Oh dear – here are the private views of about 60 outsourcing clients we polled today at the HfS Summit in New York. Close to half the room are either feeling let down by their provider over-promising, or merely feel they are only really getting cheap labor from their relationship. Moreover, barely a third of them actually believe their provider can come up with the goods, provided they pay for them via the legacy FTE pricing model. Now, these buyers are highly experienced and sophisticated, so this data is particularly hard for the outsourcing industry to digest.
So a few simple takeaways from this:
Service providers have to stop the over-promising and start over-delivering. Over-promising may result in some short-term wins, but the implications of long-term damage caused by missing client expectations are much more hazardous. Sadly, investor pressures to sustain unrealistic growth is forcing several service providers to over-sell without the talent resources to deliver anything beyond low grade offshore delivery.
Many providers are proving their competency, but failing as proactive co-innovators. As we recently revealed, a third of senior management does see real potential in their service providers to become genuine co-innovation partners, but there is a stark difference between fantasy and reality. Providers need to prove they are willing to share risks, really roll up their sleeves with their clients – and clients need to work harder to create an environment of trust that they’ll stick with their providers, provided they are willing to co-invest with them. Design Thinking anyone? Maybe it’s time to get in a room together and figure this whole thing out.
Bottom-line: We’re going to see a lot of chopping and changing of service providers in this volatile environment.
Several buyers cited they felt their providers were too comfortable with them and were not worried they would get ejected from long-term outsourcing relationships. However, with advisors, competitive providers and RPA vendors all touting the magic 40% of cost savings through automation, the leadership layers are exerting unprecedented pressures on outsourcing governance leads to demand change. In many cases, buyers are simply bringing in advisors and RPA tools vendors themselves and running their own pilots, but eventually, they are likely to put their existing deals out for rebid to find providers willing to guarantee the RPA savings. And that is where the market is going – lots of cut-throat rebids, higher degrees of risk-taking to win business and more clients being over-promised. We’re in a vicious cycle where desperation is trumping good, pragmatic partnerships where both buyers and providers can figure out how to work together in trusted, risk/reward sharing environments.
Having opened a fair few presentations and blogs with the dramatic proclamation “RPA is dead”, this title of “RPA is growing up” might sound a tad contradictory to some. Forgive me, I’m analyst and some days my glass is half full, others it’s half empty.
I am consistently trying to hammer home my plea that we approach RPA in the context of quality service delivery in all its naked complexity – not simply this obsession with individual tools, not looking for some sort of silver bullet, not looking for simple answers.
That is what our research and this blog itself are all about. Yet, for many, RPA is code for short term, guaranteed cost take out of headcount. For others, RPA is a broader placeholder, more similar to what I would term Intelligent Automation. Despite a lot of noise in the industry, RPA and Intelligent Automation are still a very nascent market. Thus, we continue to have a blurred perception around RPA that gets aggravated by the amount of smoke and mirrors spawned out by some tool providers and well as service providers.
Against this background of #RPAfakenews, I had the pleasure of sitting down with the management team of RPA solution provider upstart UiPath in Bucharest to discuss all those implications as well as getting a sneak preview of their development roadmap.
Culture, both internally and externally, underpins UiPath’ growth trajectory
Before I dive into the details, what struck me in Bucharest was the energy and togetherness of the UiPath team. Romania might not be the obvious location for an innovative start-up, but the country has been seeing a rise shared service centers, BPO delivery centers, and their entrepreneurs are part of the global village over the last few years. UiPath’ founder and CEO Daniel Dines, one of the smartest, humblest and nicest guys in the automation community, spent years coding for Microsoft in Seattle before embarking on building his own company. And this varied experience is showing, with UiPath being one of the fast-growing RPA providers and perceived by most buyers as a mandatory inclusion in RFPs next to the likes of AutomationAnywhere and Blue Prism. Clients reference the company culture, sincerity, lack of arrogance and the flexibility in commercial terms as a key reason for partnering with UiPath. From a capability side, the stability operating in Citrix environments and the expansiveness of it recorder function – features so critical to the effectiveness of RPA – is often added to those reasons. But the growth is also underpinned and enabled by smart hires. The most recent example is Boris Krumrey, UiPath’ new Chief Robotics Officer, who was won over from Atos where he had built out compelling automation capabilities around the notion of service orchestration.
Service orchestration is underpinned by operational analytics and cognitive computing
Service orchestration is the segway to understanding UiPath’s strategy. Aligned with the notion of service orchestration, UiPath is driving towards an integrated platform approach with end-to-end business process automation in mind. To achieve this, the company aspires to be an RPA eco-system player that integrates capabilities, in particular around operational analytics and the broader notion of cognitive computing. Examples include the integration of Google and Microsoft libraries, and also partnerships with providers, such as AABBYY and Elastic Search and Kibana for OCR integration and Data Analytics.
The capabilities of Elastic Search and Kibana will also underpin UiPath’s effort to advance to robot orchestration. However, the journey toward service orchestration goes beyond just tools and technologies. UiPath is trying to change the mindset in many RPA discussions and the notion of knowledge transfer is central in that regard. Consequently, UiPath is working on enhancements and tools to overcome the knowledge transfer challenges to create RPAs on robots quicker, but also in technical complex settings. At the same time, the company is beefing up partner support, training and certifications to put the evolving partner ecosystem on a much more solid platform. In a nutshell, UiPath’s platform strategy mirrors the orchestration efforts of the leading service providers that we have covered at great length at HfS. (link to the RPL)
UiPath’ platform strategy embraces the principles of the Digital OneOffice
Boris’ experiences at Atos can clearly be seen in other elements of UiPath’ roadmap and are aligned with HfS’ Intelligent Automation Continuum. Two examples for that: On the one hand, the integration of broad cognitive capabilities into the platform not least to lower maintenance costs. On the other hand, the extension of integrating automation capabilities to notions of a Virtual Agents akin to Atos AVA which Boris introduced there during his tenure. This extension to digital channels and intelligent sensor aligns UiPath strongly with our Digital OneOffice framework that suggests provider must enable customers to connect their back, middle and front offices. Thus, it is not about individual tools but about enabling a Digital Underbelly. As my esteemed colleague, Phil Fersht puts it, “Digitally-driven enterprises must create a Digital Underbelly to support the front office by automating manual processes, digitizing manual documents and leveraging smart devices and IoT where they are present in the value chain. Enterprises simply cannot be effective with a digital strategy without automating processes intelligently.”
Bottom-line: Service providers must educate, not obfuscate the market
The discussions with UiPath reference the increasing maturity in the market with a shift away from rudimentary process automation towards enabling higher value transformation projects. Yet, for those discussions to become the benchmark for the broader industry, the stakeholders and in particular the service providers, have to start properly educating the market, rather than continue to obfuscate it with smoke and mirrors. RPA clearly is growing up and maturing. But the marketing and broader discussions are not yet reflecting this reality. We urgently need a new set of custodians to translate these insights into publicly available best practices. To support exactly that, we would love to extend these discussions with other RPA providers about their roadmaps and insights.
In retail, capturing data in real-time at the Point of Sale (POS) leads to better stock replenishment and more informed customer interactions and experiences. Now take that same concept into business operations with HR and employees, where transaction or event participants similarly have the biggest vested interest in achieving maximum data accuracy and transaction processing speed.
The principles of real-time data updates and logical transaction ownership led to a lot of new Employee and Manager Self Service functionality in the early days of HCM systems. Let’s also remember, though, that self-sufficiency — as in not having to deal with the occasional black hole that some HR Departments are identified with — is also directly correlated with stakeholder or customer satisfaction.
All of this “transactional mumbo jumbo” can be boiled down to one phrase: Human Capital Management stewardship … and also perhaps one question: Where should primary HCM ownership lie? The “HR as necessary interloper to keep the company out of trouble” model hasn’t really endeared itself to many outside of those running professional HR organizations. So why keep “workforce management activities to drive enterprise value,” aka HCM, strictly in the hands of the HR Department? No reason. It’s a stupid waste of resources – both financial and human.
HR adds the most value, by far, when it enables line managers to be effective stewards of HCM
How do you as an HR professional accomplish this?
(1) by truly understanding the business of your internal line manager customers (2) by being a trusted advisor when it comes to HCM-related opportunities and risks (both — not just risks!) (3) by syndicating best practices, tools, standards and innovations related to HCM across the organization … whether an HR-borne idea, an internal customer’s idea or something learned at a professional HR organization’s conference.
Business leaders don’t just have P&L responsibility. They interact with their teams every day, in all situations, and they ideally have the “HCM acumen” to know what will drive employee engagement, retention and productivity … or conversely, what will impede these outcomes and how to mitigate those impediments.
Bottom Line: HR Departments must place a huge emphasis on line manager enablement, thereby shifting HCM stewardship to where it belongs – to team leaders, department managers, and senior executives. HR Departments should enable, or get out of the way.
I’ve been to a couple of events and listened to a number of presentations recently from IT and business service providers talking about digital strategies – and how they can help their clients engage better with “digital customers”.
Part of this strategy has included building greater empathy and emotion with customers – superficially this sounds fantastic, but when I think of digital, it’s not about being nice or building an emotional attachment to customers – it’s about speed, efficacy, and awareness – these things trump everything else.
Understanding customer needs and behavior is important – as it helps to build an efficient and speedy process, but they don’t need to like you they just need to believe that they will get the goods or service when they are told and it is what they asked/paid for. If you think about successful retail organizations Tesco, Amazon, Walmart – I’m not sure too many people like them, they like the convenience of them (Fanboys – I am generalizing so please don’t troll me, of course, some people love them.) People will buy from you and like you if you are cheap, if you deliver when you say you do and will stop when you mess up (for a bit.)
Digital businesses historically had awful customer service and many still do. Amazon in the U.K. when it first started was terrible at dealing with problems – in 2003 when I ordered a book (remember when they just did books/CDs) which didn’t turn up and they basically said that it was the couriers fault and after trying for a while I just gave up – they more or less told me to sod off. Incidentally, by 2010 they had gone the other way – if you said it didn’t turn up they’d send 3 replacements (I exaggerate). I suspect the balance has now been struck.
However, customer service is still bad with many digital firms – or digital services to consumers. Particularly when the app business is an intermediary an affiliate based – I have had checkered service from JustEat, Deliveroo, Hungryhouse and Burger King food delivery – don’t judge me I am a hungry early adopter and have a teenage daughter with friends… Usually, something missing from the order and I haven’t had refunds – but I tend to return because the convenience (and my laziness) never goes away. Even poor service won’t kill a digital company if the core proposition is sound and the number of exceptions is low.
Bottom Line – Sell speed and efficiency – people don’t need to feel special and cared for unless you mess up.
So when I hear a service provider try to portray digital experience in terms of empathy or emotion I lose interest. Speed, efficiency, and real-time information make a service digital – this doesn’t need to deliver an emotional response, – the core proposition needs to be good and it needs to work most of the time.
The Business Process Outsourcing industry is going through a significant evolution from a labour-led business model to one that is now a blend of global talent combined with automation, artificial intelligence, and digital technologies. This is especially the case with the financial function, where CFOs are under immense pressure to deliver the next wave of productivity and value from automation and richer data.
Genpact as a pioneering BPO provider in the era of Digital Finance
Genpact has always been ahead of the disruption curve in the finance and accounting function, being the first to disrupt the market with aggressively affordable and effective offshore solutions in the mid-2000s, taking a significant stake in the market in its journey to becoming one of the largest pure-play BPO providers to service the CFO’s office today.
In recent years, the firm has quietly developed its own consulting capabilities, which now account for close to 10% of its revenues, where it is supporting clients with its unique flavour of digital design consulting with its Lean Digital offering, its robust operational and process consulting capabilities and a sizeable focus in robotic process automation and artificial intelligence, including touchless machine learning, which is bolstered by its new acquisition of artificial intelligence platform Rage Frameworks. In addition, its CFO Services consulting line is now involved in piloting some Blockchain implementations and an increasing involvement in Supply chain, risk management and order management transformation initiatives.
Moving beyond the table stakes
The most progressive service buyers consider process standardization, quality levels and cost savings as table stakes. As our recent study, Finance In The Digital Age shows, finance executives are challenged to better manage regulatory compliance and financial reporting, better use financial and non-financial data, make the close cycle more efficient, and have paperless audit trails. Further, at the top of the finance and accounting function, today’s CFOs are more ambitious than ever to become more involved in driving future growth for their organizations, beyond oversight on controllership and bookkeeping.
So it is unsurprising that our last analysis, the HfS F&A As-a-Service Blueprint, focused on As-a-Service design and delivery in finance among 18 leading F&A service providers. The resulting Winners Circle service providers have collaborative engagements with clients and are making recognizable investments in future capabilities in talent and technology to continue to increase the value over time. These providers are also leading in incorporating analytics as a service into Finance contracts.
Making the shift to being a consultative BPO provider
In the Blueprint report, we positioned Genpact as a part of this As-a-Service Winners Circle category. Compared with the other service providers in the Blueprint, Genpact is one of the top two, leading in both the Execution of actual services and client management and Innovation to drive future value in the form through the use of talent and technology. With 18 years in the market, Genpact has evolved its traditional Lean Six Sigma process excellence methodologies into what it calls Lean Digital, a framework for working with clients to use design thinking for identifying, aligning and addressing issues and opportunities. It’s a transformative approach to align digital technology and talent with desired business outcomes from F&A delivery. HfS hears encouraging feedback from early client work.
Furthermore, Genpact has developed vertical-specific strengths in pharma, CPG, and manufacturing. Its “CFO and Transformation Services” approach is addressing the key needs of CFOs, which is in line with the market needs we outlined earlier.
The combination of Genpact’s Lean Digital, CFO, and transformation services has helped its sales teams take a consultative approach with F&A, particularly with new clients.
This has accelerated Genpact’s market performance in F&A, reaching double-digit growth in 2016. Clients in our Blueprint research ultimately point to Genpact’s “feel good” culture, where through extensive interactions with practice leaders, SMEs, and delivery teams, the service provider drives cultural alignment with its clients. HfS believes that Genpact is a good fit for enterprises that are considering operational redesign in their finance and accounting function, particularly in CPG, pharma, and manufacturing.
Genpact was rated highly in the Blueprint for the following criteria:
“Denial is not an option.” Contrary to the typical (and here, oversimplified) pre-certification, “approve” or “deny” approach to utilization of services in health care, HealthHelp launched a new model of utilization review based on the premise of non-denial procedures, and that utilization management is about collaboration and education. HealthHelp taps into its evidence-based database and network of physicians and academics to review and approve or to recommend alternatives to procedure requests. In tandem, HealthHelp drives studies and education opportunities to lead to better medical and financial outcomes when providing or using health care services. In short, the company that WNS just acquired is building out a patient- and healthcare provider-centric approach to utilization management designed to match procedure and treatment to the patient’s needs and network.
HealthHelp took roots in the founder’s own pain
The HealthHelp approach is tied to the experience of its founder, Cherrill Farnsworth, who found the number of denials and appeals she managed for radiology procedures discouraging and painful. Thinking about “how to do this differently… why do we have to deny”? Cherrill tapped into her network of people at medical centers and universities, creating a collaborative model on the premise of using data, insights, and education. Instead of a review, approve/deny, the approach is review, approve and/or educate and/or recommend. The approach uses an increasingly sophisticated system of data, digital technology, and relationships. HealthHelp is taking product development further into the realm of machine learning and artificial intelligence, as well.
What gives HealthHelp the “right” to make recommendations to healthcare providers and patients?
An approach like this one—essentially, a break from the norm—depends on the credibility of the data, technology, and people involved. HealthHelp faced the challenge in the early days of people not being sure that a “non-denial” approach would be effective for containing costs. With 15 years of data, though, the company has been able to ingrain a lot of experience and knowledge into the approach and platform, to the extent that now 75% of prior authorization requests get approved for providers or are responded to with recommended changes that are approved by providers, without any human intervention. In about 25% of the cases, it goes to nurses for review; 6-7% of which are forwarded to doctors, and after that, the provider has the option to and can still disagree and go with treatment, which happens in under 0.5% of cases.
Results to date show improvement in the quality of care, which impacts Star and HEDIS ratings and reduces the cost of care by making sure the right kind of care is provided versus the lowest transaction cost at a point in time. Also, in a fee-for-service model, a healthcare provider gets paid for the procedure regardless of the result. As the industry shifts to value based care with payments tied to outcomes, approval based on evidence or alternatives becomes more strategic to positively impacting outcomes (and payments). This approach, therefore, seems to have further credibility in the value-based care model and can help healthcare providers move into the new world of healthcare. HealthHelp worked with CMS to get approval to qualify this program under provider education/quality improvement initiative and thus be included in the 85% Medical Loss Ratio for health plans.
The acquisition by WNS brings a complement of resources to both organizations and its client base
The healthcare industry is so ingrained in a yes/no approach that it took a few years before the model got adoption, primarily with mid-tier healthcare organizations. Joining with WNS gives HealthHelp the opportunity to scale and support a broader range of payers and providers. WNS also has a wealth of analytics capability, talent development and industrialization expertise that is complementary to HealthHelp, with resources that can help expand and develop the services and technology platforms to impact healthcare outcomes more broadly.
The acquisition of HealthHelp is part of the WNS strategy to shift attention from the cost of transactions to the cost of quality care and support—towards patient centricity. To date, WNS’ work in healthcare has been mostly analytical and transactional services: billing, collections, provider network services, and claims processing. HealthHelp brings in clinical and operational expertise to impact medical, as well as administrative outcomes, thus closing the loop. It also brings a human-centered (aka design thinking) approach to solving problems and developing a new business capability that the healthcare industry needs.
Our day of judgment is upon us! Can we really “unlearn” the last two decades and change how we buy, sell, behave and operate? Do we really have what it takes – deep down inside – to get ahead of this maelstrom of change and come out the other side with wealth, happiness and another two decades of double-digit growth?
Of course we can! But only if you book your last-minute spot to the services event of the year, in Midtown Manhattan next week… Join me, my colleagues and the industry’s finest as we engage in the richest dialog yet on how to tackle the most crucial transition our industry has ever faced, and how to come out the other side re-energized and happy to go to work again.
Service Buyers get complimentary access – only a few seats left, so apply now!
To name a few companies which will be represented…
And a few of the power brokers debating the big outsourcing reset in New York…
Find the full line-up here. See you in New York this Thursday, I hope!
Last summer I wrote about my desire to be a superhero –to help companies buy IT products and services ethically and help suppliers create new opportunities for themselves and their people. When people source ethically they can reduce a lot of bad in the world – child labor, human trafficking, working conditions that harm and kill people, and a host of other problems.
Yesterday at SAP Ariba Live, the software company announced that it was partnering with blockchain provenance firm Everledger to explore the use of blockchain across Ariba’s suite of applications. As a first step, the two companies are working on a track and trace (provenance) application.
Everledger CEO Leanne Kemp and SAP Ariba Senior Vice President Joe Fox discussed the application and broader blockchain implications at the event, talking about empowering an ethical supply chain. They see a future where using blockchain to track goods from their raw materials through their final delivery would help companies have visibility into the entire supply chain. This would then allow companies to avoid problems such as:
Counterfeit goods being swapped in for the original goods at some point in the journey
Unintentionally supporting illegal and unethical conduct by suppliers and other third parties involved in conflict minerals like blood diamonds because you couldn’t tell where the diamond originated
Being out of compliance with government or industry regulations because related to the point above, you couldn’t prove that the product was made without conflict minerals or other illegal inputs
Undoubtedly, this announcement is a huge win for blockchain technology. It’s a major software company investing in a specific commercial application. It also reinforces the importance of provenance as a key blockchain “killer app,” coming soon after IBM’s announcement with Maersk that the two firms would work together to trace shipping containers. We’ve written before that provenance will get adopted faster than many fintech blockchain applications. These two deals show movement in that direction.
Even more powerful is the business and human story about making the world a better place. SAP Ariba’s and Everledger’s message of using blockchain to help business work more effectively AND to improve the lives of people is inspiring. It’s what technology is supposed to do, and we’re hoping to see more companies explicitly make corporate social responsibility a key factor in their technology decisions.
In order to prepare for the upcoming travel and hospitality Blueprint, I decided I needed to do some “field research” (ahem) by taking a vacation of my own to sunny Puerto Rico to get the experience of an end consumer. This was fortuitous timing as RFI responses were trickling in, and I couldn’t help but relate my experiences to what I’m hearing from the service providers and buyers in this space. As analysts, we tend to travel a bit here and there, but often have the luxury of travel plans being made for us with group coordinators. Having planned this trip out myself with the help of some great references, I thought about travel in a more selfish way—one that made me think very much about all the things T&H service buyers and service providers could be doing better to think of ME, the traveler, at the core of their operations.
As a consumer, these themes resonated with me the most:
Word of mouth matters more than ever: So many decisions to make; where to stay, eat and what to do. Review sites like Yelp and TripAdvisor are ubiquitous, and travelers really rely on these sites for decision making. The downside is information overload and credibility; I read scores of reviews with a skeptical mind, thinking this could have been written by someone with totally different vacation priorities or motivations. Now if a good friend recommends a tour, combined with a raving review on TripAdvisor, I’m sold! Service providers should be thinking about how to help hospitality clients maximize loyalty and advocacy among visiting customers. Those who represent the travel intermediaries and review sites should think about how to make the personas more “real” – think of the possibilities for gamification (i.e. giving people badges or discounts if their reviews are well liked or validated.) This could go a long way to make these review sites and intermediaries more valuable for customers. Intermediaries are also more important than ever for local tour companies whose websites are wildly out of date and impossible to navigate—so knowing the local businesses is more important than ever.
Self-service is fantastic—but make sure you have the processes and training to bring it all together. It’s pretty cool that JetBlue has started a system of printing and applying your own tags to baggage. But, as someone who doesn’t normally check a bag, this caught me by surprise at Boston Logan as I was reluctantly checking my vacation + business attire luggage to accommodate all the shoes I needed for these two incongruous journeys. I was confused, but all that the woman at the kiosk could do was repeat in a saccharine cheerful voice, “You need to print out a tag at the kiosk.” Literally, that’s all she could say. I would have felt more comfortable with a robot. When there are process and technology changes, especially those that affect your loyal customers, make sure your employees are trained to be empathetic and helpful and that you use all the relevant communication channels to update customers. Plus, preemptive outreach can prevent incoming calls to customer service and confusion in the field.
It all comes back to making it easier for the customer. This is true in every business model, but the hotel industry seems to be closer to cracking the code on seamless experiences despite juggling many balls in the air at the same time—dealing with disgruntled, tired travelers, unexpected issues like broken elevators, cancelled flights or storms closing the coveted beach, and handling countless travel intermediaries like Expedia and the like. This requires a lot of connection between front, middle and back office—as we describe in our OneOffice framework—it seems that hotels are getting closer to connecting these siloes to create omnichannel experiences, but what I’m hearing from buyers and service providers is that there’s a lot of disconnect behind the scenes and making up for it at the front end. Despite sometimes glossy front end experiences (think the swanky hotel lobby with fantastic, quick check-in service), there is still much opportunity to streamline processes behind the scenes. The notions of service experiences are also evolving, keeping T&H clients on their toes. Today you introduced mobile self-check-ins; do you need to integrate tours & activities scheduling into your app next?
The Bottom Line: competition has pushed the travel and hospitality industry to live and breathe the “customer-first” mentality, but the fast-paced nature of the industry and customer expectations will continue to create opportunity and challenge services buyers to think about “what’s next?”
Differentiation is the name of the game— and more than anything, services buyers in the travel and hospitality space need flexibility and innovation from their providers. Between M&A activity, regulatory and compliance changes, disruptors from the “sharing economy” and the volatile nature of travel itself, having the customer constantly at the center of the universe is no easy feat. Always being that step ahead, with automation and innovation, is where service providers can step in to support those memorable experiences.
Remember all those juicy reasons why companies jumped into outsourcing? Like driving out cost, standardizing processes, perhaps even finding a few nuggets of innovation along the way with better access to talent and technology? Well our new 2017 State of Operations and Outsourcing Study of 454 major enterprise buyers gives a pretty gloomy picture of the current value impact of today’s outsourcing engagements:
What made us happy in the past no longer passes muster
If there was ever one home-banker benefit from outsourcing, it was always the ability to take 30%+ off the bottom line cost of running a process or set of processes.
The VPs and below are those who are managing the engagements – and not even a third of them view their engagements as being very effective at driving out significant cost or making their operations more flexible and scalable. Their bosses are slightly less cynical, but still the vast majority is underwhelmed.
“But how can they be unhappy, we saved them so much money?” I hear frustrated providers cry…
Well, the answer is quite simply that those costs have been removed from the balance sheet – they no longer exist. Managing operations in a global environment is now the new normal – money that was saved was a onetime experience in the past. It’s like trading in your Hummer for a Prius… you don’t think to yourself, everytime you fill up with gas, “Wow, I’m saving $50 per tank”, but you might even think, “Hmmm… maybe I’ll get a fully electric car next and save even more on my running costs”.
We can go on to bemoan the disappointing lack of effectiveness from analytics, automation and cognitive from over four-fifths of outsourcing engagements, but we know clients are unlikely to have invested actual funds in these areas as part of most of these engagements today – they are getting what they have paid for in the past.
All is not lost as many operations leaders want their service providers to change with them
However, the next wave of engagements have to be set up in a very different way to bring back delights to these jaded customers, which is where the brighter news appears:
What’s encouraging here is that buyers, by and large, do not view their service providers as mere efficient cost take-out vehicles, which was how well over half viewed them a couple of years ago. While 43% of SVPs and above see service providers as competent partners who can deliver the goods, another 35% actually view them as real innovation partners who can work with them to achieve co-defined business outcomes. This is a breakthrough for the services industry.
The Bottom-line: The door is wide open for ambitious providers willing to invest in developing their talent, but closing firmly shut for those perpetuating what worked in the past
There has never been a time in the history of services where we’ve arrived at such a pivotal turning point – what used to work for clients is now commodity, and those service providers wanting to avoid this drain-circling spiral into transactional insignificance must make serious investments in their internal capabilities to partner with their clients. This means more people who can work in close proximity to their clients with real capabilities rolling out automation roadmaps, designing digital business models, working with clients to develop predictive data models and smart cognitive strategies. Sadly, there isn’t much of an available pool of eager college graduates ready to leap into these roles at low wage rates, so providers need to reinvent themselves radically as true learning establishments and universities for their emerging talent… ambitious people will want to invest their careers with firms who are prepared to invest in their talent. The future isn’t about buying packaged consulting, it’s about partnering with services firms whose stakeholders want to co-invest in themselves and their clients with a long-term vision and definitive plan. The model has changed forever… and we can only watch, learn and work with it as it unravels piece by piece.
