The Services Research Company
Is your Digital Strategy achieving Cohesion and Coherence?
Phil Fersht Chief Analyst & CEO, HfS [email protected]
NASSCOM BPM SUMMIT, September 22ND 2016
Overview:• 20 years’ business experience in the global IT and business process
outsourcing and shared services industry • Coined the “As-a-Service Economy” in 2014• Industry analyst, author, speaker, strategist and blogger• Advised and cogitated on 100’s of global IT services, BPO and shared
services engagements• Meddles with the largest global network of enterprise services and
operations professionals
Career Experience:• Practice Lead, IT Services & BPO Research, Gartner, Inc• Global BPO Marketplace Leader, Deloitte Consulting • Consulting Practice Lead, IDC Asia/Pacific• IT Markets Practice Lead, IDC Europe
Education:• BS with Honors in European Business & Technology, Coventry University,
United Kingdom • Diplôme Universitaire de Technologie in Business & Technology from the
University of Grenoble, France
Phil Fersht, CEO and Lead Analyst, HfS Research
Get tweeting!
#nasscombpm
© 2016 HfS Research Ltd.
…With a More Serious Side Too! www.hfsresearch.com
• World’s largest taxi company owns no Taxis:• Uber• The most popular media owner creates no content:• Facebook• Largest accommodation provider owns to real estate:• Airbnb• Largest phone companies own no telecom infrastructure:• Skype, WeChat• World’s most valuable retailer has no inventory:• Alibaba• Fastest growing banks have no actual money:• SocietyOne• The world’s largest movie house owns no cinemas:• NetFlix• Largest software vendors don’t write the apps:• Google• The most popular emerging research firm doesn’t sell research reports:• HfS
Data is eating the world!
© 2016 HfS Research Ltd.
Value LeversOf
As-A-Service
The What: The Modern Business Infrastructure
Data
DataData
Data
Data
Data
IntelligentAutomation
Efficiency, Labor, Data Augmentation
Software Platforms
Standardize processes, Scale, Write Off Legacy
Self Learning,Cognitive
Continuous Process Improvement, Innovation
Core Digital
Holistic View of CustomerOneOffice
Cost/Expertise/Scale
GlobalLabor
Shared Services, GICS
Centralization/Efficiency
© 2016 HfS Research Ltd.
The Innovation Killer Org Chart
© 2016 HfS Research Ltd.
8. Plug & Play Digital ServicesPlug into “ready to go” outcome-focused, people / process / tech solutions with security measures and consumption-based pricing
The How: The “As-a-Service” Approach to Operations
The AS-a-Service Economy
1. Write-off LegacyAdopting mindset to overhaul obsolete processes and write-off technical debt. A preparedness to invest in change
2. Design ThinkingDefining and prioritizing outcomes and “working backwards” to re-invent processes
3. Brokering CapabilitySource and manage expertise by pulling all available levers to optimize capability gaps
4. Collaborative EngagementIdentifying and motivating suppliers as business partners to achieve desired outcomes
5. Intelligent AutomationEmbracing automation and cognitive computing to augment human performance
6. Actionable & Accessible DataApplying forward-looking insights to real-time data with meaningful business context
7. Holistic SecurityProactively managing data across the entire service chain of people, systems & processes
Chan
ge
Idea
lsSo
lutio
n Id
eals
© 2016 HfS Research Ltd.
C-Suite Directives on Operations: Doing more, faster, with what we have
Drive down operating costs
Cost effective, flexible services
Better address risk and regulation
Accelerate speed to market with new products
End-to-end process optimization
Real-time data-driven insights
Improve the quality of operations talent
Restrict the recruitment of labor where possible
Invest in process automation and robotics to reduce reliance on labor
62%
49%
29%
29%
26%
24%
18%
13%
11%
33%
45%
40%
31%
48%
43%
30%
23%
25%
19%
22%
21%
24%
37%
29%
26%
12%
18%
5%
9%
16%
35%
38%
Mission Critical Increasingly Important Emerging Not a Directive
How critical are the following C-Suite priorities/directives, in terms of shifting from a Cost Focus to a Value Focus with your operating model?
Source: HfS Research and KPMG LLP, 2015Sample: 168 Enterprise Buyer Executives from “Achieving Value Beyond Cost” Study, 2015
Digital and Cognitive are Driving Enterprise Operations
Deploying intelligent operations to align the front office with core business will have the biggest impact
Cognitive computing is becoming a critical component of our future operations strategy
New digital technology initiatives are radically changing the way we manage business operations
24%
28%
32%
46%
44%
43%
70%
72%
75%
Somewhat Agree Total
Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371
Senior Management Driving Customer First Thinking – but they are unsure who will be their partners Please indicate whether you agree or disagree with the following statements about YOUR Intelligent Operations mind-set today
Sourcing of As-a-Service models will be delivered by the existing landscape of service providers
Sourcing of As-a-Service models will largely be delivered by a constellation of new providers
Sourcing of As-a-Service models will be driven by an operations-first, or “process first” strategy
Moving to Intelligent Operations will allow our process interaction costs to decrease dramatically
Sourcing of As-a-Service models will be driven by a “customer first” strategy
31%
34%
38%
42%
48%
53%
55%
53%
50%
45%
16%
11%
9%
9%
7%
Agree Neutral Disagree
Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371
The Path: The “Intelligent OneOffice” emerges from Digital + Automation
The Digitally-Driven Front Office
Mobile, Social/Interactive, Real-time actionable data, Design Thinking
Digital UnderbellyIntelligent Automation of manual processesDigitization of documentsIoT
Intelligent Digital Support FunctionFront office-aligned IT, Finance, HR, Procurement, Supply Chain
Intelligent Digital Processes Predictive & Operational Analytics, Cognitive.
The Customer-first Digital Organization
The Enabling Intelligent OneOffice
The Nervous System, incepting & Processing
all Inputs
The Neural System
The Circular System
© HfS Research 2016 (Proprietary)
A state of non-denial unravelling? Greater urgency to change the model from LeadershipHow quickly will your core enterprise functions adapt to become Intelligent Operations?
We are already there
Within 2 years Within 5 years Within 10 years Never
6%
50%
37%
6%2%
7%
36%
44%
9%
4%
SVP + VP and Below
Over half of upper management (56%) want
change within 2 years
Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371
Issue: Most Buyers view Service Providers as Execution Shops…
A vital partner that plugs critical gaps in terms of skills, global scale, domain knowledge and
technology
A great vehicle to drive down costs and improve efficiencies
An access to cheap labor, but little value beyond that
General disappointment
28%
52%
17%
3%
Source: The HfS Working Summit for Service Buyers, December 2015 (Sample 53 enterprise outsourcing leads)
Buyers: What do you really think about service providers?
© 2016 HfS Research
Source: “Making that leap from effective to strategic BPO/BPM" Study, HfS Research 2016Sample: 343 Industry Stakeholders (Enterprise Buyers = 115, Advisors = 55, Service Providers = 173)
Barely half of today’s buyers are looking to their providers for value beyond operational support
Delivery center locations
On-site account managers
Sourcing “fresher” talent
Continuous improvement programs
Consulting skills for process redesign/reimagining
Data scientists and analytics skills
Cognitive computing platforms
Process automation tools
Design thinking capability (e.g., methodologies, tools, expertise)
25%
27%
28%
71%
86%
95%
89%
91%
89%
10%
30%
31%
71%
83%
90%
72%
90%
83%
14%
16%
17%
34%
39%
43%
44%
47%
48%
Buyers Advisors Service Providers
Which capability attributes from service providers will be the important 2018? (more important or much more important)
© 2016 HfS Research
Are Providers avoiding Making Automation Investments? What are the three most important investments that you want a BPO service provider(s) change to make between now and 2018?
Advertising and marketing in your own geographies
Changing out the leadership of the BPO service providers
Investing in “highly verticalized” subject matter experts
“Cannibalizing” revenues on existing FTE contracts by adding automation to solutions and passing savings to existing clients
Building proprietary technology tools for process automation and analytics delivery
Training solution architects and client teams in Design Thinking methodologies
Expanding the pool of skilled analytics professionals
Partnering with the leading third party process automation and cognitive engines
42%
37%
38%
21%
5%
42%
5%
1%
3%
10%
17%
47%
17%
17%
47%
43%
0%
15%
26%
29%
34%
34%
36%
38%
Buyer Advisor Service Provider
Source: “Making that leap from effective to strategic BPO/BPM" Study, HfS Research 2016Sample: 343 Industry Stakeholders (Enterprise Buyers = 115, Advisors = 55, Service Providers = 173)
The Service Providers will bifurcate into two groupings
Back Office OutsourcersEfficiency, Automation, Labor Arbitrage and Scalability
OneOffice EnablersData Orchestration and Human Collaboration
© 2016 HfS Research
Many Buyers want their Service Providers to work with themHow would you improve the quality and outcomes from your current service relationship?
Letting go and giving up more higher-value work to our service provider(s)
Threatening to entertain competitive bid(s) to force your current provider(s) to up their game
Bring back more work in-house and improve it ourselves
Roll out an automation strategy in tandem with our provider
Bring in a specialist advisor to recalibrate our relationship(s) and get us on the right course for As-a-Service
Not a lot – we paid for “cheap and cheerful” and that’s what we’re stuck with
28%
13%
9%
45%
4%
2%
Source: The HfS Working Summit for Service Buyers, December 2015 (Sample 53 enterprise outsourcing leads)
Work as a team: Heal the disconnect and unrealism between leadership ambition and middle management operational challenges... Internal and external
Think big! with an attitude to write-off legacy. Incremental fixes clearly do not work – for all stakeholders. Stop retro-fitting!
Become a student again: This is about humans creating more creative value, finding more problems through collaborating and learning how embrace the Digital and Intelligent Automation tools available
This is not about jobs going away, it’s about the nature of work changing. A third of today’s workforce is made up of Millenniums seeking different work experiences
To create a new experience in the industry and for results… we must be brave to begin writing-off or legacy or we’ll never evolve…
Actions to drag ourselves into the As-a-Service Economy
Welcome to the Panel!
Ian Maher, Hanover Insurance
Jeremy Nixon,NYK Europe
Stephen ManningDual Group
What does a "Digital Strategy" mean to your organization?
How easily could your organization be "Digitally Disrupted" by a new age competitor? What measures can/should you take to safeguard such potential disruption?
How on earth should enterprises coordinate all the value levers of As-a-Service?
© 2016 HfS Research Ltd.
Value LeversOf
As-A-Service
The What: The Modern Business Infrastructure
Data
DataData
Data
Data
Data
IntelligentAutomation
Efficiency, Labor, Data Augmentation
Software Platforms
Standardize processes, Scale, Write Off Legacy
Self Learning,Cognitive
Continuous Process Improvement, Innovation
Core Digital
Holistic View of CustomerOneOffice
Cost/Expertise/Scale
GlobalLabor
Shared Services, GICS
Centralization/Efficiency
Can we really break down the barriers between front and back offices? And what role does BPM services play as a driver / enabler?
The Path: The “Intelligent OneOffice” emerges from Digital + Automation
The Digitally-Driven Front Office
Mobile, Social/Interactive, Real-time actionable data, Design Thinking
Digital UnderbellyIntelligent Automation of manual processesDigitization of documentsIoT
Intelligent Digital Support FunctionFront office-aligned IT, Finance, HR, Procurement, Supply Chain
Intelligent Digital Processes Predictive & Operational Analytics, Cognitive.
The Customer-first Digital Organization
The Enabling Intelligent OneOffice
The Nervous System, incepting & Processing
all Inputs
The Neural System
The Circular System
© HfS Research 2016 (Proprietary)
What will be the true impact of Intelligent Automation and Digital on jobs in our industry? Should we be worried?
How should we craft careers for our talent? Can we become an exciting industry for the younger generation?
My BPO role is fundamental_x000d_to business
performance
BPO today is an exciting career choice
BPO has a defined career_x000d_track and a certain
future
63%
13%13%
69%69%69%
83%
53%
34%
91%
76%
49%
To what extent do you agree / disagree with the following? (Agrees to a great extent)
1 in 8 professionals new to BPO view an exciting and long-term career path
< 2 Years 2 to 5 Years 5 to 10 Years > 10 Years
Source: ”Talent in BPO" Study, HfS Research 2015Sample: Enterprise Service Buyers = 192
Experience:
Top skills in 2020 shift to critical thinking, creativity and Emotional Intelligence…
Source: Future of Jobs Report, World Economic Forum, 2016
What’s really overhyped in this market – and what could use more hype?
© 2016 HfS Research
Source: “Making that leap from effective to strategic BPM/BPM" Study, HfS Research 2016Sample: 343 Industry Stakeholders (Enterprise Buyers = 115, Advisors = 55, Service Providers = 173)
Automation over-hyped. Buyers like Innovation Centers!
Innovation centers
Cognitive Computing
Platform based BPO
Analytics
Gain-sharing / outcome based contracts
Design thinking
Process Automation (RPA)
21%
20%
12%
4%
15%
12%
17%
21%
7%
7%
17%
21%
7%
17%
3%
6%
10%
11%
11%
18%
25%
Buyer Advisor Service Provider
What trend do you see as being the most over-hyped in the BPM marketplace of 2016 (pick one)?
And finally… If you could be the Emperor of Outsourcing for one week, what is the ONE change you would command on our industry?