People leadership problems like “Smarter management talent,” and “Better talent in the HR function,” are in the top 3 challenges to employee engagement uncovered in our survey while “Better technology implementations/user experience” ranked #11 and “Improved data capability/analytics to support my job” ranked #12. Unfortunately there has been too much focus on HR process and automation in companies, with the latest hype around integration and analytics as the next breakthrough “gotta have” investments.
However, people lead people and they are asking for the support, training, and enablement to meet and collaborate to both better manage day-to-day work and develop into the next generation of leaders. In another recent study HfS conducted on global business services functions, we explicitly asked about investments in formal business training in many key areas today by type of worker: enterprise or service provider.
What we found confirmed results found throughout the engagement research that workers are not getting development support: the majority are not getting any kind of formal training in critical business areas at all. As the extended enterprise expands, ambitious professionals may very well choose to work at service provider companies specifically because the traditional enterprise has dropped the ball in terms of its people. Will this be the tail wagging the dog?
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When we asked workers in the engagement survey how they want to spend their time, regardless of engagement level, they did not call for more automation or integration. They said they want to improve existing business processes, innovate for customers, and collaborate with colleagues.
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While a whole blog could be written on the trade offs of working from home and commuting (and likely will be at some point!), it is clear workers do not want to spend time on conference calls, administrative tasks, email, and compliance related activities. So companies should be relentless about giving them their time back.
There are actually great technologies out there to help manage hourly workers time – why not treat every worker as having a finite number of hours and assign them to company goals by skill set, availability, and interest? And we are not just talking hourly billable consultants here.
Measure managers on making sure that workers don’t just do what makes the manager look good, but focus them on the right priorities and give them the assignments that help with their career progression whether that will beinside or outside the company (btw stay tuned for the full write up on the HR Technology conference where some innovative companies are headed in this direction.) One has to wonder if the cut-backs in training have come out of the need for cost savings, the lack of actual career progression opportunities inside firms, or a perverse fear that new skills sets will make workers more marketable elsewhere. Guess what? They are all foolish gambles.
Also, simply give people money to get together. While some individuals reported they wanted to travel less to be more engaged, a greater numbersaid they wanted to spend more time traveling (32%) and to attend industry conferences and events (49%), which are huge professional development and relationship building opportunities. And fully half the survey respondents said they want to spend more time in team building activities, in mentor relationships, and in actual formal on the job training. Simply put, workers are starved for meaningful interaction.
Having been involved in econometric research analysis in the travel industry, I can tell you that the dramatic cutbacks of travel and entertainment budgets in 2009 and 2010 actually exacerbated the recession as people stopped going out and connecting with customers and converting prospects, as well as having internal meetings and holding in-person training. Harvard and MIT have also done a compelling study that shows that the longer teams go without in-person meetings, the more trust is eroded and productivity suffers (For copies of either of these studies, just ask.)
So ironically despite the wide-spread adoption of the term “human capital,” companies lost sight of the fact that economists use the term human capital not just as what people are inherently worth, but also how investments in people like education and training increase their value. The modern organization has stopped making too many of these investments it seems in favor of automation at a time when companies need to rethink the very people processes they seek to automate.
The Bottom-line: It’s all about people being empowered by technology across the extended enterprise
Christa Degnan Manning is Research Vice President, HfS (Click for bio)
The engagement survey results do show significant correlations between satisfactions with many software solutions (which we look forward to highlighting in the full report), but in the short term, these study highlights and suggestions should serve as reminders that business operating improvements and results are not the outcomes of automation or even outsourcing alone, but of aligning a team around a shared purpose, building relationships, removing barriers, and automating and/or removing administrative and non-value added activities.
The best research take away from this study, as well as the HR Technology conference last week where I met with old and new contacts alike, was that people make the difference in every business and they do their best work when they are motivated by people they can believe in, whom they have a personal connection with based on trust, and who reward their loyalty and best efforts. And they are not distracted by process automation and compliance for their own sakes.
Too many workers today are uninspired, unfaithful, and ironically frustrated they are not being tapped to create new value in business. A pervasive atmosphere of fear exists to cling to the jobs left after the “jobless recovery,” where they go through the motions of their roles just enough to stay away from the ends of the performance curve, and may have even stopped complaining (openly) that they are not given the time and monetary resources to drive innovation and customer success.
But now they have spoken. And we all have to smarten up.
Click here to listen to the Engaging the Extended Enterprise industry panel webcast that reviewed early findings from the Power to the People engagement survey. Watch for the full report to be published in November 2013.
It’s been a few weeks now since the surprise announcement of Accenture’s purchase of Procurian and, while the teams on both sides are busy working through details of the post-merger acquisition, we wanted to spend some time thinking about the implications of this deal for the other service providers in the Procurement Outsourcing (PO) market. What can they do in this short window, while the dust settles, to respond? Charles Sutherland pokes around at the post-Procurian procurement planet…
Regardless of whether this purchase is positive, polysemous or problematic for a service provider, everyone has to recognize that the market landscape has shifted quite seismically in recent weeks, with a clear market leader emerging, in terms of market share, industry breadth and client footprint.
Using the market shares from our recent Procurement Outsourcing Blueprint we place the combined Accenture/Procurian at 28%, which is more than 1200 basis points greater than #2, Xchanging:
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When we look at the remaining service providers, we see this acquisition in placing each one into the following these clusters: either positive, problematic or polysemous for the business, depending on the context and the opportunity. (We just couldn’t quite give up totally on the P alliteration but promise to stop now.)
The Positive Providers
So, why could the merger of two major competitors create a positive event for a PO service provider? Well, one of the key drivers for Accenture in buying Procurian was to expand its bench of seasoned category managers and sourcing experts – especially in direct materials. For all three of these specialists listed above, mid-sized providers which also have a depth in sourcing direct materials and category management (as well as consulting and transaction capabilities), are all now serious alternatives for buyers who may not want to go with Accenture. Moreover, they are also acquisition candidates for the service providers which now need to expand their own capabilities in response (e.g. most of the Problematic category).
The Polysemous Providers
For our polysemous service providers it’s a mix of positives and problems, as a result of this deal (and if you didn’t take Latin at school, Polysemous = multiple implications, in this context). GEP is another likely acquisition candidate for the Problematic providers, although the firm has been working hard to position itself as a technology, not sourcing-led, company and so they might not be first on the shopping list. The firm may find that ir has to make decisions as to where to invest if the market begins to place a greater emphasis on sourcing depth over technology in the near-term. Infosys and Xchanging are in similar positions, they have some depth in sourcing and some unique vertical strengths, but they won’t have the depth of an Accenture or an IBM in category management. What they do have going, is a greater use of proprietary technology than most PO service providers, and so steering buyers towards the value created by technology-led solutions is where the opportunity has emerged for both.
We also believe that this deal is a mixed blessing for the more traditional sourcing consultants. On one hand they now face reduced competition as Accenture’s own sourcing consulting practice will be part of the PMI plan for this acquisition and may emerge quite differently than it has been previously structured. It’s also positive in the sense that the smaller independent consultancies may be acquired by the Problematic positioned providers as readily as the likes of a Corbus, Denali or Proxima. But things aren’t all rosy; the core consulting business model in sourcing is under threat from the end-to-end capabilities of PO service providers, especially now with the depth of category management sitting in the leading companies. Also, for those PO service providers which don’t have the appetite (or cash) to make a sourcing acquisition, the consultants, managers and Partners of these consultancies make for very attractive focused hires to build up practices on a person-by-person or client industry-by-industry basis.
The Problematic Providers
This deal is problematic for other PO service providers whose depth and breadth in sourcing specialists and category managers, especially in key products or industry specializations, now clearly stand out as a competitive weakness versus Accenture.
For Capgemini and Genpact, this acquisition removes an established and growing alliance partner from their own solutions so they will need to invest in category management either through acquisition or hiring / organic growth.
For the smaller PO service providers including Aegis, HCL, TCS and WNS who generally entered the market with or from F&A P2P contracts, they need to decide if this is a sustainable strategy or whether they also need to follow in the footsteps of the larger diversified providers and quickly build up sourcing and category management benches. The alternative is to concentrate more on the transactional processing elements of PO and build their own technology platforms in the way that Infosys, GEP and Xchanging have been going.
Finally, for IBM, its strengths especially in manufacturing and consumer goods client industries for sourcing and category management are now matched by Accenture’s breadth and client references, and so the head-to-head competition that has marked this part of the market for the last several years has now become even more intense.
The Bottom-line: A spate of M&A has to emerge to re-balance the competitive nature of procurement outsourcing
Charles Sutherland is Senior Vice President, BPO Strategies at HfS (Click for bio)
Overall, it would come as no surprise to HfS to see a domino effect of acquisitions begin to take shape in Q1 of 2014 as the PO marketplace realigns itself to the post-Procurian world. We really do not expect their aggressive competitors simply to rollover and have their bellies tickled. IBM has laid out its master plan that Supply Chain Management is one of its core areas of growth and future investment; Infosys has gone gangbusters making the Pocurement Outsourcing Winner’s Circle after barely a few short years in the space; Capgemini has invested heavily in procurement with its acquisition of IBX and its fledgling supply chain BPO business and needs a strong procurement capability to balance its powerful F&A business; Genpact needs to expand its procurement strength and depth to compliment its F&A prowess. Accenture has forced the issue by sweeping up Procurian, now its competitors have to respond.
And now time for the second installment of Christa Degnan’s Manning’s discussion on HR’s obsession with obsolete processes, and we’ve got some more fascinating data to share from our new employment engagement study of 5,000 worldwide employees, conducted with the support of KellyOCG:
Why senior managers are almost as disengaged as their subordinates
Curious how leadership could be contributing to this poor employee engagement situation, we also looked at engagement by workplace hierarchy. By the nature of being a front-line employee, lower levels of responsibility and autonomy might drive disengagement as they are typically on the receiving end of orders or the bottom of the goal cascading process in the HR process world. (What is it that they say about what runs downhill?)
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While we did find higher levels of engagement the higher up the proverbial ladder one goes in an organization, the key take away for us wasthe difference wasn’t that much. This actually supports another data point near the top of the list of challenges that need to be overcome to improve engagement: #4 is “More engaged and energized management.”
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The reality is that companies are simply not investing in their people across the board; even senior leaders report a lack of support to develop new skills and capabilities. The #2 overall challenge to engagement is “Focus on career path and development,” right after “Smarter management talent.”
Get rid of the rank and yank
I would argue in today’s lean, mean virtual global marketplace, the main culprits to these issues is the cut backs in training, including face-to-face travel and events, and the all-too-pervasive “performance rating on the curve” system, which means that for one worker to win another has to lose. In a world where workers may be asked to calibrate colleagues’ performance having never been given the opportunity to even meet in person, the traditional curve approach is demoralizing, demotivating, and downright destructive because it is completely obsolete in the virtual, mobile, social, flexible workplace.
Christa Degnan Manning is Research Vice President, HfS (Click for bio)
If so much of work today has been outsourced or arranged through contingent workers or specialty statement of work (SOW) consultants, companies should only have their very best people left. With many business models shifting and people assuming multiple roles, there should be more rigorous training and opportunities for real connections in place. And companies should ask: is it fair to compare worker contribution just because they are the same band level? Or a worker in the U.S. to someone in France who legally has twice the time off (and is almost impossible to fire?)
I would also argue that senior executives are disengaged almost as much as the rest of the workforce because they have been the products of these outdated processes and are being asked to perpetuate them. They are also victims because they killed themselves to get and stay at the top of the curve in performance ratings, then too often are rewarded by being asked “to take one for the team” with a “stretch assignment” that has nothing to do with their strengths, interests, family commitments, or their own career aspirations – other than moving up – or staying on the same rung – of the ladder in the business.
Stay tuned for Part 3 (click here to read), where Christa discusses measures enterprises can take to improve the engagement levels of their staff and invest more in humans and less on systems…
Every autumn, the world’s leaders descend on New York causing mayhem as they make their way to the UN to make speeches and assert their influence over the direction of world affairs.
Last year, we noticed there was a new nation-state “Robotistan” making its presence felt at this august world body and we, at HfS, wondered how significant a player it could become in matters of the BPO and shared services nation states. So we sent our very non-robotic Charles Sutherland to take a closer look into this subtle shift to robot arbitrage…
Framing a Constitution for Robotistan
Over the last year, Robotistan has developed even faster and more extensively than we could have anticipated, a set of developments we have captured in our recently published research report “Framing a Constitution for Robotistan”. What we have seen is how Robotistan is quickly becoming part of the strategic planning efforts of leading BPO Service Providers, operational consultants, analysts and end clients many who have appointed their own dedicated ambassadors or sent fact finding missions to Robotistan so that they can better understand how the place works. We have also seen new citizens arriving in Robotistan in the roles of both software providers and end users to help swell the ranks and the influence of this emerging entity.
In fact, this growth in interest and strategic importance for Robotistan is such that this fall, it has clearly taken residence as one of the members of the BPO Security Council participating in the debate over the future of horizontal business processes such as F&A, HR, Procurement, Supply Chain, Marketing and Legal. While not yet a permanent member of the security council with the status in the BPO world like: labor arbitrage, process redesign, staff augmentation, global business services or the SMAC stack we are amazed by just how far Robotistan has come already and can already see a future when it could replace a permanent member owing to its ability to create incremental and permanent value for both clients and service providers.
Charles Sutherland is Senior Vice President, BPO Strategies at HfS (Click for bio)
For those of you asking, why this new nation-state seems to be on the ascendency at the moment, we believe it comes down to a number of major changes occurring in the world of BPO today. Specifically, the striving for differentiation amongst service providers, the increasing value of contract renewals and re-competes, the strategic imperative to break the revenue-FTE linkage for service providers, solving for the eventual end of labor arbitrage new mindsets about the role of technology and humans together and how user friendly the technologies of Robotistan are becoming.
These changes will only continue to become more significant in the BPO world in the coming years which further enhances the potential appeal of Robotistan as a destination for many of the world’s leading companies.
For those of you joining HfS this December in New York for our Blueprint Sessions 3.0, come to hear more about the HfS view on how this world is developing including more about the growth of Robotistan and how we see the BPO Security Council changing over time.
“Framing a Constitution for Robotistan” is a new report authored by HfS analyst Charles Sutherland – you can download your complimentary copy here.
Christa Degnan Manning is Research Vice President, HfS (Click for bio)
The smartest leaders are those who figure out how to get the most out of their staff – to hire the best people they can afford, make sure they are continually energized, and to ship out the poor performers and bad apples on a continual basis.
So why, oh why, do so many Human Resources executives obsess with administering irrelevant processes and buying technology products to fuel these obsessions, when they should be helping their firms’ managers get the best out of their staff? It brings me back to the heyday of HR outsourcing, where so many deals fell by the wayside as they were centered on HR offloading the administrivia to outsourcers and focusing their retained org on the “value add” HR work. Sadly, most organizations quickly discovered most HR people only wanted to deal with administrivia, and HRO was a direct threat to their employment. So end-to-end HRO died a painful death, leaving the outsourcers to focus on discreet administrative processes, namely payroll, benefits and staffing admin, which HR people could administer – and obsess over – to their hearts’ content.
As was so famously pointed out in 2005’s Fast Company’s Why We Hate HR article, the whole HR function needs to be blown and and completely reconstructed with a new set of skills, a renewed purpose and mission to put the HR function back somewhere remotely near the C-Suite table. So, without further ado, it’s time to unleash our own doyenne of the disruptive workforce as she wages her war on weird workforce ways, Christa Degnan Manning…
Time to Put the People Back into the People Business
As noted in my HfS bio, I recently returned to the business research and analysis arena focused on workforce optimization because my last five years’ experience as a line manager and employee in a Fortune 100 firm (supposedly one of the best companies to work for) exposed me to the fact that predominant human resources philosophies, policies, programs, and particularly systems in place today are woefully inadequate and even obsolete for today’s global, virtual, mobile, social, time-starved, knowledge-worker world.
Today’s firms investing more in talent outside of their core organizations
Compounding this challenging reality is the fact that companies continue to downsize their traditional full-time staffs as well as under-invest in the people that remain. Too often, they neglect the knowledge transfer, culture indoctrination, and relationship building with all their “extended-enterprise” workers including contractors, consultants, and third-party service provider partners that are critical to sustained business success.
Validating this workforce shift, procurement outsourcing firm Proxima recently shared public company data analysis quantifying the change in the workforce in the last three years, noting that labor-related costs as a percentage of company revenues have decreased 8% while non-labor costs with third party providers have risen 6%. Yet procurement and HR practices haven’t really changed a whit.
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Having just returned from the latest and greatest HR Technology Conference after a five year absence, I can definitively say the majority of organizations and workforce software and service providers are still obsessed with “hire to retire” HR-process driven approaches to supporting the workforce. Yet, I cannot find one person who has gone through that process at a single firm – let alone have that process automated by a sole software provider.
But I do talk to many people – even HR practitioners – overwhelmed by all of the disparate employee and manager Web-based self-service expectations today. Workers are also completely exasperated with the actual HR processes (painful annual calibrations and bogus development plans with no resources or commitment to execute them) and frustrated where processes should exist but don’t (on-boarding and off-boarding have to be the worst offences.)
A third of the modern workforce is disengaged and de-energized
Frustrated by the lack of any progress addressing these workforce realities and our own experiences in the business world, HfS decided to ask what workers worldwide think about their workplaces and how they want to spend their time to be more engaged and productive. While lack of engagement has been well documented (typically by firms, such as Aon Hewitt, Deloitte, Gallup, and Mercer, that sell consulting services for employee engagement strategies), we wanted to investigate, in very practical terms, what could be done to address the root causes of disengagement in the context of the modern business operating models we observe.
By conducting this survey, we hoped to focus attention on the pervasive yet interconnected issues undermining individual as well as business success, and ultimately help our economies return to healthy expansion. So in August and September we collected input from nearly 5,000 workers worldwide across all types of worker: age, geography, role, function, company size, industry and more (special thanks to KellyOCG for its support).
Not only did we document that one in three workers worldwide is disengaged in their jobs half the time or more, but we captured insights into the policies, solutions, preferences, and ultimate challenges to be overcome to achieve higher levels of workforce empowerment and productivity. From time management to software solutions, workers shared eye-opening advice in many areas that sound simple to say but may not be so simple to execute. Let’s examine further…
Why is the full-time employee the least engaged across the extended enterprise?
While the vast majority (75%) of respondents classified themselves as traditional full time workers, they turn out to be the least engaged of the lot. Given the recent waves of downsizings, uncertainty in the economy, and career development limited, the traditional worker gets the message: the company is not willing to invest in you. So why invest in this business?
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They are also overtaxed with departed colleagues’ responsibilities in parallel with more self-help duties than ever before. More than 80% of traditional employees reported spending 25% of their time or moreon administrative tasks. How many readers can identify with this: an IT help desk request more often results in a more timely service quality survey request than in the computer problem actually being solved?
Speaking of IT, workers spend so much time today setting up and attending virtual meetings and conference calls, they simply have to multitask – literally disengage during meetings – to get any real work done. At the same time, they are being asked to master the disparate self-service apps that have proliferated in the last decade. Whether it’s creating their own help desk or procurement requisition, approving supply contracts and invoices, booking travel or filing expenses, workers are spending more time on these tasks and not in real business-facing activities.
And it is particularly loathsome to the workforce when some other department or function takes a big scorecard win and performance payout bonus for FTE cut cost-savings when part of that savingsliterally comes out of their work day (if not after-hours – a third of respondents to the study reported consistently working more than 40 hours a week.) Where’s the employment brand commitment to work-life balance there?
Simply-put, many HR executives and HR technology providers have become increasingly irrelevant to corporate strategy with their own focus on automation and administrivia associated with non-value added processes and products, as opposed to solutions designed to improving employee engagement and productivity. They are just adding more things for workers to do that do not help the customer or help the manager (and through them the full population of employees and clients.)
Stay tuned for Part 2, where we discuss, who and what is to blame, the disengagement of managers as well as their subordinates… and the common sense solutions in front of us… click here to read.
Christa Degnan Manning (pictured above) is Research Vice President for HfS Research’s Workforce and Talent practice. You can view here bio here.
My good pal Vinnie Mirchandani just blogged about how we can add so much to our lives by looking beyond Twitter, LinkedIn, Facebook, Quora, Pinterest etc to find value from our networks, when it comes to learning new ideas and gleaning knowledge. He mentions going to more events, getting more magazine subscriptions on your iPad, going to the book store… I would go further and encourage us all just to make more of an effort to meet and talk! You can’t beat sharing knowledge with each other as the best way to learn something new…
I was having a drink with an old friend recently and that person said something that make me think; “Everyone knows you, but very few people actually know Phil the person”.
It really him home that I was electronically famous (or notorious) but few people actually know me to hang out / have drinks / shoot the sh*t etc
I used to really value my personal relationships but it really dawned on my how superficial so many of my social media relationships were. I’ve put so much effort into building my electronic network in recent years, and not enough into my personal network. While my electronic friends are fun, they pale in comparison with real people and real conversation…
My first New Year’s resolution is to change this and focus more on the “real” less the avatar… so if anyone’s passing through Boston, my offer is open to share a decent glass of wine… pint of good ol’ ale… maybe even a single malt. Drop me a line anytime 🙂
Why do so many service providers still hover feverishly around outsourcing advisors begging and willing them to invite them into huge contracts… when the reality is that most maturing enterprises are today less reliant on the advice of traditional consulting than they ever were? And when will advisors wake up and realize that the old method of billing their clients millions for effort-based grunt work is just no longer doing it for them?
As one advisor confided the other day… “we can tell in a quick phone call if we can bill them $500K plus… if we can’t, we just don’t bother pursuing them”. There was little thought regarding how to develop a long-term outcome based relationship, the onus simply being to park the MBA bus at the client’s visitor’s parking spot and sell the same old dog n’ pony show of cranking out operational data to effect the sort of operational result that the client really should do itself. Bottom-line, clients need a helluva lot more than the obligatory 200-slides appendix that quietly gets dropped into the recycling bin after gathering dust on some executive’s desk for a few weeks.
And when the world’s number 1 management thinker, Clayton Christensen, writes about Consulting on the Cusp of Disruption, you know it’s officially game-over for the way consultants have traditionally delivered effort-based high-cost projects for wizening clients. And when it comes to helping clients with Global Business Services and Outsourcing, the credibility of consultants is at an all time low – according to 106 C-levels and SVPs of major enterprises responding to our new GBS study:
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Why do only half of enterprise leaders see increased investments in consultants as the way forward to achieving effective global business services?
Yes – just look at the data – increasing investments in consulting scores drop-dead last when it comes to achieving fluid and effective governance. 46% actually sees no benefit whatsoever, and only 15% sees any real help coming from outside.
Compare this to the fact that over nine-tenths of enterprise leaders look to stronger C-Suite commitment, better talent and better IT to achieve their governance outcomes. Clearly, if consultants could help ensure their clients could begin to achieve these three objectives, they would find themselves sitting near the top of the priority pile, instead of at the bottom.
How has consulting reached this low-point and what can be done to turn the corner?
Let’s refer to Clayton Christensen first:
We have come to the conclusion that the same forces that disrupted so many businesses, from steel to publishing, are starting to reshape the world of consulting. The implications for firms and their clients are significant. The pattern of industry disruption is familiar: New competitors with new business models arrive; incumbents choose to ignore the new players or to flee to higher-margin activities; a disrupter whose product was once barely good enough achieves a level of quality acceptable to the broad middle of the market, undermining the position of longtime leaders and often causing the “flip” to a new basis of competition.
And the world of outsourcing advisory fits right into this trend, where, in years gone by, the likes of TPI (now ISG) would park teams of former EDS executives into enteprises to number-crunch outsourcing contracts and FTE cost-data for millions of dollars. Other advisory boutiques sprang up to take advantage of this model, such as EquaTerra (now part of KPMG), Alsbridge, Everest, W Group and Pace-Harmon. We then saw traditional consultants, namely Deloitte, PwC, KPMG, Ernst and Young and even McKinsey, form “outsourcing advisory practices” to grab their own share of the pie, as clients queued up for help with their global sourcing needs. However, as all of them quickly discovered, all the easy money was centered in the act of brokering a deal, crunching the numbers, vetting provider long/shortlists and working with lawyers to finalize the contracts. Most were quickly ejected after the contract was signed, as they simply didn’t have the right consulting skillset – or data – to support the client with its operational and strategic needs to transition the operating model and develop a fluid, effective governance capability.
Some of these firms have flourished to evolve their models to provide platform-based solutions which enable client to access process benchmarking data, dynamic pricing information, on-tap support when needed, but most have persisted in hawking the same-old model that half the clients – as the data points out – are not really looking for anymore.
As brokering outsourcing contracts has become operational – and commodotized – these consultants have been faced with three stark choices:
1) Just do deals cheaper. Today, we see deals that used to involve teams of six (or more) consultants, now being brokered by one solo advisor. Go figure. We are also seeing outcome-based models from non-traditional consultants, such as UpperEdge, that do not rely on the onsite hourly-bill-fest consultant model to broker a transaction and can radically undercut their higher-priced competition with its strong data and pricing capability. Alsbridge has been one of the few smaller advisory boutiques to survive in recent years, developing a strong competency in IT infrastructure and networking data benchmarks that enable it to take the lead in a commodity market and service clients with low-cost support, in addition to traditional outsourcing advisory, based on its client needs.
2) Persist in finding clients naïve enough to pay 2005 prices. Sadly, there are still some enterprises which still get convinced they need the MBA bus dispatched to number crunch an ADM bake-off between HCL, Cognizant and TCS. Yes – seriously – this still happens! Traditional consultants, such as Deloitte, PwC and Ernst and Young have stayed in business doing it the old-fashioned way, and do a good job leveraging their long-established auditing relationships to get to the table with clients, still happy to pay top-whack for the peace-of-mind of using a reputable brand. ISG (formerly TPI) is the traditional 800 lb gorilla of the complex and clunky outsourcing transaction, and has made efforts in recent years to position itself as more than a transaction shop dependent on the $550/hour gray-haired former EDS executive-cum-consultant rolling up to camp in a cube somewhere at the back of a mid-west shared service center for the next three years model. While it has made some interesting efforts to change its business, such as its recent multi-year contract with Marriott to manage its outsourcing governance program, the firm still makes the bulk of its business from the old world of traditional advisory. Whether it can eventually transform itself into a research / benchmarking firm after its acquisition of Compass three years’ ago, remains to be seen.
3) Develop platform-based capability that decouples the requirement for onsite consultants, while providing clients with the data and capability they need. We are starting to see pockets of this happening, such as the work KPMG has done developing its Governance Workplace tool that provides clients with ongoing process benchmarking, industry insights and pricing data to manage its service provider and shared services portfolios, supported by a dedicated onshore delivery team in Grand Rapids, Michigan. The firm has done an impressive job developing the IP and technology acquired from EquaTerra and coupling its governance consulting talent to its clients, as and when they need it, under its Managed Governance Services offering. While it’s still early days to gauge the long-term potential of KPMG’s model, it’s clearly a front runner in terms of balancing clients’ needs for traditional consulting with the disrupter product that is acceptable to the broad middle of the market which Christensen talks about.
The Bottom-line: Consultants are not immune in today’s disruptive world – it’s “change the model, or prepare to fizzle-out” time
I’ve never known a more disruptive time for business than today – entire industries can be decimated before they know it – just look at the impact social media and the proliferation of information and communication has had on PR, research, media, technology and content-provision. Many once-great great brands have faded (or become extinct) because they failed to keep up with the changing needs of their markets, preferring to stand still and hope their brands carried them through… well, if Clayton is correct, the same is about to happen right at the front door of outsourcing advisory.
Smart clients are losing their appetite to invest in expensive consulting models that only deliver effort-based inputs. So much of the information they had to pay millions for in the old days can be found in LinkedIn groups, or served up for free by eager BPO firms seeking to develop client relationships. The onus is shifting to arming clients with ongoing data, analysis, insight, support and knowledge to help them empower themselves to be more effective. Clients want to improve their own talent, not just hire it in for a piecemeal project, which goes away when the money runs out. The issue is that traditional consultants are only schooled one way – to price based on bodies and effort, as opposed to outcomes and sustainable longevity. They will obviously claim they provide their clients with those outcomes, but when those clients can start to achieve the outcomes they need from less costly and more flexible, relevant models, then the game is up – and the old world has to change.
Like any other industry, change only comes about then the actual fundamentals are shaken and the “old way” of getting paid changes. As the data clearly indicates, traditional advisory, as we knew it, is on that very cusp in the global services world. Those consultants who fail to change their ways, bring in leaders with new ideas and new models for IP delivery, or hire innovative consultants who are not always from the other traditional consulting shops, are surely about to go the way of the Woolly Mammoth…
I honesty cannot tell you… but it’ll be fun finding out!
During Blueprint 1.0 we all figured out what the biggest challenges actually were in the sourcing industry;
In Blueprint 2.0 we debated them vociferously with the buyers and providers;
And in the upcoming Blueprint 3.0 we’re going to put words into action by bringing together all the key stakeholders in outsourcing and shared services. And we’re even going as far an inviting the leading sourcing advisors… oh boy, what on earth are we doing?
Can you handle this? Click to learn more…
However which was we look at this, this is going to be one helluva crowd – with a bevvy of buyside sourcing and shared services leaders from 60 major organizations, in addition to this motley crew.
Drop us a line if you’re interested in getting involved…
And the trumpet-blowing continues as the results of the blockbuster 2013 Analyst Value Survey leak out to market. Here’s one we’re particularly proud of at HfS:
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Duncan Chapple, the grand poobah of Analyst Equity, has generously shared a deep-dive view into the survey over on slideshare.
After four years of pummeling the world with far too much free research and slightly odd humor, please allow us a few minutes of our own-trumpet-blowing as we broadcast the results of the 2013 Analyst Value Survey, courtesy of Analyst Equity and Duncan Chapple, the respected industry observer of IT analyst firms. This is based on a record number of 352 IT research consumers (buyers, vendors, journalists and investors):
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You can also view the full dataset of results by clicking here.
It’s been a few weeks now since the surprise 
My good pal Vinnie Mirchandani 
