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Category Archives: HfS Surveys: All our Survey Posts

Robotic Process Automation has now penetrated a third of enterprises. Time to advance the conversation...

May 30, 2016 | Phil Fersht

RPA 1.0 is a done discussion. We know what it is, we know what it can do, we know how it can augment operations and help digitize broken processes.  To this end, our brand new study on Intelligent Operations, which canvassed the dynamics of 371 global enterprises, already shows a third of them are very active with RPA within their IT and finance and accounting processes:

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RPA is here and being adopted at a fast clip

All the incessant RPA hype has done its job - it has literally dominated IT services and BPO conversations at every conference, provider strategy deck, advisor "new practice" press release and many buyer converations.  Indeed, we can even forgive those cheesy sales presentations from guys who suddenly claimed to have 20 years' experience as automation pioneers and talked about bot farms as if they were actually hand-raised on one...

The overwhelming conclusion is that a large chunk of enterprises are actively implementing it, and

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

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The back office is dead... long live OneOffice

May 13, 2016 | Phil Fersht

Intelligent OneOfficeIf someone called you "back office", I'd imagine you'd be a little bit offended.  It's probably not much worse than being called "useless", or "about to be automated out of existence"...

But I have good news for you back-office rebels - your time spent festering in the backend of yonder is finally coming to an end. Why?  Because the onset of digital and emerging automation solutions, coupled with the dire need to access meaningful data in real-time, is forcing the back and middle to support the customer experience needs of the front.

Our soon-to-be released study on achieving Intelligent Operations, which canvassed 371 major buyside enterprises, reveals two key dynamics that are unifying the front, middle and back offices:

  1. A "customer first mindset" is the leading business driver driving operations strategies.  Over half of upper management (51%) view their customers' experiences as impacting sourcing model change and strategy, which is placing the relevance and value of the back office in the spotlight.
  2. Three quarters of enterprises (75%) claim digital is having a radical impact. We can debate the meaning and relevance of digital forever, but the bottom line is that enterprise leaders need to (be seen) to have a digital strategy - and a support function which can facilitate these digital interactions and data needs. The old barriers where staff in the back office don't need to think and merely oversee operational process delivery, and those in the middle, which only venture a part of the way to aligning processes to customer needs, are fading away.

Consequently, we're evolving to an era where there is only "OneOffice" that matters anymore,

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Posted in: 2016 Intelligent Ops StudyAnalytics and Big DataBusiness Process Outsourcing (BPO)

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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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Rescuing BPO from its trough of directionless boredom: Make jobs challenging and creative

April 17, 2016 | Phil Fersht

Bored BPO CatWhen your enterprise is increasingly dependent on hiring "Millennials" with digital skills and lower wage needs, you'd better figure out a plan for creating exciting, challenging career paths, or you're pretty much already doomed.

Sadly, our Talent in BPO study from last year tells a very depressing tale when you ask BPO delivery executives what they think of their BPO career:

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What's alarming is the failure of enterprises to create and communicate a viable BPO career path for seven-out-of-eight professionals with under two years' experience.  And - while 63% of newbies strongly agree their job is vital to business performance, a depressing one-in-eight are actually excited by their career choice.  When people get past the first couple of years, their experience clearly improves, but the concern here is how can we attract top (or even middling) talent into BPO careers, when there is such a negative perception of the potential of the job.  If we can't attract the talent, the industry will never progress beyond a cost/efficiency play.

What can we do to attract the "Digital Generation" into the BPO business?

Start new hires on activities that require creativity and critical thinking. Working in BPO has to be about delivering capabilities beyond rote, operational processes.  Today's college graduates are simply not coming out of school willing to perform mundane routine work.  Just look at the new WEF jobs report to see how skills requirements are quickly shifting, as business needs evolve - especially the need for creative skills, going from number ten to number three in merely five years:

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In the past, for example, an accountant would often earn his/her chops processing accounts and doing routine GL work, before progressing to controllership activities, such as budgeting, quality audits, FP&A, forecasting and risk assessment work.  With much better technology and offshoring

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Posted in: 2015 Talent in BPO StudyAnalytics and Big DataBusiness Process Outsourcing (BPO)

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Confusion-as-a-Service: The massive disconnect between vision and reality

March 04, 2016 | Phil Fersht

"Our clients come back from conferences demanding they need an Automation and a Digital strategy, with no idea what they are", said a senior partner in a Big 4 consultancy yesterday.

I have never known a time in the world of business when there is no much hype, confusion and unsettlement. Sadly, we are now living in a world where snippets of soundbites are so intensely shared across the variety media we use (I nearly said "omnichannel") that our industry is completely dominated by hype, as opposed to reality.

Data from our recent As-a-Service study just shows how alarming this disconnect is... the C-Suite is just living on a different planet from the teams below them trying to keep their businesses functioning:

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"Cannibalization" is merely the C-Suite waking up to the realization they can spend less with their service providers

Let's stop beating around the bush on this one - services providers (in most cases) make nice profit margins on their outsourcing deals. What's happening is that supply is now outsripping demand - there are too many competitors vying for a pool of enterprise clients who want to decrease their external spend.  The "demand" is coming from the next layer down of clients (the proverbial "mid market") which just don't have the size and resources to warrant the attention of the top tier providers.  What's more, the top tier of service providers is simply not structured to go after the mid-market - they can't afford to - and are stuck circling the same legacy enterprises like vultures trying to find new ways to squeeze money out of them.

Terms like "Digital transformation" are being used as the new levers to encourage gullible C-Suite

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

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Automation: Flavor of the month or disease of the decade?

December 02, 2015 | Phil Fersht

The reality of Robotic Process Automation is hitting us at the HfS Summit for services buyers at Harvard Square this week.  We anonymously polled 53 senior outsourcing relationship leads with the question "what measures would improve the outcomes and quality of their outsourcing relationship":

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Last year's buyer's summit saw 48% polling they needed to let go and entrust their service provider in higher value processes... now that number is dropping to 28%, with the preferred partnering focus shifting to working jointly on an automation strategy.  Nearly half of today's buyers (45%) now see that as the main area to get renewed value.

What does this tell us?

As mature outsourcing deals get stuck in holding patterns, automation is providing the new flavor to find that next increment of value. The industry hype and marketing is clearly reaching the buyer - and many want their service providers to work with them to help figure out an automation strategy.

So the real conversation now shifts to how buyers and providers can find common commercial models to make automation work for both parties.  However which way we look at this, buyers will need to make some new investments in Robotic Process Automation technology and expertise, while the service providers will ultimately have to concede they may need to reduce the FTE provision on their side, as automation takes effect.

Now, the real challenge here is for the service provider to redeploy the freed-up FTEs on their clients' higher value processes.  So these two motivations should go hand-in-hand:  decreasing labor effort on automatable tasks and increasing it on the higher value work the clients would like to outsource in the future.  So if buyers and their providers can get this right, automation will be a long term play for both parties, where higher value work gets done and delivery staff are kept busy because of the closer collaborative relationship and greater volume of work being parsed out.

Posted in: 2015 HfS Buyers SummitBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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Finance talent: automation skills now trumping analytics skills

November 29, 2015 | Phil Fersht

Our current in-the-field study looking at Re-architecting the Finance Function for the Digital Age (click here if you are yet to complete it) is confirming some major changes in the capabilities organizations need from their finance staff:

Need for Automation skills in F&A increasing

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What's eye-opening, here, is the softening focus on analytics skills and the huge increase in the need to understand automation and better define business outcomes.  I've long preached that you can't really get the data your organization needs real-time, if you don't have well automated processes to generate it in the first place.

Enterprises are settling for what they have, and are now focused on making it function more productively

It's becoming clear that staff have to be less focused on creating data, overseeing operational processes and performing routine tasks, and much more adept at figuring out how to make better sense out of what they are doing to achieve more measurable, value-add results (outcomes) for their organizations.

In many cases, enterprise operations leaders are realizing they can't create armies of world class

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

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Hello As-a-Service Economy, goodbye Outsourcing, Part 2

August 22, 2015 | Phil Fersht

State of DenialDuring Part I, we discussed the gradual simplification of cumbersome people-centric outsourcing towards technology-centric "As-a-Service" solutions, driven by the need for enterprises to remove their excessive operations costs and anti-competitiveness burdens inflicted by legacy processes and obsolete technology.

Simply put, what worked last decade no longer works for ambitious enterprises striving to stay competitive, plus the emerging "Born in the Cloud" enterprises, many of which will comprise tomorrow's FORTUNE 500, where As-a-Service is native to their operations, not retro-fitted in painful increments. Their mantra is to invest in outcome-centric services first, then hire talent to broker these capabilities and align them to the revenue-generating activities of the business.

Gone are the days when the only solutions were to reduce labor costs and hope for the best. Arriving are the days where investments in outcome-driven solutions, fueled by common standards and automation, ubiquitous cloud delivery, digital tools and apps, are being seen to have genuine long-term ROI. Enterprise leaders, in our discussions, are much more willing to make investments in permanent solutions, where the outcomes are tangible, as opposed to temporary solutions, where there is some short-term benefit, but the long term outcomes are still murky and unclear.

We know the future is moving towards a state of creative, motivated operators accessing available tools and intelligent platforms to help their enterprises achieve their desired outcomes.  We know most viable enterprises, today, cannot afford to drag around these archaic, obsolete infrastructures and operations - and remain competitive in the long-term.

So what, pray tell, is really driving our enterprises to make decisions today, what will our world really look like in five years' time as a result, and what are the implications for society and business?  Oh the questions that need answering...

Two-thirds of enterprises are actively pursuing strategies to reduce reliance on human capital

"How much of this room will be replaced by bots in the next three years?"  I asked, polling some peers and colleagues deep in client-side automation research attending a recent service provider conference.

"As many as 60%" was the collective response - 30% directly through improved automation capability and another 30% simply through better apps and efficient processes".  Just think about that for a minute... we're really on an path away from people to technology.  So why are so many services and operations professionals so blissfully unconcerned of what's coming?  Are we living in permanent state of denial that the business world around us is simply never going to change?  It's not as if the majority of senior operations leaders do not see As-a-Service as critical, according to our new Ideals of As-a-Service study:

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So, while the leadership layer is clearly bought in and ready to go, why aren't the operational middle and junior layers following suit? Why aren't these leadership ambitions being translated down through the ranks? Why does this desire to challenge ourselves and improve our capabilities dissipate when we reach the rank and file?

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

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Hello As-a-Service Economy, goodbye Outsourcing, Part I

August 09, 2015 | Phil Fersht

As-a-ServiceWhen we coined the term "The As-a-Service Economy" a year ago (remember our famous Ten Tenets post), we never quite anticipated we were helping define the future model the services industry would adopt for business, technology and operational service delivery.

As-a-Service replaces Outsourcing

We've perennially debated the (toxic) term "outsourcing", long vilified as the substitution of onshore jobs with cheaper offshore people. The outsourcing community has continually struggled to find new defining terminology, as NASSCOM replaced "BPO" with "BPM" and the IAOP has refused to shift from the past, staying true to the O word as its core identity.

The reason why we struggled with our identity was because outsourcing, by and large, has really always been about people.  It's hard to change processes, drive common standards across clients, build a utility model that can be scaled and made cost-efficient, when you're really just moving work around the world with the goal of getting it done cheaper. And that's really been the story of outsourcing to-date - service providers battling it out, at varying levels of effectiveness, to deliver people-based services more productively, promising delights of delivery beyond merely doing the existing stuff significantly cheaper and (hopefully) a bit better.

But outsourcing hasn't failed. Only 13% of service buyers in our new Ideals of As-a-Service study believe there is no more value to be found in the current outsourcing model.  Outsourcing is the starting point towards driving out bloated labor costs, centralizing the delivery staff within a service provider, and creating some basic common standards across processes.  However, it's not the end-solution for ambitious firms, it's merely the start of the journey towards this future vision of "As-a-Service".

We also hear a lot of hype about Robotic Process Automation, which is another accelerator towards As-a-Service, but like outsourcing, RPA isn't necessarily the end-solution either  - many applications have a lifecycle and are replaced over time, and many of today's processes become obsolete as businesses evolve. RPA merely acts as a further conduit, coupled with outsourcing, to smooth the ultimate journey towards destination As-a-Service.

Defining the evolution to the As-a-Service Economy with Eight Ideals

The game-changer is centered on today's services work gradually becoming a genuine blending of people-plus-technology that helps us inch towards an ultimate destination of services value, accessible on-tap, empowering service buyers to focus on proactive value-identification with help from their service partners through meaningful and secure data, enabled by intelligent automation and digital tools... all made possible by smart people working together.

So let's examine the Eight Ideals of As-a-Service, into which we delve in-depth in our new defining report, "Beware of the Smoke: Your Platform is Burning", that canvasses the views, dynamics, aspirations and intended actions of 716 service industry stakeholders:

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The journey to As-a-Service is all about simplification

Business services, today, are one of speed to business impact. They are about simplification.  They are about removing the blockages and obstacles diluting this business impact.  Anything less is not taking advantage of the experience and capability that has been developed in the global services market, over the past three decades. In this time, enabling technologies, talent, sourcing operating models, and macro-economic trends, such as globalization of labor, high growth emerging markets, new business models and consumerization, enable service buyers, advisors, and service providers to engage increasingly in a more flexible and collaborative manner. The ambition is to achieve renewed business results with speed, quality, and effectiveness. When we get there, we will be in the As-a-Service Economy.

The transition to As-a-Service is all about simplification — removing unnecessary complexity, poor processes, and manual intervention to make way for a more nimble way of running a business. It is also about prioritizing where to focus investments to achieve maximum benefit and impact for the business from its operations.

The emerging As-a-Service Economy will be more agile and dynamic, featuring on-demand plug-and-play services in a one-to-many fashion targeted to impact what matters to consumers as well as businesses. The two are increasingly intertwined as consumer insights, decisions, and loyalty carry increasing weight on the success or failure of an enterprise in any industry.

The Bottom-line:  The As-a-Service Economy is a vision for the future, building on today's achievements

It's easy to deplore how poorly our business are run,  how dysfunctional are our processes, how badly integrated are our technologies, how reactively and transactionally our staff perform. But this is the evolution of business, this is how we got here today. When you talk to service buyers, they are unlikely to tell you their businesses are running worse every year. In fact, most have improved immensely over the last five years with improvements in global scale delivery, cloud computing etc.

Survival in today's global business environment, for most, is a marathon, not a sprint. Not every industry has been Uberized over-night - most are being disrupted with technology-driven business models that we can learn from, adapt, adjust and try to get ahead of. Most enterprises suffer from the same woes and face similar challenges to clear their path towards their desired As-a-Service Ideals.

The new challenge is to prioritize which Ideals really matter and how to work with the smart people and partners around us to get there. In subsequent posts to this theme, we will analyze our study findings further to understand the priorities, obstacles, expectations and anticipated dynamics to unravel how we will eventually arrive at the As-a-Service Economy, and what we can do as an industry to get there and prosper.

And Part II is now up - click here to read!

Please download a copy of our new Industry Report "Beware of the Smoke: Your Platform is Burning", authored by analysts Phil Fersht and Barbra McGann, that analyzes findings from 716 service industry stakeholders in our new Industry study that defines the future of services and the emergence of As-a-Service Economy. 

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

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Forget the sharing economy, we're in the uncaring economy

July 21, 2015 | Phil Fersht

The Sharing EconomyIf I have to read another article about Uber's disruptive business model, I think I am going to defect to a Trappist monastery and brew very strong beer for the rest of my life...

However, iet's be honest here - who really cares about these taxi drivers being forced to improve their services, clean their cabs,  clean themselves, start using credit card machines and even (on occasion) help you with your bags? The fact is, unless you are a legacy taxi driver, or related to one, you're most likely delighted they are being forced to get competitive and improve their services.

It's the same with Spotify / Google music - unless you are in the business of selling music, most people are ecstatic they can now get all the music they desire for $10 a month or less, without having to spend a fortune on CDs, with the hope that there's the odd good tune.  And there's Amazon versus Best Buy, there's Airbnb versus Marriott, there's Netflix versus Comcast, and so on. Moving to our industry, there's Onesource Virtual versus NGA, there's ZenPayroll versus ADP, Workday versus SAP, there's software versus people, there's offshore people versus onshore people, there are robotically automated solutions versus people, there are self-learning machines versus people, in fact, every advancement in services we look at today is all centered on less people... and delivered As-a-Service.

And like the happy world of taxi customers now getting a better and cheaper service for their money, there are many business leaders who are only too happy to get cheaper and better business operations, because they can reduce their reliance on people. If you're not an employee who is being replaced by a piece of software (although it's widely assumed we will be someday), the chances are you're happy your firm is becoming more profitable and doesn't need to rely on so many bodies to keep the lights on. Just revisit our Value Beyond Cost study we ran with KPMG earlier this year, where we asked 168 senior executives about the priorities of their C-Suites with their operations:

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What is startlingly apparent here, beyond the fact that well over 90% of C-Suite directives are obsessed with cost and flexible services as operational priorities, is that less than half (48%) view improving their operational talent as important, 65% are exploring efforts to restrict the recruitment of labor where possible, and 62% are looking, with varying levels of interest, at automation and robotics with the specific purpose of reducing their reliance on labor. The bottom line here is very clear - C-Suites are caring less and less about their people, and more and more about their services.

The big question many are facing now isn't whether to invest heavily in their people - it's whether to invest in technology to replace staff, or use outsourcing partners to reduce the burden of inhouse staffing cost, while improving their access to flexible services.  Or use a combination of the two... or use an outsourcer which is using robotics on itself and is willing to pass on the benefits to its clients desperate to move from a legacy labor-centric operational infrastructure.

The Bottom-line:  In the The As-a-Service Economy, we only care about achieving our desired outcomes 

Here's the nub of the argument, while people like Hillary Clinton want to turn back the clock and protect the legacy job-for-life, the vast majority of people really do not care that labor forces are being disrupted, along with legacy business models and obsolete practices.  Today's world is all about faster, cheaper, more accessible services - and to hell with any obsolete process, system or person which gets in the way of convenient and affordable As-a-Service models.

People care most about enjoying the outcomes of what they pay for, not the efforts made to achieve those outcomes.  Expenditure on services is increasingly related directly to outcomes, not a fixed tax we have to pay for a standard service. Personally, I always pay a limo driver $10 over the norm to drive me to the airport. He picks me up in a Cadillac, hangs up my suit, gives me a bottle of water and a newspaper - and only makes conversation if I want to. My desired outcome is a relaxing journey and the extra cost is worth it - and he wins my business everytime and I refer him to all my friends and colleagues. Now that's one way to win over the Ubers of this world - people will pay when the outcome is what they want. Welcome to the uncaring economy where is all about the outcome...

Posted in: Buyers' Sourcing Best PracticesDesign ThinkingDigital Transformation

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