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Category Archives: HfS Surveys: Cloud Business Services

Digitally modernizing legacy businesses with your eyes wide open: Hatch a plan to do it profitably

July 14, 2016 | Oliver Marks

We live in times where there is a lot of perceived fast-moving change, but what’s the reality for most traditional businesses? Let’s be honest, technology is changing a lot faster than humans, so how can we be more realistic and practical about looking ahead?

Much focus has been placed on shiny new clean sheet, ‘born digital’ companies such as Uber, AirBnB and Tesla - well funded ‘full stack’ architecture business entities, which have a major marketing messaging advantage in being new, futuristic and being seen to challenge the status quo of how things have been done.

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Posted in: Digital TransformationHfS Surveys: Cloud Business ServicesIT Outsourcing / IT Services



Want to get smart about sourcing for Cloud?

September 14, 2011 | Phil Fersht
Getting Smart About Sourcing for Cloud

(From left-to-right) Report authors Phil Fersht & Robert McNeill (HfS), Kenneth Adler & Akiba Stern (Loeb & Loeb)

We just released a brand new report entitled “Getting Smart About Sourcing for Cloud”.  Simply-put, we kinda got the impression that no-one had written a concise document that outlines what on earth is Cloud Computing, why we should care, what hundreds of IT and business leaders think about its impact, what the service providers are developing and offering in the space, and - once you know all that - how you need to think about contracting and executing for it.

So we called up some legal-eagles who are knee-deep in this stuff at Loeb & Loeb, and co-wrote this lovely little report for the benefit of the entire sourcing industry - whether you have interest in buying, advising or servicing Cloud services, this really is a must read for you!

Simply enter your details here and a little pdf will come sailing its way to your inbox...

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCloud Computing



"Cloud BPO"? C'mon... stop talking cobblers

February 13, 2011 | Phil Fersht

Is it just me, or is it just really irritating when people start using jargon that's a load of cobblers?

One of the things I have loved about BPO is that the IT evangelists have always steered clear of the topic by a county-mile, because they really don't understand it.

When I was an analyst covering BPO in the traditional research world, I was fortunate enough to be left alone to get on with my craft, because there were very few analysts who could tackle anything that wasn't centered on a piece of software, hardware or communications equipment.  To them, BPO is the unsexy grunt work that has to support uncool things like actual business processes.

Then along comes the Cloud, and a few ambitious souls from the IT world have dared to mention that mysterious "BPO" word in tandem with their wonderful, nebulous, ill-defined, confusing world of Cloud Computing. Yes, some IT knuckleheads are starting to use phrases like "Cloud BPO players" and "FAO in the Cloud", or just plain "Our Cloud BPO strategy".  They've been dying to use the BPO term for years - and now they've seized their chance.  Oh my.

Sadly for them, "Cloud BPO" is, simply put, really a load of nonsense in today's environment.  The core fulcrum processes of BPO are the toughest to move into the Cloud, and only the small-to-medium business sector is going to enjoy any modicum of success of moving genuine "BPO" processes, such as finance and HR, into the Cloud in the near-term.  And this is mainly with very standardized and straightforward Internet-hosted apps (i.e. simple interface, no integration requirements), as opposed to genuine Cloud-enabled ERP apps that leverage IaaS/PaaS/SaaS architecture.

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Posted in: Business Process Outsourcing (BPO)Cloud ComputingConfusing Outsourcing Information



Learn what 1,000 of your colleagues really think about Cloud Business Services

January 24, 2011 | Phil Fersht

Join us for a Webinar on February 17

HfS Research, in partnership with the Outsourcing Unit of the London School of Economics, is hosting a webinar, sponsored by Accenture, featuring the key findings from the groundbreaking study of Cloud Business Services.

Davis, Wilcocks, Fersht and Harris

Cloudy with a chance of Davis, Willcocks, Fersht and Harris

Join HfS Research Founder and CEO Phil Fersht, HfS Managing Director Euan Davis, Professor Leslie Willcocks, Professor for Work, Technology and Globalization at London School of Economics, and Managing Director of Cloud Services at Accenture Jimmy Harris.

The issues on the table include:

  • The contrasting views and intentions of business and IT executives towards Cloud Business Services
  • The impact of Cloud on work culture and delivering competitive advantage
  • How both business and IT executives need to tool-up and prepare to adopt Cloud Business Services
  • The crucial role service providers need to play as Cloud Business enablers for today’s organizations

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    Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCloud Computing



Cloud is changing the future of outsourcing: 1000 organizations have spoken

December 19, 2010 | Phil Fersht

HfS Research and The Outsourcing Unit at the London School of Economics have surveyed 1053 organizations on the future of Cloud Business Services

Today's CIO is under constant pressure to drive out cost, without impacting business performance. And if tomorrow's CIO can deliver real business value beyond smart cost-management, then he or she will succeed - and should remain gainfully employed after they've stripped out whatever operational cost they can.

Our study blatantly shows CIOs are caught up in an aggressive cycle of providing services to the business that are cheaper to run, faster to access, and more relevant to driving productivity and growth. Gone are the days when CIOs demanded their shareholders underpin massive technology investments in ERP and infrastructure.  Those investments have been made, and most CEOs intend never again to make capital outlays of that ilk on technology.

Enter the Cloud. This is driving a new inflection point in the provisioning of business services, that goes far beyond straightforward outsourcing.

So why is Cloud the future?

Simply-put, many of today's large businesses have already squeezed much of the obvious cost out of their IT departments by having their lower-end support and development needs replaced or supplemented with offshore-based services, while offloading the costly burden of clunky, unnecessary IT hardware to third party IT infrastructure service providers.

For many large business that have maximized their cost-savings potential with outsourcing, Cloud computing gives CEOs hope that another inflection point is upon us, that will not only take out that next 20-30% of cost, but also empower their business functions to access best-in-class services.  The potential to slim down the IT department to a "CIO and a crack team of IT service managers" is becoming very real for the sourcing-savvy organization.  However, the challenge for the large organization to move to the Cloud is far more cumbersome than most smaller business, which we discussed so vibrantly here.

For the small-to-medum business, Cloud is already pretty much here - and has been for a while.  You can access nearly all packaged applications in the Cloud and have a service provider deliver you the services you need via a shared-service utility model.  You already have your Ultimates, ADPs, Netsuites, SFDCs and the like processing your pay checks, doing your benefits enrollments, managing your customer and employee data, hosting your accounts etc. in the Cloud - and you can choose how many staff to keep inhouse to service those functions for you, versus having them provisioned by third-party service providers.

Unfortunately, for many of the large businesses using complex ERP apps that are wrenched into all sorts of back-end databases, they are faced with some significant capital investments to find their way to a Cloud-ready environment.  And it simply doesn't suit many of the Cloud-unfriendly software providers to have their clients move to a model that will save them money.  The onus is moving to the service providers to build services that can take organizations on a journey of business change and technology change, which we discuss further here.

Our study shows the momentum towards the Cloud is well under way

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Posted in: Buyers' Sourcing Best PracticesCloud ComputingHfS Surveys: All our Survey Posts



The Industry Speaks about Cloud, Part IV: Business leaders demand business transformation support - can providers gear-up to help?

December 07, 2010 | Phil Fersht

Business leaders want to accelerate to Cloud and half of them expect to rely heavily on third party expertise to help them with governance, change management and business process transformation.

HfS Research and The Outsourcing Unit at the London School of Economics have surveyed 1053 organizations on the future of Cloud Business Services

With both Business and IT decision-makers expecting to allocate 30% of their IT budgets to the Cloud over the next five years, Cloud is going to demand new IT and business operating models and radically different sourcing mind-sets from CIOs and business function leaders.

What's more, it's creating a major headache for many of today's service providers, which are enjoying comfortable growth with their ERP and software maintenance and development work.  Which service providers truly have the appetite to invest in the consultative expertise and the software development skills to be truly Cloud-capable for their clients, versus those which simply want to shut their eyes to all this and plug away with the same-old IT support work?

Ultimately, Cloud will drive disruptive change in the way services are both received and delivered, the pivotal challenge being whether those who resist this radical shift can ultimately survive.

It's heady stuff, but this is the seismic finding from our  Cloud Business Services study, conducted in conjunction with the Outsourcing Unit at the London School of Economics. Essentially, business users want to accelerate to Cloud Business Services, while IT wants to mitigate its many risks. However, we reach a critical impasse with both business and IT looking for external support to make their move to Cloud Business Services a reality…and the different type of support both sides want point towards a profound reorganization around Cloud…

Business execs expect to rely much more heavily on external governance, compliance and business transformation expertise

Click to enlarge

The bottom line: Cloud Business Services are going to create a revolution in how organizations provision IT and business services. Business leaders are looking to transform many core businesses processes around Cloud, and show serious intent to make it happen—40% revealed to us how they want support transforming IT and business relationships, and want change management support to make the transformed organization effective. But the eye-opening finding is how critical business leaders view governance capability in achieving a Cloud operating end-state—over 50% of business respondents see governance as critical compared with only 36% of their IT counterparts .

At HfS, we believe we are seeing a new mind-set emerge as firms start to rethink their IT operating models around “digital” governance structures to support the move to Cloud Business Services. Why? Because they expect to source Cloud into the delivery mix and will want their internal IT teams to turn themselves into Service Integrators. Cloud Business Services are not hype: they are going to revolutionize IT delivery and business performance.  Vineet correctly pointed out (in his own flamboyant way), that the industry has a long way to go with regards to Cloud-enabling many critical business applications and developing more realistic cost-models, but we're definitely moving past that hype phase in terms of preparing for disruptive change.

Posted in: Buyers' Sourcing Best PracticesCloud ComputingHfS Surveys: All our Survey Posts



The Industry Speaks about Cloud, Part III: business and IT finally agree - IT must tool-up to enable cloud business services

November 29, 2010 | Phil Fersht

Savvy CIOs are developing themselves into Cloud-enablers by honing their sourcing and service integration skills. Our Cloud Business Services study, conducted in conjunction with the Outsourcing Unit at the London School of Economics, contrasts many differing views and expectations from business and IT executives about Cloud business services... however, both sides do agree on one thing — the crucial enablement role that IT executives must adopt  in order to provision Cloud business services.

While business execs are more gung-ho on Cloud than their risk-averse IT counterparts, both sides agree on who should enable this - it's going to be the IT function. The survey reveals that 42 per-cent of business respondents expect to rely extentively on their own in-house IT function to implement a move to the Cloud:

Click to enlarge

The bottom-line:  Cloud business services creates a massive opportunity for the IT department to realign itself to the business

HfS sees the future of the inhouse IT function as being the conduit between the business  and the providers delivering Cloud business services.  The successful IT executives will be those who develop governance expertise in sourcing and service integration to make Cloud a reality.

Business stakeholders want Cloud, and they know smart CIOs can mitigate its risks.  However, HfS believes IT professionals must tool-up to deliver cloud to their business stakeholders, otherwise they risk a gap growing between business demand and IT supply. Tooling-up for the Cloud calls on CIOs to develop new internal skills and embracing  third-party expertise to accelerate the sourcing of Cloud services.  Security, compliance and integration are huge issues that predicate success with Cloud, as our survey will reveal when released later this week. Running due diligence on service providers is critical to ensure any potential cracks in service delivery do not cataclysmically impact performance.  Stay tuned for more...

Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCaptives and Shared Services Strategies



The Industry Speaks about Cloud, Part II: business execs fear its impact on work culture; IT execs doubt their ability to drive competitive advantage

November 11, 2010 | Phil Fersht

HfS Research and The Outsourcing Unit at the London School of Economics have surveyed 1053 organizations on the future of Cloud Business Service

The colossus Cloud Business Services study we just conducted, in conjunction with the Outsourcing Unit at the London School of Economics, has served up some contrasting concerns that business executives are having versus their IT counterparts:  Cloud's potential impact on work culture versus its impact on the value of the today's IT department.

Essentially, two-thirds of business executives have expressed concern over the impact Cloud business services could have on the speed by which they could be driven to operate in virtual environments.  Moreover, a similar number expressed concerns over Cloud impeding their ability to collaborate with other businesses.

Conversely, IT executives are hugely worried (80%) by the potential for Cloud providers to exploit customers, but contradict these fears by also worrying about competitors leveraging Cloud to steal competitive advantage from them:

The bottom-line: when the business execs look at Cloud, they sense a major cultural change in the way they work, while IT executives are terrified by the potential curtailment of their value  as the technology-enabler of core business processes.

The fact that the IT side of the house recognizes the competitive advantages Cloud can give business (see Part I), creates a massive challenge to the CIO today: how can their IT department become a vehicle for helping their organization find competitive value from Cloud. Because if the CIO fails to deliver this value, the business side will be forced to look at alternative avenues.  We'll talk about the business transformation implications of Cloud shortly.  Stay tuned for more...

Posted in: Buyers' Sourcing Best PracticesCloud ComputingHfS Surveys: All our Survey Posts



The Industry Speaks about Cloud, Part I: Business execs are buying-in to Cloud even more than their IT counterparts

November 02, 2010 | Phil Fersht

HfS Research and the London School of Economics have surveyed 1053 organizations on the future of Cloud Business Services

This week, we're beginning to unravel the colossus study we just ran with the London School of Economics delving into the future potential of Cloud Business Services.

We managed to receive 1053 participants across business buyers, IT buyers, advisors, providers and industry influencers - if anyone else in the industry has performed such as exhaustive study of Cloud business services, please enlighten us!   Thank you to all our loyal readers who completed the study, and our friends at SSON who helped engage their network.  A complimentary report of the study findings will be winging its way to you all very soon.

One of the unique angles of our study has been to contrast the views and intentions of the non-IT business community, and solely IT executives.  And - as we suspected - the dynamics driving the future direction of Cloud adoption within the business functions is going to come from the business function leaders who "get it".

Cloud Business Services are no longer hype - both business and IT executives are buying-into the value Cloud can bring to their jobs and their organizations. Let's examine further:

*The ability to access business applications quicker, faster, cheaper and in a virtual business environment are the major drivers - and it's the business side of the house which is even more engaged by the potential value than the IT-side.

*Most notably, half the business respondents seriously value the focus Cloud brings to transforming their business, as opposed to their IT.  Barely a third of IT respondents were as enthralled by this.

Does this mean that the real impetus behind future adoption of Cloud Business Services is going to come from business function leaders with heavy influence over IT spending for their function?  And what role will Cloud Business Services play in altering the make-up of today's outsourcing and integrated services engagements?

Stay tuned for Part 2, and Part 3... and probably Parts 4 and 5 as well...

Posted in: Buyers' Sourcing Best PracticesCloud ComputingHfS Surveys: All our Survey Posts