At HfS Research, we’re growing fast in a very competitive and volatile market… and with growth comes change – but change is always good if you ask me! The most fun in jobs is when you have changes – you learn new things, get new ideas, and you meet new people to help accommodate the change.
HfS is always on the lookout for serious talent that can help our clients become even more successful. So happy days when I heard that some serious quality was on the lookout for some new chapter in her life. Sunayana Hazarika has joined per January, and today I wanted to give you a little more background about her.
Bram Weerts, Chief Commercial Officer, HfS:
Bram Weerts, Chief Operating Officer, HfS Research: Sunayana, can you share a little about your background and why you have chosen Marketing and Brand Reputation as your career path?
Sunayana Hazarika, Senior Brand Strategist at HfS Research: As the saying goes” Everything happens for a reason,” the economic recession in 2008 changed my career path. From an engineering graduate to a remote executive, my first job in TTK Services introduced me to the world of marketing. I was facing global clients- the who’s who of the business world from renowned bloggers to technology founders, and helping them in doing Digital marketing (web marketing is what it was called then). The varied requests from clients opened the door for understanding SEO, content marketing, social media promotions, brand messaging, to even executing fundraising events. This inspired me to pursue my MBA in marketing and soon after explored both services marketing and product marketing of software enterprise solutions.
What draws me towards Marketing is the very nature of it – dynamic, fast paced and the fact that it is centered around the relationship between People’s awareness, product/service innovations and the value generation. I am intrigued by how brands impact the market. To me, Brand Management is like nurturing a sapling to grow and proliferate into a forest. The right and proper projection of the organization is the heart of Brand Reputation. A big and serious task, but with the passion and right intention, we can see the results. All this put together has compelled me to make marketing a career and more so in brand management.
Bram: Why did you choose to join HfS?
Sunayana: HfS Research is an industry leading research and data analytics firm, renowned as a trusted voice with edgy insights and disruptive viewpoints. They do not shy away from raising real issues even if it bruises some egos. I echo the same spirit. The organization has an impressive and matured outlook focusing on fostering an optimized business function, fully empowered team and delivers maximum value for the global community of clients. This provides me an opportunity to unearth optimum potentials to scale heights of success. Moreover, the fact that it analyzes cutting-edge technology and services like Digitization of business processes and Design Thinking, Intelligent Automation and Outsourcing makes it even more viable for a marketer to be on top of latest market trends. And to top it up is the pleasure of working with some of the most intelligent and good people on earth. Trust me; I have never been more content.
Bram: What are the areas of focus for driving success in your current role?
Sunayana: The success of marketing in a Research, Data Analytics, and Strategy firm lies in enabling the “informed decision making” by providing the right information at the right time to the right set of people. For this, it is crucial for Marketing to merge into the organization’s core objective and culture. This enables outlining the appropriate value proposition to the audience. It is also equally important for marketing to connect with the audience to know their expectations and be abreast with the market. The focus on maintaining a symmetry between the two approach creates a two-way network for shared experiences and true value projection.
Bram: What trends and developments are capturing your attention today?
Sunayana: The world is moving towards digitalization and the marketing function of an organization, as a harbinger is expected to lead the way. Mobile, Social Media, Analytics, and cognitive automation are breaking the path for an individualistic approach towards interacting with the target audience. We as marketers should harness these technology enablers to increase market reach and have personalized engagement with the audience directly. These innovations can be used to evade distractions, garner relevance and bridge the gap between insights and actions.
Bram: And what would you like to see different in the research/services industries?
Sunayana: “Change is inevitable” and occurs sooner than ever. Information, opinions, trends, technology and processes have an expiry date, so it makes sense for the industry to keep ahead and have control of this transformation through continued innovation and research. Even if it requires challenging or superseding conventions, proven methodologies, tested services, recommended solutions, wealthy analysis or rich offerings.
Bram: And, what do you do with your spare time?
Sunayana: I love to explore nature and my husband partners with me, we go hiking in the forest and hills, trek to mountains, swim in natural water sources, to get out of comfort zone and appreciate the basics. I love to travel and go on backpacking trips to live life in a million different ways, with people from various regions and enjoy a variety of cuisines.
I also play racquet sports regularly and enjoy watching good movies and reading books.
Bram: If you could change one thing in Marketing what would that be?
Sunayana: Marketing has often been looked at as a function that projects the magnified and exaggerated image of the values provided by an organization. This need not be the truth anymore. Marketing is an integral part of an organization aligning to its goals and objective. Marketing enables organizations to stay in touch with their target audience, understand them and relate to their unique and different needs. Now in this new age with the availability of instant information in one’s fingertip, the audience is gravitating towards facts and authenticity of every promotion and do not get allured by the shine. Therefore, it is time marketing reflects the true image of the organization and value of the offerings to its clients.
Bram: Thank you for your time Sunayana, it’s a real delight to have you onboard and work with you in these fascinating times!
This roughly $300M deal, expected to close end of June, doesn’t only have the potential to positively impact the HCM agendas of 4,000 combined customers worldwide between the two talent management players. It also has the potential to lift the HR Tech domain overall. How can this deal possibly achieve something that the much larger HR Tech deals done by SAP and Oracle didn’t?
For one thing, SAP buying SuccessFactors and Oracle acquiring Taleo were motivated in large part by accelerating a transition to the cloud, and secondarily, by the ability to leverage best-in-class Performance Management (SuccessFactors) and Recruiting Technology (Taleo) at the time. Elsewhere, IBM acquiring Kenexa gave it a nice beachhead from which to eventually launch other HR services and solutions. In short, these deals arguably benefited vendors more than they helped customers achieve better HCM-dependent business outcomes.
The Saba – Halogen Software deal opens new routes to HCM optimization
We suspect many forward-thinking HR technology customers will want to take advantage of the combination of a world-class LMS (Saba) and a top-tier Performance Management solution (Halogen) in ways that extend beyond performance review and coaching outputs feeding employee learning and development plans. These talent management “meat and potatoes” capabilities are there. The “kicker” is the combined ability to address today’s unprecedented rate of change, the explosion of corporate social tools, and just-in-time learning.
And this leads to the often-illusory goal of “organizational agility.”
Saba + Halogen together could enable a bottom-up, employee-owned and initiated way of quickly addressing whatever performance, behavioral or skill gaps are most relevant at any point in time. Saba has robust capabilities around informal learning and social collaboration tools (even social network analysis functionality). Put it together with Halogen Software’s flexibility to support many different performance management models, and you go beyond that “meat and potatoes” passing of performance management process outputs to actionable learning plans. It’s a whole new level of execution that ties together professional development, employee engagement, individual / team performance and business results that include improved organizational agility.
Take the example of a mid-level professional being moved from an individual contributor role to one of managing a project team, add-in that the vacancy was unexpected, the project is behind schedule, and there aren’t many other resourcing options. The new project manager can immediately start marshaling peer and team member feedback, coaching and mentoring, broader community or social network support plus other internal and external resources to make this resourcing dilemma a much more manageable issue. Now multiply this unexpected, unplanned scenario by dozens company-wide.
When you can mitigate risk to sustain momentum on key initiatives this way, you have the essence of organizational agility.
Bottom Line: This new pairing of HR Tech players might be the answer for many organizations that are too often held back by their lack of organizational agility.
We’re witnessing the most far-reaching evolution in Procurement’s existence with ambitious procurement professionals desperate to elevate the profession to a much more strategic level aligned with the needs of the business or face irrelevance in the wake of emerging digital procurement solutions and rapid automation of transactional procurement processes. This means procurement leaders need to reposition procurement as a strategic ally that supports the business stakeholders it is designed to serve.
The evolution of Procurement As-a-Service solutions is making day-to-day procurement needs become increasingly easy at access in an affordable on-demand model. Our Procurement As-a-Service Blueprint shows the steps service providers have made in morphing their service offerings to combine people, technology, and processes into these on-demand, flexible services, with pay-as-you-go, As-a-Service pricing, and subscription based models.
Procurement As-a-Service delivery models are already having a significant impact on the market thus far; with the expectations of procurement services buyers rapidly changing. The average size and length of outsourcing engagements have plummeted from large ($50-100 million) and long (8-10 years) to small ($3-6 million) and short (1-3 years). This greatly impacts ambitious service providers’ revenue models once they have realized the ability to scale modular, agile services delivered via a utility model and increase their overall profitability. This is in addition to delivering high-value upstream procurement activities in strategic sourcing and category management to build out their end-to-end procurement capabilities.
Customer Demands and Technology Drivers will relentlessly continue to Disrupt Procurement
Let’s explores how the landscape will evolve and who we expect to rule the Procurement As-a-Service space.
The big survival challenge for procurement is threefold;
Redefining Talent: The old-school procurement professional has become legacy and needs to be completely reoriented or retired. Focusing on (transactional) procurement with the sole purpose of saving as many costs as possible is a dead end – it’s counter-productive in the new business world, especially when it’s increasingly easy to leverage digital procurement solutions to source purchases at the lowest prices and conduct most transactions digitally without the need for human interaction. The name of the survival game for procurement is relationship management; becoming the spider in the web that consists of internal business stakeholders, suppliers, service providers, partners. Next to relationship skills like empathy and business acumen, the new skills that need developing are critical thinking, creativity, and complex problem-solving. And being able to use technology to improve processes and ultimately experiences.
Embracing Technology is Critical: Standardized procurement platforms combined with cognitive automation is the only way forward. Procurement tech platforms like Ariba, SMART by GEP, Coupa, Tradeshift have demanded a lot of attention the past few years and have emerged at the core of procurement. Processes are clustered, integrated and delivered by platforms. Processes that are not suitable to be on these platforms are the focus of robotic process automation. The next wave of technology affecting procurement and sourcing is cognitive and artificial intelligence.
Delivering the customer experience must be embedded into all procurement activities. The pièce de resistance is creating better experiences for customers, being end-customers, buyers within the internal organization, suppliers, partners and your customers’ customers. It’s about creating buying experiences that meet the needs of more mature internal buyers, underpinned by seamless, straight through transactional processes. Effective procurement is all about enabling much more collaboration and innovation to take place with suppliers, providers, partners and customers and amongst them.
This past Monday at the Boston FinTech Showcase over 300 people gathered to talk shop around emerging Financial Technology (fintech) and see demos from several hot startups in the space. There’s a lot of activity in fintech right now, demonstrated by the excitement around the event, which was at capacity with a waitlist.
There were startups for asset management, payments, analytics, and risk management, among others. And each startup had a point of view about how to transform fintech. There were also several incubators, investors, and corporate innovation groups. But what wasn’t? Blockchain. (Author Note: Check out my colleague Reetika Joshi’s blog for a broader perspective on the technologies and solutions that were highlighted at the Boston FinTech Showcase.)
Last Fall, we looked at what’s happening with blockchain services in BFSI and found that the market was mostly still in the proof-of-concept (POC) stage. At the showcase, we talked to several innovation teams at big financial services corporations about their progress on blockchain and found that they’ve gotten past the research stage and are in development in some specific areas like payments/settlements (something that was also big in our research) and derivatives. They all pointed out that they picked areas where they saw ROI. In other areas, they decided that blockchain was not better than current or alternative solutions.
Investors echoed this perspective. Network costs, interoperability and switching costs, and first-mover costs of picking a platform that might not wind up as the industry standard were among some of the reasons they felt that adoption hadn’t progressed faster and why the business cases were stronger in specific areas like cross-border payments.
Bottom Line: Blockchain and fintech tend to get used together a lot as if blockchain was the major trend in fintech, but in fact, the two markets aren’t as intertwined as we’d expected.Instead, fintech is developing quickly in areas unrelated to blockchain, like analytics and automation. Meanwhile, blockchain is finding a foothold in some specific areas but isn’t the driving force in fintech.
We also think that this shows some further evidence that other applications like provenance (proving the origin and chain of custody of materials through a supply chain,) anti-counterfeiting efforts and compliance reporting will overtake financial applications as the “killer apps” for blockchain, as HfS has written before. In fact, a recent study from Deloitte recently found this as well: it recently published results that showed 58% of consumer goods and manufacturing companies had already deployed or would deploy blockchain this year, compared to only 36% of financial services firms.provenance
We’re going to keep digging further, as my colleague Reetika Joshi and I research blockchain’s evolution in BFSI and I kick off reports in supply chain-related blockchain applications. Stay tuned.
There is a staggering gap between C-level executives and middle managers when it comes to dealing with the change digital-enabled business models and new services paradigms force upon us. The journey to the As-a-Service Economy is met with enthusiasm by the C-Suite (see Exhibit 1). But their middle management has a different take: shying away from big transformational initiatives and focusing on more tactical interventions. Are you all living in the same world?
We should not blame middle management for the inertia we witness in many industries, including the business and IT services industry.
Anxiety and resistance are logical reactions to change. People don’t like change, as it threatens the status quo, what they know and worked hard for. This is the playground of the sunk cost fallacy. “We worked so hard to get to where we are: we can’t throw that away. We need to keep going to maintain what we have”. C-Suite respondents in our large surveys show they’re not willing to throw good money at keeping the status quo. That is the big point: change is inevitable. The way a company deals with change will increasingly be a deciding factor for survival and competitive advantage.
The Ball is in the C-Suite’s Court
Having a vision is one thing, enabling implementation and executing the vision is significantly different. Middle management’s lukewarm reaction to change is understandable and frankly not surprising. There is a lot of uncertainty about new technologies such as autonomics, robotic process automation, artificial intelligence, and cognitive computing. There are wild predictions about robots destroying people’s jobs. People are wondering how they will be impacted; what do the changes mean, what will my job look like in this As-a-Service economy, do I have the skills to be successful?
Uncertainty is the enemy of the ability to embrace change.
The answer? Educate, show results and impact. Also, are people incentivized in the right way to lead sweeping change? Or are they incentivized to drive incremental improvement? Aligning incentives to the ultimate goal is paramount.
“Beam me up, Scotty”
Wouldn’t we all want to just be there, at the destination? Counting the times, you would love to say, “Beam me up, Scotty” … But alas, if you need to go somewhere, you must endure the journey.
It is a journey to change, and all road warriors know making a journey is not always fun, it is pretty exhausting, and you often have to deal with unpleasant adversity.
Investing in disruptive technologies is one thing. Successfully implementing them and going through the change process as a business is another. C-Suite respondents are likely to bring in external help in the form of transformational leadership or change agents to redesign the operations. However, to be successful, they need to inspire, motivate, and properly measure and provide associated incentives and rewards for the team.
Often when a sports team is dysfunctional, the leadership tries to shake things up by firing the coach and bringing in new blood. On the one hand, a new perspective can change the dynamics of the team for the better. On the contrary, there is an entirely pragmatic reason to fire coaches; it is much easier and cheaper to fire one coach than to fire all players. This logic holds true for enterprises as well. An external stimulus is good, but getting rid of the middle management is impossible and threatens the going concern (aka the revenue generating machine). See here the dilemma for the large incumbent with legacy operations trying to fight off the nimble new entrants, who simply don’t have to drag all the baggage with them.
A Plan is as Good as its Implementation
Leadership is critical; don’t let there be any doubt about the destination, the Northern Star. But, involve the rest of the company to map out the journey. Let them be a part of the solution. Our research shows the gap between C-Suite and middle management is significantly smaller when asked about using creative problem solving (Design Thinking) to reach the As-a-Service end-state. 54% of C-Suite and 43% of middle management think Design Thinking will have a significant impact on the journey.
Unleash the Knowledge and Creativity of the Company
Years of operational excellence, Lean and Six Sigma have beaten all creativity out of operations and middle management. You get what you pay for. So if you pay for hundreds of green KPI’s, you get hundreds of micro-managed green KPI’s.
C-level leadership has to set creativity free, unleash the innovative power of the workforce. Granted, corporate Japan is not the prime example of free-spirited creativity, but they have a thorough understanding of the power of expert knowledge. Toyota’s concept of the Creative Idea Suggestion System brought them a lot of good (and paradoxically they copied it from the American firms they tried to beat). For service providers, a big challenge will be to integrate the innovation labs and all the beauty created there into the legacy beast. Innovation labs can quickly become ivory towers. And no-one likes the people shouting from ivory towers.
Revamp Imagination by Creating a Culture Capable of Dealing with Constant Change
Our take on change? Use the old concepts of Total Participation and Employee Engagement and focus it on creative, lateral problem solving and Design Thinking (instead of operational excellence and Lean Six Sigma) in an era of increasing volatility, uncertainty and technology driven change. Bring in academics, analysts, practitioners, other ‘thinkers’, but most of all the company’s own brain trust.
We are not arguing everyone will be a good fit in the new era, or that the goal is to keep everybody on board and happy. But an inclusive strategy to alter the culture is ultimately the most promising trajectory for change.
Technology was first and foremost on the minds of the over 42,000 people who gathered in Orlando for HIMSS2017 last week – or was it? And should it be? There is a groundswell rising at HIMSS for not just talking but acting when it comes to putting the individual—the person—at the center of healthcare. In a word: empathy. How does what you do with IT, or as an IT professional impact the way a person experiences healthcare throughout their lives? There is a lot of attention on security, cognitive computing, analytics, and so forth – the enablers of how healthcare can better serve its constituents. But at the end of the day, it’s about the people for whom you are designing these systems because if they can’t or won’t use them, it won’t impact health, medical, and financial outcomes. So an undercurrent of themes is swelling around social, behavioral, and environmental aspects of healthcare.
Effective healthcare IT systems need alignment and collaboration inside the hospital system—but need to also include what is outside of it
After the conference, on the way back from the airport, I sat next to an IT project manager. She told me how she had coordinated across five hospitals in a system to prioritize a list of IT projects that would enable these hospitals to create an interoperable network to exchange data more effectively and enable communications. After the agreement, one hospital came back and said, no, we have a different priority this year. This is the real challenge in healthcare—not whether the technology will work because it can and it will—it’s about whether the people will work together to define and achieve common goals.
Community collaboration as shown by the Value Care Alliance (VCA) in Connecticut
Earlier in the week, I attended a session about a group of hospitals in an ACO called the Value Care Alliance. They share a goal to increase quality and to build capabilities to assume and manage risk in a move to value-based care, with efforts to improve the health of the local community, reduce ER instances, and to reduce the number of attributed ACO members who go outside their community and their provider network for healthcare services.
To be successful, the alliance knew they needed to have a shared view of the community members – in technical terms, a population health platform with a data repository that would bring in data from disparate systems. However, each member of the alliance had a different platform; and they didn’t know each other’s platforms. They had started the alliance with a governing body that over time had saved money through shared services and group purchasing, thereby funding the investment in infrastructure needed for the population health initiative.
How has VCA approached it?
The VCA aggregated claims and electronic health record data, the hospital and physician practice medical records. The group then cross-referenced medical data with geographic data, looking at maps in the neighborhood: what is the health of the community when looking at, for example, a group of people with high HbA1Cs… is there local access to clinical care; what are the community activities offered; where are the grocery stores; can they see physical elements and conditions of buildings. They started reaching out to other community organizations such as the YMCA and a local parish nurse program to conduct health education, screenings, and other outreach activity. They also applied to CMS for a community health grant that will help them fund activities for further identifying high-risk individuals and connecting them to resources.
Back to the IT: the local hospitals all had legacy population health IT and didn’t know each others’ systems, and getting them to abandon what was already in place was complex. They brought in a facilitator to assist with defining shared goals and IT decisions; and every organization had one vote, regardless of size, to show commitment to the collective. The group also defined the value of the data to each and to the collective, to come to an agreement on multi-stakeholder data sharing. The underlying theme throughout, is how to get to a community health program – where the hospitals are enabling greater health in the community, where people locally come to their hospitals for treatment as needed, and have local support for being healthier, staying healthier, and receiving the right care at the right time and right (local) place.
To strategically use Health IT to drive health, medical, and financial outcomes, you need to balance internal and external efforts in coordinating care with shared community goals.
While walking the halls at HIMSS, I saw an endless variety of technology offerings—and among them, people—physicians, EMTs, nurses, patients, caregivers—all of whom want a healthier society. We need to not only connect the systems for interoperability, we need to connect the individuals. IT professionals need to be just as excited as doctors, nurses, and caregivers about truly changing people’s lives through healthcare, in order to really have an impact. We need to get our security experts, IT project managers, coders, consultants, and data scientists all thinking about the impact they can have on helping the people in their community live healthier, and therefore less expensive, lives. Because when we care, we make a difference.
“I’m putting more money behind women-run businesses because of return of capital and performance; this is what matters,” said self-made millionaire Kevin O’Leary, in the closing keynote at HIMSS2017 last week. When it comes to growing a business, Kevin has a proven track record you can easily find online if you don’t already know it from the U.S. hit show, Shark Tank. He has invested millions in startups over eight seasons of the show that hosts entrepreneurs pitching businesses and requesting support.
When taking a look at the returns in his portfolio, Kevin O’Leary noticed the ones with the greatest returns are owned or run by women. And what he called out about their management style is universally applicable in business.
It may also be a reason why we’ve seen in our research at HfS that the #1 thing that executives would change about the outsourcing services industry – per 25% of respondents – “more women in executive roles.” What we can learn from women-run businesses that are realizing higher results:
Allocation of Time: “If you want something done, give it to a busy mother.” This is about focusing on what you know needs to get done first to impact the outcomes that matter; and about delegation, not trying to “do it all.” As an example, Kevin pointed to Honeyfund, which is approaching ~$500 million. He describes CEO and co-founder Sara Margulis’ approach with her team as: you have goals to achieve on a monthly or quarterly basis, period. It’s not about “how” or watching to see it done. It is closely linked, however to #2…
Achievable Targets: In the companies run by women, the teams achieve revenue targets over 90% of the time, in Kevin’s experience with his portfolio. He claims this is because women tend to set realistic goals and motivate productivity. When individuals and teams achieve goals, there is a feeling of satisfaction, turnover is lower, and productivity is higher. In some circles, it’s called employee engagement. The opposite approach is to set goals that are too high to be achieved … leading more often to higher staff turnover, lower morale, and lower return on capital.
Along with the management style, Kevin also pointed out that successful business (and project) pitches have three characteristics: (1) Articulation: Ability to articulate an opportunity in 90 seconds or less; (2) Uniqueness: Why you are the right person or the right team to execute; (3) Numbers: Know the numbers on the size of the market/opportunity, margin, etc. Altogether, these three, with the passion of a leader for her cause, can take a pitch from a spark to a sizzle to an explosion.
While Kevin’s observation comes from a review of his portfolio of start-ups that survive the explosion to move into operations, these two “T” characteristics can be universally applied to management in current business as well.
Bottom line: Today’s businesses need this type of outcomes-focused performance management with meaningful and achievable targets in this day and age when so many businesses that have been in existence for years are having to undergo transformation to become more customer-focused, interactive, and flexible.
When HfS Research community members check back here later this week they will have access to my first major research effort for HfS since joining late last year: “Predictive Capabilities in HCM Systems”. This Blueprint Market Guide includes trends, themes and related implications for both buyers and solution vendors, an evaluation of these capabilities within 9 HRMS or HR System of Record vendors, what to watch as this emerging area continues to evolve, and – of course – our recommendations for driving business value and ROI from these capabilities.
The aforementioned 3 reasons are:
Surprising trailblazers … such as some of the HRMS players blazing the trail for other vendors to follow (aka our High Performers group) are probably not who you’d expect; e.g., none of the top 3 rated vendors on these specific capabilities are in the top 3 from a market share perspective.
Insights … as well as market intelligence that will likely make you say to yourself “Hmmm, I haven’t thought of that.” As just one example, there are very logical reasons why a number of the 9 HRMS vendors covered selected ‘predicting flight or retention risk’ for their initial foray into this product investment area, but also some not-so-obvious reasons. Among the latter ilk, the “consequences of being wrong” are probably not as severe as with a number of other examples of predictive HCM use cases (actual and hypothetical) highlighted in the Report.
Recommendations … including why investments from both vendors and customers in this exciting product innovation area should arguably be ratcheted up, and ways that both parties can do that and start reaping corresponding benefits while proactively managing risks and costs.
Bottom Line:This first-of-its-kind industry research from HfS will shine a bright light on one of the most promising advances to hit HR Tech since on-premise, client-server deployments went the way of the dinosaur.
Yes, the costs to hop onboard are not insignificant, but you can perhaps start with an economy ticket (modest investment) and then go further into this realm when business impacts are obvious. In time, HfS believes they will be, and early adopters often hold onto competitive advantage once they have it.
Industry adoption is the biggest obstacle to blockchain becoming important in banking, according to 78% of participants in a study. Wait, what? It’s an odd data point to me, because adoption happens (or doesn’t) because of obstacles like cost and complexity. Slow or late adoption is a symptom of a challenge, not the challenge itself. So let’s take a quick look at what might slow or stall adoption, and what to do about it.
Blockchain is an element of “the platform revolution” that’s based on user economies of scale
Recently I had the chance to speak with Marshall Van Alstyne, co-author of The Platform Revolution and a professor at Boston University. He discussed the network and platform model of many new digital businesses like Airbnb. Airbnb is successful because it can exist and profit from user economies of scale instead of company-based economies of scale, according to Professor Van Alstyne. Essentially, this type of platform business allows users to create and share value themselves instead of relying on a company to create the value. The role of the business is to provide the infrastructure and support. While Airbnb doesn’t use blockchain as its base technology, the concept applies because firms can use blockchain as the basis of new platform-based business models.
Blockchain, with its design point of peer-based approvals for transactions and distributed ledger data storage, is a great example of a platform technology. It’s the enabler of a business that needs users to help define how it will scale.
What to consider in using blockchain as a platform for business
If blockchain can help companies build a platform business, what might slow or stall adoption? Professor Van Alstyne mentions a few:
Network ownership – who manages the network and gets to decide the rules? Is that owner in a position to run the network effectively?
Cost/transaction friction – how much does it cost to join or participate? And do you have to pay before you get value out? Can you design the network so participants pay only after they’ve gotten value to reduce the transaction friction?
Monetary policy (for financial transactions) – who or what agency is going to ensure the network isn’t too volatile? Who will ensure that there are guardrails to give users comfort that the system will have some inherent stability?
Standards – can players on different blockchain implementations work together rather having to agree on the same implementation? Who creates and manages those standards to ensure adoption isn’t hindered by interoperability problems? A good example of how standards can help is to solve issues like block sizes and reducing network consensus time, both of which significantly hinder the speed with which transactions can be completed.
The end user is at the center of the platform-based business
Customer-focused businesses need to exist in an environment where user economies of scale have become the norm. That means the business needs to understand the user and the users’ needs—doing so, will help identify and drive scale. And understanding the users and what they value, and how that then fits into a business model (addressing compliance, for example) can help drive the answers to the questions above. Rather than trying to scale internal operations like manufacturing, firms that adopt this customer-centric “Digital OneOffice” need to focus on user value and associated data. As Professor Van Alstyne points out, platform businesses can scale indefinitely because they don’t require internal company investment (beyond some compute power.) Instead, platform businesses that use technology like blockchain can scale as quickly as user adoption grows because there are no marginal costs of that growth.
Going back to that study I saw – blockchain may not get adopted, but if it doesn’t, it’s because companies didn’t take advantage of user economies of scale and learn lessons from older network-based businesses like eMarketplaces.
Bottom line: Focus on solving the obstacles to adoption, not adoption itself – especially transaction friction and interoperability standards – if you want your blockchain implementation to succeed and move you forward in your digital transformation.
A smart business operation uses the right combination of talent and technology to drive desired business outcomes. Third party suppliers are crucial for that combination, and our new research shows an increasing focus on the relationships with suppliers to standardize contract management and governance, centralize management of strategic suppliers, recruit and engage talent that has relationship building and critical thinking skills, and better leverage self-service platforms and automation in procurement and supplier management.
The big emerging trends in SRM:
Based on our new research, including discussions at the HfS Summit, our annual Shared Services and Outsourcing survey with KPMG, and interviews with executives from financial services, healthcare, logistics, high tech and other industries, we’ve put together this picture of the “state of supplier and partner management” in the IT and business process services industry:
Ambitious procurement / sourcing leaders are positioning themselves as advisors to plug capability gaps – partnering with the business units to define strategy; coordinating across business units, IT, and legal; defining standards for governance (reinforced through templates and automation); using training to ensure the more distributed relationship management is active and following a framework.
Organizations are increasingly standardizing and centralizing business operations functions – often incorporating outsourcing in hybrid / global business services models.IT has been the first mover here, with business functions following – F&A, Procurement, and HR as well as industry specific support. We expect centralization and shared services to continue, with selective and targeted use of outsourcing (on and offshore) and RPA in a model many are calling “no-shore.”
There is a similar move to centralize supplier/partner governance and contract management, often separate from the relationship management. Relationship management is more difficult to centralize, and typically happens when the suppliers are providing IT or BPO through a shared services unit. Once centralized, governance and contract management is increasingly automated; and relationship management gets more focus.
Exhibit 1: Top 3 Desired – and Hardest to Find – Capabilties for Business Operations
Source: HfS Research in Conjunction with KPMG, State of Business Operations 2017 N=454 Enterprise Buyers
Supplier management talent is increasingly oriented toward relationship building, decision-making, and analytical skills. Subject matter knowledge of the function is a basic capability that’s needed; negotiation and contract management “can be taught.” Executives are also increasingly interested in candidates with technical skills (or interest) in determining the right mix of talent and technology for managing optimal business results.
Procurement is setting the pace for evaluating and implementing robotic process automation and cloud-enabled platforms for more self-service. In our state of industry study, 57% of enterprises are in the process of evaluating/implementing RPA for procurement processes.
Across the board, we have found a move to consolidate and prioritize/tier suppliers for better negotiation capability, more effective and compliant oversight, and a more collaborative and engaged approach to partnering versus managing “off the side of the desk.”
It doesn’t matter what your operating model is if you don’t have the right talent. The right talent will make the relationship with the supplier effective for the business.
The bottom line: There are three critical components to effective supplier management that stand out in our research
Alignment and tiering of suppliers with business objectives
Standardized and coordinated supplier relationship management and contract management and governance
The “right” talent to broker and manage relationships and results
In general, companies are on a journey to have a more strategic approach to supplier management and believe it will take a matter of years to get there because of the cultural shifts required. We explore these themes further in our recently published POV, “The Rise of Supplier Relationship Management,” available for download (free with site registration).
Sunayana Hazarika, Senior Brand Strategist at HfS Research: As the saying goes” Everything happens for a reason,” the economic recession in 2008 changed my career path. From an engineering graduate to a remote executive, my first job in TTK Services introduced me to the world of marketing. I was facing global clients- the who’s who of the business world from renowned bloggers to technology founders, and helping them in doing Digital marketing (web marketing is what it was called then). The varied requests from clients opened the door for understanding SEO, content marketing, social media promotions, brand messaging, to even executing fundraising events. This inspired me to pursue my MBA in marketing and soon after explored both services marketing and product marketing of software enterprise solutions. 
