HfS Network
Jamie Snowdon
 
Chief Data Officer 
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HfS Data Products are here!
September 07, 2017 | Phil FershtJamie Snowdon

We just love data at HfS - we built this company by surveying our terrific community over the last 10 years to keep on top of all the curious things enterprises do to stay competitive and profitable.  And this year, we are literally surveying 3,000 billion dollar plus enterprises on their intentions and dynamics across the 5 critical change agents of our industry: automation, AI, analytics, blockchain, emerging digital business models, and global sourcing strategies.  

While everything we do is based on data, we've not really packaged it all up in a way for our clients to digest it and use it most effectively for themselves.  Until today.

We’ve set out our research agenda to bring reality to the research analyst world, dynamic engagement with our clients and our vision for the industry: our Analyst 2.0 model. Over the next 6 months, we will be adding more data products and enriching the existing ones, based on the wealth of information we have collected over the years:


1: Contracts Database

Launching in September 2017. As part of its ongoing research HfS has always collected and collated contract data across the different service lines it tracked. HfS Contracts Database gives subscribers access to this data, which provides up-to-date analysis of IT Services and Business Process Outsourcing contracts. This interactive tool allows users to search for specific contracts, view contract progression annually and by quarter, and view heat maps of specific deal categories by region.

2: HfS PriceIndicator™

HfS PriceIndicator™ has been part of HfS Research data tools for over 4 years now. The next 6 months we will start to include RPA and automation pricing.

HfS PriceIndicator™ is a real-time, research based price benchmarking service that provides clients an insight into current ITO and BPO pricing. Currently, PriceIndicator™ provides a biannual set of hourly FTE rate cards for ADM, F&A BPO, Insurance BPO and Healthcare Payor BPO.

3: Buyers’ Guides

HfS buyers' guides provide an independent view of individual service providers across different service capabilities. Giving a summary of the organization's strengths and weaknesses in addition to details in specific service categories.

The long-term plan will be to integrate these guides into the HfS Data website updating them whenever new financial data is available and when we publish new blueprints/vendor analysis – so they always deliver the most up-to-date content on each provider.

4: Quarterly Market Indices

HfS provides market size and forecast for the IT and business services market updated on a quarterly basis. This view of the industry provides a top-level view of service provider performance and uses this to predict market growth and performance within the main IT and business services markets.

5: Supplier Revenue Data

For the past 5 years, HfS has been tracking the IT and Business service supplier landscape collecting key financial data from the industry – creating models which are used to create our Top 25 IT services and our Top 50 BPO provider list. HfS is expanding these models to create revenue maps across key service lines, industry, and geography.

6: Direct Buyer Viewpoints

HfS regularly interviews buyers throughout the Global 2000 organizations, conducting 3,500 interviews over the course of the year. The Buyer Viewpoints opens up this data for additional analysis by industry, and across regions. So our subscribers can create their own views of the information for presentations and infographics, in addition to HfS own drive to make our data more accessible.

The bottom-line

The Analyst 2.0 model means making data more accessible, easier to digest and self-service – the analyst should not be a barrier to insight. HfS wants to enable our community with the right data to drive their own insights and their decision making – revolutionizing the way market data is used and consumed. At the same time letting our analysts do what they do best - drive thought leadership within the operations and IT services community.

 

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Automation to displace 750,000 low skilled Indian jobs, but create 300,000 mid-high skilled jobs by 2022
August 30, 2017 | Phil FershtJamie Snowdon

HfS subscribers can access the full report by clicking here

A lot has changed in the last year... especially when it comes to automation: it has now become the broadly-accepted efficiency tool for cost leverage with operations.

Every customer has RPA project managers and automation leads hungry for data, advice, and ideas. Every service provider has RPA embedded into their service delivery models, and every credible advisor has a practice that is working with multiple clients to make this happen. The Armageddon days of talking about robots taking our jobs are over - these are now the reality days where we can see exactly what's going on with automation and AI, and accurately estimate how it's going to impact the services industry in the next few years.

There will be impact, but it's manageable provided we focus on new skills and value.  

In short, the global IT and BPO services industry employs 16 million workers today.  By 2022, our industry will employ 14.8 million - a likely decrease of 7.5%* in total workers (see our research methodology below).  This isn't devastating news - we'll lose this many people through natural attrition, but what this data signifies is this industry is now delivering more for less because of advantages in automation and artificial intelligence.  The new data also shows how job roles are evolving from low skilled workers conducting simple entry level, process driven tasks that require little abstract thinking or autonomy, to medium and high skilled workers undertaking more complicated tasks that require experience, expertise, abstract thinking, ability to manage machine-learning tools and autonomy.

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The low skill routine jobs are getting increasingly impacted, and our new demand data shows an acceleration in RPA tools (a 60% increase over the next year) where service providers are the largest adopters into their own service delivery organizations.  We expect to see a more rapid impact on routine job roles which is most notable in 2022 as companies take time to build the impact of RPA into service contracts and figure out how to turn work elimination into hard savings than merely soft efficiency savings.  With barely a 50% satisfaction level, this will take 4-5 years to see the real cost benefits in terms of job elimination.  Most of the short-medium term benefits are being seen in increased efficiencies and more digital process workflows.  All major service delivery locations are expected to be impacted at the low-end, but the higher the wage costs, the higher the expected role elimination (750,000 roles in India and a similar number in the US):

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Medium skilled roles are picking up across the board, especially in roles that are customer/employee facing with the need for more customized support, the ability to handle

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Unveiling the HfS 1-2-3-4 Research Agenda
August 26, 2017 | Phil FershtJamie SnowdonBram WeertsSaurabh Gupta

 

Last week, we launched the Analyst 2.0 Model along with the HfS ThinkTank to revolutionize our industry. And today we unveil the new HfS 1-2-3-4 Research Agenda. The updated agenda serves the real needs of our clients. The tired legacy analyst model continues to only look at the past and lacks out-of-the-box, stimulating, and forward-looking thinking. We aim to turn this legacy Analyst 1.0 Model on its head, by delivering impactful knowledge and insights that will help our clients survive and succeed in the VUCA (Volatile, Uncertain, Complex, and Ambiguous) world that we all live in.

1: Research coverage across each element of the OneOffice

HfS launched the OneOffice Framework in January 2017. Our industry is evolving to an era where there is only "OneOffice" that matters anymore, one that is focused on creating an impactful customer experience and intelligent operations to enable and support it. At HfS, we like to practice what we preach. We have aligned our research practices with the OneOffice with designated research leaders.

  • The Digital Front Office research explores customer engagement, design thinking, contact center, marketing and sales, as well as social, mobile, and interactive solutions.
  • The Digital Underbelly research focuses on desktop automation, robotic automation, and security.
  • Our coverage for Intelligent Digital Support Functions spans across IT services, Finance, Procurement, Supply Chain, Payroll, and Engineering services.
  • The Intelligent Digital Processes research explores advancements in artificial intelligence, smart analytics, blockchain, and IoT.

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2: Voice of the Customer embedded in the Analyst 2.0 Model

In-sync with the Analyst 2.0 Model, we designed the new research agenda to help us become the leading Voice of the Customer. Our team of global analysts speaks to over 3000 stakeholders across the Global 2000, our industry summits provide us with an unmatched platform to interact with senior stakeholders, and our analysts publish real client stories. We’ve always mandated customer reference calls for every Blueprint report that we publish and with the new research agenda, we are taking this customer focus a notch higher. Some key initiatives:

  • Our recently published and upcoming IT-services research, based on a Global 2000 client-only survey that helps us get beyond the supplier marketing and sales spiel.
  • Similar survey(s) for mature horizontal business process areas as well as industry-specific offerings.
  • Our major Blueprint reports will now be accompanied by a summary of client conversations in the space to present aggregated patterns of how clients view market execution and innovation.
  • A unique buyer experience guide for the top RPA products, based solely on interviews with RPA clients. 

3: Forward-looking research across three-time horizons

A key reason for clients to engage with us is the provocative nature of our research.  We’re future looking, and unafraid to call a spade a spade. The new research agenda aims to arm our clients with the knowledge and insights across three-time horizons they need to navigate the future of operations:

  • Horizon 1 - Act-now: Mainstream topics in the market, such as Robotic Process Automation (RPA). Horizon 1 research is aimed to deliver practical insights into current market trends, supplier capabilities, as well as current client experience that will help institutionalize the concepts.
  • Horizon 2 - Watch-out: Emerging themes and topics that are likely to become mainstream in the next 1-2 years, such as Artificial Intelligence (AI). The objective is to help clients test value propositions and understand potential benefits and challenges in their industry.
  • Horizon 3 - Investigate: Areas that show tremendous potential but are still too nascent to predict adoption, such as blockchain. The purpose of covering such topics is to ensure a healthy dialog with key industry stakeholders to define these spaces, articulate challenges and support awareness.

4: Four-dimensional view of business operations

The future of business operations is not one-dimensional. To provide our clients with a completely holistic view of the market, we have a team of four-dimensional analysts who understand the market across four lenses in their area of specialty:

  • Dimension 1 - Change agents: Major change agents driving the industry including automation, artificial intelligence, blockchain, digital business models and smart analytics.
  • Dimension 2 - Business functions: Detailed coverage across Business Process Services (both back office and front office), IT Services, and engineering services.
  • Dimension 3 - Industry orientation: Business operations impact across 10+ industries including Banking & Insurance, Healthcare, Energy, Utilities, Manufacturing, Telecom, Retail, Travel & Hospitality, and Public Sector.
  • Dimension 4 - ThinkTank: Bringing together our collective knowledge and insights across change agents, business functions, and industries to think out-of-the-box and collaboratively solve real business issues.

 

Bottom-line: We are raising the bar, and we are revolutionizing the industry with our new HfS 1-2-3-4 Research Agenda.

Check out the details of the Analyst 2.0 Model, ThinkTank, and our 1-2-3-4 Research Agenda.

HfS hammers the final nail in the legacy analyst coffin with the HfS ThinkTank
August 11, 2017 | Phil FershtJamie SnowdonBram WeertsSaurabh Gupta

It’s time to close the chapter on the legacy analyst industry that has lost its energy, its identity, its independence and sense of purpose.  HfS was founded seven years ago to shake this up, and what’s astounded us is the stubborn refusal of the rest of the industry to change, preferring to milk the remnants of a stale model.  So we’ve worked very hard behind the scenes to develop a knowledge platform that impacts, with an engagement style that shakes our clients from their slumbers.  Welcome to our ThinkTank…

Why is the legacy analyst industry stuck in a depressing holding pattern?

The analyst industry never made it out of 1.0.  Despite all the guff about analysts using twitter and blogs, the sporadic number of boutiques and one-man/woman bands that slipped in (and out) of the analyst market over the last decade. Despite the “freemium model”, where there was a pretence of free research “disrupting” the market, but most of it being regurgitated supplier press releases. We are still trapped in the old analyst model:

Let’s face it, this current model has steadily deteriorated over the last decade, with most analysts firms selling their praise to willing vendor marketeers only too happy to fund the propaganda, adding increasingly damp fuel in vein attempts to heat up their sodden sales decks and watery marketing brochures.  Even firms like NelsonHall, Everest, Zinnov and others have got in on the act of putting out endless scatterplot quadrants of supplier positions in all sorts of markets – as if customers really take this stuff seriously anymore? Is this the only way these firms can forge a living these days? How can you “influence” a market when your only impact is a few thousand quasi-human twitter followers, you don’t run customer summits, you don’t provide your clients with research labs, you don’t provide relevant data products and the only people you ever talk to are suppliers?

I would even go as far as declaring some of these “analyst” firms should be more correctly reclassified as supplier marketing support firms.  How can you be an “analyst” when all you do is take money from marketing people to reinforce their products?

The current model is increasingly desperate, we now see tech suppliers buying up advance licences of Quadrants, Waves and Marketscapes at the beginning of their budget cycles, before they are even written, so they can pick and choose which scatterplots to buy licenses when they like the outcome.  Yes, people, this really happens

How did it get this bad?  Simple – most analyst firms are just not very good. They are jaded, they are too stingy to invest in real talent with real experience, and just reel out the same old dinosaurs whose only value to industry is to market the wares of their paying customers.

Fortunately, we have started to see light at the end of this rather dingy tunnel. Which is about time, as  there’s nothing more depressing than bemoaning a stagnant industry encircling the drain before its eventual plummet into the plug hole of irrelevance. 

Don’t lose hope. Analyst 2.0 is finally here!

The industry is reaching its first major Come-to-Jesus moment, where growth is flat, there is mass confusion surrounding the real impact of “disruptive digital business models”, with the potential creative destruction of automation, the lack of clarity of the business benefits of cognitive and AI, and the blurry potential of blockchain in its nascent pre-industrial form.  It’s well past time for enterprise customers, suppliers and other key stakeholders to come together and really collaborate and think about what their true options are moving forward.

But, all is not lost, folks, because HfS is kick-starting a new era in the analyst biz with the HfS Impact model.  Let’s be honest, the analyst 1-800 hotline market, where you have to wait 3 weeks to talk to some clueless kid, and those strategy days when you got subjected to an endless deluge of dull slides explaining the basics of your industry that you were reading about in 2003, are fizzling out.  No one cares anymore.  No one bloody cares.

We’ve made it our mission  to drag this business kicking and screaming out of these dark ages of obsolescence. So, welcome to  Analyst 2.0, a model based entirely on Knowledge and Influence, centred around our revolutionary ThinkTank:

The ThinkTank approach is all about getting the industry collaborating again, where we use Design Thinking techniques to drive joint problem-solving.  Our mantra is that the analyst role is shifting from passive observer to facilitator. To make this happen, we have dedicated an entire floor of our new offices in Cambridge England, in addition to facilities in Chicago and Boston, to hosting day long ThinkTank sessions with our clients. ThinkTanks are where we invite customers, suppliers and even advisors to spend entire days with us Design Thinking their desired goals, and solving the problems that are preventing their achieving these outcomes.  This is where we challenge you, you challenge us, and we work together, supported by our research, to drive genuine achievement, defining where you need to go and clearing the path to get there. And yes, we lock all our phones away in a safe, while we drive this whole ThinkTank process. Learn more about the ThinkTank.

The Bottom-line:  The HfS Mission is to Revolutionize the Industry and lay the Analyst 1.0 model to rest.  For good

HfS’ mission is to provide visionary insight into the major innovations impacting business operations: automation, artificial intelligence, blockchain, digital business models and smart analytics. We focus on the future of operations across key industries. We influence the strategies of enterprise customers to develop operational backbones to stay competitive and partner with capable services providers, technology suppliers, and third party advisors.

HfS is the changing face of the analyst industry combining knowledge with impact:

  • ThinkTank model to collaborate with enterprise customers and other industry stakeholders.
  • 3000 enterprise customer interviews annually across the Global 2000.
  • A highly experienced analyst team.
  • Unrivalled industry summits. 
  • Comprehensive data products on the future of operations and IT services across industries.
  • A growing readership of over one million annually.

The "As-a-Service Economy" and "OneOffice™“ are revolutionizing the industry!

Break With Tradition Drives Infrastructure Services Toward Better Outcomes
August 02, 2017 | Jamie SnowdonOllie O’Donoghue

The HfS’ Blueprint reports are our temperature check of an industry. A guide to some of the trends that are already in play, and those starting to bubble under the surface. We have just launched the first in our series of IT Services reports focused on Infrastructure Services, and it’s some the trends around this research we’d want to shine a light on today. Of course, if you’re interested in all of the market information and dynamics covered in the research, you can get your hands on a copy here.

The industry breaks with tradition

When we talk about infrastructure services, the mind immediately jumps to build and manage or “lift and shift” engagements. Indeed, for a long time, it was this type of work that was the most in demand and lucrative of providers operating in the space. However, this is no longer the case as businesses seek to secure more holistic IT Services to support their digital ambitions. As we researched the mechanics of the infrastructure and enterprise cloud industry, it became apparent that providers are breaking with the traditional services and models they used to thrive on, and are seeking to focus on higher-value transformational activities instead. For some providers, this is more of a pivot, as they grapple with providing traditional services as well as new ones. While for others it is a more decided and strategic shift, in which “lift and shift” engagements are avoided entirely in favour of juicier transformative projects.

Our expectation is that this will transform the way some vendors pitch their infrastructure services completely. Polarising some to either end of the spectrum – those focused on high-value transformation, and those solidifying their position in at the traditional end. Somewhere in the middle, we’ll see some of the larger firms, capable of spreading themselves across the spectrum to handle a broad range of engagements.

Service Brokerage enables firms to become a one-stop-shop

Another dynamic, undoubtedly linked to the commotion caused by an industry pivoting and refocusing engagement models, is the decidedly increased role service brokerage plays. Many firms are moving toward semi-impartial and fully-agnostic service brokerage models to enable clients to secure best-in-class services through them. Many firms are moving toward semi-impartial and fully-agnostic service brokerage models to enable clients to secure best-in-class services through them, allowing them to offer a one-stop-shop for sourcing services across the IT spectrum.

However, some firms will find this easier than others, particularly those who have invested considerable sums in building proprietary technologies. For these firms, balancing the incentive to protect investments and assets against the industry shift to brokerage will be tough. But potentially necessary if client expectations set the pace at the agnostic provision of best-in-class services.

As this trend develops, we can expect to see larger and more tightly woven partner ecosystems in the space. Alongside increased activity from vendors trying to prove their credentials to partners in a bid to take relationships to the next level, while articulating their brokerage credibility to clients.

Consultancy-led engagements focus on business outcomes

The two preceding trends have the potential to completely alter the dynamics of the infrastructure and enterprise cloud industry and, indeed, IT Services as a whole. In part client expectations and demand are leading these challenges as business scream out for services and solutions that meet their digital and operational ambitions. Of course, businesses vary considerably, and the suitability of one IT Service offering varies accordingly. Leading to another shift away from tradition, as providers seek to deploy higher value solutions that tackle the core of a businesses problems.

We can see this trend play out in various ways - such as evolving pricing models that focus on business outcomes - but there’s another way that paints an encouraging picture. A picture of an industry refocusing its engagement model away from core, unadaptable services and towards the design and implementation of those which tackle a particular challenge. At the forefront of this shift is the increased focus on consultancy-led engagements that seek to understand a business and its challenges and objectives.

Approaches like this will be necessary if firms are to thrive in the changing marketplace. For example, it’s only through understanding a client's needs that a provider will be able to select and recommend the right services through its brokerage model or if the firm is to assess whether the engagement fits in with their model and approach.

As this trend develops, we can expect to see firms shoring up their consultancy brains and brawn to support engagements across IT Services from initiation to completion.

Bottom Line: Trends impacting the infrastructure and enterprise cloud industry signal a potentially turbulent future albeit one packed with opportunity for dynamic and agile providers.

Getting into the Top 50!
July 13, 2017 | Jamie Snowdon

Another year another top 50 list of service providers can be found on HfSresearch.com. We have included some new providers – including a couple of interesting BPO firms in Japan and adjusted for the recent wave of consolidation in the market.

I just wanted to repeat the advice I gave out last year about the report and the list – this report is all about the money. Being on the list or not, doesn’t make a service provider good or bad – hopefully market forces mean that better/cheaper providers rise through the ranks, but it isn’t necessarily so. 

The Top BPO FAQ:

You’ve made a mistake can you correct it?

We are human and from time to time this happens – just send me an email and with your thoughts and we’ll correct. By all means, call me names on Twitter – but I may shout back…

We can miss companies from time to time and define where revenues go incorrectly. And, occasionally, spell your name incorrectly ;) Also we may define things differently from you – we are trying to compare like with like as close as possible. Remember this is an estimate – so if you have further guidance, I’d be happy to have a conversation to let you know how we came up with any of the numbers.

I should be on the list / What do you have to do to get on the list?

Sending us evidence (a financial report or two, would help) that shows latest annual revenues. We use calendar years for our lists usually, so something that shows the relevant quarters would work. But happy to have a discussion with any private firms – just so we can properly establish position. I am not a miracle worker so private companies that don’t publish results and don’t provide guidance may not make the list.

How much do I need to bribe you to change my position?

It (still) pains me to say it but no – we just can’t. The pesky tax man (and our boring accountant) frown on it ;)

That said it is also free to be on the list – you just need to demonstrate that you have the revenues to make it. But I will check against public sources and validate.

I really want to be part of this but I just don’t have the revenues yet – is there anything I can do?

We are happy to engage regardless of the absolute market share if a vendor has an interesting service – we are interested in up and coming providers. And we may profile interesting firms.

Look into my eyes – I can see the future.
June 14, 2017 | Jamie Snowdon

A question I get asked a lot is what do I think about the future of outsourcing? In this case in a few hundred words. I thought I’d share, but forgive me if it becomes evangelical:

The future of outsourcing is linked very strongly to the future of technology and its use in the enterprise – often it’s very hard to distinguish between the trends of these two things. Essentially outsourcing is the commercial arrangement between technology (and business services) organizations and their customers – it’s how you put a price on an operational service between the two.

The big shift will be the level at which you quantify an amount of service. The most popular way to quantify outsourcing arrangements has been by the number of people, per FTE models. But over time these transformed into a hybrid of FTE, transaction/consumption based and the slightly misleading outcome based pricing – which was often just an emphasis shift toward an achievement or variant of the first two, essentially the same but with a stricter KPI focused on a specific goal.

Cloud and as-a-service types of the contract have made consumption/transaction based pricing the norm for IT and IT services – we expect this to pretty much remain. The twist in its tail will be the unit being consumed will not be an IT measure. The unit of consumption will start to be linked more directly to a business metric, not an outcome. So, for example, all of the costs associated with hiring a bicycle from a city-wide hire scheme could be paid for in bike hire units – the provider only gets paid when a bike is hired – irrespective of the technology being consumed. This is a simple example – but as we see better use of automation and AI within IT and within transaction management, which reduces idle costs and we will reach a point where this type of deal has little risk. The cost of keeping the IT running could be negligible – this won’t be risk/reward in the traditional sense as the IT firm carries very little risk if the client doesn’t achieve the desired volume. The build and run deal, where the client doesn’t pay for the implementation will require the same type of calculation as current build and run deals – but the measure used for payback will be different.

Additionally, as these models develop we expect the level of risk within the contract to be better understood. This means the risk equation can be better calculated into the mix as analytics dictate the acceptable level of risk and the appropriate price points.

We have quantified this shift to more consumption-based services in the chart below – if you look at the proportion of IT services contracts that will be as-a-service by 2021, it is jumping from its current 19% level to almost 40% by 2021. We define AaS is a turnkey managed service solution based on a standardized platform delivered via the Internet – uniform standards across clients with relatively low levels of customization (<25%) – not lift and shift, but adopt, change and adapt. The price of the service is directly proportional to a transaction or measure of consumption. We also include consulting and professional services that advise upon and wrap around this type of service.

 

Another shift, particularly in IT outsourcing will be the merging of applications and infrastructure – which we have already seen to a certain degree. Cloud and DevOps have helped to break the silos between applications and infrastructure intrinsically linking these two pieces – making separate outsourcing deals for these two parts of an organization increasingly unlikely as the applications and infrastructure continue to merge. This will be particularly true in industries where applications are developed for customers, and the infrastructure requirements are linked to the success of the application. The adoption of the app dictates the scale of the infrastructure – which increasingly means monolithic, inflexible infrastructure deals fade away. Replaced by more application focused deals including the infrastructure paid for based on consumption linked to business use.

Bottom line – outsourcing will continue to exist, but the variable won’t be as directly linked to the cost of people. It will use technology to form new blocks of consumption.

Outsourcing is one of the commercial wrappers for consuming technology and business services. As these services become more software and platform based, the commercial models will become more As-a-Service. So consumption based models will be and already are becoming the norm. However, the most critical shift in will be the commercial parameters changing to fit the technology being outsourced. Automation and AI technologies will be used to allow outsourced IT (and business services) to split into new blocks of consumption, more linked to business requirements. With AI even helping to match risk levels to specific price points. True As-a-Service outcome pricing is born. 

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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Recessions destroy jobs not robots
May 24, 2017 | Jamie Snowdon

May is one of my favourite months of the year. Not because it warms up and brings milder weather. Not because of the number of bank holidays we get in the UK or that it is National Burger Month or National Innovators Month (who decides these?) – but because of the massive amount of data that becomes available during the month. It marks when most of the annual reports are available, and importantly it marks when National Bureau of Labor Statistics publishes its annual occupation statistic for the US. If that isn’t exciting, you clearly aren’t a data junkie like me ????

These statistics are important as they show real job creation and job losses – which comes as a refreshing contrast to the recent obsession we see around the prediction of mass job losses caused by digital and the shift toward more digital operations. This rhetoric is becoming increasingly unhelpful as enterprise organizations navigate the ongoing shift toward digitally engaged commerce. The current mantra de jour being advances in machine learning, the internet of things (IoT), data analytics, and artificial intelligence (AI) will steadily eliminate all kinds of jobs. Economies across the globe will have to brace themselves for massive job destruction.

We’ve all seen the studies that state that half of manufacturing jobs will be eliminated by automation in the next decade. Driverless trucks and trains are set to become commonplace, eliminating many more jobs. Advances in technology are not only impacting lower skilled jobs but also skilled professions. People with advanced qualifications such as lawyers and doctors are undertaking activities that can be automated.

Although there is some truth in this – technology is taking on increasing amounts of low skilled and mundane work, the largest inhibitor to the continued digital transformation of businesses and whole industries is, and will continue to be, a lack of skills. Yes, it is a shortage of talent that will slow down the adoption of new technologies such as robotics, AI, big data analytics, and the IoT.

The truth as you can clearly see below, automation doesn’t kill jobs – wider economic issues kill job creation – recessions and stagnation. As you can see from labor statistics in the US – in spite of the growth of automation there is still a net gain in jobs over the last 5 years:

Although automation will impact jobs, the rate at which jobs will be eliminated will be limited by the availability of skills that can implement and manage this technology. Which tends to self-regulate the creation v destruction trend and help, at least with the timing of any job market adjustment. As we have seen in past industrial revolutions, these shifts in jobs end up creating more work than they eliminate. We saw in the 18th century industrial revolution massive shifts from agricultural work – we expect a similar trend with this current wave of disruption.

New jobs will need to be created to enable automation, and to engender the innovation facilitated by new technology. Skills required for these new jobs are in extremely short supply. We maintain that a lack of people with appropriate skills, will slow any shift in operating models toward driverless trucks, driverless trains, software defined factories, connected health, smart grids, smart cities and so forth.

So what will these new roles be?

The biggest change will be a shift from specific functional roles to more blended multilayered job. With more complex skill sets being required. Organizations will need to acquire talent which blends technical skills with operational skills (industry specific skills) as well as softer skills such as critical thinking, adaptability, continuous learning, active listening and other non traditional capabilities. Education and training from technology professionals needs to be much more holistic, given that technology is transforming many aspects of our lives. With education and training institutions having to adjust offerings so they develop the required blended and holistic skill sets for the needs of the emerging job market. These new jobs emphasize skills, knowledge and willingness to learn, over traditional highly specialized degrees, and the rather narrow scoped careers that gave people their early work experience.

Valuable workers will soon be those who can adapt and learn new skills as and when more automation is embedded within their role. To stay ahead in the talent game, businesses should focus on:

  • Hiring for potential. This means hiring staff based on their inherent ability to learn and adapt to situations rather than their experience, particularly if it is narrow.
  • Learning not education. These two things are not the same – if you hire people who are able to learn, you must provide a continuous learning environment and incentives based on learning. Just hiring people with Stanford or Harvard degrees won’t necessarily give you people who are able to learn on the job long term.
  • This means looking outside of the norm when hiring. Traditional MBA courses may not provide you with people who have flexibility to operate in today’s multidisciplinary world.
  • Work with external education establishments to make sure students have the skills you want. Better to invest in helping universities develop the skills you need in people rather than focus on competing for them. Demonstrating a willingness to invest in young people is likely to engender loyalty and being part of university programmes provides more opportunity to demonstrate that commitment than the usual milk round and job fairs.

The Bottom Line – We must focus on generating value for customers, not protectionism and panic-mongering

There needs to be a shift in emphasis away from set task based skills to more blended and soft skills where technical and business skills combine. Without an increase in the supply of these kind of people the transformation to more digitally driven operating models will be slowed. Hiring policies need to look to the future, without the right people the step into the digitally enabled world will slow to a crawl.

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

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

Don’t let our crazy orthogonal ideas be pecked to death by negativity
May 08, 2017 | Jamie Snowdon

A few weeks ago, I was fortunate enough to spend some time talking with the head of IT of a large transportation company – and we talked about the future of his job and the most important things impacting his role. When I asked him what was the main issue getting in the way of him adding value to his business, he said it was a cloying inertia brought about by a thick soup of negative thinking.

The number of people in his organization that focus on the way things have been done in the past and the reasons why things can’t change, were a source of incredible frustration to him. Incremental change was possible, colleagues understand how processes evolve, so innovation could be staged, but it was very hard to implement anything totally new. We joked that original thinking was being pecked to death by negativity, like a flock of miserable seagulls.

As an analyst, this is something really close to my heart – if we are to produce anything that approaches original thinking, we need an environment where ideas are cherished and even the craziest thought is welcome – although it will ultimately need to stand up to scrutiny, the original thought can’t be wrong. It’s only when you make cerebral room to nurture some crazy, orthogonal thinking do you create inspirational work like the Digital OneOffice.

So what needs to happen, how can this change? How can we get people to take leaps of thought rather than increments?

Phil’s recent blog “Is your current job the end of the line?” delivered seven action points directly to the chief “peckers” of the world. Distilling that, the most important thing organizations can do to encourage this behaviour and become more open is to move away from traditional hierarchical relationships, look at the idea itself and any data that supports the idea. It is the addition of data and more evidence that helps to shift thinking from more traditional decision making.

It’s interesting that the message, at least in terms of its overall importance, seems to be getting out at last. In a recent survey of 300 major Global 2000 enterprises, we asked IT leaders about the importance of some c-suite directives to their IT strategy.

This graphic shows that IT decision makers realise the best way that they can increase the relevance of IT within the organization is by supporting more predictive decision making. This is a crucial change in mindset, taking IT away from its most recent manifestation which has almost been as a custodian of IT, or a gatekeeper, focused on reigning IT in and keeping the costs down.

Bottom Line – data gives crazy thoughts wings

We suspect that part of the embracing of data by IT departments goes back to my friend and his battle with the naysayers. Data levels the playing field and gives more people a voice. It gives more power to the elbow of anyone seeking to make a change. An IT department that delivers insight will be listened to, as opposed to being largely ignored as a legacy function tasked with keeping the lights on. Let’s stopped being pecked to death.