Monthly Archives: Oct 2014

Why some service providers are grimly clinging onto the labor-arbitrage model

October 31, 2014 | Phil Fersht

As I was finalizing client interviews for our forthcoming Blueprint on "Progressive F&A Services", my overwhelming conclusion is how unprogressive many of today's BPO relationships still are.

To epitomize our findings, to quote one major enterprise client, "We worked really hard to move onto a transactional pricing model with our service provider - and they worked with us to achieve that outcome.  However, once the service provider started taking a drop in revenues from us they insisted on moving back to the FTE-based set up."

Now re-read that quote one more time - what does that tell you?  Yes, people, some of today's service providers depend on the legacy effort-based labor model to keep their revenue numbers up.  Having their clients shift to more fluid volume-based models is costing them money, and they don't like it. What's more disturbing here, is the fact that the profitability generated by the service provider is through the margins on selling the labor, not the margins on selling the services.  Changing the legacy model does not sit well with some service providers, as pricing by FTE

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices



If anyone can, Barbra McGann can...

October 28, 2014 | Phil Fersht

You may have seen, earlier today, we announced a couple of very exciting analyst additions to the HfS teams in the US and UK this week.  So let's start with one very talented individual who plies her knowledge trade just outside of the city of Chicago... Barbra McGann Sheridan.

Barbra Sheridan McGann joins HfS as Senior Vice President, Research

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

As the saying goes, my parents wondered what I would do with my Bachelor’s Degree in English if I didn’t want to teach… it would have been so much more practical to stick with Engineering. And yet, what I’ve learned over the [many] years is that the skills I developed in earning that degree, and since, have helped move me into this direction… listening, researching, analyzing, distilling down issues, ideas, and problems, and finding ways to communicate messages to different audiences with different interests.

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

There is a lot of energy and forward thinking at HfS, grounded in practical realism and surrounded by a depth of knowledge and experience. At the heart of HfS is the ability to communicate a point, challenge the status quo, generate a conversation, and collaborate with a client to dive into a challenge and drive a desired result. I’m looking forward to both participating in the BPO to business process ‘as a service’

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices



Why Cloud-centric services are critical to the survival of service providers in today's As-a-Service Economy

October 27, 2014 | Phil Fersht

In today's worlds of services and software, all roads these days are leading directly into the Cloud. Last month alone, SAP announced it was spending a jaw-dropping $8.3 billion on an aging SaaS platform and Larry Ellison used the majority of his opening keynote at Oracle’s annual end-user conference to lay out his own vision for the Cloud. The very next day, Microsoft’s CEO, Satya Nadella, focused on the opportunity in a public appearance as well.

"So tell us something new" We hear you cry

Indeed... why, suddenly, is all the attention on a technology trend that has been emerging for years (and remember that 2010 study)?  Because we have now reached the tipping point where Cloud-centric delivery is the only true direction providers can take, if they want to be around in another

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



Murphy's BPO Law

October 22, 2014 | Phil Fersht

The more time I spend with some of the top services account leads for providers, the more impressed I become with how some of them manage incredibly complex client relationships, which only seem to be getting even more complex in today's climes.

Carole Murphy is Capgemini's Head of BPO Business Transformation Services

The good account managers literally have to know everything about their clients, from their quirky custom built systems, their internal politics, their process flows, their changing directives from leadership, and so on. And when you get into BPO, it's not like consulting where you can parachute into clients, devise impressive roadmaps for them to follow and make a hasty exit before the real work begins. Nope - in BPO you need to craft the game-plan and handhold your client through the quagmire for many years to come. As someone one told me, "you've got to eat what you kill"...

One person who lives and breathes these complex client transformations is Capgemini's Carole Murphy, who today heads up the firm's BPO transformation services. When we managed to drag her away from her reserved seat at the Tottenham Hotspur stadium  (a team which can certainly benefit from her transformation skills), we managed to pose some questions on where this BPO business is heading and what she's experiencing with her clients...

Phil Fersht, HfS: Carole, it’s great to have you on our interview docket today. You’ve been in the BPO industry for quite some years now and are very hands-on with several clients I know. Would you give us a little more color on your background and how you've found yourself so involved int he BPO industry?

Carole Murphy, Capgemini: Like many of us in Capgemini BPO, I started off as an accountant. I worked for British Steel and for Kraft Foods, and in about 1996 I joined what was then Ernst & Young Consulting because I was really interested in finance and accounting and transformation. Finance transformation has been the core of my career since then. Five or six years ago I started exploring how we could use Capgemini BPO’s assets to best help our clients to transform, delving deeply into how transformation really works and how we could bring more impactful transformation to our clients. As time went on, I got increasingly interested in how BPO delivers the promise of transformation. I think there’s something quite exciting about the BPO industry in that you’re able to help clients not only make transformation happen, but also sustain that transformation because it’s part of what we do every day.

Phil: We've had countless discussions over the years about how clients can achieve operational results with BPO and meeting their core performance metrics. Suddenly, many buyers we speak with expect transformation, and if a provider can’t bring that to the table, it’s not going to last very long. Do you feel that client expectations are a lot higher than they were three or four years ago?

Carole: I’m finding it surprising that some clients’ expectations of what a BPO can deliver is still limited to the simple lift and shift, or just transactional activities, or the impression that ‘surely the

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesCloud Computing



Deconstructing your manual BPO activities for the As-a-Service Economy

October 17, 2014 | Phil Fersht

With the increasing momentum of Robotic Process Automation and comprehensive business platforms solutions in BPO, it seems like a good time to step back and take a look at what really occurs “under the covers” of most BPO delivery.  Let's hear what HfS' Charles Sutherland has to say about deconstructing those "human" elements of processing work - and how they will evolve with all the technology-enablement underway...

HfS' Charles Sutherland (pictured right) and Tom Ivory deconstruct BPO in a Dallas parking lot

When you get right down to it, BPO isn’t all that complex and, regardless of whether it is a horizontal or industry vertical based process solution, there are only a few basic components that are used to construct a solution.   Understanding this will be critical to making BPO work in the new “As-a-Service Economy”.

Architecting a BPO solution is not all that different from being a writer of a comedy movie, whether that writer happens to be based in Hollywood, London, Paris or Mumbai.  If you watch closely, most comedies are based on the interweaving of a few recurring plots involving the key cast members.   These might include:

  • Mistaken identity (in all forms)
  • Boyfriend/girlfriend that got away returns to town
  • A couple works together for the first time
  • Eccentric in-laws come for a visit
  • Friends feel that someone is hiding something and decide to investigate
  • A family vacation
  • Dad gives horrible advice to son/daughter about dating/relationships
  • A protagonist suffers accidental memory loss
  • Competition for a prize
  • Unexpected arrival of a windfall of $
  • A surprise party/birthday/pregnancy
  • Accidental ingestion of a mind-altering substance

The only difference, therefore, between most generic comedies, whether they involve Kate Hudson,

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Posted in: Business Process Outsourcing (BPO)Buyers' Sourcing Best PracticesDigital Transformation



HfS leads analyst firms for value both in Europe and globally

October 10, 2014 | Phil Fersht

We really didn't want to over-toot our horn with regards to our performance with the recent excellent 2014 Analyst Value Survey, which canvassed the views of 1093 enterprises, analysts and vendor consumers of research. However, we were extremely excited (and proud) to see how effectively our research has penetrated European organizations:

Click to Enlarge

We've been trying very hard to increase our readership and client uptake in Europe and this really validates our open model for getting our research into the nooks and crannies of global enterprises.  It also goes to show how much noise you can make with a "Born in the Cloud" business model these days, when a small boutique like HfS can outperform a host of firms many times our size, because of our ease of access and quality of work. It's also a great validation for the services industry when we have firms like ISG, Everest and NelsonHall also outperforming many of the mainstay traditional analyst firms.  This is also very apparent when we look at the rankings global for "Value for Money":

Well, that's the last of our horn-tooting for now, but a special shoutout to the team at Kea, especially Duncan Chapple, Bram Weerts and Derk Erbe, for doing such a tremendous job pulling off this innovative and unprecedented research.  Oh - and people can purchase a full copy of the data for a few shekels here.

Posted in: Buyers' Sourcing Best HomepageIT Outsourcing / IT Services



How successful do you think you really are?

October 07, 2014 | Phil Fersht

My word is this a frightening way to look at yourself... but how much of you is really more left than right here?

Posted in: Absolutely Meaningless ComedyBuyers' Sourcing Best PracticesHR Strategy



The Ten Tenets Driving the As-a-Service Economy

October 06, 2014 | Phil Fersht

The globalization wave is peaking, and many maturing enterprise service buyers are struggling to find incremental value from the traditional model, such as accessing more meaningful data, deploying end-to-end process delivery, and driving down operating costs to a minimum, with globally accessible technology platforms based on common standards enabled by the cloud.

Looking at this next evolution of value, it is coming from technology-driven "As-a-Service" advances that directly enhance employee, partner and consumer effectiveness.

This emergence of As-a-Service represents the most disruptive series of impacts to the traditional IT and business services industry that we have seen.

The way service buyers receive services and the way service providers sell and deliver them, is going to be very, very different in a few short years, and already is already impacting some process areas where the technology is already available.

For those legacy service providers still thinking this is a passing fad, it may already be too late...

Click to Enlarge

The Ten Key Tenets Providing the Foundation of the As-a-Service Economy

As the As-a-Service Economy continues to emerge and evolve, it is the belief of HfS that the model will follow the following tenets:

1. Services and technology are available on an as-needed (plug-and-play) and/or subscription based model.  Traditional commercial models from pricing to contract durations will be replaced by "As-a-Service" solutions meeting an increasing buyer expectation that flexibility is at the core of

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Posted in: 2015 As-a-Service StudyAnalytics and Big DataBusiness Process Outsourcing (BPO)



More hope less fear, please - Digital is not only changing the way we work, it's improving it

October 04, 2014 | Phil Fersht

I don't know about you, but I've been getting really tired of people lamenting that jobs are being robotized, our operations talent is too transactional and we're all, basically, screwed.

I've also been guilty, in the past, of preaching the doom and gloom scenario for the workforce, as our enterprises find new ways and means to improve efficiencies and effectiveness, however, as business models evolve, so do our labor needs - and this often translates into an even greater need for talent.  I also have an increasing amount of faith in the capability of most workers to evolve and adapt, and our new research supports this theory.

In short, industry has been striving to minimize the reliance on manual labor to support processes for centuries, since the invention of the water wheel, the steam engine, the spinning jenny, the

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices