Oh no! We’re back on your laptop screen this 26th March at 11.00am ET.

Posted in : Business Process Outsourcing (BPO), Cloud Computing, Digital Transformation, Global Business Services, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, Outsourcing Advisors, Outsourcing Events, Outsourcing Heros, Robotic Process Automation, SaaS, PaaS, IaaS and BPaaS, Security and Risk, Sourcing Best Practises, sourcing-change, Talent in Sourcing, The As-a-Service Economy, The Internet of Things

These are really exciting times for the services industry, where little upstart “Born in the Cloud” As-a-Service providers can sneak up on the traditional service providers and deliver pure cloud-based services in a model that was designed to be in the cloud.

And when you design services for pure cloud delivery, they have to be seamlessly automated at their very core. The services ethos is about enterprises operating smarter, not cheaper… and as a result will likely save a ton of money because they end up simply running more effectively.

One such irritant to the traditional services model is OneSource Virtual (OSV), which has built up a compelling business delivering business process service offering for clients around Workday’s HR and F&A SaaS platforms.  OneSource Virtual is an As-a-Service provider – there is no transition to becoming one, it was born as one with As-a-Service as it’s intended delivery. And when you consider one of OneSource’s clients is Uber, it just makes for one harmonious As-a-Service mash-up…

The exciting value OSV is bringing to the table is its services are focused on real business support areas, such as organizational design and workforce analytics, in addition to the transactional needs of clients in areas such as payroll fulfillment, or accounts payable. And this also creates exciting jobs for onshore staff who can apply more consultative, value-based capabilities to service their clients.  This is the As-a-Service Economy, where service jobs are becoming more challenging and interesting, where real business services are delivered on-tap and clients can access services designed to meet the needs of the modern business, not just some legacy back office designed on a mainframe cluster back in the late 1970s…

OneSource Virtual’s service delivery was built with RPA at its core

We’ll admit it. We didn’t see the robots for the trees. We’ve been so focused on how Robotic Process Automation is being implemented across legacy application environments, we missed how it is also being rolled out in “Born in the Cloud” business environments.

Last Friday, we spent time with the As-a-Service provider OSV, which has built business process service offerings around the Workday SaaS platform for HR and F&A. While it is true that Workday itself has automated many processes that require more manual intervention in other applications, OSV has gone taken this one step further.

With the development of its proprietary service delivery environment Atmosphere, built on force.com, OSV has created a platform for the extraction – and then automation of – recurring processes across their base of hundreds of clients.   This is a critical development, because together, with consistency in the code base of Workday across clients, the automation in Atmosphere allows OSV to establish very high levels of productivity in tasks where human agents are still required.

Especially compelling is that fact that OSV has not developed its Atmosphere and this model of shared automation after years of running individual silos of client delivery, as several other service providers are now trying to do. Instead, OSV was founded on this principle of shared automation from its inception.

In essence, this means that OSV is already operating at the highest Level of the HfS Maturity Model for Robotic Process Automation that we released in November 2014. This Level, “Institutionalization” describes a common theme of broad strategic commitment by a service provider to the transformational potential of RPA on their clients’ business and operations. Any service provider characterized by this Level is making a sizeable investment in RPA, with a view to creating a fundamental change in the commercial and delivery operations of their clients’ business operations.

Other service providers are striving to move aggressively into the Institutionalization Level, however, they are doing it by retrofitting RPA into their established business, as opposed to develop new client delivery environments with RPA at the core.

Net-net, it’s time to really get down and dirty with RPA as a core component of the service delivery platform – get ahead of this unstoppable trend as opposed always chasing it…

Posted in : Business Process Outsourcing (BPO), Cloud Computing, Digital Transformation, HfSResearch.com Homepage, IT Outsourcing / IT Services, Robotic Process Automation, SaaS, PaaS, IaaS and BPaaS, sourcing-change, Talent in Sourcing, The As-a-Service Economy

Mike Sutcliff is Group Chief Executive, Accenture Digital (Click for bio)

Two buzzwords have re-ignited the world of global services since “offshoring” became so passé… Digital and Automation.

And the two are inextricably linked – you can’t really digitize your business processes until you have effectively automated them.  And if your industry requires you to have that digital interface with your customers and suppliers to survive (and that pretty much includes all industries today), you’re pretty much done for, if you haven’t build that automated process layer as the foundation.  And if you need more evidence of this, please take some time to read our recent report on the impact of Digital on business services.

So surely this is the gravy train for ambitious service providers to jump to the needs of their clients to save the day?  Or is the business world changing so dramatically that this is simply going to be one insurmountable challenge too far for many enterprises, and they might as well give up now?

So let’s hear from the one service provider that dusted off the “Digital” terminology from the dictionary and reapplied it to the world of services.  We managed to get some face-time recently with Accenture’s Mike Sutcliff at his firm’s Global Shared Services Conference (GSSC) in Prague, to hear about how his group is developing its digital capabilities and applying them to the world of business operations and shared services…

Phil Fersht (CEO, HfS): Mike – Good to connect again! Tell us about your background. How did you come to lead the digital practice for Accenture?

Mike Sutcliff (Group Chief Executive, Accenture Digital): I’ve been at Accenture for 27 years. In the early 1990s, I founded the Finance Management Group which developed our shared services business. Then I got the opportunity to establish a new business. I became interested in analytics; I wanted to understand how analytics could bring more value to companies. I studied how enterprises created data as a mass that they then could leverage across the organization. I combined my experience in financial services with my new understanding of these growing fields to form Accenture Digital, which brings together our capabilities around e-Commerce, digital marketing, social collaboration, mobility and analytics.

Phil: “Digital” is the industry’s new hot button; everyone has jumped on this and is coming out with their own digital practices. How is Accenture’s digital practice different from the offerings of other tech-based services firms?

Mike: First, we have history. We’ve been working on various parts of our digital business for a decade, collaborating with our technology partners across the entire ecosystem. Over time we developed our offering that now the marketplace considers digital.

Second, we don’t use digital as a group of technologies. We think about digital as:

• Connecting people
• Creating mobile capabilities
• Embedding real-time analytics into enterprise operating models

We do this across different industries and geographies. When we talk about the digital customer, we think about how citizens engage with their governments, how patients interact with their healthcare providers or how consumers engage with retailers. We try to put together the digital pieces in new and unique ways to change the way the world is working.

Phil: Mike, The consensus at the recent GSSC conference is that shared services operations are ideal to house a digital CoE (center of excellence). In your opinion, can digital services become a genuine innovation engine for business operations?

Mike: Absolutely, Phil. Digital services allow enterprises to house expertise in different types of data; for example, they could create an analytics center of excellence. They could also innovate by doing mash ups, where you combine technology from inside the organization with technology from others in the environment. And these digital technologies can help individuals capture market share–it could be in a call center, agent network or a physical store. The business unit can now think about how digital technologies can enable each business process at every point in the customer interaction. In my opinion, all of these are interesting opportunities for shared services organizations to accelerate the innovation that’s happening within the business.

Phil: Based on your experience, how can operations executives improve their digital capabilities? Is there a big opportunity here or is it too late?

Mike: It’s not too late, Phil! Digital is a fantastic opportunity. Here’s why: There was a cycle of early adoption which required executives to act as general contractors to put together their own solutions as the technology matured. Today solutions have been tested, developed, even packaged as subscription services.

Phil: What is your first piece of advice to people starting out in a digital transformation, Mike?

Mike: Understand you need to design business processes for the mobility environment. Today your employees, customers, business partners and supply chain are all increasingly using their mobile phones as a business tool. Mobility is more than people using their handsets to access information, which was the hallmark of the first generation of mobility. Today organizations have to embed computing capabilities into centers and analytics into devices. Things are mobile as well as people. We can design much more effective business processes if we think about what it really means to untether people from the laptops or desktops. People are no longer just sitting in an office or stuck in a static physical location.

Phil: And what is your advice concerning analytics?

Sutcliffe: Enterprises need to take the next generation of analytics, which includes machine  learning, cognition engines and structured text mining, among other things, to take advantage of all the information that exists. That includes the information both within your company and in your business environment. We were not able to collect and amalgamate these in the past. Then use the combined data to do something you couldn’t do in the past. The new digital tools allow companies to discover and act on insights in a more practical way because trends are become more economically visible than in the past.

If companies understand both the mobility and analytics involved, they can start imagining more effective business processes. That can start a revolution internally, a revolution that challenges the existing constraints in current operating processes.

Phil:  What do you think is the broader societal impact of digital transformation? Are we going to see real issues arise due to a lesser reliance on humans? Do you see real growth opportunities for professionals or are we heading into a very different future?

Mike:  I am an optimist. Yes, technology is destructive. In the disruption there are different short and long-term benefits to different members of the ecosystem. Like other technologies before it, digital will change the way we work. People will have to adjust to the new way or potentially be eliminated in order to make a process more efficient.

Yes, introducing new ways of doing things is a challenge in the short term. But this change is necessary because technology:

• Facilitates efficiency and achievements
• Allows employees to work smarter and faster
• Permits employees to be mobile and work from anywhere
• Enables everyone to interact at a deeper level of detail

Phil: Can you provide a real world example?

Mike: We developed a solution in India for the farming community, which is composed of a lot of small family farms. Traditionally these farmers don’t take advantage of the available science to determine what kind of fertilizers to use depending on their specific land and the crops they want to grow. It was just too expensive to understand the soil content, weather patterns and chemicals that would improve their yields.

Accenture combined digital technologies which gave them access to this information and expertise. The result: they were able to make better decisions. They put the correct amount of the right chemicals in the proper places based on the weather and crop patterns. Indian farmers using this simple combination of technologies significantly increased their crop yields per acre, making them more productive.

Look at how distance learning has changed education. Or the new ways doctors and technology are delivering healthcare. These are all structural changes in the way people do things. These structural changes do more than just make us more efficient. That efficiency enables some of us to work on problems no one has solved yet-like how to tackle new forms of cancer or reorganize cities to reduce congestion. Digital technology has freed us to work on societal issues we all know we need to work on.

Phil: So…you are anointed as Digital Emperor for one week, what two things would you do to change the industry?

Mike: The first thing I would do, Phil, is create a public directory of all known sources of data that enterprises could combine with their own data. This is a good move because many of our clients simply don’t know what’s out there or how to access what they need. I believe we can improve our society significantly if we had a better understanding of how to use the data. For example, looking at energy usage, crop yields and healthcare requirements from a global level allows us to do a better job of feeding, housing and clothing the world’s population. I think this global data amalgamation will mature fairly quickly.

The second thing I would do is engage more aggressively with both regulators and the various layers of government to challenge the current regulations. Are the historical regulatory control structures we have in place now going to be equally valid in this new digital world? I want to determine if what’s in place currently is the most effective. Now that we’ve got access to these digital capabilities we can determine the most effective regulations to put in place. Please note I am not challenging the need for effective regulation. What I’m saying is we need even better regulation. It’s time to start now (it’s not too early!) to start engaging government in this type of conversation. How can we work together to create digital policy to allow more effective regulatory controls moving forward?

I’m sure you’re surprised that I would talk about the importance of regulation as a digital emperor. But I think the pace of digital change is significantly faster than the government’s reaction to that change. Hopefully, early conversations with government regulators would allow the world’s population to gain advantages from the digital technology faster.

Phil: That’s right, Mike. Most governments are still catching up to the impacts of earlier Internet evolutions. Maybe we can help them get it right this time… I appreciate your candid views here – am sure our readers will enjoy reading them.

Mike Sutcliff (pictured) is Group Chief Executive, Accenture Digital.  You can download your complimentary copy of “Disrupt of be Disrupted:  The Impact of Digital Technologies on Business Services” by clicking here.

Posted in : Business Process Outsourcing (BPO), Captives and Shared Services Strategies, Digital Transformation, Global Business Services, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, kpo-analytics, Mobility, Outsourcing Heros, Robotic Process Automation, smac-and-big-data, Social Networking, Sourcing Best Practises, sourcing-change, Talent in Sourcing, The As-a-Service Economy

There’s nowhere better to test the temperature and mood of the global IT and Business Services industry than at India’s NASSCOM Leadership Forum, where the bigshots from all the major India-heritage providers, and the leaders from the major Western-centric providers’ India operations, get together for three main purposes:

1)  To be seen as a player at IT services’ premier networking fest;

2) To partake in presentations and panels that are all pretty much sung from the same hymn sheet;

3) To have great conversations that cut through the glossy digital lipstick veneer and elaborate entertainment, to debate the reality of whether this industry can truly evolve beyond its current “all about scale” predicament.

And this year, did we get just that – with a new energy that has been lacking in recent years since the recession.  What I love about this networking event is the sense of common purpose, community and belonging you get as part of the services industry, which you do not get at most other events (especially Stateside, where some conferences still seem to be stuck somewhere in 2004…).

At NASSCOM, you don’t feel that outsourcing was that “accidental career” choice you just happened to fall into because you could never figure out what you wanted to do with your life.  You actually feel part of something – and part of history as well as the future.  Just bumping into the legendary (and very fit and energized) Pramod Bhasin (the founder of Genpact), who could (and probably should) be lying prostrate on some beach checking the number of zeroes on his bank balance – and hearing his passion for doing more for the Indian services industry – tells you something about the DNA that will keep brand India at the forefront of technology-driven business services for a very long time to come.

How India’s services stars can shine with their Digital lipgloss

But let’s not get too carried away by the hype of the moment. India’s services economy has some big challenges, but it really does have the nuts and bolts to lead the way into this unraveling Digital future, and play a significant role in the emerging As-a-Service Economy.

There are three dimensions we need to consider when we evaluate India’s ability to continue on its services growth-path:

1)    Leading with digital technology and an appetite to cannibalize short-term revenue for longer-term profitability and value.  HfS success probability =  90%

For example, the more I learn about Robotic Process Outsourcing (RPA), the more convinced I am that some of the ambitious Indian-heritage firms will be at the forefront of development and capability here.  I am already witnessing a strong appetite to cannibalize some shot term revenue with clients to develop beta solutions that can be re-used for the future, and scaled across multiple clients.  The common-sense to transform a $10m engagement that has 20% profit margin into a $7m engagement at 50% profit, is not just lip service from the service provider executives attempting to placate cynical analysts, we hear this from an increasing number of clients.

Meanwhile, too many of the traditional Western-centric providers have massive scale deals involving hundreds, and even thousands, of FTEs and have a real problem when it comes to changing the pricing model at the risk of taking a hit on short term income.  Sadly, most of the incumbent service providers are today looking at their current client portfolios and thinking “Why on earth did we take on some of these low-value FTE-centric deals where the clients refuse to do anything beyond complain about us not taking out enough cost, and are too insecure to increase the scope of the work to create a more value-driven, rewarding relationship”.

Conversely, most of the leading Indian-centric providers have built up their businesses on a plethora of mid-size deals ($5-$25m) where the FTE model simply will not make sense for their clients in 3-5 years’ time – why pay for the same 20 bodies every year?  They will want to see some incremental improvement on cost and efficiency, and will change to a new service provider if their incumbent insists on a status quo scenario.  What’s more, RPA will shift services to be delivered smarter not cheaper, where business-centric staff can focus on delivering services at higher value, as opposed to surplus numbers of programmers and transactional staff being employed simply to keep workflows and operations functional.

There are a few Indian-heritage providers today who must be thanking their lucky stars they never dived headfirst into the lift-and-shift BPO business – it’s so much easier to drive value into less complex engagements, where there is less risk as stake to make a few sensible bets for the future.

With regards to mobility, I have only been impressed with the focus of many Indian-centric providers to embed consumer-centric mobile processes into enterprise solutions.  Digital is about bringing the service providers closer to the customers of their enterprise clients, and is driving the need for capable mobile, social and analytical solutions to be weaved into the service delivery.  And however to do this, you really need to be able to transform the automation layer for clients, which is the foundational building block for digital transformation.

And last, but certainly not least, is analytics.  I am only impressed at the appetite of Indian-heritage firms to take on analytics service for clients, no matter how small or complex the client requirement.  Without trying to make a sweeping generalization (and clearly failing to do so), Indians just love data.  Analyst firms hire analysts in India because they are just so adept at foraging around for data points, crunching them up and presenting them.  The challenge here is going beyond generating great data – and truly interpreting it for clients in relevant business contexts, which takes me to the second dimension…

2)    Leading with business services.  HfS success probability = 60% 

This is where India’s stars are facing some significant challenges, namely transitioning and training staff to approach client solutions from more of a business, and less of a technology, context.

In 2020, I am willing to bet my house on the fact that NASSCOM will be all about business solutions, with noone being remotely excited by the digital plumbing that has made it all possible.  So what does this mean for the millions of developers who just live for code?

It means we’re going to need a bit less tech and a lot more business-context support.  It means India’s universities need a bit less ABAP and a bit more MBA.  It means India’s most ambitious service providers will be investing heavily in world-class HR to identify their talent potential, retrain it and frame entirely new career paths.  It means India’s services industry leaders and populace are going to have to demonstrate a stomach for change, the likes of which they have never experienced.

At NASSCOM, about 40% of the service providers I spoke with really get what’s happening, and are already making some investments to make this tech-2-busness shift; about 30% recognize what’s going on, but are still figuring out their play; however, a good 30% are like deer in the headlights – they just can’t grasp the change and I generally worry whether they can continue on a healthy growth path, and can break out beyond their pure-tech approach to service delivery.

Yes, talent transformation is a big, big challenge for India’s services economy, but it’s not as if all the North American and European service providers and consultants are making massive investments to change their delivery model?  Most of they seem more focused on shedding costs than buying capability.

3)    Managing the pace of change clients demand.  HfS success probability = 75%

This is critical, in my opinion.  Nearly all of the solutions today are largely being driven by vendor-push as opposed to client-pull, which is fairly typical as new ideas and technologies are launched onto the market.  At HfS, we get calls from clients to discuss Digital, RPA and so on, but more because they just want to know what the fuss is all about, than the fact they are ready to move with an executed strategy and plan.

Most of the traditional incumbent Western-centric providers are masters at managing the pace of change that works for their clients.  In my experience, services clients are falling into two quite distinct camps;

• ‘Born in the cloud’ firms which are rapidly emerging today, who want everything sourced, delivered in the cloud, mobility-enabled and perfectly automated.  They don’t have that legacy operations infrastructure of dysfunctional ERP instances, poorly stitched-together processes and staff still living somewhere in 1996 running it all.  They will also make up a good portion of the Global 2000 in 2020. These clients are demanding a fast journey to As-a-Service, and want to move to a platform-driven environment as quickly as they can, where they can literally “plug-in” to standard digital processes and capabilities. This is where investments in digital platforms that bring immediate process solutions is critical – and the ability to work at speed with impatient clients not waiting to make massive upfront investments in transformation services.

• The ‘traditional enterprise’, which has a quagmire of legacy business process and technology that need overhauling and will take years to ease its way toward as As-a-Service mentality.  Change is expensive and painful for these firms and they will only really invest in it when their core business model is under true threat.  For example, healthcare payer firms in the US must have digitized customer management capabilities now they are directly servicing consumers via their iPads and not only corporations.  And most retailers will simply die if they can’t have digitally effective commerce solutions to sell their wares and manage their supply chains effectively. While these clients will demand fast change, most have/are/will struggle to evolve from breaking from their legacy systems and writing off their technical-debt. Moreover, they need the skilled consultative ability of a services partner who can help steer the change management program for them at a pace they are comfortable. This is where Indian-heritage firms can often struggle, where a “white shoe” approach is often needed.

India-heritage service providers need to figure out how to approach their clients to develop a plan to take them where they want – and need – to go.   Most of today’s Indian-heritage providers struggle to diversify their approach with clients –  they are trained to sell, sell, sell and it often results in clients being turned off by their approach.  The Indian-heritage firms need to make serious changes in how they manage their clients, the behavior of their account managers, and their ability to have much more of a  listening and consultative relationship.

The Bottom-line:  Complexity and change drive major opportunities.  This is India’s time to prove it can do it once more  

When India built its IT services economy in the 80’s, 90’s and 00’s to become truly formidable, it did so with incredible purpose from its leading IT services providers and support from its government.  The plan was simple – go after the incumbents like EDS and IBM with much lower-cost offerings that changed the game.  The incumbents were asleep at the wheel and simply let it happen.  In the last few years, the likes of Accenture, IBM, HP and Capgemini have developed huge Indian organizations to remain competitive and win back some of the lost market share.

So today, the playing field is now a lot more level, and there are no more surprises in store – everyone will have their Digital/RPA/Mobile/Analytics platforms beautifully designed on a PowerPoint deck winging its way to you very soon.  This is now more about talent and culture than anything else – and the race is on across the leading providers to develop their own people programs to deliver more business-centric solutions to clients, to solve problems proactively than merely fix processes.

This isn’t going to be the cakewalk it was in 2003, when all you needed was an army of programmers and project managers, and a decent internet pipe.  However, where I see India having a genuine advantage here is an ability to go where the business is – a tenacious culture to push new ideas and innovations onto clients, many of whom love the humble, can-do attitude of most of the leading Indian-heritage service providers.  Whether all of these firms can become more MBA and less ABAP is still very much open to question, but at least the smart ones have their eyes wide open and know what they need to do.

Net-net 2015 is a phenomenal time to be a services professional – there is so much opportunity for career growth, whether you are an analyst, consultant, practitioner or service delivery professional.  Complexity and change drive new growth and opportunity – it’s time for the ambitious people to get ahead of this and embrace the challenge!

Posted in : Business Process Outsourcing (BPO), Cloud Computing, Digital Transformation, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, kpo-analytics, Outsourcing Events, Robotic Process Automation, SaaS, PaaS, IaaS and BPaaS, smac-and-big-data, Social Networking, Sourcing Best Practises, Sourcing Locations, sourcing-change, Talent in Sourcing, The As-a-Service Economy, The Internet of Things

Just as we thought we’d negotiated a safe landing back to earth for our talent-challenged sourcing advisors, that we discover another mismatch between perception and reality – they just love service providers.

Yes indeed – probably the only time anyone has ever bothered to ask a seriously large number of enterprise service buyers (168) and advisors (154), during our recent industry study with KPMG, what they really think of service providers, yielded quite an alarming response:

Click to Enlarge

Are some advisors simply out of touch, or are too many buyers suffering from stagnating relationships?

One of the quirks of the services industry that has long-bothered me – and many others – are the cosy relationships some advisors clearly enjoy with some service providers.

Turn up at many of the service provider-hosted industry “analyst” events these days, and there is usually an assortment of advisors added to the occasion to partake in the PowerPoint orgy, the mutual backslapping, the “I’ll share with you my pipeline if you share yours” side-bar discussions, the “how dare that analyst rank you so low in their last report – he clearly knows nothing”  grumble…

However which way we look at this, one thing is clear – most buyers (49%) which have to live with their service providers everyday, predominantly view them as efficient partners to drive out cost and improve operations, while a third actually see them as having the ability to be real transformational partners (34%).  Which isn’t too bad as only 17% view them as body shops… but clearly room for improvement, in terms of more buyers enjoying higher value relationships.

So why, pray tell, do a whopping 54% of advisors think service providers are simply just wonderful?  Do they only talk to the happy 34% of clients?  Do they talk to more than a couple of clients a year?  Or are they so submerged in the schmooze-fest of service providers showering them with booze, Disney World, the same old client still droning on about his incredible 2007 process transformation, and hoards of white papers and books that have really cool titles, but quickly land in the trash can, that they’ve lost all touch with reality?

Bottom-Line: Too many advisors are simply not being exposed to buyers’ real painpoints

Firstly, I know many brilliant advisors – and often call on them to chat about the industry, share views and ideas etc. We even invite a selection of clever ones to our Blueprint sessions to add to the debate.  But this gap between perception and reality is clearly too great – I could expect maybe a 10% delta between buyer and advisor, as many relationships struggle because of the buyer’s failure to entrust their provider with higher level work, but a delta of 20% is simply too great.

Quite simply, buyers are getting smarter and those with real experience want direct, honest conversation when they spend a lot of money on consulting services. With so many enterprises, today, struggling with talent shortages and rising complexity of their needs, we need advisors steeped in reality who can give them a nice big dose of reality, who truly understand what life is like a few years into an outsourcing engagement.  This is why many advisors need to be better informed – they need access to governance data, unvarnished research.  They need to listen to many, many clients talk about their experiences and start asking the tough questions of their service provider buddies at their champagne receptions.  The backslapping needs to tone down and the real conversation needs to begin in ernest.

Posted in : Business Process Outsourcing (BPO), HfSResearch.com Homepage, IT Outsourcing / IT Services, Outsourcing Advisors, Sourcing Best Practises, the-industry-speaks, Value Beyond Cost Study 2015

David Poole is Co-Founder and CEO, Symphony Ventures

One of the many nuances of the business process services world is that the same cast of characters just can’t stay away from the action.

Many of the same mavericks who helped build this business from the early days of transformational consulting, CoEs and shared services, through to lift and shift BPO, virtual captives, and, more recently the hybrid services delivery model, are now hopping aboard the train that encompasses the As-a-Service ideals.

These ideals that are centered around the benefits of process delivery in the cloud, where unnecessary manual steps are automated, where systems can interact intelligently with each other, where staff think orthogonally about how things should be done, where enterprises can hive off crappy old back office operations and jump into the world of the new with limited pain.  Yes, it’s time to retire ladies and gentlemen – or shall we call the legendary David Poole himself to figure out how to get ahead of this disruptive nightmare?

David will talk about his illustrious background shortly, but I would like to commend his bravery for setting up his own disruptive advisory shop “Symphony Ventures”  based in London, where he has picked up some exceptionally talented guys like David Brain and Ian Barkin, who’ve cemented solid reputations in the world of Robotic Process Automation (RPA) – and are already creating trouble for themselves with some big enterprise clients.

So, without further ado, let’s hear what the Robo Conductor has been up to lately with his foray into the world of entrepreneurialism, and what he thinks about where this train of disruption is really heading….

Phil Fersht (CEO – HfS): David – good afternoon!  So how did you get into this business?

David Poole (Founder and CEO – Symphony Ventures): I started at Price Waterhouse as a consultant back when BPO was in its infancy. My first job was helping BP set up one of their first BPO centers in Caracas. I then worked in sales, transition and delivery and ultimately it was my job to help close down the BPO business because there was a conflict with the audit practice. We sold most of the assets to IBM & Exult. Cap Gemini purchased the Krakow delivery center. That’s how I first met Cap Gemini.

I went on to help set up Cap Gemini’s BPO practice in Europe and the U.S. Over a period of 10 years we executed some of the landmark contracts and acquisitions in the BPO space. I then did a short tour at Serco and then Sutherland where I focused on developing Innovation capabilities, including setting up User Experience Labs, Incubators and a Robotic Process Automation (RPA) Center of Excellence. At the time, the market was just waking up to the opportunity automation and robotics presented. We sold a large contract to a major US corporation which allowed us to work out what it really takes to implement RPA on an industrial scale with a client.

Phil: And what did you learn from that first RPA engagement?

David: We learned a few things. First, RPA is a significant game changer. So significant in fact, it was clear this was going to be truly disruptive to the BPO market as I knew it. Second, we learned that it’s not as easy as it says on the tin. Doing automation right is as much about the fundamentals like great process redesign, as it is about the ‘robots’. Third, by opening our eyes to creative new ways of working, we discovered there were further opportunities in Crowd Sourcing, Impact Sourcing, Artificial Intelligence and the digital sphere in general. And fourth, we saw the greatest opportunity was in combining these new approaches to create a hybrid solution able to address a client’s end-to-end needs. No one was serving this market so it became just too tempting. I left Sutherland and decided to set about building a new business to address this opportunity.

Phil: So what’s the premise behind your new firm Symphony Ventures, David?

David: Symphony Ventures is a new breed of services firm. It’s a consultancy and managed services business powered by “Future of Work” technologies and approaches including Robotic Process Automation, Artificial Intelligence, Crowd and Impact Sourcing. While services firms today say they deliver innovation for their clients, we know that enterprise needs are not being met. Clients are desperate to improve quality, operational visibility and customer satisfaction, while at the same time managing costs. Conventional modes of work, like BPO, are not cutting it – as your research has shown. Global corporations are in need of, and hungry for, better ways of achieving impactful outcomes. We believe there is a new way of working on the horizon. Symphony’s premise is that successful solutions harness a number of these “Future of Work” technologies in a type of hybrid design. What’s more, the hybrid must be customized for a client’s industry and challenges, and the solution must be dynamic and flexible to adapt to a client’s ever-changing needs. We realized, there is really no place to go for that kind of advice, managed services or implementation help. Hence, “Symphony”.

Phil: There was a lot of talk in Chicago (HfS Blueprint Sessions) about the transition the industry is going through. Can you sum up where we are… and where we are going?

David: Over the last 10 years the BPO industry relied on a labor arbitrage model. Even though a lot of new alternative technologies were emerging, it was easier for the BPO industry to continue to use labor arbitrage because it could be implemented quickly without significant systems or process changes. This was clearly valuable to clients because the BPO industry grew tremendously in the last decade. It’s a good business model where the core skill is managing people and providing incremental continuous improvement. But BPO firms were never the innovation, process or technology champions that large enterprises had expected or needed.

Today, however, things have changed. Cloud infrastructure, software-as-a-service and mobile platforms are significantly altering the way companies design, build, sell and support. There is a lot of very capable technology readily available in the marketplace. This has caused business leaders to stand up and say to their providers: “You have done BPO for us for a while now. What else are you going to bring us?” The expectation is that the BPO business will bring creativity, inspiration and change to the table. But the lack of innovation has been palpable. Leaders at client organizations know the new approaches are working. These changes are forcing the BPO industry to take notice. In order to stay relevant, BPO providers will have to start implementing these “Future of Work” technologies and services. As we’re starting to see, this is forcing BPOs to invest and develop on a scale that is unfamiliar to them. This is where we are today.

Phil: And tomorrow?

David: I think we are at a turning point. We’re very excited about the prospect of what’s coming, and Enterprises should be too – there will be a lot more choices available for them. But with choice comes complexity, so we will see a new breed of Pure Play emerging with a specialized set of skills to help clients assess, design and deploy this range of new work types, including automation.

Phil: I have always taken the stance that disruption doesn’t truly happen until the technology is ready. Clearly that is happening in some areas around SaaS. But I do worry about robotics. I think there is a lot of hype in this space. We can see the potential. But is the technology really there today for what we want to achieve?

David: I agree that disruption happens on the back of technology, not hype. And we’re seeing plenty of hype. But, thankfully, we’re also seeing good technology, compelling business cases, and actual deployments. As for “robotics”, I think the term is catchy but confusing. We believe the industry may soon drop the term, but it’s hard to foresee exactly what will replace it. Every Analyst and Advisor has their own set of terms. Furthermore, we’re currently grouping a lot of different types of automation into one big bucket. As our frameworks mature we’ll begin to more clearly distinguish between basic automation we’ve had for decades (scripting, macros, screen scraping), automation that is beginning to emulate human agents (autonomics, transaction processing), and dynamic automation that is on the horizon (AI, cognitive). This entire class of ‘digital labor’ technologies will be hugely disruptive to the benefit of Enterprises. But, not all automation types are equal or ready for prime time, therefore some can interpret that as hype.

It’s important to note, we are careful to distinguish between automating a desktop (scripting, screen-scraping, etc.) and RPA that emulates the end-to-end transactional tasks of agents, creating a virtual workforce. As far as RPA is concerned, there are only a handful of enterprise-ready RPA technologies available today, but we expect many more to be coming.

I would add, there is a real danger in generalizing. We advise our clients not to assume the available tools are similar, because frankly, they aren’t. Enterprises have to be careful or they will make some big mistakes either choosing completely wrong products or underestimating the rigor, design and control required to make automation useful and not dangerous. These mistakes will be bad for the industry as a whole. So yes, I am worried that organizations rush in and start implementing technology without really focusing on proper process and systems design principles. As I mentioned earlier, solid process design must be the foundation on which automation deployments are built.

Phil: Isn’t pricing the use of automation software one of the biggest issues ? For example, David, we keep hearing of some suppliers looking to charge “per robot” like we were doing previously “per FTE”.  Doesn’t that defeat the purpose?

David: Current pricing models do vary widely between vendors. To date, the business case pitch for RPA has been around the number of FTEs being replaced, comparing that savings to the cost of a software license. It’s a convincing argument, but the problem is, RPA is still software, and enterprises procure software as software, and not as human labor replacement – with the knowledge that the marginal cost of each additional license is zero. Furthermore, it’s still early days and each RPA product is different enough that it’s understandable that there would be a wide price range between products.

But to answer your question, yes, we anticipate RPA pricing models will evolve to be more in keeping with the as-a-service or transaction-based pricing models we are seeing for SaaS applications, and even for BPO services.

However, to go one step further, it’s important for buyers to understand that for a large enterprise-wide automation project, the software is actually a fraction of the total cost. It’s the solution design, implementation services and support that make up a majority of the investment. So to focus only on RPA license costs is a bit of a distraction. Plus, the value generated from RPA projects is several times that of a pure BPO project – so in all assessments we’ve performed, the case is clear, automation projects have rapid and convincing ROIs.

Phil: Are outsourcing buyers genuinely ready for this?

David: I think the pioneer buyers are taking a good, hard, judicious look at automation. Some are asking their BPO providers to reveal what they have and others are looking outside at RPA Specific service providers.

In my opinion, outsourcing buyers should pay close attention to this trend. Some very large BPOs are actively evaluating RPA as a way to reduce headcount. Buyers need to make sure they are benefitting from these initiatives.

Phil: What does an “enterprise solution” really look like with RPA?

David: The fact you can install robots on a PC very cheaply is not an enterprise solution and does not comprise a digital workforce. So we need to be careful when we make comparisons or pass judgment between these products. Enterprises need solutions that are reliable, fully tested, controlled and compliant with security protocols. It’s not too difficult to get the software working on a PC for example, but without a proper design and testing process you can imagine that a lot of damage can be done. Secondly, it’s important to think about the end-to-end process. There is a danger that Enterprises end up with a large number of fragmented automated processes rather than a well designed and implemented end-to-end automated process. It may work in the very short term but longer term could lead to significant issues of maintenance and control.

Phil: How will BPO providers adopt automation technology? Do you think they will try to build their own or are they actually going to acquire software firms? How will this play out?

David: First, you have to define the issues. Besides the few firms I was referring to earlier, a lot of BPO players are not really doing modern automation per se; although they are looking and experimenting (and certainly marketing). I fear we will see a number of paper partnerships with players trying to associate themselves with RPA providers because they think that’s a “good” thing to do and there is a Fear of Missing Out (FOMO).

I predict some of these partnerships will work, but most won’t because there is a fundamental conflict of interest between a robotics software provider and a BPO provider. Most BPO providers don’t like investing in technology and they don’t like buying licenses. I think the big companies will make some selective acquisitions once they know what the value of the software is. In the meantime, we’ll see more and more of these paper partnerships forming.

As for building their own, I would be surprised if any BPO homegrown solution is ever considered a reasonable competitor to those on the market.

Finally, the elephant in the room is the RPA Catch-22 for BPOs. Even though robotic automation can create a large impact for the client, providers make money by growing the number of people on staff. So the automation model is cannibalistic to their business model. They will have to balance client satisfaction and margin against dwindling revenue on a per-project basis.

Phil: These labor arbitrage-driven relationships will evolve. Ultimately the decision to automate is going to come from the buyer, right? Are buyers really looking at this? What is their real level of interest?

David: At the Chicago Blueprint Session I got to speak with several outsourcing buyers. They were all frustrated that their providers have not been presenting them with options. Going forward, the question is, are the existing BPOs willing to change their models over time? I think automation will become a challenge to the BPO providers. But I believe they will have to embrace it when pushed by their clients. However, whilst providers may accept revenue decline, they will attempt to maintain absolute margin levels. In doing so they may find they are uncompetitive compared to alternative specialist or pure play automation providers.

Phil: Do you think we need a burning platform for change? Right now there doesn’t seem to be one for many buyers. Everyone wants to drive out more cost and add more effectiveness, but there seems to be a disconnect when you tie that to new initiatives like automation and business platform technology. Do you think automation will eventually set itself alight?

David: I think there is a burning platform, Phil. As your research so often shows, clients expect more from their providers. And, any mature buyer of BPO services has long ago received the step-wise benefit of arbitrage. The slower long-term savings from continuous improvement are not sexy or career-making – and there’s your burning platform. It’s hard to get cheaper than India, so clients are on the hunt for the next step. We’ve clearly seen that automation can create additional savings of 20-50% in some cases, over work already offshored.

Now, I do agree that it is taking a while for the burning platform to crystalize. I think this is for two reasons. First, outsourcing has a 5-10 year maturity cycle – it’s an industry predicated on delivery stability rather than dynamic change. Second, friction between buyers and providers develops because the buyers will always want continued cost reduction and quality improvement. And they want relief from issues around attrition, recruitment and training. But buyer influencing power is strongest every 5-7 years upon contract renewal. So, it takes a while for the pushing to take effect.

Phil: Which model will be the real driver behind automation’s acceptance?

David: I’m much more optimistic about the Global Business Services model. Establishing a capability within the enterprise that has a portfolio of tools at its disposal including automation technology solutions, process as a service, shared services, crowd and impact sourcing as well as conventional BPO. The current bunch of BPO providers just cannot provide this range of choices and the natural conflict of interest between a service provider who wants to make a profit and a customer who wants the best return for their business will ultimately get in the way.

Phil: Do you think we’ll see certain BPOs fade out in the next three years because they don’t adopt the new model?

David: Some of the growth in established BPOs will slow down. Then we will see new entrants coming into the BPO space; some may be real niche players like an HR or AP As a Service provider others may be pure play automation specialists like Symphony. Most will have a technology-driven model using a cocktail of “Future of Work” tools and services that they have integrated to be fit for purpose.

Phil: So outsourcing buyers will have to manage many vendors?

David: Yes. The new entrants will have low cost models that will be attractive. Unless the BPOs can buy them all, there is going to be a broad smattering of providers. Placing GBS or specialist providers as the so called “brokers of capability”, identifying and implementing in very defined process areas.

Phil: David, it appears that many of the existing advisors and consultants are starting to provide advisory services around RPA. What do think about this trend and what do you predict will happen over the next couple of years?

David: This is a sign of the times. Advisors are having to evolve their services to stay relevant in this time of change. This is a wise move on their part, however, in the early stages of this trend, they will struggle to provide informed guidance because they will not have taken part in actual automation design, deployment and support. Many advisors come from BPO, and that is why they are qualified to advise on the topic. Over the next couple of years, we will see natural rotation where experienced RPA practitioners will migrate from delivery to advisory – only then will Advisors be able to speak from experience on behalf of their clients.

Most advisory firms, whilst independent, are not in the business of design, implement and run. They may be able work out the potential for an RPA opportunity, but they will ultimately be handing-off the implementation to another firm which creates a lot of duplication of effort. At Symphony the initial assessment is done at a key stroke level. We provide independent advice and build the design and business case from complete data that can immediately be useful in configuring automated processes without the need to duplicate the analysis

Phil: If you look into your crystal ball, what will our industry look like in five years? How will people be buying services? What types of providers will you see?

David: First, I think we’ll see a lot more specialists, digital services and niche providers. This will drive the standardization of processes. There will be a few places to go to assemble your end-to-end processes, but this will not necessarily be the conventional BPO firm. Of course, there will still be large BPOs handling large managed services businesses.

I think the GBS organization will stitch together traditional processes with the specialist services. The GBS organization will also control its own workflow and analytics on top of all this so it can manage a broader array of providers, be it robot, crowd, impact or artificial intelligence.

We are starting to see that happen today, certainly in the SME space. Look at the accounting software product Xero or the procurement software Coupa. We need to watch companies like this. The day firms like that start providing services on scale is the day we need to sit up and listen.

Phil: Yes, it’s about replacing the old model with more standardized products. Services in the cloud like FreshBooks and LegalZoom which are subscription based and templatized. These new models are creeping into the marketplace and changing things dramatically.

David: Exactly. For large enterprises, it’s all about getting the right price. And having the right people who can work together to achieve all the things they need. People who really understand the services required to achieve their corporate goals.

The concept of “broker of capability” for GBS is an interesting one. Large enterprises will need experts who can pull everything together. This is a promising place for the services industry.

David:  It’s been a pleasure to hear from you again – and good luck with your new venture!

David Poole (pictured) is Co-founder and CEO at Symphony Ventures in London, England.  He can be reached by email here and you can view his bio here.

Posted in : Business Process Outsourcing (BPO), Digital Transformation, HfSResearch.com Homepage, kpo-analytics, Outsourcing Advisors, Outsourcing Heros, Robotic Process Automation, SaaS, PaaS, IaaS and BPaaS, Sourcing Best Practises, The As-a-Service Economy

We’ve been addressing the massive opportunity for the services industry as we move into times of unprecedented complexity.  However, while complexity brings with it the opportunity to solve recurring problems and design new solutions, it also brings new workforce challenges that could prove insurmountable for many enterprises, without a radical rethink with how they design their business operations to get ahead of their markets where technology is increasingly at the center of their business universe.

As we recently discussed, this is especially the case for many Continental European organizations, where rigid labor laws and a pervasive  “job for life” mentality makes it very challenging to find – and then fund – the new talent that can replace legacy staff struggling to meet the business-relevant needs of the modern workforce. We believe this inability to achieve greater workforce flexibility to gain access to new talent and skills is the main reason driving Continental European enterprises to evaluate alternative means to improve processes and drive more efficiency and effectiveness into their operations.  One of the emerging areas where we are seeing a remarkable level of interest is that of Robotic Process Automation (RPA), where enterprises can develop an automation layer upon which to cement its operations and create a true analytical and digital capability for the As-a-Service Economy into which we are venturing.

Enterprises need skills to help them understand their financial data to make better investment decisions in emerging markets, to redesign process flows that get their products to the right markets quicker, to align revenue opportunities with their global supply chain activities, to understand where to make talent investments, based on high-growth market needs. They need to understand the viability of maintaining legacy products at the opportunity cost of investing in emerging product areas and other innovations. This means they need an operations infrastructure that has the process standards to help extract this data, with the right people that have been trained how to use it effectively – and can develop these skills on a continual basis.

However, if you cannot make the swift changes you need to augment your overall base of operations talent, surely the advent of effective Robotic Process Automation (RPA) platforms is providing an increasingly appealing alternative path for many enterprises to take: when you cannot augment your process people, why not replace them with automated process platforms? And, as the following chart clearly shows from our new global study conducted with KPMG, emerging interest in RPA is already prevalent in eight-out-of-ten European enterprises:

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The difference today is there is a provider side gearing up to deliver RPA platforms, with several enterprises piloting them

The service provider community is ready to respond to this increasing demand, and we have recently interviewed 16 buyers in various stages of successfully pilotting RPA (stay tuned for the results, but we’re already seeing significant progress being made).  Capabilities to solution, implement and manage RPA deployments are becoming widespread in Europe (and globally) as we captured in the recent 2015 HfS Robotic Premier League of 20 BPO service providers.  Europe is also proving to be a hotbed for start-ups at  RPA specialist services including: Genfour, Symphony Ventures, Thoughtonomy and Virtual Operations who are all building solutions that respond to many of the particular labor challenges present in those markets today.

All of these service providers are able to tap into a growing community of leading independent RPA software vendors in BPO and IT including the likes of: Arago, Automation Anywhere, Blue Prism, IPsoft, NICE, Redwood, and UIpath as well as proprietary RPA tools from service providers such as Cognizant, IBM, Infosys, and TCS amongst others.  In fact, many of these independent RPA software vendors are based in Europe which creates a reinforcing ecosystem to generate these new sources of capability, skills and savings required by European enterprise clients.

The Bottom-line:  RPA could well be delivering a whole new alternative to Labor Arbitrage – and faster than we think

If the skills fail, but the technology is adequate, we believe we will see entire functions being replaced by digital portals, automation tools and functional business platforms that can get the job done in a low-cost, standard fashion.  However, enterprises really need to develop a firm foundation for Robotic Process Automation to standardize processes and build the base upon which to develop their future operations.

The advent of the cloud, mobility and social media have changed the way we will forever do business, but we are already adapting to these new environments and starting to address what needs to be done to plug the gaps.  Facebook, LinkedIn and Twitter are all decade-old developments and have changed little in recent years, with little further dramatic disruption on the horizon with regards to social media and communication.  Mobility apps and capabilities are all mainstream today and the cloud infrastructure capabilities of all the major ITOs and SaaS providers are pretty robust, scalable and proven.  We’ve emerged well from these “disruptions” to operate in much more global, virtual, adaptive playing fields.

Next on the horizon is the need to streamline, mine and interpret our data better – and we need to automate processes more effectively in order to get better data from them and apply them to our business needs.  This is where we need to upskill – in process redesign, in managing and enabling analytics tools, in driving advancements in automation and cognitive platforms more effectively.   And it is pretty clear – especially in Europe – that much of this help needs to come from external service providers, RPA specialists and advisors all skilled in moving clients into an automated process platform.

Tomorrow’s successful enterprise is as much about getting its labor and automation strategy right, as it is about getting its technology and business strategy primed for their markets.  So make way for the emerging As-a-Service model where these capabilities can be provided on-demand to plug these gaps.

Click here to download the full (freemium) POV, “Europe: If you can’t do Arbitrage, then Automate”, authored by  HfS analysts Phil Fersht and Charles Sutherland

Posted in : Business Process Outsourcing (BPO), Cloud Computing, Digital Transformation, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, Outsourcing Advisors, Robotic Process Automation, smac-and-big-data, Sourcing Best Practises, Talent in Sourcing, The As-a-Service Economy, Value Beyond Cost Study 2015

The IT and business services industry is now navigating unchartered waters, where the common challenge for today’s enterprises is simple:

“How can we design our businesses and operations to run more effectively, so we’re geared up to get ahead of our markets where technology is increasingly at the center of our business universe. How can we understand data to respond to our market needs, and how can we be smarter and more creative about how we operate and go to market?”

The answer is pretty straightforward, really – go get the help you need to be this effective, whether you hire it, retrain what you have, outsource it, or simply buy on-tap consultative expertise.

We’ve recently discussed the fact that many service providers are struggling to find this talent, while many buyers also need real help to access business-relevant skills.  So let’s now look at the great intermediary which can readily plug those talent gaps for a paltry $500/hour… the consulting firm.  Surely these MBA-qualified guys and gals have these skills in spades for the needy enterprises ready and willing to pay for them?  Let’s see what came out of our soon-to-be published study, conducted with KPMG, that covered the views of 492 industry stakeholders, which included 154 advisors discussing their major challenges:

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Dallas, we have a problem: Over half of today’s advisor shops are struggling to upskill their existing talent

This, to me, is the greatest cause for concern in our industry.  Consultants are supposed to be like doctors – they need to use the latest tools, methodologies, technologies and knowledge at their disposal to help their clients.  They are supposed to be trained to stay ahead of their fields of specialty to push their clients to perform at the peak of their abilities.

However, when two thirds (65%) of consulting firms are struggling to hire in business-relevant talent and 54% of them upskilling what they already have invested in, then, Houston, we have a problem.  Or should that be “Dallas”, as that’s where most of them seem to stem from these days 🙂

Unspectacular outsourcing deals have created a negative mindset from enterprises towards advisors

Another area which our recent study fleshed out was the fact that two-thirds (67%) of advisors are tarnished by the fact that enterprises are reeling from feeling let down by their outsourcing experience – the very experience advisors previously developed their reputations selling. Why call the doctor for more help after they offered bad advice the first time around?

Advisors need to address their own talent crises as aggressively as their clients and the service providers need to. Too many entities in our industry are still living in the good old days, where providers and advisors got fat and happy feeding off the old scale beast of global labor arbitrage and cranking transactions. Those days are fast running out and a slimmer, fitter advisor is required which can roll their sleeves up and help their clients get ahead of their markets.

The Bottom-line:  There is a massive opportunity for those advisors which can reinvent themselves to deliver “Expertise-as-a-Service”

Here are some potential steps advisory firms can take to broaden their skillsets and business relevant to enterprise clients:

Stop hiring so many average consultants who “know the process”.  The science of running operations at scale is a commodity skill-set these days.

Stop hiring so many consultants who “know Big 4 culture”.  The amount of times I have seen the Big 4 shops only wanting to interview candidates who have experience of the Big 4 legacy way of doing things is depressing.  These guys will never change if they don’t have the courage to diversify their talent mix beyond the white shoe brigade.

Stop hiring so many white-haired grizzled IBM and EDS veterans.  The outsourcing business will forever be stereotyped by these individuals if we can’t break from the old school meeting-room negotiator jockeys, whose focus on number-crunching scale deals is a million miles from any genuine “business transformation”.

Start hiring practitioners.  People who really understand process and how to enable it more effectively with better technology are generally found on the buyside – people who live and breathe this stuff. And many of these people are not particularly well paid and may relish the increased salary and alternative career path.

Start hiring more millennials. People who have grown up in social media and mobile technology who can adapt their digital minds to the consumerizing needs of the enterprise.  Yes, a challenge in today’s enterprise model, but when you need to be expert on digital transformation and as-a-service technology, you need people who have this embedded into their DNA.

Change (somehow) the old $500/hour legacy consulting model to “Expertise as-a-Service”.  Just like the outsourcing FTE model, this needs to change and the focus must shift to outcomes.  Start figuring out how to leverage virtual expertise-on-subscription models for clients, where they can pay for annuity-based relationships that are affordable, scalable and “as-a-service”.  Research firms already service most their clients on these types of models, however, many fall short by lacking the right mix of experts to support clients and rely on drive-by consulting to get through the day. Smart consultants can change all that.

In short, this is all about the advisory industry getting ahead of the shift to the As-a-Service Economy, by adopting more “As-a-Service” delivery themselves.  Again, it’s about shedding the bad habits picked up on the 90’s and 2000’s and making the brave changes to invest in skills, more than just scale.

Posted in : Business Process Outsourcing (BPO), Digital Transformation, Global Business Services, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, kpo-analytics, Mobility, Outsourcing Advisors, smac-and-big-data, Sourcing Best Practises, sourcing-change, Talent in Sourcing, The As-a-Service Economy, the-industry-speaks, Value Beyond Cost Study 2015

Rick Simmonds, Founder and Managing Partner, Aecus

We recently had the pleasure of hearing from Alsbridge’s CEO, Chip Wagner, regarding his firm’s organic expansion plans into Europe as his firm cements its growing reputation in the sourcing advisory market.  But what about the  UK advisory firm formerly known as “Alsbridge Plc”?  Answer, it renamed itself “Aecus“, named after one of the sons of Zeus, renowned for wisdom and piety, and his fairness as a judge. He was a resolver of disputes between the gods.

So we caught up with the firm’s founder and managing partner, Rick Simmonds, to find out more about his renamed business, the split with Alsbridge mothership, the renewed focus on the new firm and whether their famous “speed dating” approach to provider selection is effective for clients…

Phil Fersht (HfS): Good morning Rick – can you share your background with our readership? When did you get into this outsourcing business?

Rick Simmonds (Aecus): I’ve been in outsourcing for a long time. I started in the late 1980s with Andersen Consulting in the pre-Accenture days, working for David Andrews who went on to set up Xchanging. Then I helped Ernst & Young set up its outsourcing practice in the 1990s. They sold this division to Cap Gemini; which I left in 2002 to set up ALS Consulting.

Ben Trowbridge was a partner of mine at Ernst and Young; he left to start Trowbridge Group. We merged our two brands to become Alsbridge. Two years ago Trowbridge sold his firm to a private equity group and left last year.

We were structured a bit like a Big Four partnership, just two separately owned businesses. We were wholly owned in each country and shared a brand and IP. That’s the arrangement that came to an end. In December last year Alsbridge PLC left the Alsbridge group and rebranded as Aecus, a consulting and benchmarking firm providing tailored sourcing advice to its clients across Europe.

Phil: So what was the thinking behind the Alsbridge split, Rick?

Rick: Two things really, Phil:

1. The management structure. Neither side had control of the other. That created a control issue, which we happened to trigger. We couldn’t be sure there wouldn’t be a difference of view of the future in the future.
2. A difference of focus. We both focus on outsourcing and shared services advisory services. We have a strong BPO heritage, they have a strong telecom focus which we don’t have. So there were some slight strategic differences.

But there was no particular problem – the decision to separate was really just an evolution, things changing over time.

Phil: What geographies are you going to focus on? UK? Europe? Are you going to enter the US market?

Rick: Our focus is NOT just the UK, it’s the entire European market. Many of our hot spots are outside the UK; we are strong in places like Switzerland and the Nordic and Benelux countries and that will continue. We recognize the complexities of the European market.

We have no intention of entering the US market. We have a European heritage with European DNA. We have the biggest and most experienced team in the market from that point of view.

Phil: As you look at the current level of demand in the UK and Europe, we see a lot more BPO deals popping up. What does your current business look like? Is it a mix? More IT? Or are you getting into the BPO growth areas?

Rick: Traditionally our business has been 50 percent BPO and 50 percent ITO and it’s that way today. We have seen a lot of BPO activity recently as well and that’s good strength for us; our heritage has a strong emphasis on BPO.

The current business is very much multi-country–not necessarily global but within the European countries. That’s a strength of ours too.

The other thing we are seeing is second and third generation ITO deals coming through more and more, so that’s becoming more of a focus for us as well. This is how the market has changed.

We see some pretty big deals coming through in both ITO and BPO. There’s a lot of churn.

Phil: So, Rick.. do tell us about the “speed dating” we’ve been hearing about. Is it a one-off thing one of your employees dreamed up or an official company methodology?

Rick: Ben (Trowbridge) and I developed it years ago and we’ve been using it on both sides of the Atlantic for quite a long time. It will remain part of the Aecus methodology in a slightly different version going forward. We call it “Supplier Scan”, which focuses on the RFI part of the methodology. The point is to help clients quickly focus down on the few players they should pay proper attention to in the buying practice.

Here’s how it works: Instead of preparing a document-based RFI, which we found isn’t particularly helpful since we already have most of that information and it doesn’t differentiate organizations really well, we bring providers into short workshops with a client. We might go through 8, 10, 12 organizations.

The point of the session is not to test their fact base but instead to test the chemistry of the two organizations. We want to see to what the degree the provider can demonstrate a reasonable understanding of what the client is looking for. Can they create empathy? How would they work with the client? Will and how will they customize? That’s the process we have been using.

What have you heard about this?

Phil: There were a couple of disgruntled providers who went through the process; they were unhappy they were deselected!

Rick: The problem with this is it gives everyone an equal chance. Clearly, if you are giving 10 organizations an equal chance and the buyer picks four to go through the selection process, then you can have six who are disgruntled.

The advantage to providers over the traditional RFI process is it gives them an opportunity to engage. It might not work out for them. But they are not just thrown into a document-based process they can’t control.

Secondly, it doesn’t take a huge amount of effort for them either. They are coming to a two-hour workshop. As long as they bring people who are knowledgeable and engaged about what they do, they don’t need much customization. We provide a briefing on the client’s business context, challenges and constraints. Then they bring an expert, multi-disciplined team who can engage knowledgeably with the client about possible solutions and approaches. It is short, sharp and focused.

So there are two advantages to this methodology:

1. Providers actually get the chance to engage with the executives of the client.
2. They aren’t locked in an office preparing RFI documents for ages.

This process is clean and efficient. Personally I would prefer that to sweating over documents and sending them to be analyzed in isolation.

Phil: So there is no documentation at all? It’s just literally a speed dating situation?

Rick: It varies, to be honest. We’ve had providers make formal presentations before they engaged in discussions; it was a combination of the two. We are not fundamentalist about this: it’s what works for the client. We customize this for the client for whatever they want to do. We are always client-driven in this process. We don’t make down selection decisions for our clients, we just facilitate the process. We have never made any of these decisions for our clients; we just advise the community.

Phil: Please look into your crystal ball for 2015. What sort of business do you think you will be engaged in this year? A lot more BPO or will you be pulled into other areas like robotic automation?

Rick: Both actually. We carried out a lot of research into  innovation in the outsourcing market over the last year. The Alsbridge Innovation Awards, which were purely an Alsbridge Europe initiative and have now been re-branded as Aecus, were well-subscribed last year and will happen again this year. Last year we had 50-odd submissions and gave out 15 awards in the areas of digital innovation, robotic automation, etc.

There’s a convergence now between BPO and ITO and the innovative technologies providers are using. We are trying to position ourselves to be in the forefront of that. One of the reasons we sponsor these awards is because it helps us learn and understand what’s really out there and therefore helps us advise our clients appropriately. So that will be the main thrust of what we are doing.

We have clients now in their second and third generation of traditional outsourcing; they already have good experience going through the process, so they are not looking to organisations like us for help with the basics of that any more. We now have to provide relatively forward-thinking, high-quality boutique services to differentiate ourselves from in-house providers or the contracting market. Part of that is to understand the supplier market, where it’s going and what can be delivered. That’s where our focus is going to be.

Phil: Rick – it’s been a pleasure and am sure many of our readers will enjoy reading your views.  Good luck with the new venture!

Rick Simmonds (view bio) is Founder and Managing Partner for UK-based sourcing advisory firm Aecus.  You can email him here.

Posted in : Business Process Outsourcing (BPO), HfSResearch.com Homepage, IT Outsourcing / IT Services, Outsourcing Advisors, Outsourcing Heros, Robotic Process Automation, Sourcing Best Practises

We’ve talked a lot about the massive opportunity for the services industry as we move into times of unprecedented complexity.  However, while complexity brings us much opportunity to solve problems and design new solutions, it also brings skills challenges that could prove insurmountable for many, without external support.

New data findings from our soon-to-be released report “From Human to Digital, the Future of Global Business Services”, conducted with KPMG, covered 492 industry services stakeholders and reveals some marked regional differences, when it comes to enterprises better aligning internal operations  with their corporate goals and directives:

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Better IT, service provider collaboration and talent are the missing ingredients for European enterprises

Settling for the status quo is clearly not a viable option for 43% of European firms viewing a formal change management effort, or simply bringing in new talent, as essential actions to get themselves out of their current predicaments to get better value from their operations. While the need for better IT systems from all global enterprises comes as no surprise, the open admission, from more than half of European enterprise operations executives that they would benefit greatly from better collaboration with their service providers (compared to a third of their North American counterparts), brings us to the conclusion that the majority of large-scale European firms are in dire need of third party help to achieve better value from their existing operations.

What’s more, the real number of European firms in need of external help is probably much greater than this, and the fact that half are already acknowledging this is worrying.  Clearly, rigid labor laws and the “job for life” mentality is still besetting many European enterprises, which this survey data substantiates. There clearly is a need for more flexible labor in many European countries, and the ability to source skills “As-a-Service” from providers is becoming increasingly attractive to those firms tired of being held hostage by stagnant workforces unwilling to change with the times.  Simply put, driving change into your talent base is hard, and surely driving many firms, eager to roll with the times, to examine more flexible As-a-Service models to be more effective.

The more we struggle to improve our talent, the greater the risk we’ll simply digitize it

The talent crunch is prevalent right across our global industry, with services  providers freely admitting that staying ahead of the talent curve is their number one challenge, as the demand for addressing ever-complexifying corporate needs is already reaching unprecedented proportions.  We need skills to help us understand our financial data to make better investment decisions in emerging markets,  to redesign process flows that get our products to the right markets quicker, to align revenue opportunities with our global supply chain activities, to understand where to make talent investments based on high-growth market needs.  We need to understand the viability of maintaining legacy products at the opportunity cost of investing in emerging product areas and other innovations.  This means we need operations that contain the technology and process standards that can extract this data… with the right people that have been trained how to use it effectively – and can develop their skills on a continual basis. We need skills and infrastructure that can support our business in an As-a-Service fashion… in an As-a-Service Economy.

My fear is where enterprises fail to develop their capabilities, they will simply settle for “good enough” and take as much cost out of them as they can. It’s like when most enterprises cut their HR departments down to the bone in the 90’s and 2000’s as they simply were not getting value out of them – they’d become transactional functions which kept things functioning, as opposed to really performing for the business.  The same is already happening in other operational functions, such as IT, finance and procurement, claims processing and data management etc., where many enterprises are simply not getting enough value.  If the skills fail, but the technology is adequate, we’ll see entire functions being replaced by digital portals, automation tools and functional platforms that can get the job done in a low-cost, standard fashion.  Enter any major enterprise today, and I guarantee you their HR function is likely to be a portal with links and a 1-800 number to call on the offchance you can’t get services executed for you automatically.  What’s preventing firms doing this for other operational functions, where automation becomes a more effective option for them?

However, I do not see this digitization of human services happening  as ruthlessly as what’s transpired in HR – we’ve been through many inflection points in history, where the skills requirements evolve with changing needs and demands and today’s era of new digital capability is no exception.

The Bottom-line:  We’re already adapting to the disruption,  now its about skilling up to get the value out of it

Yes, the advent of the cloud, mobility and social media have changed the way we will forever do business, but we are already adapting to these new environments and starting to address what needs to be done to plug the gaps.  Facebook, LinkedIn and Twitter are all decade-old developments and have changed little in recent years, with little further dramatic disruption on the horizon with regards to social media and communication.  Mobility apps and capabilities are all mainstream today and the cloud infrastructure capabilities of all the major ITOs and SaaS providers are pretty robust, scalable and proven.  We’ve emerged well from these disruptions to operate in much more global, virtual, adaptive playing fields.

Next on the horizon is the need to mine and interpret our data better – and we need to automate processes more effectively in order to get better data from them and apply them to our business needs.  This is where we need to upskill – in process redesign, in managing and enabling analytics tools, in driving advancements in automation and cognitive platforms more effectively.   And it’s pretty clear – especially in Europe – that much of this help needs to come from external service providers, advisors and contract staff.  Tomorrow’s successful enterprise is as much about getting its labor strategy right, as it is getting its technology and business strategy geared up in the right way.  So make way for the emerging As-a-Service model where these skills can be provided on-demand to plug these gaps…

Posted in : Business Process Outsourcing (BPO), Cloud Computing, Digital Transformation, Global Business Services, HfSResearch.com Homepage, HR Strategy, IT Outsourcing / IT Services, kpo-analytics, Mobility, Robotic Process Automation, SaaS, PaaS, IaaS and BPaaS, smac-and-big-data, Sourcing Best Practises, Sourcing Locations, sourcing-change, Talent in Sourcing, The As-a-Service Economy, the-industry-speaks, Value Beyond Cost Study 2015