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From staring at his fish tank to working on an IT service desk... to becoming an analyst, then ending up at HfS. Now that is unlearning personified for Ollie O'Donoghue (see bio), our latest recruit covering the IT services landscape from the UK.... so let's learn a bit more about this curious fellow...
Welcome Ollie! Can you share a little about your background and why you have chosen research and strategy as your career path?
Hi Phil! My career started in IT Services after I graduated from University with a History degree. Luckily for me, by the time I graduated, IT organisations had become more focused on service as opposed to technical ability – of which I have none.
I joined a large public sector organisation and moved around to a few different positions in the three years I was with them. I thoroughly enjoyed my time there, but my real passion lies in research, so I jumped at the opportunity to join an organisation as an Industry Analyst covering IT services. After a year or so, I made the jump to Head of Research and Insight which allowed me to develop and drive the research agenda.
It was around this period I started on the IT Service speaker circuit. At the time, the industry was particularly concerned about the impact of automation, so I tailored my presentations to bring data and research to the party which, at the time, was being overrun with sensationalism from the mainstream media. Finding good data and sources for my sessions brought me into contact with HfS who, unlike some of the other analyst firms, were mirroring what I saw taking place in the industry.
Why did you choose to join HfS... and why now?
As they say, all good things come to an end. Covering the service and support industry was great fun, and I made some amazing friends and contacts. But after a few years, I felt the need to expand my coverage to encapsulate a lot of the other key areas and trends at play in the wider business landscape.
When it came down to it, moving to HfS was an easy decision, I just asked the question: Do I want to join the Blockbuster of the analyst industry, or the Netflix?
HfS have been busily disrupting the industry for years with their freemium model and high
For those of you who made our New York Digital OneOffice Summit a couple of weeks ago, we had a rumbustious mix of seasoned outsourcing buyers, service provider leaders, advisors and robo vendors under one roof to cogitate, discuss and argue where the hell the industry known as outsourcing and operations is truly heading. Let's just lay down what the hell is really happening in the only unvarnished way we know how...
There is a fast realization that the outsourcing industry has reached a phase of almost insufferable tension. Why?
Several of the RPA (Robotic Process Automation) solutions vendors are painting an over-glamorous picture of dramatic cost savings and ROI. RPA software firms are claiming - and demonstrating - some client cases where ~40% of cost (or more, in some cases) is being taken off the bottom line. While some of these cases are genuine, there are many RPA pilots and early-phase implementations in the industry that have been left stranded because clients just couldn't figure out the ROI and how to implement this stuff. This isn't simply a case of buying software and looping broken processes together to remove manual efforts... this requires real buy-in from IT and operations leaders to invest in the technical, organizational change management, and process transformation skills.
Buyers are backed into a corner with broken delusions of automation grandeur as their CoEs fail. Buyer leaderships are being fed all this rosy information and are under incredible pressure to devise and execute an RPA strategy, with some sort of set of metrics, that they can demonstrate to their operations leadership. Many are quickly discovering they simply do not have the skills inhouse to set up automation centers of excellence and are frantically turning to third parties to help get them on the right track.
Outsourcing consultants are selling RPA before they can really deliver it. Sourcing advisors are claiming they are now "RPA experts" who can make this happen, while struggling to scale up talent bases that can understand the technology and deal with the considerable change management tensions within their clients. RPA is murky and complex, and not something you can train 28-year-old MBAs to master overnight. Meanwhile, we are seeing some advisors simply do some brokering of RPA software deals for small fees, only to make a hasty exit from the client as they do not have the expertise to roll-out effective implementation and change management programs.
RPA specialist consultants few and far between. Pure-play RPA advisors are explaining this is not quite so easy and requires a lot more of a centralized, concise strategy. There are simply not enough of these firms in the market, especially with Genfour having been snapped up recently by Accenture. With only a small handful of boutique specialists to go around, these firms can pick and choose their clients and command high rates.
Service providers will set the pace, but many will destroy each other in the process. Service providers are claiming they can implement whatever RPA clients need, but are not willing to do it at the expense of reducing their current revenues. Meanwhile, smart service providers are aggressively implementing RPA into their own operations to drive down their delivery costs and reduce their own headcount. So we can expect to see providers aggressively attacking competitive clients with automation-led solutions that should create unbearable pricing pressures for service providers looking to retain the talent they need to implement this stuff. Hence, services providers will be hell bent on destroying each other and the winners will be those who eventually succeed in winning more work than they lose amidst all the destruction. This is a war of many battles being fought - and the winners will be those who are in this for the long haul, who can absorb some short-term losses to pick up the larger spoils further down the road when they have a fully equipped intelligent automation delivery capability that can deliver highly-competitive and profitable As-a-Service offerings.
The good news is that half of today's buyers want to turn to service providers to make this work
When we privately polled 60 senior outsourcing buyers, at the recent HfS New York Summit, on what would improve the quality and outcomes of their current services relationships, the answer was pretty conclusive - half want to work with their providers to rollout their automation and cognitive roadmaps, while only a third think they should pull back work in-house to figure this stuff out for themselves:
The Bottom-line: The automation gauntlet is now in full effect and the casualties will mount up as the outsourcing industry plays out its most perilous battle for survival yet. But all is not lost if we eye a longer-term prize...
So we've reached crunch time. Whichever way we look at it, RPA has created a lethal environment, which was only just coming to terms with providers and buyers working together to get the basics of delivery right. Most outsourcing buyers have to look to automation to save their jobs and please their ambitious leaders, no longer content with the ~30% they saved on offshore-centric outsourcing just a few short years ago (see our recent State of Outsourcing and Operations data on 454 major buyers).
So, in the meantime, for all the reasons outlined above, this industry will literally go into a destructive war over automation. The skills to make automation a massively profitable reality are few and far between, while greedy corporate leaders demand cost savings that simply are not achievable if their organizations fail to make the necessary investments and partnerships to make this achievable. Did companies become world class at HR overnight because they bought an expensive Workday subscription? Or stellar at sales and marketing because they slammed in a Salesforce suite? So why should they become amazing at cost-driven automation simply because they went and bought some licenses from an RPA vendor promising bot farms and virtual labor forces?
RPA and Intelligent Automation have sparked a major war in the worlds of outsourcing and operations, where many battles are being fought - and the winners will be those who are in this for the long haul, who can absorb some short-term pain in order to benefit from the larger spoils further down the road. While automation is killing outsourcing today - costing many people their jobs, their reputations and destroying the profitability of legacy engagements, those who can hunker down, focus on self-contained projects where they can fix one broken process at a time, can get stakeholders onside by demonstrating meaningful, impactful outcomes without major resource investments, will be the winners. Start with one process at a time, prove how to fix in, then onto the next, then the next... that is the only true way to be successful in this destructive automation-infested world.
In today's perilously paranoid services industry, many ambitious executives are resurfacing in smaller sized service providers, which can compete on smaller scale contracts that are arising with mid-market firms, in addition to being nimble enough to compete for business at the high end. What's more, many savvy buyers are feeling more secure investing in emerging providers that are not weighed down by the legacy contracts of older times and greedy investors eager to jump ship once they sense the gravy train has stalled.
One such character is the affable Manish Tandon, who made his name at Infosys, where he led some major divisions, before recently popping up at customer experience and IT provider CSS Corp. So let's hear what life is like moving from the very large to the medium-sized provider...
Phil Fersht, Chief Anaylst and CEO, HfS Research: Good morning Manish. It’s great to have you on HfS today. You've had a very illustrious career in the services industry, spending a long time at Infosys where you climbed the ladder, and you recently took the CEO job at CSS Corp. Did you expect such an illustrious career in services - and what's exciting about this move for you?
Manish Tandon, CEO, CSS Corp: Thank you, Phil for having me, and great talking to you, as always. I would say I have always liked the services business tremendously. As a graduate from one of the top management institutes, I had the pick of jobs in most of the top financial institutions and so on, but I always liked technology and particularly technology services. Primarily, because this is one area you get to work on something new, something different, something challenging every one or two years, every assignment is different, so I have always
April 3rd saw the long-anticipated creation of a new IT and BPO powerhouse service provider – DXC.technology. However, DXC’s challenges represent a microcosm of a services industry in perilous transition.
This is a crucial event in the services industry, not only because it isn’t often a “new” $25 Billion services firm is created, but because of what it signifies about the uncertain state of the current market and the huge challenges facing service providers in the near future.
I worked with Andrew in IDC UK in the late 90s, and in IDC Asia/Pac in the early 2000s when I was based in Singapore and Andrew was in IDC Australia - and we've kept in touch for most of the past two decades. Andrew is a big deal in the region, having led Frost and Sullivan's APAC IT and comms practice from Singapore for the last 9 years. He also single-handedly established NelsonHall's US research business, prior to that.
Extending our coverage of global markets is critical to our future direction at HfS, so I wanted to have Andrew introduce himself to our readers with a simple guide of the region and give you a snippet of his insight as we firmly get to grips with services and operations dynamics in Asia/Pac. Over to you, Andrew...
An idiot’s guide to buying and selling services in Asia: Some Key Considerations
After a break of nearly 7 years, it is great to start blogging again with the analyst industry’s most successful socially-driven analyst firm: HfS Research. I have had the privilege to spend most of the last 7 years, living and working in Asia. I say ‘privilege’ because the experience has been truly enriching professionally, intellectually and personally.
My learning curve steepened the day I started to work in the world’s largest, most populous, and richest continent. Much of the understanding of Asia that I developed, while working in the
As an addendum, many of you have reached out to us since publishing this blog, regarding whether this was the right time for an emerging star in automation, like Genfour, to sell. There is a lot of runway in Intelligent Automation and there is no doubt in my mind that Genfour's architect, James Hall, could have held out for longer and continued along his growth path as one of the few attractive pureplays in the space worth acquiring.
As our recent analysis of them revealed, the current bunch are not very well established, hence some want a quick cash-out and exit, while others are hunkering down to play the longer game. It is our view that Intelligent Automation and AI will evolve like the digital market, with service providers crying out for "press release buys" that give them credibility. Hence, this is as good a time as any to establish your own pureplay Intelligent Automation shop and throw yourself into the mix. But good luck finding the talent... there's a real shortage of it out there!
So why did Accenture acquire Genfour and does this make market sense?
In times of disconcerting political and macro-economic events, where #fakenews and a traditional outsourcing model officially running out of value, getting predictions right is becoming increasingly difficult for an analyst. Hence, the more pleasing it is when you can gloat about predicting an acquisition.
Case in point, Accenture’s acquisition of UK-based Genfour, a pure-play automation services provider that will become the cornerstone of a newly formed Center of Excellence (CoE) for Intelligent Automation, located in Wales. Back in December 2016 we did gaze deeply into the automation crystal ball and suggested that similar to the acquisition of Alsbridge by ISG, the
We've talked long and hard about the extent of digital disruption of traditional business models, so we decided to extend our research coverage into growth markets where the impact of digital is always positive. When you look at the premium whisky, for example, our research shows its impact promotes new ideas, helps foster greater team collaboration and can even provoke new Design Thinking principles. Let's have a look at how the leaders in this space are positioned, based on our Blueprint Research Methodology:
At HfS we are expert analysts at peering into markets and evaluating the performances of the major players, so we thought "why not extend our coverage into adjacent markets where some of our analysts have years of practical, hands on experience?". Personally, I have had more innovative client discussions comparing the various merits of single malt whiskies than which automation tools vendors have better control features.
So let's talk to a few of our contributing analysts to understand how this market played out:
Bram Weerts, COO, HfS Research:
"I've tried each and every one of these buggers and you can't beat the old Yama 18. I do love the Mac, but Yama hits the spot everytime"
Tom Reuner, SVP Intelligent Automation Research:
"I believe I've sampled all of these whiskies, especially when I am out at analyst conferences. I haven't a clue which is the best, but wanted my name on the report, so I endorse whatever Bram and Phil came up with."
Derk Erbé, VP Research:
"I believe the whisky market is ripe for digital transformation. Emerging brands like the Walmart Fireball are poised to rip the bottom out of the market"
Jamie Snowdon, Chief Data Officer:
"There's no way I could get through our quarterly forecasts without sampling a few of these first. And the way the industry's going, the old Walmart Fireball will only increase in popularity"
Phil Fersht, CEO:
"We may worry about robots stealing our jobs, but those bastards will never be able to drink our Scotch."
Bottom-Line: This is only the beginning, HfS is going to extend into new markets everywhere as digital disruption takes hold
We believe we are qualified to become experts on any market where money changes hands and greats ideas emerge. Stay tuned for our forthcoming blueprints:
"Tequila Transformation - it can really change things"
"The least disgusting low-carb beers of 2017" and
"Organic wines that you really want to avoid As-a-Service"
And of course... this was an:
The spreading outsourcing disease: barely a third of buyers see real value in their current provider relationships
Oh dear - here are the private views of about 60 outsourcing clients we polled today at the HfS Summit in New York. Close to half the room are either feeling let down by their provider over-promising, or merely feel they are only really getting cheap labor from their relationship. Moreover, barely a third of them actually believe their provider can come up with the goods, provided they pay for them via the legacy FTE pricing model. Now, these buyers are highly experienced and sophisticated, so this data is particularly hard for the outsourcing industry to digest.
So a few simple takeaways from this:
Service providers have to stop the over-promising and start over-delivering. Over-promising may result in some short-term wins, but the implications of long-term damage caused by missing client expectations are much more hazardous. Sadly, investor pressures to sustain unrealistic growth is forcing several service providers to over-sell without the talent resources to deliver anything beyond low grade offshore delivery.
Many providers are proving their competency, but failing as proactive co-innovators. As we recently revealed, a third of senior management does see real potential in their service providers to become genuine co-innovation partners, but there is a stark difference between fantasy and reality. Providers need to prove they are willing to share risks, really roll up their sleeves with their clients - and clients need to work harder to create an environment of trust that they'll stick with their providers, provided they are willing to co-invest with them. Design Thinking anyone? Maybe it's time to get in a room together and figure this whole thing out.
Bottom-line: We're going to see a lot of chopping and changing of service providers in this volatile environment.
Several buyers cited they felt their providers were too comfortable with them and were not worried they would get ejected from long-term outsourcing relationships. However, with advisors, competitive providers and RPA vendors all touting the magic 40% of cost savings through automation, the leadership layers are exerting unprecedented pressures on outsourcing governance leads to demand change. In many cases, buyers are simply bringing in advisors and RPA tools vendors themselves and running their own pilots, but eventually, they are likely to put their existing deals out for rebid to find providers willing to guarantee the RPA savings. And that is where the market is going - lots of cut-throat rebids, higher degrees of risk-taking to win business and more clients being over-promised. We're in a vicious cycle where desperation is trumping good, pragmatic partnerships where both buyers and providers can figure out how to work together in trusted, risk/reward sharing environments.
Welcome to Judgement Day, where the real future of Outsourcing and the Digital OneOffice will be decided in NY this week!
Our day of judgment is upon us! Can we really “unlearn” the last two decades and change how we buy, sell, behave and operate? Do we really have what it takes - deep down inside - to get ahead of this maelstrom of change and come out the other side with wealth, happiness and another two decades of double-digit growth?
Of course we can! But only if you book your last-minute spot to the services event of the year, in Midtown Manhattan next week… Join me, my colleagues and the industry’s finest as we engage in the richest dialog yet on how to tackle the most crucial transition our industry has ever faced, and how to come out the other side re-energized and happy to go to work again.
Service Buyers get complimentary access - only a few seats left, so apply now!
To name a few companies which will be represented...
And a few of the power brokers debating the big outsourcing reset in New York...
Find the full line-up here. See you in New York this Thursday, I hope!