Aside from airline strikes, ash clouds, oil leaks and Sarah Palin's plea to "drill baby drill" (what a brilliant faux pas that was), global media attention was briefly diverted to Edinburgh, last week, as some of BPO's top buyers and providers bravely duked it out under the lilac-neon lighting at SSON's European Shared Services & Outsourcing Week.  

The occasion was the "Thundering Hooves", where HfS nervously stood between two aggressive teams of buyers and providers eager to prove they could thunder more thunderously.  Moreover, with the incentive of a coach-class ticket to tour WNS' facility in Mumbai, with only a 20 hour-layover in Nairobi and Dakkar (industrial action and political unrest permitting), the tension was akin to a frenzied iPad queue with fast-depleting inventory. 

The thundering victorious "Buy Family" (pictured left-to-right): Graham Russell (Astrazeneca), Simon Newton (KimberlyClark) and John Transier (Unilever)

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Posted in: Absolutely Meaningless Comedy,  Outsourcing Events,  Outsourcing Heros

Time to demonstrate real governance...

In Part I of Innovation?  The BPO industry needs to escape from purgatory, our latest survey reveals a few crucial aspects about innovation* in BPO endeavors: 

• 43% of decision-makers now see it as a critical element of BPO
• Half of today's enterprise buyers are disappointed with the innovation they have currently achieved
• The potential to achieve innovation across many core business processes is huge.  This was notably cited in industry-specific process and analytics areas, in addition to some maturing BPO domains, namely procure-to-pay, supply chain and recruitment

So why aren't half of today's enterprise buyers achieving innovation? 

When we asked those executives with significant influence over BPO decisions their prime concerns for failing to achieve innovation in BPO, they cited the following reasons: 

It is abundantly clear that enterprises buyers recognize that the blame lies a lot more in their camp than their provider's, with well over a third citing poor change management and communications as a great concern, coupled with the fact that their current governance team has little juice internally to drive an innovation agenda.  If they were going to blame primarily their provider's lack of innovation prowess, much more than a fifth of buyers would have cited "the wrong composition of skills among their governance team and the provider's relationship team" as a major concern. 

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Posted in: Business Process Outsourcing (BPO),  HfS Surveys: Innovation in BPO,  Knowledge Process Outsourcing & Analytics

Zach Nelson, CEO of NetSuite, a.k.a The Admiral of Cloud BPO

"First gain the victory, and then make the best use of it you can."
Admiral Horatio Nelson, before the Battle of the Nile, 1st August, 1797

"The cost of managing IT infrastructure is four to five, or even ten times the license cost. It’s enormous. We’ve eliminated all the cost to manage this stuff, so that’s a huge advantage for BPOs."
Zach Nelson, CEO of NetSuite, before the Battle of Cloud BPO, 25th May, 2010

So without further ado, let's do Part II...

Phil Fersht:  Zach, there’s been a lot of talk in our industry around business-process-as-a-service, or business as a utility, with an entire business process being accessed by a pay-by-the-drink model, hosted in the cloud.  How do you see BPO, SaaS and cloud all coming together? Is it going to be a reality?

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

Zach Nelson, CEO of NetSuite

"Gentlemen, when the enemy is committed to a mistake we must not interrupt him too soon".  Admiral Horatio Nelson, 1795

"This is a new and different way to replace those Stone Age on-premise applications."  Zach Nelson, CEO of NetSuite, 2010

Hot on the heels of its recent alliance annoucement with Genpact, we caught up with NetSuite CEO Zach Nelson to get his take on Business Process Outsourcing delivery, and how he intends to leverage that channel to oust incumbent ERP platforms from midmarket businesses with his Cloud Computing business management software suite.

Zach is a legendary figure in Silicon Valley, where he held exec positions with  Oracle, Sun Microsystems, and McAfee/Network Associates, before taking NetSuite to IPO in 2007.  He now finds his firm at the forefront of this new movement to leverage on-demand applications in a BPO model, or what we term at HfS "Business Process as a Service" (BPaaS).  Anyhow, we dragged Zach away from the love of his life (his job, not the golf course) to get a few soundbites on how they are approaching the BPaaS model...

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

493 posts, 2386 comments, about 3 million visits and THREE YEARS in the making... Horses for Sources enters a fourth year of thunderous frolics... thanks for all your support and comments.  Keep 'em coming!

Posted in: Uncategorized

Sue Marks, Chief Executive Officer, Pinstripe Talent Acquisition Solutions

Without any doubt, the best known figure in the world of Recruitment Process Outsourcing is the all-tweeting, i-pad-wielding, champagne-supping, serial entrepreneur herself, Sue Marks, CEO of high performance talent acquisition solutions firm, Pinstripe.

As we ready ourselves to produce the results of our new RPO study in conjuntion with Human Resources Executive magazine, who better to have a conversation about the future state of RPO than Sue herself?   So we sent our roving HRO analyst, Mindy Blodgett, out to  catch up with Sue the other day...

Here at Horses, our research reveals that C-level executives are showing heightened interest in the potential of Recruitment Process Outsourcing (RPO).  Prior to the deep economic downturn, many enterprises resisted handing over their recruiting functions to a third party to manage - many saw recuiting as something they could manage better themselves.  However, the demands of a fast moving, post-recession economy are nudging business leaders towards exploring RPO as a means to add talent acquisition expertise and flexibility in a fast, cost-effective way.  Many are faced with the need to scale their operations faster than they had envisaged, and they simply to do not have the internal resources to cater for these requirements in this market.  

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Posted in: HR Outsourcing,  HR Strategy,  Outsourcing Heros

Forgive me father, for I hath missed gain-share opportunities...

While there's a lot of puff coming from several providers, expectations are not being met when it comes to the actual achievement of innovation within many Business Process Outsourcing (BPO) engagements.  Consequently, this improves the options for the first-time BPO buyer to select a provider that can demonstrate a proven track record of innovation, but what about the second-time buyer, firmly-rooted in BPO purgatory?

Our brand new survey* of 588 shared services and outsourcing executives, studying the current achievements of innovation within BPO, serves up a major does of realism to the global sourcing industry:  buyers want it, but they are not working effectively with their providers to achieve it.  And many buyers and providers are pointing the finger at each other.  So why should we care?

Innovation is becoming a critical component when it comes to BPO

In the past, many buyers shied away from innovation because they were so laser-focused on achieving operational stability within their BPO environment. Many claimed that they would have to sacrifice meeting service levels if they tried to tinker with their processes to find new ways of achieving better outcomes.  However, when we  look at how those buyers with significant influence over BPO decisions are viewing innovation today, the importance being placed on innovation is distinct:

Close to half of enteprises' operational leadership today now view the achievement of innovation as a critical component of their BPO strategy.  With most providers operating within a similar price-band today, this is clearly becoming the major differentiator for the first-time BPO buyer, as we first discussed in our "New Normal in Outsourcing Delivery" study, ealier this year.

First time BPO buyers can select proven innovators, but the second-time buyers have a challenge on their hands to escape BPO purgatory

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Posted in: Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices,  Finance & Accounting BPO

You are not permitted to process any receivables...

So now Indian prisons are piloting BPO services  for cost-savvy providers.  Hmmm...

Some advantages:

• Very low attrition (dependent upon prison security)
• Wide range of available skills
• Extremely low cost

Some disadvantages:

• Concerns over use of voice work...  "How can I help you, kind Sir..."
• Might cause a few minor branding issues for providers
• Lift-and-shift options are limited unless you can convice your whole finance department to raid the local bank with AK47s

HfS opinion:

A great strategy for locking in your clients, but they may feel a bit robbed.  So not a lot of change there then :)

Posted in: Absolutely Meaningless Comedy

I'm sorry, sir, no more Cloud in here...

Whenever you mention the world "Cloud" to an experienced IT infrastructure professional, he or she will likely talk up the dreaded "S" issue as a major obstacle that will derail Cloud ever really being widely adopted across enterprise processes. 

Quite simply, Cloud computing represents one of the biggest opportunities and threats to IT professionals today.  However, spend some with the CTOs at the likes of eBay, Amazon, Salesfore.com etc., and their eyes will light up talking about their intense development programs, where they are training young IT talent to learn how to Cloud-enable applications that can underpin many different types of business processes.   

Cutting to the chase, where industries such as IT services are rapidly commodotizing, don't they need a new wave of innovation to drive new development, new thinking and new energy to create new levels of productivity and top-line growth into enterprises?  Having business processes enabled to be provisioned on-demandin the Cloud is a massive disruptive opportunity for both providers and buyers of global business/IT services.  Our forthcoming research wave on Business Process as a Service (BPaaS) is fleshing out the potential versus the reality of this happening (stay tuned). 

Anyhow, we did want to get the "S" issue firmly on the table for discussion, so asked our new expert contributor, Andy Milroy, to weigh in with some of his perspective here... 

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Posted in: Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices,  Cloud Computing

Stan Lepeak

Andy Milroy

We're delighted to announce two new experts who will be adding their tuppence to the HfS agenda.

As part of our new research alliance with EquaTerra, Stan Lepeak will be contributing on a broad array of global IT and business process areas (view Stan's bio here).   Stan leads global research for EquaTerra.

Posted in: Business Process Outsourcing (BPO)

Analyst work? It could be worse...

Due to unprecedented demand for research, (plus the fact we're kinda new and trying to do some), we're actively looking to bring on some additional analyst talent. 

If you have some excellent experience in global sourcing, love to write, have an opinion and a bit of an attitude, we'd love to hear from you, whether it be as a contributor or full-time analyst.

Drop us an email if you'd like to be considered.  All resume submissions will be treated with the utmost discretion.

Posted in: Uncategorized

Meet us on our travels...

We'll be making the rounds over the next month, and would be pleased to meet with folks along the way:

London:  15th-23rd May

Edinburgh:  23rd-26th May (European Shared Services & Outsourcing Week)

Nice:  27th May-7th June (actually on holiday, but thought I'd add that in just to make you jealous)

Bangalore:  8th-11th June (NASSCOM BPO  Summit)

Boston:  16th-30th June

Posted in: Uncategorized

One of our greatest anomalies has been to run a blog on global outsourcing dynamics for three years and never actually feature a single contribution from anyone at IBM. 

A surreal sourcing paradise: IBM's Bill Payne takes it all in on the Peak in Hong Kong

Well, the cycle had to be broken at some stage... and with who better to do it, than the most down-to-earth and outspoken IBMer you're ever likely to meet:  step up Bill Payne.  Bill is IBM's Vice President for Global CRM and Industries for Managed Business Process Services  (that's IBM speak for "vertical BPO"). 

Anyhow, we managed to drag Bill away from tendering his beloved vegetable patch to share with us his current experiences of the market and why he's having another day in paradise, despite the surreal experiences he has when someone stries to sell him their captive center... 

Phil Fersht: Bill, how on earth has the global sourcing world changed since the recession? From a macro-level, what is different these days? 

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Posted in: Business Process Outsourcing (BPO),  Captives and Shared Services Strategies,  IT Outsourcing / IT Services

We are excited to announce a major development in our journey to be a truly distinctive analyst voice in the global services industry.  Today, we are officially engaged in a research alliance with global business advisory firm EquaTerra to develop a new category of data-driven research, ‘Actionable Intelligence’.

Actionable Intelligence

We are combining the immediacy of social networks with industry and advisory insight to provide technology services and BPO executives knowledge for improved decision making. We are not merging our organizations, moreover, we are dedicating resources to develop research that we believe will fill intelligence needs in the industry that are currently under-served. You can read the full press release here.  

As new research clearly demonstrates, enterprise sourcing and shared services practitioners are increasingly using social networks for insight and knowledge-sharing, and we feel we are creating a compelling platform to take actionable research to an entirely new level with this alliance.

On behalf of HfS, I would like to issue a personal thank you to so many of you who have been coming here over the last three years, now we have reached this exciting point in our evolution. It has been your willingness to engage in our research studies, engage in our discussion and provide so many views and experiences, which has made it possible to take actionable, rapid intelligence and insight to an entirely new level. Combining the talents of our analyst team and our quantitative research, with such an innovative advisor as EquaTerra, is a testament to the power of social networks, and the collective desire of our community to share knowledge and constantly seek to improve everything we do.

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Posted in: Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices,  Captives and Shared Services Strategies

Without further ado, let's dive back into our discussion with Genpact's President and CEO Pramod Bhasin, who graciously abandoned his golfing buddies to spend time with us. In Part I, we talked about how Genpact survived the Recession; in Part II we delve into how Genpact is striving to retain a unique identity in the industry as a pureplay BPO provider, in the face of increasing competition and the convergence of Cloud, SaaS and BPO delivery models....

Phil Fersht: Pramod, there is a concerted drive from the service provider community, particularly those with an IT services heritage, to diversify into BPO by pushing "productized solutions", whereby you have the IT componentry underpinning the BPO.  My view is that BPO is critical for these offerings, providing the "personalization" that can mould them effectively into client scenarios. Is Genpact pursuing a similar "product" strategy, or do you have a different angle here?

Pramod Bhasin:You and I are in exactly the same spot on this one. IT companies are going into our industry and I am convinced that it is more because of their ability to access customers than it is with "convergence of BPO and ITO". I am pretty sure about that. Why do I say this? If you look into how companies are running their business process areas, they are running them very separately. It is not that they are running them to get any great traction, which is where you might say there is real convergence between the two at a meeting point across the board. Of course, there are areas, which have meeting points. There are areas like healthcare claims and insurance platforms where you can process a lot of transactions. There are the HR and payrolls platforms that one can use. So, yes, you can have this kind of convergence.

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

I swear by Apollo to meet all service levels...

At HfS Research (sorry, we have to start using that acronym - if I have to keep spelling out "Horses for Sources" every five minutes...), we're focusing our microscope on the healthcare industry with our new research agenda (drop us a note if you'd like more details on our research coverage).  Our resident healthcare analyst, Anthony Calabrese, has a pretty decent point of view here... 

Healthcare Payors Reshuffle Their Priorities

Unlike medical product manufacturers and pharmaceutical companies’ industries, healthcare reform will absolutely transform the healthcare payor industry.  Mandated medical loss ratios, state-run insurance exchanges, guaranteed coverage, and required purchase requirements will restructure the payor’s business models.  The trickle-down impact on operations will be significant, shifting priorities in a manner that will eventually impact outsourcing priorities.  

Healthcare Reform – The Big Changes 

Few people understand the healthcare reform laws signed by President Obama.  While the laws are lengthy, the list of major changes is not: 

• Consumers must purchase insurance and companies with more than 50 employees must provide insurance.  Those who fail to do so will be subject to fairly substantial fines. 
• Insurance companies cannot deny coverage or price individual policies based on prior medical conditions. 
• State-run exchanges will be created to directly offer individual policies. 
• Federal electronic enrollment protocol standards will be developed to allow consumers to enroll, view, and manage their enrollment in insurance. 

Healthcare companies have mandated medical loss ratios (MLRs) of 85% for large groups of more than 100 and 80% for small groups and individuals.  If payors manage to generate lower MLRs, they must refund the difference to enrollees. 

What does this mean to the heathcare payor industry?  

The changes are substantial: 

First: payors can expect to compete for over 30 million new enrollees that are required to purchase insurance.  While some of this business will be generated by small groups who previously did not provide insurance to employees, the bulk of the 30 million new enrollees will come through individual insurance.  As witnessed by the payors go-to-market implementation of Medicare Part D, the enormous spike of sales and new customers requires significant planning and operational bandwidth.  This impact sales and customer service activities, requiring substantial investment in customer service teams, technology readiness, and enrollment processes. 

Second: transactional workflow associated with individual enrollment will need to be completely reengineered.  Prior to reform, transactions flowed through underwriting groups who priced each individual plan.  With the advent of state-run exchanges, insurance plans will be codified in just four basic formulas (Platinum, Gold, Silver, and Bronze) and offered through online exchanges.  There will no longer be a need for underwriting to review enrollments for pricing or previous medical conditions.  Furthermore, the implementation of federal standards for electronic enrollment transactions will require investment in transaction gateways and internet portals. 

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Posted in: Business Process Outsourcing (BPO),  Buyers' Sourcing Best Practices,  Healthcare and Outsourcing

As we deconstruct the recording of our interview with Genpact's President and CEO Pramod Bhasin, one factor keeps springing out of the discussion, that makes me realize how far today's organizations have to go, before they can truly claim they are satisfied that they are maximizing their potential: 

"Most companies can’t tell you how good or bad their business processes are"

Cutting to the chase, those providers which can offer services to help clients evaluate their current level of "goodness" or "badness" and execute a plan to reach the next level, will be the ones which win out.  Hence, it's not solely about sitting down with a client and claiming:  "this is the best-in-class claims processing workflow", it's being able to help that client evaluate whether it's worth changing what they currently have, and demonstrating the chops to execute on a plan to help them achieve that next performance level.  That means providers need real process experts which have the consultative prowess to help clients think through their options.

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