capabilities – to execute on transforming the digital customer experience for its clients. 

Posted in: Digital TransformationCustomer Experience ManagementM&A

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The Latest HR Power Tool … IoT!

July 03, 2017 | Steve Goldberg

Now available in select “HR supply stores”: IoT (Internet of Things), one of the five tools discussed in my latest POV - “The HR Power Tools 6-Pack for High-Impact Service Delivery.” Much like the double-edged sword nature of its companion power tools, IoT in workforce management can usher in unprecedented and significant business benefits, but only when the right capabilities are selected and potential risks and adverse outcomes are accounted for. 

IoT is a process in which people, machines, and devices are connected to one another via a single network in order to automatically exchange data without any manual involvement. IoT can, for example:

  • track the productivity of workers in the field
  • confirm overall fitness or fatigue when relevant
  • assign tasks based on the nearest worker
  • tie scheduling real-time to customer flow
  • offer real-time training based on an employee’s time on job, credentials or performance

All of this sounds pretty compelling, but a couple words of caution. The first word: Volkswagen, whose engineers illegally programmed IoT-like software to sense when the car was being tested during an emissions inspection, which then activated more costly equipment that reduced emissions. This resulted in a roughly $3B fine this year. Additionally, IoT solutions will generate lots of new, often very valuable data related to people and how they perform their jobs, and not every HR Department is adequately staffed to handle the current explosion of people data or supported by data scientists.

Cause for Optimism with Early Adopters of IoT in HR

While not many HR Technology solution providers are occupying the IoT market category just yet, one company caught our attention: Triax Technologies, and specifically with their “spot- r” solution for companies with workers in the field, particularly on constructions sites. Certainly, accidents are more common there. My briefing from Triax’ COO Peter Schermerhorn enlightened me that U.S. construction companies pay out $1 billion annually for claims related to slips, trips or falls; that the construction industry pays more than twice the national average for workers’ compensation insurance; and that an estimated $7.2 billion in fraudulent workers’ compensation claims are filed annually in the U.S.

spot-r by Triax provides data-driven, real-time visibility into construction operations and safety incidents, leading to an improved safety culture on site and can result in reduced insurance costs. Automatic, geo-tagged “slip, trip, fall” alerts improve response time to accidents and record surrounding conditions (temperature, height, location of witnesses in the area, etc.), self-alert buttons empower construction workers to stop working due to unsafe conditions and alert supervisors to hazardous conditions, and high-decibel evacuation alerts are included in the mandatory wearable devices used on many of the company’s pilot projects with customers. Peter also offered a glimpse into the near future when the company’s sensors will be used in new ways to promote safety and visibility on the job site. Imagine knowing in real-time where your workers, equipment, machinery, and tools are onsite and how they’re interacting with each other.

Who said technology innovations related to HR and workforce management usually lag other business areas?

Bottom Line:  As with all the other power tools (i.e., sophisticated capabilities) recently added to the HR practitioner tool belt, IoT’s potential to be a game-changer cannot be overstated, but neither can the surrounding considerations for avoiding possible misuse or sub-optimal deployment.

Posted in: HR StrategyThe Internet of Things

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The Market Outlook for Robotic Process Automation

July 01, 2017 | Phil Fersht

One of the things I've been at pains to convey is the critical link between digital transformation... and the role RPA plays it making so much of it possible. Digitally-driven organizations must create a Digital Underbelly to support the front office by automating manual processes, digitizing manual documents to create converged datasets, and embracing the cloud in a way that enables genuine scalability and security.

Organizations simply cannot be effective with a digital strategy without automating processes intelligently - forget all the hype around robotics and jobs going away, this is about making processes run digitally so smart organizations can grow their digital businesses and create new work and opportunities.

So click here to download my full session at the recent packed-out Blue Prism World in London town:

Posted in: Digital TransformationRobotic Process Automation

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What GBS leaders can learn from the Rise and Fall of Empires

June 26, 2017 | Saurabh Gupta

I was struck by the similarities between Global Business Services (GBS) and Empires after reading ‘Sapiens: A Brief History of Humankind’ by Noah Harari. He says:

An Empire is a political order with two important characteristics. First, to qualify for that designation, you have to rule over a significant number of distinct peoples, each possessing a different cultural identity and a separate territory….Second, empires are characterized by flexible borders and a potentially unlimited appetite…

These two characteristics of an empire are uncannily similar to Global Business Service (GBS) organizations. GBS is:

  1. Multi-function. GBS organizations aim to deliver services across multiple business functions (aka distinct peoples with different identities) such as F&A, HR, IT, procurement etc. all under one organizational umbrella.
  2. Multi-geography. GBS organizations also aim to deliver its services across all regions and countries (aka flexible boundaries) that a company operates in.

The basis of the creation of Empires and GBS also has similarity. For Empires, it is about basic unity of the entire world around a central ideology. For GBS, that ideology is around standardization, collaboration, and effectiveness.

This all becomes troubling when you realize that we all have a very negative connotation around the word “Imperialism”. We tend to associate wars, brutality, coercion, oppression, and so on when we talk about imperialism.

So, is GBS also this brutal? I think it depends on what lens you view it from:

  • People lens. GBS makes total sense if you are sitting in the corporate headquarters but will be a bitter pill to swallow if you are the one who loses your job because of what you and many others consider to be some corporate mumbo jumbo and the latest consultant gimmick
  • Time lens. It feels like an achievement in hindsight but it is really challenging during set-up. Have you thought why almost everyone describes their experience of setting up a GBS as ‘war stories with battle scars to prove it’? I’ve not met anyone who has told me that the journey was smooth and they did not meet any resistance.

Bottom-line: GBS will work as long as we keep people at the core, define our outcomes and keep an eye on the future

However, I don’t think there is any value in painting GBS as black or white. Like almost everything in life, it has shades of gray. The most important question is ‘how can we make it better?’ And I think this is where GBS organizations can learn from the rise and fall of Empires.

  • Lesson #1. Focusing on developing talent is at the crux. GBS is about people and will not succeed without buy-in from people. The tone from the top helps but cannot be the only driver for sustainable success. Phil’s recent rant on this subject is spot on – too many enterprises are obsessed with achieving a scalable operational backbone centered on technology, as opposed to talent
  • Lesson #2. Make sure you know what “success” looks like. Balancing efficiency with empathy is an important concept to keep in mind. Also, there is a diminishing return to efficiency improvements and cost reductions. After a certain point of time, it really does not matter. What matters is business outcomes and for that, you need motivated talent.
  • Lesson #3. All good things come to an end. Every empire eventually falls. GBS is the concept that we are all rallying behind in recent times, but you can be pretty sure we will come up with an even better framework for organizing ourselves to deliver work in future (such as the HfS framework, the Digital OneOfficeTM). The life expectancy of ideas is coming down dramatically, as we jumpS-curves in years not decades. So it is extremely important that we keep looking out at the future. Keep testing, keep piloting, keep investigating. This is how we at HfS Research are designing our future research agenda – but more on that later!

Disclaimer: I am a firm believer in the value and concept of GBS. My sole objective of this post is to make it more human.

Posted in: GBS, Shared Services and Captives

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The Dark Side of Shareholder Value: Its impact on the very people it’s designed to benefit

June 26, 2017 | Derk Erbé

Our industry requires a shift in mindset from providers, buyers, AND investors. We need to rethink shareholder value and the integral link it has with the very element it seems to be bent on eliminating – people. In a thought-provoking post, my colleague Phil Fersht called out the fact we are in the people elimination business, wondering how it got so bad. My take: there are two key aspects in this debate; the way we view talent and the (unintended) consequences of decades of shareholder value doctrine.

The importance of talent for the future of services

Buyers need to deal with their cost reduction obsession and recognize talent is still the differentiating factor for their business success – and will be for the foreseeable future. Domain expertise, talent, and local people are critical components of the value service providers produce. This is true in any industry, but for example in oil & gas and the utility industry, the service providers that are perceived as delivering the most value by buyers are those that invest in talent, local people with deep industry expertise, and innovation prowess. These folks are not the cheapest, but bring exponentially more insight and impact on results. Buyers have shared ample examples of service providers that help them tackle the sticky industry problems by bringing the talents of industry experts, data scientists, technology experts and the client’s domain experts together. This teaming leads to multidisciplinary cross-pollination to design and deliver solutions that combine technology, industrial process and ideas and proven concepts from other industries.

We are on the verge of a shift in the way we work, and the outcomes we produce

The future value delivered by the outsourcing industry won’t be people running the accounts payable process, but in knowledge-intensive, decision-rich processes. You need the talent to make the technology work effectively – to drive the results and business outcomes. If we again look at the oil and gas and utility industry, organizations are starting to recognize the talent they need to compete in the new economy aren't smitten with the work and reputations of the oil & gas industry or utilities. The reality is that the competition for data scientists, for instance, is not Shell versus Exxon Mobil, but Exxon Mobil versus the likes of Apple, Google, Facebook and a host of start-ups. Service providers can offer more interesting career paths and are a source of talent that can plug the quantitative and qualitative skills gap these industries face. Long story short; focusing on talent, continuous education and business value creation is the viable path forward for service providers. 

The creed of shareholder value and its disconnect from reality

Too many people are still worshipping the totem of shareholder value, a theoretic and flawed notion from its conception. We are in a slow transition to more stakeholder value focus, more fitting our interdependent world that needs more cohesion and inclusiveness.

Ever since the invention of the term shareholder value, it was adopted as the dominant discourse by Wall Street and institutional investors. It, among other factors, has led to a short-term, myopic circus that reduces the horizon of executives to 90 days, de-humanizing our enterprises. It’s a fact that we are richer than ever before and there is less sickness, famine, and war (you wouldn’t say it if you watch the news). But there are still large swaths of the world struggling to improve the standard of living. And even in the world’s richest countries, large groups of people don’t feel better off. They feel left behind, disenfranchised and powerless. This is about half the population in countries like the US, the UK and France, evidence Brexit, Trump and Marine Le Pen’s rise. 

We need to go full circle on shareholder value
Coming back to shareholder value; it’s time to go full circle. Take a minute to think who is behind the vast pools of capital institutional investors manage… It’s us, the people saving money for their pensions. Shareholder value is a construct that served the money managing industry well but forgot to look at the wider interests of the actual owners of the money…. those shareholders are also your employees. Shareholders are not the clever folks on Wall Street, they are the representatives of the ‘normal people’ in your neighborhood and your company, the people who save their money in a pension fund or 401k.

If you take a narrow interpretation of ‘fiduciary duty,' you can get away with the fallacy that returns on investment is the only metric of interest. But what if you fail to let that money you invest create prosperity for the people you invest it for in their real life? If your addiction to dividends and higher share prices is ruining the jobs of your future beneficiaries? It is time to bring the financial economy and the real economy closer together. 

We can’t ignore the externalities of business any longer. People elimination is one of the challenging externalities that is a short-term lever executive in our industry seem to see as the inevitable answer to competitive pressures and new technologies (RPA, AI). 

The Bottom Line - Taking social responsibility seriously is a critical and foundational aspect of doing business anno 2017

Only ten years ago, when I was doing research about investment preferences of pension fund beneficiaries and their ability to influence pension fund investment policy, corporate social responsibility and socially responsible investing were a theoretic discussion, often painted as the domain of idealistic, money-hating tree huggers. Not anymore. Since the 2008 financial crisis, everyone understands CSR is a real thing, a source of durable value creation, competitive advantage and not a fad you only use as window dressing. CSR has come a long way since. It’s time for service providers and buyers, along with governments, to come up with credible policies to make sure talent is up for the new tasks at hand, to truly augment people with the new technologies instead of using this as an excuse for the next round of layoffs.

Posted in: Global Workforce and Talent

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Why have so many sourcing advisors failed with automation?

June 24, 2017 | Phil Fersht

Remember when sourcing advisors has become the "new analysts" and dominated so many outsourcing discussions?  Remember when it was the norm for clients to bring in the sourcing specialists whenever they needed a deal done, not only to get a good price, but also to make sure they selected the right partner and had a strategic view of the future?  Remember when most advisors were not only contract experts, they were also strategists, researchers, sounding boards and respected brands you could hang your hat on... Just look at our 2011 study when advisors lorded the influence over everyone bar direct peer feedback:

Fast forward to today, with all the sourcing advisors doubling-down in RPA to compensate for the drying up outsourcing deals and confidently hoping their outsourcing clients will immediately turn to them to help them grapple with the new outsourcing-cum-automation model.  Surely their ability to craft deals for clients will put them in pole position to take their clients down the RPA path...

Let's visit our brand new (still-in-the-field) study on the 2017 State of Automation, and it's telling us a very different story when we spoke with 56 enterprises actually deploying RPA:

Less than half the RPA buyers view either consultants of sourcing advisors as influential in their automation sourcing.  Even conferences are impacting automation buyers more.

So what's gone so wrong with advisors in automation?

Credibility. Suddenly many advisors who were previously hawking their deep understanding of HCL versus TCS's FTE rate cards are now suddenly adding their names to white papers on automation and trying to insert themselves into serious client conversations about said topic.  It's just not credible.

Smarter clients.  The swirl of information over social channels is so intense these days that most clients' knowledge isn't that far behind the experts.  In many cases, you'll learn more about RPA talking with a client in beta mode than an advisor or analyst trying to impress you at

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Posted in: Outsourcing AdvisorsRobotic Process Automation

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A third of enterprises are making significant investments in RPA

June 22, 2017 | Phil Fersht

Tired of the RPA hyperbole?  Well, you'd better get used to it continuing, as key industries have already made significant short-medium term commitments:

Our 2017 State of Operations and Outsourcing study with KPMG, covering 454 major enterprises, shows the hi-tech and financial services industries leading the way with, respectively, 53% and 44%  already making significant investments in RPA over the next couple

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Posted in: HfS Surveys: All our Survey PostsRobotic Process Automation2017 State of Industry Study

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Off-Shore-Based Service Providers Look to Develop “Meaningful” Presence in the U.S.

June 22, 2017 | Barbra McGann

The pendulum is swinging back. Over the past year, we’ve seen the increasing focus from India-based service providers to invest in building on-shore presence and capability in the U.S.  While spurred on by H-1B visa limitations and in-flight policies regarding minimum wage and the politics of “protectionism,” the long and short of it is that the U.S. citizens should benefit from local investments. U.S. governments and economic development entities are offering incentives for partnering with these service providers as they seek out “hubs” central to current and potential clients. Two recent examples are Indianapolis, Indiana with Infosys and Jacksonville, Florida with Genpact, where the cities offer tax incentives and colleges and universities can provide a talent pool.

It used to be “too expensive” for service providers to set up on-shore service delivery centers, but with the increasingly integrated and intelligent use of robotic process automation and cognitive computing and the motivation of politics and protectionism, this argument is fading. What is also relevant is when the partnership changes focus from outsourcing a task or point solution such as “collections” to business outcomes such as providing a better patient experience and increasing upfront payment (thereby reducing the need for collections), the service provider needs to be more integrated into the end-to-end process and business operation. That means having a local presence and interaction to provide relevance and create meaning and insight. (See “Recasting the patient billing experience” as an example). 

Our research (see Exhibit) shows the there is a significant drop across the board in the move to “offshore” business and IT work – finance and accounting and HR, in particular.  Case in point, we recently heard from a client about how Sutherland helped set up and recruit into a local service center for F&A services in a matter of a few months for a company that was separating from its parent.

Exhibit: Changing use of offshoring – shared services and outsourcing

 

Source: HfS Research in Conjunction with KPMG, “State of Operations and Outsourcing 2017”  Sample: n=454 Enterprise Buyers 

Click to enlarge

How service providers are expanding local, U.S.-based presence

Investments by service providers in having short- and long-term U.S-based capability for clients include local service delivery centers and increasing co-location delivery teams as well as work-from-home options; education support through curriculum development in local colleges and universities as well as programs for K-12 to “entice” and enable interest in STEM (e.g., code.org and Girls Who Code) to create the workforce of the future; and transitioning workforces from clients to their own organizations.

Examples include:  

  • Genpact: In July, Genpact will add to its network of 12 U.S.-based service support and delivery centers by opening one in Jacksonville, Florida. This one will focus first on mortgage service support with processing, underwriting, and closing services for residential mortgage loans for a leading financial services institution 
  • Infosys: A new entry into this discussion, Infosys has far outstripped other service providers in pursuing H-1B visas to date and is now refocusing on building local presence and brand recognition. Infosys intends to develop four locations in the U.S., centered in “client clusters” and focused on particular capability areas such as artificial intelligence, user experience, and enterprise cloud. Its approach is to partner with local colleges and universities and offer incentives such as investing in student tuition and curriculum development. Infosys is also preparing for more long-term needs by looking at ways to entice a broader interest in STEM. The first partnership in this effort is in Indianapolis, Indiana, the heart of the U.S.
  • Cognizant: Its recent acquisition of Health Care Services Corporation’s TMG Group adds Medicaid and Medicare support in offices in Texas and Pennsylvania. This move provides its clients access to more local resources – people with knowledge and depth in government health as well as infrastructure.

Bottom line: Indian-based service providers have been building near-shore and onshore presence for a few years now, but it takes on new meaning and significance now as the context changes – politics, the impact of technology, objectives for partnering, and changing priorities around the skill sets that are needed. As a service buyer or government, university or economic development organization, be creative and also take a long-term view as to how these service providers can funnel the investments they are increasingly willing to take to have value locally to grow their businesses.   

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Microsoft Dynamics Gets Saas-y

June 20, 2017 | Khalda De Souza

HfS has just published its first HFS Blueprint Report: Microsoft Dynamics Services 2017. The report looks at the capabilities and vision of nine global Microsoft Dynamics service providers. As this report forms part of HfS’ SaaS services research, a small weighting was applied to the service provider’s specific experience in deploying the cloud products.

 

What are the Microsoft Dynamics cloud products?

That’s not an easy question to answer! We have traditionally looked at the services market for stand-alone SaaS products (Workday, Salesforce and SuccessFactors). The Microsoft Dynamics ERP and CRM products are different and can be deployed on-premise, on a private cloud, on a public cloud, or with a hybrid model.  Many buyers love this because it gives them maximum flexibility and control which is future proof.

The majority of Microsoft Dynamics deployments have been on-premise, especially for the ERP products, which have also been more popular with mid-market buyers. The CRM cloud product, CRM Online, has been more popular in recent years with mid-sized and large enterprises alike. The new Dynamics 365 platform, launched in Q4 2016, delivers a combination of Microsoft Dynamics ERP, CRM, productivity, and other applications on the cloud. We expect this platform to be a key growth driver for the adoption of cloud in this market over the next few years.

So, which service providers stood out in this Blueprint?

We included leading, global Microsoft Dynamics service providers. They all have good experiences and have made impressive investments to grow this aspect of their service practice. All of the service providers were positioned either in the Winner’s Circle or High Performers category. Notable performances from the different providers include:

  • DXC Technology, which impressed with its overall experience in deploying Microsoft Dynamics.
  • Those with the best cloud experience in engagements were Accenture/Avanade, Capgemini, HCL (PowerObjects), IBM and KPMG.
  • Accenture/Avanade and KPMG also impressed with their investments in consultative tools and technologies.
  • DXC Technology, IBM, Infosys, Wipro and TCS particularly stood out for their industry sector tools investments.

So, where do we expect this market to be headed in the next few years?

As the Dynamics 365 platform gains momentum, we expect increased service opportunities across our Value Chain of consulting, implementation, management and optimization services. One of the biggest challenges service providers have is keeping up-to-date with Microsoft’s product developments and training consultants to meet increasing buyer demand. As with all SaaS service markets, key differentiators lie in the ability to hire, motivate and retain good talent to maintain client project continuity.  Buyers are becoming increasingly selective of the specific team members on projects.  Look out for notes detailing recommendations for service providers and buyers on the HfS research site soon.

Posted in: SaaS

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We are in the People Elimination business. How did it get this bad, and can we change course? (Rant warning)

June 18, 2017 | Phil Fersht

Talent is still the most precious asset firms have and it needs to be nurtured as the real proponent of growth and success, not merely the fancy technologies that can automate workflows. Our technology and business services industry desperately needs a mindset shift - and one that requires a longer term view, than the next quarterly Wall St announcement. Whilst we are not the only guilty party here, our technology and business services industry is still rooted firmly in people capability, much more than technology and commodity products, hence the desperate need to correct course and avoid circling the drain...

I was interviewing with the Delhi branch of NPR the other day on the layoff paranoia engulfing the Indian IT industry, and it dawned on me just how inhuman our business has become. These are normal people who still view the world as one where employers have responsibilities to their employees, where people still care about the welfare of others, when you got up in the morning and went to a job that had a purpose and a future.

The poor interviewers simply couldn’t comprehend why major employers enjoying ~20% profit margins and continual 5-10% growth were so focused on making massive staff reductions.  “Don’t these firms have a responsibility to their employees, Phil?” was the question. “Of course they don’t, it’s all about their shareholders” was my immediate hair-trigger response.  Ugh – I suddenly felt ashamed of the business of which I was part. 

We’re in the business of increasing profits for investors, not creating new business value from people

Is our sole purpose now simply to eliminate people? We spend a couple of decades displacing "expensive" workers because we could find less expensive able ones to do the job. Now we’re getting rid of them altogether just to keep the Buffetts and Elliotts happy? And why are we literally obsessing with labels to describe what we do:  Digital, Machine Learning, Intelligent Operations, Robotic Process Automation… or my favorite “Digital Labor”. 

Let’s be honest, what all these things really signify is “how to get work down without the need for people”. And how can you call something “Digital Labor” when the labor is no more… unless we start redefining RPA recording loops based on optical recognition software as “labor”. Maybe we need to revisit what labor actually is, according to Merriam-Webster:

Definition of Labor (Merriam-Webster): 

"1) The human activity that provides the goods or services in an economy; 

2) The services performed by workers for wages as distinguished from those rendered by entrepreneurs for profits."

Correct me if I am completely losing my mind here, but we’re no longer in the business of promoting human activity to stimulate economies… we’re in the business of increasing profits for investors.  Is there any way to dig ourselves out of this hole, or are we on an inexorable nosedive to the lowest common denominator of creating and promoting business operations that no longer require people?

As technology and operations professionals, we must rediscover our purpose or we’re just promoting the end of labor

I wish I had a silver bullet solution to help us take this dramatic U-turn, but sadly, all I can offer are some ideas on how we can re-humanize what we do:

Find meaningful work for our people to do - not just fire them. In the past, when most businesses had some excess staff capacity, there were always useful things for them to do – such as consulting and outsourcing firms deploying their benched consultants to work gratis with existing clients on special projects that could eventually lead to future business – or just

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

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Time to hangout with the real robo-bosses at the FORA Council this September

June 17, 2017 | Phil Fersht

When an industry is enduring a secular shift that is literally redefining how we do work, it's pretty important to get some real, unfettered dialog going among all the key stakeholders this impacts. We need to break free from the glitzy paid-for sales presentations, robot keyrings, stress balls, nasty logo-ed leather notepads and greedy events firms vying for a quick buck from vendors eager to part with cash to promote themselves to all their competitors.

That's why we're assembling 100 of the industry's finest leaders in a single room for a whole afternoon to thrash out the mandate for the future of operations in the robotic age for our inaugural FORA council session in Chicago, 19th September. And we promise no sponsors, stress balls or bad white papers to take away...

Here's just a sample of the industry robo dignitaries who've already committed:

  • Alastair Bathgate, CEO, Blue Prism
  • Chetan Dube, CEO, IPsoft
  • Chip Wagner, President, Emerging Business Services, ISG
  • Cliff Justice, Partner, US Leader, Cognitive Automation and Digital Labor, KPMG
  • David Poole, CEO, Symphony Ventures
  • Daniel Dines, CEO and Founder at UiPath
  • Jesus Mantas, Managing Partner and General Manager, IBM Business Consulting, IBM US
  • Lee Coulter, Chair for the IEEE Working Group on Standards in Intelligent Process Automation
  • Dr. Mary C. Lacity, Curators' Distinguished Professor of Information Systems, UMSL, and Visiting Scholar MIT
  • Max Yankelevich, CEO, WorkFusion
  • Mihir Shukla, CEO, Automation Anywhere
  • Peter Lowes, Partner, and Head of Robotics & Cognitive Automation, Deloitte US
  • Shantanu Ghosh, SVP, CFO Services and Consulting, Genpact
  • Thomas Torlone, U.S. Leader of Enterprise Business Services, PwC
  • Tijl Vuyk, CEO and Founder, Redwood Software
  • Weston Jones, Global RPA Leader, EY

We also have leaders of cognitive and automation initiatives from the following buyside firms already signed up to get stuck into the debate:

So let's cut to the chase - it's time to have the real, hard conversation about where we really are as an industry. Why aren't those 40% cost savings happening, each time someone slams in some software and hopes it somehow eliminates manual labor because they can access a bot library? In fact, why are a third of RPA pilots just left hanging with no result? Yes, people, it's

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Posted in: Robotic Process Automation

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HCSC’s Sale of TMG Health to Cognizant Shows A Move to Focus – and Partner– for Better Outcomes

June 16, 2017 | Barbra McGann

Earlier this week, Cognizant announced its intention to expand its footprint to support U.S. Government health operations through the agreement to acquire the TMG Health subsidiary of Health Care Services Corporation (HCSC).  On the flip side of that announcement, HCSC has carved out its Government health support function to be run by a partner – Cognizant. HCSC can benefit from Cognizant’s dedicated, prioritized, and leveraged (cross-client) resources to manage the operations services. However, to impact the health, care, and financial outcomes of its healthcare consumer base, HCSC will need to partner with Cognizant in a way that creates the OneOffice™ – a seamless flow of data, insights, and infrastructure for the front, middle, and back office. 

TMG Health’s relationship with HCSC started back in 2005 when HCSC selected it to provide BPO services in support of its entry into the Medicare Advantage market. At the time, TMG Health provided some measure of enrollment, eligibility, claims, and billing support to a total client count of 30 plans covering 2.8 million lives. In 2008, HCSC acquired TMG Health for $100m, tucking in the BPO provider as a subsidiary. TMG Health has since added support for Medicare and Medicaid claims processing and member services and has local resources in Pennsylvania and Texas – for 32 health plans (+2 since 2009) and more than 4.3 million lives. TMG Health has not really grown its portfolio of clients although the footprint of services has expanded over time.  And public health programs continue to grow – in numbers and complexity as the industry moves to greater coverage and value-based care. The changes in the healthcare market driven by consumerism and compliance are driving healthcare plans to “rethink” their business and operations strategy.  

By exiting the “back office business,” HCSC can focus its investment and resources on becoming a more consumer-oriented company.

While retaining a partnership with Cognizant for its support/back office services, we expect HCSC to focus on becoming more consumer-oriented; to channel its resources to becoming insightful, tech-enabled, and overall “savvy” to impact health outcomes for its constituents. In the meantime, it can rely on Cognizant to provide a steady and increasingly optimized rules-based foundation. We expect Cognizant to tap into the Medicare/Medicaid COE it told us about in our last Healthcare Operations Blueprint research. The consolidation of its subject matter expertise, IP, and tools in the COE is to help manage the tricky business of complying with government policies and the continued growth of Medicare, Medicaid, Medicaid Advantage, and Dual-Eligible consumers – providing support for eligibility, enrollment, billing, claims, and applying its solutions around quality and reporting (e.g., STARServe). Cognizant has the right experience plus industrialization and scale and has the Trizetto and RPA capabilities to drive increased efficiencies and free up resources to support new growth in the Government Health operations business.

The Bottom-line: HCSC and Cognizant will need to partner to keep – or establish – integration between front and back office to impact health, care, and medical outcomes.

One place this arrangement could break down is if the back office support that Cognizant provides is not integrated with the front- and middle-office of HCSC (and its other clients). In order to impact health, care, financial, and quality outcomes, healthcare payers need to be healthcare-consumer oriented – understand the health, financial, economic, and social determinants of their constituency. A lot of that data is part of those back office systems and processes, so HCSC and Cognizant will need to be partners in defining workflows of the future that will support an insightful, consumer-oriented business that complies with government standards and also enables HCSC to better manage the health, care, medical, and financial outcomes of its public health base.

Posted in: Healthcare and Outsourcing

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Look into my eyes – I can see the future.

June 14, 2017 | Jamie Snowdon

A question I get asked a lot is what do I think about the future of outsourcing? In this case in a few hundred words. I thought I’d share, but forgive me if it becomes evangelical:

The future of outsourcing is linked very strongly to the future of technology and its use in the enterprise – often it’s very hard to distinguish between the trends of these two things. Essentially outsourcing is the commercial arrangement between technology (and business services) organizations and their customers – it’s how you put a price on an operational service between the two.

The big shift will be the level at which you quantify an amount of service. The most popular way to quantify outsourcing arrangements has been by the number of people, per FTE models. But over time these transformed into a hybrid of FTE, transaction/consumption based and the slightly misleading outcome based pricing – which was often just an emphasis shift toward an achievement or variant of the first two, essentially the same but with a stricter KPI focused on a specific goal.

Cloud and as-a-service types of the contract have made consumption/transaction based pricing the norm for IT and IT services – we expect this to pretty much remain. The twist in its tail will be the unit being consumed will not be an IT measure. The unit of consumption will start to be linked more directly to a business metric, not an outcome. So, for example, all of the costs associated with hiring a bicycle from a city-wide hire scheme could be paid for in bike hire units – the provider only gets paid when a bike is hired – irrespective of the technology being consumed. This is a simple example – but as we see better use of automation and AI within IT and within transaction management, which reduces idle costs and we will reach a point where this type of deal has little risk. The cost of keeping the IT running could be negligible – this won’t be risk/reward in the traditional sense as the IT firm carries very little risk if the client doesn’t achieve the desired volume. The build and run deal, where the client doesn’t pay for the implementation will require the same type of calculation as current build and run deals – but the measure used for payback will be different.

Additionally, as these models develop we expect the level of risk within the contract to be better understood. This means the risk equation can be better calculated into the mix as analytics dictate the acceptable level of risk and the appropriate price points.

We have quantified this shift to more consumption-based services in the chart below – if you look at the proportion of IT services contracts that will be as-a-service by 2021, it is jumping from its current 19% level to almost 40% by 2021. We define AaS is a turnkey managed service solution based on a standardized platform delivered via the Internet – uniform standards across clients with relatively low levels of customization (<25%) – not lift and shift, but adopt, change and adapt. The price of the service is directly proportional to a transaction or measure of consumption. We also include consulting and professional services that advise upon and wrap around this type of service.

 

Another shift, particularly in IT outsourcing will be the merging of applications and infrastructure – which we have already seen to a certain degree. Cloud and DevOps have helped to break the silos between applications and infrastructure intrinsically linking these two pieces – making separate outsourcing deals for these two parts of an organization increasingly unlikely as the applications and infrastructure continue to merge. This will be particularly true in industries where applications are developed for customers, and the infrastructure requirements are linked to the success of the application. The adoption of the app dictates the scale of the infrastructure – which increasingly means monolithic, inflexible infrastructure deals fade away. Replaced by more application focused deals including the infrastructure paid for based on consumption linked to business use.

Bottom line – outsourcing will continue to exist, but the variable won’t be as directly linked to the cost of people. It will use technology to form new blocks of consumption.

Outsourcing is one of the commercial wrappers for consuming technology and business services. As these services become more software and platform based, the commercial models will become more As-a-Service. So consumption based models will be and already are becoming the norm. However, the most critical shift in will be the commercial parameters changing to fit the technology being outsourced. Automation and AI technologies will be used to allow outsourced IT (and business services) to split into new blocks of consumption, more linked to business requirements. With AI even helping to match risk levels to specific price points. True As-a-Service outcome pricing is born. 

Posted in: IT Outsourcing / IT ServicesThe As-a-Service Economy

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It'll be a very windy city this September... so don't miss the flagship HfS Digital OneOffice Summit

June 14, 2017 | Phil Fersht

The windy city will get extremely blustery this September 19-21, when HfS stages the inaugural FORA Council session, immediately followed by our annual HfS Summit "The Digital OneOffice: Redefining How We Get Work Done"

Friends,

Someone just described going to an HfS event as the whole industry being bludgeoned with a blunt instrument... how dare they? Yes, friends, it's nearing the time for the next, immense iteration of that HfS summit, where we're cementing together the biggest, boldest and

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Posted in: Digital OneOffice

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America Last: Why Trump’s running away from ‘Paris’ is so foolish

June 14, 2017 | Derk Erbé

I have refrained from political commentary since Trump took office because so much has been unclear. Not that his stated views during his campaign that climate change is a Chinese hoax and climate rules are designed to hurt American businesses or his appointment of staunch climate change-deniers to the EPA and Department of Energy, promised anything good. But now the long awaited, reality TV decision about the Paris Climate Agreement showed the real Donald Trump meant what was really going to do what he promised: The United States will “withdraw from the Paris Climate Accord,” “seizing all implementations right away."

Trump frames the climate change fight, not as one of our world’s biggest challenges but an economic zero-sum game of the US against the rest of the world. In his speech, Trump tried to tie leaving ‘Paris’ to the protection of the American people. This is a narrative weaned from reality.

Here are some sobering facts to put Trump’s decision in context

  1. Withdrawing from Paris doesn’t impact much in the medium term, regarding real climate policy and action. Withdrawing from the agreement will take a full four-year period. Ironically the US can only officially withdraw the day after the 2020 presidential election.
  2. Paris is a voluntary agreement, of which many critics claim lacks teeth. Every nation sets its own goals. Obama pledged to reduce carbon emissions by 26 percent during the 2005 – 2025 timeframe. The US could have simply adjusted its ambitions and goals if it felt Obama’s goals are unattainable. Trump has already gutted the Clean Power Plan, an essential part of Obama’s efforts to reduce emissions by fossil fuel burning electricity plants and increase the use of renewable energy and energy conservation.
  3. Many “legacy” energy jobs are already gone. Coal jobs won’t come back, nor will the jobs in Oil & Gas that were lost in the downturn over the last three years. Coal has lost its ground and competitive edge to natural gas, solar and wind. Mostly for competitive pricing reasons, not policy reasons. Coal companies acknowledge this, saying they don’t see a future for coal and jobs will continue to diminish. The production of oil and gas has rebounded from the slump of 2014-2016, but jobs have not. This is due to new efficiencies in the field, primarily driven by automation.
  4. The new jobs re in clean energy and Paris promotes their creation. The jobs Trump is so eager to create are not in the fossil fuel industries but in clean energy. The solar industry is the biggest engine of job creation in America. In 2016, one in fifty new jobs was in the solar industry. Grid modernization driven by renewable energy has created 100,000 new jobs in 2016, according to the Department of Energy. The Paris Agreement created a lot of momentum for the adoption of clean energy. For the first time in history, the world united to curb emissions and set a framework to act against climate change. The Paris Agreement provides a big push for the energy transition that is underway across the globe, a transition that some experts expect to create a ten-trillion-dollar economy for renewable energy and is already creating large numbers of blue-collar manufacturing, installation and service jobs in the US.
  5. Any deal on climate change is terminal while Trump is in power. There won’t be a new deal of a re-negotiation of the current agreement, as Trump alluded to in his Rose Garden spectacle.

Will it change US progress in the inevitable move to renewable energy?

The simple answer is no. Besides the damaging effects of Trump’s actions at the federal level, for businesses, states, and cities, the only common sense course of action is to continue down the path of renewable energy.  Directly after Trump’s decision, California, Washington, New York, Connecticut, Massachusetts, Rhode Island, Hawaii, Oregon, Vermont, Minnesota, Delaware, Virginia and Puerto Rico – representing roughly 35% of the US economy – formed the United States Climate Alliance, vowing to uphold the Paris Climate agreement within their borders. Eleven other states, including Maryland, Ohio, North Carolina and Illinois, have also supported the Climate Agreement.

The historic Paris Climate Agreement has already been ratified by most parties to the treaty and was signed by all countries except Nicaragua, who find the agreement not far-reaching and aggressive enough, and Syria, for obvious reasons. The Paris agreement is an agreement with intentions, not with automatic actions. The interpretation and subsequent actions heavily rely on industry and civil society. And they are now further encouraged to take action. While the Trump administration is doing everything to shut down forward-looking energy policy and climate change policy on a federal level, such as overhauling Obama’s Clean Power Plan, on a state and city level, the majority is acting; investing in renewable energy resources, adhering to the Paris Agreement guidelines. Since Trump’s announcement, governors, mayors and business leaders have spoken out and showed their intentions to stick with ‘Paris.' California’s governor flew to China to sign an agreement with the Chinese to collaborate on climate and clean tech, emphasizing the resolve from states to act and move forward.

A symbolic policy shift with diplomatic and reputational impact first and foremost

The announcement to withdraw from ‘Paris’ is a symbolic move more than anything. And it is symbolic for all the wrong reasons 

  • The backlash is starting to show; there is a negative impact on the reputation of the US – the rest of the world effectively sees Trump’s move as the withdrawal of the US from the world stage. The diplomatic backlash will be felt beyond the climate realm.
  • Impact on American businesses - US businesses fear they will be at a disadvantage seizing the opportunities in the renewable energy market, while they, until Trump’s decision, where well-positioned to lead in the global clean energy market.
  • It highlights the missed opportunity to jump on the renewable energy train. Trump is missing a great opportunity to make a concerted effort on infrastructure and the job creation in the renewable energy market. Last year, one in fifty new jobs in the US was created by the solar industry. Think about that. And only 50.000 people work in coal. Pick your battles, Mr. Trump. Instead of trying to save a small number of coal mining jobs with the red herring of ‘clean coal’ and withdrawing from Paris, focus on re-training coal miners for the manufacturing, installation and service jobs in the wind and solar industry.

The bottom-line: Trump will be gone when Mar-a-Lago is swallowed by the sea

As Oscar Wilde famously said: “With age comes wisdom, but sometimes age comes alone.” Trump’s announcement was short-sighted and removed from reality and science, catering to a small fraction of people with extremist and ancient views on climate and energy 

The good news is that the clean energy transition is well underway and won’t be stopped by the Trump administration, not in the US and certainly not abroad. But, as many critics of the climate agreement emphasize, it might be too little too late. The Paris deal was a strong message from all nations, coming together in the endorsement of curbing global warming and the impacts of climate change, but the climate fight needs more ambitious goals and most importantly actions. The world can’t wait any longer and play an economically motivated game of chicken, with the well-being of our planet at stake. 

Posted in: Energy

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