As we embark on our fifth year in operation at HfS, I’ve been reflecting on where the research analyst industry is going.
I’ve always passionately believed research thrives on innovation and disruption of the enterprise status quo, which means you need two factors to be an effective analyst organization:
Data. Trends from the buyers of services and solutions that tell us where they are with their current strategies, how they aspire to evolve, what they need to help them evolve – and what catalysts will drive the evolution.
People. Individual analysts who can read into the data points, who surround themselves by the buyers, sellers and expert advisors, to share an informed judgement on where things are heading and what the industry stakeholders needs to do to survive and thrive.
When it comes to research, big just isn’t so beautiful anymore
What we’ve proven (so far), at HfS, is that you don’t need hundreds of millions in revenue and hundreds of employees to provide that. When you have a platform to present your research to your market, people will flock there, and many others will quickly find you. However, what we’ve also learned is that enterprise executives want data and insight from analysts whom they respect and with whom they can interact, not necessary a faceless machine which churns out facts and figures that simply have to be accurate… as you paid tens of thousands to access it. Simply put, clients want to pay for the experience, as opposed to merely a productized service.
I spend a lot of time with many academics, think-tanks, investors, consultants, pundits, enterprise practitioners, service provider and tech vendor execs to share ideas, data and viewpoints. They all tend to work within small groups of smart individuals to figure out where their world is heading. One factor is common among these beings – most have a real passion for their respective areas of coverage – their careers and livelihoods depend on it, and they care about where all this is heading.
However, when I talk to many analysts working for the big machines, many of them just seem so jaded, and almost disconnected with the world, they’re just going through the motions. Many of these analysts just seem so beaten down by the pressure from paying vendor clients and internal territory wars with other analysts from within their own firms, that they struggle to have anything innovative or profound to say. As one analyst once told me “we just call the trends, that’s all we need to do to get paid”. I would argue that some of these legacy analyst firms aren’t really analysts anymore, they’ve become “J.D. Powers” that validate buying decisions of products and services. Clients aren’t getting an experience from them, they are getting a product.
‘Analyst 2.0’ is about insight, data and community. It’s about experiences, not products.
The core challenge for the emerging analysts is achieving a revenue model that allows them first to first survive, then to establish the right degree of scale and degree of influence to build enough reputation and credibility to attract clients which want a long term, ongoing relationship. Smart clients tend to want three things from analysts:
1) Credible Data. Everyone wants data – on suppliers, on market directions, on business models, on pricing trends; With real validity and statistical significance.
2) On-tap expertise. Clients want instant knowledge-gratification; When they need help with something, they want it via a quick email, phone call. No-one likes 1-800 numbers which take two weeks’ to set up to talk with some individual you don’t know, who’s probably going to tell you they don’t have what you need, in any case.
3) Networking and influence. Research buyers often want to feel they are talking to an analyst connected with the world, who is part of a community that involves them. I have a secret joke with friends, but the best analysts would make great headhunters if they chose to change careers!
Entire industry models are being disrupted, and some obliterated, at a speed yet not seen – and research is not immune
The exciting – and daunting – aspect of today’s business environment, is the speed with which entire industries can be turned on their heads. Did the likes of Sony, Nokia, or Blackberry see Samsung, LG and Apple in their rear view mirrors? Didn’t Yahoo, AOL and Microsoft think they had the internet game sewn up before Google obliterated their dominance? Did Monster have any inkling that LinkedIn would eat its lunch in barely a couple of years (before it was too late to respond)? Does Walmart have any concept how to deal with Amazon developing the ultimate digital retail sales channel, which is revolutionizing the whole retail ecosystem? Did Blockbuster stand a chance responding to Netflix once the industry model had shifted – or, in fact, did it ever stand a chance even if it had realized what was happening in time?
As with many industries, most of the leading enterprises only respond to business model changes when they genuinely feel the impact on their revenue streams (an unfortunate bi-product of the Wall St quarterly view of the world). However, as with the examples above, once the inflection point has been reached, it’s almost impossible to respond, and the only obvious measure is to acquire the disruptor. However, the culture and business model of the acquiring firm often crushes the innovation of the disruptive firm they are buying, even if a takeover is financially viable.
In today’s business environment, the power of digital collaboration, ease of information dissemination, and ubiquitous global access of the cloud is ripping into the 1980 and 1990 business models at a pace that is now frightening. Services are becoming commodities in time-spans we have never seen before – just look at the IT services and BPO industries where the “value” from buying low-cost labor is being completely commodotized by cloud-based business platforms and automation, where clients simply do not need to pay for as many bodies to take support calls, develop lines of code, process payments, claims, paychecks or invoices. The handful of service providers with ambitions to survive are desperate to develop value-add capabilities that will stop their clients dragging them into a price-war for the lowest common dollar denominator.
The research industry is not immune to disruption – the 800lb gorillas can’t simply keep buying up smaller competitors which dare to threaten the status quo, if the way in which the customers desire to use their services is changing. Today, thought-leadership and good ideas are free – and clients expect them to be free. In fact, most of the research clients need to help their decision-making is likely to be freely available if they search hard enough. So that means they will eventually not need to pay for the “basics” that research houses persist in providing today – they will only pay for more personalized expertise, actual data to support specific scenarios and a networking relationship that can really help them be successful in their jobs. They will pay for an experience, not a product.
The Bottom-line: The new analysts are coming, but they just might not be what you expect
This means the “analysts” of the future aren’t necessarily going to be the analysts of today – the smart consultants are desperately looking at more “one-to-many” models to service their clients who want more of an ongoing relationship, than simply splurging on expensive projects every time they need some help. What’s stopping the likes of a Deloitte taking on Gartner, with its global presence and vast resources of experts and networks of clients? And where next for the likes of Reed Elsevier or Thomson Reuters, which are streamlining their executive offerings in a similar model to the analyst houses? And what about smart BPO providers themselves, with their analytics capabilities, global presence, domain knowledge and client communities, where they can pool vast quantities of knowledge, which already have the capability to deliver people services at low cost on long term annuity contracts?
The future of analysts is about providing clients the experiences they need to be smarter and more effective at what they do, not selling them something pre-packaged that everyone else already has…
One of the great discussion topics coming out of the recent Blueprint 3.0 sessions in New York was centered on how enterprise operations can progress beyond the “ordinary” and avoid fading into the netherworld of corporate insignificance. Or, as one member profoundly stated, “We really need to stop being really good at irrelevant stuff”. So let’s take a look at how they can start to do just that…
It’s all about shifting the whole foci of operations from yesterday’s fragmented immaturity to tomorrow’s mature model
Let’s examine the six maturity leaps we identified during our recent GBS study of major enterprises with KPMG:
Location leap: from high-cost to low-cost locales; Do we really need to process those insurance claims in New Jersey?
Standardization leap: from independent standards tied to BUs and geos to enterprise-wide standard solutions; Why do we have 14 instances of ERP, when we can rollout multi-tenant cloud solutions and kill the dysfunction and poor data integration?
Process Orientation leap: from siloed processes within BUs to business-wide process alignment across geographies and broad functions; Why do we need 153 different ways to pay suppliers and process invoices?
Commercial Orientation leap: from operating like a cost center to being measured as a business service center; Why wouldn’t we want to have centralized operations servicing our enterprise with the skill, scale and efficiency of a professional services firm, than some back office cube-farm which constantly gets beaten up for cost and quality, which the BUs barely use in any case?
Pace of Change leap: from low-impact change to a genuine willingness to impact people and invest in long-term strategies; Rolling out a “Big Data” roadmap takes enterprises 5-10 years – how can you be serious about a strategic roadmap when every action is reactive and short-term in nature?
Service Portfolio leap: from being merely transactional to delivering both transactional skills and analytical services at scale. Transactional process are ultimately automated, or outsourced (or both) – especially if these are delivered inefficiently, which means operations teams need to deliver business value and analysis if they want to thrive in today’s business environment.
As the GBS study detailed, most enterprises still have a long way to go when it comes to achieving “maturity” across these six leaps, especially when it comes to adopting a more commercial orientation:
Click to Enlarge
The Bottom-line: In 2014, ambitious operations leaders must begin achieve a certain degree of maturity across their operations before they can really address achieving their desired outcomes
Our research has clearly shown that enterprises can’t achieve anything near their desired levels of cost-reduction, analytics quality or innovation, if their operations and processes are fragmented and poorly aligned with the corporate goals of the business. Outsourcing and shared services can provide levers to access expertise (often at lower cost) and standard ways of managing process flows. However, it is the job of the governance organization to take oversight control of end-to-end processes and work with their BU leaders to map out a long-term roadmap to get better access to data and achieve consistent, ongoing cost efficiencies.
Global Business Services isn’t just about managing a few provider contracts and beating up on poorly performing shared service centers – it’s about re-aligning the enter operations function (the old “COO’s office”) to support the business with a commercial orientation. A GBS operation needs to operate like a consultative service provider that can deliver ongoing expertise, processing capability and analytical services in a scalable fashion. GBS executives needs to pull together both the internal and external resources to make this happen. Smart service providers will (and some already are) positioning themselves as partners to support their clients’ GBS strategies, while smart sourcing advisors know they need to address the broader GBS transformation needs of their clients, or face being relegated to supporting contract procurement.
Stay tuned for Part II of our 2014 outlook, we will analyze the performance of enterprises against their desired business outcomes, based on their maturity levels.
Readers can also access our complimentary new report, “The Global Business Services Industry Study“, produced in conjunction with KPMG LLP, where we interviewed 416 enterprises across a cross section of regions and industries about their GBS activities, priorities, drivers, constraints, and plans.
Naomi Bloom discusses the new breed of SaaS-savvy HRO providers
My little rant last week (click here) about HRO and SaaS seemed to ruffle a few feathers. It’s clear, without the benefit of significant labor arbitrage, the advent of serious SaaS solutions is going to (and already is in some quarters) bulldoze the entire way enterprises access business services. None more so than HRO, which has been so reliant on onshore processing centers to deliver low-value administrative work for clients – especially those suffering dysfunctional / non-existent technology. I wanted to share a contribution to the discussion from matriarch of HR technology, Naomi Bloom, who expands on these points and provides a couple of excellent example of where the HR Cloud revolution is already well under way….
Phil, this is a great topic with lots of threads worthy of comment, but I’ll focus on just two.
First, not only does the new breed of SaaS provide a better foundation for delivering a wide range of HR capabilities directly to the real customers, from manager and members of the workforce to applicants and vendors of contingent workers, but the best of the new SaaS offerings automate HRM so much more fully that the amount of manual work, the amount of HRO needed, is reduced substantially. Except in the heavily regulated areas, like benefits and payroll, great SaaS should eat a lot of HRO providers for lunch. Call centers? We shouldn’t need them at anywhere near the level that exists today for many large organizations. HRO-provided self-service? Gone! But that doesn’t mean that there isn’t work to do with SaaS; it’s just very different work, which takes me to my second point.
Second, with near continuous attention to turning on entirely new functionality as frequent releases deliver it or business conditions warrant its use in an already present release or even when changes in business require reconfiguration/changes to existing functionality, customers need clever business analysts with deep business and product knowledge to ensure that such work gets done well and quickly. But these are still scarce KSAOCs in our world, especially as regards understanding the growing number of models-based, metadata-driven products which old think analysts struggle to understand. What’s needed to support customers here is a very new style of HRO, which is much more business analyst services than call center/manual processing services.
One example, OneSource Virtual, is such a new style HRO provider focused entirely on Workday’s customer base for whom they provide not only a wide range of initial and ongoing implementation services but also a variety of ongoing back office payroll and benefits administration outsourcing services. Another strong example is Ultimate Software, which just bought one of its partners, which provided similar services focused entirely on Ultipro’s customer base, to offer some of these same services in-house. These are just examples as you and I know that there are many such offerings in various stages from planning to real.
It will be fascinating to see if the larger SIs and/or HRO providers will be able to craft just the right mix of quality and cost-effectiveness to be successful in delivering much smaller, less labor-intensive and more tool-based implementation and post-implementation HR services.
How much longer will we be staring into the HR abyss?
My attention was momentarily side-tracked by an interesting blog penned by HR blogger-cum-consultant Andy Spence bearing the dramatic title “Will HR in the Cloud kill HR Outsourcing“. Oh yay – I like titles like that…
Andy raises some interesting points and cites some good examples and other analyst data sources, namely:
HR Buyers are cautious, ‘letting the dust settle’ on SaaS providers as they review their current HR Operating Models and future needs.
The rise and rise of Workday has actually breathed life into the HRO market – NGA HR, IBM and AON Hewitt are implementing or have HRO contracts using Workday software.
HRO Buyers want both SaaS and services together, however are not willing to lose portal, chat, contact centre solutions that have been developed over last 10 years. Expect HRO providers to develop solutions in this space.
There is a 15-20% HRO penetration level for orgs with >10,000 employees and there has been more new buyers in last 8 months than previous 2 or 3 years
Why the successful advent of HR Cloud solutions breathes new life into the multi-process HRO corpse
Having cut my teeth on HRO in the early-mid 2000s, I became increasingly frustrated with the market because you couldn’t make the numbers work moving dysfunctional processes to a third party provider which – more often than not – didn’t have much of an integrated technology platform to help standardize process and workflow. My good friend and HfS board member, Naomi Bloom, was at pains to point out that multi-process HRO was fundamentally flawed as you can’t improve HR processes if the technology underbelly was a steaming pile of rubbish.
So I watched the market tank into insignificance while the likes of Fidelity, Mercer, Convergys, IBM, Accenture and several others made subtle (and some not-so-subtle) exits from the space. I also watched the admirable efforts of SAP and Oracle trying to encourage everyone to do HRO on their on-premise software packages, but struggle to do much more than paint pretty pictures around payroll deals that weren’t really much more than… er… payroll.
Sadly, everyone who was counting of multi-process HRO being successful quietly slipped away, either to focus on discreet HR services markets like staffing, benefits admin or payroll, or slinking off into adjacent growth BPO markets like F&A, procurement or LPO.
Let’s face facts here, people. When God was dishing out the technology dollars, poor old HR was always loitering at the back of the queue. We’ve grown up amidst hoards of enterprises suffering from multiple instances of ERP, far too many payrolls, benefits providers, staffing firms, complete black holes of data on their workforces being mismanaged by understaffed and under-skilled HR departments. So many firms have been desperate to make HR less cumbersome – they’ve tried to outsource it, they’ve tried looking at terrible software products that are overpriced, hard to integrate and built on rules-based engines that add little-to-no-value. They’ve made HR the whipping boy for everything dysfunctional and low value about an enterprise.
Then slowly, but surely, HR has gone Cloud crazy.
It’s completely changing the way companies can/are/should be approaching HR. The industry is suddenly awash with enterprises rolling out the likes of Workday – and seeking providers which can not only implement the product, but also help with the HR transformation, support and processing that comes along with the purchase. In short, rolling out a true Cloud-based HR solution completely changes the HR dysfunction game. It brings together the app and the process in a way we have never experienced and enables organizations to kill off the obsolete processes that add zero-to-negative value – and helps them re-set and rethink how they manage their workforces.
Suddenly, you don’t need armies of HR admin weenies to pester staff to fill out forms and jump through their hoops – as so much of this is now automated and standardized. And when there are providers (we hope) prepared to step up to the plate to host your Cloud-based HR nirvana, you can completely rethink how to refocus how you manage your staff. Suddenly, line of business managers can access better data to understand how to staff their functions better and manage the performance of their staff in a more relevant value-add manner. The value of HR – of acquiring, developing, motivating and managing staff, is now able to permeate the business managers outside of the dreaded HR department because their systems of record are suddenly functional and more relevant.
The Bottom-line: Cloud is helping clean out the detritus of everything that was wrong with HR
Dysfunctional process and dysfunctional technology created a dysfunctional function that attracted low-value individuals to paper over the cracks. The emergence of more affordable Cloud based solutions is finally – after decades of disarray – making it possible for firms to stop staring into the HR abyss and start getting functional again. And the HROs who want to do more end-to-end HR services finally have a backbone upon which to service clients. Yes, the dust needs to settle on the SaaS products and the capabilities of the new breed of HROs, but the HR Cloud revolution seems to be taking root and threatening to completely revamp how today’s enterprises can – and should – manage their workforces.
Well, that was quite the week! Thanks to all of you who made the effort be part of a great December networking escapade in the Big Apple. I can’t remember such a large group of outsourcing powerbrokers under a single roof…
Recessions are good times for business leaders who love to focus on containing costs. Saving money is the name of the game, and executives who achieve this for their organizations become heroes.
Struggling to manage your extended enterprise? Then click here to course correct
However, times of recovery are markedly different. The onus shifts from cost to value; from defense to attack; from conservative to bold; from tactical to strategic; from efficiency to innovation. And, with the current recovery, perhaps most significantly, the very nature of a company’s cost base is shifting from inside to outside of the organization.
For decades, enterprise executives focused on reducing costs as the key to unlocking an organization’s profitability. This often began with an emphasis on reducing expenditures around SG&A. Activities that fell under this area received derogatory descriptions such as “back-office” and “non-core.” In time, the application of these terms spread across the entire business and any function tagged as such was prime for outsourcing. As a result, many parts of the enterprise were increasingly outsourced.
At the same time, forward-looking businesses began to adopt new organizational structures that were developed to foster lean operations. Rather than build out functional areas across the value chain, companies picked a few key areas to focus on and used partners to deliver the rest. Car manufacturers stopped building components and focused on design and assembly. Hotel chains stopped owning and operating buildings and focused on building and maintaining a brand. Businesses in nearly every industry adopted models that moved significant functional elements to a third party.
Consequently, many of today’s companies look like shells of their former behemoth selves. Marketers now rely on outside agencies and analytics providers to improve their own customer insight and advertising spend, operations teams rely on outsourcing and technology to eliminate labor costs, and IT teams rely on cloud-enabled SaaS platforms instead of an army of programmers occupying the lower floors. For any area of an enterprise’s P&L, a range of suppliers are ready and willing to perform the same tasks faster, cheaper, and better. Yesterday’s pay slips have become today’s supplier invoices.
Want to learn more? Then download our new report “Why so many cost-obsessed CEOs will fail if they ignore their supplier management capabilities”, where we hone in on the following:
The shell game: today’s successful enterprises are leaner versions of their former selves
The goal: leverage external relationships for broader business value
How to shift from tactical sourcing and procurement to a capable strategic team
The bottom line: the business models of the future require better leverage of your supply base’s assets and operational flexibility
Feel free to drop me a line with any questions on the topic,
As we gather the largest-ever superstar assemblage of sourcing leaders in New York this week, let’s have a look back at how we got here as an industry… and how HfS has evolved from this ramshackle little outfit into such a glitzy professional high-end corporation (ahem)… oh – and crank up the volume 🙂
Leila Janah is Founder and CEO of non-profit social sourcing organization, Samasource (click for bio)
One person we are very excited to be addressing the Blueprint 3.0 Sessions next week is Leila Janah, the dynamic Founder and CEO of non-profit social sourcing firm Samasource.
Leila’s work is focused on providing training and computer-based work to women, youth, and refugees living in poverty, while providing Internet-enabled outsourcing services to paying clients. Samasource recruits workers from low-income, underserved communities across the world. We managed to catch up with Leila to learn more about her, and what we can expect to hear from her address next week…
Phil Fersht (HfS): Leila, we are very excited at HfS that you will be coming to our event and delivering our evening keynote address. Before we get into that, can you give us a little bit of information on your background?
Leila Janah (Samasource): Sure, Phil. I started Samasource 5 years ago. Before that I studied international economic development at Harvard as an undergrad and did a lot of work in the NGO world after going to Africa when I was 17 to do volunteer work. I worked with Ashoka and the World Bank and just became frustrated with the traditional approaches to poverty alleviation, which saw poor people as helpless. What I saw while I was there was how much educated human talent was emerging and could be tapped to contribute to the global economy and would contribute to wages that would help to alleviate poverty. Over time, I thought through that model further and became a management consultant at Katzenbach Partners, which was later acquired by Booz & Company. My first consulting assignment was to help take a large Indian Outsourcing firm public. Through that I got a lot of exposure to the industry and I learned the dynamics of outsourcing. Perhaps the most powerful thing that I learned was that thanks to the internet, a back-office job can be done pretty much anywhere. This frees us of the traditional constraints of capitalism, which is that money can move freely across borders but people cannot. That has profound implications for the ½ of the world’s population that lives off of less than $4 a day. This population is increasingly educated and capable of doing knowledge work. So it was this background that led me to found Samasource. I had a number of experiences following my undergraduate career, both through the World Bank and Ashoka , but also through some other NGO’s that really led me down this path.
Phil: You are working across a number of economically challenged nations including Haiti, parts of Africa, and even parts of rural America. Can you tell us more about your global reach and where you are engaging with your clients today?
Leila: Sure, and I think as I talk about this, the thing to consider is that the bulk of people living in extreme poverty now live in middle income countries. One of the myths about poverty is that poor nations have most of the world’s impoverished population, yet what we are finding increasingly is because of income inequality, those poor people reside in places like India, China, and Brazil; places that are not seen as the most destitute areas. So that is where Samasource does most of its work. We work in India, Kenya, Uganda, Haiti, have a small presence in Ghana and we launched a new program in the US called SamaUSA, which trains low-income Americans to do online work.
Phil: Leila, can you give us some examples of some of the types of projects that you’ve taken on across the world for your clients and how they are developing as you evolve the company?
Leila: We work with Google, Wal-Mart, and Getty Images. The reach of these three projects is really astounding. For Getty Images we are doing a large-scale image tagging project. At the Blueprint Sessions, I will start with a video that outlines this program. We have workers at locations disparate as Northern India, where we have an all-women’s center in a conservative Muslim community where women are not ordinarily allowed to work. Additionally we have a center in rural northern Uganda, which is an area that had previously been in the middle of a massive civil war that had tens of thousands of children abducted as child soldiers and some of those former child soldiers are now working on that same project for Getty. The project involves tagging celebrity images in a way that machines cannot yet do. We have human workers identifying images with celebrities and then tagging the celebrities. The same images then get pulled into national and international media that requires celebrity images. It is a very exciting project for workers because their output is immediately seen by people all over the world.
Another example is what we do for Wal-Mart.com, which is a growing need among e-commerce companies. That work involves helping to improve the quality of the e-commerce product catalogue. In this case we have English speaking workers who come together and write descriptions of products on Wal-Mart’s website. What’s remarkable about this project is that people who don’t have a lot of exposure to Western products, but are interested in them because of their interest in Western media, are very passionate about learning about these products. So you will find a worker in Kampala who is able to write a very accurate and thoughtful description of the product that has never before been seen in Uganda. Nonetheless, the quality of the descriptions remains high because there is such a strong motivation to do this work well.
Phil: When you look at the broad commercial outsourcing industry today, which is so centric around India, the Philippines, Central and Eastern Europe, what is your take on where all of that is headed? Do you feel that there is a race to the lowest common denominator or do you feel that it is an industry that is headed in the right direction?
Leila: I do see some things that are concerning. I see the consistent production rate in the price that companies are willing to pay for these services, which has a lot of implications for workers in these countries. At the same time, I think that the constant price pressure forces us to look beyond the current locations for outsourcing and that can be a good thing for workers in poor locations. What might be less than a livable wage in one country could be a huge boon for a worker in another. So, that can be good. The critical concern that I have is that the wages that workers are paid are appropriate and living wages given their context. That is not currently a huge priority for the industry, but it really should be.
Phil: You are going to meet a lot of these folks who are big customers of outsourcing and suppliers of outsourcing at the Blueprint 3.0 event in December. What do you plan to talk about at the event?
Leila: First, I think I will talk about the evolution of corporate social responsibility. It used to be something that companies would do to check a box and to show that they had been responsible and then could move on. I think what we are seeing now is this hunger among employees at big companies to feel like their company is not just checking boxes but is having a positive impact on the world. The new generation of people entering these companies are young people who are hungry for change and are less interested in just taking home a big paycheck. They want to see that the organizations that they are a part of are genuinely improving the world. I think that Impact Sourcing is one trend that goes far beyond CSR and cuts across so many aspects of the business, especially in the supply chain. It is a very real way for a company to make a social impact that goes far beyond just having an employee volunteer day or giving some money to a charity. This is helping people in a way that is completely integrated with the company’s bottom line and supply chain and that is the real way to create change and to evolve capitalism from within. I will talk about the implications of that strategy and what that means for the field of poverty alleviation. In this field, which is dominated by non-profits, we are finally starting to come around to the idea that corporations have far more capital than non-profits do to solve some of these big problems. Essentially, what we do, is we take money from Google and Wal-Mart and we get it into the hands of poor people in rural Uganda. Traditionally that would only be done by a development agency and now I think it is really cool that it is being done by a big corporation. So we need more corporations doing that and I think the other piece of it is ensuring that once those relationships are established, that they continue to work for the benefit of people. Unfortunately, in the wake of the Bangladesh factory fire, I think there is growing concern that Western firms can have a negative impact in poor countries. As an industry, I think we have to nip that in the bud and ensure that we are setting things up in a way that doesn’t lead to those outcomes. I think it is very possible and not so difficult to do.
Phil: Leila, thank you for your time today and looking forward to seeing you in NYC next week!
Laila Janah (pictured above) is Founder and CEO of Samasource. You can also learn more about Leila Janah at her personal website and follow her on twitter here.
Click to find out about private clouds embedded inside public ones…
Now we’ve really heard it all… HP and Salesforce’s new “Superpod” offering provides a Private Cloud within the Public Cloud, making the term “Cloud”, well, pretty much irrelevant…
HP and Salesforce.com have teamed up to provide Salesforce CRM on dedicated “Superpod” HP boxes in an effort to satisfy enterprise clients fearful of having their data situated in the Public Cloud. The partnership is designed to help Salesforce.com gain more traction with large global enterprises and highly regulated industries, while providing HP some Cloud street-cred after years of negative publicity and pride a much-needed fillip to its hardware and CRM services businesses.
Following the announcement, many industry stakeholders quickly questioned whether the arrangement met “required criteria to be referred to as a Cloud offering” based in the fact that dedicated hardware boxes do not service “multiple tenants”. HfS believes those arguments from multitenant purists have some validation from a theoretical perspective; however, in today’s environment of commoditizing hardware prices and paranoid enterprise IT leaders, those arguments have now become irrelevant. If having a dedicated HP box can provide some increased processing power and peace of mind to enterprises while still delivering all the benefits of scalability, security and global ubiquitous access that internet-based delivery can offer, does it really matter whether that offering is classed as “Cloud or multi-tenant anymore”? HfS believes the core focus has now shifted to the “what” in achieving business outcomes rather than the “how” in terms of technical mechanics.
Clearly, leveraging a public cloud environment is still too much of a bitter pill to swallow for “Zombie” IT departments still clinging to the idea that they need to control all the data that flows in and out of the enterprise and not have their enterprise data housed on the same Internet services as other firms. Creating a “private cloud within a public cloud” will provide a more acceptable solution for many enterprises still grappling with the concept of public Cloud, especially for their most sensitive data that resides within their CRM system. In short, the whole concept of public and private cloud is becoming pretty moot, as long as the enterprise is leveraging cloud delivery to achieve the outcomes it needs in a secure, reliable, effective delivery environment. So who cares whether the new offering, which, for a higher price, provides a dedicated hardware environment within Salesforce’s larger public cloud, violates some sacred principle?
For years, Salesforce was the poster child for anyone touting the benefits of adopting a SaaS based solution and by broader implication an underlying cloud based infrastructure. It was a strategy and market position the company and its founding CEO aggressively pursued. The company’s very logo demonstrates how important it is to its core.
However, as opportunities mature, so to must the innovators driving the change. What this announcement signifies is not the end of the Cloud but quite the opposite – the maturation of the Cloud. In short, this is likely the moment we can attribute it to the delivery model becoming truly mainstream. Do we even need to use the term “Cloud” anymore? Is it still relevant? Does anyone purchase new services, outside of a few stagnant examples of legacy on-premise ERP, that are not in the “Cloud”?
Why This Matters
IT departments can focus on driving Cloud integration and business alignment, as opposed to low-value security and maintenance tasks. Cloud advocates should greet this announcement with glee as it could boost adoption among those reluctant to embrace a truly multitenant public environment. More importantly, it also allows the entire IT industry to focus on the business outcomes to be achieved when adopting these newer offerings, rather than whether or not such adoption creates undue risk. IT executives can focus on the integration work that needs to be done to adopt new Cloud services into the enterprise and work with their LOB counterparts to ensure the applications are supporting the business needs.
Future IT solutions are increasingly being driven by the business lines. Furthermore, questions around how to deploy the underlying technology and implement security should always be secondary to how best to address the business need. The driving force behind the adoption of any particular cloud based offering is not the underlying technology, but rather the business change the new model can bring. The driving appeal is a better-run organization, the ability to better match costs to performance, the freeing up of scarce resources to focus on more strategic efforts, or perhaps some combination of all three. This new offering helps remind us of all that. In the instance of Salesforce, for example, sales and marketing executives are increasingly making the decisions regarding purchasing new solutions to drive business value. The same is happening across all major lines of business, such as finance, HR and procurement. IT has become the enabler of the solution, not the solution itself.
The need for enterprise mobility is rapidly changing the onus of IT solutions to achieving business outcomes. Finally, by marking the point of cloud maturity, the announcement allows us to truly focus on the next evolutionary phase of our computing environments – mobility. This is not to say cloud environments are fading to the background nor even diminishing in importance. Quite the opposite, they will continue to be prominent as the enabler that allows us to connect to our core processes from anywhere at any time on a mobile device. But as we increasingly leverage the cloud to embrace mobility it brings with it an additional layer of enterprise change.
As consumers we expect our mobile environment to be crisp, clean and focused. When the need arises to perform a task, we look for a specific app to get it done. Increasingly, that consumer led singularity of focus now flavors our desired approach to engagement within the enterprise. Yet the burden this puts on existing legacy applications – whether old behemoth onsite systems or yes, even the newer lightweight SaaS offerings – is huge. New interfaces must be designed, road tested, and implemented for all of these applications or better yet robust APIs developed to allow connectivity across all of them and into new task specific UIs.
What to Watch
Ned May, article co-author, is SVP for IT Services Research, HfS (Click for bio)
The critical question in all of this is whether we will see a new class of enterprise apps emerge to overshadow the current SaaS darlings or if these existing leaders will adapt to the new demands. In an interview with the media and analyst community at the same event, Benioff shed light on the company’s efforts around building out its APIs highlighting it as one of the most important efforts underway. Sometimes maintaining relevance means letting go of what once defined you. Salesforce appears to get that and is well on its way to helping us all embrace the Applification that is spreading across all aspects of our lives.
The good news in all this for the traditional IT services firms is that the new delivery models which at first appeared to offer a lightweight solution for the enterprise and thus little need for additional programming, ultimately require a great deal of integration work to tie them back deeper into the enterprise. As we move to a SaaS driven mobile environment, systems integration is now giving way to services integration and the opportunity is robust. In short, the clouds just might be clearing on the next wave of IT services growth.
“Now, suddenly, CIOs have to be very creative, they have to adjust to these new challenges, they have to deal with ambiguity”
–Bruce Rogow, November 2013
And we can bring our superlative discussion with Bruce “hand-brake released” Rogow to a conclusion with one very frightening warning to all technology leaders…. don’t fumble the future!
Phil Fersht (HfS): Bruce, what do you think visitors from 10 years into the future will think of us if they came back for a gander?
Bruce J. Rogow (IT Odyssey & Advisory): The 80’s taught me that most organizations will adapt. It may be very painful though. For my view of what It will need to become, here are some relatively radical ideas. First, I think that IT will have a merchandising function. And by that I mean it’s going to try to figure out what technologies are out there, and what ways IT should bring them into the enterprise to add value. It will be very much like a merchandising manager at Home Depot decides what goes on the shelves. IT’s second role will be brand management, being able to consumerize services and present them to end users in a way where they are literally building brand equity. Third, IT won’t be able to successfully manage brands unless it has service management, so the whole idea of how they do service management, and what those services will be, Next, although most firms have a PMO, I think we’ll see a growth in asset management to the extent that they will also have an AMO function. Informatics is another weak area in which companies aren’t getting enough value.
Bruce being kept in line by his missus, Winnie
But I have a terrible concern that with everything going on right now, we can fumble the future. So we must have some type of underlying architecture and operating platform to bring all of these pieces together in some coherent fashion. If you’re asking what an IT organization is going to be…it’s not going to be about developing or running a business center or network, it’s going to be in these more value added roles.
Another thing that bothers me is the attitude of many CIOs. There hasn’t been a need for someone to talk to for many CIOs of the past two decades. However, going forward, most CIOs need a confidant they can talk to, test ideas and push back. Yet, when I ask many CIOs who performs that role, they tell me they don’t need anyone like that, go to a conference, get feedback from their existing vendors or talk to other CIOs. This isn’t an attempt on my part to solicit clients. I’m fully engaged.
Phil: So… what is your final piece of advice for today’s aspiring IT professionals looking out at their long-term careers?
Bruce : The first thing is, despite everything I’ve said here, they have to start and end with security, control of the asset base, privacy in the data, and assurance of the service. Everything else I’ve said is added on top of that. Effectively, they’re going to have to sort out the way in which they convert from their current base. Recognize that base has pretty much been abandoned by the vendors and the outsourcers, and figure out how, over the next five, ten, or 15 years, do they move to this new platform?
Next, I think they have to create a template and an architecture as an onramp and a way in which they rethink the governance structures for how these things are going to come into the enterprise. For example, mid-range companies I visit are really into mobility. I actually have one small firm, a $200 million company, with 150 mobile apps on the shop floor and in engineering. Everyone from the manufacturing engineers to machine operators to the forklift drivers have apps that make them much more productive. Their on-time shipments are up and there’s a reduction in waste which has more than paid for the investments out of yearly budgets. And then I go visit a big company and they’ve been spending a year trying to evaluate whether to go Mobile Iron or Ironwatch for their MDM. Now, I believe they’re going to spend another year developing mobile policies before they even start to deploy. Talking to all these big companies, I’m reminded of 1982 arguments we had about whether Profs from IBM or All-in-One from Digital was going to be the future. And I remember one of my clients being absolutely convinced it was neither, and he chose Wang. So when I listen to these folks taking a year to evaluate something…you may make a mistake, but you have to do something and start the learning process.
Phil: Bruce, when you’re not thinking about technology or writing? Are you trying to enjoy any form of retirement at all?
Bruce: I’m not made for retirement. I tried it once and drove my wonderful wife nearly nuts. I do a little bit of boating and golfing. I’m blessed with a spectacular family and an EA, Ruth who optimizes my life. But I really enjoy talking to these people. In addition to the 120+ IT Odyssey visits, I probably do 60 dinners and lunches a year with these folks, and there’s just so much to learn from other people’s perspectives. So I think my hobby is just trying to understand how other people think. We are back in most exciting times and I am thrilled to still be involved in this great endeavor of IT. And yes, I do like sports…I’m a Red Sox fan, a Patriots fan, and I like the Bruins. It’s a good year in Boston this year 🙂
Phil: Thanks so much for spending time with us Bruce. I know our readers will love digesting your insights.
Bruce Rogow (pictured above) runs his own advisory practice, IT Odyssey & Advisory. Each year, he visits with over 120 executives, academics and consultants involved in the management of IT. He is also a Gartner Executive Programs research affiliate, with four decades of experience that have included roles with IBM and Gartner group, where he served as head of worldwide research. You can view his bio here.
As we embark on our fifth year in operation at HfS, I’ve been reflecting on where the research analyst industry is going.
