Hook, Line and….

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 🙂

Posted in : Absolutely Meaningless Comedy

Yes we can!

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 🙂

Posted in : Absolutely Meaningless Comedy

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?

You cannot be serious…

Posted in : Outsourcing Events

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.

Cliff Justice (pictured) is National Leader, Shared Services and Outsourcing Advisory at KPMG LLP

Posted in : Outsourcing Advisors, Outsourcing Events, Outsourcing Heros

What on earth's an "oxymoron"?

You’ve undoubtedly heard the terms “public” and “private” cloud being bandied around quite loosely by every IT services provider trying to hitch themselves to the new trend towards the use of computing resources that reside outside of the enterprise and are delivered to multiple customers by a cloud services provider (read Bruce McCracken’s new article).

A very old friend and former analyst colleague of mine, Andy Milroy, who leads the Australasian IT and Communications practice for research and consulting giant Frost and Sullivan, poses an excellent question to those service providers today who may be confusing hosting services with cloud:

“To me, the term private cloud is a misleading way of describing hosted services.  In fact, it is an oxymoron. It is a term that is used by providers of hosted services in order to hold onto lucrative contracts and prevent the loss of customers to companies that provide public cloud services.”

So we dragged Andy away from his didgeridoo class to explain further…

Is a Private Cloud an Oxymoron?

The IT community is now strongly focusing on the impact of cloud computing on their businesses.  This can largely be explained by the fact that the rapid growth in the use of cloud services in recent years, massively disrupts traditional IT delivery models.  But, there remains much confusion regarding the nature, scope and definition of cloud computing. The situation is becoming cloudier (excuse the pun) as major IT suppliers start to re-brand existing offerings as ‘private clouds’.

Attributes of cloud computing typically include, scalability, elasticity, multi-tenancy, payment models that are linked to usage, resources delivered from virtualized environments and the provision of all support and management tasks by a cloud services provider.

However, the emergence of the marketing term, ‘private cloud’ challenges common definitions of cloud computing and creates confusion. It is a term that is commonly used by those with vested interests in existing computing paradigms.

In my view, the use of private clouds is not cloud computing since key attributes of cloud computing include, the use of computing resources that reside outside of the enterprise and that are delivered to multiple customers (multi-tenancy) by a third party (cloud services provider). Private clouds deliver IT resources from within the corporate firewall and to one customer. To me, the term private cloud is a misleading way of describing hosted services.  In fact, it is an oxymoron. It is a term that is used by providers of hosted services in order to hold onto lucrative contracts and prevent the loss of customers to companies that provide public cloud services.

Companies that offer services from the public cloud such as Salesforce.com are undermining traditional on-premise business models. The business case for sourcing resources from public clouds will soon be indisputable. In the next few years, business unit and IT managers will need to provide business cases for not using public clouds and for keeping resources on-premise.

Services that share the attributes of public cloud computing, have, of course been with us for many years. For example, the Application Service Provider (ASP) model of computing was expected to deliver services from the Internet to multiple clients. The ASP model did not mature for a variety of reasons. However, the planets are now aligned for an explosion of public cloud activity. Today’s virtualization technology, application acceleration technology, the widespread use of OpenSource and faster average broadband speeds are enabling the rapid adoption of public cloud based services.

In many ways, the use of public cloud services is creeping up on us by stealth. Although, the use of platforms, infrastructure or/and applications delivered from public clouds may seem to be comparatively immature, most people are using public cloud services. Each time we use Google’s search engine or a social networking tool such as Facebook or LinkedIn, we are using public cloud services.  From an enterprise perspective, payroll processing services offered by companies such as ADP, are also a form of cloud computing. Now, if companies can send the personal details of their employees, their salary details, their tax details and their identification details to a datacenter that is operated by a third party such as ADP, are privacy and security concerns legitimate reasons for not wishing to use public cloud services?

Andy Milroy

I believe that a mix of groupthink and blind conservatism is at play in many cases when objections to the use of cloud services are raised. These objections tend to be centered around security and privacy. It is argued that private clouds address these concerns. In my view, private clouds simply re-inforce the conservatism of many in business today by giving them an excuse not to use the public cloud. In a few years time, those that simply revamp their existing datacenters to provide private cloud services and those that refuse to use cloud services for security and privacy reasons, will give the impression that they simply cannot grasp their very straightforward and obvious business benefits of using public cloud services.

Andy Milroy (pictured) leads Frost and Sullivan’s Australasian ICT Practice.  He has previously held senior analyst positions at both IDC, where he led its European IT services research organization, and at NelsonHall, where he started its US business. 

Posted in : Cloud Computing, IT Outsourcing / IT Services, Outsourcing Advisors, Outsourcing Heros, SaaS, PaaS, IaaS and BPaaS

Bruce McCracken, Senior Research Analyst

So you may have picked up that we just love the Cloud at the Horses.  As we’ve discussed at length, we see Cloud Computing as the coming-together of business process and IT delivery in a fully outsourced model (see earlier post).

Cloud’s not simply about outsourcing the heavy-duty computing grunt – it’s about the delivery of real business services, enabled by the applications needed to support them, and powered by the requisite computing and network infrastructure to host and deliver them.  Moreover, Cloud computing represents a crucial next layer of cost-elimination from the corporate infrastructure.  While many moons off being actual reality, the seeds have been planted and we see entire industries scurrying to develop applications, datacenters and managed services to support it. 

So we asked our new senior research analyst, Bruce McCracken (sorry Bruce…) to investigate some new trends, based on an interesting study recently conducted by Cloud based SaaS email management provider Mimecast, involving 565 respondents from the US and Canada.  Over to you, Mr S…Cloud – The Delicate Sound of Thunder

No, this is not about a Pink Floyd performance on DVD. It is about improving IT performance and reducing costs while increasing server capacity on demand as needed, right here/right now. A recent survey shows who is doing what, and why (or why not). While many mull the onslaught of perspectives on the subject of Cloud, we will succinctly submit yet another for you. There are a few important points and takeaways that we want to zero in on:  

•     Even smaller organizations can gain immediate benefit from Cloud now.  

•     Setting up a road map to move the least critical, complex and risky applications first pays immediate benefits.  

•     Service providers are now offering robust tools to significantly alleviate the pain of accessing the Cloud.  

•     Are concerns about security déjà vu all over again, reminiscent of similar worries regarding SaaS and outsourcing providers several years ago?  

How Cloud is going to revolutionize IT and which industries are using it

Cloud essentially involves pay as you infrastructure for applications and storage from a third party provider. Cloud gives organizations an inexpensive, easy, and quick way of adding new servers and hosting new Web based applications with little upfront investment. Through Cloud, data centers can be built out without having to expand the physical floor space and hardware procurement. The “on demand” nature of Cloud allows for a rapid expansion of the data center without the hassles of server maintenance by internal staff. The business will also see a marked reduction in its utility consumption. The value proposition for adopting Cloud is compelling to say the least.  

Cloud based SaaS email management provider Mimecast, released results in February 2010 of its Cloud Computing Adoption Survey, involving 565 respondents from the US and Canada.  

Click here to download the full article:  Cloud – the Delicate Sound of Thunder

Posted in : Cloud Computing, IT Outsourcing / IT Services, SaaS, PaaS, IaaS and BPaaS

There was a suggestion recently (see “Busting the Innovation myth”) that innovation in back office operations wasn’t important and it’s all about the “front” office.  We would argue that achieving innovation in the global support operations of businesses, is often the only lever most firms can pull to remain competitive in this economy. 

In most cases, it’s not enterprises’ products and services that have to change, but the speed and efficiency with which they can adapt to the changing environment, that now provides the competitive edge.   Here’s an overview of the secular changes impacting the very core of today’s industries:

Can BPO engagement models broaden to help businesses stay ahead of secular changes?

Our research delves into the heart of major industries, to understand how sourcing engagement models can enable firms up and down their entire supply chains.  Let’s take a closer look at a few examples:

Life Sciences and Manufacturing

In the pharmaceutical business, for example, the increase in the use of generics is bringing the issue of cost and speed-to-market into play.  In previous times, innovation was focused primarily on research and development of new blockbuster drugs, but with those becoming fewer and further between, combined with the massive M&A activity in the sector, the innovation focus has quickly shiften to the support operations and the supply chain.  With generics, there really isn’t much you can do to differentiate by product, but you can compete on price and respond to market demand quicker than your competitors.  Driving down production costs across both manufacturing and business operations processes is critical, and having a global support infrastructure to get these products to market, and keep inventory levels optimized is how to stay ahead of the competition.   

Core sourcing challenges:  BPO providers need to step up their competency delivering managed supply chain processes that encompass master data management processes and other supply chain functions, to help their customers.  It’s not simply about payroll and payables anymore; life sciences firms need to drive their providers to invest in taking a greater interest in creating new ways to reach their markets faster and more intelligently.

Media and Entertainment

In the media business, the impact of web 2.0, social media etc., hasn’t altered the actual “products”, but  the way in which they are delivered to – and consumed by – the end-customer. For example, the diminishing need for printed media products is shifting the focus to driving out as much cost from the operation as possible so media firms can invest in quality content to remain in business.

Core sourcing challenges:  The bottom is getting ripped out of the media business at an alarming pace and media firms have no choice but to eliminate as much cost from their distribution channels as quickly as they can, in order to survive.  Many media firms  have run out of time to go through gradual transformation;  in most cases, they simply have to find providers which can enable rapid lift and shift deals to rip out as much short term cost as possible.  Then they have to streamline the operations in the BPO environment as quickly as they can to take advantage of the cost take-out (see Surviving the Aftermath of a Lift and Shift Transition).  Being able to grasp – and live – with such rapid change, and find a provider which can work with you to ahieve that is the only way forward.  Selecting the wrong provider in this market could be fatal.

Financial Services

In financial services, the appetite to move away from captive-only support models is helping many firms find new levels of cost-elimination, but also new flexible models for improving the delivery of their current services.  Banking and insurance services aren’t changing that much per se, it’s how effectively they are delivered to market that is providing the competitive edge.  Deploying more flexible and sophisticated global sourcing models, is the only way to go for most financial services firms today.  By staying with  jaded and often expensive captive operations, is holding many financial services firms back from being exposed to new ideas, new process flows, and the new energy some BPO providers can bring to the table, based on their experience with many other enterprises.

Core sourcing challenges:  The majority of financial services enterprises are busily shopping their captives at present, and only a few will find willing service providers to buy them.   Most providers now have the scale they need, and are only interested in specific niche competencies that give them new capability.  Many financial service firms are facing the prospect of having to phase out their captive operations in order to move into a blended, or fully-outsourced, operational support environment.  They will need to decide whether or not to write-off years of investment in their captive operations, in order to transform their delivery model.

The Bottom-line:  We’re caught in a relentless pursuit of cost elimination and efficiency

We’ve spent the last few weeks having intense dialog with buyers regarding how the uncertain, but recovering, economy, is impacting their stance on outsourcing, and the common thread is one of speed and urgency.  There’s a genuine impetus from business leaders to act on new efficiency drives that were formulated during the recessionary months – and global sourcing strategy is right at the heart of these.  The conversations dominating this week’s SSON show in Orlando left us with the phrase “the relentless pursuit of cost elimination and efficiency” firmly etched on our minds.

Our argument with current BPO engagement models is that they have to encompass more than simply a few administrative processes to be truly effective.  If your BPO provider is only fulfilling a few standalone functions such as purchasing, or invoice processing, it’s going to be very difficult for them to achieve much more than a few dollars shaved off the labor cost, and perhaps some elimination of duplicate tasks and unnecessary process steps. 

In order to find that next level of performance, you need to take a broader view of your entire global business operations and find ways to bring your BPO partner into the heart of your critical data management processes, so they can help you source unique and creative ways to be more productive and source new avenues for growth.

Posted in : Business Process Outsourcing (BPO), Captives and Shared Services Strategies, IT Outsourcing / IT Services, kpo-analytics, Procurement and Supply Chain, Sourcing Best Practises

Posted in : Business Process Outsourcing (BPO), Cloud Computing, IT Outsourcing / IT Services, Outsourcing Events, Procurement and Supply Chain

Just another Dog and Pony show… or is it?

We would like to thank so many of you for the fantastic support since we’ve launched the Horses for Sources research organization and are giving away three of our new research pieces in response to such a warm welcome into the analyst industry.

While we thought this was  going to be a quiet little venture, where we sneaked onto the analyst circuit virtually unnoticed, it’s been the total opposite, with so many people wanting to know what we’re doing, why we’re doing it and – most importantly – why we’re different from the regular dog-and-pony analyst thing. 

So why do we think we’re a little bit different?  

1) We have a massive social media presence where we have the ability to survey large numbers of practitioners very, very quickly.  We think we may just have the pulse on the outsourcing industry; 

2) We track the demand for outsourcing, as opposed to simply racking and stacking canned data from suppliers (and taking their word for it); 

3) We give practical advice to buyers of outsourcing services, backed up by demand-side data; 

4) Our audience is the buyer of outsourcing, which is why we’ve partnered with the SSON to service the largest buyer-audience of BPO services.  Yes, our team spends most its time interacting with buyers, and not solely suppliers;

5) We’re not afraid to call it how it is.  While most analysts puff up their markets to keep their paying vendor customers happy, we’re just giving our audience the real deal.  Outsourcing can represent the toughest, most challenging experience for executives today – careers can either be made or broken over specific choices and decisions.  Our goal is to educate our audience with real, practical advice.

6) We’re letting our research do the talking.  Unlike other research entities who stick their stuff behind a paywall, we’ve decided the proof is in the pudding, because we want people actually to read our stuff and call us up.  So as a gesture of thanks for all the support we’ve received during our first month on the job, we’re giving away three pieces of our latest research to give you an idea of what we’re all about:

The IT Outsourcing and Business Process Outsourcing Industry Landscape in 2010 

Eradicating the Innovation Dearth in BPO – Practical Advice on how to Achieve it

Surviving the Aftermath of a Lift and Shift Transition

And we really do welcome any comments / input on research you want to see from us, surveys we can run, webcasts you want us to do etc.  Drop us an email to [email protected]

Cheers!

The Horses Team

Posted in : Business Process Outsourcing (BPO), Captives and Shared Services Strategies, Cloud Computing, Finance and Accounting, HR Outsourcing, IT Outsourcing / IT Services, kpo-analytics, Social Networking

Over to you, Mr. Anthony Calabrese for a sensational debut as the “Mark Twain” of the analyst world…  

Surviving the Aftermath of a Lift and Shift Transition

Well, now you’ve done it.  Instead of fixing things first, you outsourced your processes almost completely intact.  The result?  Your junky processes are now in the (hopefully) capable hands of your lower cost vendor and, not surprisingly, the outcomes are the same.  While it is quite possible that you took the time to image and digitally distribute your previously paper-based processes, there’s nothing remarkable about a digitized bandage hiding a poorly performing, wounded process.  Worse yet, there are few things more restrictive than your IT organization’s standard prioritization process – and one of those “things” happens to be your 300-page multi-year outsourcing contract.  What can you do you?  

You Are Not Alone – Misery Loves Company  

The “Lift and Shift” outsourcing paradigm is a choice of many companies for several reasons.  It speeds transition, so labor arbitrage savings can be quickly delivered.  Conversely, vendors frequently recommend it because revenue can be quickly generated and the implementation risks are minimal (Remember the multi-phase pitch they gave you?).  Some clients believe that their vendors are more capable of turning things around than internal resources.  Lastly, a thoughtful, very small minority of companies reinvests the initial labor arbitrage savings into innovation.  

For these reasons, and many others, you are not the only person facing the task of transforming a recently outsourced function.  In fact, the overwhelming majority of companies need to tinker with recently outsourced processes to some degree.  Unfortunately, few have come to grips with the situation.  

Click here to read Anthony’s article in full:

Surviving the Aftermath of a Lift and Shift Transition  

Posted in : Business Process Outsourcing (BPO), IT Outsourcing / IT Services, Procurement and Supply Chain, Sourcing Best Practises