I’ll agree that “blowing up” may have been a little strong of an adjective (but, hey, it made you all read the damned thing), and “shaking up” probably more appropriate. However, this doesn’t disguise the fact that too many technical folks fail to view the bigger picture when it comes to Cloud.
At a tactical level, when you look solely at Cloud as a hardware-capacity solution, it’s hard to see beyond how it can impact businesses beyond creaking ITO-only deals. However, you really need to look at the convergence of BPO, SaaS and Cloud in a broader outsourcing context to start to visualize how these three pillars of business delivery can – and are – coming together in a blended outsourcing model. Yes, it will take time (and I have called out a two-year time frame to see some real progress here), but it has to happen, and our recent “state of the industry” survey data supports this.
BPO provides labor arbitrage and the ability to personalize “standardized” solutions, SaaS provides the one-to-many process templates that underpin the BPO, and Cloud the delivery engine. Moreover, the virtualization that Cloud provides also adds a whole new dimension of cost-arbitrage for clients – the arbitrage of inefficient hardware infrastructure, the ludicrous wastage of energy costs (not to mention the impact on the environment), and the labor costs to maintain and support infrastructure that provides zero competitive advantage for organizations. The one anti-Cloud argument that keeps getting thrown out there is centered on data-security, but how this is really any different from those security issues surrounding the externalization of data in today’s outsourcing engagements, is beyond me.
I completely agree that this “blowing up of the traditional outsourcing model” is far more easily said than done, and we are seeing a huge resistance to this movement from many IT professionals threatened by these trends, but the bigger picture doesn’t lie: company leaders are constantly seeking new avenues of cost-elimination and Cloud – combined in an outsourcing context – can provide that for many companies willing to embrace it.
One other factor to consider is the push we’re seeing from the vendor-side. Yes, there’s tons of hype and fluff right now (that’s how the tech industry works), but the service providers, in particular, need to keep moving the needle to keep their margins high, and their clients’ productivity levels on a constant upswing. This relentless pursuit of cost-elimination is driving our world today, and the speed at which service providers need to keep sourcing new ways to help their clients find new thresholds of business effectiveness has never been stronger. Some providers will always remain content picking off low-end body-shopping work, but many are eyeing the bigger pie and will strive to make this outsourcing convergence a reality.
Whoever said Obama was going to be bad news for the outsourcing business? The outsourcing market has rebounded heavily with the economic recovery and the successful passage of the new Heathcare Reform Bill has both the IT outsourcers and BPOs on red-alert for a barrage of new business opportunities. For example, the need for payors to manage their administrative costs has never been as intense as it is now, with the fixed medical loss ratios.
We’ve sent our analysts Mindy Blodgett and Anthony Calabrese on the trail to find out exactly what this bill means to both healthcare provision and how it will impact the outsourcing industry. Our research starts now and we’d like both healthcare providers and outsourcers to get involved:
Healthcare Reform: The Scramble for Outsourcing Business Begins
The successful passage of the historic Healthcare Reform bill has sent eager BPO and IT services providers scrambling to be first in line to take on new business.
With 32 million Americans slated to join the ranks of the newly-insured, that’s going to create a major administrative headache for healthcare payors and providers. Increased business process requirements, in the form of new customer enrollment; customer service; claims processing, revenue cycle management etc. will soon be cropping up as the existing systems strain to cope with the major influx of new users. Moreover, the additional demand for IT services to support the increased data requirements is already pushing service providers to position their strategies for incremental business.
Healthcare insurance providers, leery of outsourcing processes, will have little choice but to seriously examine BPO as a way to quickly scale up to handle the new administrative requirements. When facing the new demand for services and the unpredictability that will ensue, the flexibility of a BPO partnership to support rapid expansion, while keeping costs down, becomes much more attractive than hiring new staff for an uncertain volume of new business. In addition, new regulations and requirements, still being understood and analyzed, will put increased pressure on healthcare and insurance providers, which are part of an industry that is already strictly monitored and tracked. Smart providers that can stay ahead of the new regulatory environment and to stand ready with relatively low-cost, quick-fixes to these issues, will be in a prime position to develop or grow their healthcare delivery footprints.
In terms of IT services, it has been estimated that the U.S. will need to spend some $2.5 trillion just to develop a new healthcare system. The bill allocates about $37 billion for electronic healthcare records (EHR), forcing healthcare providers to look at such activities as data conversion and the beta testing; installation and change management needed for a new system. Creating a standard for EHR and implementing it will be a huge challenge for payors and providers, and they will look to outside help to ease the cost and the headaches. Healthcare providers, like never before, will be interested in resource optimization; access to accurate data and will look to the third-party providers for low-cost effective solutions to help them quickly react to the larger, and more complex, healthcare provision needs. There will also be a need for analytics solutions to assess the needs and effectiveness of the systems.
The race to the negotiation-table starts now
While BPO providers scrutinize this looming opportunity, they are also assessing the pitfalls. Some BPO insiders worry that many of the providers are not prepared with the technology and services required to meet the growing needs. As providers ramp up their functional delivery capabilities in areas such as revenue cycle management; clinical supply chain management for clinical and affiliated businesses; there will likely be a time-lag while insurance providers consider their options. However, those which are engaging in the right conversations with the insurance providers today, will likely be at the negotiation-table when it’s time to select service partners for the additional work-requirements.
The offshore service providers, in particular, are salivating at the potential of this new market. But they face some challenges, including the fact that some of the work will be prohibited from being offshored. Such providers as Cognizant, Genpact, Infosys, and TCS and Wipro, just to name a few, are considering ways, therefore, to expand their onshore and nearshore delivery center presence or to broaden their partnerships. BPO providers are working on expanding, revamping and launching services to meet the need. Also well positioned to take advantage of the new market are incumbent BPO giants such as Xerox (ACS), Accenture and IBM. Moreover, Dell, with its recent acquisition of healthcare IT-BPO specialist Perot Systems, is on red altert to expand its footprint in the sector.
At HfS, we are committed to tracking, researching, analyzing and reporting on this developing healthcare challenge. The Healthcare Reform bill is not just a game-changer politically and socially – it has the potential to alter significantly the outsourcing landscape.
We’d love you to participate in our research, and want to talk with you:
As a supplier of healthcare-specific BPO services (or a potential supplier) – how are you gearing up to respond to the new needs, requirements and regulations?
As a practitioner working in the healthcare payer or provider industry, how is the bill impacting you, and how will it influence your outsourcing decisions?
Contact us and we’ll send along some specific questions we are seeking to answer as we put together a report on the changes in healthcare BPO.
Whether you’re a healthcare payor or provider or outsourcing service provicer in the healthcare sector, please email Research Director Mindy Blodgett if you wish to be a part of this pivotal research project.
We LOVE the Cloud. When you think that 60% of the costs of maintaining the average server are purely electrical power (and worse with old hardware), simply jettisoning the asset-heavy infrastructure will reap a return.
However, when we delved more deeply into the seeds of Cloud Computing (read our earlier article), it’s clear the future potential of Cloud goes well beyond cost-savings generated by eradicating clunky, inefficient IT infrastructure. Cloud can harness the true benefits of SaaS delivery and BPO can plug the gaps may companies need to have business services delivered in a readily-available “as you need it” model.
One of the core discussion points on this site over the years has been how the outsourcing industry can find new levels of efficiency – and business value – once companies have maxed-out the cost-savings from lower-cost labor. The IT outsourcing business still has plenty of mileage shifting software development and support work offshore, but eventually this will dry-up. Many of the high-end enterprises have already moved as much of the commodity work offshore, and they are having to look at more of the complex infrastructure areas for the next wave of productivity gains. Cloud delivery is going to pay a pivotal role in the heart of the future global sourcing delivery business, but the critical question is how quickly it will become adopted.
Gartner predicts that by 2012, 20 percent of businesses will own virtually no IT assets. “While adoption of cloud services is still low, outsourcers need to adapt to this change. The days of dedicated data centers are probably limited” (Susan Tan, Gartner)
“Enterprise decision makers are rightfully fed up with old-school, black-box, ten-year handcuff deals” (Phil Fersht)
While Doug Plotkin, of PA Consulting, seems to hold the opposite view that enterprises need to invest in research and take their time, before making radical decisions to their architectures; “Large established firms should research the market for the areas they can participate in without going overboard on the idea that they should completely re-architect their solutions and delivery mechanisms”. Hmmm, maybe Doug spots a consulting opportunity…
The answer undoubtedly lies somewhere between a slow, methodological approach and a fast-paced impetuous decision.
One thing is clear: we are now living in a New Relentless Economy, where business are aggressively looking at new ways to drive out cost, improve productivity and find new thresholds of performance. I don’t predict Cloud to sit around for years before companies finally adopt it. Moreover, we’ll see a heavy vendor-push (already started by some) to move clients quickly onto Cloud-based platforms and train IT staff to develop Cloud-capable applications to support the transition. Look back two years to see how dramatically the climate has shifted and ask yourself “will enterprises hang aroundin this environment, or are we on a relentless spiral for productivity improvement?”
I predict we’ll start seeing the first wave of genuine Cloud-based business utility offerings becoming widely adopted within a two-year time-frame.
A polymath ( Greek polymathis – “having learned much”)is a person, with superior intelligence, whose expertise spans a significant number of different subject areas. In less formal terms, a polymath (or polymathic person) may simply be someone who is very knowledgeable. Most ancient scientists were polymaths by today’s standards. Yes, we’re now going feature an interview with Sarah Palin.
Oh wait… I just heard that Sarah is unavailable today, so we’ll have to make do with another polymathic personality: the one and only Vinnie Mirchandani. Vinnie is the Lord of the technology blog (visit his famous Deal Arthitect and New Florence blogs). Since early 2005 he has been consistently discussing and prophesizing about every facet in the technology and services universe: from busness process angioplasty to Cloud computing, from airline travel experiences to Sesame Street… yes, I have to confess Vinnie is one of the inspirations (or should I say perspirations) that drove me to the blogosphere.
And if you think cranking out three blog posts a day while running a consulting business is wearing on your literary talents, try writing a 23 chapter anthology that takes us on the ultimate journey through the world of information technology innovation and its impact on today’s globally-integrated society. Yes, Vinnie’s literary debut is forthcoming with his new book “The New Polymath”. You can pre-order today his book today at amazon.
I caught up with Vinnie earlier to tell you a little more about his inspiration behind the book…
Vinnie, what’s the significance of the name “The New Polymath”?
Phil, a Polymath is a Renaissance Person like Da Vinci, good at many disciplines. The New Polymath in my book is an enterprise which is comfortable with a wide range of technologies and has learned to package 3,5,10 strands of infotech, cleantech, nanotech, biotech etc into complex new solutions to solve some of the big and small problems we face.
A number of people know of my Deal Architect blog. But, the real joy for me has been my other innovation focused blog, New Florence. New Renaissance. Over 5 years I have posted over 2,000 entries in 40 tech categories from mobile computing to nanotechnology. Many recent entries have focused on innovations in the consumer space and in social networks – as you know that’s where the buzz has been.
Nice, but those are hardly complex problems compared to the some of the grand challenges the National Academy of Engineering has laid out, including ensuring plenty of clean water around the world and reverse engineering the brain.
Fortunately, as the database of posts grew year after year, I started to notice two patterns. I was seeing ever-more complex products and services that blended a variety of technologies. An example was General Electric’s plans for the Net Zero Home (as in zero annual energy costs), which plans to bring together solar, wind, next-gen battery, smart grid interface technology, and energy management software to efficient appliances, water heaters, and other devices at home. Or the BP CTO group, which effortlessly weaves sensory networks, predictive analytics, and other technologies to bring innovation to a variety of refineries, exploration sites, and other aspects of its global reach.
I was also seeing refugees from information technology increasingly move into cleantech and healthtech. Ray Lane, ex Oracle, and Bill Joy, ex Sun, are key leaders at Kleiner Perkins, which has made 50-plus investments in cleantech. Little in Kleiner’s past success as a venture capitalist in information technology (including blockbuster investments in Netscape, Amazon, eBay, and others) prepared it for a world of methane and selenium. Yet here the company is, reinventing itself learning new sciences while investing in a new generation of entrepreneurs who are helping the United States catch up to the Germans and trying to stay ahead of Chinese, Japanese, and other investors in cleantech. Similarly, Google, Microsoft, and others are increasingly offering products in the healthtech market.
Those are modern-day polymaths, I thought. That led to do interviews and write on 8 Polymath organizations – GE, BP, salesforce.com and others who have shown the ability to effortlessly package multiple technologies. I then also interviewed another 100+ innovators who are pushing the ball forward in specific areas like next-gen analytics and sustainability the Polymath enterprises are leveraging.
And, I know I enjoyed reading it, but what are the main things you’d like readers at “Horses” to take away?
There are huge new technology markets around cleantech, healthtech etc that IT outsourcers can target. You can already see firms like IBM are starting to tout them in their “Smart Planet” series. But they are still really doing IT work on these projects, and even there, back office IT work. That’s needed but it’s not “innovation “stuff anymore. So, for well-trodden technology paths, they are significantly overpriced. I have seen in a couple of “Smart Grid” projects in the utility industry, the outsourcer’s proposal for updating the back office billing and service application kill the ROI for the real innovation areas. So, outsourcers will have to commoditize basic IT skills and learn new types of energy, medicine and algorithms to justify premiums. They will also need to work with a whole new set of vendors and technologies to succeed in those emerging markets, and the book catalogs many.
Outsourcers also have the opportunity to dramatically innovate their own operations. There is a chapter in the book on Cloud Computing which is allowing clients to question long-term, fixed price infrastructure outsourcing contracts. They want variability in supply and economics of such services. SaaS vendors like salseforce.com and NetSuite profiles in the book are showing massive scale in shared application services, that few outsourcers can match today. Telepresence and growing experience with global delivery is leading clients ask why consultants have to travel to their site week after week and rack up another 20-30% in expenses. BTW, global delivery cannot just be India delivery any more. As Cognizant, one of the case studies in the book shows, you need to leverage talent pools everywhere to take advantage of linguistic, application, time zone factors. Data centers from which outsourcers provide services, will have to compete with those Google and amazon have set up over the last few years with Crowdsourcing models and communities, also discussed in the book, are allowing clients experiment with different ways of sourcing talent. So, plenty of opportunities to innovate outsourcing business models and operations.
And you said the book will be available in June… can we alter readers here when it is published, so they can order it directly?
Vinnie Mirchandani, (pictured left) is founder of Deal Architect, is a former technology industry analyst (with Gartner), outsourcing executive (with PwC, now part of IBM) and entrepreneur (founder of sourcing advisory firm, Jetstream Group). He is a thought leader on trends in software, outsourcing and offshoring. He has personally helped clients evaluate and negotiate technology contracts valued in excess of $ 5 billion and has consistently advised companies on IT risk management, globalization and sourcing issues.
We’ve certainly had a full dose of the “How can HR Outsourcing find its rhythm” discussions over the years, and the consistent theme has been one of reducing operational complexity and increasing the focus on the retained HR organization, to help companies actually add some value to their HR operations throughout the whole outsourcing experience.
We sent our HRO diva, Mindy Blodgett, out to investigate where some of the leading minds are focusing in this post-recession environment, and her first port of call was with Erica Volini, one of Deloitte Consulting’s leading Principals in the HR transformation field.
Erica Volini has been working with HR on the elusive goal of HR transformation for 12 years, with a particular focus on HRO for the past eight. She has therefore had a privileged perch and a decidedly insider’s view from which to assess HR’s struggles with outsourcing and other solutions – and she knows what works, and what doesn’t, when implementing HRO. When not advising organizations on their HR journeys, Erica loves to explore her home base of New York City. She also professes to loving 80’s music and secretly admits to being fascinated with the latest entertainment news. She took a break from her grande, skim caramel macchiato to chat with us about the direction she sees HRO going in today.
Mindy Blodgett: How is it that you are working with HR organizations today?
Erica Volini :My focus has been on helping organizations figure out how to take HRO and get it up and running. This is no easy task. When I first started, multi-process HRO was all about “big bang” and people viewed implementing everything all at once as the right answer. Now, buyers are starting to understand how complex it is and everyone is trying to figure out how to simplify in the hopes of increasing success. In that way, HRO has almost followed a reverse maturity curve.
Mindy Blodgett: We’ve heard so much about HR transformation as a goal of HRO – but that concept seems tired and overused. What is your view of whether HRO can achieve true organizational transformation?
Erica Volini: When HRO first came along, it was viewed as THE answer to transformation. We all realize now that outsourcing is only an enabler of transformation and that it takes a lot more than HRO to truly transform. Organizations need to start looking at HRO as a way to increase operational efficiency and organizational credibility. Then they need to leverage that credibility to drive transformation. And they can’t forget the retained HR organization. If the focus is only on the provider, and what the provider brings, transformation will never be achieved.
Mindy Blodgett: What is wrong with the way some organizations approach HRO?
Erica Volini: It comes down to too many organizations taking a vertical, silo-ed approach. A typical HRO contract is set up in silos – so the benefits team is defining one set of services while the recruiting team is doing another. The problem comes in when trying to drive integration among them. Unless they start looking across the silos, it’s hard to see how services and activities need to connect. Without finding ways to embed that interconnectivity into the HR solution, it will always fall short. HRO providers have the capability to look across processes – but the challenge is taking that integration capability and turning it into a set of services that providers can offer and organizations can measure.
Mindy Blodgett: How are the providers positioned to provide these integration services?
Erica Volini: A lot of the large providers are well positioned to do this because of their breadth of services – and a lot of the offshore providers are extremely well positioned, because their legacy of BPO and ITO taught them how to connect disparate systems and processes. But on the buyer side, the problem is that integration services don’t jump out on an organizational chart. It doesn’t automatically come up when purchasing services because there is no single role in charge of integration. The buyers need to start saying to the providers, “I want to purchase integration services because I know they’re key to optimizing service delivery. I want you to own cross-process activities such as data monitoring and vendor management. I want SLAs tied to it and I’m willing to pay for that service so that I know it will be done right.”
Mindy Blodgett: Why is focusing on integration so important for organizations engaging in HRO?
Erica Volini: Because providers can’t deliver services in a vacuum. If their services aren’t integrated across the end-to-end process and if they aren’t working hand-in-hand with retained HR, they will always fall short of delivering what the organization needs and expects.
If you look at the typical HRO challenges, integration is usually the issue. Retained HR can’t be strategic because they’re left filling the administrative gaps in the delivery of services (such as end-to-end process integration, data clean-up, workflow routing); SLAs fall short because providers don’t have the accountability for the hand-offs between processes which is where the majority of operations-related issues lie; and customers are unhappy because they get bounced around when trying to get their questions answered. Each one of these issues points to a lack of integration, so if we don’t fix the integration issue, I’m not sure how HRO can succeed.
As we shift from the one-provider-does-everything model to best-of-breed, integration becomes even more important. While a best-of-breed approach can offer customers the best individual solutions, it creates an even greater need for integration amongst them. You can’t just tell your providers, hey, please go and integrate with each other. But when you turn the concept of integration into a service that providers can sell and organizations can buy, you’re on your way to making it work.
Mindy Blodgett: What do you foresee as an answer to this integration challenge in HRO implementations?
Erica Volini: The new world of HRO will emphasize customization – not in terms of processes (which has been the focus in the past) – but in terms of which solutions and providers can be pulled together to form a comprehensive HRO solution that can best meet the buyers’ needs. That means changes for both buyers and providers.
Buyers need to figure out what capabilities they need and communicate that effectively to the provider community. And HR needs to engage the full organization to figure out what those needs are. Finance, IT, Legal, Procurement, business leaders – they all have a role to play in making integration happen.
Providers will need to think more out-of-the-box in terms of what they offer and how they partner with other providers to create an integrated HRO solution. Consider payroll as a prime example. While very few providers have the capability to do global payroll by themselves, many have figured out how to partner with other providers to offer it as an integrated service. Best-of-breed doesn’t always mean that the buyer needs to be the glue holding it all together.
And finally, the buyers and providers need to work together to form an integrated approach to implementing HRO. We need to stop thinking about HRO as the implementation of a provider solution and start thinking about it as a way to embed the provider into the broader service delivery model. It may sound overly simplified, but if we want to make HRO succeed moving forward, integration is key.
Mindy Blodgett: Thanks so much for your time, Erica, am sure our readers will enjoy reading this discussion.
Erica Volini(Pictured) is Principal in Deloitte Consulting’s Human Capital Practice. You can read her full bio by clicking here.
The setting sun in Savannah… and it’s also time to sunset those inefficient processes
We’ve talked a lot about thefear of change when companies explore radical steps to overhaul their global operations, and outsourcing undoubtedly represents a major change for most organizations used to running things a certain way for a very long time.
People are scared right now – they feel threatened and are struggling to visualize where their careers are heading, where their organizations are heading, where the economy is heading. But why be scared? Shouldn’t we be filled with hope with this revitalized quest for improvement?
Having just spent two rather pleasant days with the excellent Sourcing Interests Group, enjoying (too much of) the carbohydrate-infused southern hospitality of Georgia’s Savannah, the common theme of discussions was centered on this relentless pace of change, and the in-exhaustive corporate pursuit of cost elimination that is gripping the post-recession economy. And executives are worried. But why should they be?
Why we need to stop worrying
We’ve entered into an era which we have been demanding for a long, long time: companies finally waking up, prepared to take definitive action to improve their global operations. That means getting better at how efficiently they can close their books, pay their staff, hire new staff, manage their suppliers, collect their debts, support their customers and access accurate, timely data to make decisions. Essentially, this entails ironing-out broken or inefficient process flows, sourcing better applications to enable them, and engaging talent to support them that doesn’t cost the earth.
The fear comes from the fact that better automation and better process flows ultimately means organizations need less people to manage them. But won’t that mean these organizations will be able to re-invest some of these newly-acquired efficiencies into areas that can help them develop new products or services, increase their sales staff, enter new markets, better manage their supply chains, investigate the potential of Cloud computing or video conferencing technology, or even, heaven forbid, develop their staff?
What we are witnessing is a re-distribution of human capital in today’s economy – not necessarily a reduction of human capital. Many of us will need to explore role transformations where we take on jobs or responsibilities that we never imagined a few short years’ ago. This change is one of new learning, new experiences, new challenges. It’s about improving our own talents. One thing is clear: we won’t have a choice not to…
After last year’s now infamous “Obama to ban offshore outsourcing” April Fool’s gag, we didn’t suspect that even more of you would fall hook, line and sinker for this year’s little effort.
As much as we would love to advise President Obama, even I doubt I’d receive a “personal tweet” from the President to announce the news…
Again – you’re a great community, you’re great sports, and keep on smiling 🙂
We’re deeply honored to be selected as the exclusive analyst advisor to the Obama administration on offshore outsourcing issues.
As part of the contract award, the Horses analyst team will be invited to quarterly white-boarding sessions at the White House to discuss the latest market dynamics in IT outsourcing and Business Process Outsourcing, in a quest to help the administration make onshore locations more competitive for white collar jobs. The contract will be ongoing until the next US general election.
Commenting on the award earlier today, the White House Press Secretary, Robert Gibbs, added, “Washington needs to be ahead of the curve when it comes to offshore outsourcing. Far too many of our jobs have been shipped off to China, India, Central Europe and the Philippines, and it’s time to do something about it. Now Healthcare Reform is assured, it’s time to turn our attention to the next burning issue on the Obama administration’s agenda: reversing offshore outsourcing and creating new jobs in the United States of America. “
In addition, the administration cites Horses for Sources social media impact as a core reason for selecting the research firm as its chosen outsourcing advisor. “We realized the importance of Facebook and Twitter when we won the last election, and are impressed with the extensiveness with which Horses for Sources uses its blog, LinkedIn group, and, most importantly, it’s prolific use of Twitter, to be the outsourcing research organization most in touch with the needs of industry.”
President Obama personally tweeted the news of the announcement to Horses for Sources CEO, Phil Fersht, this morning.
Michael Buffer calling the Horses to action
“It was most appropriate to receive this contract award via a tweet from the President”, stated Fersht earlier today. “We are deeply honored that the Obama administration has selected us as its advisors – we hope to host a guest blog from the President soon where he will succinctly set out his agenda to bring more white collar jobs back onshore. We assure all our readers that we will make every effort to avoid any grammatical errors, or spelling mistakes”.
Horses for Sources successfully beat the Black Book of Outsourcing to secure the contract in a bake-off aural that was supervised by Vice President Joe Biden and Michael Buffer.
I thought Michael Buffer was the big give away! Thanks for being good sports 🙂
Thanks for all of you who helped support the first “public” appearance of the Horses for Sources research organization in the lovely Orlando last week for SSON’s “Shared Services and Outsourcing Week” event, which achieved over 900 delegates. (And yes, I was symbolically middle-seated on my journey home…).
Our “Thundering Hooves” session, which was based on the Family Fued game show (Family Fortunes in the UK) was highly entertaining and we’re excited to stage this again (with real sound effects) in Edinburgh in May. Thanks to Lee Coulter (HfS), Deborah Kops (WNS), Tiger (Genpact), Graham Russell (Astrazeneca), Jay Desai (Northern Trust), Rick Arpin (MGM Mirage), Joe Hogan (Alsbridge) and Mike Fraley (Everest Group) for being good sports. And a special thanks to Emma Beaumont and Sarah Clayton at SSON for making this happen. Now who, on earth, is this grinning idiot?
Cliff Justice, National Leader, Shared Services and Outsourcing Advisory at KPMG
Horses for Sources Research Fellow Lee Coulter distinguished himself at the Shared Services and Outsourcing Week event last week, where he steered clear of the golf course and his evil bar-propping companions, to facilitate a number of sessions at the show.
And one character who stood out this year was Cliff Justice, who last year elected to experience the management consulting delights of KMPG after an exemplary long-time career with sourcing advisor, Equaterra. Lee managed to grab some time with Cliff at the show. Here are his thoughts…
Shared Services Advice from KPMG? – On Cliff’s Edge
Orlando in March is supposed to be a great boondoggle destination. Fortunately for Shared Services Week, the Shared Services and Outsourcing Network’s (SSON) annual event, the ‘winter that wouldn’t let go’ down south meant more people were actually in the seats rather than in the fairways of the many good golf courses in the area.
One of the conference’s anchor events is the G8 panel. This is a panel of the industries leading providers and advisors that get together to discuss things pertinent to the whole industry. They are organized by region and this year was the first meeting for the US Chapter. Among the regulars we all expect to see such as IBM, Accenture and CapGemini, was KPMG. KPMG? Yes, and represented by Cliff Justice. Cliff is KPMG’s new US Leader, Shared Services and Advisory. This isn’t the first time that a major accounting services firm has placed a bet on getting into the shared services and outsourcing advisory business, and I was interested to find out more about how KPMG is moving into this space.
I caught up with Cliff later in the evening to get a little more insight. Cliff, who has been a leader in this industry for more than a decade with NeoIT (led their alliance with TPI) and then Equaterra, came over late in 2008 to build this practice for KPMG. In a pretty short period of time, Cliff has managed to get a name most often associated with audit and tax – KPMG – named one of the World’s Best Advisors by IAOP, and now shows up next to IBM and Accenture on the G8 panel. Hmmm.
I had a lot of questions for Cliff. The theme linking them all together was: “are you really doing this and is KPMG really committed to it?” The answer: a resounding yes. Despite my only-a-little exaggerated description of the challenges a newcomer to this space faces with solid competition, dynamic industry shifts, volatile political dimension, and uncertain economics; Cliff remained unfazed. I probed at the firm’s willingness to invest in the long sales cycle and time it takes to build a stable pipeline. Cliff assured me that KPMG was solidly behind him and this practice. I gave him my best “surely, you didn’t tell them everything” look, and he went on to tell me KPMG believes their strong CFO and C-suite relationships are a natural entre into the world of shared services and outsourcing advisory. Inevitably, the CFO has a strong voice in these initiatives. In many organizations, administrative and technological functions report directly into the CFO, and where the CFO doesn’t have direct control, there is usually a business case that passes the CFOs desk.
Beyond the conversation I had with Cliff, I talked to a lot of other folks at the conference that told me about KPMG hiring talent, responding to RFPs, and building shared services recommendations into their conversations with their existing clients. Does KPMG have what it takes to be a major player in this space? The jury is still out, but they do have a strong cliff hold, and appear determined to scale the peak.
