HfS supply chain process expert (among other things), Charles Sutherland has finally done what no other analyst has done before him... define and develop the first comprehensive view of Supply Chain Management As-a-Service....

Supply Chain Management BPO has, since its inception, been an enigma in the overall BPO industry. Combining both large-scale transactional order management contracts along with focused domain and analytic skill-enabled forecasting engagements, it has been both an outlier in the portfolio of many large service providers as well as a lucrative market for specialist pure play providers. Clients often considered these engagements as something more like prolonged consulting deals than actual outsourcing contracts, while service providers wondered where best to house the delivery teams inside the organization as a result.

Now, more than a decade into operations—and with total market ACV closing in on $2 billion—HfS is seeing that many of the characteristics of Supply Chain Management BPO that were once considered causes of its uniqueness (Design Thinking, Collaborative Engagement, Accessible and Actionable Data) are now traits sought for all BPO engagements as the market moves toward As-a-Service solutions.

Once ahead of its time, Supply Chain Management is now very much integral to the realization of As-a-Service and so it was time for HfS to look again at this market following our inaugural Blueprint in 2014 to describe how it is developing and which service providers are leading the way. So let’s get Charles' thoughts on this market and its leaders...

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Charles, how would you describe the current state of Supply Chain Management As-a-Service?

We describe this market as one that is fast growing but still tiny against the backdrop of the entire BPO marketplace. But we believe the potential opportunity is massive—at potentially $300 billion-plus. So penetration today of this addressable market is less than 1% and we expect to see the current enthusiasm for participation by service providers to continue and only grow more in the next few years.

We covered 14 different service providers in this Blueprint (with 3 service providers covered for the first time) and what is striking, versus say the Finance & Accounting BPO marketplace, is how

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Posted in: HfS Blueprint Results,  HfSResearch.com Homepage,  Procurement, Engineering & Supply Chain Outsourcing

Coming away from our Cambridge University buyers summit this week, I was pleasantly surprised by the increased level of sophistication and maturity many services buyers are now exhibiting.

Gone are the provider bitch-fests and endless ranting about failed promises and absent innovation (that they didn't pay for in the first place).  Instead, there was a desire to look at themselves, and really try to figure out how to broker change and run their outsourcing engagements as part of a broader business agenda, not some quirky siloed activity, forever tarnished by the word "outsourcing".

Adopting a mindset to change today (not tomorrow), is where everything must start

Yes, the conversation has turned to buyers accepting they need to change first, before heaping all the blame for their woes onto their service providers. This is why our Ideals of As-a-Service begin with a mandate for buyers and providers to change how they behave, how they can adopt a mindset to start writing off their legacy processes and technologies.  In short, it's time we focused on fixing our present - it's time we focused on Being As-a-Service:

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It's time we stopped talking about this scenario of "this was legacy and this is our future desired endstate"... we'll just remain stuck in this perpetual stranglehold of never getting anywhere. We'll always we a work-in-progress, a project that never finishes...

As someone joked during our Cambridge University summit this week "Cognitive computing is always going to be huge in the future"... so let's stop evangelizing about a nirvana we many never reach and, instead, start talking about what we need to do today. Let's stop panicking about the future, which is scaring so many people, and start focusing on what we can do today to be more effective.

Let's start talking about Being As-a-Service today... not tomorrow, or some far off point in the future, where we just hope this all becomes somebody else's nightmare...

Bottom-line: We have to narrow the chasm between hype and reality in order to be successful in the present

Our industry is beset by fear, like never before. People are scared - they know their skills and capabilities could quickly become obsolete in a world where the job openings increasingly demand creativity, analytical prowess and an ability to pivot across domains.  Suddenly, if you're not a Digital native who talks about endless disruption and the coming robo-geddon, you're a dinosaur... The gap between hype and reality has reached ridiculous proportions, and it's time we stopped thinking about the fantastical future and focus on what we can achieve today.

Successful sourcing executives have to become "brokers of capability" (which one buyer commented sounds like a rock band) where they can live in the present to drive a change mindset for the future. Most of the executives have been tasked with adopting Digital strategies (whatever those may be) and to come up with smart approaches to take advantage of automation technologies. But to get there, they need to change how their teams think, collaborate and operate.

It's a mindset change, it's a culture change. It's about bringing together the key stakeholders and delivery leads to address the As-a-Service Ideals today and stop looking at them as some far off nirvana someone else will take them to.  Simply put, most firms can't simply saw-off their legacy by disposing of some archaic ERP system and slamming in some SaaS product, or mimicking every defunct manual process into a piece of RPA software, or firing an entire department of ineffective process wonks. In fact, a lot of the legacy actually works and the ROI of binning it doesn't make financial sense.  Writing-off legacy is about starting the process of re-imagining a future without those legacy systems and processes that are holding back our businesses.

So the Ideals of As-a-Service can be initially addressed today by making the most of what we currently have, not simply waiting for the day budget magically appears from above to bring in teams of nose-ringed consultants to redesign our businesses.

Posted in: 2015 As-a-Service Study,  Analytics and Big Data,  Business Process Outsourcing (BPO)

Amidst the relentless robo-hype in our current era of robotic rhetoric, it’s fast-emerging that many buyers and service providers are really struggling to work together to create workable Robotic Process Automation initiatives – in many cases, neither are willing to make the necessary investments, trade-offs or sacrifices to make his work.

So let’s start with those selfish service providers unwilling to share the robotic rewards...

Some service providers want to implement RPA on themselves and avoid passing on the savings to their buyers. Having come off a great many buyer discussions about their developing Robotic Process Automation (RPA) capabilities to augment their BPO engagement productivity, I have been shocked to hear a common thread from several buyers: their service providers only want to implement RPA on themselves and insist on charging their buyers the same legacy FTE rates.  Some service providers simply cannot stomach sharing gains with their buyers - some have, but the general experience, from the buyers, has been they are not really interested. And one of those service providers even boasts its own "cannibalization fund", while refusing to do anything different with several of its biggest engagements.  It's quite mind blowing how contrary some of these service providers can be, when it comes to what they claim they are doing versus the reality of what they really up to.

Yes, amidst this talk of the leading service providers breaking away from the old model and openly exploring ways to invest in initiatives to delink headcount from revenue, it would appear that some are simply playing lip service to the industry while, in reality, they are just looking at RPA as a vehicle to drive down their own costs and improve their margins, while maintaining their legacy FTE-pricing.  One buyer even mentioned to me that their service provider had the nerve to ask them if they could reduce their own staff delivery headcount using RPA, but keep charging them the same FTE rates.... no joke.

However, this isn’t just the fault of the service providers, many buyers are equally to blame for robotic restraint...

Buyers need to entrust their providers with more intimate data access. Most enterprise buyers, for security and control reasons, keep the providers at bay and force them to connect to their systems only using Citrix. This limits the effectiveness of RPA overall and encourages an “us versus them” mindset between buyer and provider, so it’s no surprise service providers do what they can on the other side of the “Citrix” firewall. Both parties cannot enjoy the full benefits of RPA and Intelligent Automation, without genuine collaborative engagements and a holistic security model that aligns the capabilities more effectively.

Greedy buyers need to stop treating RPA like legacy offshore BPO, demanding all the savings up front. I would also argue that many costs of RPA –greater testing, maintaining a fall-back agent pool and the incremental manner that robots are typically actually rolled out (versus a one time overall reduction in costs, as often asked by buyers) diminish the “greedy” aspect of this from many service providers. In addition, many buyers want royalties for advancing the automation initiatives of the

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Posted in: Business Process Outsourcing (BPO),  Cognitive Computing,  Design Thinking

One of the most significant shifts towards As-a-Service delivery, in recent times, has been the investments in delivering comprehensive IT and business process services to support the enablement of leading SaaS platforms. With the gravy train of revenue the leading service providers have enjoyed from clunky on-premise ERP services, over the last 2+ decades, now slowing, the land-grab to manage the data, business transformation and integration elements of the leading SaaS platforms is hotter than ever.

To this end, we're very excited to unveil the industry's very first HfS Blueprint on SuccessFactors Services. With HfS Principal Analyst in SaaS services, Khalda De Souza, at the helm, this Blueprint builds on the direction we carved out in our Workday and Salesforce Blueprints in 2015.  So who better than Khalda to bring us up to date:

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Khalda, why have we undertaken an HfS Blueprint on the SuccessFactors Services market?

Blueprint author Khalda De Souza covers SaaS for HfS. (click for bio)

The SuccessFactors Blueprint continues our theme of looking at the markets for services around leading SaaS platforms, following on from our Workday and Salesforce Services Blueprints of the past 12 months. All of these markets are in high growth mode as enterprises seek flexible, user-friendly solutions to better manage their HR or CRM processes. The service providers included in our SuccessFactors Blueprint have experienced an average of 45% growth in SuccessFactors services last year and expect to see the same growth levels next year. Given that enterprises with SAP ERP in the back-office are more likely to select SuccessFactors for their cloud HR solution, the potential market is huge.

We also see snippets of the HfS Ideals of the As-a-Service Economy in the SuccessFactors service market. Clearly, enterprises are making the commitment to Write Off Legacy by moving to SuccessFactors and building new HR processes around the platform. Service providers are also driving Collaborative Engagements with flexible engagement methodologies and a key focus on desired business outcomes.

How does HfS define the SuccessFactors Services market?

HfS has defined a Value Chain of services that applies to all the SaaS platforms we cover. This includes the five components delivered by service providers to create value for enterprises: Plan, Implement, Manage, Operate and Optimize. For SuccessFactors services, Plan includes consulting services such as SuccessFactors business case development, compliance, security and governance services, as well as HR strategy and SuccessFactors-specific process and design services. Implement covers all the services and skills required for effective deployment, including but not limited to project management, testing, training and data migration services. Manage includes all ongoing integration and support services. Operate includes business processing outsourcing (BPO) services where they are delivered by the service provider around the enterprise's SuccessFactors environment. Finally, Optimize services are intended to improve the impact of SuccessFactors solutions and may include: the assessment of new SuccessFactors releases and solutions and on-going HR strategy alignment.  

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

"Our clients come back from conferences demanding they need an Automation and a Digital strategy, with no idea what they are", said a senior partner in a Big 4 consultancy yesterday.

I have never known a time in the world of business when there is no much hype, confusion and unsettlement. Sadly, we are now living in a world where snippets of soundbites are so intensely shared across the variety media we use (I nearly said "omnichannel") that our industry is completely dominated by hype, as opposed to reality.

Data from our recent As-a-Service study just shows how alarming this disconnect is... the C-Suite is just living on a different planet from the teams below them trying to keep their businesses functioning:

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"Cannibalization" is merely the C-Suite waking up to the realization they can spend less with their service providers

Let's stop beating around the bush on this one - services providers (in most cases) make nice profit margins on their outsourcing deals. What's happening is that supply is now outsripping demand - there are too many competitors vying for a pool of enterprise clients who want to decrease their external spend.  The "demand" is coming from the next layer down of clients (the proverbial "mid market") which just don't have the size and resources to warrant the attention of the top tier providers.  What's more, the top tier of service providers is simply not structured to go after the mid-market - they can't afford to - and are stuck circling the same legacy enterprises like vultures trying to find new ways to squeeze money out of them.

Terms like "Digital transformation" are being used as the new levers to encourage gullible C-Suite

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Posted in: 2015 As-a-Service Study,  Analytics and Big Data,  Business Process Outsourcing (BPO)

One of the cleverest (and most subtle) pieces of branding you will ever see... but just think of the Design Thinking the branding agency applied to come up with this:

Posted in: Buyers' Sourcing Best Practices,  Contact Center and Omni-Channel,  CRM and Marketing