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Category Archives: Security and Risk

Budgets? We don’t need no stinking budgets! Or do we? An interview with Accenture’s Bill Phelps

June 29, 2016 | Fred McClimans

Earlier this year, HfS Research and Accenture surveyed over 200 cybersecurity professionals around the globe to better understand how enterprises are securing their digital assets and dealing with increasingly sophisticated, and all too frequent, cyber attacks.

I recently had the opportunity to sit down with Bill Phelps, Managing Director, Accenture Security, to discuss our report. Bill was one of my co-collaborators in this research effort, and I was curious to get his take on both the survey and its implications for the cybersecurity sector moving forward.

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Posted in: Security and Risk

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Welcome to my blog: In Digital We Trust?

June 27, 2016 | Fred McClimans

I don’t believe there is any digital business or consumer that can be 100 percent secure 100 percent of the time, unless they opt to abandon technology and live in an obsolete analog world. It’s as simple as that. 

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Posted in: Digital TransformationSecurity and Risk

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Can HPE + CSC dominate the digital underbelly, or has that ship sailed?

June 19, 2016 | Phil Fersht
Digital Underbelly

Just stare at that digital underbelly... there's a lot of work needed down there!

When the news broke last month about the second largest IT services merger of all time (after the 2008 HP-EDS whopper), the reaction among the services cognoscenti was - and has continued to be - one of confusion.  Big services mergers have just not done very well over the years. HP/EDS was a culture clash of immense proportions - and occurred right before the great recession, while other mergers, like Dell's acquisition of Perot, has resulted in the old Perot business being flipped over to NTT Data at a significant loss, and the Xerox/ACS merger has been shaken up and spun off and needs a major reinvention under new CEO Ashok Vemuri to get the company back on track.  Meanwhile, Capgemini and IGATE are still figuring out the best pieces of each other to mesh together, while not taking their eye off the ball, during the services industries' most cut-throat transition phase.

We heard HPE CEO, Meg Whitman, excitedly address the firm’s key clients and industry analysts at HP’s recent Discover event in Las Vegas, with an obsessive focus on “digital transformation” and the impending impact of “digital disruption”.  However, the real opportunity for HPE isn’t really in the design of digital business models for clients, it’s the enablement of them – it’s the provision of the agile “digital underbelly” to make digital change really happen for enterprises.

It's easy to be cynical about legacy IT services, but there's an awful lot of it to scrap over as enterprises are forced to fix their plumbing

Digesting the merger of these two struggling services giants has resulted in more rumination than most, considering the timing, sheer scale, transitional uncertain market and motivation. This is not a time when most traditional service providers are looking to add more global delivery scale to already large foundations – most are trying to slim down their delivery armies and sales forces,

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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Buyers perceive Accenture, Deloitte and KPMG as the most trusted consultants for achieving Intelligent Operations

May 06, 2016 | Phil Fersht

john-lylyIn 1588, the English dramatist John Lyly, in his Euphues and his England, wrote:

"...As neere is Fancie to Beautie, as the pricke to the Rose, as the stalke to the rynde, as the earth to the roote."

In other words, "Beauty is in the eye of the Beholder", which just about sums up how buyers perceive consultants when they need some serious rethinking and rewiring done to their operations to make them more intelligent:

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So what's actually surprising here?

In the past, you may have expected to see the pureplay strategy houses rule the roost, however, when we break down the Change Management and Solution Ideals enterprises need to achieve more Intelligent Operations, the focus shifts much more to using consultants with real change management, process transformation, analytics and automation chops... this is less about strategy, and more about just driving through the changes. Most company leaders know where they want to go - it's now more about executing a plan to get there:

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The Bottom-line: We're moving to a world where the expertise enterprises need to be successful is really changing 

One of the above firms asked me recently if it should start an automation practice.  My response was "If you're only asking me this now, then you're already too late to the game".  In a nutshell, enterprise operations functions need genuine expertise in adopting a mindset to write off their legacy systems and obsolete processes - and a real understanding of how to approach automation and embrace digital opportunities.

A lot of this is about prioritizing what not to automate and learning where digital transformation actually makes business sense. This is about creating an operations function that can pivot and support the rapid changing needs of the front office with actionable data, that is secure and available in real-time.  This is about defining and devising a digital strategy that has the customer at the forefront of the business and an operational support function that has the customer experience at its core.

Hence, consultants need talent that can not only think creatively with their clients, but also create an ongoing environment for writing off legacy, embracing change and being smart and proactive about leveraging automation and real digital strategies effectively. The speed at which some of these advisors must make the pivot from merely brokering transactional contracts, or spouting off some high level fluffy strategy, to supporting real change is critical - I'd imagine we'll know in the next 9-12 months which ones will genuinely be helping their clients achieve these ambitious ideals.

Posted in: 2016 Intelligent Ops StudyBusiness Process Outsourcing (BPO)Design Thinking

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Teleperformance, Concentrix and Sutherland lead the HfS Contact Center Operations Blueprint

May 03, 2016 | Phil Fersht

Our latest research into intelligent operations reveals a customer first strategy is the biggest driver for C-Suite leaders today, so where more important to focus than what's going on at the call center?  Has there ever been a more compelling time for call center service providers to step up and prove to their clients they can do a whole lot more than execute basic customer services?

Call center services have matured significantly in recent years, where you can find a plethora of providers doing a masterful job managing resources all over the world to deliver affordable voice services - but choosing between them has often never been so difficult.  However, with the need for so many enterprises to focus on the omnichannel customer experience to differentiate themselves, we're now in a critical bake-off between those call center providers delivering real customer value versus those still walking the treadmill of proving legacy voice services at ever-cheaper rates.  Plus, we still have many enterprise buyers who squeeze the life out of their providers on cost, and then expect the provider's A team to show up. Hence, there is a fine balance between the value clients need, the investments they are prepared to make to achieve this value, and the ability of smart providers to invest in As-a-Service models that take advantage of talent, digital technology and automation to deliver high value, without huge increases in headcount investments. Sounds easy, right?

In this vein, we're excited to announce the release of our first Contact Center Operations Blueprint, authored by HfS Research Director and contact center veteran, Melissa O’Brien, the only contact center analyst who's actually lived in the Philippines running a call center operation herself. Melissa's been exploring the cluttered competitive landscape, talking to a huge number of clients and leading providers, to help shed some light on the competitive landscape and where this market is truly heading:

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Melissa, please give us a flavor for the current state of the contact center operations market

This is a market undergoing a pretty dramatic transformation, in part due to increasing end-customer expectations - ambitious service providers are looking

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

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Accenture, Cognizant, EXL, Genpact, IBM, Infosys and TCS Top the Winners Circle for BFS Analytics

April 04, 2016 | Phil Fersht

The BFS industry is completely dependant on data and analytics and the services to provide these analytics are critical. These services enable analytics data preparation and management, routine business intelligence reporting and dashboarding, advanced analytics modeling and ongoing decision-making for industry-specific use cases, including customer and marketing analytics, fraud, risk and compliance, and portfolio analytics.

To this end, we're excited to announce the release of our latest Blueprint Report--this one on BFS Analytics Services, authored by HfS Research Director Reetika Joshi's exhaustive research to arrive at this comprehensive view of the market. So let's get an up-close view from Reetika on the Blueprint Report:

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Reetika, why have we undertaken an HfS Blueprint on analytics services specifically in banking and financial services?

The BFS industry is heavily reliant on the use of data, and yet the potential for embedding analytics-driven insights into operations is still far greater than adoption. The last few years have seen their focus on risk analytics intensify as regulatory changes and government scrutiny continue to mount. Along with balancing this growing compliance work, banks have also found a renewed interest in customer analytics to orient their growth initiatives. Most banks are not set up to meet digital consumer needs and are now embarking on digital transformation, powered by customer and marketing analytics.

Major banks and financial institutions are once again focusing on the next generation of analytics models, tools, and skillsets. We see demand from BFS clients across fraud, risk and compliance, AML/KYC, and customer and marketing analytics. Enterprise buyers in this industry are either unable to find the talent they need, for areas like specialized fraud, risk and compliance, or technology platform expertise, or are unable to afford it at the level of scale needed today—leading us to undertake this Blueprint to understand market direction. We see BFS clients trying to balance and complement their internal analytics teams with the global talent access that some service providers can bring them.

Report author Reetika Joshi, HfS Research Director (click for bio).

Report author Reetika Joshi, HfS Research Director (click for bio).

So how would you describe the current state of BFS analytics services?

For most service providers, big data and analytics services are the fastest-growing businesses in their portfolios, with significant revenues coming from BFS clients. This is due to the growing adoption of data-driven decision making within different parts of the enterprise for BFS buyers, and the need for more analytical support than internal staff can support.

Service providers have doubled down on BFS verticalization in their analytics portfolios, turning initial work with clients for analytics modeling and reporting into portfolios of pre-packaged industry-specific use cases and catalogues. As service buyers consistently stress the need for domain expertise from service providers, we see service providers strengthening industry training programs and hiring professionals from BFS industry backgrounds to increase contextual understanding and allowing for more meaningful analysis. We see the types of BFS analytics solutions changing today, with the next level of analytics use case development. BFS analytics services buyers seek the following:

  • The application of cross-vertical learnings to banking, especially from other consumer-facing industries that have progressed in customer experience analytics (e.g., from telecom to retail banking)
  • The incorporation of newer sources of data into existing analytical models to gain new insights into fraud, risk, and marketing (e.g., sensors, geolocation mobile data, and web and social data)
  • The exploration of modern business intelligence and reporting applications and tools, big data infrastructure, and advanced analytics platforms (e.g., cloud-based data warehousing, the mobile delivery of reports, and insights)

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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It's time we started Being As-a-Service

March 23, 2016 | Phil Fersht

Coming away from our Cambridge University buyers summit this week, I was pleasantly surprised by the increased level of sophistication and maturity many services buyers are now exhibiting.

Gone are the provider bitch-fests and endless ranting about failed promises and absent innovation (that they didn't pay for in the first place).  Instead, there was a desire to look at themselves, and really try to figure out how to broker change and run their outsourcing engagements as part of a broader business agenda, not some quirky siloed activity, forever tarnished by the word "outsourcing".

Adopting a mindset to change today (not tomorrow), is where everything must start

Yes, the conversation has turned to buyers accepting they need to change first, before heaping all the blame for their woes onto their service providers. This is why our Ideals of As-a-Service begin with a mandate for buyers and providers to change how they behave, how they can adopt a mindset to start writing off their legacy processes and technologies.  In short, it's time we focused on fixing our present - it's time we focused on Being As-a-Service:

Being-as-a-Service

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It's time we stopped talking about this scenario of "this was legacy and this is our future desired endstate"... we'll just remain stuck in this perpetual stranglehold of never getting anywhere. We'll always we a work-in-progress, a project that never finishes...

As someone joked during our Cambridge University summit this week "Cognitive computing is always going to be huge in the future"... so let's stop evangelizing about a nirvana we many never reach and, instead, start talking about what we need to do today. Let's stop panicking about the future, which is scaring so many people, and start focusing on what we can do today to be more effective.

Let's start talking about Being As-a-Service today... not tomorrow, or some far off point in the future, where we just hope this all becomes somebody else's nightmare...

Bottom-line: We have to narrow the chasm between hype and reality in order to be successful in the present

Our industry is beset by fear, like never before. People are scared - they know their skills and capabilities could quickly become obsolete in a world where the job openings increasingly demand creativity, analytical prowess and an ability to pivot across domains.  Suddenly, if you're not a Digital native who talks about endless disruption and the coming robo-geddon, you're a dinosaur... The gap between hype and reality has reached ridiculous proportions, and it's time we stopped thinking about the fantastical future and focus on what we can achieve today.

Successful sourcing executives have to become "brokers of capability" (which one buyer commented sounds like a rock band) where they can live in the present to drive a change mindset for the future. Most of the executives have been tasked with adopting Digital strategies (whatever those may be) and to come up with smart approaches to take advantage of automation technologies. But to get there, they need to change how their teams think, collaborate and operate.

It's a mindset change, it's a culture change. It's about bringing together the key stakeholders and delivery leads to address the As-a-Service Ideals today and stop looking at them as some far off nirvana someone else will take them to.  Simply put, most firms can't simply saw-off their legacy by disposing of some archaic ERP system and slamming in some SaaS product, or mimicking every defunct manual process into a piece of RPA software, or firing an entire department of ineffective process wonks. In fact, a lot of the legacy actually works and the ROI of binning it doesn't make financial sense.  Writing-off legacy is about starting the process of re-imagining a future without those legacy systems and processes that are holding back our businesses.

So the Ideals of As-a-Service can be initially addressed today by making the most of what we currently have, not simply waiting for the day budget magically appears from above to bring in teams of nose-ringed consultants to redesign our businesses.

Posted in: 2015 As-a-Service StudyAnalytics and Big DataBusiness Process Outsourcing (BPO)

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Why it's time for Robotic-BPO to break the mold of legacy F&A engagements

March 18, 2016 | Phil Fersht

Robotic BPOAmidst the relentless robo-hype in our current era of robotic rhetoric, it’s fast-emerging that many buyers and service providers are really struggling to work together to create workable Robotic Process Automation initiatives – in many cases, neither are willing to make the necessary investments, trade-offs or sacrifices to make his work.

So let’s start with those selfish service providers unwilling to share the robotic rewards...

Some service providers want to implement RPA on themselves and avoid passing on the savings to their buyers. Having come off a great many buyer discussions about their developing Robotic Process Automation (RPA) capabilities to augment their BPO engagement productivity, I have been shocked to hear a common thread from several buyers: their service providers only want to implement RPA on themselves and insist on charging their buyers the same legacy FTE rates.  Some service providers simply cannot stomach sharing gains with their buyers - some have, but the general experience, from the buyers, has been they are not really interested. And one of those service providers even boasts its own "cannibalization fund", while refusing to do anything different with several of its biggest engagements.  It's quite mind blowing how contrary some of these service providers can be, when it comes to what they claim they are doing versus the reality of what they really up to.

Yes, amidst this talk of the leading service providers breaking away from the old model and openly exploring ways to invest in initiatives to delink headcount from revenue, it would appear that some are simply playing lip service to the industry while, in reality, they are just looking at RPA as a vehicle to drive down their own costs and improve their margins, while maintaining their legacy FTE-pricing.  One buyer even mentioned to me that their service provider had the nerve to ask them if they could reduce their own staff delivery headcount using RPA, but keep charging them the same FTE rates.... no joke.

However, this isn’t just the fault of the service providers, many buyers are equally to blame for robotic restraint...

Buyers need to entrust their providers with more intimate data access. Most enterprise buyers, for security and control reasons, keep the providers at bay and force them to connect to their systems only using Citrix. This limits the effectiveness of RPA overall and encourages an “us versus them” mindset between buyer and provider, so it’s no surprise service providers do what they can on the other side of the “Citrix” firewall. Both parties cannot enjoy the full benefits of RPA and Intelligent Automation, without genuine collaborative engagements and a holistic security model that aligns the capabilities more effectively.

Greedy buyers need to stop treating RPA like legacy offshore BPO, demanding all the savings up front. I would also argue that many costs of RPA –greater testing, maintaining a fall-back agent pool and the incremental manner that robots are typically actually rolled out (versus a one time overall reduction in costs, as often asked by buyers) diminish the “greedy” aspect of this from many service providers. In addition, many buyers want royalties for advancing the automation initiatives of the

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Posted in: Business Process Outsourcing (BPO)Cognitive ComputingDesign Thinking

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Would a Big Blue Prism create an Intelligent Automation monster? #Crazymergerideas

March 15, 2016 | Phil Fersht

Big Blue PrismA momentous event occurred in the world of Robotic Process Automation (RPA) today, when its pioneering vendor, Blue Prism, became the first pureplay RPA vendor to announce officially  its intention to IPO.

Naturally, this sparked some feverish debate among the RPA cognerati over whether we may see one of the established services firms make a play to own their very own RPA platform, as opposed the the currently practice of every service provider partnering with every RPA product on the market.

My personal viewpoint is that IBM should take a serious look at Blue Prism, especially now RPA is officially a market-worthy capital asset. IBM is a huge software company and could seriously benefit from having an RPA offering it can build out as an enterprise platform, provided it makes sufficient investment and has leadership attention to develop the solution.

So let's look at the pros and cons:

Why IBM should probably buy Blue Prism

Watson alone is not going to do it for IBM in the Intelligent Automation space. IBM needs an RPA offering as the first building block along the Intelligent Automation Continuum (see below). Pushing RPA onto more clients will also open up the Watson conversation as a logical next step for many clients.

A Blue Prism + Watson platform could create a whole new ecosystem of possibilities. Adding Watson's cognitive capabilities to Blue Prism would create a real differentiator in the Intelligent Automation domain - you would end up with a whole new ecosystem of services and capabilities for enterprises across automation, predictive analytics and cognitive computing.

IBM needs to focus on becoming the leader in industry-centric Automation/Cognitive services. This is where IBM can really make its future mark in 2020-and-beyond enterprise services.  There are limitless possibilities with the potential of artificial intelligence in industries such as healthcare,

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Posted in: #CrazymergerideasAnalytics and Big DataBusiness Process Outsourcing (BPO)

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Accenture, IBM, NGA and NTT Data lead in SuccessFactors services

March 12, 2016 | Phil Fersht

One of the most significant shifts towards As-a-Service delivery, in recent times, has been the investments in delivering comprehensive IT and business process services to support the enablement of leading SaaS platforms. With the gravy train of revenue the leading service providers have enjoyed from clunky on-premise ERP services, over the last 2+ decades, now slowing, the land-grab to manage the data, business transformation and integration elements of the leading SaaS platforms is hotter than ever.

To this end, we're very excited to unveil the industry's very first HfS Blueprint on SuccessFactors Services. With HfS Principal Analyst in SaaS services, Khalda De Souza, at the helm, this Blueprint builds on the direction we carved out in our Workday and Salesforce Blueprints in 2015.  So who better than Khalda to bring us up to date:

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Khalda, why have we undertaken an HfS Blueprint on the SuccessFactors Services market?

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Blueprint author Khalda De Souza covers SaaS for HfS. (click for bio)

The SuccessFactors Blueprint continues our theme of looking at the markets for services around leading SaaS platforms, following on from our Workday and Salesforce Services Blueprints of the past 12 months. All of these markets are in high growth mode as enterprises seek flexible, user-friendly solutions to better manage their HR or CRM processes. The service providers included in our SuccessFactors Blueprint have experienced an average of 45% growth in SuccessFactors services last year and expect to see the same growth levels next year. Given that enterprises with SAP ERP in the back-office are more likely to select SuccessFactors for their cloud HR solution, the potential market is huge.

We also see snippets of the HfS Ideals of the As-a-Service Economy in the SuccessFactors service market. Clearly, enterprises are making the commitment to Write Off Legacy by moving to SuccessFactors and building new HR processes around the platform. Service providers are also driving Collaborative Engagements with flexible engagement methodologies and a key focus on desired business outcomes.

How does HfS define the SuccessFactors Services market?

HfS has defined a Value Chain of services that applies to all the SaaS platforms we cover. This includes the five components delivered by service providers to create value for enterprises: Plan, Implement, Manage, Operate and Optimize. For SuccessFactors services, Plan includes consulting services such as SuccessFactors business case development, compliance, security and governance services, as well as HR strategy and SuccessFactors-specific process and design services. Implement covers all the services and skills required for effective deployment, including but not limited to project management, testing, training and data migration services. Manage includes all ongoing integration and support services. Operate includes business processing outsourcing (BPO) services where they are delivered by the service provider around the enterprise's SuccessFactors environment. Finally, Optimize services are intended to improve the impact of SuccessFactors solutions and may include: the assessment of new SuccessFactors releases and solutions and on-going HR strategy alignment.  

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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