Monthly Archives: Apr 2010

Preaching Process with Pramod: Genpact's CEO discusses the New Relentless Economy, Part I

April 28, 2010 | Phil Fersht
Welcome to the New Relentless Economy.  As the global economy creaks back into life, we're looking around at this new environment and four factors are startlingly apparent: 
  1. Everything's global
  2. The quest for improvement has never been as intense
  3. The tolerance for inefficiency has never been as low
  4. We need to re-define our own roles in this environment

The opportunity for the service providers to help enterprises and their key talent achieve progress across these four factors is undeniable:  some will step it up and become true consultative partners for their clients, while others will remain where they are and hope customer requirements will never really change.  Tomorrow's winning enterprises already know what they have to do, and they need service partners who can help them achieve their goals.  

Genpact's President and CEO, Pramod Bhasin

In order to help us grasp how the global provider community is responding to this new relentlessenvironment, we have engaged a number of CEOs of the leading providers to share with us their frank views of the changing world, how they survived the Recession, and how they intend to shape their businesses to support tomorrow's winners.  

To begin this series, we caught up with Genpact's President and CEO, Pramod Bhasin, and are delighted to feature some his thoughts from a very engaging discussion...  

 Phil Fersht:  Good evening Pramod – thanks for taking time out to talk with Horses for Sources.  Can we start by discussing Genpact’s approach to the recession and measures you took to get through the worst of it?  

Pramod Bhasin: Our background as a company with GE (General Electric) really helped us. Especially their picking up signs that there was  major problem ahead of us, frankly, in the last quarter of '07.  Seeing the nervousness in customers, the nervousness in the pipeline, and talking to those in our industry, all whom were a little jumpy about this. We at once began to put a lot of action into this, in fact, quite early in '08. Clearly discretionary spending, etc. are all things that we stopped. 

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Posted in: Business Process Outsourcing (BPO)Knowledge Process Outsourcing & AnalyticsOutsourcing Heros



How do you really define innovation?

April 26, 2010 | Phil Fersht

We've been having, let's say, some "interesting" interactions with folks, when we asked them to talk about their innovative experiences with finance and accounting BPO. 

I'll show you some innovation...

What's been a tad disturbing, is how many have tried to pass up any mild form of progress as "innovation".  Our lieutenant entrusted with plowing through these case studies is Bruce McCracken, who shares some of his recent experiences with us, when trying to explain what innovation actually entails.  Over to you Dr Bruce...

Innovation?*[email protected]?#!?

Ask six people what represents innovation and you will get half a dozen answers. Three people discussing innovation will consist of a couple of people talking about two different things while the eyes of the third glaze over. Innovation is a term that epitomizes the semantic differential. But regardless of how it is interpreted, it is a very important element for potential buyers of BPO services.

Innovation is the cornerstone of our forthcoming report, “Reaching New Performance Thresholds with Managed Finance Services: Real-world Experiences”. As we progress, our contacts with providers have shown considerable variance in the perceptions of what innovation entails.

Some providers feel that if a solution is new for a particular client, then it is innovative. But what is new to that buyer may not be new to the industry. An example would be digitizing documents utilizing OCR technology to move from a paper-based system. A late adopting client may see this change as transformational (which it is) and the greatest thing since sliced bread. But others in the industry may view it as being as old as sliced bread. In point of fact, I had OCR software on my Macintosh home computer in the early nineties.

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Posted in: Business Process Outsourcing (BPO)Finance & Accounting BPO



Weekend stuff: The myth of "enterprise" social networking

April 24, 2010 | Phil Fersht

We've certainly had some juicy discussion on here regarding the virtues of social networking for enterprises - especially those whose competitive differentiators are centered primarily on the intellectual capital and creativity of their employees.  

Collaborate to Innovate? Don't be silly, let your firm do it for you...

Our latest study results already shows that specialist blogs are seriously becoming one of the most helpful sources of information and advice for outsourcing executives (stay tuned for some stunning data on this trend shortly), which begs the question whether "enterprise" social networks really deliver value, when they are only made available for the internal enterprise and its specific stakeholders. 

Andy Milroy (see earlier contribution), one of the leading analysts at research firm Frost and Sullivan, shares his views with us: 

The Myth of Enterprise Social Networking 

One of the most attractive concepts I have ever come across is that of crowdsourcing.  At no time in history have ordinary individuals possessed the tools that enable them to engage with such a huge variety of people and to tap such a vast amount of knowledge. Enabling ordinary people to create content and potentially share it with a global audience, using virtually no resources, truly is a massive step forward for mankind. Many of today’s emerging business titans such as Facebook have used ‘the crowd’ to build their businesses and to build fortunes for their founders. 

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Posted in: Social Networking



Practical outsourcing tips over a pint: legal advice from George Kimball

April 22, 2010 | Phil Fersht

George Kimball: author, outsourcing lawyer and father of three girls

 I once swore I'd never have lawyers on here - that was until my old pal George Kimball decided to write his first book, which deserves a plug.   

George is unique - he's an outsourcing contracting lawyer with whom you'd actually enjoy a pint or two, and always has the uncanny knack of adding an air of practicality to the most stressful and dicey of situations.   However, it may be the three daughters currently running (not ruining) his life that help him deal so calmly with the rigors of negotiating some of today's toughest outsourcing contracts.  

George has become one of the best known lawyers in the industry over recent years,  representing both buyers and service providers on some of the largest and most pivotal engagements during his tenure at law-firm Baker & McKenzie, before recently joining the legal team at Hewlett-Packard (so read that small-print carefully next time you buy a printer).  

I asked George to share his top tips for approaching outsourcing contracts with our readers; so go to the fridge, crack open a cold-one and take onboard George's practical postulations...  

George Kimball's "over a pint" tips for first-time outsourcing buyers  

Thanks, Phil, for the kind invitation to offer a little advice – “over a pint.”  Here are a few suggestions for buyers of outsourced services – especially first time buyers.  

Get good advice.  Unless you have done this before, repeatedly and successfully, seek outside advice; but don't just “turn it over to the experts.”  No outside advisor can know your business as well as you do.  You (and not the advisors) must live with the results.  Proven methods, processes and forms have great value, but can be tailored to suit situations.  One size does not fit all.  Look for consultants and lawyers capable of thinking creatively, and willing to vary familiar forms and methods.  

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Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesOutsourcing Advisors



President Peter prognosticates… Part II

April 22, 2010 | Phil Fersht

Oh, the anticipation since Part I!  Without further ado, let's ask Peter Allen his views on CSC's Cloud Computing strategy and whether some sourcing advisors can escape the hamster-wheel...

Peter Allen, President of Global Sales & Marketing, Computer Sciences Corp

Phil Fersht: Peter, CSC’s been making a very concerted move with its Cloud Computing offerings.  How to you view the future of Cloud and what role can you see CSC playing in its development down the road?

Peter Allen:  The principle reason I elected to join the CSC team was the vision, investments, and strategy relating to industry-specific business services. The talent that we’ve assembled to design and implement “new world” business models for our Clients is exceptional.

Central to our approach is embracing disruptive technologies that we can apply in order to accelerate and enable the business strategies of our Clients. The term “Cloud” means so many different things to people in our industry. For us, however, it’s the beneficial effect of virtualization, application modernization, enterprise data management, cyber security, and services integration. We believe that those five conditions are essential for the promise of public/hybrid/private Cloud architectures to be embraced.

Being the largest product-independent IT services provider, we see our role as serving as the expert architect of solutions in a world of fast-paced change. We are decidedly vertical in our thinking on this. We believe that buy-side executives want a partner to enable future-state business services that can move at the tempo of change that we are all experiencing.

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Posted in: Cloud ComputingIT Outsourcing / IT ServicesOutsourcing Advisors



Are you achieving innovation? Share your experiences with us (please)

April 19, 2010 | Phil Fersht

If you can't achieve innovation...

We've had some right ol' rhubarbs on the "I" topic this year, so it's high time we put the discussion to rest with a good ol' survey.  Yes - you are cordially invited to spend the next few riveting minutes of your life plodding through our latest surveymonkey utopia to air your experiences of achieving (or not achieving) innovation when you do some BPO. 

 We'll be probing for the following nuggets of experience from you:

  • Buyers (customers):  where have/haven't you achieved innovation and where can you possibly achieve more of it in the future.  What's holding you back, and what measures are you taking to get more of it.
  • Service providers:  where are your customers achieving innovation, and where can they achieve more of it in the future, with you as their partner.  How are they stepping up (or not) to put measures in place to achieve it.
  • Advisors and consultants:  how are your clients faring and what steps are they taking (or not taking) to achieve more.

We've also partnered with our networking partner,the Shared Services and Outsourcing Network (SSON) to reach the global sourcing industry at large with this study, and would dearly love to have you contribute your experiences with us, in full confidence.  Please spend a few minutes completing the following survey:

Click here to access our "Are you achieving Innovation" survey

In return for your time, you will receive a complimentary copy of the study findings. In addition, ten customer responses will be randomly selected to receive a free six-month subscription to Horses for Sources research, where you can pose questions to our motley crew on outsourcing, shared services strategy, Tibetan singing bowls or anything else that tickles your fancy.

In all seriousness, thanks in advance for your time - your opinions and experiences are incredibly valuable for furthering our research and this community's shared learnings.

Posted in: Business Process Outsourcing (BPO)



President Peter prognosticates... Part I

April 18, 2010 | Phil Fersht

Many of you will recall some great dialogue in the past with one of the true thought-leaders in global sourcing:  Peter Allen.  Peter has been one of the most prominent and consistent figures in the world of global sourcing over the last decade, where he played a key role as the public face of sourcing advisor TPI during the firm's rise to prominence in recent years.  Not only was Peter a such pivotal figure for TPI in the global sourcing industry, but he also was the driving force behind its Consider the Source blog, that was such a great complement for the Horses over recent years. 

Since departing TPI last year, Peter has ventured into the service provider world, where he spent time earlier in his career, and now assumes the mighty role of President of Global Sales and Marketing for technology service giant, Computer Sciences Corp.  I thought it time to drag Peter away from his latest culinary creation to shares some of his recent experiences with us since his venture over to the dark side...

Phil Fersht: Firstly, how are you finding life on the provider side of the fence?  Has anything surprised you?  What have been your main challenges and opportunities?

Peter Allen: After spending the past eight years serving as an Advisor to buy-side executives around the topic of shared services and outsourcing, I’ve found that the ecosystem looks very different from provider-side.

On a personal level, I’d start by saying that I am finding the challenges and opportunities as a service provider to be much more dynamic and creative than I appreciated from my prior tenure in the provider community (over 10 years ago). The energy around Clients and investment models, which are at the heart of any strategy to deliver the benefits of leverage, are quite progressive. The notion of business being defined at the level of a “deal” has, thankfully, been replaced by industry-oriented and client-driven strategies. Investments are being made in a much more targeted manner – on both sides of the relationships.

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Posted in: Cloud ComputingIT Outsourcing / IT ServicesOutsourcing Heros



What is your basis of competition? Or what can you safely outsource?

April 17, 2010 | Phil Fersht

Mike Atwood, Expert Contributor for IT Outsourcing, Horses for Sources

There was some great discussion recently on why outsourcing in competitive times tends to lead to a redistribution of human capital, as opposed to a reduction.  Companies during downturns get polarized on driving out cost (and none more so with the nasty recession we've just endured), while companies in times of renewed opportunity seek to invest in new growth opportunities - with as little cost to themselves as they can avoid. 

Today's current climate is all about renewed opportunity, but the ongoing uncertainty is driving firms to pursue the dual strategy of cost-elimination with increased focus on sharpening their competitive edge.

When the core issue is purely cost-elimination, the aging theory was to focus on outsourcing non-core processes and retaining the core, however, HfS analyst Mike Atwood invokes some interesting theory that the old core/non-core argument isn't weighing up to much in this economy - it's more about making outsourcing decisions based on your basis of competition. 

What is your basis of competition?   Or what can you safely outsource?

This seems like an easy question, but many people don’t seem to know what it is, or accept that it may be changing.  Quite simply, your basis of competition is that reason why your customer chooses you over your competitor. It can be color, feature, function, style, availability or a host of other things. It is crucial that you know your basis of competition and then concentrate the resources of your enterprise into being the best in the world at whatever that is.

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesIT Outsourcing / IT Services



BPO, SaaS and Cloud: Too many people aren't seeing the bigger picture

April 13, 2010 | Phil Fersht

Oh my... was that the traditional outsourcing model?

So there was a bit of Phil-bashing going on when I dared to talk about "Cloud blowing up the traditional outsourcing model"

I'll agree that "blowing up" may have been a little strong of an adjective (but, hey, it made you all read the damned thing), and "shaking up" probably more appropriate.  However, this doesn't disguise the fact that too many technical folks fail to view the bigger picture when it comes to Cloud.  

At a tactical level, when you look solely at Cloud as a hardware-capacity solution, it's hard to see beyond how it can impact businesses beyond creaking ITO-only deals.  However, you really need to look at the convergence of BPO, SaaS and Cloud in a broader outsourcing context to start to visualize how these three pillars of business delivery can - and are - coming together in a blended outsourcing model.  Yes, it will take time (and I have called out a two-year time frame to see some real progress here), but it has to happen, and our recent "state of the industry" survey data supports this.  

BPO provides labor arbitrage and the ability to personalize "standardized" solutions, SaaS provides the one-to-many process templates that underpin the BPO, and Cloud the delivery engine.  Moreover, the virtualization that Cloud provides also adds a whole new dimension of cost-arbitrage for clients - the arbitrage of inefficient hardware infrastructure, the ludicrous wastage of energy costs (not to mention the impact on the environment), and the labor costs to maintain and support infrastructure that provides zero competitive advantage for organizations.  The one anti-Cloud argument that keeps getting thrown out there is centered on data-security, but how this is really any different from those security issues surrounding the externalization of  data in today's outsourcing engagements, is beyond me.

I completely agree that this "blowing up of the traditional outsourcing model" is far more easily said than done, and we are seeing a huge resistance to this movement from many IT professionals threatened by these trends, but the bigger picture doesn't lie: company leaders are constantly seeking new avenues of cost-elimination and Cloud - combined in an outsourcing context - can provide that for many companies willing to embrace it.

One other factor to consider is the push we're seeing from the vendor-side.  Yes, there's tons of hype and fluff right now (that's how the tech industry works), but the service providers, in particular, need to keep moving the needle to keep their margins high, and their clients' productivity levels on a constant upswing.  This relentless pursuit of cost-elimination is driving our world today, and the speed at which service providers need to keep sourcing new ways to help their clients find new thresholds of business effectiveness has never been stronger.  Some providers will always remain content picking off low-end body-shopping work, but many are eyeing the bigger pie and will strive to make this outsourcing convergence a reality.

Posted in: Business Process Outsourcing (BPO)Cloud ComputingConfusing Outsourcing Information



Healthcare Reform: The scramble for outsourcing business begins

April 11, 2010 | Phil Fersht

Wonder if I'll get an invitation to Nasscom?

Whoever said Obama was going to be bad news for the outsourcing business?  The outsourcing market has rebounded heavily with the economic recovery and the successful passage of the new Heathcare Reform Bill has both the IT outsourcers and BPOs on red-alert for a barrage of new business opportunities.  For example,  the need for payors to manage their administrative costs has never been as intense as it is now, with the fixed medical loss ratios.

We've sent our analysts Mindy Blodgett and Anthony Calabrese on the trail to find out exactly what this bill means to both healthcare provision and how it will impact the outsourcing industry.  Our research starts now and we'd like both healthcare providers and outsourcers to get involved:

Healthcare Reform:  The Scramble for Outsourcing Business Begins

The successful passage of the historic Healthcare Reform bill has sent eager BPO and IT services providers scrambling to be first in line to take on new business.

With 32 million Americans slated to join the ranks of the newly-insured, that’s going to create a major administrative headache for healthcare payors and providers. Increased business process requirements, in the form of new customer enrollment; customer service; claims processing, revenue cycle management etc. will soon be cropping up as the existing systems strain to cope with the major influx of new users.  Moreover, the additional demand for IT services to support the increased data requirements is already pushing service providers to position their strategies for incremental business.

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Posted in: Buyers' Sourcing Best PracticesFinancial Services Sourcing StrategiesHR Outsourcing



The New Relentless Economy: How quickly can Cloud blow-up the traditional outsourcing model?

April 09, 2010 | Phil Fersht

It's not a question of "If"...

We LOVE the Cloud.  When you think that 60% of the costs of maintaining the average server are purely electrical power (and worse with old hardware), simply jettisoning the asset-heavy infrastructure will reap a return.

However, when we delved more deeply into the seeds of Cloud Computing (read our earlier article), it's clear the future potential of Cloud goes well beyond cost-savings generated by eradicating clunky, inefficient IT infrastructure.  Cloud can harness the true benefits of SaaS delivery and BPO can plug the gaps may companies need to have business services delivered in a readily-available "as you need it" model.

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



Are you a New Polymath?

April 09, 2010 | Phil Fersht
Leonardo da Vinci

Are you a Polymath?

A polymath ( Greek polymathis - "having learned much") is a person, with superior intelligence, whose expertise spans a significant number of different subject areas. In less formal terms, a polymath (or polymathic person) may simply be someone who is very knowledgeable. Most ancient scientists were polymaths by today's standards.  Yes, we're now going feature an interview with Sarah Palin.

Oh wait... I just heard that Sarah is unavailable today, so we'll have to make do with another polymathic personality:  the one and only Vinnie Mirchandani.  Vinnie is the Lord of the technology blog (visit his famous Deal Arthitect and New Florence blogs).  Since early 2005 he has been consistently discussing and prophesizing about every facet in the technology and services universe:  from busness process angioplasty to Cloud computing, from airline travel experiences to Sesame Street... yes, I have to confess Vinnie is one of the inspirations (or should I say perspirations) that drove me to the blogosphere.

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Posted in: Cloud ComputingIT Outsourcing / IT ServicesKnowledge Process Outsourcing & Analytics



New-generation HRO: a reverse maturity curve?

April 06, 2010 | Phil Fersht

Erica Volini, Principal, Deloitte Consulting LLP

We've certainly had a full dose of the "How can HR Outsourcing find its rhythm" discussions over the years, and the consistent theme has been one of reducing operational complexity and increasing the focus on the retained HR organization, to help companies actually add some value to their HR operations throughout the whole outsourcing experience.

We sent our HRO diva, Mindy Blodgett, out to investigate where some of the leading minds are focusing in this post-recession environment, and her first port of call was with Erica Volini, one of Deloitte Consulting's leading Principals in the HR transformation field.

Erica Volini has been working with HR on the elusive goal of HR transformation for 12 years, with a particular focus on HRO for the past eight. She has therefore had a privileged perch and a decidedly insider’s view from which to assess HR’s struggles with outsourcing and other solutions – and she knows what works, and what doesn’t, when implementing HRO. When not advising organizations on their HR journeys, Erica loves to explore her home base of New York City. She also professes to loving 80’s music and secretly admits to being fascinated with the latest entertainment news. She took a break from her grande, skim caramel macchiato to chat with us about the direction she sees HRO going in today.

Mindy Blodgett:  How is it that you are working with HR organizations today?

Erica Volini :My focus has been on helping organizations figure out how to take HRO and get it up and running. This is no easy task. When I first started, multi-process HRO was all about “big bang” and people viewed implementing everything all at once as the right answer. Now, buyers are starting to understand how complex it is and everyone is trying to figure out how to simplify in the hopes of increasing success.   In that way, HRO has almost followed a reverse maturity curve.

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Posted in: Business Process Outsourcing (BPO)HR OutsourcingHR Strategy



The new relentless economy: why it’s time to stop being scared

April 02, 2010 | Phil Fersht
The setting sun in Savannah... and it's also time to sunset those inefficient processes

We’ve talked a lot about the fear of change when companies explore radical steps to overhaul their global operations, and outsourcing undoubtedly represents a major change for most organizations used to running things a certain way for a very long time. 

People are scared right now – they feel threatened and are struggling to visualize where their careers are heading, where their organizations are heading, where the economy is heading.  But why be scared?  Shouldn’t we be filled with hope with this revitalized quest for improvement?

Having just spent two rather pleasant days with the excellent Sourcing Interests Group, enjoying (too much of) the carbohydrate-infused southern hospitality of Georgia’s Savannah, the common theme of discussions was centered on this relentless pace of change, and the in-exhaustive corporate pursuit  of cost elimination that is gripping the post-recession economy.  And executives are worried.  But why should they be?

Why we need to stop worrying

We’ve entered into an era which we have been demanding for a long, long time:  companies finally waking up, prepared to take definitive action to improve their global operations.  That means getting better at how efficiently they can close their books, pay their staff, hire new staff, manage their suppliers, collect their debts, support their customers and access accurate, timely data to make decisions.  Essentially, this entails ironing-out broken or inefficient process flows, sourcing better applications to enable them, and engaging talent to support them that doesn’t cost the earth. 

The fear comes from the fact that better automation and better process flows ultimately means organizations need less people to manage them.   But won’t that mean these organizations will be able to re-invest some of these newly-acquired efficiencies into areas that can help them develop new products or services, increase their sales staff, enter new markets, better manage their supply chains, investigate the potential of Cloud computing or video conferencing technology, or even, heaven forbid, develop their staff?

What we are witnessing is a re-distribution of human capital in today’s economy – not necessarily a reduction of human capital.  Many of us will need to explore role transformations where we take on jobs or responsibilities that we never imagined a few short years’ ago.  This change is one of new learning, new experiences, new challenges.  It’s about improving our own talents.  One thing is clear:  we won’t have a choice not to…

Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesHR Strategy



How could you fall for it again!

April 01, 2010 | Phil Fersht

Hook, Line and....

After last year's now infamous "Obama to ban offshore outsourcing" April Fool's gag, we didn't suspect that even more of you would fall hook, line and sinker for this year's little effort. 

As much as we would love to advise President Obama, even I doubt I'd receive a "personal tweet" from the President to announce the news...

Again - you're a great community, you're great sports, and keep on smiling :)

Posted in: Absolutely Meaningless Comedy



Horses for Sources to advise Obama administration on offshore outsourcing

March 31, 2010 | Phil Fersht

Yes we can!

We’re deeply honored to be selected as the exclusive analyst advisor to the Obama administration on offshore outsourcing issues. 

As part of the contract award, the Horses analyst team will be invited to quarterly white-boarding sessions at the White House to discuss the latest market dynamics in IT outsourcing and Business Process Outsourcing, in a quest to help the administration make onshore locations more competitive for white collar jobs.  The contract will be ongoing until the next US general election.

Commenting on the award earlier today, the White House Press Secretary, Robert Gibbs, added, “Washington needs to be ahead of the curve when it comes to offshore outsourcing.  Far too many of our jobs have been shipped off to China, India, Central Europe and the Philippines, and it’s time to do something about it.  Now Healthcare Reform is assured, it’s time to turn our attention to the next burning issue on the Obama administration’s agenda:  reversing offshore outsourcing and creating new jobs in the United States of America. “

In addition, the administration cites Horses for Sources social media impact as a core reason for selecting the research firm as its chosen outsourcing advisor.  “We realized the importance of Facebook and Twitter when we won the last election, and are impressed with the extensiveness with which Horses for Sources uses its blog, LinkedIn group, and, most importantly, it’s prolific use of Twitter, to be the outsourcing research organization most in touch with the needs of industry.”

President Obama personally tweeted the news of the announcement to Horses for Sources CEO, Phil Fersht, this morning.

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Posted in: Absolutely Meaningless Comedy