HfS Network

Yamazaki, Macallan and Redbreast lead the inaugural HfS Premium Whisky Blueprint

April 01, 2017 | Phil FershtBram Weerts

We've talked long and hard about the extent of digital disruption of traditional business models, so we decided to extend our research coverage into growth markets where the impact of digital is always positive.  When you look at the premium whisky, for example, our research shows its impact promotes new ideas, helps foster greater team collaboration and can even provoke new Design Thinking principles. Let's have a look at how the leaders in this space are positioned, based on our Blueprint Research Methodology:

At HfS we are expert analysts at peering into markets and evaluating the performances of the major players, so we thought "why not extend our coverage into adjacent markets where some of our analysts have years of practical, hands on experience?".  Personally, I have had more innovative client discussions comparing the various merits of single malt whiskies than which automation tools vendors have better control features.  

So let's talk to a few of our contributing analysts to understand how this market played out:

Bram Weerts, COO, HfS Research:

"I've tried each and every one of these buggers and you can't beat the old Yama 18.  I do love the Mac, but Yama hits the spot everytime"

Tom Reuner, SVP Intelligent Automation Research:

"I believe I've sampled all of these whiskies, especially when I am out at analyst conferences. I haven't a clue which is the best, but wanted my name on the report, so I endorse whatever Bram and Phil came up with."

Derk Erbé, VP Research:

"I believe the whisky market is ripe for digital transformation.  Emerging brands like the Walmart Fireball are poised to rip the bottom out of the market"

Jamie Snowdon, Chief Data Officer:

"There's no way I could get through our quarterly forecasts without sampling a few of these first.  And the way the industry's going, the old Walmart Fireball will only increase in popularity"

Phil Fersht, CEO:

"We may worry about robots stealing our jobs, but those bastards will never be able to drink our Scotch."

Bottom-Line:  This is only the beginning, HfS is going to extend into new markets everywhere as digital disruption takes hold

We believe we are qualified to become experts on any market where money changes hands and greats ideas emerge. Stay tuned for our forthcoming blueprints:

"Tequila Transformation - it can really change things"

"The least disgusting low-carb beers of 2017" and

"Organic wines that you really want to avoid As-a-Service" 

And of course... this was an:

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Posted in: Absolutely Meaningless ComedyDigital TransformationHfS Blueprint Results

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The spreading outsourcing disease: barely a third of buyers see real value in their current provider relationships

March 30, 2017 | Phil Fersht

Oh dear - here are the private views of about 60 outsourcing clients we polled today at the HfS Summit in New York.  Close to half the room are either feeling let down by their provider over-promising, or merely feel they are only really getting cheap labor from their relationship. Moreover, barely a third of them actually believe their provider can come up with the goods, provided they pay for them via the legacy FTE pricing model. Now, these buyers are highly experienced and sophisticated, so this data is particularly hard for the outsourcing industry to digest.

So a few simple takeaways from this:

Service providers have to stop the over-promising and start over-delivering.  Over-promising may result in some short-term wins, but the implications of long-term damage caused by missing client expectations are much more hazardous. Sadly, investor pressures to sustain unrealistic growth is forcing several service providers to over-sell without the talent resources to deliver anything beyond low grade offshore delivery.

Many providers are proving their competency, but failing as proactive co-innovators.  As we recently revealed, a third of senior management does see real potential in their service providers to become genuine co-innovation partners, but there is a stark difference between fantasy and reality.  Providers need to prove they are willing to share risks, really roll up their sleeves with their clients - and clients need to work harder to create an environment of trust that they'll stick with their providers, provided they are willing to co-invest with them. Design Thinking anyone?  Maybe it's time to get in a room together and figure this whole thing out.  

Bottom-line: We're going to see a lot of chopping and changing of service providers in this volatile environment.  

Several buyers cited they felt their providers were too comfortable with them and were not worried they would get ejected from long-term outsourcing relationships.  However, with advisors, competitive providers and RPA vendors all touting the magic 40% of cost savings through automation, the leadership layers are exerting unprecedented pressures on outsourcing governance leads to demand change. In many cases, buyers are simply bringing in advisors and RPA tools vendors themselves and running their own pilots, but eventually, they are likely to put their existing deals out for rebid to find providers willing to guarantee the RPA savings.  And that is where the market is going - lots of cut-throat rebids, higher degrees of risk-taking to win business and more clients being over-promised.  We're in a vicious cycle where desperation is trumping good, pragmatic partnerships where both buyers and providers can figure out how to work together in trusted, risk/reward sharing environments.  

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

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Welcome to Judgement Day, where the real future of Outsourcing and the Digital OneOffice will be decided in NY this week!

March 26, 2017 | Phil Fersht

Dear Friends,

Our day of judgment is upon us! Can we really “unlearn” the last two decades and change how we buy, sell, behave and operate? Do we really have what it takes - deep down inside - to get ahead of this maelstrom of change and come out the other side with wealth, happiness and another two decades of double-digit growth?

Of course we can! But only if you book your last-minute spot to the services event of the year, in Midtown Manhattan next week… Join me, my colleagues and the industry’s finest as we engage in the richest dialog yet on how to tackle the most crucial transition our industry has ever faced, and how to come out the other side re-energized and happy to go to work again.

Service Buyers get complimentary access - only a few seats left, so apply now!

To name a few companies which will be represented...

And a few of the power brokers debating the big outsourcing reset in New York...

Find the full line-up here. See you in New York this Thursday, I hope!

Cheers,

Posted in: Digital OneOfficeOutsourcing Events

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The traditional outsourcing model is officially out of value, but the future is bright for co-innovation partnerships

March 19, 2017 | Phil Fersht

Remember all those juicy reasons why companies jumped into outsourcing? Like driving out cost, standardizing processes, perhaps even finding a few nuggets of innovation along the way with better access to talent and technology? Well our new 2017 State of Operations and Outsourcing Study of 454 major enterprise buyers gives a pretty gloomy picture of the current value impact of today’s outsourcing engagements:

 

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What made us happy in the past no longer passes muster

If there was ever one home-banker benefit from outsourcing, it was always the ability to take 30%+ off the bottom line cost of running a process or set of processes.

The VPs and below are those who are managing the engagements – and not even a third of them view their engagements as being very effective at driving out significant cost or making their operations more flexible and scalable. Their bosses are slightly less cynical, but still the vast majority is underwhelmed.

"But how can they be unhappy, we saved them so much money?" I hear frustrated providers cry… 

Well, the answer is quite simply that those costs have been removed from the balance sheet – they no longer exist. Managing operations in a global environment is now the new normal – money that was saved was a onetime experience in the past. It’s like trading in your Hummer for a Prius… you don’t think to yourself, everytime you fill up with gas, “Wow, I’m saving $50 per tank”, but you might even think, “Hmmm… maybe I’ll get a fully electric car next and save even more on my running costs”.

We can go on to bemoan the disappointing lack of effectiveness from analytics, automation and cognitive from over four-fifths of outsourcing engagements, but we know clients are unlikely to have invested actual funds in these areas as part of most of these engagements today – they are getting what they have paid for in the past.

All is not lost as many operations leaders want their service providers to change with them

However, the next wave of engagements have to be set up in a very different way to bring back delights to these jaded customers, which is where the brighter news appears:

Click to Enlarge

What's encouraging here is that buyers, by and large, do not view their service providers as mere efficient cost take-out vehicles, which was how well over half viewed them a couple of years ago. While 43% of SVPs and above see service providers as competent partners who can deliver the goods, another 35% actually view them as real innovation partners who can work with them to achieve co-defined business outcomes.  This is a breakthrough for the services industry.

The Bottom-line: The door is wide open for ambitious providers willing to invest in developing their talent, but closing firmly shut for those perpetuating what worked in the past

There has never been a time in the history of services where we've arrived at such a pivotal turning point - what used to work for clients is now commodity, and those service providers wanting to avoid this drain-circling spiral into transactional insignificance must make serious investments in their internal capabilities to partner with their clients.  This means more people who can work in close proximity to their clients with real capabilities rolling out automation roadmaps, designing digital business models, working with clients to develop predictive data models and smart cognitive strategies.  Sadly, there isn't much of an available pool of eager college graduates ready to leap into these roles at low wage rates, so providers need to reinvent themselves radically as true learning establishments and universities for their emerging talent... ambitious people will want to invest their careers with firms who are prepared to invest in their talent.  The future isn't about buying packaged consulting, it's about partnering with services firms whose stakeholders want to co-invest in themselves and their clients with a long-term vision and definitive plan.  The model has changed forever... and we can only watch, learn and work with it as it unravels piece by piece.  

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT Services2017 State of Industry Study

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Genpact becomes the first provider to acquire an AI platform

March 14, 2017 | Phil FershtReetika JoshiTom Reuner

While most of the services and operations industry obsesses with Robotic Process Automation to streamline its rudimentary back office processes, one provider that’s never shied away from making bold moves to disrupt illustrious competitors is Genpact, with an imaginative move to integrate true artificial intelligence with its business process service offerings by acquiring the impressive Boston-based Rage Frameworks.

It's almost history repeating itself from a decade ago, when the (then privately held) Genpact turned the BPO model on its head with its disruptive virtual captive proposition that significantly challenged the pricing models and ability to integrate offshore capabilities into the old BPO model. Now, the firm is breaking the mold, yet again, by making real inroads into infusing AI into business processes and introducing these concepts to its huge global community of finance leaders.  

Let’s get to the rub: RPA is all about digitizing the back office, but Artificial Intelligence is where we see the true marriage of business processes with clever technology and self-developing algorithms. We’ve danced for years trying to prophesize when BPO will truly integrate with IT, but we’ve now had reality unveiled: RPA platforms streamline the back office, while AI brings the middle and front together to create that true Digital OneOffice experience. The Digital OneOffice is not about collecting and archiving historical data simply to discover what went wrong, it's about being able to predict when things will go wrong and devising smart strategies to get ahead of them. The Digital OneOffice is about embedding smart cognitive applications into process chains and workflows, it’s about learning from mistakes and new experiences along the way. This is the emerging “organization neural system”, where the needs of the customer can be intelligently supported by real-time, self-learning intelligent operations:

 

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Why is this acquisition significant?

In a nascent market where stakeholders stumble through smoke and mirrors to make any sense of the many claims around Intelligent Automation, M&A is a clear indicator that the market is starting to mature. When in December 2016 ISG bought Alsbridge and CA acquired Automic, HfS suggested that Intelligent Automation was at an inflection point and that the focus on automation tools will shift toward the likes of Google, Amazon, and Facebook around deep learning and the integration of unstructured data. While we have not yet seen the Internet giants play their hand, Genpact’s acquisition of Rage Frameworks is underlining exactly these market dynamics. And this is the first time that a service provider is driving automation capabilities through M&A.

Rage Frameworks drives pre-built automation engines deep into unstructured territory

Whereas the broader market remains misguidedly focused on the intricacies of RPA, Rage’s focus is not on automating specific process steps, often on sub-process level, but on developing a broad ranging platform (RAGE Enterprise) for custom solutions with a deep vertical footprint. While RPA is largely focused on structured information, Rage will take Genpact deeper into integrating semi and unstructured data. Their development effort over the last two years to build enterprise applications for financial industry processes (wealth management, commercial loan processing and financial statement spreading) is shifting the focus from automation tools and capabilities to providing an end-to-end process leveraging a model driven business transformation platform.

In our view, the value proposition of Rage Frameworks is centred on leveraging Machine Learning and Natural Language Processing to build out highly vertical engines in Financial Services, Capital Markets, and Supply-Chain. The functionality of these engines ranges from managing business rules to real-time integrating content to data access and NLP all built around a process assembly engine. These engine building blocks can then be assembled for custom solutions that automate business processes or can be used as one of three pre-assembled financial services industry applications: LiveWealth, LiveCredit, and LiveSpread. In addition, broader capabilities including front desk automation, real-time intelligence, and pricing are transforming how commercial lending, policy underwriting, financial statement analysis, investment research, and multi-system reconciliation can be performed.

RAGE’s industry applications are a big part of the allure for Genpact, which has spent the last few years going deeper into its commercial banking and capital markets operations accounts with data and analytics solutions trying to solve the same client operational challenges as Rage. In our recent HfS Capital Markets Operations Blueprint, Genpact placed in the Winner’s Circle, with an HfS callout about its need to bring more technology enablement to capital markets. The service provider has examples of using emerging technologies such as machine learning, automation, dynamic data extraction, etc., in LOBs as retail banking. What Rage brings to the table for Genpact is a more strategic approach for impacting client operations through technology-led change.

Genpact continues to lead the automation discussion from the front

From Genpact’s perspective, the acquisition is reinforcing the perception of being a pioneer in Intelligent Automation. Having led the market with the first publicly announced partnerships with AutomationAnywhere, Exilant, and Automic around its Rapid Automation program, Rage Frameworks fits in well with Genpact’s holistic approach to automation. Within that context, Rage’ assets will further advance the integration of unstructured data: Genpact has invested heavily in analytics and big data with a dedicated research lab in Bangalore, India. They have developed a Data Engagement Platform using big data technologies, in order to be able to harness structured and unstructured data from multiple sources. Thus, its Lean Digital strategy is aligned with HfS OneOffice concept. But the company has to demonstrate that it is starting to link up back, middle and front-office.

The broader market will follow with accelerated M&A activity

Regulations and risk management requirements are forcing banks to rethink the way in which they capture, store, manage, and distribute the growing volumes of transactional and trade data. Structured data from multiple departments and asset classes are maintained in silos, and unstructured data present new challenges as well as opportunities for automation and analytics.

Despite the continuing noise around RPA, we believe the market will shift toward operational analytics and the broader notion of AI. Not only are the leading RPA tool providers expanding in that direction, but we expect the investment focus to progress toward Deep Learning, Neural Networks, and broad NLP capabilities. While it might sound trite, data really is becoming the new currency. But this currency needs to be integrated into delivery backbones on an industrial scale. Thus, service providers need to reinforce their efforts on service orchestration. We haven’t seen many proof points for a successful expansion into data-centric scenarios, but those deployments will be a clear demarcation between the leaders and the also-runs.

Central to this will be the articulation and delivery of business outcomes for specific industry functions through the use of operational analytics, RPA, BPO and AI. Can Genpact put together a financial spreading function by leveraging its operational expertise in BPO and RPA, the RAGE LiveSpread application and analytics interventions to deliver more efficient and effective credit risk management?

Bottom-line: Genpact is progressing toward True Digital OneOffice capabilities

Genpact’s announcement can be crystalized to its ambition of blending RPA in the back-office with AI in the middle-office, which is why the firm, still regarded by many as a "pureplay BPO" managed to break the top 10 in the recent Digital OneOffice Premier League, despite not dragging a multi-billion dollar IT services business around.

Thus, BPO is ever more changing to becoming technology-led. We expect that this strategy will be increasingly underpinned by neural networks and notions of self-remediation to enhance the Digital Underbelly and the Intelligent Digital Processes of the OneOffice concept. While Rage Frameworks is one of the superior suppliers across the Intelligent Automation Continuum, the more providers that are progressing toward the notion of AI, the more inflated the valuations for M&A will become. Against this background, valuations for RPA providers could look like peanuts very quickly. But then again, M&A is rarely rational in today's foggy market.

Posted in: Business Process Outsourcing (BPO)Cognitive ComputingFinance & Accounting BPO

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Deconstructing Q4 2016 – Growth in the Traditional Services Model close to Flatlining

March 10, 2017 | Phil FershtJamie Snowdon

The traumatic Q4 results season has finally ended and our Chief Data Officer, Jamie Snowdon, is able to report on the final Q4 standings...

We’ve visualised the latest set of results for Q4 in the diagram, the top chart shows our usual margin v growth view (excluding AWS). With a chart showing the quarterly growth for Q4, an estimation of the annual (calendar) growth and the Q4 operating margin.

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For each of the providers the results look like this:

 

Growth Q4 (%)

Growth 2016 Calendar Year (%)

Margin Q4 (%)

Comments

Accenture

6.3%

7.1%

15.6%

Good quarter for Accenture with plenty of success stories around digital, cloud and security. Constant currency growth around a percentage point above the actual growth for the quarter. Annual services growth is 7.1%.

Atos

6.8%

9.7%

9.6%

Coming down from the highs of its recent acquisition-fuelled growth of the last couple years - Atos remains solid with organic growth at 1.8% for the year and 1.9% for the quarter. Benefiting from strong execution and its investments in analytics, security and automation.

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Posted in: IT Outsourcing / IT ServicesTrends Analysis

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Watson and Einstein Sitting In A Tree: IBM-Salesforce join forces to give you more ways to buy AI

March 10, 2017 | Phil FershtReetika JoshiTom ReunerKhalda De Souza

The time for smart partnerships to drive real innovation and new thinking in Artificial Intelligence (AI) and cognitive computing is now. This means we need to see the industry’s deep-pocketed innovators become increasingly open – and eager - to working together to help the services industry make the shift to true digital, intelligent, cognitive capabilities.

Recent HfS research shows adoption of Artificial Intelligence (AI) and cognitive computing to enhance operational analytics and Machine Learning is strongly accelerating, with 72% of senior operations executives citing cognitive as becoming a critical component of the future operations strategy:

Digital and Cognitive are Driving Enterprise Operations

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Source: “Intelligent Operations" Study, HfS Research 2016; Sample: Buyers = 371

While the market perception around these topics remains refreshingly blurred, AI is a critical building block as organizations increasingly look to progress from legacy labor-driven service delivery to progress toward notions the As-a-Service Economy and the Digital OneOffice (see link). While AI is capturing the imagination of many PE investors and VCs and is being used to hype up media reporting and conference circuits, the market dynamics are far from clear.

Against this background, the fundamental question being posed is “Who will be in the driving

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Posted in: Analytics and Big DataCognitive ComputingIntelligent Automation

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Crush that cobol... at last a standard org chart for your disruptive digital hierarchy

March 07, 2017 | Phil Fersht

Finally! We've just saved you hours upon hours of mind-numbingly dull hangouts trying to figure out all your fancy new digital job titles and reporting lines... now time to get combatting all that disruption to make your firm a true transformative digital pioneer in this emerging quantum era, where you can be a digital Michael Phelps diving into your own datalake:

Posted in: Absolutely Meaningless ComedyDigital TransformationDigital OneOffice

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IBM, Accenture, Cognizant, Deloitte and Infosys lead the first Digital OneOffice™ Premier League

February 26, 2017 | Phil Fersht

As the market for enabling and supporting the digital organization reaches fever pitch, HfS’ analyst team has run a detailed assessment of service provider capability to deliver the Digital OneOffice experience across the five pillars that align the front, middle and back offices. We believe it essential to evaluate how service providers’ emerging capabilities are stacking up, not just in each distinct category, but how they align to the holistic Digital OneOffice Framework across these five key pillars:

Pillar 1) The Digital Customer Engagement (Weighing 25%)

Pillar 2) Design Thinking: Designing Digital Outcomes (Weighting 15%)

Pillar 3) The Digital Underbelly (Weighting 20%)

Pillar 4) Intelligent Digital Support Functions (Weighting 20%)

Pillar 5) Intelligent Digital Processes (Weighing 20%)

This is HfS’ very first Digital OneOffice Premier League ranking exercise. We have taken the 5 key components of the Digital OneOffice described above, and scored each service provider on each category and subcategories as applicable (see the Digital OneOffice Organization illustration below). Using materials from recent research projects, namely Blueprint reports and many client reference discussions, we leveraged our broad analyst team’s collective knowledge of the industry to perform this analysis, involving analysts Phil Fersht, Melissa O'Brien, Barbra McGann, Jamie Snowdon, Tom Reuner, Derk Erbé, Reetika Joshi, Pareekh Jain, Khalda de Souza and Steve Goldberg.  

HfS subscribers can download their copy of the 2017 Digital OneOffice 2017 Premier League here.

The result below is the ranking of the top 25 service providers and how comprehensively each is aligned to the Digital OneOffice framework overall and enabling its clients to become more intelligent organizations that ultimately improve customer experience. 

Why The Digital OneOffice is the Future of Outsourcing

The Digital OneOffice Framework is all about the design and implementation of the organizational digital experience and the creation of an intelligent, single office to execute and support it. In a few months, we won’t be talking nearly as much about intelligent automation and digital technology as the critical “value levers” for operations, as they become an embedded part of the fabric of the future operations platform for new generation organizations. Instead, we will be talking about an integrated support operation having the digital prowess to enable its organization to meet customer demand - as and when that demand happens. Everything about the digital organization is about engaging people by responding to their needs instantaneously, giving people their choice of medium to interact with it, be it voice, chat box, text, Facebook messenger, email, virtual agent, etc.

In this context, "Digital" describes the interactive channels that drive customer engagement, such as cognitive agents, interactive tools, mobile, social, text and chat. "OneOffice" describes the enabling technologies, such as unified analytics and cognitive automation, that enable real-time predictive capabilities and an engaging digital experience that unifies all the stakeholders across the organization: the customers, partners and employees. In short, the Digital OneOffice is where the organization's people, intelligence, processes and the infrastructure come together as one integrated unit, with one set of unified business outcomes tied to exceeding expectations.

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The Bottom-line: The Winning Service Providers are those who can become Digital OneOffice Organizations themselves

The bottom line is that digital is all about realigning the organization to the customer; even those processes and roles which aren’t even remotely customer facing still play a critical role in supporting the digital customer experience. The service providers we have evaluated all play different roles in enabling that for clients. Those which scored well in the rankings are doing the best at bringing together the cross-organizational Digital OneOffice concepts for clients, but in the age of frequent and abrupt disruption, things can change. In 2017, we’ll continue to see service providers making moves to invest in and build out more comprehensive Digital OneOffice capabilities as well as those which will double down in the pillars of The Digital OneOffice where they excel. These are still early days, and we anticipate the next iteration of the Digital OneOffice Premier League will produce winners which have proven they can integrate the pieces most effectively, driving transformation across the pillars leveraging their strategy, consulting, Design Thinking and operational enablement prowess.

To conclude, people simply want to operate digitally these days, whether they are an employee, customer or partner. They want to use interactive technology, mobile apps, social media, text, online chat, etc. to get things done. We are used to using sophisticated digital technologies in our personal lives, and now expect to use them in our professional lives. Whether we are buying products, groceries, renting accommodation, ordering Starbucks, takeout, applying for mortgages, insurances policies etc., digital technology is the new language of business. The issues facing many traditional businesses today is the fact that while the consumer is increasingly digitally sophisticated, many organizations are still beholden to legacy technologies and processes that are fast sinking into obsolescence. In addition, many have employees in the “back office” who are so steeped in the legacy way of doing things, they are facing a double-edged issue: how do they drag their operations kicking and screaming out of the dark ages to support their digital customers? The answer, believe it or not, is quite simple: break down the barriers between departments, involve the digital customer experiences into all the business processes and practices, by creating a Digital OneOffice where an organization’s customers, partners and employees are all entwined together to deliver the end customers the ultimate experience, and the operations function a genuine connection with the true running of the business from back to front.

Net-net - every touch point of the modern business needs to be digital - and to achieve that you need to be a digital business right at your core, where the most rudimentary of processes are automated to enable the building blocks of the digital experience. The winning service providers will be those which are true digital organizations that can partner with their clients to feed off their DNA and culture.

HfS subscribers can download their copy of the 2017 Digital OneOffice 2017 Premier League here

Posted in: Digital TransformationDigital OneOffice

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It's here, it's real... it's the 2017 RPA Blueprint deal!

February 22, 2017 | Phil FershtTom Reuner

At a time where alternative facts and fake news open doors to a parallel universe, where global labor markets are being disrupted by various flavors of travel bans to the United States, the specter of a wall being built at the US-Mexico border that costs more than the entire Space-X program, a reform of H1B visas that could likely dismantle the traditional outsourcing model, and a curious thing called Brexit that could change the global trade landscape forever, one might be forgiven for feeling slightly disoriented.  Yes, people, we've arrived at a time where the very foundations for service delivery models across the industry are being put at risk, where there is no written rule book for how to get ahead of this. So what better time than to add a sprinkle RPA into this global potpourri of disruption? Maybe a food dose of process automation will give us all something to cling onto during these heady days?

Against this slightly perturbing background, what is the state of the RPA market, the emergence of the virtual workforce - and how will it affect the broader markets? Is RPA the silver bullet to overcome many of these issues and obstacles? Back in December, we already chartered the service provider capabilities around RPA. As a result, we not only got a strong endorsement for our findings, but stakeholders were asking us to provide a similar assessment for the RPA tool providers themselves. To get more clarity on these pressing issues, we have sent our automation overlord Dr Tom Reuner back into the RPA community to separate the wheat from the chaff... the bots from the clots.

Based on his findings, Tom and I went into conclave, compared notes and war stories, as well as cranking the numbers for the evaluation. And finally, we have white smoke. Thus, we are pleased to share the new 2017 RPA Blueprint grid and the key findings with you.

Click to enlarge

 

Phil Fersht, CEO and Chief Analyst: Despite all the noise, many stakeholders still struggle to comprehend what RPA is all about. Tom, can you help these lost souls to get up to speed before we dive into the details?

Tom Reuner, SVP Intelligent Automation: I wish that would be so easy, Phil. Despite all the noise RPA is still an undefined market. To make matters worse, the IT juggernauts, the service providers, and management consultancies are only very gingerly educating the market. Two

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Posted in: Cognitive ComputingRobotic Process AutomationIntelligent Automation

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Sticking to his education NIIT-ing... meet Arvind Thakur

February 20, 2017 | Phil Fersht

There's never been a better time than this for the specialized midtier services partner which isn't dragging around billions of dollars of legacy contracts and isn't reliant on massive people-scale deals to sustain its growth and profit margins.  Clients are increasingly looking for shorter, sharper engagements - with immediate impact - that drive executives and their staff back to the classroom... the type of engagements which may simply not be attractive enough for a Tier 1 service provider which isn't built for smaller, focused engagements that require higher level talent to lead real change management programs.  In addition, most clients today do not want to drop millions of dollars on consultants to change things for them... they would rather have someone come in who can teach

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Posted in: Digital TransformationIT Outsourcing / IT Services

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NASSCOM 2017: Indian IT services paralyzed by Trump, but being a deer in the headlights is not an option

February 17, 2017 | Phil Fersht

When, in history, has there existed a market that keeps relentlessly growing at 5-10% each year, with profit margins consistently at a 15-20% level; and for well over a decade? Yet you attend the annual flagship Indian IT conference only to experience an atmosphere of acute paranoia and paralysis.  Is change really that frightening?

Even most clients are openly declaring they haven't had their budgets reduced - many simply aren't ready to make investments while there is such uncertainty surrounding the market because of an unpredictable US President.  Even NASSCOM itself adds to the uncertainty by deferring its usual business outlook... 

However, acting like a deer in the headlights is not an option.  The smart strategy is to expect the worst and make measures now to get in front of it.... don't let the juggernaut, that is a protectionist US administration, squash you flat in your tracks.  

Breaking out of this paralysis cycle

However negatively this could turn out for some of the Indian IT services industry – here are six simple ways to break out of this paralysis and reinvest some of these bloated warchests, before greedy investors who got rich off your spoils demand to cash in their chips...

1) Invest internationally beyond the US.  Those Indian IT majors in the strongest position are those that are least reliant on their US clientele for future growth.  In fact, HfS estimates $7 Trillion in B2B digital expenditure by 2020 - with only $2bn being in the US (traditionally 50% of worldwide IT spend came from the US, but digital spending - both B2B and B2C - is changing that picture dramatically). For example, the British PM is already deep in discussions with Modi about closening UK/Indo ties even further in the wake of Brexit. The UK has the potential to become a major digital hub, fuelled by Indian talent.  While Brexit appears like a terrible idea on paper, change forces action and these actions will be all about increasing the flow of trade and talent with emerging nations and creating new wealth. We also see a real appetite for digital business model investments and automation by Australian businesses - and many of the Asian nations are only too happy to move from zero to hero to take advantage of the humongous digital B2B expenditure in Asia/Pacific and the rest of the world.  

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In addition, many of the European regions, such as Nordics and Germany, are now rapidly exploring more global resources to support their digital growth. If America - as it appears - is on the path of becoming a protectionist anti-globalization country for the next four years, perhaps its time to broaden your horizons?  

2) Invest in a smarter onsite/offshore model that gets you closer to your customer's customer.  Yesterday's IT services model was all about helping legacy traditional enterprises keep their lights on by maintaining clunky old ERP implementations keep operating, adding extra sauce to spaghetti code and keeping an eye on server outages from afar.  Tomorrow's winners have moved all this stuff into the cloud and automated much of their infrastructure management.  The future growth is working much closer to your customers to help them design and implement digital business models by building mobile applications, testing customer sentiment, forging partnerships and developing APIs with new digital business partners and communities.  Technology skills such as DevOps, Agile, Hadoop, Blue Prism and

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

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See you at NASSCOM!

February 13, 2017 | Phil Fersht

Am looking forward to seeing many of you in the warmer climes of Mumbai this week... so having some "Beef Wellington" to protect myself against what threatens to be a mudslide of confusion this week! I hope many of you can attend our opening session "“The Digital OneOffice - Getting Ahead of Today's Disruption”... cheers PF

Posted in: IT Outsourcing / IT ServicesOutsourcing Events

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Is there any sanctuary left from the robot these days?

February 08, 2017 | Phil Fersht

Posted in: Absolutely Meaningless ComedyRobotic Process AutomationIntelligent Automation

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Unveiling the first ever Digital OneOffice Premier League (Webinar Replay)

February 06, 2017 | Phil Fersht

WATCH THE REPLAY

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

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Four Golden Rules to save the Indian IT Industry from Trump

February 04, 2017 | Phil Fersht

You must read my LinkedIn post and join in the discussion. Click here to access... go on, you know you want to =) 

Posted in: Policy and Regulations

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Harman, Accenture and Atos are bossing emerging IoT Services, but we need real IoT algorithms and security standards

January 28, 2017 | Phil FershtPareekh Jain

I plugged my iPhone into my new (fuel-emission friendly) VW this week and - for the first time - my car was connected to by digital life.  Siri (finally) came alive and started sending my contacts voice to text messages, my favorite Spotify soundtrack was arranging itself in all its glory on my vehicle dashboard, and I didn't have to worry about tuning radio stations, pairing devices that barely talked to each other, or getting stuck using some horrible proprietary technology my previous car had forced me to use, or those awful attempts at being "appy" from the cable TV providers that look nice, but require months of frustration to figure out.

My car was finally seamlessly connected with my personal apps that run my life, and my suicidal urge to text and drive has been cured by Siri finally doing it for me! While it's been pretty cool to program the air-con using a mobile app or have automated replenishment of new coffee capsules... being able to take your digital life into your moving vehicle is what IoT is all about. It's high-time to get past the buzz about IoT being bigger than IT itself - it's really about sensors, data and most importantly what we can do with this data, and how we can create digital experiences outside of our traditional mobile and laptop screens.  

So, without further ado, let's take a look at the 2017 landscape for IoT service providers and have a chat with report co-author and manufacturing-engineering analyst guru himself, Pareekh Jain, about the emerging landscape for IoT services...

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Phil Fersht, Chief Analyst and CEO, HfS: Pareekh, how do you see the IoT market evolving and what are the key IoT trends you have been observing?

Pareekh Jain, Research Vice President, HfS: Phil, the current state of IoT revolves around sensors and data collection and its use in sub-process or process optimization, but there is not enough visible thought or action by IoT service providers in exploiting the potential of data for the business reimagination of the Digital OneOfficeTM. Take the example of Amazon Go – the concept store where there will be no checkout queues (seriously). Shoppers can pick... and just go. The combination of IoT with artificial intelligence and machine vision is what makes Amazon GO possible. This is just one of the business reimagination possibilities of IoT, where these true digital experiences come alive, and we're finding this kind of conversation depressingly absent in our discussions with some of the service providers.

Having said that, we do see real progress with the foundations of IoT over the last couple of years and are observing five key trends in our IoT research.

1) IoT is for real, but is limited in scale and scope at present. We found many examples of PoCs and actual customer engagements. The customer engagements are small and limited in scope to a couple of business or geographical units. The organization-wide IoT strategy and implementations examples are rare. 

2) IoT update is pervasive and use cases are cropping up across all industry sectors. The highest number of IoT examples we have seen are in manufacturing or Industrial IoT, smart cities, and connected cars.

3) Efficiency or cost optimization are the major drivers in IoT projects at present. This is

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Posted in: Digital OneOfficeInternet of Things

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Offshore has become Walmart…as Outsourcing becomes more like Amazon

January 21, 2017 | Phil FershtJamie Snowdon

In the post-digital world, no one cares much about “offshore” as a strategy - it has become part of the fabric of managing a global operating model, where operations leaders just tap into whatever global resource they need to achieve their desired outcomes. This doesn’t mean that traditional “offshore” global delivery locations, such as India and the Philippines, are going bust overnight. But it does mean the playing field is leveling out as the need for emerging skills trumps the desire simply to reduce labor costs.

Our new State of Industry Study, conducted with KPMG (see above) of more that 450 major global enterprises – shows an increasing majority of customers of traditional shared services and outsourcing feel they have wrung most of the juice offshore has to offer from their existing operations, and aren’t looking to increase offshore investments.  When we compare enterprise aspirations for offshore use between the 2014 and 2017 State of the Industry studies, we see a significant drop, right across the board, with plans to offshore services. Organizations are now either looking to make their existing offshore operations more effective, or even reduce them where they can (especially in F&A and HR), using new technologies and smarter process management.

It’s all about future scalability without the linear resource investments

The difference between new style of automation-rich intelligent operations and offshore-centric traditional operations is growing. It’s a bit like comparing the growth of Walmart to that of Amazon – (although it has started to change with its belated online strategy and acquisition of Jet.com), for many decades, the success and growth of Walmart has largely been tied to

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Posted in: Business Process Outsourcing (BPO)HfS Surveys: All our Survey PostsIT Outsourcing / IT Services

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2017: The year people are forced to learn new skills... or join the Lost Generation

January 13, 2017 | Phil Fersht

Let’s cut to the chase – there have never been times as uncertain as these in the world of business. There is no written rule-book to follow when it comes to career survival. The “Future of Work” is about making ourselves employable in a workforce where the priority of business leaders is to invest in automation and digital technology, more than training and developing their own workforces.

As our soon-to-be-released State of Operations and Outsourcing 2017 study, conducted in conjunction with KPMG across 454 major enterprise buyers globally, shows a dramatic shift in priorities from senior managers (SVPs and above), where 43% are earmarking significant investment in robotic automation of processes, compared with only 28% placing a similar emphasis on training and change management. In fact, the same number of senior managers are as focused on cognitive computing as their own people… yes, folks, this is the singularity of enterprise operations, where cognitive computing now equals employees’ brains when it comes to investment!

My deep-seated fear for today’s workforce is that we’re in danger of becoming this "Lost Generation" of workers if we persist in relying on what we already know, versus avoiding learning new skills that business leaders now need. We have to become students again, put our egos aside, and broaden our capabilities to avoid the quicksand of legacy executives no longer worth employing. We need to become hybrid corporate animals.

So let’s give some examples of these "new skills" we need to develop for ourselves:

Sales people: it’s no longer just about selling and relationship development, it’s about understanding evolving business models, understanding the impact of technology and the importance of smart marketing. You need to be a trusted consultant, not simply good with a 9-iron. Clients needs are increasingly complexifying and you need to be the arbiter of helping them simplify their requirements. Understanding business models is what will make you successful in the digital world.

Software people: it’s no longer about data management, security and making apps function, it’s also about understanding the desired business outcomes associated with these investments and helping your enterprise stakeholders articulate them better, so you can work with them to

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Posted in: Cognitive ComputingDigital TransformationHfS Surveys: All our Survey Posts

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No more denial for WNS as it makes its concerted procurement play

January 12, 2017 | Phil FershtDerk Erbé

This is era of the emerging BPO provider, as IT services stagnate and clients demand greater personalization and attention from business services firms that have the scale, resources, hunger and technology enablement skills to take on increasing complexity and make sense out of the dataswamps plaguing so many of today's businesses.  

One such stalwart of BPO, quietly going about its business over the years with steady growth and increasing reputation for solid delivery, is WNS (yes, the one that was spawned out of the British Airways captive back in the day).  WNS has performed well over the years, growing business streams in knowledge process domains, finance and accounting, insurance, travel, mid-size banks, contact center and some other areas.  It has oft-threatened to make a grander procurement BPO play, but mostly opted to partner with the likes of Denali when the need arised.

In my view, having solid procurement delivery capabilities goes hand in hand with F&A, so it's refreshing to see WNS snap up one of the best pureplay strategic sourcing providers left in the market, which should make the merged entity a Winner's Circle contender later this year when we rerun the Procurement-as-a-Service blueprint:

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So let's hear from our Procurement and Supply Chain analyst, Derk Erbé, who's recently emerged from a major analysis of the procurement services market:

WNS + Denali - The Details

To start the New Year with a bang, WNS announced the $40 million acquisition of Denali Sourcing Services. We have covered both WNS and Denali in our December 2016 Procurement As-a-Service Blueprint. WNS is ranked as an Execution Powerhouse, while Denali is a High Performer in the Procurement As-a-Service market.

The acquisition of Denali Sourcing Services is a good move from WNS, and effectively bolsters

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Posted in: Business Process Outsourcing (BPO)HfS Blueprint ResultsProcurement, Engineering & Supply Chain Outsourcing

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