And now time for the second installment of Christa Degnan’s Manning’s discussion on HR’s obsession with obsolete processes, and we’ve got some more fascinating data to share from our new employment engagement study of 5,000 worldwide employees, conducted with the support of KellyOCG:
Why senior managers are almost as disengaged as their subordinates
Curious how leadership could be contributing to this poor employee engagement situation, we also looked at engagement by workplace hierarchy. By the nature of being a front-line employee, lower levels of responsibility and autonomy might drive disengagement as they are typically on the receiving end of orders or the bottom of the goal cascading process in the HR process world. (What is it that they say about what runs downhill?)
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While we did find higher levels of engagement the higher up the proverbial ladder one goes in an organization, the key take away for us wasthe difference wasn’t that much. This actually supports another data point near the top of the list of challenges that need to be overcome to improve engagement: #4 is “More engaged and energized management.”
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The reality is that companies are simply not investing in their people across the board; even senior leaders report a lack of support to develop new skills and capabilities. The #2 overall challenge to engagement is “Focus on career path and development,” right after “Smarter management talent.”
Get rid of the rank and yank
I would argue in today’s lean, mean virtual global marketplace, the main culprits to these issues is the cut backs in training, including face-to-face travel and events, and the all-too-pervasive “performance rating on the curve” system, which means that for one worker to win another has to lose. In a world where workers may be asked to calibrate colleagues’ performance having never been given the opportunity to even meet in person, the traditional curve approach is demoralizing, demotivating, and downright destructive because it is completely obsolete in the virtual, mobile, social, flexible workplace.
Christa Degnan Manning is Research Vice President, HfS (Click for bio)
If so much of work today has been outsourced or arranged through contingent workers or specialty statement of work (SOW) consultants, companies should only have their very best people left. With many business models shifting and people assuming multiple roles, there should be more rigorous training and opportunities for real connections in place. And companies should ask: is it fair to compare worker contribution just because they are the same band level? Or a worker in the U.S. to someone in France who legally has twice the time off (and is almost impossible to fire?)
I would also argue that senior executives are disengaged almost as much as the rest of the workforce because they have been the products of these outdated processes and are being asked to perpetuate them. They are also victims because they killed themselves to get and stay at the top of the curve in performance ratings, then too often are rewarded by being asked “to take one for the team” with a “stretch assignment” that has nothing to do with their strengths, interests, family commitments, or their own career aspirations – other than moving up – or staying on the same rung – of the ladder in the business.
Stay tuned for Part 3 (click here to read), where Christa discusses measures enterprises can take to improve the engagement levels of their staff and invest more in humans and less on systems…
Every autumn, the world’s leaders descend on New York causing mayhem as they make their way to the UN to make speeches and assert their influence over the direction of world affairs.
Last year, we noticed there was a new nation-state “Robotistan” making its presence felt at this august world body and we, at HfS, wondered how significant a player it could become in matters of the BPO and shared services nation states. So we sent our very non-robotic Charles Sutherland to take a closer look into this subtle shift to robot arbitrage…
Framing a Constitution for Robotistan
Over the last year, Robotistan has developed even faster and more extensively than we could have anticipated, a set of developments we have captured in our recently published research report “Framing a Constitution for Robotistan”. What we have seen is how Robotistan is quickly becoming part of the strategic planning efforts of leading BPO Service Providers, operational consultants, analysts and end clients many who have appointed their own dedicated ambassadors or sent fact finding missions to Robotistan so that they can better understand how the place works. We have also seen new citizens arriving in Robotistan in the roles of both software providers and end users to help swell the ranks and the influence of this emerging entity.
In fact, this growth in interest and strategic importance for Robotistan is such that this fall, it has clearly taken residence as one of the members of the BPO Security Council participating in the debate over the future of horizontal business processes such as F&A, HR, Procurement, Supply Chain, Marketing and Legal. While not yet a permanent member of the security council with the status in the BPO world like: labor arbitrage, process redesign, staff augmentation, global business services or the SMAC stack we are amazed by just how far Robotistan has come already and can already see a future when it could replace a permanent member owing to its ability to create incremental and permanent value for both clients and service providers.
Charles Sutherland is Senior Vice President, BPO Strategies at HfS (Click for bio)
For those of you asking, why this new nation-state seems to be on the ascendency at the moment, we believe it comes down to a number of major changes occurring in the world of BPO today. Specifically, the striving for differentiation amongst service providers, the increasing value of contract renewals and re-competes, the strategic imperative to break the revenue-FTE linkage for service providers, solving for the eventual end of labor arbitrage new mindsets about the role of technology and humans together and how user friendly the technologies of Robotistan are becoming.
These changes will only continue to become more significant in the BPO world in the coming years which further enhances the potential appeal of Robotistan as a destination for many of the world’s leading companies.
For those of you joining HfS this December in New York for our Blueprint Sessions 3.0, come to hear more about the HfS view on how this world is developing including more about the growth of Robotistan and how we see the BPO Security Council changing over time.
“Framing a Constitution for Robotistan” is a new report authored by HfS analyst Charles Sutherland – you can download your complimentary copy here.
Christa Degnan Manning is Research Vice President, HfS (Click for bio)
The smartest leaders are those who figure out how to get the most out of their staff – to hire the best people they can afford, make sure they are continually energized, and to ship out the poor performers and bad apples on a continual basis.
So why, oh why, do so many Human Resources executives obsess with administering irrelevant processes and buying technology products to fuel these obsessions, when they should be helping their firms’ managers get the best out of their staff? It brings me back to the heyday of HR outsourcing, where so many deals fell by the wayside as they were centered on HR offloading the administrivia to outsourcers and focusing their retained org on the “value add” HR work. Sadly, most organizations quickly discovered most HR people only wanted to deal with administrivia, and HRO was a direct threat to their employment. So end-to-end HRO died a painful death, leaving the outsourcers to focus on discreet administrative processes, namely payroll, benefits and staffing admin, which HR people could administer – and obsess over – to their hearts’ content.
As was so famously pointed out in 2005’s Fast Company’s Why We Hate HR article, the whole HR function needs to be blown and and completely reconstructed with a new set of skills, a renewed purpose and mission to put the HR function back somewhere remotely near the C-Suite table. So, without further ado, it’s time to unleash our own doyenne of the disruptive workforce as she wages her war on weird workforce ways, Christa Degnan Manning…
Time to Put the People Back into the People Business
As noted in my HfS bio, I recently returned to the business research and analysis arena focused on workforce optimization because my last five years’ experience as a line manager and employee in a Fortune 100 firm (supposedly one of the best companies to work for) exposed me to the fact that predominant human resources philosophies, policies, programs, and particularly systems in place today are woefully inadequate and even obsolete for today’s global, virtual, mobile, social, time-starved, knowledge-worker world.
Today’s firms investing more in talent outside of their core organizations
Compounding this challenging reality is the fact that companies continue to downsize their traditional full-time staffs as well as under-invest in the people that remain. Too often, they neglect the knowledge transfer, culture indoctrination, and relationship building with all their “extended-enterprise” workers including contractors, consultants, and third-party service provider partners that are critical to sustained business success.
Validating this workforce shift, procurement outsourcing firm Proxima recently shared public company data analysis quantifying the change in the workforce in the last three years, noting that labor-related costs as a percentage of company revenues have decreased 8% while non-labor costs with third party providers have risen 6%. Yet procurement and HR practices haven’t really changed a whit.
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Having just returned from the latest and greatest HR Technology Conference after a five year absence, I can definitively say the majority of organizations and workforce software and service providers are still obsessed with “hire to retire” HR-process driven approaches to supporting the workforce. Yet, I cannot find one person who has gone through that process at a single firm – let alone have that process automated by a sole software provider.
But I do talk to many people – even HR practitioners – overwhelmed by all of the disparate employee and manager Web-based self-service expectations today. Workers are also completely exasperated with the actual HR processes (painful annual calibrations and bogus development plans with no resources or commitment to execute them) and frustrated where processes should exist but don’t (on-boarding and off-boarding have to be the worst offences.)
A third of the modern workforce is disengaged and de-energized
Frustrated by the lack of any progress addressing these workforce realities and our own experiences in the business world, HfS decided to ask what workers worldwide think about their workplaces and how they want to spend their time to be more engaged and productive. While lack of engagement has been well documented (typically by firms, such as Aon Hewitt, Deloitte, Gallup, and Mercer, that sell consulting services for employee engagement strategies), we wanted to investigate, in very practical terms, what could be done to address the root causes of disengagement in the context of the modern business operating models we observe.
By conducting this survey, we hoped to focus attention on the pervasive yet interconnected issues undermining individual as well as business success, and ultimately help our economies return to healthy expansion. So in August and September we collected input from nearly 5,000 workers worldwide across all types of worker: age, geography, role, function, company size, industry and more (special thanks to KellyOCG for its support).
Not only did we document that one in three workers worldwide is disengaged in their jobs half the time or more, but we captured insights into the policies, solutions, preferences, and ultimate challenges to be overcome to achieve higher levels of workforce empowerment and productivity. From time management to software solutions, workers shared eye-opening advice in many areas that sound simple to say but may not be so simple to execute. Let’s examine further…
Why is the full-time employee the least engaged across the extended enterprise?
While the vast majority (75%) of respondents classified themselves as traditional full time workers, they turn out to be the least engaged of the lot. Given the recent waves of downsizings, uncertainty in the economy, and career development limited, the traditional worker gets the message: the company is not willing to invest in you. So why invest in this business?
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They are also overtaxed with departed colleagues’ responsibilities in parallel with more self-help duties than ever before. More than 80% of traditional employees reported spending 25% of their time or moreon administrative tasks. How many readers can identify with this: an IT help desk request more often results in a more timely service quality survey request than in the computer problem actually being solved?
Speaking of IT, workers spend so much time today setting up and attending virtual meetings and conference calls, they simply have to multitask – literally disengage during meetings – to get any real work done. At the same time, they are being asked to master the disparate self-service apps that have proliferated in the last decade. Whether it’s creating their own help desk or procurement requisition, approving supply contracts and invoices, booking travel or filing expenses, workers are spending more time on these tasks and not in real business-facing activities.
And it is particularly loathsome to the workforce when some other department or function takes a big scorecard win and performance payout bonus for FTE cut cost-savings when part of that savingsliterally comes out of their work day (if not after-hours – a third of respondents to the study reported consistently working more than 40 hours a week.) Where’s the employment brand commitment to work-life balance there?
Simply-put, many HR executives and HR technology providers have become increasingly irrelevant to corporate strategy with their own focus on automation and administrivia associated with non-value added processes and products, as opposed to solutions designed to improving employee engagement and productivity. They are just adding more things for workers to do that do not help the customer or help the manager (and through them the full population of employees and clients.)
Stay tuned for Part 2, where we discuss, who and what is to blame, the disengagement of managers as well as their subordinates… and the common sense solutions in front of us… click here to read.
Christa Degnan Manning (pictured above) is Research Vice President for HfS Research’s Workforce and Talent practice. You can view here bio here.
My good pal Vinnie Mirchandani just blogged about how we can add so much to our lives by looking beyond Twitter, LinkedIn, Facebook, Quora, Pinterest etc to find value from our networks, when it comes to learning new ideas and gleaning knowledge. He mentions going to more events, getting more magazine subscriptions on your iPad, going to the book store… I would go further and encourage us all just to make more of an effort to meet and talk! You can’t beat sharing knowledge with each other as the best way to learn something new…
I was having a drink with an old friend recently and that person said something that make me think; “Everyone knows you, but very few people actually know Phil the person”.
It really him home that I was electronically famous (or notorious) but few people actually know me to hang out / have drinks / shoot the sh*t etc
I used to really value my personal relationships but it really dawned on my how superficial so many of my social media relationships were. I’ve put so much effort into building my electronic network in recent years, and not enough into my personal network. While my electronic friends are fun, they pale in comparison with real people and real conversation…
My first New Year’s resolution is to change this and focus more on the “real” less the avatar… so if anyone’s passing through Boston, my offer is open to share a decent glass of wine… pint of good ol’ ale… maybe even a single malt. Drop me a line anytime 🙂
Why do so many service providers still hover feverishly around outsourcing advisors begging and willing them to invite them into huge contracts… when the reality is that most maturing enterprises are today less reliant on the advice of traditional consulting than they ever were? And when will advisors wake up and realize that the old method of billing their clients millions for effort-based grunt work is just no longer doing it for them?
As one advisor confided the other day… “we can tell in a quick phone call if we can bill them $500K plus… if we can’t, we just don’t bother pursuing them”. There was little thought regarding how to develop a long-term outcome based relationship, the onus simply being to park the MBA bus at the client’s visitor’s parking spot and sell the same old dog n’ pony show of cranking out operational data to effect the sort of operational result that the client really should do itself. Bottom-line, clients need a helluva lot more than the obligatory 200-slides appendix that quietly gets dropped into the recycling bin after gathering dust on some executive’s desk for a few weeks.
And when the world’s number 1 management thinker, Clayton Christensen, writes about Consulting on the Cusp of Disruption, you know it’s officially game-over for the way consultants have traditionally delivered effort-based high-cost projects for wizening clients. And when it comes to helping clients with Global Business Services and Outsourcing, the credibility of consultants is at an all time low – according to 106 C-levels and SVPs of major enterprises responding to our new GBS study:
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Why do only half of enterprise leaders see increased investments in consultants as the way forward to achieving effective global business services?
Yes – just look at the data – increasing investments in consulting scores drop-dead last when it comes to achieving fluid and effective governance. 46% actually sees no benefit whatsoever, and only 15% sees any real help coming from outside.
Compare this to the fact that over nine-tenths of enterprise leaders look to stronger C-Suite commitment, better talent and better IT to achieve their governance outcomes. Clearly, if consultants could help ensure their clients could begin to achieve these three objectives, they would find themselves sitting near the top of the priority pile, instead of at the bottom.
How has consulting reached this low-point and what can be done to turn the corner?
Let’s refer to Clayton Christensen first:
We have come to the conclusion that the same forces that disrupted so many businesses, from steel to publishing, are starting to reshape the world of consulting. The implications for firms and their clients are significant. The pattern of industry disruption is familiar: New competitors with new business models arrive; incumbents choose to ignore the new players or to flee to higher-margin activities; a disrupter whose product was once barely good enough achieves a level of quality acceptable to the broad middle of the market, undermining the position of longtime leaders and often causing the “flip” to a new basis of competition.
And the world of outsourcing advisory fits right into this trend, where, in years gone by, the likes of TPI (now ISG) would park teams of former EDS executives into enteprises to number-crunch outsourcing contracts and FTE cost-data for millions of dollars. Other advisory boutiques sprang up to take advantage of this model, such as EquaTerra (now part of KPMG), Alsbridge, Everest, W Group and Pace-Harmon. We then saw traditional consultants, namely Deloitte, PwC, KPMG, Ernst and Young and even McKinsey, form “outsourcing advisory practices” to grab their own share of the pie, as clients queued up for help with their global sourcing needs. However, as all of them quickly discovered, all the easy money was centered in the act of brokering a deal, crunching the numbers, vetting provider long/shortlists and working with lawyers to finalize the contracts. Most were quickly ejected after the contract was signed, as they simply didn’t have the right consulting skillset – or data – to support the client with its operational and strategic needs to transition the operating model and develop a fluid, effective governance capability.
Some of these firms have flourished to evolve their models to provide platform-based solutions which enable client to access process benchmarking data, dynamic pricing information, on-tap support when needed, but most have persisted in hawking the same-old model that half the clients – as the data points out – are not really looking for anymore.
As brokering outsourcing contracts has become operational – and commodotized – these consultants have been faced with three stark choices:
1) Just do deals cheaper. Today, we see deals that used to involve teams of six (or more) consultants, now being brokered by one solo advisor. Go figure. We are also seeing outcome-based models from non-traditional consultants, such as UpperEdge, that do not rely on the onsite hourly-bill-fest consultant model to broker a transaction and can radically undercut their higher-priced competition with its strong data and pricing capability. Alsbridge has been one of the few smaller advisory boutiques to survive in recent years, developing a strong competency in IT infrastructure and networking data benchmarks that enable it to take the lead in a commodity market and service clients with low-cost support, in addition to traditional outsourcing advisory, based on its client needs.
2) Persist in finding clients naïve enough to pay 2005 prices. Sadly, there are still some enterprises which still get convinced they need the MBA bus dispatched to number crunch an ADM bake-off between HCL, Cognizant and TCS. Yes – seriously – this still happens! Traditional consultants, such as Deloitte, PwC and Ernst and Young have stayed in business doing it the old-fashioned way, and do a good job leveraging their long-established auditing relationships to get to the table with clients, still happy to pay top-whack for the peace-of-mind of using a reputable brand. ISG (formerly TPI) is the traditional 800 lb gorilla of the complex and clunky outsourcing transaction, and has made efforts in recent years to position itself as more than a transaction shop dependent on the $550/hour gray-haired former EDS executive-cum-consultant rolling up to camp in a cube somewhere at the back of a mid-west shared service center for the next three years model. While it has made some interesting efforts to change its business, such as its recent multi-year contract with Marriott to manage its outsourcing governance program, the firm still makes the bulk of its business from the old world of traditional advisory. Whether it can eventually transform itself into a research / benchmarking firm after its acquisition of Compass three years’ ago, remains to be seen.
3) Develop platform-based capability that decouples the requirement for onsite consultants, while providing clients with the data and capability they need. We are starting to see pockets of this happening, such as the work KPMG has done developing its Governance Workplace tool that provides clients with ongoing process benchmarking, industry insights and pricing data to manage its service provider and shared services portfolios, supported by a dedicated onshore delivery team in Grand Rapids, Michigan. The firm has done an impressive job developing the IP and technology acquired from EquaTerra and coupling its governance consulting talent to its clients, as and when they need it, under its Managed Governance Services offering. While it’s still early days to gauge the long-term potential of KPMG’s model, it’s clearly a front runner in terms of balancing clients’ needs for traditional consulting with the disrupter product that is acceptable to the broad middle of the market which Christensen talks about.
The Bottom-line: Consultants are not immune in today’s disruptive world – it’s “change the model, or prepare to fizzle-out” time
I’ve never known a more disruptive time for business than today – entire industries can be decimated before they know it – just look at the impact social media and the proliferation of information and communication has had on PR, research, media, technology and content-provision. Many once-great great brands have faded (or become extinct) because they failed to keep up with the changing needs of their markets, preferring to stand still and hope their brands carried them through… well, if Clayton is correct, the same is about to happen right at the front door of outsourcing advisory.
Smart clients are losing their appetite to invest in expensive consulting models that only deliver effort-based inputs. So much of the information they had to pay millions for in the old days can be found in LinkedIn groups, or served up for free by eager BPO firms seeking to develop client relationships. The onus is shifting to arming clients with ongoing data, analysis, insight, support and knowledge to help them empower themselves to be more effective. Clients want to improve their own talent, not just hire it in for a piecemeal project, which goes away when the money runs out. The issue is that traditional consultants are only schooled one way – to price based on bodies and effort, as opposed to outcomes and sustainable longevity. They will obviously claim they provide their clients with those outcomes, but when those clients can start to achieve the outcomes they need from less costly and more flexible, relevant models, then the game is up – and the old world has to change.
Like any other industry, change only comes about then the actual fundamentals are shaken and the “old way” of getting paid changes. As the data clearly indicates, traditional advisory, as we knew it, is on that very cusp in the global services world. Those consultants who fail to change their ways, bring in leaders with new ideas and new models for IP delivery, or hire innovative consultants who are not always from the other traditional consulting shops, are surely about to go the way of the Woolly Mammoth…
I honesty cannot tell you… but it’ll be fun finding out!
During Blueprint 1.0 we all figured out what the biggest challenges actually were in the sourcing industry;
In Blueprint 2.0 we debated them vociferously with the buyers and providers;
And in the upcoming Blueprint 3.0 we’re going to put words into action by bringing together all the key stakeholders in outsourcing and shared services. And we’re even going as far an inviting the leading sourcing advisors… oh boy, what on earth are we doing?
Can you handle this? Click to learn more…
However which was we look at this, this is going to be one helluva crowd – with a bevvy of buyside sourcing and shared services leaders from 60 major organizations, in addition to this motley crew.
Drop us a line if you’re interested in getting involved…
And the trumpet-blowing continues as the results of the blockbuster 2013 Analyst Value Survey leak out to market. Here’s one we’re particularly proud of at HfS:
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Duncan Chapple, the grand poobah of Analyst Equity, has generously shared a deep-dive view into the survey over on slideshare.
After four years of pummeling the world with far too much free research and slightly odd humor, please allow us a few minutes of our own-trumpet-blowing as we broadcast the results of the 2013 Analyst Value Survey, courtesy of Analyst Equity and Duncan Chapple, the respected industry observer of IT analyst firms. This is based on a record number of 352 IT research consumers (buyers, vendors, journalists and investors):
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You can also view the full dataset of results by clicking here.
On a Sourcing Mission – Accenture's Mike Salvino adds Procurian to his previous Ariba services acquisition
You know when a market’s hotting up when the leading specialists start getting plucked by the top tier, and Accenture today made a massive $375m statement of intent in the procurement and supply chain management BPO industry by acquiring the darling of niche sourcing specialists, Procurian.
Today’s acquisition of Procurian both reinforces Accenture’s market leading position in procurement and sourcing and significantly alters the competitive landscape. In our July 2013, Blueprint for Procurement Outsourcing Services both Accenture (#1, 19.4% market share) and Procurian (#5, 8.9%) were in our “Winner’s Circle” of service providers, hence the merger between these two Procurement Outsourcing leaders creates a clear procurement BPO market leader in terms of market share, client base, vertical industry expertise and breadth of service offerings across the procurement and supplier management domains.
Six Reasons Why This Matters
In particular, we think this is an important event in the development of the Procurement Outsourcing market because for the following reasons:
1) Strengthens Accenture’s Leading Position in Procurement Outsourcing. Accenture was one of the early entrants in the Procurement Outsourcing market and over the years has built a market leading position by providing both sourcing and transactional procurement services. Just three years ago, Accenture purchased Ariba’s strategic sourcing practice for $51 million in order to add breadth and depth to its sourcing and category management capabilities especially in direct materials and coverage of manufacturing industries. This acquisition which really is a “double down” investment in sourcing, including ~800 FTEs to add further depth and coverage of some direct materials categories and a broad reference base of clients in consumer goods from which Accenture benefits . We also believe that Accenture will be able to leverage the acquisition to encourage further integration between its BPO, Management Consulting and Technology capabilities for Procurement which increasingly go-to-market together as Accenture Sourcing and Procurement Business Services. Many HfS clients are looking for procurement transformation capabilities from providers, often before considering a BPO engagement and the merged Accenture/Procurian service offers this in spades.
2) Removes a significant independent service provider and undermines Genpact’s and Capgemini’s procurement strategies. Where Procurian has been a sourcing partner to other BPO Service Providers such as Genpact and Capgemini in the last few years, with Accenture it has been a head-to-head competitor – for example winning its landmark Kimberly Clark procurement engagement against Accenture in 2006. Acquiring Procurian therefore takes out a direct competitor for Accenture (especially in strategic sourcing services) and also undermines the procurement positioning of Genpact, which will most likely need to look to either organically to build up its own sourcing depth quickly, or may look to acquire one of the other remaining stand-alone sourcing and procurement service providers. Capgemini was also working in partnership with Procurian, where the two firms enjoyed a recent procurement BPO contract win with US chemical manufacturer Ferro, and may need to seek a niche acquisition in the market to supports its IBX platform and growing supply chain BPO business.
3) Provides a broader technology suite for Accenture. One of Accenture’s strengths (and challenges) has been its technology agnostic approach to solutioning procurement engagements. We like this acquisition because it brings Procurian’s various proprietary tools and applications for procurement over to Accenture. As we identified recently when assessing Xchanging’s acquisition of MarketMaker4, the market is placing greater importance now on service provider technology in procurement and this acquisition marks a significant evolutions in Accenture’s procurement and sourcing toolset with additions such as SavingsLinkTM allowing for the measurement, analysis and tracking of forecasted and realized enterprise savings.
4) Brings greater scale to recent Procurian acquisitions. Procurian had been an active acquirer in the last year or so, purchasing MediaIQ for capabilities in media audits and Utilities Analyses to manage energy costs. Both of capabilities will benefit from having access to the greater breath of Accenture’s client base post the transaction close.
5) Adds significant depth to Accenture’s broad finance and procurement multi-tower capability. At HfS, we are increasingly seeing procurement transformation and BPO engagements being initiated by finance leaders already experienced with the trials and tribulations of finance and accounting BPO – a more mature and developed market globally. With Accenture’s considerable scale and depth in F&A BPO, adding the additional technology and sourcing acumen brought by Procurian provides a tremendous compliment – and upsell potential – to Accenture’s F&A BPO clients.
6) Moves another step towards Mike Salvino’s 6th Generation BPO vision for Procurement. Previously, HfS Research had interviewed Accenture BPO Growth Platform CEO, Mike Salvino and shared his framework for the generations of BPO. That framework ended with a future 6th Generation which is built around the concept of “community”. We believe that by acquiring Procurian’s strong client community development program and deliverables and adding it to what has continued from the Ariba acquisition, this vision for a “community” of procurement BPO specifically is much closer to becoming real. We have been increasingly impressed with the thought leadership focus and benchmarking prowess Procurian has delivered to its client community, especially in recent years. Accenture needs to embrace this capability and integrate the Procurian community into its own BPO community.
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What to Watch
At HfS Research, we believe that technology is becoming a real differentiator in the Procurement Business Process Outsourcing market. From analytics to platforms to dashboards, the exposure to – and adoption of – IT Procurement offerings are changing the market landscape, and one of things that we will watch most carefully from this acquisition is the degree to which the Procurian technology suite becomes integrated into the core of Accenture’s offerings and becomes part of a simplified technology roadmap over time. We will also want to watch how the other leading Procurement BPO service providers respond to this acquisition, with regards to how they try to match the breadth of sourcing expertise this creates, and how they respond to the changing technology landscape as well. Procurement and Sourcing specialist providers, such as GEP (Global eProcure), Proxima, Denali and even, potentially, Xchanging, now come into play as potential acquisition targets for the Tier 1 BPOs seeking further sourcing and technology depth and expertise.
Most acquisitions in the services world result in some degree of client defections after the event, and with several Procurian clients having come from partnerships with other service providers such as Genpact, we will be anxious to see if they stay with Accenture – and how Genpact and others respond. Similarly, will the SMB clients that Procurian has developed find a home in Accenture both as procurement clients but also as potential buyers of other BPO offerings as well? Clearly, both merging parties feel comfortable that the exiting clientele will stay loyal with the merged entity and additional BPO services added over time, or they wouldn’t have ventured into this arrangement.
We will also be interested in what happens organizationally during the post-merger integration, to see where the procurement leadership team is itself sourced. How will the strong Procurian leadership team of today be integrated with the retained Ariba team as well as procurement specialists from Management Consulting and Technology? Accenture has a decent track record of develop executives who arrive via acquisition, and clearly the Procurian leadership team feels more comfortable with Accenture as their suitor, as opposed to other potential providers, which were also interested in the firm.
Finally, we will be observing whether the stellar efforts Procurian has made over the last several years to create its cherished community of clients will be nurtured and well-managed post-merger and used to launch Salvino’s much-vaunted Sixth Generation BPO ecosystem. This is clearly newer turf for Accenture and it’ll be interesting to see how the community evolves in a broader client environment.
In any event, this is a momentous transaction in the history of Procurement Outsourcing which will have major ripple effects across all the other service providers and likely re-shaping our “Winner’s Circle” for 2014, as a result of Salvino’s decision to double-down on sourcing.
Michael J Salvino (pictured above) is is group chief executive of Accenture Business Process Outsourcing (BPO). You can access his bio here.
The HfS Point of View of the merger, authored by Charles Sutherland and Phil Fersht, can be downloaded here.
Ready to join The Conference Board and HfS in Chicago? Click to learn more…
Still confused with GBS, but too afraid to ask what it’s all about? Then never fear as Deb Kops and the HfS team have the answers… in Chicago… 13-14 November. Not only will we be sharing the blockbuster results of our brand new GBS survey that covered the dynamics of 1005 industry buyers, advisors and providers, but you’ll also get to hear from a host of industry luminaries such as UBS’ Roxanna Wall, BP’s Andrew Simpson, AOL’s Cindy Gallagher, Hershey’s Jeff Kemmerer, Ascension Health’s Lee Coulter and Northern Trust’s Jay Desai… are lots more. So without further ado, let’s talk to the belle of the ball, Deb Kops herself…
So… Deborah, what’s going down in Chicago this Fall? The Conference Board’s much vaunted annual Shared Services Conference is now renamed GBS?
Phil, GBS is now an aspiration for many shared services folk. The TCB conference acknowledges the fact that the sights of a number of shared services leaders now goes beyond one or two centers, linking both sourcing and internal delivery, sharing governance and disrupting processes to deliver end-to-end business value. This year the conference small group streams will recognize that evolution
So, who’s going to be there, and what are you most excited about?
The conference draws shared services and global sourcing professionals at all stages of the journey—those just starting, those with rapidly maturing operations, and those ready to implement radical change. The agenda is agnostic to function and industry, but draws a good cross section of folks who are keen to network with peers, discuss issues in small group settings designed for their specific stage of evolution, and participate in plenary sessions where some of the best and brightest in the industry—practitioners from UBS, SAIC, SC Johnson & Company, AoL, BP, Merck, Walgreens and others– deal with some of the most important issues facing practitioners today.
I have the privilege of chairing this year; for me, it’s a bit of a homecoming as I chaired the conference in 2006, which in global services time, is eons ago. I find the small group format, or streams, almost like small peer discussion groups within a larger conference context—well suited to give participants the white space they need to get answers to their challenges, and learn from others.
My good pal Vinnie Mirchandani 
