HfS Network

Why have so many sourcing advisors failed with automation?

June 24, 2017 | Phil Fersht

Remember when sourcing advisors has become the "new analysts" and dominated so many outsourcing discussions?  Remember when it was the norm for clients to bring in the sourcing specialists whenever they needed a deal done, not only to get a good price, but also to make sure they selected the right partner and had a strategic view of the future?  Remember when most advisors were not only contract experts, they were also strategists, researchers, sounding boards and respected brands you could hang your hat on... Just look at our 2011 study when advisors lorded the influence over everyone bar direct peer feedback:

Fast forward to today, with all the sourcing advisors doubling-down in RPA to compensate for the drying up outsourcing deals and confidently hoping their outsourcing clients will immediately turn to them to help them grapple with the new outsourcing-cum-automation model.  Surely their ability to craft deals for clients will put them in pole position to take their clients down the RPA path...

Let's visit our brand new (still-in-the-field) study on the 2017 State of Automation, and it's telling us a very different story when we spoke with 56 enterprises actually deploying RPA:

Less than half the RPA buyers view either consultants of sourcing advisors as influential in their automation sourcing.  Even conferences are impacting automation buyers more.

So what's gone so wrong with advisors in automation?

Credibility. Suddenly many advisors who were previously hawking their deep understanding of HCL versus TCS's FTE rate cards are now suddenly adding their names to white papers on automation and trying to insert themselves into serious client conversations about said topic.  It's just not credible.

Smarter clients.  The swirl of information over social channels is so intense these days that most clients' knowledge isn't that far behind the experts.  In many cases, you'll learn more about RPA talking with a client in beta mode than an advisor or analyst trying to impress you at a conference.  That is why internal channels, such as procurement and plain old desk research is such an influence factor these days.

Archaic focus on headcount reduction. Just because you could create simple cases for headcount reduction with "take the people" outsourcing, doesn't mean you can deploy the same draconian strategy to automation.  Even the most clueless governance executive knows you can just fire people before you programmed some manual activities into a piece of software. Sure, there are serious productivity gain to be gleaned over time through the digitization of manual processes, but to tie this to immediate headcount takeout just doesn't work.  

Competition from service providers.  For the first time, sourcing advisors and service providers are going head to head, and automation is the promoter of the fight.  When clients want to understand RPA and a partner so help them roll it out, they need people who are in the game for the long haul, not a broker to dip in and out and get a deal done.  Many of the sourcing advisors are just not transformation people - they are great at helping clients plan their outsourcing weddings, but marriage guidance councilors they truly are not.  Service providers depend on long-term, complex and often messy relationships to keep them employed and busy... and RPA really fits the bill.  While it poses significant threats to their margins over the long term, they cannot afford to be not playing in the automation game.  What's more, most the BPO service providers are rapidly running RPA in their own delivery organizations, which is giving them the experience and lower cost base to be effective.

The traditional consulting model doesn't work with RPA.  The advisors are struggling to scale up talent bases that can understand the technology and deal with the considerable change management tensions within their clients.  RPA is murky and complex, and not something you can train bus loads of 28-year-old MBAs to master overnight.  Meanwhile, we are seeing some advisors simply do some brokering of RPA software deals for small fees, only to make a hasty exit from the client as they do not have the expertise to roll-out effective implementation and change management programs.  

RPA specialist consultants few and far between. Pure-play RPA advisors are explaining this is not quite so easy and requires a lot more of a centralized, concise strategy. There are simply not enough of these firms in the market, especially with Genfour having been snapped up recently by Accenture. With only a small handful of boutique specialists to go around, these firms can pick and choose their clients and command high rates. Quality RPA advisory boutiques, such as Symphony Ventures, are literally turning business away as they cannot scale fast enough to cope with the demand.  

Advisors are not producing research.  There's a reason why procurement folks, analysts and simple desk work actually sit above advisors in the new data - clients want product specific benchmarks and real experienced advice that they are simply not getting from the advisors.  All the advisors are putting out is the same of tired "drama" about robots replacing workers, and how to think "strategically" about RPA.  While I like some of the stuff I see coming out of the likes of McKinsey, KPMG and EY, it's just not giving me the real deal about which RPA vendor I need to be working with, how these tools truly stack up against each other and how I can actually build a bloody bot.  That is why many clients are getting more reality from attending a conference than the lovely lunch they just got bought from their nice friendly consulting partner.  

Turgid, hackneyed marketing doesn't work anymore. Cheesy pictures of robots and the same endless stream of 300-foot view puff that sounds just like the last piece you read on LinkedIn by some weird dude who you can't actually recall allowing into your network, isn't helping matters.  These advisors are relying on their brand and past reputation for credibility in a world where clients want to see some meat on the bones. 

The Bottom-line: Advisors need a vastly different approach to automation to avoid complete irrelevance in this market

This industry has literally entered into a destructive war over automation, and the need for credible, independent and experienced advice has never been so in demand from customers. The skills to make automation a feasible profitable reality are few and far between, while

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Posted in: Outsourcing AdvisorsRobotic Process Automation

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A third of enterprises are making significant investments in RPA

June 22, 2017 | Phil Fersht

Tired of the RPA hyperbole?  Well, you'd better get used to it continuing, as key industries have already made significant short-medium term commitments:

Our 2017 State of Operations and Outsourcing study with KPMG, covering 454 major enterprises, shows the hi-tech and financial services industries leading the way with, respectively, 53% and 44%  already making significant investments in RPA over the next couple

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Posted in: HfS Surveys: All our Survey PostsRobotic Process Automation2017 State of Industry Study

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Time to hangout with the real robo-bosses at the FORA Council this September

June 17, 2017 | Phil Fersht

When an industry is enduring a secular shift that is literally redefining how we do work, it's pretty important to get some real, unfettered dialog going among all the key stakeholders this impacts. We need to break free from the glitzy paid-for sales presentations, robot keyrings, stress balls, nasty logo-ed leather notepads and greedy events firms vying for a quick buck from vendors eager to part with cash to promote themselves to all their competitors.

That's why we're assembling 100 of the industry's finest leaders in a single room for a whole afternoon to thrash out the mandate for the future of operations in the robotic age for our inaugural FORA council session in Chicago, 19th September. And we promise no sponsors, stress balls or bad white papers to take away...

Here's just a sample of the industry robo dignitaries who've already committed:

  • Alastair Bathgate, CEO, Blue Prism
  • Chetan Dube, CEO, IPsoft
  • Chip Wagner, President, Emerging Business Services, ISG
  • Cliff Justice, Partner, US Leader, Cognitive Automation and Digital Labor, KPMG
  • David Poole, CEO, Symphony Ventures
  • Daniel Dines, CEO and Founder at UiPath
  • Jesus Mantas, Managing Partner and General Manager, IBM Business Consulting, IBM US
  • Lee Coulter, Chair for the IEEE Working Group on Standards in Intelligent Process Automation
  • Dr. Mary C. Lacity, Curators' Distinguished Professor of Information Systems, UMSL, and Visiting Scholar MIT
  • Max Yankelevich, CEO, WorkFusion
  • Mihir Shukla, CEO, Automation Anywhere
  • Peter Lowes, Partner, and Head of Robotics & Cognitive Automation, Deloitte US
  • Shantanu Ghosh, SVP, CFO Services and Consulting, Genpact
  • Thomas Torlone, U.S. Leader of Enterprise Business Services, PwC
  • Tijl Vuyk, CEO and Founder, Redwood Software
  • Weston Jones, Global RPA Leader, EY

We also have leaders of cognitive and automation initiatives from the following buyside firms already signed up to get stuck into the debate:

So let's cut to the chase - it's time to have the real, hard conversation about where we really are as an industry. Why aren't those 40% cost savings happening, each time someone slams in some software and hopes it somehow eliminates manual labor because they can access a bot library? In fact, why are a third of RPA pilots just left hanging with no result? Yes, people, it's

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Posted in: Robotic Process Automation

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It'll be a very windy city this September... so don't miss the flagship HfS Digital OneOffice Summit

June 14, 2017 | Phil Fersht

The windy city will get extremely blustery this September 19-21, when HfS stages the inaugural FORA Council session, immediately followed by our annual HfS Summit "The Digital OneOffice: Redefining How We Get Work Done"

Friends,

Someone just described going to an HfS event as the whole industry being bludgeoned with a blunt instrument... how dare they? Yes, friends, it's nearing the time for the next, immense iteration of that HfS summit, where we're cementing together the biggest, boldest and

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Posted in: Digital OneOffice

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The Robotic Process Automation market will reach $443 million this year

June 10, 2017 | Phil FershtJamie Snowdon

Have we ever got so excited about a market that isn't even yet past the half-billion dollar spend level? Are we getting over excited about solutions because of their potential before they are fully tried and tested in reality?  Let's get to the realities of RPA by examining the size and five-year forecast for software and related services expenditure:

The global market for RPA Software and Services reached $271 million in 2016 and is expected to grow to $1.2 billion by 2021 at a compound annual growth rate of 36%. The direct services market includes implementation and consulting services focused on building RPA capabilities within an organization. It does not include wider operational services like BPO, which may include RPA becoming increasingly embedded in its delivery.

RPA describes a software development toolkit that allows non-engineers to quickly create software robots (known commonly as "bots") to automate rules-driven business processes. At

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Posted in: Cognitive ComputingRobotic Process Automation

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We are in the People Elimination business. How did it get this bad, and can we change course? (Rant warning)

June 02, 2017 | Phil Fersht

Talent is still the most precious asset firms have and it needs to be nurtured as the real proponent of growth and success, not merely the fancy technologies that can automate workflows. Our technology and business services industry desperately needs a mindset shift - and one that requires a longer term view, than the next quarterly Wall St announcement. Whilst we are not the only guilty party here, our technology and business services industry is still rooted firmly in people capability, much more than technology and commodity products, hence the desperate need to correct course and avoid circling the drain...

I was interviewing with the Delhi branch of NPR the other day on the layoff paranoia engulfing the Indian IT industry, and it dawned on me just how inhuman our business has become. These are normal people who still view the world as one where employers have responsibilities to their employees, where people still care about the welfare of others, when you got up in the morning and went to a job that had a purpose and a future.

The poor interviewers simply couldn’t comprehend why major employers enjoying ~20% profit margins and continual 5-10% growth were so focused on making massive staff reductions.  “Don’t these firms have a responsibility to their employees, Phil?” was the question. “Of course they don’t, it’s all about their shareholders” was my immediate hair-trigger response.  Ugh – I suddenly felt ashamed of the business of which I was part. 

We’re in the business of increasing profits for investors, not creating new business value from people

Is our sole purpose now simply to eliminate people? We spend a couple of decades displacing "expensive" workers because we could find less expensive able ones to do the job. Now we’re getting rid of them altogether just to keep the Buffetts and Elliotts happy? And why are we literally obsessing with labels to describe what we do:  Digital, Machine Learning, Intelligent Operations, Robotic Process Automation… or my favorite “Digital Labor”. 

Let’s be honest, what all these things really signify is “how to get work down without the need for people”. And how can you call something “Digital Labor” when the labor is no more… unless we start redefining RPA recording loops based on optical recognition software as “labor”. Maybe we need to revisit what labor actually is, according to Merriam-Webster:

Definition of Labor (Merriam-Webster): 

"1) The human activity that provides the goods or services in an economy; 

2) The services performed by workers for wages as distinguished from those rendered by entrepreneurs for profits."

Correct me if I am completely losing my mind here, but we’re no longer in the business of promoting human activity to stimulate economies… we’re in the business of increasing profits for investors.  Is there any way to dig ourselves out of this hole, or are we on an inexorable nosedive to the lowest common denominator of creating and promoting business operations that no longer require people?

As technology and operations professionals, we must rediscover our purpose or we’re just promoting the end of labor

I wish I had a silver bullet solution to help us take this dramatic U-turn, but sadly, all I can offer are some ideas on how we can re-humanize what we do:

Find meaningful work for our people to do - not just fire them. In the past, when most businesses had some excess staff capacity, there were always useful things for them to do – such as consulting and outsourcing firms deploying their benched consultants to work gratis with existing clients on special projects that could eventually lead to future business – or just

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Posted in: Business Process Outsourcing (BPO)Cognitive ComputingDigital Transformation

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Welcome back to the analyst community, Saurabh Gupta

June 01, 2017 | Phil Fersht

I am proud to announce we've unveiled a very exciting analyst talent to lead our global research team, based in Chicago US, as our Chief Strategy Officer (see bio).

Saurabh Gupta worked with me at Everest over ten years ago where I helped train him up to help lead the firm’s BPO research team. After a distinguished career at Everest, where he earned a very strong reputation as a highly focused and respected analyst in the areas of BPO, banking, F&A, procurement, analytics and the underlying technology platforms, he went onto the buyside with AbbVie (the spin off shared services for Abbott Labs), where he helped craft the firm’s BPO and shared services strategy, working across various service lines and service provider relationships. He then had a spell with Genpact, where he has been instrumental helping them devise and shape the firm’s CFO service offerings and digital strategy. 

Saurabh has long eyed a return to the analyst fold and coming onboard HfS is the ultimate challenge for him, where he'll be leading our global research team and working with all of us to write about real buyer experiences and mapping where enterprises are on their Digital OneOffice journeys, how fast they need to move and what is preventing them getting to their ideal states.  I caught up with Saurabh this week to share more with you all what you can expect...

Phil Fersht, CEO and Chief Analyst, HfS Research: Saurabh - it's just terrific to be working with you again after a decade since we were at Everest together!  What took you back to the research industry after your recent years on the buyer and supplier side of services life?

Saurabh Gupta, Chief Strategy Officer, HfS Research: Thanks Phil. I am thrilled to be here. I am passionate about business research and being an analyst was the best thing that happened to

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Posted in: Outsourcing Heros

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Standards in automation? There's only one Lee in the IEEE...

May 27, 2017 | Phil Fersht


Few people can claim to have led shared services and IT for Kraft Foods, built shared services from scratch for Ascension Health, become one of the first true shared services practitioners to kick the tires with RPA... before establishing the industry's first standards body for Intelligent Process Automation with the IEEE.  Plus, he's going to be at our inaugural FORA Council (The Future of Operations in the Robotic Age) as the voice of standards and reason this September in Chicago.  Yes, ladies and gentlemen, meet the reincarnation of the process pontiff himself, Lee Coulter, who's going to give us a little more insight into why the heck we desperately need to adhere to some standards if we're going to find that automation haven that exists somewhere between fantasy, reality and failed promises...

Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Lee it’s great to chat with you again. You have been pretty deeply involved in developing and working on standards in process automation with the IEEE for over a year, would you be able to give us an update on what has been accomplished, and what we can expect next?

Lee Coulter, CEO Shared Services, Ascension Health and Chair for the IEEE Working Group on Standards in Intelligent Process Automation: Absolutely Phil, it has been quite a journey and I am very happy say that after working through the various societies of IEEE, the Board of Governors realised that this work impacted multiple societies and decided to use their reserve prerogative to sponsor a standards effort at the Board of Governors level. The first standard establishes some common terminology for us, it goes for approval on 5 May and that’s the procedural verification, making sure we have followed all the procedures of setting the standard, and we expect it to be published in June.  At the same time a part of IEEE called NeSCom which stands for the New Standards Committee that reviews all proposals. The next efforts, which will be referred to as P2756 in the IEEE world and their website, will be technology, taxonomy and classification for intelligent process automation products. Incidentally, in the same meeting where our first standard will be approved, they will also be reviewing and voting on the next standard. We have significantly increased attention for the second standard, which is really where we wanted to start but we realised we couldn’t do a taxonomy until we agreed what words meant. Several new members across the spectrum of providers have become advanced corporate members with IEEE and we expect to have a first working group meeting towards the end of June, as we go down the path of establishing a taxonomy.

Phil:  And when you look at the general state of automation in the industry today, where would you say companies are, as a whole, and how does this tie in with the need for standards?

Lee: It’s interesting, I recently presented an update at an event and a bunch of people hung out after the update, these were people new to the world of automation. They came up to thank me

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Posted in: Robotic Process Automation

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Gartner: 96% of customers are getting real value from RPA? Really?

May 23, 2017 | Phil Fersht

Last year we couldn't help ourselves revealing our lovely Gartner analyst friends, via the voice of Chief of Research and Distinguished Analyst, Fran Karamouzis, declaring, "3 million of us will be supervised by robobosses by 2018".  

So, while many of us are counting down the last few months enjoying our last experiences of having human bosses (or maybe some of us will actually prefer a robot), we can now breathe a huge sigh of relief that a whopping "96% of clients are getting real value from RPA" (Robotic Process Automation).  And not only that, RPA is thriving at a "satisfaction level greater than anything Fran has seen in her 17 years at Gartner":

I personally would love to meet this incredible cross sample of delighted clients Fran has had the good fortune to interview, seeing as we've been covering the emergence of RPA for nearly 5 years and this space is still at a very early phase of (sometimes) painful RPA experimentation, as enterprises figure out how to scale these tools, govern them and learn how to integrate them with other applications using scarce technical skills, while dealing with very challenging change issues.  

At HfS, we just came off a very intense day with 60 enterprise clients tinkering with RPA, and can officially declare that 96% of them are definitely not in love with their experience.  In fact, only a handful are making real progress, while the majority lack a cohesive governance program to get this stuff working on even a few rudimentary processes.  At HfS, we estimate, from our extensive ongoing research, that about half of today's RPA implementations are, so far, making some progress, while even Ernst and Young's new RPA report declares it has seen 30-50% of initial RPA implementations fail. (And this McKinsey piece entitled "Burned by the bots: Why robotic automation is stumbling"  has since been published... well worth a read).   

Why claiming 96% of RPA customers are seeing real value is plainly ridiculous 

Several of the RPA solutions vendors are painting an over-glamorous picture of dramatic cost savings and ROI. RPA software firms are claiming - and demonstrating - some client cases where ~40% of cost (or more, in some cases) is being taken off the bottom line. While some of these cases are genuine, there are many RPA pilots and early-phase implementations in the industry that have been left stranded because clients just couldn't figure out the ROI and how to implement this stuff. This isn't simply a case of buying software and looping broken processes together to remove manual efforts... this requires real buy-in from IT and operations leaders to invest in the technical, organizational change management, and process transformation skills. 

Several RPA clients cannot scale their solutions and are aborting implementations.  One solution in particular, which featured high in many analyst scatterplots, has recently suffered

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Posted in: Confusing Outsourcing InformationRobotic Process Automation

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The FORA Council has assembled the industry's leading minds in cognitive automation

May 17, 2017 | Phil Fersht

When an industry is enduring a secular shift that is literally redefining how we do work, it's pretty important to get some real, unfettered dialog going among all the key stakeholders this impacts. We need to break free from the glitzy paid-for sales presentations, robot keyrings, stress balls, nasty logo-ed leather notepads and greedy events firms vying for a quick buck from vendors eager to part with cash to promote themselves to all their competitors.

That's why we're assembling 75 of the industry's finest leaders in a single room for a whole afternoon to thrash out the mandate for the future of operations in the robotic age for our inaugural FORA council session in Chicago, 19th September.  And promise no sponsors, stress balls or bad white papers to take away...

Here's just a sample of the industry robo dignitaries who've already committed:

  • Alastair Bathgate, CEO, Blue Prism
  • Chetan Dube, CEO, IPsoft
  • Chip Wagner, President, Emerging Business Services, ISG
  • Cliff Justice, Partner, US Leader, Cognitive Automation and Digital Labor, KPMG
  • David Poole, CEO, Symphony Ventures
  • Daniel Dines, CEO and Founder at UiPath
  • Jesus Mantas, Managing Partner and General Manager, IBM Business Consulting, IBM US
  • Lee Coulter, Chair for the IEEE Working Group on Standards in Intelligent Process Automation
  • Dr. Mary C. Lacity, Curators' Distinguished Professor of Information Systems, UMSL, and Visiting Scholar MIT
  • Max Yankelevich, CEO, WorkFusion
  • Mihir Shukla, CEO, Automation Anywhere
  • Peter Lowes, Partner, and Head of Robotics & Cognitive Automation, Deloitte US
  • Shantanu Ghosh, SVP, CFO Services and Consulting, Genpact
  • Thomas Torlone, U.S. Leader of Enterprise Business Services, PwC
  • Tijl Vuyk, CEO and Founder, Redwood Software
  • Weston Jones, Global RPA Leader, EY

We also have leaders of cognitive and automation initiatives from the following buyside firms already signed up to get stuck into the debate:

So let's cut to the chase - it's time to have the real, hard conversation about where we really are as an industry. Why aren't those 40% cost savings happening, each time someone slams in some software and hope it somehow eliminates manual labor because they can access a bot library? In fact, why are a third of RPA pilots just left hanging with no result?  Yes, people, it's time to wake up and smell those robotic roses and have those really tough conversations about what is real, versus why so much of this stuff just isn't working - and why we're not putting together properly governed RPA rollout plans like we do with ERP software and SaaS platforms.  Why are we making such a mess with this, when we could have so much to benefit from?

So join us in Chicago this September 19th for FORA the inaugural council meeting that finally debates the true Future of Operations in the Robotic Age

FORA is the very first industry council is established to bring together buyside operations leaders, service providers leaders, expert advisers and technology developers to steer industry’s transition to the Digital OneOffice™.  

FORA’s mission is to bring together the leadership from senior buyside operations leaders, service provider leadership, expert advisers, and technology developers to set the agenda for the transition to the Digital OneOffice™, and to develop an industry mandate for navigating and managing the creative destruction that looms. Supporting the FORA initiative is the IEEE’s Intelligent Process Automation Standards initiative that will encourage further research and investment, leading to powerful and attractive new service offerings. But the commercial frameworks needed to encourage and sustain wider deployment of these technologies are lagging because they fundamentally threaten established models.

In order to communicate the learnings from the FORA meetings, the group will produce a quarterly “FORA Mandate” that communicates core recommendations to the industry from the group meetings that will be held at quarterly HfS Summits.

So how can you get considered for Council Membership?

HfS will consider applications to the FORA Council based on seniority and relevance. Are you interested in participating? Just email us at [email protected]

This is a really important development as we consider the future of services and operations amidst all this creative disruption. I hope to greet many of you personally in Chicago this September.

Cheers,

Posted in: Outsourcing Events

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Frank D'Souza: We're now experiencing the biggest shift since the Internet

May 12, 2017 | Phil Fersht

 

It's always more fun to be the disruptor than the disrupted in markets where innovation is the key differentiator and commoditization the curse. The world of technology is a constant challenge as programming languages become commonplace, processes increasingly standardized and automated, and global service delivery efficiency a bread-and-butter offering. How can you continue to grow at a double-digit clip, while maintaining profit margins of 20%+ amidst cut-throat competition and clients forever eager to batter down their costs?  

Fortunately, the entire role technology plays is changing at a pace that is faster than most industries that can barely tolerate, which keeps driving new opportunities for smart firms with a disruptive appetite at their core and a willingness to live outside of their comfort zones. Today, enterprises are asking for business problems to be addressed and simply expect their service partners to get the job done. It's no longer "Provide me with 50 developers for this amount of time to perform these tasks", it's more, "We need to redefine our healthcare insurance business to be more competitive in the market to survive - come help us do that", or "These new banking regulations are crippling our ability to remain viable - what can we do to get ahead of these and operate effectively in this environment, faster than our competitors?"

Hence, it's up to the ambitious service providers to pivot how they address their clients' needs by redesigning business operations through smarter automation, process design and a much more proficient understanding and orchestration of their critical data sets. This is what digital is really all about - and this is where Cognizant CEO, Francisco "Frank" D'Souza is determinedly taking his organization. Cognizant has been Wall Street's golden child of IT services growth over the past decade, the firm ballooning from $2bn in 2007 to $13.5bn exactly a decade later, and last week announced 11% year-on-year revenue growth and a 26% increase in year-on-year net profits to $557m. Cognizant continues to outperform the market with relentless growth and appears to be on a new upward growth trajectory after a challenging 2016, which saw the whole IT services industry tackle this new secular shift, which Frank believes if the most pivotal transition since the onset of the Internet itself.

I caught up with Frank this week in London to get a little deeper into this pivotal industry shift and learn more about how he intends to keep disrupting his market.

Phil Fersht, CEO and Chief Analyst, HfS Research: Frank – great to see you again. Was good for the whole industry to see you guys announce strong results last week – is the gloomy cloud that’s been hovering over our industry lifting, from Cognizant’s vantage point?

Francisco D'Souza, CEO Cognizant: Phil, last year was an important foundational year in our pivot to digital. I think we were ahead on some of the digital thinking, code halos and SMAC (social, media, analytics and cloud), we have been talking about those for many years. I think last year was the year that picture, at least in our minds, and our clients’ minds, crystallized around what are the specific opportunities around digital. Prior to last year, digital was the typical catch-all term used for lots of different things.

I think it’s become very clear, Phil, with every day that goes by, is the notion that if you think about a company’s enterprise model (what is the business model, what’s the operating model and what’s the technology model) it’s now become clear what is the implication of digital technology at each layer in that stack and by industry. What does that mean for financial services, what does that mean for healthcare, what does it mean for insurance?

Last year was about crystallizing around that – we reorganised the business we took all our capabilities, we grouped them into three big practice areas: digital business, digital operations, digital systems and technology. Within that we really focused and emphasized the key digital themes and trends in each of those areas. If you think about the technology space we built and emphasized the cyber security aspects, we built and emphasized performance and scalability,

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Posted in: Digital TransformationIT Outsourcing / IT ServicesOutsourcing Heros

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Is your current job the end of the line?

May 06, 2017 | Phil Fersht

 

A new trend is developing in the tech and business world and the speed at which it is happening is alarming. The need for people is waning as companies seek to scale themselves profitably on a digital backbone - and it's having a serious impact on our career paths.

When companies historically did layoffs, it was because they were in financial peril and had no choice but to saw off costs to stay solvent on the balance sheet. It was always painful, because you needed people to grow your business. Sacking people was not a good thing to do.

Suddenly it’s in vogue to shed people

However, if you were unfortunate enough to get caught in a layoff, you dusted off your CV, went out on the job market and (usually) found yourself something pretty quickly. Companies needed people – whether they were superstars, or solid foot soldiers; when you needed an employer, you would always find something.

Now something different is happening in the mindsets of business leaders – companies which are doing really well are in the process of proactively removing staff – both at junior and senior levels. You really don't want to get caught up in one of today's layoffs if you're eager to stay in a similar job in future, because the modern business is adopting a new mentality - cut costs and scale profitably with a digital backbone.  Adding armies of people is no longer the order of the day when you peer into an uncertain future, and many savvy businesses are eagerly looking to

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Posted in: Cognitive ComputingRobotic Process AutomationGlobal Workforce and Talent

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The Real Purpose of #Digital: Bringing it all together in OneOffice™ with Five Fundamentals

April 30, 2017 | Phil Fersht

Whenever anyone utters the term “digital”, please do me one favour: Ask them to define what they mean by “digital” and send me their response.

What I love about the Digital OneOffice is the simple fact it not only defines "digital", but also provides a meaningful framework of five fundamentals that must come together to create a real-time flow of data across customers, partners and employees:

Fundamental 1) - Fostering genuine Digital Customer, Partner and Employee Engagement

A genuine “digital” organization has the ability to take all the cool social, mobile and interactive tech we use in our personal lives and create that experience for all the people in its environment - its employees, customers, and partners – and empower them to interact with

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Posted in: Digital OneOffice

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Why even the Beeb needs sourcing standards

April 24, 2017 | Phil Fersht

 

When you're one of the last vestiges of commercial-free television trying to compete in a media world gone mad on digital and traditional advertising, you need to be pretty savvy when it comes to managing the coffers when you're still reliant on public TV license frees each year to maintain your program quality.  So who better to talk with than the Beeb's Jim Hemmington, who sits on the corporation's external expenditure on goods and services, which includes several key outsourcing relationships. We also invited Chris Halward of the Global Sourcing Association (which engages with HfS as its preferred research partner), who leads the GSA's global standards accreditation program to the conversation...

Phil Fersht, Chief Analyst and CEO, HfS Research: Good morning gentelmen. Let's get started with the introductions, shall we?          

Jim Hemmington, Director of Procurement, BBC: Yes, of course, Phil. I’m Jim Hemmington, Director of Procurement at the BBC. I am responsible for external spending on goods and services. That’s about 1.4 billion pounds a year. It's about 19% of the BBC 's licensing. I look

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Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesGovernance Practices and Tools

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By golly, HfS hires Ollie...

April 22, 2017 | Phil FershtOllie O’Donoghue

From staring at his fish tank to working on an IT service desk... to becoming an analyst, then ending up at HfS.  Now that is unlearning personified for Ollie O'Donoghue (see bio), our latest recruit covering the IT services landscape from the UK.... so let's learn a bit more about this curious fellow...

Welcome Ollie!  Can you share a little about your background and why you have chosen research and strategy as your career path? 

Hi Phil! My career started in IT Services after I graduated from University with a History degree. Luckily for me, by the time I graduated, IT organisations had become more focused on service as opposed to technical ability – of which I have none.

I joined a large public sector organisation and moved around to a few different positions in the three years I was with them. I thoroughly enjoyed my time there, but my real passion lies in research, so I jumped at the opportunity to join an organisation as an Industry Analyst covering IT services. After a year or so, I made the jump to Head of Research and Insight which allowed me to develop and drive the research agenda. 

It was around this period I started on the IT Service speaker circuit. At the time, the industry was particularly concerned about the impact of automation, so I tailored my presentations to bring data and research to the party which, at the time, was being overrun with sensationalism from the mainstream media. Finding good data and sources for my sessions brought me into contact with HfS who, unlike some of the other analyst firms, were mirroring what I saw taking place in the industry. 

Why did you choose to join HfS... and why now?

As they say, all good things come to an end. Covering the service and support industry was great fun, and I made some amazing friends and contacts. But after a few years, I felt the need to expand my coverage to encapsulate a lot of the other key areas and trends at play in the wider business landscape.

When it came down to it, moving to HfS was an easy decision, I just asked the question: Do I want to join the Blockbuster of the analyst industry, or the Netflix?

HfS have been busily disrupting the industry for years with their freemium model and high

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Posted in: IT Outsourcing / IT Services

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Automation will destroy, then save outsourcing: The industry has spoken

April 15, 2017 | Phil Fersht

For those of you who made our New York Digital OneOffice Summit a couple of weeks ago, we had a rumbustious mix of seasoned outsourcing buyers, service provider leaders, advisors and robo vendors under one roof to cogitate, discuss and argue where the hell the industry known as outsourcing and operations is truly heading. Let's just lay down what the hell is really happening in the only unvarnished way we know how...

There is a fast realization that the outsourcing industry has reached a phase of almost insufferable tension.  Why?

Several of the RPA (Robotic Process Automation) solutions vendors are painting an over-glamorous picture of dramatic cost savings and ROI. RPA software firms are claiming - and demonstrating - some client cases where ~40% of cost (or more, in some cases) is being taken off the bottom line. While some of these cases are genuine, there are many RPA pilots and early-phase implementations in the industry that have been left stranded because clients just couldn't figure out the ROI and how to implement this stuff. This isn't simply a case of buying software and looping broken processes together to remove manual efforts... this requires real buy-in from IT and operations leaders to invest in the technical, organizational change management, and process transformation skills.

Buyers are backed into a corner with broken delusions of automation grandeur as their CoEs fail. Buyer leaderships are being fed all this rosy information and are under incredible pressure to devise and execute an RPA strategy, with some sort of set of metrics, that they can demonstrate to their operations leadership.  Many are quickly discovering they simply do not have the skills inhouse to set up automation centers of excellence and are frantically turning to third parties to help get them on the right track.

Outsourcing consultants are selling RPA before they can really deliver it. Sourcing advisors are claiming they are now "RPA experts" who can make this happen, while struggling to scale up talent bases that can understand the technology and deal with the considerable change management tensions within their clients.  RPA is murky and complex, and not something you can train 28-year-old MBAs to master overnight.  Meanwhile, we are seeing some advisors simply do some brokering of RPA software deals for small fees, only to make a hasty exit from the client as they do not have the expertise to roll-out effective implementation and change management programs. 

RPA specialist consultants few and far between. Pure-play RPA advisors are explaining this is not quite so easy and requires a lot more of a centralized, concise strategy.  There are simply not enough of these firms in the market, especially with Genfour having been snapped up recently by Accenture. With only a small handful of boutique specialists to go around, these firms can pick and choose their clients and command high rates.

Service providers will set the pace, but many will destroy each other in the process. Service providers are claiming they can implement whatever RPA clients need, but are not willing to do it at the expense of reducing their current revenues. Meanwhile, smart service providers are aggressively implementing RPA into their own operations to drive down their delivery costs and reduce their own headcount.  So we can expect to see providers aggressively attacking competitive clients with automation-led solutions that should create unbearable pricing pressures for service providers looking to retain the talent they need to implement this stuff. Hence, services providers will be hell bent on destroying each other and the winners will be those who eventually succeed in winning more work than they lose amidst all the destruction. This is a war of many battles being fought - and the winners will be those who are in this for the long haul, who can absorb some short-term losses to pick up the larger spoils further down the road when they have a fully equipped intelligent automation delivery capability that can deliver highly-competitive and profitable As-a-Service offerings.

The good news is that half of today's buyers want to turn to service providers to make this work

When we privately polled 60 senior outsourcing buyers, at the recent HfS New York Summit, on what would improve the quality and outcomes of their current services relationships, the answer was pretty conclusive - half want to work with their providers to rollout their automation and cognitive roadmaps, while only a third think they should pull back work in-house to figure this stuff out for themselves:

The Bottom-line: The automation gauntlet is now in full effect and the casualties will mount up as the outsourcing industry plays out its most perilous battle for survival yet.  But all is not lost if we eye a longer-term prize...

So we've reached crunch time. Whichever way we look at it, RPA has created a lethal environment, which was only just coming to terms with providers and buyers working together to get the basics of delivery right. Most outsourcing buyers have to look to automation to save their jobs and please their ambitious leaders, no longer content with the ~30% they saved on offshore-centric outsourcing just a few short years ago (see our recent State of Outsourcing and Operations data on 454 major buyers). 

So, in the meantime, for all the reasons outlined above, this industry will literally go into a destructive war over automation. The skills to make automation a massively profitable reality are few and far between, while greedy corporate leaders demand cost savings that simply are not achievable if their organizations fail to make the necessary investments and partnerships to make this achievable. Did companies become world class at HR overnight because they bought an expensive Workday subscription?  Or stellar at sales and marketing because they slammed in a Salesforce suite?  So why should they become amazing at cost-driven automation simply because they went and bought some licenses from an RPA vendor promising bot farms and virtual labor forces?  

RPA and Intelligent Automation have sparked a major war in the worlds of outsourcing and operations, where many battles are being fought - and the winners will be those who are in this for the long haul, who can absorb some short-term pain in order to benefit from the larger spoils further down the road. While automation is killing outsourcing today - costing many people their jobs, their reputations and destroying the profitability of legacy engagements, those who can hunker down, focus on self-contained projects where they can fix one broken process at a time, can get stakeholders onside by demonstrating meaningful, impactful outcomes without major resource investments, will be the winners.  Start with one process at a time, prove how to fix in, then onto the next, then the next... that is the only true way to be successful in this destructive automation-infested world. 

Posted in: Cognitive ComputingRobotic Process Automation

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With reckless abandon, here's Manish Tandon

April 14, 2017 | Phil Fersht

In today's perilously paranoid services industry, many ambitious executives are resurfacing in smaller sized service providers, which can compete on smaller scale contracts that are arising with mid-market firms, in addition to being nimble enough to compete for business at the high end. What's more, many savvy buyers are feeling more secure investing in emerging providers that are not weighed down by the legacy contracts of older times and greedy investors eager to jump ship once they sense the gravy train has stalled.

One such character is the affable Manish Tandon, who made his name at Infosys, where he led some major divisions, before recently popping up at customer experience and IT provider CSS Corp.  So let's hear what life is like moving from the very large to the medium-sized provider... 

Phil Fersht, Chief Anaylst and CEO, HfS Research: Good morning Manish. It’s great to have you on HfS today. You've had a very illustrious career in the services industry, spending a long time at Infosys where you climbed the ladder, and you recently took the CEO job at CSS Corp. Did you expect such an illustrious career in services - and what's exciting about this move for you?

Manish Tandon, CEO, CSS Corp: Thank you, Phil for having me, and great talking to you, as always. I would say I have always liked the services business tremendously. As a graduate from one of the top management institutes, I had the pick of jobs in most of the top financial institutions and so on, but I always liked technology and particularly technology services. Primarily, because this is one area you get to work on something new, something different, something challenging every one or two years, every assignment is different, so I have always

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Posted in: Outsourcing Heros

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DXC’s challenges represent a microcosm of a services industry in perilous transition

April 09, 2017 | Phil FershtJamie SnowdonTom Reuner

April 3rd saw the long-anticipated creation of a new IT and BPO powerhouse service provider – DXC.technology. However, DXC’s challenges represent a microcosm of a services industry in perilous transition.

This is a crucial event in the services industry, not only because it isn’t often a “new” $25 Billion services firm is created, but because of what it signifies about the uncertain state of the current market and the huge challenges facing service providers in the near future.

Read our complimentary analysis of the merger on the HfS Research website by clicking here.

Posted in: IT Outsourcing / IT Services

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Worried you're failing at your job? Here are six simple questions to ask yourself...

April 06, 2017 | Phil Fersht

Posted in: Global Workforce and Talent

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Accenture adds European Automation Brains and Brawn with Genfour Acquisition

April 03, 2017 | Phil FershtTom Reuner

As an addendum, many of you have reached out to us since publishing this blog, regarding whether this was the right time for an emerging star in automation, like Genfour, to sell. There is a lot of runway in Intelligent Automation and there is no doubt in my mind that Genfour's architect, James Hall, could have held out for longer and continued along his growth path as one of the few attractive pureplays in the space worth acquiring.

As our recent analysis of them revealed, the current bunch are not very well established, hence some want a quick cash-out and exit, while others are hunkering down to play the longer game.  It is our view that Intelligent Automation and AI will evolve like the digital market, with service providers crying out for "press release buys" that give them credibility.  Hence, this is as good a time as any to establish your own pureplay Intelligent Automation shop and throw yourself into the mix.  But good luck finding the talent... there's a real shortage of it out there!  

So why did Accenture acquire Genfour and does this make market sense?

In times of disconcerting political and macro-economic events, where #fakenews and a traditional outsourcing model officially running out of value, getting predictions right is becoming increasingly difficult for an analyst.  Hence, the more pleasing it is when you can gloat about predicting an acquisition.

Case in point, Accenture’s acquisition of UK-based Genfour, a pure-play automation services provider that will become the cornerstone of a newly formed Center of Excellence (CoE) for Intelligent Automation, located in Wales. Back in December 2016 we did gaze deeply into the automation crystal ball and suggested that similar to the acquisition of Alsbridge by ISG, the

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Posted in: Cognitive ComputingRobotic Process AutomationIntelligent Automation

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