HfS Network

Monthly Archives: Sep 2016

What I Hope to See at the HR Tech Conference in Chicago Next Week

September 28, 2016 | Steve Goldberg

This is my inaugural blog post for HfS Research, an analyst firm I’m very pleased to now be part of.

I joined HfS because of the deeply held belief that HCM solution vendors could be bringing more clarity to the buying decision and even drive more compelling business outcomes for customers, and that a certain type of analyst firm could help pave the way.

I also joined HfS because, like hockey players go where the puck will be vs. where it is, HfS struck me as a firm that is not only going where the puck will be, but arguably laying down the ice for a new arena. And in the spirit of “I’ll try almost anything twice,” I had an opportunity in 2011 to work with someone I (and legions of others) greatly admire, Josh Bersin, and I also covered the HR Tech landscape then.

Attending the annual HR Tech Conference, as I’ve done 12 of the last 15 years, is like going to a family reunion for me, only a bit less gossip and lamenting about getting old (given tech sector demographics). Re-nourishing the relationships cultivated over the years is frankly as important to me as the intel gathering done at the conference, although the latter makes for a much easier cost justification.

I started going when I served as PeopleSoft’s HCM Product Strategy head, and would have gone when I was an HRIS practitioner from the mid-80s to late 90s but no equivalent conference existed in my view. This one rules the roost.

My esteemed colleagues at HfS, Phil Fersht (founder and CEO) and Barbra McGann (Chief Research Officer), asked me to do a pre-event post on what I’d like to see, and then a post-event post on how much of my wish list was fulfilled – AND BY WHICH HCM VENDORS IN PARTICULAR.

My list follows, and I strongly encourage appropriate vendor contacts to reach out to me at [email protected] so you can brief me in Chicago on the extent to which your offerings align with any of the items mentioned here:

  1. HR-user configurability of the solution, even not-very-technical HR users.
  2. Prescriptive analytics (i.e., analytics that also guide the user in addressing or solving a problem vs. just reporting the news).
  3. Examples of cognitive computing that demonstrate real machine learning such as pattern recognition and appropriate actions automatically initiated at either the micro (employee) or macro (workforce) level
  4. Product innovations that can drive significant business results for customers without major operational dependencies (e.g., change management, process changes, competency re-alignments, etc.), or innovations that will be central to solving customer business problems or pains that are likely to become more acute over the next 5 years. Examples of the latter might relate to the impending mass exit of baby boomers from the workforce, more reliance on freelancers, etc.
  5. Technology that mirrors the way end-users think and solve problems, often in idiosyncratic ways.
  6. Evidence of how a vendor’s customer success model is helping customers achieve measurable user adoption and business value targets.
  7. … and in general, more acknowledgement that no matter how great the solution is, technology by itself is no more than perhaps 40-50% of the answer to solving business challenges in the HCM domain.

Bottom Line

I’m genuinely excited about once again navigating the HR Tech vendor and solution landscape at the annual HR Tech event, culling and calling out nuggets that buyers will find valuable; and very keen to do so on behalf of HfS Research.

Posted in: HR Strategy

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Recognition-as-a-Service to Facilitate Great Work in Today’s Workforce

September 27, 2016 | Mike Cook

You’re not alone in thinking that the age of the physical long service award is well and truly dead. A trophy, medal or pin for long standing service now seems horribly outdated, doesn’t it? However, this is not the case. Far from it, actually: There has been an evolution in the way firms in the long service award space now operate with most having expanded into the service reward market whereby employees can be rewarded for great work accomplished as well as the traditional long-service awards.

In a recent piece of research, Can HR be an Innovation Incubator?, I identified how the right people can be sourced, assessed and incentivized to deliver enterprise wide innovation. For organizations looking to stay ahead of the curve, it is essential to have the right people and to also provide incentives for these people to behave in a way that drives revenue and profitability growth.

Now it’s all well and good investing in new assessment criteria, interview techniques and bonus schemes. But if your workforce doesn’t hang around for long, these new measures are worthless. Voluntary employee churn is incredibly pricey, both in terms of opportunity and replacement cost—not to mention the loss of IP. Increasing employee engagement is a key means with which to drive employee engagement and therefore retention. The simple act of recognizing great work, and in some cases physically rewarding it, goes a long way toward building and incenting a motivated workforce.

Service providers doling out long-standing awards are still alive and well but are now, by and large, evolving service provision into Recognition-as-a-Service.

At a recent event, I had the opportunity to go under the bonnet, so to speak, of one of these employee rewards and recognition service providers—OC Tanner. The company is looking to modernize rewards and recognition—both the practice of it, and the services that support it. In its early days, OC Tanner simply provided “thanks for your years of service” awards, which it still manufactures. The company added recognition awards and now also provides end-to-end recognition solutions and services with a design lab and SaaS.

Although it keeps evolving, OC Tanner, like the HR industry, is having an identity crisis

The company has evolved with the market but it’s not clear where it is headed over the long term. Is it now a software company? What does it want to help its clients achieve and how? The development of its SaaS offering and its continued development of additional HR bolt-ons would suggest it’s moving into the talent management software space. That said, at present SaaS only makes up one tenth of revenues and clients can use differing software and channels to run rewards and recognition programs that OC Tanner fulfills. This seems to disenfranchise the service provider’s SaaS offering. OC Tanner has also made extensive investments in an on-site storage, fulfillment and distribution service for employee rewards. With the Amazons of the world freely available, and with a global reach, this seems unnecessary.

So, while it has branched out into the digital world with SaaS-based services and mobile capability, OC Tanner seems a bit stuck in its roots. The founder of the company put the organization in a 100-year trust in which it could not be sold or offered to IPO, and family members continue to hold positions on the board. Perhaps these two factors keep it emotionally tied to its manufacturing origination. However, the company drinks its own medicine, running an extensive in-house employee recognition program.

It is important to note that the service that organizations such as OC Tanner provide do not simply reward great work but they actively encourage and facilitate it. As such, Recognition-as-a-Service can be a crucial arrow in today’s CHRO’s quiver. In order to continue to speak to the member of the C-Suite, OC Tanner needs to continue down the path of Recognition-as-a-Service and steer clear of diluting itself and its go to market with IT based HR services that are already supported by other providers.

Posted in: Talent in Sourcing

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Lisbon, Then and Now with Teleperformance

September 27, 2016 | Melissa O'Brien

Lisbon, Portugal is the home of contact center giant Teleperformance’s crown jewel of consumer research, its CX Lab.  I was fortunate enough to visit this center back in 2012 and to return again earlier this month.  What’s different for Teleperformance since that last visit? This market leader has retained all of the features that made its Portugal operations special, while expanding its consumer research and keeping an eye on upcoming industry disruptors.  Teleperformance’s size is making it harder than ever to move the needle on growth, but the service provider is continuing to invest in analytics and talent to continue on the path of innovation.

So what’s new? 

  • Internal Recruitment Analytics:  Teleperformance's R&D team based in Lisbon conducts 130,000 consumer interviews across 11 countries annually. A noteworthy addition is its effort to study and analyze its own recruitment efforts; leveraging its analytics engine to assess a candidate pool of applicants.  As one attendee adeptly put it, they’re “drinking their own Merlot.” The candidate assessment algorithm was performed on 300,000 candidates and achieved much higher accuracy rates in predicting employee success than the recruiter’s decision making alone. The service provider has also noted lower absenteeism, better employee experience and customer experience as a result. 
  • Acceleration of Social Media Expertise: There were also great examples of the e-Performance and social media command center in action. The center employs researchers specializing in buzz monitoring, social media strategy design and best practices. The company is looking more at social media as a verticalized offering and taking into account the maturity of its clients as well as some of its clients’ status as “born digital” companies to create the most effective campaigns.   For example, Teleperformance implemented buzz monitoring and social engagement for a retail client where their social SMEs were able to respond to 95% of customer responses within 2 hours.  They were also able to increase the retailer’s following on Facebook by 500%.
  • Consumer Research with a Security Focus: On this trip I found the same level of keen focus on understanding consumer experience—what was different this time around is a newfound appreciation of the complexity that understanding customer dynamics entails.  Along with this healthy paranoia about understanding consumer behavior is the staunch devotion to protecting that consumer data. This is particularly important for a service provider that employs 190,000 people across 65 countries.  Especially for Europe, the new standards imposed by the GDPR legislation will significantly elevate the requirements to comply with security regulations.  Teleperformance’s goal is to get operations up to those standards globally to stay out in front of future changes.  The service provider prides itself on keeping rigorous security measures ahead of its competitors.

 The future of omnichannel is immersive client experiences

Analysts tour the Teleperformance CX Lab in Lisbon, Portugal

An investment in integrated omnichannel strategy is about connecting the consumer research with clients, and bringing those insights directly from the end consumer.  Teleperformance will be rolling out "Customer Journey Showrooms" over the next 6 months, looking at ways to showcase the potential for omnichannel experience, where clients can touch and feel what omnichannel could be for them.  This will also include experimentation with intelligent automation and bot channels, as they progress in pilots with those solutions. 

One aspect that hasn’t changed is Lisbon’s resolute status as a hub for attracting talented multi-lingual professionals from across Europe to service clients in 29+ languages.  Comments from this tour echoed that of four years ago, in that Teleperformance is committed to recruiting talent from around Europe to service its multinational customers. About half of the Portugal staff has been recruited from abroad, and the service provider helps significantly with relocation and assimilation in Portugal.  Floor tours of the Lisbon multi-lingual offices have a laid back hipster vibe you might expect from the kind of “born-digital” logos we saw there, and clearly they are attracting the talent to match. 

Moving forward, a reality check

However, I sensed from this return visit a palpable and healthy sense of discontent among leadership—one that comes from being the biggest player in an industry facing disruption.  The most obvious change was the announcement of a committee formed to study the impacts of artificial intelligence on the industry.  For this BPO leader to say “we need to become more of a software company” and admit that they’re constantly nervous and on their toes, signals a big shift in the industry.  Teleperformance is backing up that strategy-- doubling the number of software developers in the next 12 months to enhance proprietary platforms like TP Observer, CCMS and TP Client.  For the largest BPO organization in the contact center space, this kind of focus on potential disruption is incredibly important right now, and needs a lot of further development, in particular in partnership with clients.

The feel of the commitment to research and thought leadership at the CX Lab is what resonates in my memory from both visits.  My favorite quote from the event was from Paolo Righetti, founder of Teleperformance-owned GN Research: “We’re teaching clients how to work differently, and they’re teaching us. We’re learning together.”  This is the kind of collaborative approach that is needed to move this industry forward, regardless of location. 

Posted in: Contact Center and Omni-Channel

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FOCUS: Follow One Course Until Successful

September 26, 2016 | Bram Weerts

How many of you go to a store without a list of what you need? Personally, I never go out to the store without a specific need. I guess I am not the type of clientele the retailers are looking for since I don't buy just because there’s a discount. And definitely, don’t go shopping randomly.

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Posted in: Outsourcing HerosTalent in SourcingThe As-a-Service Economy

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Accenture Acquires DayNine and positions itself at the forefront of the race for Workday services supremacy

September 26, 2016 | Phil Fersht

Why do the eyes of HR people always light up when you mention the word “Workday”?  Has Workday become the “complete suite” for the HR function, in a similar vein that SAP did with the CIO in the 1990s? 

Well, judging by the feverish excitement from the leading service providers to scoop up the best and brightest of the star niche players, the battle for Workday services supremacy has hit fever pitch, with Accenture following IBM’s and KPMG’s recent acquisitive forays in the space with the purchase of DayNine.

So over to HfS analyst, Khalda de Souza, author of our Workday Services Blueprint 2016 report to giver her take on what this means to the future of Workday services:

What did we tell you last week? Workday Services Blueprint 2016: Lots of Changes in this still Immature Market . Yes – this market is moving fast with even more consolidation in the Workday services market!

Accenture’s latest move in this competitive game has potentially check-mated its closest competitors, at least in the short-term. Instead of just acquiring a set of specific technical or geographical delivery capabilities, Accenture has targeted one of the leading Workday services partners in the market.  Both service providers did very well in the recently published Workday Services Blueprint 2016 report. We positioned Accenture and DayNine in the Winner’s Circle because they both demonstrated depth of experience and capabilities, impressive investment in tools and technologies to support deployments, and a focus on talent retention, all supported by strong client references. In fact, we positioned DayNine as the best executor in the Blueprint.

We estimate that the combined entity has a total of 1,275 people in the new Workday practice, including an estimated 1,152 certified Workday consultants. This is bigger than the largest Workday practice we have seen so far at Deloitte. Moreover, Accenture consultants hold an average of 2 Workday certifications each, and at DayNine this figure is 3.5, among the top 4 in the Blueprint.

Of course, it’s not all about pure scale. DayNine gains access to Accenture’s broader consulting capabilities and innovation around service development. Accenture gains access to medium sized enterprises and additional skills in Europe, which is a hot growth area for Workday services next year.  This initiative also aligns neatly with Accenture’s Cloud First growth agenda. It acquired Salesforce services partner, Cloud Sherpas last year (see: Why Accenture's acquisition of Cloud Sherpas is both an offensive and defensive move) and  more recently, Italy-based Salesforce solutions provider, New Energy Group.

The Bottom Line:  DayNine was one of the last "hidden Workday jewels" waiting to be snapped up... now Accenture needs to make 1+1=3 to deliver

By acquiring DayNine, Accenture will have the opportunity to create genuine synergy from this acquisition, if they can realise the ’1+1=3’ value proposition that this appears to be on paper. Yes, there is a lot of work to do as there always is when acquiring any IT services entity. But if the strategic alignment and energy from Accenture Cloud First Applications lead,  Saideep Raj,  Accenture Workday practice lead, Beth Boettcher,  and DayNine CEO and co-founder, Tim Ramos (who will lead the new Accenture DayNine group), is anything to go by, the main recommendation for competitors is to Watch Out!

 

Premium HfS subscribers can access the new HfS Blueprint Report: Workday Services 2016 here. 

Posted in: Business Process Outsourcing (BPO)HfSResearch.com HomepageSaaS, PaaS, IaaS and BPaaS

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Governing a Core Automation Strategy as the Operations Backbone … And a Catalyst for Change in SEI and NIIT Technologies Partnership

September 20, 2016 | Barbra McGann

How can enterprises make automation core to their operations strategy and not merely a peripheral activity? Let’s be blunt here, many service providers have been automating routine tasks with their clients for years, yet as my HfS colleague, Tom Reuner, has noted, the innovations referenced by the notion of RPA and Intelligent Automation are “often at sub-process levels…not at the heart of a delivery backbone.” We are seeing the momentum pick up here, though, particularly when automation is a shared strategy between service providers and their clients. We heard one such case highlighted by Peter Quinn, Managing Director of Automation at SEI Investments Co., (NASDAQ: SEIC) a wealth management solutions company, at the recent NIIT Technologies Industry Analyst/Advisor Day.

Service buyers want to partner for automation, but where - and how - is it actually working?

Read More »

Posted in: Robotic Process AutomationSourcing Change ManagementThe As-a-Service Economy

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From Russia With Love: Infosys Provides Engineering Services to You!

September 20, 2016 | Pareekh Jain

The stills from the James Bond movie, “From Russia With Love” flashed in my mind when Infosys SVP and Global Head of Engineering Services, Sudip Singh described the latest multi-million and a multi-year engineering services outsourcing deal with Ansaldo Energia. As part of the deal, Infosys will open engineering service delivery centers in Moscow (Russia) and Karlovac (Croatia) leveraging a rich pool of engineering talent in both these countries.

The Context of the Deal

GE acquired Alstom’s Energy business for €12.4 billion in 2015. The EU Commission and the US Department of Justice approved this acquisition conditional upon the divestiture of parts of Alstom’s R&D gas turbine projects. In 2016,  Ansaldo Energia acquired these R&D gas turbine projects from Alstom.  

Infosys has been a strategic partner of Alstom’s Energy business and has delivering engineering services to Alstom for the last few years. This merger and de-merger of GE-Alstom Energy business provided an opportunity to Infosys to upscale its engineering services engagements with both GE-Alstom and Ansaldo Energia.

Why Is this Deal Important for Infosys?

Strengthens engineering services footprint in Europe and Russia: Infosys is one of our As-a-Service Winner’s Circle service providers in our Engineering Services Outsourcing Blueprint. We advised Infosys to improve its business and footprint in Europe. We are glad that Infosys has acted on it.

Augments expertise in turbomachinery: Infosys has strong engineering services capabilities in turbomachinery with Alstom as its anchor customer. This acquisition augments Infosys’ turbomachinery capabilities with specific skills in heavy duty gas turbines, industrial gas turbines, steam turbines, etc. These are hard-to-find skill sets in the highly specialized industry and Infosys can leverage them to provide engineering services to other customers as well.

Additional skill sets in other engineering verticals: Turbomachinery Engineering is one of the most complex engineering skill sets. This deal allows Infosys to access high-end turbomachinery engineering skill sets, that augment Infosys’ engineering design and analysis capabilities in the automotive and the aerospace verticals (aero structures and aero engines).

Position Infosys to leverage Russia and Croatia: Infosys had no engineering delivery presence in Russia and Croatia. In fact, the broader Infosys operation had no major delivery presence in both these countries. Infosys only had a few support and business development professionals in Russia. This deal will change that and provide an opportunity for Infosys to leverage a delivery presence in Russia as well as Croatia to win more deals for both engineering services and larger IT services in the region.

Why Is this Deal Important for Ansaldo Energia and GE-Alstom?

Provides continuity and future proof engineering support: This deal ensures that Ansaldo Energia will have the engineering support of Infosys in providing continuity to the customers of GE-Alstom. Otherwise, it would have been a challenge for Ansaldo Energia to bring the dedicated focus to turbomachinery design and analysis, invest in future skill development, and manage spikes and trough in demand.  There was always a danger of rationalization and right sizing but now under Infosys umbrella, engineering team can look for a long-term career option. Infosys will leverage this engineering team to provide engineering support to other customers too and overall grow Russia and Croatia operations.

Why Is this Deal Important for the Engineering Services Industry?

Leveraging manufacturing and technology mergers and de-mergers: The manufacturing and technology industries are going through global turmoil. A lot of the big mergers happening in the industry are subject to regulatory approval, such as Nokia-Alcatel, GE-Alstom, Dupont-Dow, Holcim-Lafarge, Electrolux-GE, Dell-EMC, Inbev- SABMiller, Halliburton-Baker Hughes, Shell-BG, Avago-Broadcom, etc. One of the rationales of the big mergers is synergies or consolidation in R&D and procurement spending where engineering service providers could be at the disadvantage. The corollaries of these big mergers are de-mergers or selloffs either for regulatory approval or for generating cash. These mergers and de-mergers can also provide an opportunity for engineering service providers to leverage discontinuity and build their strengths and move up in the value-chain as Infosys Ansaldo Energia deal shows.

Russia as engineering talent base for the engineering services industry:  Russia has the incredible engineering talent and despite a good history of Indo-Russian relationships, Indian IT and engineering services has failed to tap it. This could be the start of one of many deals where Indian engineering service providers will augment their delivery capability in Russia.

The Bottom Line: This interesting deal gives Infosys an opportunity to drive its strong turbomachinery strength in engineering services and leverage its engineering delivery presence in Russia and Croatia to grow both engineering services and overall IT services business.

To close, I’d like to twist the opening line of one of my favorite songs – “From Russia and Croatia with love, Infosys provides engineering services to you!....”

Posted in: Procurement, Engineering & Supply Chain Outsourcing

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Workday Services Blueprint 2016: Lots of Changes in this still Immature Market

September 20, 2016 | Khalda De Souza

Just one year after the industry’s first ever in-depth competitive intelligence report on the Workday Services market, HfS has just published the updated HFS Blueprint Report: Workday Services 2016. We analysed and positioned sixteen Workday service providers according to their execution and innovation capabilities.  

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Posted in: SaaS, PaaS, IaaS and BPaaS

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Three Charts That Show Why Automotive Is in the Driving Seat of Engineering Services

September 18, 2016 | Pareekh Jain

If you had dropped by our new Bangalore office last month, you would have found fellow HfS Research analyst Tanmoy and me poring through loads of engineering services data for the Q2. The end result was that we prepared a comprehensive 29-page report (which even our Editor-in-Chief Mark Reed-Edwards had a hard time editing!) highlighting Q2 Engineering Services Trends with a large number of data points and charts.

I have picked three charts from this report to convince you that automotive is in the driving seat of engineering services growth.

The first chart is the percentage breakup of the engineering services outsourcing deals announcements by verticals in Q2 2016 (see below). This chart shows that automotive vertical bagged the  highest number of deals in the last quarter at ~30% of the total.

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Posted in: Procurement, Engineering & Supply Chain Outsourcing

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Goodbye Denial… we’ll miss you!

September 18, 2016 | Phil Fersht

Don’t you just love being in Denial? That wonderful place where all you have to do is show up for work, do the same old, same old… and everything just keeps on ticking along. Isn’t it so cool to wake up in the morning and proclaim to the world that you’re just so excited to plonk your behind down in your tried and trusted swivel chair and keep those lovely green lights staying on?

Well, I have bad news for, Denial-lovers, because we finally all accepted, at the HfS Cognition Summit this week in Westchester New York, that we have to bid our fond farewells to that nice cosy place, where linear growth and green light happiness were taken for granted, where it was OK to have lots of manual workarounds to keep workflows going, when robots were visitors from the future, as opposed to appearing on your desktop to run repetitive loops on your invoice processing…

As our recent study of 371 major enterprise shows, well over half (56%) of senior leaders now expect to see major moves towards intelligent operations within two years. Compared to our 2015 study, where 70% were still looking at a 5 year horizon:

 

Click to Enlarge

Two years is real, it's a time span that impacts us all today, not one where we are procrastinating, or simply leaving the problem to someone else, once we have left our current job.  

By why now?  What's wrong with a few extra years wallowing peacefully in Denial?

Social media is leaving us with nowhere to hide. Let's face facts here - RPA technology, by and large, is nothing new - much of it has been around for the last decade and beyond.  "Cloud" has been around for so long, we've almost forgotten about it.  Cognitive tools are still largely smart macros and algorithms (again, nothing new), while Rolf Faste was harping on about Design Thinking to Stanford students in the 1980s. The reality, today, is that we're educating ourselves (and hyping ourselves) at a breathtaking daily pace and, suddenly, if you don't have an automation strategy, are tinkering with cognitive capability and have some clue how to make your enterprise behave more "digitally", then you are officially legacy. The way we think, operate, manage and communicate is becoming brutally exposed - in almost every business situation with which we deal. If you are behind the curve, everyone knows it very quickly and you are typecast as the walking corporate dead. There is nowhere to hide, people... it's time to purchase that one-way ticket out of Denial, before that long-awaited career move making sandwiches becomes your future.

Offshoring never was a permanent solution, it's part of the gearbox of value levers. Remember all those times we debated the accidental "career" that is outsourcing? When shifting back office work to cheaper labor pools around the world was a special skill, a unique capability that only a very select group of us, endowed with this blessed experience, could boast? What we weren't really considering, back in Denial-day, was that offshoring work was only the first phase in a quest for better efficiency and value. Just because you signed a five year deal to shift the work of 500 headcounts to a be carried out at lower cost elsewhere, didn't mean you weren't intending to search continually for new ways to innovate in the future?  Most enterprises that have outsourced IT and business process work today are already putting real pressure on their operations leadership to commit to new, identified value levers, with an automation strategy being the prime lever that is the natural sequential transformation phase for most operations, whether or not they are outsourced.

Digital disruption is driving more urgency and paranoia among enterprise leaders. In many industries today, digital business models can completely take established legacy enterprises out overnight. If you are (for example) an insurance firm with 10,000+ people processing claims onshore using green screen computers, a bank which still has hundreds of branches employing tellers from the 1970s, or a retail outlet with no mobile app strategy, you are at dire risk of competition coming at you with a completely app-ified, user friendly, intuitive and cognitive business model, supported by low-cost sourced operations. If you have failed to see what could be coming at you, and do not have that salvage plan already in play, where you are ripping out that costly, unnecessary legacy, with a plan to compete against your potential "uberized" new competitor, you really are doomed. If you are a highly paid enterprise leader who is not aware of what could happen, without a plan to counter it, you might not be in a job for much longer... 

The Bottom Line:  Leaving Denial is one thing, but make sure you arrive successfully in Optimistic Reality

If there's one thing that we all need to stamp out, it's the pessimism and fear-mongering - most of it's unwarranted, unfounded and irresponsibility created by people who should know better. The reality is, we are dealing with some disruption to jobs, as automation, when implemented well, can reduce some transactional headcount (which we predict as having a 9% negative impact over the next five years, and will be largely offset by natural attrition and workers evolving their skills into other areas).

In my view, the real threat comes in the form of disruptive competitors using digital platforms and cognitive computing that can wipe out your enterprise overnight. Imagine a new bank appearing, with a great mobile app, immediate customer service via chat / phone etc.  Or a rival insurance firm that delivered everything you needed at half the premiums, but twice the usability?  You'd switch in a heartbeat wouldn't you?  And these capabilities are here today, they're not coming tomorrow.

And also remember that the threat of legacy extinction is with mid/advanced career folks, not our kids... they'll always adapt and survive, as they have the digital skills and awareness to do what modern businesses need. It's the 35+ generation that needs to get with the program and grasp how to manage automation initiatives, how to understand a cognitive workflow, how to determine and execute a digital business model. It's the mature executives who have been basking far too long in the delights of Denial and must make a hasty exit to Optimistic Reality. 

Posted in: 2016 Intelligent Ops StudyHfSResearch.com HomepageSourcing Change Management

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Let's rewrite the Future of Services this week in New York!

September 10, 2016 | Phil Fersht

Friends, Robots, Contractmen,

Fed up with all the hype and noise clogging up your inbox? Worried that you've already been digitally disrupted and your Roboboss is poised to subject you to a life of sandwich making? Well, worry no more, as next week we will cut through this horrendous hogwash to uncover the true picture of global services: What is really legacy? What is really relevant? And how can we define our careers amidst all the noise and confusion?

This week, the industry elite will convene to face some hard truths we need to tackle so we can clear a roadmap for what the future holds. I have never faced a time when people are so scared, confused and unsure what do to be successful in this As-a-Service Economy

"Sourcing" is no longer about plastering various shades of lipstick on shared services and outsourcing. It's about integrating all the levers of new value we can derive from labor arbitrage, global talent, inhouse centers, outsourcers, automation tools, advanced analytics and cognitive. Call this the "As-a-Service Economy" or the "Digital Era" or "Outsourcing 5.0" (OK, I just made that one up), but today's real deal is that we're all in the business of defining and achieving outcomes using whatever means at our disposal to be successful.

I am personally very excited to meet so many of you at our 13th HfS Buyers Summit next week in New York (see the agenda here) at a time when there's never been a greater need for industry stakeholders to take a deep breath, collect our thoughts and share our experiences on where our industry is heading.

I hope you can join us this week to raise a glass of wine and get the real conversation started!

 

Posted in: Cognitive ComputingOutsourcing Events

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Whoever said the omnichannel was a myth?

September 09, 2016 | Phil Fersht

Posted in: Absolutely Meaningless ComedyContact Center and Omni-Channel

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Who are the leading IT and BPO services firms in Asia Pacific region?

September 09, 2016 | Jamie Snowdon

Over the last few weeks we’ve written a few blogs about the leading BPO/IT services players in EMEA, more recently the leading BPO/IT services players in North America. Now is the turn of Asia and the Pacific region. This region is more awkward, with a list containing a few familiar faces, but many less familiar to those outside of the region. The most dominant force in the Asian market are the Japanese players – Fujitsu, NTT Data, NEC ad Hitachi – with some notable players from Korea such as Samsung SDS.

Although most of the trends are familiar – the traditional players struggling to grow, while battling to gain mindshare in new As-a-Service business models like cloud infrastructure, BPaaS, and SaaS. Although

Perhaps surprising to many outside of the region is the lack of presence of the big offshore firms apart from TCS, no Cognizant, Wipro, HCL, or Infosys. Although they have significant revenues in India, this is still a relatively small market, and they have little elsewhere in the region, especially in the big markets like Japan. TCS has made bigger strides in gain a presence outside of India – with a sizable business in Japan and Australia. Wipro is second in the region, just off the bottom with success in Japan. Frankly, the key to scale in the region.

The large global integrators like IBM, Accenture and HP have never been as strong in Japan as the local players and so in spite of strong presence in China/Pacific are dwarfed by Fujitsu.

The biggest changes we expect over the next two years are the rise of more Chinese players – with firms like Digital China, Alibaba and Neusoft building on and offshore business. Additionally, we see AWS as a key player shortly, particularly given the recent investments made by the firm in the region with centers in India and Korea launched earlier this year.

Bottom Line: The AP market is poised for major change… but not just yet

There is still plenty of room for growth in IT services and BPO within the region. Particularly in emerging super economies like India and China – but the beneficiaries are likely to be local providers and international providers with a distinct value proposition – like AWS and its best in class cloud infrastructure. Although we anticipate stiff competition from regional champs like Alibaba.

The lack of success of the offshore firms in the region is mainly due to the reduction in their key value proposition – labour arbitrage. However, we may start to see other members of the Indian WITCH group rise the list as labor takes a less important role within the market and within these providers, some of which are making real efforts to develop “as-a-service” offerings that blend low-cost talent with automation capabilities.

It doesn’t really matter what part of the world we are in, the competitive landscape is pretty much being shaped by the same overriding forces – the endless client demand for productivity improvement, rapid technology adoption around client engagement and data, the drive to simplify infrastructure, whilst providing a more comprehensive service and the shift to more platform-based services. This means the criteria for success for the providers, particularly in the enterprise space will be the same. If anything when we survey Asian companies they are more progressive about technology adoption and business process change. So agility is the key differentiator for providers, the world over. Given the uncertainty across the world, we are sticking to our mantra: the main differentiators for any service providers is the ability to adapt to the market conditions and the capacity to deliver intelligent (and adaptive) solutions to clients.

 HfS Premium Subscribers can download the full report here.

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT Services

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Translation Service LanguageLine Accents the Teleperformance Portfolio

September 09, 2016 | Melissa O'BrienMike Cook

Translation Service LanguageLine Accents the Teleperformance Portfolio

Contact center outsourcing powerhouse Teleperformance has seldom ventured outside of its core of contact center services, so it was with great interest we learned of its recent $1.5 billion acquisition of LanguageLine Solutions, a provider of over-the-phone and video translation services. In today’s world of “going digital,” this acquisition is more about filling a market gap and increasing the value of non-automated interactions, and fulfilling the talent strategy that supports “OneOffice” than about enabling the automated or digital interactions themselves. This is a smart move that complements Teleperformance’s business and will help to better serve its clients. 

Translation service fits well into a comprehensive talent strategy

LanguageLine fits well into Teleperformance’s portfolio, as one of the many contact center service providers trying to carve out a new value proposition and maintain relevance in a rapidly changing market. LanguageLine’s 8,000 interpreters, supporting 240 languages, are largely work at home employees; the home based delivery option is one we’ve watched grow in recent years as a solid strategy to find and retain better talent. Companies like LanguageLine have created a common market for interpreters, most of which are formerly self-employed contractors. It provides these contractors with a network, benefits, and corporate culture, but the flexibility of the work-at-home, and the satisfaction that comes with assisting customers with higher value services.

We can surmise that much of the translation service are of higher value than the average contact center interaction; the majority of the interpreters’ calls are over 10 minutes long, indicating more calls greater in complexity than average. LanguageLine is protected from (simple) automated interpretation services due to the majority of clients coming from highly regulated industries including healthcare and BFSI, supporting our that automation generally isn’t replacing contact center jobs, it is making them more challenging and interesting. 

LanguageLine will help Teleperformance better serve the healthcare vertical

We see the greatest opportunity here in particular to increase the value of the service provider’s healthcare offerings (LanguageLine's revenues are close to half from the healthcare vertical).   Teleperformance has a sizeable and growing presence in the payer space, and we speculate that using the video translation services of LanguageLine could help create a unique value proposition at those sites where Teleperformance runs the interactions for people enrolling in health insurance. Healthcare organizations are highly sensitive about interactions with their constituents, and the context and finesse needed to handle these translations are great, so Teleperformance’s ability to handle these interactions well would be a big differentiator.

Taking the LanguageLine service and integrating it into Teleperformance’s already well rounded customer experience portfolio will be the key to success. Teleperformance is no stranger to adeptly integrating major acquisitions (i.e. TLS Contact, Aegis U.S.).  LanguageLine has proven to be an adaptable organization, starting off as a translation service for Vietnamese refugees in 1982, and was owned by AT&T from 1990-1999, before being sold to a private equity firm. Teleperformance shares a number of clients with LanguageLine and partners with them on specific projects, something the service provider has proven works well through the TLS Contact acquisition. Teleperformance should in theory be able to position complementary services for business results with clients that overlap.

The Bottom Line: LanguageLine’s expertise helps Teleperformance further hone its already smart talent strategy.

The acquisition confirms the service provider’s focus on home based agent delivery and higher value interaction services.  The fact that LanguageLine already has a well established remote video interpretation service shows that it is pivoting the business toward important trends and keen to serve the customer of the future.  This acquisition takes a talent and vertical expertise focused approach to support OneOffice; it is a really smart move to fill a market gap, reaffirming Teleperformance’s commitment to sustained growth and serving its clients by developing and retaining the best possible talent.  

Posted in: Contact Center and Omni-Channel

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EXL Wants Insightful, Quantifiable Results (IQR) In BFS Analytics

September 07, 2016 | Reetika Joshi

EXL just announced its acquisition of IQR Consulting, a small but fast-growing marketing and risk analytics service provider to the banking industry. This follows EXL’s acquisition of RPM Direct early last year to augment its insurance data and analytics portfolio (read more in our coverage here), which it is also starting to use in healthcare. With IQR, EXL is continuing its focus on adding analytics and data assets with a vertical flavor.

Read More »

Posted in: Analytics and Big Data

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Mapping the Real State of Digital

September 05, 2016 | Oliver Marks

It’s time to end the hype and get real about the evolving world of digital! Later this month, I’ll be sending out Requests for Information for our forthcoming HfS Digital Blueprint where we will truly flesh out where this market is today, and the path we need to take to close the gap between Digital potential and the ability for ambitious organizations to achieve it. 

‘Digital' is a word which has been hopelessly mangled by market forces. The huge societal change wrought over the last eight years by the advent of the iPhone and Android and improved connectivity - the prime as catalysts for the proliferation of social network connections, conversations and data, has created havoc for the vast majority of companies, still firmly anchored in previous generations of technologies. Digital marketing has evolved very quickly to allow the positioning of products, services, buying opportunities, customer support and feedback, and digital marketing budgets have exploded in so many ambitous organizations eager to hop on this “bandwagon”.

Marketing, by its very nature, evolves and changes constantly to seek competitive advantages and differentiation, and these techniques have also been used to position countless companies as ‘digital’, much as previous generations added an ‘e’ prefix to everything (or Apple’s ‘i’ prefix)- so we had eShopping, eCommerce etc etc. In most cases, this posturing was to cover up the fact that the ‘e’ suffix was being added to tart up legacy offerings as market repositioning, and this is often the case today with ‘digital’.

While these digital branding activities can be highly effective for specific sales motions and targeting, it has arguably hurt broader digital evolution, creating mass confusion about what ‘digital’ actually is beyond marketing speak. A few years ago ‘SSMAC’ - Security, Social, Mobile, Analytics and Cloud - were considered core components of ‘digital’,  floating offshore from IT on a sea of ever more valuable Data. Since then, legacy IT has soldiered on in a business climate made ever more complex by digital and budget pressures, while ‘digital’ has grown to become ever more ubiquitous. 

Bymid-2016, and moving forward, many firms have high level ‘digital first’ imperatives in place, and some understanding of strategic goals and threats. What’s problematic is all those pesky legacy ways of doing things - the workflows, ring binders, filing cabinets/ Sharepoint, technologies and relationships that choke any sort of change management. Like ivy in a garden, the old ‘we know how to do this’ culture grows back fast. Add to this the reality of multiple vertical budget P&L’s, organizational politics and rivalries along with a percentage of management and most of HR sleeping on digital opportunities and threats, and we have a growing vacuum.

Fortunately, enterprise service providers have been tireless in creating and learning new ways of doing things in a digital world, having  seen the threat to their livelihoods in continuing to merely servicing last century IT and associated business processes. Where a couple of years ago it was quite challenging to find scale resources to execute digital initiatives, today there is an appetite to help businesses compete in the ever more data and collaboration driven world. 

I’m right in the middle of briefings with both providers and buyers of services for our upcoming ‘internet of things’ (‘IoT’) blueprint and having a fascinating time discussing approaches, projects, methodologies and business outcomes with scale vendors. Sensor-driven data flows are a critical dimension of digital, from real time industrial machine intelligence feedback (‘I’m going to need a new solenoid soon’) all the way to smart factories creating smart products that communicate regularly throughout their life, to both the seller, owner and manufacturer to be as efficient as possible. 

During the coming months I’ll be meeting various industry luminaries to discuss the state of ‘digital' - perceptions of opportunities, stresses and pressures, and what it takes for companies to take the leap and place big bets on a holistic, ultra interconnected digital framework to replace the fragmented, heterogeneous environment most IT infrastructure evolution grapples with. This takes vision,  confidence and courage to achieve in mature companies, but the reality is that failure to grasp this opportunity will result in modern ‘full stack’ digital startups, rapidly superseding legacy firms and taking their markets.

Interesting times and this is going to be an interesting, timely piece of research in a fast moving world...

Posted in: Digital Transformation

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Why the slogan “Fail Fast” is bullsh*t if you want to succeed with OneOffice

September 04, 2016 | Jamie Snowdon
Perverse Infinite Monkeys... Failing Fast

One of the business mantras we hear far too often is the concept of “fail fast”, but like other all-or-nothing business slogans, it’s majorly flawed. Although digital technology is disrupting many industries and business processes, “failing fast” is not a great approach to decision making: yes or no, or on or off is too simplistic. Decision making needs to be more analogous, much more nuanced, based on real context, and, most importantly, real-time data.

That said, failing is vital to any business, but simply failing and moving on to the next idea? Throwing your business thoughts against the wall and seeing what sticks, like some perverse infinite monkey approach, is not smart. Failing and limiting the damage from a dead-end pursuit is a good idea, but the real value of failure is what you learn , and how your subsequently apply that learning experience to your business. This is what provides the value.

You may have seen the OneOffice operating model that Phil has shared on his blog here.

Click to Enlarge

The goal of the OneOffice is to engineer processes to ensure that the whole of an organization is greater than the sum of its parts. Any system, within any organization, is likely to become inefficient or will require maintenance or over haul at some point. The issue with current business practices in many industries, is their systems and processes have typically been operated using closed feedback loops.

The “innovation cycle” in legacy traditional business models has been driven by the experience of business leaders who have not had the benefit of accessing and interpreting the vast amount of data – particularly around the cause and effect of changes to business practices. The biggest change driven by Digital is not the better interaction or access to new markets,  but analyzing real-time data from interactions right across the customer, supplier and employee value chain to make informed decisions on the future. It gives companies instant (or near instant) feedback on its decision making loops – which can be used to create a massive open feedback loop for decision making that helps business leaders create their markets, not simply react to historical facts.

In such a feedback loop, the impact of changes made, at any part in the system, can be tracked and analyzed. This data can determine, for example, when and how products are launched, the level of training a new product will require – and perhaps, more importantly, whether this strategy was correct. The open feedback loop is the heart of Design Thinking and the key to successful OneOffice schema. All parts of the organization are joined so cause and effect can be judged. Failure can be measured and learned from. Equally, the real reasons for success can be measured and replicated.

The Bottom Line: Embrace your mistakes - and Learn from them

The most important feature of Design Thinking, or any business system designed to drive data driven decisions, is to create a culture where mistakes are embraced and learned from, rather than hidden and repeated. A good example of this is the “Aggregation of Marginal Gains” ethos used by the British Cycling team, which helped it go from 2 medals in the 2004 Olympics to 12 in 2016 (6 of which were gold). The assumption being that any process can be improved. When you look at a system as a whole it’s hard to see how to improve it, but if you look at the components it’s easy to see how small improvements can be made. When a customer outcome isn’t as good as it could be, what can be done to make it better?

Posted in: Analytics and Big DataDesign ThinkingOneOffice

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How Energy firms and their Service Providers must embrace change to survive

September 01, 2016 | Derk Erbé

Refusing to change our ways in today’s energy sector is a certain recipe for failure. There are a lot of inefficiencies in Oil & Gas, which in times of high oil prices and high margins, are largely hidden and/or ignored. In today’s continued low oil price environment with low margins and profitability—what we believe to be the new normal—Oil & Gas companies need to take out inefficiencies and find new ways to optimize production and bring down operating costs like never before. Our Energy Operations Blueprint highlights the way Oil & Gas companies are looking at digital technologies, automation and outsourcing as avenues for change, and levers to pull to drive new efficiencies and value creation.

Sustaining the current momentum of change in today’s environment is a huge challenge for Oil & Gas companies and their service providers. Changing for new results requires progressive change from within, not just rearranging the deck chairs hoping for a different result. The Blueprint identifies eleven trends that are currently taking place, and while they all serve a purpose to address the trends impacting their world, there are a few that bubble to the top.

Four trends that we see as an opportunity for focus by service buyers and providers to increase the value of their engagement over time:

  • Evolve analytics capabilities to cater for energy-specific applications. Analytics offerings have started to progress from being based largely on access to data science talent and unique algorithms to include
industry specific analytical applications delivered by service providers that deeply understand a client’s enterprise and marketplace. We see good progress in analytics that improve the drilling process and analytics capabilities underpinning the 24/7/365 monitoring of thousands of units of critical equipment from a central support center in Exploration & Production.
  • Leverage data to look into the future, not the past. Predictive and prescriptive analytics are starting to enable more real-time decision-making and continue to have a huge impact on the operating models in the industry. The industries’ strict requirements for safety, reliability and uptime in operations, often in harsh circumstances and remote locations can be better met with advanced analytics capabilities offering real-time and actionable insights. Knowing what went wrong through descriptive analytics simply doesn’t cut it.
  • Put IoT at the heart of your planning. The (Industrial) Internet of Things holds tremendous promise and we expect adoption to accelerate as there are already huge numbers of connected assets in the industry and providers and Oil & Gas companies have to focus on connecting those assets to the internet to bring tremendous value. Think about how in Midstream, pipeline sensors providing data on transportation of product and the health of the pipes replaces the need for field workers to get sensor readings in person. And using drones and connected sensors to inspect the gigantic stretches of pipeline in difficult terrain instead of visual inspections by field workers. 
  • For future effectiveness, focus on IT/OT integration and the Digital Oilfield. The digital footprint is increasing in Energy Operations, bridging the gap between Information Technology and Operations Technology. In Upstream, advanced analytics improve operations in drilling, reservoir modeling and engineering and remote monitoring.

Bottom Line: It’s time to dare the industry to build—not inhibit—momentum for change

Here are two dares I want to put forward to Oil & Gas executives and service providers respectively, both of them critical to sustain the change momentum and achieve the innovation that is so desperately needed: 

Energy Buyers - Dare To Reinvest Cost Savings into Innovation Funds: It is very attractive to put cost savings achieved by outsourcing in the hands of the CFO.  However the CFO isn’t going to turn around and say “great job, let’s all sit back and celebrate that 20% off the bottom line”. We recommend to reinvest these savings in further innovation, perhaps make it a part of a Collaborative Engagement arrangement: “Service provider, save us 20% and we can both reinvest the 20% as next year’s innovation budget”.  For example, saving driven through the offshoring of application development and accounting work could be funneled into a digital oilfield project.

Energy Service Providers - Put Your Money Where Your Mouth Is: Pro-actively and aggressively push the innovation agenda around automation, analytics, drones, 3D printing for MRO, simulating with digital twins, machine learning, deep learning, cognitive computing. Present clients with use cases, examples and capabilities to “unfreeze,” inspire and build credibility in innovation.

Posted in: EnergyHfS Blueprint Results

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What Drives Engineering Service Providers Revenue: Customers Quantity or Customer Quality?

September 01, 2016 | Pareekh Jain

We often ask this question. Customer quantity is a no brainer because more customers can bring more revenue. Similarly, customer quality is also important because the better the customer quality or size, the better the revenue potential for service providers. But what is more important—customer quantity or customer quality? 

We all have the anecdotal answer to this question based on our experiences but what does the data say?

In one of our engineering service studies, we tested this on data and found interesting results. In our software product engineering services study, we correlated service providers’ software product engineering services revenue with the quantity and quality of their customers (see the Exhibit). For customer quantity, we took the count of service providers’ ISV customers. For customer quality we took the count of service providers’ ISV customers that are among the top 100 ISV customers by revenue because the larger the size, the better the potential of account mining.

We found that the correlation between service providers’ revenue and quality of customers is very strong (Correlation = 0.92 and R2=0.85) in comparison to the correlation between service providers’ revenue and quantity of customers (Correlation = 0.56 and R2=0.31): As a student of mathematics, I will be the first one to point out that correlation doesn't mean causation. But it nevertheless gives us the opportunity to step back and ask ourselves the following: What if the quality of customer drives revenue more than the quantity of customers? What are the implications for engineering service providers and how can they position themselves to grow in a more future-oriented way? 

Service providers should focus on the quality of customers and persistently target large customer accounts: This is a no-brainer as a strategy but sometimes difficult to execute. Getting a foot in the door of a large account and displacing incumbents can be difficult and requires persistence. Sometimes, with quarterly pressures mounting, service providers give up on these large accounts and target easier options. In my earlier gig, I came to know that it took seven years to penetrate a large customer account (Yes, seven!). In quarterly reviews, leaders sometimes lose focus on long-term targets, but in this example, leaders kept asking for an update on this particular account in every quarterly review I attended. What is happening in that account? Who has the account manager met with in the last quarter? Are there any RFIs or RFPs they’ve heard about? Any chances of proposing free PoC? Any firm they can partner with? And the list goes on. It requires the persistence of leaders to pursue this long-term strategy and luckily the business leaders in that firm were for the long haul (they are still working there when I last checked =) ). 

Once the service provider has got a foot in the door, grow the account by making it real and not over-selling: In engineering services, especially at this time, service providers are competing more with the non-outsourced spend than with other service providers to grow the accounts. Service providers have told me that even after signing the contract and setting up the ODCs, the accounts just don't grow. One piece of feedback I heard from the buy-side is that many product leaders are skeptical of outsourcing and somehow service providers need to convince them. Service providers typically approach this by hiring good sales and account managers. But the problem is most of the product owners or decisions-makers are technical guys and they don't like sales guys or account managers showing their face every month. But they do like to know industry trends, what their competitors are doing, where the industry is moving. So, in my opinion, service providers will do better if they invest in “making it real” (something Phil Fersht has also written about in the larger IT services context). In other words: share prototypes, case studies, and demos. But don't sell!

Mid-tier and emerging service providers should focus on smaller customers and develop their solution value proposition: The mid-tier service providers might not have the luxury of time and manpower to focus on the big customers. They will do better to focus on smaller customers that are not natural targets of the larger service providers. They should grind it enough to make themselves ready for the bigger customer later. The disruption often starts at the bottom and slowly moves to the top. Amazon has done the same with the cloud. Its initial value proposition was aimed at startups and SMBs. Now it is ready to compete in the bigger customer segment. One Fortune 100 buy-side customer told us that they gave a few projects to a mid-tier engineering service provider because it was more cost-competitive than many leading engineering service providers. Although the customer is satisfied with the service provider’s delivery quality and timelines, the customer feels that the service provider has limitations in domain knowledge, solutions, organizational maturity and the customer is unlikely to give that service provider any major additional work. In a way, this mid-tier service provider wasted the opportunity by entering the account early without sufficient capability. The mid-tier service provider should have defined its value proposition beyond cost reduction when they bid to enter large accounts.

The Bottom Line: Both large engineering service providers and mid-tier engineering service providers can use this correlation research to review their client acquisition and account growth strategies based on quality and quantity of customers. 

Posted in: Procurement, Engineering & Supply Chain Outsourcing

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Why is Gartner spewing such irresponsible and unsubstantiated data about "robobosses"?

August 29, 2016 | Phil Fersht

Clients are being subjected to such a load of nonsense about the impending impact of robotics and cognitive computing on enterprise jobs, many are literally terrified. Conversing with the "head of automation" for a F500 organization today, is akin to meeting a Secret Service agent in a clandestine alleyway. These people do actually exist, but most have to conduct their work under a veil of secrecy, due to the level of discomfort and panic our robo-commentators are making in the presses.  

Remember the panic about jobs getting shipped offshore?  Well, that is child's play compared to the emerging tumult of fear being generated by jobs being completely eliminated by robotics. Net-net, people are frozen stiff with fear, and it's the responsibility of respected analysts, consultants, academics and journalists alike to educate and world using real, substantiated facts. Sadly, the likes of Gartner, McKinsey, Oxford University and our beloved Stephen Hawking, all seem hell-bent on capitalizing on the panic to grab the headlines (read my post earlier this year) as opposed to dispelling much of the ridiculous scaremongering about the impact of automation on job losses.  

At HfS, we published a very thorough analysis on the impact of automation on global services jobs, showing there is likely to be modest downsizing of ~9% over the next five years as low-end tasks are increasingly automated across major service delivery locations.  And this 9% will be immersed in natural attrition and redeployment of workers to other industries, as global services streamlines and matures as an industry. Yes, there will be impact, and it will be somewhat painful to absorb for some enterprises, but it's not the impending workforce apocalypse these people are predicting. 

So why, pray tell, is Gartner, a respected voice in IT research, continually pounding us with continual scaremongering that we're all doomed to the will of the robot, and we may as well start preparing for a life of unemployment, or sandwich making? Oh wait, robots can even make sandwiches, right?

Peter Sondergaard, Gartner's Head of Research, predicted one in three jobs will be converted to software, robots and smart machines by 2025.  OK, that's so far out in the future, I think Peter's on pretty safe ground here - he's probably going to have cashed in his Gartner stocks long before then, in any case, and be on a golf cart somewhere, when one very earnest soul decides to dig into the Gartner archives of previous decades to read very old research, with very dodgy predictions, that absolutely noone care about anymore.  So we'll let Peter off the hook here - he wanted to make a splash at his Symposium and he achieved exactly that.

But then we get treated to this almighty whopper from Fran Karamouzis, a vice president and distinguished analyst at Gartner...

By 2018, more than three million workers globally will be supervised by "robo-bosses".  Wow - isn't this barely more than a year away? Excellent, so Fran's going to be around to declare automation glory when global employment goes through a robo-geddon so seismic, it'll be like all three terminators visited from the future at once  to change the world? My god - what is going on here? The suggestion that an employee will be supervised by a machine simply cannot be corroborated by any meaningful research...

So why do we, at HfS, view claims like this as factually incorrect and irresponsible? 

There is only one very shaky example of "robo advisors" in the industry. The most cynical implementations of automation that HfS has come across, thus far, where direct replacement of human labor by robots is the declared outcome, are examples such as Royal Bank of Scotland, where virtual agents, deployed as “robo advisors” are solely deployed to replace FTEs.  We've also witnessed a service provider radically downsizing some delivery staff claiming success of its robotics strategy (only to find out later these staff were simply redeployed elsewhere).  Let's be honest here, the onus so far seems to be about firing people and using "robotics" as the smokescreen. While Intelligent Automation decision-making will undoubtedly increase (view our Continuum here), we see no examples of employees being supervised by bots. At HfS, we are covering every deployment in the industry, and are just not seeing it.

We still haven't had a real debate on the ethics of automation and cognitive computing in the B2B environment. Suggestions that employees will be supervised by bots can be traced to the broader discourse on Artificial Intelligence, where more consumer-facing technologies are discussed with undercurrents of movies, such as the Matrix. These discussions tend to focus on technology capabilities of providers like Google and Facebook. However, we haven’t seen a similar debate in the B2B space. If anything, the B2B urgently needs a debate on the ethics of automation, in light of these nascent cognitive capabilities. But to surmise that robobosses will be so prevalent in barely over a year before we've even had these debates is quite absurd.

The speed of internal organizational change is painfully slow. The tendency from clients with automation is to pilot first, rather than to go full scale, and every ambitious forecast is always waylaid by the reality of interacting with legacy systems.  Most of today's Robotic Process Automation(RPA) tools are simply being retrofitted into smoothing over manual processes within legacy technology environments with obsolete processes. They are adding efficiency to broken operations, which may, in the future, lead to a lesser need for headcount in low value work areas.  Talking about today's enterprises being so close to investing in Robo bosses is just very wide of the mark.  What's more, much of this RPA technology has been around for more than a decade - this stuff isn't exactly revolutionary, it's just becoming more popular as enterprises figure out further efficiencies beyond initiatives such as offshore outsourcing and shared services

Cognitive tools are only just emerging. While IBM has done a stellar job aligning its Watson capabilities with the healthcare industry (read our report here) and software experts such as IPSoft's Amelia and Celaton have some compelling client stories to tell, the focus on self-learning and intuitive cognitive solutions are mainly confined to customer service technology and virtual assistant chatboxes.  Talk to the call center BPO providers and they're really only just figuring this out.... forget robobosses, we're still just trying to figure out some basic software to make chatboxes work better these days. Moreover, with Watson, our research shows it's best application today in the medical field is helping flesh out the bad science and saving scientists serious amounts of time doing their research.  Meanwhile Celaton, in the UK, has created a really cool tool to help Virgin trains handle emailed customer queries.  But the long and short, here, is that Intelligent Automation solutions today are great at augmenting processes and unstructured data pools, not replacing real people who make real decisions doing real jobs.  

The definition of robo bosses, and the potential value, of robobosses is missing. There is, however, something to be said for the value of increased automation combined with analytics to better understand the impact — measured by targeted business outcomes — in a more realtime way during a contract with a “gig economy” worker (or any worker).  Such knowledge can help us intervene and train/coach a project “going south” sooner, or catch fraud fastest, or identify a worker to “gets it faster”. Along these lines, we see value in "robo advice", but the point also needs to be made that these "robobosses" (give me a break) do not work alone, such as with Watson and health / medical diagnosis and treatment, they work in tandem with doctors / clinicians, changing and refining the dr/clinician job (freeing up that person to be more targeted and more of a coach than a statistician) with the intent of better medical results.  These robo tools (or whatever we call them) do not replace the doctor / clinician. 

Monitoring software has existed for decades... so when does it become a "Roboboss"? Currently, there are probably a million or more workers just in the UK (for example) managed by extreme monitoring of some kind. The Amazon style warehouse pickers, fast food cooks, many call center agents, delivery drivers, assembly line factory workers are subject to time monitoring and computers giving them tasks. We're just not sure when this turns into a roboboss?  

Bottom Line: The real "roboboss" is the human worker who can use Intelligent Automation tools effectively

It today's swirl of gibbering noise around the social media presses, it's the responsibility of leading analysts, advisors and academics to be the voices of sanity and reason, when it comes to topics as critical as the future of work elimination through Intelligent Automation technology.  The vendors love the hype as it gets them attention with clients, but analysts who like to take money from these vendors have a responsibility to articulate the realities of these technologies to their clients. They are great at augmenting work flows, and even aiding medical discoveries, but this is the real value - it's not about sacking people.  It's about making operations function better so people can do their jobs better.  The real "roboboss" is the human enterprise operator who can use smart Intelligent Automation tools to enhance the quality of their work.

Net-net, industry analysts, advisors, robotics vendors, academics and service providers need to engage with clients around how all these disruptive approaches will affect talent management as well as organizational structures. Even without these apocalyptic scenarios, some job functions are likely to either disappear or be significantly diminished (as our 9% forecast reveals). Equally, we need to talk about governance of these new environments, touching upon ethical, but also practical, issues. This is not only a necessity for the broader adoption, but also offers high value opportunities. 

I'll probably get a few nasty messages as a result of this piece, but I sincerely hope this has the outcome of steering our industry conversation in a more realistic direction, backed up by real data and experts who prefer realistic conversation that mere headline-grabbing and panic creation.  

A special shout out to Cartoonist and Innovation evangelist Matt Heffron for penning this little gem:

Click to Enlarge

Posted in: Cognitive ComputingConfusing Outsourcing InformationRobotic Process Automation

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