Click to find out about private clouds embedded inside public ones…
Now we’ve really heard it all… HP and Salesforce’s new “Superpod” offering provides a Private Cloud within the Public Cloud, making the term “Cloud”, well, pretty much irrelevant…
HP and Salesforce.com have teamed up to provide Salesforce CRM on dedicated “Superpod” HP boxes in an effort to satisfy enterprise clients fearful of having their data situated in the Public Cloud. The partnership is designed to help Salesforce.com gain more traction with large global enterprises and highly regulated industries, while providing HP some Cloud street-cred after years of negative publicity and pride a much-needed fillip to its hardware and CRM services businesses.
Following the announcement, many industry stakeholders quickly questioned whether the arrangement met “required criteria to be referred to as a Cloud offering” based in the fact that dedicated hardware boxes do not service “multiple tenants”. HfS believes those arguments from multitenant purists have some validation from a theoretical perspective; however, in today’s environment of commoditizing hardware prices and paranoid enterprise IT leaders, those arguments have now become irrelevant. If having a dedicated HP box can provide some increased processing power and peace of mind to enterprises while still delivering all the benefits of scalability, security and global ubiquitous access that internet-based delivery can offer, does it really matter whether that offering is classed as “Cloud or multi-tenant anymore”? HfS believes the core focus has now shifted to the “what” in achieving business outcomes rather than the “how” in terms of technical mechanics.
Clearly, leveraging a public cloud environment is still too much of a bitter pill to swallow for “Zombie” IT departments still clinging to the idea that they need to control all the data that flows in and out of the enterprise and not have their enterprise data housed on the same Internet services as other firms. Creating a “private cloud within a public cloud” will provide a more acceptable solution for many enterprises still grappling with the concept of public Cloud, especially for their most sensitive data that resides within their CRM system. In short, the whole concept of public and private cloud is becoming pretty moot, as long as the enterprise is leveraging cloud delivery to achieve the outcomes it needs in a secure, reliable, effective delivery environment. So who cares whether the new offering, which, for a higher price, provides a dedicated hardware environment within Salesforce’s larger public cloud, violates some sacred principle?
For years, Salesforce was the poster child for anyone touting the benefits of adopting a SaaS based solution and by broader implication an underlying cloud based infrastructure. It was a strategy and market position the company and its founding CEO aggressively pursued. The company’s very logo demonstrates how important it is to its core.
However, as opportunities mature, so to must the innovators driving the change. What this announcement signifies is not the end of the Cloud but quite the opposite – the maturation of the Cloud. In short, this is likely the moment we can attribute it to the delivery model becoming truly mainstream. Do we even need to use the term “Cloud” anymore? Is it still relevant? Does anyone purchase new services, outside of a few stagnant examples of legacy on-premise ERP, that are not in the “Cloud”?
Why This Matters
IT departments can focus on driving Cloud integration and business alignment, as opposed to low-value security and maintenance tasks. Cloud advocates should greet this announcement with glee as it could boost adoption among those reluctant to embrace a truly multitenant public environment. More importantly, it also allows the entire IT industry to focus on the business outcomes to be achieved when adopting these newer offerings, rather than whether or not such adoption creates undue risk. IT executives can focus on the integration work that needs to be done to adopt new Cloud services into the enterprise and work with their LOB counterparts to ensure the applications are supporting the business needs.
Future IT solutions are increasingly being driven by the business lines. Furthermore, questions around how to deploy the underlying technology and implement security should always be secondary to how best to address the business need. The driving force behind the adoption of any particular cloud based offering is not the underlying technology, but rather the business change the new model can bring. The driving appeal is a better-run organization, the ability to better match costs to performance, the freeing up of scarce resources to focus on more strategic efforts, or perhaps some combination of all three. This new offering helps remind us of all that. In the instance of Salesforce, for example, sales and marketing executives are increasingly making the decisions regarding purchasing new solutions to drive business value. The same is happening across all major lines of business, such as finance, HR and procurement. IT has become the enabler of the solution, not the solution itself.
The need for enterprise mobility is rapidly changing the onus of IT solutions to achieving business outcomes. Finally, by marking the point of cloud maturity, the announcement allows us to truly focus on the next evolutionary phase of our computing environments – mobility. This is not to say cloud environments are fading to the background nor even diminishing in importance. Quite the opposite, they will continue to be prominent as the enabler that allows us to connect to our core processes from anywhere at any time on a mobile device. But as we increasingly leverage the cloud to embrace mobility it brings with it an additional layer of enterprise change.
As consumers we expect our mobile environment to be crisp, clean and focused. When the need arises to perform a task, we look for a specific app to get it done. Increasingly, that consumer led singularity of focus now flavors our desired approach to engagement within the enterprise. Yet the burden this puts on existing legacy applications – whether old behemoth onsite systems or yes, even the newer lightweight SaaS offerings – is huge. New interfaces must be designed, road tested, and implemented for all of these applications or better yet robust APIs developed to allow connectivity across all of them and into new task specific UIs.
What to Watch
Ned May, article co-author, is SVP for IT Services Research, HfS (Click for bio)
The critical question in all of this is whether we will see a new class of enterprise apps emerge to overshadow the current SaaS darlings or if these existing leaders will adapt to the new demands. In an interview with the media and analyst community at the same event, Benioff shed light on the company’s efforts around building out its APIs highlighting it as one of the most important efforts underway. Sometimes maintaining relevance means letting go of what once defined you. Salesforce appears to get that and is well on its way to helping us all embrace the Applification that is spreading across all aspects of our lives.
The good news in all this for the traditional IT services firms is that the new delivery models which at first appeared to offer a lightweight solution for the enterprise and thus little need for additional programming, ultimately require a great deal of integration work to tie them back deeper into the enterprise. As we move to a SaaS driven mobile environment, systems integration is now giving way to services integration and the opportunity is robust. In short, the clouds just might be clearing on the next wave of IT services growth.
“Now, suddenly, CIOs have to be very creative, they have to adjust to these new challenges, they have to deal with ambiguity”
–Bruce Rogow, November 2013
And we can bring our superlative discussion with Bruce “hand-brake released” Rogow to a conclusion with one very frightening warning to all technology leaders…. don’t fumble the future!
Phil Fersht (HfS): Bruce, what do you think visitors from 10 years into the future will think of us if they came back for a gander?
Bruce J. Rogow (IT Odyssey & Advisory): The 80’s taught me that most organizations will adapt. It may be very painful though. For my view of what It will need to become, here are some relatively radical ideas. First, I think that IT will have a merchandising function. And by that I mean it’s going to try to figure out what technologies are out there, and what ways IT should bring them into the enterprise to add value. It will be very much like a merchandising manager at Home Depot decides what goes on the shelves. IT’s second role will be brand management, being able to consumerize services and present them to end users in a way where they are literally building brand equity. Third, IT won’t be able to successfully manage brands unless it has service management, so the whole idea of how they do service management, and what those services will be, Next, although most firms have a PMO, I think we’ll see a growth in asset management to the extent that they will also have an AMO function. Informatics is another weak area in which companies aren’t getting enough value.
Bruce being kept in line by his missus, Winnie
But I have a terrible concern that with everything going on right now, we can fumble the future. So we must have some type of underlying architecture and operating platform to bring all of these pieces together in some coherent fashion. If you’re asking what an IT organization is going to be…it’s not going to be about developing or running a business center or network, it’s going to be in these more value added roles.
Another thing that bothers me is the attitude of many CIOs. There hasn’t been a need for someone to talk to for many CIOs of the past two decades. However, going forward, most CIOs need a confidant they can talk to, test ideas and push back. Yet, when I ask many CIOs who performs that role, they tell me they don’t need anyone like that, go to a conference, get feedback from their existing vendors or talk to other CIOs. This isn’t an attempt on my part to solicit clients. I’m fully engaged.
Phil: So… what is your final piece of advice for today’s aspiring IT professionals looking out at their long-term careers?
Bruce : The first thing is, despite everything I’ve said here, they have to start and end with security, control of the asset base, privacy in the data, and assurance of the service. Everything else I’ve said is added on top of that. Effectively, they’re going to have to sort out the way in which they convert from their current base. Recognize that base has pretty much been abandoned by the vendors and the outsourcers, and figure out how, over the next five, ten, or 15 years, do they move to this new platform?
Next, I think they have to create a template and an architecture as an onramp and a way in which they rethink the governance structures for how these things are going to come into the enterprise. For example, mid-range companies I visit are really into mobility. I actually have one small firm, a $200 million company, with 150 mobile apps on the shop floor and in engineering. Everyone from the manufacturing engineers to machine operators to the forklift drivers have apps that make them much more productive. Their on-time shipments are up and there’s a reduction in waste which has more than paid for the investments out of yearly budgets. And then I go visit a big company and they’ve been spending a year trying to evaluate whether to go Mobile Iron or Ironwatch for their MDM. Now, I believe they’re going to spend another year developing mobile policies before they even start to deploy. Talking to all these big companies, I’m reminded of 1982 arguments we had about whether Profs from IBM or All-in-One from Digital was going to be the future. And I remember one of my clients being absolutely convinced it was neither, and he chose Wang. So when I listen to these folks taking a year to evaluate something…you may make a mistake, but you have to do something and start the learning process.
Phil: Bruce, when you’re not thinking about technology or writing? Are you trying to enjoy any form of retirement at all?
Bruce: I’m not made for retirement. I tried it once and drove my wonderful wife nearly nuts. I do a little bit of boating and golfing. I’m blessed with a spectacular family and an EA, Ruth who optimizes my life. But I really enjoy talking to these people. In addition to the 120+ IT Odyssey visits, I probably do 60 dinners and lunches a year with these folks, and there’s just so much to learn from other people’s perspectives. So I think my hobby is just trying to understand how other people think. We are back in most exciting times and I am thrilled to still be involved in this great endeavor of IT. And yes, I do like sports…I’m a Red Sox fan, a Patriots fan, and I like the Bruins. It’s a good year in Boston this year 🙂
Phil: Thanks so much for spending time with us Bruce. I know our readers will love digesting your insights.
Bruce Rogow (pictured above) runs his own advisory practice, IT Odyssey & Advisory. Each year, he visits with over 120 executives, academics and consultants involved in the management of IT. He is also a Gartner Executive Programs research affiliate, with four decades of experience that have included roles with IBM and Gartner group, where he served as head of worldwide research. You can view his bio here.
“You really need progression planning where you determine the skill set you’ll need going forward, because it’s a different circus with different clowns”
Phil Fersht (HfS): Bruce, how has the role of the CIO changed to cope with the shift in approach to enterprise technology? Are many CIOs succeeding in refocusing themselves into more business-aligned roles within their companies?
Bruce J. Rogow (IT Odyssey & Advisory): Ah! We are NOW going to be “business aligned”. Phil, with all due respect, what the heck do you think DP managers and CIOs have been trying to do since the 60’s?
I come from the school that has seen these guys trying to do alignment since 1968! Once again, the game has changed. And the important thing to recognize here is the maturity of the platform and its relationship to IT strategy, expectation, deployment and management. I’ve likely talked with over 1,000 DP managers and CIOS in my career and I never met one who said he was all about the technology and was working to ignore or misalign with the business.
In 1982 we had a very immature platform, and so the key role of the DP manager becoming a CIO in those days shifted to figure it all out, sort it all out, and try to figure out what comes first and what’s going to work. There was no vision of where we were headed, the boundaries and the journey. Then we went through a period of rapid deployment…let’s put in an ERP, let’s see if we can solidify some of this, consolidate it, negotiate contracts, figure out the CRM, an awful lot of the back end activity. But all that was alignment too.
Then as we headed toward the maturity stage, it became how do we get cost out of this thing, how do we further consolidate, can we eliminate licenses, can we do a little vendor bending, can I fool around with my rate card with my outsourcer…and that was the way in which we got alignment in the last five-10 years.
Now, those CIOs are suddenly finding themselves with a totally different set of challenges. They are still out to maintain what they have, but trying to get agility into it. Over 60 percent of the CIOs that I interviewed now have responsibility for revenue generation or business development, and they’re involved in M&As and restructuring. Many have been given staff or line responsibility well beyond IT. It’s not so much about optimizing and baby sitting the supply chain anymore as it is about how to generate revenue and help re-invent the business.
On top of that, the second issue is that there’s this new technology base, and a new application set…I call this a different circus with different clowns. And you’ve got CIOs who have done a good job of getting us this far at the tail end of a maturity curve. Their challenge is whether these buttoned down, slack eliminating, control oriented IT leaderships and providers can morph into a very different type of role. Can they deal with the need for slack and vision creating rather than fulfilling capabilities associated with a very immature set of technologies and a tremendous amount of ambiguity related to the business and the technology?
Finally, what consistently comes out in the interviews I conduct with these people is that they feel the majority of the vendors they have are anywhere from misaligned to clueless at this point in terms of what the market really needs to thrive. They give the vendors credit for trying real hard, but question if they know the game they are in or what to do differently tomorrow morning.
Phil: In terms of companies finding the right skill set for a CIO, would you say the traditional CIO from 10 years ago can adapt? Or do you think many of them just don’t have the right backgrounds, and companies need to look at different types of individuals for these roles? What are you seeing work for companies, and what are you seeing as a struggle for them?
Bruce: We didn’t have the perfect set of players in 1982 and we don’t have many perfect players now. There are a lot of moving parts in what you said, Phil. One of them is that expectations are different. We’re coming out of 10-15 years where the CIO was measured on cost, efficiency, and tightening things down. And the whole purpose was to get the ambiguity out of the system. “Let’s nail this thing down, get it down to an SLA, get it to whoever we have as a provider, and make them do it.” And CIOs and their directors were sort of nursemaids to that. Their staffs mastered the way to get things done was by dialing 1-800-outsourcer. As their few older, experienced players retire, many firms are left with a paucity of the practical, detailed skills and experience needed to prudently move ahead. But move ahead they must.
Now, suddenly, CIOs have to be very creative, they have to adjust to these new challenges, they have to deal with ambiguity. They have to stop asking to see “best practices” and be told war stories about what another company did. They have to get engaged, think for themselves and invent what is the prudent way forward in their situation. Hearing another war story is not as important as taking the IT staff aside from the day-to-day tasks and doing the hard work of envisioning, testing and delivering the future.
And while they’re trying like crazy, many are finding: 1) it’s a totally different game; 2) it’s totally different players; 3) they have a skeleton staff left over from vendor bending during the last generation; 4) now they’re expected to be technology insight people, be creative, look at revenue generation, deal with ambiguity, understand exactly how the business works and can work, be flexible, be agile; and 5) they might as well be talking a foreign language to many of their support staffs. They have a partial compliment of officers skilled and experienced at fighting the last war.
There’s another issue in that the CIOs that are in many of these companies are viewed as a cartoon. They’re the guy who keeps users from doing things. They have an architecture bureaucracy thing centered on the desktop and locking the organization to ugly technologies that are pathetic compared to what the employee has at home. They look like dinosaurs to the young, bright, digital natives that are once again being hired. And now, users want to have a revolution, demand BYOD, buy their own SaaS or whatever it may be, and drag brother dinosaur along. So today’s CIOs are in hostile territory. Whether they can make it remains to be seen on a one on one basis.
Bruce Rogow runs his own advisory practice, IT Odyssey & Advisory. Each year, he visits with over 120 executives, academics and consultants involved in the management of IT. He is also a Gartner Executive Programs research affiliate, with four decades of experience that have included roles with IBM and Gartner group, where he served as head of worldwide research. You can view his bio here.
Bruce Rogow willing Big Papi to knock one out of the park
Can you imagine a guy who’s immersed in, literally, hundreds of CIO relationships. And not only immersed in them today, but for more than four decades – long before they were called “CIOs”.
This guy knows exactly why CIOs are succeeding and why many are failing in their jobs. He is the archetypal CIO therapist, one of the original “Gartner Greats” having headed their worldwide research in the 80’s and 90’s, in addition to years and years advising, coding and analyzing IT.
Today, Bruce Rogow has been banned from retiring by his missus, Ruth, as he’ll just drive her insane, so instead he wiles away his hours advising, perhaps, the most challenged of enterprise executives today. Plus he still writes for Gartner’s executive program as a Research Affiliate, so not exactly sure how we managed to get him on here. But here he is – my favorite lunch companion and living IT mind, who has his own very distinct flavor of the future of the IT function, the role of the CIO and how companies frequently xxxx up their outsourcing strategies. So, without further ado, let’s begin the first of three blogs where Bruce opens up to us – and where better to start than…
The Outsourcer’s Comeuppance
Phil Fersht (HfS): Bruce, you’ve been a luminary in technology, as an analyst and an advisor, for a very long time. Would you please give us an overview of your career background, and how you wound up where you are today?
Bruce J. Rogow (IT Odyssey & Advisory): I started off with IBM a long time ago. One of the areas I was involved in there for five years was advanced technical training, where we were trying to invent what became known as systems management and was later packaged as ITIL. After that, I spent 10 years with a consulting firm called Nolan Norton, which was a spin-off of some work that had been done by Dr. Richard Nolan at Harvard Business School. I left there in 1987 and joined Gartner Group. My mandate was to change Gartner from being all about Wall Street and vendors to producing research that users would buy. So we developed and institutionalized things like the Magic Quadrant, the Hype Cycle, the IT Industry Scenario and the idea of TCO. After I left Gartner I remained a Fellow, and still do some work as an affiliate of its executive program.
For the last 10 years, I’ve been doing this thing called IT Odyssey. Each year I visit over 120 executives, academics and consultants involved in the management of IT. These visits, which are free and open discussions, are the background, practice development and refresh process for my private practice and support of my client work.
Phil Fersht (HfS): So when you look back over the last 15 years, what’s changed with technology in enterprises in terms of the way they approach managing their IT infrastructure and strategy? What have the shifts been?
Bruce J. Rogow (IT Odyssey & Advisory): In my opinion, the last major shift occurred around 1982. We’ve had adjustments since then, but the shift we saw in 1982 was on both the business and IT aspects. The nature of business changed dramatically as well as the business’ expectations for IT. In the IT arena we saw PCs, minis, distributed networks and databases cascade into the organization, changing forever the IT landscape, architecture, applications, major and minor vendors, management processes and governance. We even saw the name for IT change as what was called DP morphed into IS. As IT became more pervasive, we saw the emergence of the CIO as the new IT leader. Initially, it was the wild, wild west and that has played out over the past 20-25 year period as the IT landscape and current platform matured.
As the master IT platform matured we developed new applications, skills and management processes. IT was becoming a stable, mature, robust family of relatively commodity offerings and providers. Businesses learned how to deploy what they needed for the lowest cost.
When things became fairly mature, which they were from about 1995 on, it made sense to outsource, offshore, solidify your relationships, and attempt to manage to contractually set SLAs. By 2000 both the customers and the providers knew what they were doing and it was a game of who could get the upper hand or establish a workable relationship.
I think we’re now in a totally different world because both businesses and IT are simultaneously changing so radically. Over half of the firms I visit tell me that they honestly believe that if they don’t change their business models, they won’t survive the next decade. IT is moving from the platform it’s been on to a host of alternative delivery vehicles (ADVs) including everything from private cloud to public cloud to SaaS to BPaaS to IaaS to social media to mobility and app stores rather than massive enterprise-wide, all-encompassing commodity systems. During my IT Odyssey discussions I’ve been asking for the terms they use to describe these ADVs and I now have a list of 60 different names for various types of ADVs. I believe we are now in the third, fourth or fifth year of another one of these major transitions and we are re-entering the wild, wild west.
Another way to look at the situation is that for 25+years IT has been filling in a relatively crisp vision. We have been implementing packages, overcoming Y2K, consolidating resources, cutting IT cost and putting up web sites. No one has a crisp vision of where we are headed. We may feel the drivers but there are no packages to implement for capitalizing on mobility, morphing to a service-based delivery model, making money on social or BI, providing for the converged vs. diverged architecture or enabling the new business model which is also just coming together. This is a major epiphany that seems to be eluding much of the IT industry. Many feel they can play Whack-a-Mole as the issues pop up or tweak their way forward.
Phil: Bruce, we were talking a few weeks ago about companies that may have outsourced too much for too long, where many have lost too much control or pretty much given up on their IT strategy. I’ve actually been seeing more of this since we last spoke, and we’ve actually got situations with clients where they’ve got IT managers who literally don’t know what they’ve got in their apps portfolio any more. What’s your view? Do you think companies have given up too much, and can they get it back at all in the future? Where is this headed?
Bruce: I call this the outsourcer’s comeuppance. Many of these outsourcers wanted more and more control which made the client more manageable. They didn’t want to be challenged by their clients. As somebody said to me last week, they aren’t outsourcers, they are a legal staff of IT people. And I’d say that 80 percent of the people I’ve interviewed in the last three months told me they don’t have enough enterprise architects, IT strategists, security expertise, business analysts, mobile/social/UI experts and program managers. Their project management capability is low. They don’t have people who know how to work across the silos. In fact, when I asked if they have the right technology, multiple CIOs stated they don’t have the technical staff to appraise that so they’d have to ask their outsourcing partner.
And then you also have this sort arrogance on the part of the outsourcers that’s coming back to bite them. I keep hearing stories in which the outsourcer has told the CEO, or in one case the board, “our people know more about your business than your people do”. Gee, that has to make the CEO or Board feel so good. So I think CIOs are facing a dilemma of finding the staff they need.
There’s one other really important point here. We now have governance models that are distrusted and killing many organizations’ ability to change. What I’m about to say is heresy, but succession planning is killing IT because it ensures like for like. What I’m suggesting is that we need new people, new skills. I’ve stated in a couple of recent writings that if you’re just doing succession planning, you’re probably digging a hole. You really need progression planning where you determine the skill set you’ll need going forward, because it’s a different circus with different clowns. If you don’t know how the skills you will need are different from the ones you have…that should tell you something.
Stay tuned for Part II, “A Different Circus with a Different set of Clowns”
Bruce Rogow (pictured above) runs his own advisory practice, IT Odyssey & Advisory. Each year, he visits with over 120 executives, academics and consultants involved in the management of IT. He is also a Gartner Executive Programs research affiliate, with four decades of experience that have included roles with IBM and Gartner group, where he served as head of worldwide research. You can view his bio here.
So here we are, staring up at the big shadow of the Borg after four years of ranting and raving about the future of the services industry, collecting data like lunatics and flinging our research over the paywall to anyone who wants to read it. We’ve managed to race past 42 unsuspecting purveyors of analytical information (click here to view the full Index results), leaving us with just the one hurdle to jump. But we’ll take second. Second is good, it’s where you can pose as the alternative to numero uno. It’s like winning the silver medal for table tennis at the Olympics – and not being Chinese. It’s like Netflix taking on HBO…
In all seriousness, when analyst observer maestro, Duncan Chapple, and his team at Kea Company went out and surveyed an unprecedented 352 consumers of IT and services research, we thought we’d be happy with an honorable mention, or maybe a “they’re quite good at covering outsourcing” pat on the back. Or even an “innovation” award, which is what you give the little guys who try hard and have great ideas, but ultimately get their asses kicked by the monolith incumbents. So, you can imagine our surprise when we – somehow – didn’t get trampled by the old guard, when the real consumers of research came through and declared out stuff is actually pretty bloody useful, accessible and more valuable than much of the other stuff floating around out there…
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Why is this data meaningful?
The respondent depth is more significant than any other analyst firm survey. There were a minimum of 40 respondents commenting on each firm (352 in total took the survey).
Small research firms can out-muscle much larger competitors on trust and quality. Key categories for formulating the overall scoring were current value, degree of independence, future confidence and share of voice. We like the fact that boutiques can compete with firms many times their size. Research quality isn’t about how much money a firm makes, or how many bodies are on the ground – it’s about getting insights to market quickly and accessibly that are credible and have the confidence of the reader.
Analysts focused on services do well. Congratulations to some of our services research peers, which also made the top 10. This reflects well on the amout of focus and diligence we’re all placing on the space, and the level of interest out sector has in reading our work.
And, finally, we’d like to give a shout out to Kea Company’s Duncan Chapple and Ian Scott for their hard work in developing the Analyst Value Index:
And finally one of the most complex Blueprints is finally final, where we researched across the services lines to ascertain which outsourcing service providers are delivering the goods for enterprise analytics services. Here’s a sneak look at the Axis:
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Still preserving her sanity after collecting over 1000 data-points from 250 live multi-process enterprise analytics contracts, and conducting an exhaustive series of interviews with enterprise users of analytics services, we caught up with report author, analyst Reetika Joshi, to get a little more color into the analytics services environment and discover what she learned from the 2013 Blueprint process:
Reetika, is analytics really such a big deal for services, or just a lot of puff and bluster?
It’s a pretty big deal! Service providers are betting big on growing out their analytics capabilities in the next two years – and with good reason. I see analytics as a transformative force for an industry that’s undergoing an identity crisis. In ways, analytics is already helping IT and Business Services providers bridge the gap between being ‘vendors’ and being ‘partners’, offering ‘mess for less’ vs. smart, efficient business operations and most importantly, driving the conversation towards outcomes. Buy side organizations are leveraging these providers’ analytics expertise in many ways – improving reporting and efficiency improvements for business processes, getting help on overall information strategy, legacy BI frameworks and increasingly, advanced analytics initiatives around core business areas. Analytics is helping providers collaborate with their clients on solving industry-specific challenges and creating opportunities to improve core business areas including customer, finance, operations and risk – and that’s big business.
What stood out during the Blueprint analysis? Which industries / company sizes are have the greater analytics needs?
Reetika Joshi is HfS Research Director, BPO and Analytics Strategies (click for bio)
From a service area perspective, analytics data preparation and management and routine reporting remain critical services today. However, we see a growing number of engagements that include advanced analytics, predictive modeling, ongoing analytics support, and analytics consulting.
Industry verticals that have had greater data availability have naturally adopted analytics faster, across multiple business areas. These include banking and financial services, insurance, retail and consumer goods. As a result, analytics engagement maturity with service providers is also higher for companies in these verticals. They’ve developed confidence in their partnerships and are on the lookout for more complex analytics opportunities… leveraging emerging technologies (e.g. social media monitoring) or applicability in core areas (e.g. underwriting analytics). Companies in verticals that have comparatively recently had data availability (such as healthcare) are looking to providers to show them cross-industry learnings and opportunities for analytics interventions.
How did we assess analytics innovation and execution performance for providers? What did we look for?
Talking to buyers, they are most concerned about the quality of analytics talent working for them, industry expertise (particularly during strategy sessions and solution design), and flexibility in their analytics engagements. With this background, we applied our Blueprint methodology to evaluate innovation and execution for providers. With execution, we looked for solid delivery capabilities across the analytics value chain, analytics-specific geographical footprint and scale, experience delivering industry or horizontal-specific analytics solutions, flexibility to meet different client needs and the quality of customer relationships. For innovation, we looked for the completeness of vision of the end to end process lifecycle (from analytics road mapping to implementation and decision making), completeness of vision of industry-specific solutions (including talent and technology investments) and the ability to leverage external value drivers, including the other ‘SMAC’ components social, mobility and cloud.
I wanted to stress that the analytics services market is still nascent with many of the service provider models still emerging. As this is our first Blueprint in this space, we wanted to highlight the market leaders that have developed full service analytics capabilities, demonstrating scale and service depth across the analytics value chain. We evaluate services up and down the analytics value chain, including certain processes that aren’t ‘analytics’ per se, but are essential for analytics success, such as analytics data preparation and management. Our analysis reveals no true market ‘laggards’ for analytics, as we see expertise for one or more service categories from many providers.
We saw some surprises with the Winners Circle and High Performers – can you talk a bit about which providers have excelled versus those which could perform better further down the road?
Genpact, Infosys and Wipro are in the Winner’s Circle as they have significant scale in analytics, have demonstrated execution capability across service areas, and have very responsive account management teams. They have made great strides in vertical specializations and industry-unique analytics offerings and bring emerging technologies to clients. Along with these strengths, IBM and Accenture also have extensive experience in consulting, and have applied their expertise to help clients chart their analytics and data road maps and strategy. This makes their end-to-end vision for analytics compelling (I don’t even need to mention IBM’s $16B+ analytics acquisitions!) TCS and Capgemini have built strong offerings to help companies manage their requirements for ongoing reporting and insights. TCS especially excelled in the BFS analytics area. Cognizant, WNS, and EXL bring domain-specific innovations, having built strong industry-specific analytics capabilities especially in the high-end analytics modeling service area. I expect them to perform better in the next couple years as they are aggressively expanding these capabilities.
Overall, what would your recommendations be to both buyers and providers looking at enterprise analytics services in today’s environment?
Talent will ultimately be the key to differentiation. The most satisfied buyers in our research spoke to the high quality of analytics talent they accessed through their providers. Buyers must look beyond fancy toolkits to the actual resources allotted to deriving insights from them. Onshore support, business context, and prior industry experience will make all the difference between good and great analytics providers in the near future.
Leveraging emerging technologies will pay off. Buyers are looking externally for expertise in new technologies for analytics. Providers that invest in integrating services with new technologies will earn thought leadership. Opportunities include modern data mining, data visualization, industry-unique predictive modeling tools, mobile dashboarding, and strategies for leveraging big data.
Leading with business perspective will drive value chain adoption. The bulk of work outsourced in this space continues to be in the realm of data preparedness and routine reporting. For advanced analytics and decision support to proliferate, the conversations must shift from the CIO’s office to business leaders, from costs to business outcomes. Winning providers will encourage brainstorming sessions and regular senior leadership and SME interactions with clients to drive high value creation. The majority of buyers still seek help with more foundational areas, but the scope for high-value analytics will continue to expand as operating models mature.
Service providers must bring cross-industry lessons to succeed. Buyers look for analytics expertise from providers that have prior experience and increasingly industry vertical experience. Providers are accordingly developing CoEs and aligning solution sets by verticals. Our conversations with buyers reveal that they are now also looking to providers to bring best-of-breed innovations from across industries that may have shared applicability. We see functional areas as equally important service areas for analytics, and foresee innovative analytics implementations through cross-industrial partnerships.
The 2013 Blueprint Report for Enterprise Analytics Services can be accessed by HfS premium subscribers by clicking here.
When Zombieism takes its grip on enterprise operations, many fail to realize… until it’s too late. In fact, many of you reading this may already be exhibiting signs of early-onset Zombieism and immediate inoculation is imperative…
But never fear folks, as the forthcoming BluePrint Sessions 3.0 in New York this December are specifically designed to detect the early warning signs of creeping Zombieism and help you do something about it.
Just picture the scene, the leaders of the leading outsourcing providers and advisors face off with 75 of the leading buyers of outsourcing services. Pure ITO and BPO with a twist of shared services and GBS. And there is one common rule which applies – all egos must be left at the lobby of the W Hotel Union Square New York City, or face being personally escorted from the premises by the corporate Zombie-buster himself, Lee Coulter.
In all seriousness, we’ve arrived at the sixth HfS Sourcing Executive Council summit, and this one has all the ingredients to provide the jolt this industry needs to define its purpose, its career paths and its long-term direction.
So, without further ado, let’s take a closer look at the festivities…
Zealots of Anti-Zombieism leading the way in New York this December: H.D. Smith's CIO David Guzman; Author and Hero of the Uncorporation Vinnie Mirchandani; Northern Trust's Sultan of Sourcing Stategy Jay Desai; Ascension Health's Shared Services CEO Lee Coulter; Cigna's Head of BPO John Haworth and Samasource CEO Leila Janah
The Agenda
We start on the Monday night with a private buyers-only reception and dinner on the evening of the 2nd where a garlic-free evening promises to lubricate the intimate conversation and set the agenda for the following two days.
Day 1: Disruption Day
Guzman gravitates. We kick off the intellectual proceedings with legendary CIO, David Guzman presenting on the Data-Driven Organization. David is CIO for pharmaceutical wholesale giant H.D. Smith, possessing a stellar track record in the data-hungry healthcare, pharma and retail industries where he served as CIO for the likes of Acxiom, Owens & Minor and Office Depot. Any of you who have crossed paths with David will be eagerly anticipating his views on where the future of data and analytics is heading.
Cliff contemplates. We then get treated to a bit of Captain Cliff Justice, KPMG’s head of shared services and outsourcing advisory and the grand architect and proponent of Global Business Services. Presumably, he’ll be discussing Global Business Services and what it actually means to the world.
Vinnie validates. Then comes the irrepressible Vinnie Mirchandani, one of the all-time great technology bloggers, where he will stoke the morning fires by addressing Five Disruptions Shaking the Foundations of the Modern Enterprise. If any of you don’t know who Vinnie is (and shame on you if you don’t), he’s a former analyst with Gartner, consultant with PwC, and today a serial entrepreneur and author. Vinnie’s pupliteering will be palpitated by HfS’ Ned May as he probes deep into the disruptive dynamics.
Tim and Don delectate. We then get treated to a double-act of vendor management debate, with the lively and (occasionally) outspoken Tim Norton, now with UPS after a long career with GE, teaming up with his drinking buddy colleague Don Hickey to tackle the topic of Progressive Vendor Management head-on in his usual no-frills style.
Craig encapsulates. The afternoon feature some serious governance debate, with HfS’ Mike Beals leading off a discussion on training and certification, followed by a new double act to saviour: the inventive Craig Libby of USAA twinned with HfS Fellow, and industry outsourcing veteran, Paul Cervelloni tackling the little topic of Creating an Actionable Road Map for Attaining a Progressive and Mature Governance Program.
Michael and Jo Ann invigorate. The sticky topics continue to get stickier with Deutsche Bank’s Michael Heeger going for the kitchen sink with The Good, the Bad, and the Ugly, followed by The Hartford Group’s Jo Ann Tan who wrenches herself from her road-mapping to discuss the topic we all having in common, Getting to Where We Want to Be. If there is anyone who does not want to get where they want to, I suggest they stay away from this one…
Everyone Speed Dates. We then do something I once vowed never to take place at an HfS event… Speed Dating. Sigh. We’ll also lock the doors, so there is no escape from this one… like a colonoscopy, it’ll be over before you know it and you’ll feel better for the experience. I think.
And Leila liberates. After the horrific experience of Speed Dating, we promise to make it up to you with a healthy injection of food and booze, where we will be treated to Samasource CEO, Leila Janah talking to us about how Samasource has moved 4,000 workers and their families over the poverty line in under five years, and spun out a domestic program, SamaUSA.
Day 2: Judgement Day
Reality-check. The hangovers are guaranteed to kick in with the latest rendition of the sorryState of the Industry, this time being tag-teamed by yours’ truly and BPO/Robotics/Techie brain-box Charles Sutherland.
C-Suite provider leaders. However, the real fun starts with the most berserk C-suite provider panel ever-constructed, where we put to task Accenture’s Mike Salvino, Gapgemini’s Hubert Giraud, WNS’ Keshav Murugesh, Cognizant’s Vipul Khanna, Sutherland’s David Poole, IBM’s Christine Gattenio, Genpact’s Gianni Giacomelli, Infosys’ Gautam Thakkar and HP’s Danila Meirlaen to tackle all the really tough talking points.
The advisor heads take the stand. And once we’re done grilling the providers, we’re putting leading minds from the advisor shops on the stand for their turn – ISG’s David Whitmore, Alsbridge’s Chip Wagner, KPMG’s Cliff Justice, Deloitte’s deadly Doug Plotkin, PwC’s Derek Sappenfield, Alvarez and Marsal’s Peter Allen, Loeb and Loeb’s Howard Akiba Stern and Ernst and Young’s Tom Schramm. The roof threatens to be blown off with the level of big thinking and big hutzpah we’re gonna hear…
The Zombie-busters visit from the future. If you just can’t come back down to earth after witnessing 17 captains of industry duke it out, then Cigna’s John Haworth and Ascension Health’s Lee Coulter will do their best by reenacting what the world would look like when some characters from some future point in time visit us to assess how our enterprises are falling into a state of creeping Zombieism – and what catalysts will/should/can occur to break the cycle.
A brief sojourn to Robotistan. Sending us back into the realms of an alternate reality – in fact, into the land of the robots – is Blue Shield of California’s Pradeep Khemani, where he will lead a discussion reminding us that Outsourcing: really is just An Interim Step Towards Automation.
Back down to earth and the ‘innovative partnership’ topic. And after we’ve been truly robotized by Pradip, Coventry Healthcare’s Rajesh Bhutani and Patty Onion will bring tears to our eyes, when we tackle that thorny topic Traveling the Path from a Cost-Saving to an Innovative Partnership.
Our dysfunctional career paths are exposed. However, just as you think you’re going to survive until cocktails, we unleash the fearsome feistiness of Change-maestro Deb Kops and HfS’ Talent Queen Christa Degnan Manning to put everyone on the spot when we debate our own futures and undefined career paths with Creating a Blueprint for Global Services Talent.
The grand finale. And to cap it all, we finish up with the pièce de résistance as we wheel out the sultan of sourcing himself, Northern Trust’s Jay Desai, to lead the Family Fued-themed buyside team as they look to take on the Sell and Advise Families. Oh fun.
And then there are the much-needed drinks…
Bottom-line: If you like the status quo – and creeping corporate Zombieism is a viable option – then this little extravaganza just ain’t for you
The outsourcing business is in danger of killing itself with boredom, with repetition, with believing its own bad marketing. Most of the corporate world has little clue what “outsourcing” is beyond subbing onshore with offshore labor. It is a business with unclear career paths, with over promised outcomes, and too many struggling and distrusting relationships. Can we change all this in two days of great discussion and open views? Let’s give it a shot 🙂
I’d personally like to thank our sponsors for helping with the ever-spiraling cost of putting on an event in New York during Xmas shopping season: Accenture, WNS, HP, Cognizant, IBM, Infosys, BluePrism, Sutherland, HCL and TCS.
How would you fancy behaving like an arrogant xxxxx all day, work for a firm still living in the 90’s, have the whole world forced to kiss your behind, while you put out nonsensical research and vendor rankings that noone can fathom? Well – send your resume to [email protected] and we’ll review your application.
However, if you want to join a research firm that believes a world exists outside of the CIO’s office, a firm that is living in true “whitespace” where it is trying to define and shape an industry living at the heart of global business operations, then we would like to actually talk to you!
In all seriousness, HfS is expanding its global remit and we need to bring onboard more talent which has a good idea where our world is heading. If you are passionate about our industry, want to put YOUR stamp on its direction and be part of an incredible team, then send us your resume to [email protected].
Here are our pre-requisites:
1.) Wants to work and is sick of the “nine to five”
2.) Loves embracing, debating and writing about change
3.) Wants to be part of something special
4.) Has genuine entrepreneurial spirit
5.) Has had opinons repressed for years are can’t wait to get them out
6.) Has some tendencies towards insanity, or just plain wackiness
7.) Wants to make a difference
8.) Wants to stick it to the man (desirable, but not essential)
People leadership problems like “Smarter management talent,” and “Better talent in the HR function,” are in the top 3 challenges to employee engagement uncovered in our survey while “Better technology implementations/user experience” ranked #11 and “Improved data capability/analytics to support my job” ranked #12. Unfortunately there has been too much focus on HR process and automation in companies, with the latest hype around integration and analytics as the next breakthrough “gotta have” investments.
However, people lead people and they are asking for the support, training, and enablement to meet and collaborate to both better manage day-to-day work and develop into the next generation of leaders. In another recent study HfS conducted on global business services functions, we explicitly asked about investments in formal business training in many key areas today by type of worker: enterprise or service provider.
What we found confirmed results found throughout the engagement research that workers are not getting development support: the majority are not getting any kind of formal training in critical business areas at all. As the extended enterprise expands, ambitious professionals may very well choose to work at service provider companies specifically because the traditional enterprise has dropped the ball in terms of its people. Will this be the tail wagging the dog?
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When we asked workers in the engagement survey how they want to spend their time, regardless of engagement level, they did not call for more automation or integration. They said they want to improve existing business processes, innovate for customers, and collaborate with colleagues.
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While a whole blog could be written on the trade offs of working from home and commuting (and likely will be at some point!), it is clear workers do not want to spend time on conference calls, administrative tasks, email, and compliance related activities. So companies should be relentless about giving them their time back.
There are actually great technologies out there to help manage hourly workers time – why not treat every worker as having a finite number of hours and assign them to company goals by skill set, availability, and interest? And we are not just talking hourly billable consultants here.
Measure managers on making sure that workers don’t just do what makes the manager look good, but focus them on the right priorities and give them the assignments that help with their career progression whether that will beinside or outside the company (btw stay tuned for the full write up on the HR Technology conference where some innovative companies are headed in this direction.) One has to wonder if the cut-backs in training have come out of the need for cost savings, the lack of actual career progression opportunities inside firms, or a perverse fear that new skills sets will make workers more marketable elsewhere. Guess what? They are all foolish gambles.
Also, simply give people money to get together. While some individuals reported they wanted to travel less to be more engaged, a greater numbersaid they wanted to spend more time traveling (32%) and to attend industry conferences and events (49%), which are huge professional development and relationship building opportunities. And fully half the survey respondents said they want to spend more time in team building activities, in mentor relationships, and in actual formal on the job training. Simply put, workers are starved for meaningful interaction.
Having been involved in econometric research analysis in the travel industry, I can tell you that the dramatic cutbacks of travel and entertainment budgets in 2009 and 2010 actually exacerbated the recession as people stopped going out and connecting with customers and converting prospects, as well as having internal meetings and holding in-person training. Harvard and MIT have also done a compelling study that shows that the longer teams go without in-person meetings, the more trust is eroded and productivity suffers (For copies of either of these studies, just ask.)
So ironically despite the wide-spread adoption of the term “human capital,” companies lost sight of the fact that economists use the term human capital not just as what people are inherently worth, but also how investments in people like education and training increase their value. The modern organization has stopped making too many of these investments it seems in favor of automation at a time when companies need to rethink the very people processes they seek to automate.
The Bottom-line: It’s all about people being empowered by technology across the extended enterprise
Christa Degnan Manning is Research Vice President, HfS (Click for bio)
The engagement survey results do show significant correlations between satisfactions with many software solutions (which we look forward to highlighting in the full report), but in the short term, these study highlights and suggestions should serve as reminders that business operating improvements and results are not the outcomes of automation or even outsourcing alone, but of aligning a team around a shared purpose, building relationships, removing barriers, and automating and/or removing administrative and non-value added activities.
The best research take away from this study, as well as the HR Technology conference last week where I met with old and new contacts alike, was that people make the difference in every business and they do their best work when they are motivated by people they can believe in, whom they have a personal connection with based on trust, and who reward their loyalty and best efforts. And they are not distracted by process automation and compliance for their own sakes.
Too many workers today are uninspired, unfaithful, and ironically frustrated they are not being tapped to create new value in business. A pervasive atmosphere of fear exists to cling to the jobs left after the “jobless recovery,” where they go through the motions of their roles just enough to stay away from the ends of the performance curve, and may have even stopped complaining (openly) that they are not given the time and monetary resources to drive innovation and customer success.
But now they have spoken. And we all have to smarten up.
Click here to listen to the Engaging the Extended Enterprise industry panel webcast that reviewed early findings from the Power to the People engagement survey. Watch for the full report to be published in November 2013.
It’s been a few weeks now since the surprise announcement of Accenture’s purchase of Procurian and, while the teams on both sides are busy working through details of the post-merger acquisition, we wanted to spend some time thinking about the implications of this deal for the other service providers in the Procurement Outsourcing (PO) market. What can they do in this short window, while the dust settles, to respond? Charles Sutherland pokes around at the post-Procurian procurement planet…
Regardless of whether this purchase is positive, polysemous or problematic for a service provider, everyone has to recognize that the market landscape has shifted quite seismically in recent weeks, with a clear market leader emerging, in terms of market share, industry breadth and client footprint.
Using the market shares from our recent Procurement Outsourcing Blueprint we place the combined Accenture/Procurian at 28%, which is more than 1200 basis points greater than #2, Xchanging:
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When we look at the remaining service providers, we see this acquisition in placing each one into the following these clusters: either positive, problematic or polysemous for the business, depending on the context and the opportunity. (We just couldn’t quite give up totally on the P alliteration but promise to stop now.)
The Positive Providers
So, why could the merger of two major competitors create a positive event for a PO service provider? Well, one of the key drivers for Accenture in buying Procurian was to expand its bench of seasoned category managers and sourcing experts – especially in direct materials. For all three of these specialists listed above, mid-sized providers which also have a depth in sourcing direct materials and category management (as well as consulting and transaction capabilities), are all now serious alternatives for buyers who may not want to go with Accenture. Moreover, they are also acquisition candidates for the service providers which now need to expand their own capabilities in response (e.g. most of the Problematic category).
The Polysemous Providers
For our polysemous service providers it’s a mix of positives and problems, as a result of this deal (and if you didn’t take Latin at school, Polysemous = multiple implications, in this context). GEP is another likely acquisition candidate for the Problematic providers, although the firm has been working hard to position itself as a technology, not sourcing-led, company and so they might not be first on the shopping list. The firm may find that ir has to make decisions as to where to invest if the market begins to place a greater emphasis on sourcing depth over technology in the near-term. Infosys and Xchanging are in similar positions, they have some depth in sourcing and some unique vertical strengths, but they won’t have the depth of an Accenture or an IBM in category management. What they do have going, is a greater use of proprietary technology than most PO service providers, and so steering buyers towards the value created by technology-led solutions is where the opportunity has emerged for both.
We also believe that this deal is a mixed blessing for the more traditional sourcing consultants. On one hand they now face reduced competition as Accenture’s own sourcing consulting practice will be part of the PMI plan for this acquisition and may emerge quite differently than it has been previously structured. It’s also positive in the sense that the smaller independent consultancies may be acquired by the Problematic positioned providers as readily as the likes of a Corbus, Denali or Proxima. But things aren’t all rosy; the core consulting business model in sourcing is under threat from the end-to-end capabilities of PO service providers, especially now with the depth of category management sitting in the leading companies. Also, for those PO service providers which don’t have the appetite (or cash) to make a sourcing acquisition, the consultants, managers and Partners of these consultancies make for very attractive focused hires to build up practices on a person-by-person or client industry-by-industry basis.
The Problematic Providers
This deal is problematic for other PO service providers whose depth and breadth in sourcing specialists and category managers, especially in key products or industry specializations, now clearly stand out as a competitive weakness versus Accenture.
For Capgemini and Genpact, this acquisition removes an established and growing alliance partner from their own solutions so they will need to invest in category management either through acquisition or hiring / organic growth.
For the smaller PO service providers including Aegis, HCL, TCS and WNS who generally entered the market with or from F&A P2P contracts, they need to decide if this is a sustainable strategy or whether they also need to follow in the footsteps of the larger diversified providers and quickly build up sourcing and category management benches. The alternative is to concentrate more on the transactional processing elements of PO and build their own technology platforms in the way that Infosys, GEP and Xchanging have been going.
Finally, for IBM, its strengths especially in manufacturing and consumer goods client industries for sourcing and category management are now matched by Accenture’s breadth and client references, and so the head-to-head competition that has marked this part of the market for the last several years has now become even more intense.
The Bottom-line: A spate of M&A has to emerge to re-balance the competitive nature of procurement outsourcing
Charles Sutherland is Senior Vice President, BPO Strategies at HfS (Click for bio)
Overall, it would come as no surprise to HfS to see a domino effect of acquisitions begin to take shape in Q1 of 2014 as the PO marketplace realigns itself to the post-Procurian world. We really do not expect their aggressive competitors simply to rollover and have their bellies tickled. IBM has laid out its master plan that Supply Chain Management is one of its core areas of growth and future investment; Infosys has gone gangbusters making the Pocurement Outsourcing Winner’s Circle after barely a few short years in the space; Capgemini has invested heavily in procurement with its acquisition of IBX and its fledgling supply chain BPO business and needs a strong procurement capability to balance its powerful F&A business; Genpact needs to expand its procurement strength and depth to compliment its F&A prowess. Accenture has forced the issue by sweeping up Procurian, now its competitors have to respond.
We’ve had the 
It’s been a few weeks now since the surprise 
