Amigos – I’ll be waxing on about my favorite new topic “The Future of Operation in the Robotic Age” this Thursday morning at the Nasscom Summit in Bangalore – reserve your spot here! I hope to see you at my favorite hotel in the world… the lovely Leela in Bangalore…
Posted in : Uncategorized
The worlds of software, business operations and services have always been chasms apart – different mindsets, vernaculars, conversations, ideas of what constitutes value – and vastly different cultures. Software people never understood the operations folks and vice versa – each thought they were top of the corporate food chain.
However, the past couple of years have seen the coming together of these diverse groups of people to rethink completely how we run global operations in this robotically digital era (or whatever we want to call this curious period of time in which we exist).
One thing is abundantly clear: the outsourcing phenomenon which has gripped the Global 2000 over the past decade is making way for a genuine industry in which we all play a part – an industry where we have no choice but to develop learning programs, sustainable business strategies and make real, actual investments in order to survive. And what’s most fascinating are the new conversations that have rapidly emerged to bridge this divide between the technologists and the business operators.
Suddenly, we’re talking about business logic, about datasets, about redesigning processes with genuine business outcomes in mind. We’re talking about deep learning AI systems that store what has been learned in the past, take notes of how variables and results have changed under different scenarios and then make decisions based on that.
The narrative has radically changed and the focus is now firmly on bringing together all the components that can escort us to this promised land of Digital Operations. So let’s take a look at what has transpired to get us to this point, where we can actually claim to be part of this emerging industry….
“Outsourcing” never materialized as an “industry”
Having spent the best part of the last two decades trying to make some sort of sense out of “outsourcing” I have come to the simple conclusion: “outsourcing” was never an industry – it was simply the practice of moving work around the world to save money. It consisted of people selling outsourcing deals and the poor suckers who’d been lumbered with trying to manage them – and the deal brokers and lawyers who took money from both sides making it all happen. It was never an industry, it was greedy corporates slashing their wage bills, and those lovely folks who were just so keen to comply with their wishes to turn a profit. Outsourcing has always been an activity searching for a higher purpose than cost take-out. While service providers and advisors undoubtedly feel part of an outsourcing industry, the buyers do not – they are operations people doing their job deploying whatever techniques are at their disposal to improve efficiencies and operating costs. They would not class themselves as “outsourcing professionals”. It’s like selling gym equipment to gyms. The seller is in the “gym equipment business”, the gym itself is in the “gym business”, and the customer at the gym is looking after their fitness. The “industry” is ultimately the higher purpose of which all the entities are all constituents – in this instance, it is the fitness industry – which could also encompass sportswear manufacturers, specialist outlets stores and so on.
How traditional outsourcing has left us in a right pickle
Outsourcing was like a one-time thing C-suite execs arranged on the golf-course to take 30-40% off the operations budget for a set of low-level processes – and enjoy the bulk of those savings upfront for a nice impact. Many folks became heroes overnight for making these deals happen, and they were lauded and courted at conferences as those radical executives who possessed some secret talent ingredient to make this all possible. Yes, a mystique around outsourcing was created, advisors did an amazing job making a science out of the “art of the deal”, and the façade of a new profession and (possibly) a whole new industry was borne.
Sadly, there was never (really) a long-term plan to sustain those productivity impacts, beyond moving as much work offshore, without overly impacting business performance and finding even lower cost cities to take on the low-hanging fruit to eek out a little bit more cost off the bottom line. Eventually, that well runs dry if you don’t make fundamental improvements to the quality of your processes and the convergence of the data sets they support.
Yes, we had a lot of fun creating useless qualifications and meaningless SLAs, but the end results were always the same: clients figured out how they only got what they had paid for, and the fancy innovations they were fed on those lovely pitch decks were always subject to change orders (or never really existed). The only real leverage came at rebid time, when the incumbent would usually make some new promises to get their house in order, if they felt there was actually a chance they could lose the business. Otherwise, it was business as usual.
The Global 2000 is littered with stale outsourcing deals that need radical transformation
However which way you paper over the cracks of short-termism, costs are like hedges – if you don’t look after them properly, eventually they grow back. As a result of all these fun and games, we are left with thousands of ropy outsourcing engagements littering the corporate world, where the clients are still paying for the same number of FTEs to deliver the same tired old obsolete processes, while their providers has no incentive to cannibalise their revenue streams, and the actual concept of moving these deals to other service providers is pretty desperate – all the smart ones have no interest buying up a legacy mess, while some desperate lower tiers ones may take on the work if they can shunt it to even cheaper, lower quality delivery resources.
But there is a way forward, and outsourcing has served a purpose
Believe it or not, there is a method to all this madness – companies managed to externalize work they didn’t want to run themselves, they got a lot of cost off their books, and they opened up the opportunity to pull more levers in the future to find new thresholds of productivity. Rarely will you ever find an enterprise which regretted outsourcing – they’ll never want that work back. The big issue, now, is ensuring that work is in a state to be optimized further by improving the quality and logic of process flows, digitizing them and applying smart automation techniques, where it makes sense. However, that can prove quite a challenge when the work has been distributed across third and fourth tier cities, and it actually requires some investment to transform those processes to consider meaningful automation and other delights that digitized processes can enjoy, such as Machine Learning and AI.
In fact, in too many cases, outsourcing resulted in enterprises sweeping their real process issues under the carpet and choosing to ignore the real need for genuine transformation until that day of reckoning occurred. And that day is now upon us, as CFOs are smoking the automation crackpipe and demanding that next 50% of cost to be ripped from the bottom-line in a 3 year timescale. Outsourcing provided them with a band-aid to enjoy cost savings through labor arbitrage, but robots can only provide further band-aids if the outsourced work has high-intensity, high-throughput processes that can easily be programmed into the software. If that work is distributed across too many locations, with service providers unwilling to make renewed investments to co-invest with those clients, we have an emerging issue facing many enterprises: their day of reckoning has been reached and they actually need to make some investments in their processes and underlying systems.
Welcome to an actual industry in which we can co-exist: Digital Operations. This is why we are now emerging as an industry – we are facing the reality that most enterprises need to make long-term investments in their digital underbelly, their process flows and their people to run them, in order to find sustainable value over the next decade.
For the first time, we are witnessing deep conversations happening across the operations spectrum: RPA, Machine Learning and AI software vendors and now talking with service providers about how to embed their offering into long-term service contracts to support sustainable productivity and incremental data value over time (our data already shows close to a third of the Global 2000 are already integrating automation into their service delivery):
Ambitious enterprise customers of outsourcing, shared services heads and other operations leaders are all feverishly learning how to understand the value of software tools and how to prepare their process flows for the benefits of digitization and automation. Consultants worth their salt are rapidly training their people to develop automation roadmaps for their clients and prepare them for a longer term strategy of creating a truly effective digital underbelly. Yes, we are still are suffering from a few cowboy consultants claiming their clients can slash 50% overnight through RPA, the our observations are quickly showing that people are learning fast and know they need to address many of their underlying processes and talent issues, if they are truly going to take the next step forward.
Bottom-line: The Industry is Digital Operations, and there are six levers to pull to find sustainable value
The conversation among operations executives has changed dramatically just over the past year. As the excruciating hype around robots taking our jobs and these outlandish predictions from drama-loving analysts and academics, a sense of reality is finally setting in – roles are not changing overnight, we just need to get out of our comfort zones and learn new stuff. We need to understand the pivotal role data plays in our professional lives and become smarter about how we manage it. We need to understand where RPA adds value, where to start with Machine Learning and AI, how we can truly leverage globally distributed talent to support out operations affordably and smartly, we need to be observant about the creeping impact of blockchain and how we can truly take advantage of digital technologies to nurture new revenue streams and enhance customer, partner and employee engagement up and down our supply chains. It’s taken a full decade just to take advantage of the cloud, and we need another one before that really fulfils its potential. It’s going to be even more complex to ingest the benefits of automation, AI and blockchain into our business operations – but now we have six genuine value levers to pull to tend the hedgerows of digital operations.
Posted in : Business Process Outsourcing (BPO), Design Thinking, Digital Transformation, Global Business Services, IT Outsourcing / IT Services, OneOffice, Outsourcing Advisors, Robotic Process Automation, the-industry-speaks
In case anyone thought we were going soft, we’re proud to announce another feisty outspoken analyst to the HfS family to help drive our coverage of industries – most notably the hi-tech and banking sectors – Elena Christopher.
Elena – it’s just terrific to be working with you at HfS! Can you share a little about your background and why you have chosen research and strategy as your career path?
It’s wonderful to join the HfS family. Research and IT and business process services have been the prevailing themes of my professional life. I realized while in university studying social science that research and its various methods provide valuable insights into whatever topics you apply it to. In my second job out of school, I was fortunate to be hired by Dataquest (Gartner), which afforded me the opportunity to learn the IT and business process services industries from the ground up. I never looked back. Since 1994, I have served as either an advisor or supplier partner to clients in most commercial industries, working to make sense of the various waves of seminal change in how businesses operate.
So why did you choose to join HfS… and why now? And didn’t you want to go back to one of the traditional analyst houses?
I started my career as an analyst with Dataquest/Gartner. After nine years, I went into industry to build practical experience to complement my theoretical knowledge. I’ve been in the supplier world for the past ~15 years building and running services businesses. I was resolute in wanting to come full circle and connect my practical experience with my analyst skills. However, I only wanted to go with a firm that was doing things differently and one with which I personally had derived value. I was very attracted to HfS’ approach of tackling and breaking down the major trends and issues in an incredibly timely fashion with much of the research accessible open source. I also appreciated the independent perspective and use of enterprise data rather than substantial reliance on supplier research. And as a services research company it is perfectly aligned with my experience base.
So where is the services industry right now, Elena? Do you see us in a transition state, or is something else bubbling to wake us all up?
We are most certainly in a transition state – with most industries in the process of being remade as disruption and enabling technologies change the fundamental concepts of business as usual. The services industry is enabling much of this transformation but it is also in throes of change with increased impetus placed on platform-based models and business outcomes.
So what can we expect to see from you at HfS… can you give us a little snippet of what you’re going to be working on?
l’ll be driving the industry-specific research agenda for HfS – digging into the major trends impacting each in-scope industry and the implications for business process and IT services. I’ll collaborate with my fellow analysts to cultivate the industry angle on major trends such as automation, artificial intelligence, blockchain, digital business models and smart analytics. My primary coverage areas are High-Tech and Banking. In addition, I’ll drive the industry point of view across HfS research.
And finally, is the analyst industry going as exciting as it was 10 years’ ago?
Probably more so – there is so much change and transition afoot that creates a great need to research near-term and future horizons
Welcome back to the analyst community, Elena – am sure you’ll find HfS a fascinating laboratory for observing the next phase of this industry!
Posted in : Uncategorized
After the unprecedented success of our inaugural Future of Operations in the Robotic Age (FORA) Council in Chicago last week, we’re thrilled to announce esteemed strategist, product entrepreneur and analyst Azeem Azhar will keynote our next FORA council session in London 7th December at the Andaz Hotel.
Azeem has spoken for TV and radio on BBC, CNN, Sky, among others, lectured at Harvard and London Business School, and writes a column for the Financial Times. Azeem has taken the stage at major tech conferences, including TechCrunch, The Europas, DLD Conference, WHU Founders Conference, Nordic.ai. At the HfS FORA Council, he’ll deliver his Exponential View on the impact of artificial intelligence on global business and how our near future is shaping up as we ride this disruptive wave. He’ll also stick around to engage with the council members and co-lead our AI breakout session,
I cannot wait to unveil the full FORA agenda that spans the leading minds and stakeholders across the worlds of RPA, AI, operations services very soon… stay tuned folks, but this will be our most explosive summit yet.
Don’t forget to apply for your seat, as this will fill up very fast… be there or be eliminated!
Cheers,
Posted in : cognitive, Robotic Process Automation
We interviewed 300 digital technology decision makers across the Global 2000 to get up close and realistic about their experiences working with all the main IT consultants and services providers, when it comes to their consulting and strategy abilities (report can be accessed here).
What’s unique about the HfS approach is we don’t allow any of these firms to opt-out of our report, and we also do not need to rely on the wined-and-dined reference clients for their rose-tinted views. So how did this all shake out?
For us, the standout performers are TCS, KPMG and Wipro, after the obvious “big two”. And this is so much more about pragmatism and focus, than big marketing and glitz.
Let’s take a closer look out the digital tech services firms which make up the 2017 HfS Winner’s Circle:
IBM: IBM is all about technical skills and the ability to bring a wealth of enterprise IT experience to fix a problem – the company has thrived on huge transformations, which has proven both a bane and a boon for the firm, as the whole IT industry shifts to smaller-scale deals, more one-off projects and the demise of the multi-year billion dollar managed services contract. Big Blue has invested in strong business consulting skills across offerings including customer experience/design thinking to help clients understand digital and drive value out of tech projects. In addition, the arrival of former Accenture consulting head Mark Foster is having a significant impact on IBM’s approach to services as the firm seeks to embrace the value of Watson and break out of legacy FTE engagements which are weighing down so many service providers. While it’s been a tough couple of years dealing with these winds of change in the traditional global services sector, the firm’s focus on designing and operating complex solutions is starting to bear fruit and it’s recent top spot in the Digital OneOffice Premier League emphasizes its broad capabilities across the front, middle and back offices. It’s big challenge now is to become the ultimate “whole is greater than the sum of the parts” partner for clients.
Accenture: Accenture scored highest in the ability to execute criteria, supported by a plethora of recent acquisitions that shore up its digital business. With digital talent and resources in abundance – the challenge now is to integrate of the likes of Karmarama, Chaotic Moon and Kuntsmaan and align these front office design areas with the firm’s digital technology execution. The landmark acquisition of Fjord has paved the way for the firm to allow its digital assets to maintain their own creative cultures and leverage the Accenture execution and consulting machine. However, the massive new abundance of digital acquisitions (19 so far this year) could prove challenging, simply because of the sheer size and scale of the new investments. Whichever way we look at it, Accenture is now firmly competing with advertising agencies for digital accounts, and is redefining the whole digital market place with its aggressive approach. Accenture’s challenge now is to capitalize on its terrific momentum in the digital space and really bridge its newly-acquired design capabilities with its execution machine. With projects increasing in business focus and the need for data-driven consulting, this should be Accenture’s market for the taking, but ultimately the firm will need to venture beyond its comfort zone inside the Global 2000.
KPMG: KPMG’s capabilities in the traditional consulting space haven’t held it back from pushing a compelling digital narrative. The firm’s digital clients are benefiting from the cross-pollination of design talent and operational prowess to address business challenges. The firm’s operational prowess to integrate the back office with the customer experience has been noticeable with several major clients, and its ability to partner effectively with the likes of Microsoft and IBM are putting the firm in a surprisingly strong position as one of the most nimble of the “Big 4” to work on spot projects and larger more complex transformations – a critical component of making these digital initiatives successful. KMPG does need to work on its brand positioning in the digital market as it continues its impressive trajectory – both in terms of thought leadership and perception from CIOs.
Wipro: Investments in Designit and Appirio have created a defining set of digital capabilities for the firm – giving the firm the necessary structure and focal point to repackage the firm’s strong operational IT skills to match a client’s digital transformation agenda. While its current digital footprint is still emerging, its ability to partner with digital native pureplays and fintechs is impressive, and its digital design labs in the US and UK great hubs for driving new client work. We view Wipro as a well-resourced, disciplined outfit which could emerge as a genuine contender in the digital race, as clients needs become more demanding and providers have to be more flexible and aggressive to take advantage. Its challenges moving forward are scaling its consultative talent and finding smart ways to bring its Holmes AI platform into meaningful client conversation. Wipro is frequently viewed as a “safe pair of hands” for IT projects and it need to work hard to evolve this perception.
TCS: TCS has the scale and capacity to handle heavy IT and digital engagements, which makes the firm perfect for organisations with a lot on their digital to-do list. They’ve also got a great reputation for packaging their deep domain experience into usable solutions for clients. TCS simply has that ability to win any deal in the world if it really wants – its industrial and relentless approach to execution always stands the firm in good stead, and its aggressive more to analytics and automation will be crucial for digital exercises with clients mired in obsolete processes and creaking infrastructures. Its challenges are managing its next phase of growth, with the firm famous for avoiding acquisitions in favor of organic development. With this convergence of digital business design capabilities with IT execution, organic growth may no longer be an option as the market consolidates at unprecendeted speed and the emergence of digital pureplays threaten the traditional IT service model.
Deloitte: Deloitte has solidified its position in the digital space, driving innovative thought leadership and research into the market and using it to develop offerings. Similarly to KPMG, the firm can also bring that same “outside-in” broader market perspective to help firms contextualize new technologies and solutions within the broader market and industry trends. It’s no surprise Accenture has recruited Deloitte’s head brand honcho, Amy Fuller, to take on the Accenture CMO role next year (see link) – clearly the brilliance of Deloitte’s branding and thinking has impacted the industry at the highest levels. However, while Deloitte is clearly an early leader in the space, we are seeing several key competitors closing the gap, both from the traditional consulting space, as well as the outsourcing industry. We need to see the “what’s next” from the firm as competition intensifies.
Atos: Atos’ broad digital offerings include structured transformation projects – such as the Atos Digital Transformation Factory – which offers clients an accelerated journey to embracing digital. The firm offers significant experience in some industries (mainly public sector, manufacturing and retail) and especially in Europe with a long list of successful engagements. On the IT enablement side of digital, Atos is clearly doing well, however, adding capabilities at the design front-end would add significant capabilities if the firms wants to compete more aggressively with the market leaders. However, outperforming the likes of Capgemini and DXC is a significant achievement for the French-led firm. Atos really need a flagship digital acquisition to take its strategy to the next level and keep it ahead of its traditional competitors.
Premium HfS Subscribers can download their copy of the Blueprint Report, “Digital Technology Strategy and Consultancy Services 2017” authored by Phil Fersht, OIlie O’Donohue and Jamie Snowdon, by clicking here.
Posted in : Digital Transformation
Posted in : Uncategorized
Posted in : IT Outsourcing / IT Services
As you may have seen last week, we officially unveiled our data products at HfS, where we bring together the full gamet of demand and supply side data to share everything you ever needed to know about the big change agents impacting business operations. So who better to help support our new range of offerings that a veteran analyst with a broad knowledge across all services markets, who’s developed a solid reputation with the likes of Ovum and NelsonHall: Suvradeep Bhattacharjee.
In addition to being a true gent and an eloquent observer of the market, what also appeals is the fact he moved himself to our new HfS headquarters in Cambridge England (where his wife teaches HR practice at one of the local colleges), but he also comes from the great city of Calcutta, where you can actually visit man-eating tigers. My 8-year-old boy is begging me to take him, so I will need some local expertise to give me the lowdown….
Welcome, Suvradeep – it’s just terrific to be working with you at HfS! Can you share a little about your background and why you have chosen research and strategy as your career path?
I think, I am curious by nature. I am usually stimulated by new knowledge which is mostly esoteric by nature, in my experience. Also, I would like to know how this new knowledge affects the big picture. From software development to being my own boss for a while, then as an industry analyst, it is indeed a bit of serendipity as well, but research and strategy has become my natural career turf.
Why did you choose to join HfS… and why now?
Blinding optimism of the Silicon Valley in the corner of old and gentle England – I just couldn’t believe my luck when I discovered that HfS was moving its HQ to Cambridge, England. I have always admired the frankness and genuineness of thoughts opined by HfS. In particular, your blogs on outsourcing and automation, Phil, has breathed a lot of fresh air in a rigourous industry often lacking the big picture. Thanks for that, Phil. Finally, I am a lot quieter now but still a rebel. Joining a gang of rebels in HfS, isn’t it natural?
Where is the industry right now, Suvradeep? Are things really that different than they were five years ago?
The services industry is in a state of flux right now – we are in a transition to a world where we we do more for less! The twitching corpse of labour arbitrage is still looming large, while RPA and AI are promising a very different future, but right now it’s a scramble to balance both the new and the old model with a blended approach. Political developments across the world around outsourcing have become much more prominent with the rise of populism across many western political systems, and it has become nigh-on impossible to ignore the calls to curtail offshoring or nearshoring. As you have pointed out, Phil, the next five years will be transitory, but it’s the five after that which will be truly frightening!
So what can we expect to see from you at HfS… can you give us a little snippet of what you’re going to be working on?
I will manage the delivery of HfS contracts database, delivery of HfS buyers guides, and delivery of HfS PriceIndicator. Also, I will be working with the HfS analysts to utilize data around product areas more effectively and develop relationships across the industry to help support and promote these products. I will be aligning our data with our insight to really drive our view of the future, and am very excited to be working with Jamie Snowdon (Chief Data Officer) who has some great ideas for innovative data solutions for our clients.
And finally, is the analyst industry as exciting as it was 10 years’ ago?
I am tempted to say that the analyst industry is more exciting now as we are about to watch really big changes in the world around us! It’s a great time to be here. Change and uncertainly drive the need for clarity and insight, so where better to be than a firm like HfS?
Good to have you with the HfS family, Suvradeep… look forward to seeing our data products really make a difference in the analyst business!
Posted in : Business Process Outsourcing (BPO), IT Outsourcing / IT Services
