Hold onto your seats everyone, but- at HfS – our ambitious enterprise clients want to achieve much more with their governance capability than simply meeting cost metrics and tactical operational targets.
This why we acquired Selah Group earlier this year to launch a governance training and certification capability that today’s sourcing industry is sorely lacking (see press announcement here). This Governance Proficiency Certification Program (GPCP) is designed to help today’s sourcing executives approach service provider relationships and governance strategy with a sophisticated and pragmatic approach that will help them advance their careers, their skills and their experience.
We caught up with HfS’ lead, Mike Beals, to discuss the HfS Governance Academy initiative in greater detail…
Phil Fersht, CEO, HfS Research: Good Afternoon, Mike. So you have recently come onboard HfS to take on the HfS Governance Academy. Can you just give us a quick overview on what the academy is and the key objectives?
Mike Beals, Managing Director, Governance and Training, HfS Research: Well, Phil, the Academy is really an attempt to provide more structure around the governance of shared services, outsourcing and global business services environments. And the reason for it is really that most organizations, almost all large organizations, are leveraging one or all three of these different service delivery models. And there really isn’t a program or a curriculum that’s structured to provide the training and the education across the enterprise that most companies need.
Phil: What do you think is unique about the training that we are providing compared to other offerings on the market?
Mike: Well, I think it’s unique in a couple of respects. One of them is that it’s based on very practical experience over more than a decade working with clients. So that’s first. The second is that I think most training that’s available is somewhat ad hoc in nature. You might find a tool here or a template there. And what we have done is put together a very systematic and scalable approach to the training so that the curriculum, as you go from one concept to the next, really builds. This lets us progress students from the very basic fundamentals of governing and managing these complex relationships to very advanced concepts in a very systematic fashion.
Phil: And you’ve been instrumental in developing some certifications (that we’ve just announced) that people can look at doing. Can you talk a bit about what they entail, and how applicable are they to our members?
Mike: Well, the first thing we know in governing these complex environments is that not everybody needs to have the same level of proficiency. And so we wanted to have a program that started out with the fundamentals, and was generally applicable to everybody that participated in managing an external service provider, a shared service center or, a global business services environment. But then we also wanted to have higher level tiers to layer on more complex concepts, tools, and capabilities for more advanced resources.
Ultimately, we patterned our Governance Proficiency Certification Program after the belt levels within Six Sigma. So we have the Yellow Belt that is generally applicable, as I mentioned, to each of those resources involved in outsourcing, shared services, GBS environments.
The Green Belt is applicable to resources that are running small governance organizations or are the functional heads of larger governance organizations. We have the Black Belt that’s intended for resources that are managing multi-provider environments, very complex, or multi-geographic outsourcing relationships. And then we have the Master Black Belt which is an enterprise-level resource that looks at the overall capability of governance across the enterprise and makes sure there aren’t any gaping holes in individual teams. The Master Black Belt training also incorporates pretty sophisticated joint planning and innovation management techniques.
Click for more details on HfS' Governance Proficiency Certification Program
Phil: Typically, is this going to be for individuals or entire functions/groups within organizations?
Mike: Well we really look at this program at two levels. One of them is the enterprise level where we offer capability assessment tools that assess the capability/maturity of a company’s governance organizations as well as the strength of their internal and external relationships. And that assessment is very helpful in developing an overall training plan. But then we also recognize that improvement happens at the individual level. So that’s where the certification levels come in, the Yellow, Green, Black and Master Black Belt, to make sure that individuals within those teams have the right level proficiency to be successful in their role.
Phil: Mike, how much effort is required from the enterprise executives to complete some of these training modules? Is it going to be very arduous? What is the process they have to go through?
Mike: It is not a difficult program for a company to implement. If an organization adopts this program, we can help them quickly assess their overall governance capability and develop a training program for their individual governance teams. We use two different non-intrusive assessment surveys as the mechanism. Then it’s just a matter of scheduling the number of onsite training sessions required to get resources certified at the appropriate level.
If individuals can’t attend the onsite training, we offer facilitated online web-based courses, and for those resources requiring total flexibility, we have an online, video-based course that can be taken anytime, anywhere, on a computer or any mobile device, including a smartphone or tablet with internet access and a browser.
Phil: In a nutshell, Mike, once executives have been through this training, what are the three things which really improve their governance capabilities?
Mike: Well, I think the program does several things for you. One thing sounds pretty simple but it creates a huge amount of value is just to have a common governance framework, vocabulary and philosophy about how you manage these different relationships across the enterprise. It helps more effectively communicate expectations and priorities internally and externally.
Next, this framework, and the training that goes along with it, produces cost savings in terms of improving the understanding of the commercial methodologies and how to leverage commercial terms to get the most out of provider relationships. It results in cost avoidance in terms of better planning and communication and reduced re-work across the organization. It provides risk reduction by proactively assessing and mitigating risk. And finally it improves value creation as a result of improved joint planning, solution development, and innovation.
Phil: That’s great. Thank you Mike. This is very compelling and we look forward to many of our members getting to know the programs more and seeing the first round of the certifications being completed. We really appreciate you getting this up and running and look forward to hearing the progress.
Mike: Thanks Phil. It’s a great opportunity to launch this program for the HfS community.
HfS members can learn more about the HfS Academy and the Governance Proficiency Certification Program by visiting the HfS website.
Last week, Salesforce.com’s Chairman and CEO Marc Benioff, and Workday’s Chairman, Co-Founder and Co-CEO Aneel Bhusri held a press/analyst conference where they unveiled a unique partnership between the two leading independent SaaS application vendors on the planet. The partnership involves a commitment to co-engineer an integrated SaaS offering between the two providers, resulting in a “complete, end-to-end, enterprise cloud solution.” The solution will include “deep integration” which is “what everyone is looking for.”
This is why the three major SaaS upstarts, namely Workday, Netsuite and SFDC, command up to 40 times their annual sales income in valuation; they threaten the status quo of a much, much larger industry scared stiff of being blown out of the water by disruptive technology that isn’t so dependent on armies of integration bodies to keep the software functional across the enterprise. And if they can genuinely figure out how to knit together multiple clouds within enterprise clients to create broader suites of enterprise SaaS, then these threat levels to the ERP status quo will rise significantly.
However, with a quarter-of-a-trillion dollars a year being plowed into integrating and managing SAP and Oracle, are the SaaS upstarts truly ready to integrate multiple cloud apps at this gargantuan level of scale to challenge the status quo? Quite frankly, it seems light years away at this juncture and needs many, many more clouds to come together, supported by immense ongoing integration investment, to truly challenge with worldclass ERP.
Click to Enlarge
Is the gap between the SaaS “Big Three” and SAP and Oracle closing or widening?
Both SAP and Oracle have made a number of SaaS acquisitions; they have updated their database and middleware offerings to be more cloud-friendly, Oracle reengineering its de facto industry standard enterprise database to run in clouds – Oracle Database 12c and it’s brand new “In-memory” database (unveiled yesterday) that threatens to move data automatically between three tiers: disk, flash and dynamic random-access memory. Both vendors, to varying degrees, have come up with their own SaaS solutions, home engineered. Both vendors have far richer ecosystems and installed bases than Salesforce.com and Workday put together. SAP is approaching $1b in trailing four quarters cloud revenue, and once Oracle pushes 12c through its ecosystem and into several clouds, it will quickly ascend towards that benchmark number.
NetSuite, was limited to companies under $300 million revenues for many years, and its financials still reflects this: very weak multi-currency, very weak consolidations, full support for only a few countries, etc. It works well for small-medium firms, but is unproven at the enterprise level.
Workday, by contrast, is primarily designed for precisely those large-scale enterprises that NetSuite has previously avoided penetrating, and is determined to develop a financials system that would work for those companies. However, that is still seemingly many years from fruition, based on current progress.
Saleforce.com is the industry-standard sales and CRM solution, but has yet to broaden into other core ERP areas namely HR and financials, and appears to be bent on doing this via co-development initiatives, such as this one, as opposed to buying up more SaaS modules to develop the elusive “enterprise cloud suite”.
The Bottom-line: Having best-of-breed SaaS works for some, but it’s the integration of the core functions that’s the Holy Grail
The single-cloud app jig is up for Salesforce.com and Workday. The singular SaaS app play is a market that has begun its sunset, as the enterprise app suite monsters have not just caught on, but have turned the corner and are hurtling down the path to the cloud. To their credit, Mr. Benioff and Mr. Bhusri are joining forces now to be able to battle the rising SAP and Oracle funnel clouds over the coming years. It might not stop with Salesforce.com and Workday, who are likely, just as SAP and Oracle have done for on-premise suites down through the years, need to do many, many more acquisitions to round out their portfolio.
Perception isn’t always reality. Having these major “true cloud” vendors form a partnership helps them promote a market perception that differentiates themselves from their on-premise (or pseudo-on-premise) competitors, but the practical benefits appear to be limited in today’s current environment.
Sales-and-Work.com will likely become the third major ERP proposition over the long-haul. When we look out five years hence there will likely be 3, instead of 2, monster enterprise app providers, SAP, Oracle, and Sales-and-Work.com. But as the data plainly shows, the “deep integration” work never ends. Just ask the likes of Informatica, Accenture, Deloitte and IBM Global Services.
It’s nearly 10 years since I ventured back to these shores, and to celebrate, I decided it was time to reveal to the many unsuspecting Americans what we British really mean when you think we’re being nice and polite…
Growing a research firm is all about attracting the best and brightest minds in your industry and making sure they have food, shelter, a twitter account, and a constant supply of rubber chicken and cheap wine.
Charles Sutherland is Senior Vice President, BPO Strategies at HfS (Click for bio)
This is all while having an interested pensive look on their face, whilst nodding occasionally, so people actually think they are listening to them. It’s this philosophy which has propelled HfS to the forefront of thought leadership and the queue to the bar.
When we searched far and wide for a great mind to help bolster our BPO knowledge, we decided to double-down on someone who has lived and breathed every nuance, issue, value proposition, disaster, theory and pipe-dream in the BPO business for sixteen years.
Charles Sutherland will be playing a key role in helping lead many of our strategic BPO assignments across traditional horizontals, such as F&A and Procurement, in addition to driving new coverage in growth areas such as Supply Chain Management and Robotization. So, without further ado, Let’s find out more about this intriguing character…
Charles, can you share a little about your background and why you have chosen research and strategy as your career path?
My background is in strategy consulting. The majority of my career to date was with Accenture where for sixteen years I provided strategic support both to external clients especially in the media & entertainment and telecom industries and internally for the Outsourcing and BPO Growth Platform. I chose this career as I really enjoy working with clients to understand their marketplaces, business opportunities and challenges and then shaping implementable plans based on that research which help them to realize their goals and ambitions in new and value creating ways.
Why did you choose to join HfS and why now?
Charles: I chose to join HfS because I think the BPO marketplace is entering a period of radical change in how solutions are designed and delivered which in turn will also greatly change the way that value is created for clients. I wanted to be in a firm where I would have the chance to be a part of all this change, working directly with leading Service Providers and with visionary buy-side clients on their strategies, offerings and needs. I have had a great relationship with HfS over the years and appreciated what you and the team were trying to do to help advance the value of our industry and I think that together we are going to really help bring about that radical change over the next few years.
What are the subject areas and topics that you will focus on in your analyst role?
Well, my role as SVP for BPO Strategy really consists of two parts. The first is leading our custom project initiatives for all our clients and here the topics will vary according to the strategic needs of our varied clients. For the second part, I am going to be our analyst covering Finance & Accounting, Procurement and Supply Chain BPO. For many Service Providers and clients these three process areas are interdependent and overlapping and I think having a view that is individual to each and yet stretches across all of them will be of great value to our clients.
What trends and developments are capturing your attention today?
At the heart of all the trends and development that are capturing my attention today are the roles that analytics, technology and automation have in bringing about the radical change in the BPO business model that I mentioned before. The ways in which these elements are being conceived and implemented across the Services Providers are very different so it’s a great time to be an analyst and an advisor in this market as there is just so much that is new and exciting, to track and understand.
What are you working on first for our clients?
I am just in the process of completing a report on how technology is being deployed by leading F&A BPO Service Providers today and contrasting that to what the common beliefs were ten years ago on how technology might changed that market. I am also wrapping up a follow-on to last year’s HfS report on Robotic Automation “Robotistan” to see how the market for the technology has changed over the last twelve months and what role it may play in the future evolution of horizontal business processes. Both of these initial reports are bringing to live great examples of the types of trends and developments that captivate me and lead me to believe that we are entering this period of change. Now I can’t wait to begin working with our clients on their own custom projects as well with the full breadth of the HfS Research team.
When you’re not drilling into technology enablers and process enhancers, what do you do with your spare time?
Well, with three teenagers in the house, I don’t know how much “spare time” there really is, but I try to get out and golf and go kayaking with them although to be fair finding good water isn’t so easy down here in Texas. Aside from that I am an avid reader and I am dabbling in creating art pieces that have a business theme, something I am calling “cubicleism”.
Cubicleism? We’ll hold you to exhibiting some of this! Welcome to HfS, Charles.
Charles Sutherland (pictured above) is Senior Vice President for BPO Strategies at HfS – you can view his full bio here, email him here and tweet him here.
Data, data everywhere and not enough talent to analyze it? Or talent, talent everywhere and you don’t have the tools to get to the data you need?
Well, the answer’s simple – either spend millions on a high-end consultancy to govern your data for you, or engage with a service provider to help you create your own analytical environment and culture, where you have the tools and capabilities to become… er… more analytical.
Pankaj Kulshreshtha is Senior VP, Analytics and Research, Genpact (Click for bio)
So how about looking at the journey of one of the leading BPO providers, whose own analytics group has exploded from 10 to 6000 people under the guidance of one particular data maestro: Pankaj Kulshreshtha, who took time away from his beloved job to talk to us. I would normally have expected to have said “golf course”, or “Porsche”, however, Pankaj is one of these chaps who barely has time for his own kids once he’s wrenched himself from his first love: analytics. So, without further ado, let’s hear from one of the BPO industry’s most committed data scientists himself…
Phil Fersht (HfS Research): Hi Pankaj, To start with, would you please tell us a bit about your background, and how you ended up in a career driving analytics as a function at Genpact? Is this something you trained for? How did you end up in this space?
Pankaj Kulshreshtha (Genpact): Phil, having received an engineering degree, I went to a management school to do a Ph.D. in what was formally called “Quantitative Methods & Information Systems”. So, in essence, I do have a formal qualification in Analytics. After the doctorate program, I took the unlikely corporate route to get some real life experience on the applied side. The original plan was to return to academics in future.
Then, with the explosive growth we saw at GE at the time, I had an ongoing opportunity to grow, learn, manage more relationships, manage more people, learn new areas of work, new applications of analytics, etc., and the idea of returning to academics took a back seat. After about seven years of doing that, since the start of Genpact, I actually went to GE Money (now GE Capital) in UK. I did various risk leadership roles there, leading up to being the Chief Risk Officer for their Loans portfolio towards the end.
And then, in 2008, with the state of the financial services industry in the U.K., I chose to come back to India and what better place than familiar Genpact! Since then, I’ve been living and breathing Analytics at Genpact, finding new ways to grow and deliver these services to global corporations.
Frankly, Phil, I still attribute much of my landing here to serendipity. Much as I would like to take credit for having made a very well-considered choice in my career, timing had a lot to do with it. When I started in this role, the group was 10 people. Today it’s about 6000. But, I never dreamt that I would be in a role that’s so broad in its scope and coverage. In last 3-4 years, the level of interest and applications of analytics have grown dramatically and we have created a hugely exciting discipline.
Phil: So, what’s all the hype about analytics? Why is it so much bigger an issue today than it was just a couple of years ago?
Pankaj: Even as far back as 15 years ago, a large number of companies were making pretty significant use of analytics. But in the last four or five years, what has happened is pretty significant.
There are three broad dimensions that I think are important drivers. The first is from the supply side. There is a lot more data available today and you can now actually store much larger amounts of data than you were able to seven or eight years ago. Ability to manipulate data and to visualize very complex aggregations has greatly improved. The tools have gotten much more sophisticated.
The second big driver is that there are some very influential success stories. Think about Google, Facebook, LinkedIn, Amazon, etc. These are all fundamentally analytics companies, and analytics still continues to be a very significant, integral element of their business model (and success)…that’s their differentiator. So I think the other big trend is the level of interest in the discipline – there’s a huge amount of interest and visibility into the power of data and the impact analytics can have and deliver for businesses today.
The third one has a lot to do with the financial crisis. Many industries, companies went through a significant phase of slow down post the 2008 meltdown. And when you’re in a low-growth environment, you have to find ways to shift your marketing and sales spends more smartly. You have to find ways to manage your supply chains to save money so that you can actually find money to invest in driving growth, because that’s the only way to succeed in a shrinking environment. So companies today increasingly have to use analytics to make smarter, more profitable, more focused decisions.
Phil: When you look broadly across your client base, what are you seeing as the core differentials between industries – and where’s the real growth coming from? When you have to pick the two hottest industries right now, where would you double down?
Pankaj: I actually think the big opportunities from an analytics services perspective are probably in financial services and the pharmaceutical and healthcare industries. There are a couple of others that are very interesting, and we’ll have to see how they’ll play out. But pharma/healthcare/life sciences and financial services are the biggest.
Phil: Pankaj, when you look at financial services and the changes that industry is going through, it’s had its very foundation shaken with the recession – and now it’s finally going through the recovery. What would you say is driving analytics growth in financial services today?
Pankaj: I think there are two broad opportunity areas. First, these companies have tried to engage their customers through e-channels like mobile and the Internet. But, they really have to deal with their customers in a seamless manner across their channels, and they’re not yet as good at that as they need to be. They have a huge opportunity to use analytics for getting incremental sales through better segmentation and targeting, for offering the right products, at the right times, through the right channels. And once they’ve considered the available channels appropriately, they can give their customers a much better experience through personalization at much lower cost. So multi-channel is one area that is very rich from an analytics perspective.
The second area is risk management. As you know, the regulatory environment is changing fast across the board. Regulators are tightening compliance procedures and businesses need to proactively manage risk without hampering growth or increasing the cost base. Application of analytics enables risk leaders, regulatory compliance leaders, to focus on their work strategically and give them a huge amount of support in a very cost effective manner. So that’s another area in which we see an opportunity.
Phil: We’ve heard a lot of information from sources like McKinsey that talk about the dearth of data talent in the industry. I think one report said that in 2020, just in the U.S alone, we’re going to see a shortfall of 200,000 data scientists a year. So how do we fill this need? Do you see a lot of budding professionals looking to develop a data science career. What’s your advice to these people? How do you develop your skills in this area? How would someone grow in a company like Genpact or one of its clients’ businesses?
Pankaj: We definitely need lot more talented and trained people to join this exciting discipline. I believe many more business leaders in future will essentially come with an analytics background.
My advice to people who are actually pursuing the quantitative discipline is to make sure they understand the business. It will be very useful for them to take courses in marketing sciences and in operations management so they can use that knowledge to apply analytics in practical situations. They should actually look for business analyst careers rather than data scientist careers, because that’s where the biggest need is and where they’ll make the biggest impact.
For people who are not in the quantitative discipline, I recommend they take a few quantitative courses, do some vocational training in summer programs, and get some experience working with analytics service providers so they actually understand the application of analytics across industries which will help them in selecting their careers.
Phil: Pankaj – it’s been a phenomenal growth story, to hear how well Genpact has emerged as a leading provider of analytic services. We’d love to hear more form you in the future as the analytics environment matures. Thanks for sharing your views with our readers today.
Pankaj Kulshreshtha (pictured above) leads the Analytics and Research practice globally at Genpact – part of the firm’s Smart Decision Services that enables clients across industries to make smarter decisions in sales and marketing, cost, and risk management using data and insights. You can access his bio here and email him here.
We got some face time with flamboyant Massolution CEO, Carl Esposti (and founder of the Crowdsourcing.org community platform) about next week’s first-ever crowdsourcing & crowdfunding conference.
Phil Fersht, CEO HfS Research: Good morning, Carl, we’ve been keeping tabs on your firm’s development over the last few yearsin the enterprise crowdsourcing and crowdfunding space. Can you give us a quick snapshot of the company and the premise behind it?
Carl Esposti, Founder Crowdsourcing.org and CEO Massolution: Yeah, absolutely Phil. Thanks for the discussion. So growing up in outsourcing, offshoring and shared services, I realized few years ago that a big shift was underway, one that was much greater than the shift off-shoring had on outsourcing. The next stage of the globalization of services was occurring and work was now being distributed more broadly through the development of online communities where you can tap into workers to do a whole bunch of different things. Whereas offshoring just made outsourcing cheaper, this new distributed online model was also making things quicker and better. It was a very different model and it was really going to shake things up!
So, seeing that this was going to be a big play for large enterprises, I established Massolution to help companies explore and implement crowdsourcing and crowdfunding solutions and Crowdsourcing.org to really organize and publish information and data around these new models so that enterprises
could understand how they fitted with the more traditional models they understood so they could learn what new things were possible with these new approaches.
Phil: Crowdsourcing hit the sourcing industry with quite a lot of hype about three or four years ago – and we ‘re still waiting to see how it’s going to become part of the broader outsourcing scenario. What’s been going on, here, and how do you see this evolving?
Carl: So, I think the first thing is to try and help people put their arms around exactly what crowdsourcing is and it’s pretty straightforward when you describe it in simple terms. Think of it like this; unlike outsourcing where you award larger packages of work to companies, with crowdsourcing you outsource much smaller packages of work, sometimes discrete tasks, to the best worker for the job. This could be based on availability, price, skills, etc.
It’s about using distributed workers that are connected online that you reach through worker communities. You can tap into these workers, as and when you need them to fundamentally do two things: perform work (e.g., find and organize this data) or to solve problems (e.g., we are losing customers, how can we improve our retails stores?).
Crowdsourcing gives you an opportunity to integrate new ways of performing work into current outsourcing models or to outsource different types of work into crowd where traditional outsourcing models don’t fit.
You have access to abundant capacity provided by all of these workers; over six million are currently engaged performing crowdsourcing work. They can perform high volume routine tasks quickly with many; often thousands of workers, working concurrently or you can use them in a whole new way to solve difficult problems. Giving you ideas and feedback on products that you are developing, providing ideas on how to improve your brand or it can be solving complex problems like supply change issues around material forecasting, for example.
If you look at how crowdsourcing is impacting outsourcing, we are now seeing the innovation, strategy folks in large enterprises and in the big ITO/BPO providers, responsible for looking out onto the horizon, starting to embrace this model and explore it. Seeing the model as a way of processing work faster and at lower cost that traditional outsourcing. Also, requirements to outsource new types of work that have come about because of the new internet-centric businesses that simply just didn’t exist 10 years ago. This work can be crowdsourced more effectively than other sourcing options: big data problems, content problems, problems with connecting with customers globally. Crowdsourcing offers us a solution to address these new types of issues. These types of new business needs haven’t needed to be addressed before in such a scale or so rapidly as in previous more traditional businesses that move more slowly.
The big BPO and ITO providers know that for most enterprises, outsourcing and offshoring has become table-stakes so they are looking for the next level of change in terms of delivering new services or processing work cheaper and quicker. And they are looking at it really from two perspectives. First of all, what can they do in crowdsourcing that allows them to go to market with new offerings to generate additional revenue streams. They are looking at these plays either to establish a stronger footprint with existing clients or as a competitive differentiator to help win new logos. Then the other side is that they are looking at how crowdsourcing is changing service delivery in terms of their own back office operations whether that’s client work or whether it’s their own work. They are also realizing that as well as using ‘public crowd” workers, crowdsourcing technology and processes also allows work to be distributed into the internal workforce, we call that the “private crowd” – which allows them to drive much higher utilization within their captive workforce and to tap into internal experts that aren’t necessarily assigned to a particular client account but they might have the right answer to a given problem.
Phil: So would you say it’s more small- to mid-sized businesses which are being taking advantage of crowdsourcing today, than the enterprise? Or are you beginning to see enterprises look at this more strategically?
Carl: So it’s a great question and it’s best answered by looking at the supply side of the market. In the crowdsourcing provider side of the market is there are three types of company. There are the freelance market places that have traditionally serviced small to medium sized businesses. We all know that there is a big cost of entry to outsourcing so utilizing freelancers allow smaller companies to access work on a more sort of agile basis. Those freelance companies, the likes of oDesk, are building technology to enable larger enterprise to utilize their labor pools on a task-bases (aka crowdsourcing) rather than the more common “worker for hire” basis. So larger enterprises are now able to start to tap into the freelance market labor pools for crowdsourcing task-based work.
So the predominant customers of the cloud-labor forms of crowdsourcing at the moment are enterprises under a $100M that are predominantly tapping into to it through the freelance market places or very large enterprises that are using a range of crowdsourcing providers to solve some of the big enterprise problems around data, content and analytics and things of that nature. And then on the problem solving side, ideation type of activities, that’s mostly the larger enterprises that have large problems to solve, new markets, new competitors, new customer demands. Most of the adoption in the ideation side is in the larger, more established companies that are finding that in some instances, there are better or fresher ideas outside the enterprise than inside.
Phil: What are the hot areas of crowdsourcing now where you are seeing real traction? What types of processes and expertise are clients leveraging?
Carl: So in one area there’s this what we call micro-tasks. And these are pretty straightforward; they are very short tasks that require a simple workflow. So there are jobs that can be done in very high volume and processed by lots of people at any one point in time like data management and categorization. There are more complex tasks we call expertise-based tasks like content creation, transcription, localization and analytics.
Take for example large online retailers. In order for ecommerce retailers to have their products found by the search engines, their catalogues have to be created, optimized and simply found! A lot of content has to be written to create unique product descriptions in order to be indexed by the various search engines. As companies expand internationally, they need that content translated or localized. So the crowd is doing massive amount of work in these type of area.
There is a lot of general data management type of activity. You can use the crowd to improve data sets and organize them. There is a lot of crowdsourcing work being done to validate documents that have been scanned by OCR systems. Machines are able to read handwritten forms at an accuracy level of 85-90 percent but if think about claims processing and invoice processing etc., at the end of the day it requires a level of human judgment to be able to accurately compare electronically scanned forms with what’s on the paper, when 100% accuracy is needed and 90% isn’t good enough. So there is a tremendous application of the crowd around improving further the work that can’t be performed by machines. So that’s one of the largest use cases in the simple micro-tasks category.
Computer systems can do an awful lot in terms of processing data but there’s an awful lot that computers are too dumb to do where a human needs to use judgment in order to be able to do creative things and things like entity matching, determining whether two data field are the same or different or two phrases are the same or different.
A lot of crowdsourcing work is being done in the area of sentiment monitoring and analysis. A particular division in tweet maybe a positive or a negative reference and it requires human judgment to make these sorts of calls and it’s very difficult for machines to determine those nuances. So when big companies are looking to see what their customers are saying about their products and brands and how they are reacting to campaigns for example, the crowd is being used very extensively to mine, organize and to filter sentiment and the type of information that’s being communicated around brand and around companies.
Phil: Do you see the BPO’s really looking to leverage crowdsourcing in their own models or do you think some of them see it as a threat to their traditional model?
Carl: We absolutely see some of the most progressive BPO companies looking at how crowdsourcing affects their market model and what opportunity it presents and what new doors it opens. I mentioned earlier that a number of large ITO/BPO providers are already investing in crowdsourcing strategies. I can tell you that during the course of the next four-six months, a number of the big ITO/BPO providers will be launching different types of crowdsouring market offerings. For example we are aware of a number of Tier 1 companies that are launching crowdtesting market offerings. Basically that’s about testing, mobile and web applications, faster, cheaper and more thoroughly and under real world circumstances rather than relying on lab simulations. There are a couple of big Tier 1 providers that we are working with are very aggressively exploring crowd as a very central part of the competitive strategy over the next five years.
Phil: So – finally – you are having an enterprise crowdsourcing conference coming up in New York next week and hopefully we will get some HfS readers to attend as well. In a snapshot can you just give us a quick lowdown on what to expect?
Yeah certainly. We have a one-day main event on the 19th of September. And there is also a half-day pre-conference workshop for the large enterprises that already performing crowdsourcing work or are really serious about exploring it and are wishing to set up pilots. We have structure the content for the conference with a focus on how is crowd relevant around four key elements of enterprise strategy – how does “crowd” affect an enterprises strategy regarding innovation, sales, growth, and customers. How does enterprise crowdsourcing affect these aspects of the business?
And we have got a very strong line up. Some of the biggest enterprises including LEGO, Xerox, Walmart, Amazon, Google, LinkedIn, IBM, Genpact, will be presenting, talking about their uses of crowdsourcing. So the event will help attendees learn how the most progressive companies are developing enterprise crowdsourcing models and strategies. And then we have got some of the leading crowdsourcing providers who are really developing the technologies and new models for how crowdsourcing can being applied.
The other thing that we are going to cover is enterprise crowdfunding. We will be looking at crowd funding from the point of view of how does it affect the enterprise not just how small businesses are raising capital via crowdfunding. We have use cases of enterprise crowdfunding projects by the like of Coca-Cola, American Express and ABN AMRO – talking about how these large enterprises are using crowd funding as a new model for market validation of products and how crowdfunding is being modeled as an online incubator. You have companies like Proctor & Gamble and General Mills for example that have realized that through crowdfunding they get access to human capital, Intellectual Property, and demand signals on what the market actually needs and at what levels of demand, far better than traditional focus group models. So we’ll be hitting on that as well.
Phil: We’ll look forward to seeing you folks there. And thank you very much for spending some time with the readers today.
The first 20 HfS Readers to email[email protected]will receive a complimentary 1-Day or 2-Day event pass.
Carl Esposti (pictured above) is CEO of Crowdsourcing and Crowdfunding insights and advisory firm Massolution. You can learn more by clicking here.
Concentrix’s investors, SYNNEX, were clearly so impressed with IBM’s performance in reaching the Winner’s Circle for customer experience management they wanted a piece of the action for themselves.
So what does this mean – wasn’t IBM such a stalwart call center BPO provider? And wasn’t Concentrix a small player?
In short, IBM is exiting the customer services call center arena, which began with its purchase of Daksh in 2004. It will focus on its core business of providing the enabling technology services and tools for customer experience management. Concentrix increases its footprint massively and becomes one of the significant providers in the customer experience management industry. The big question, now, is whether Concentix can maintain IBM’s vaunted position in the Winner’s Circle for customer experience management services.
IBM has stated that it wishes to focus on its higher-value BPO businesses, namely finance and accounting, supply chain management, procurement, HR, and mortgage services, with a specific focus on its analytics and Smarter Workforce initiatives. During the analyst call, IBM stated it wants to move more into cloud-based service provision, where it is steadily spending its way through its $20 billion war chest.
HfS sees Concentrix quickly becoming the new “IBM of contact center services.” This deal represents a significant play for Concentrix, increasing its footprint from 5,000 to 45,000 in one fell swoop. Concentrix has strong customer lifecycle management capabilities, and, combined with IBM’s enterprise CEM clients, experienced delivery organization and leadership, strong account management team, and technology integration capabilities, Concentrix will be a significant company to watch in all things customer care.
The Bottom-line: The end of an era for IBM and the dawn of a new one for Concentrix
So many of the leading BPOs started off in the call center business before evolving their offerings across the back office into HR, finance, supply chain and industry-specific areas. IBM was no exception, making a concerted play with Daksh nine years ago. But – today – the firm’s leadership clearly sees limited value (and profit margin) continuing to grow its footprints in CEM, despite an encouraging series of client wins and high-end customer marketing focus in recent years. IBM wants to focus elsewhere… especially with its dedication to the cloud.
Our question, simply, is where IBM’s focus will be in another couple of years. Call center alone is completely commoditized, and it’s understandable why IBM decided it was time to exit while retaining its technology enablement opportunities. Will the same happen eventually with finance or HR? Will IBM tire of processing paychecks and invoices, as it has done with taking customer service calls? With significant client investments, such as Cemex (F&A) and Kraft (HR), it doesn’t appear that the firm will do a 180 anytime soon, but this decision to exit CEM does raise doubts as to the company’s long-term focus outside of technology services and software.
With the intense proliferation of customer communications channels, there’s a huge strain on CMOs, like never before, to keep up and stay ahead of the competition.
Management of an omni-channel environment that is effective across all customer touch-points is a brutal, but necessary, reality for competitive success in today’s business world. Leveraging service providers which can deliver the customer-centric marketing savvy, the business processes, global scale and technology capabilities to support these secular changes to the customer environment is critical to the success of so many organization’s today.
We are proud to reveal our first Blueprint report that has gone deep into the innovation and execution capabilities of today’s leading service providers in the customer experience management industry – and many congratulations to Teleperformance, IBM/Concentrix and Convergys for making the inaugural Winner’s Circle:
Here are the top 3 factors necessary to create a valuable customer experience in the future:
*Capabilities to Monitor, Understand and Proactively Serve the Expectations of Customers are the Crucial Ingredients. The elements that touch the customer are increasingly originating from the digital realm. Organizations will need to adapt to this change and develop competencies to understand the expectations of customers and align each touch point with brand expectations. This is critical now, and becoming even more so in the future.
*Understanding the Customer is becoming More Complex, but Creates Competitive Opportunities for Ambitious CMOs. Although more channels need to be developed (social and mobile) if an organization utilizes monitoring technology and builds models around the flow of customer data, more complete pictures of the customer will become available that were not previously available. This can enable organizations to align marketing activities better to customers through more specific segmentation, as well as to understand, and proactively address, customer sentiment and customer trends.
*Customer Experience Alignment Across All Customer Channels is Imperative for many Brands. Aligning expectations to an organization’s brand image across all channels is a make or break proposition. For example, many organizations are fighting to align traditional brick-and-mortar stores with online and mobile experiences. There are increasingly more channels to contend with, including SMS usage in emerging economies such as Africa.
Getting customer experience management right will matter to all organizations, especially larger organizations that have sizable product portfolios across multiple geographies. Organizations will need to monitor, understand, and align their brand to the right customers, at the right time. The three service providers that we found best placed currently to service organizations with customer experience management services are Teleperformance, IBM (whose call center assets have been recently acquired by the Concentrix division of Synnex), and Convergys.
The CEM Blueprint utilizes our Blueprint Methodology (click here to read in detail), which measures both execution and innovation against a set of crowdsourced criteria derived from the State of the Outsourcing Survey 2013. We assessed data from over 130 live multi-process CEM BPO engagements to ascertain provider market shares, depth of client base, breath of execution and geographic scope of delivery. We examined the CEM value chain (consulting, product design, marketing and sales, and service and support) and interlaced what we know will be important to CEM buyers in the radically evolving CEM sector with the capabilities and vision of the service providers in our assessment.
Report Author, Adam Luciano, Principal Analyst, HfS Research (Click for bio)
Our analyst team conducted exhaustive interviews with multiple buyers and market advisors to help score providers against each other across all the sub-categories of the Blueprint using ExpertChoice, an advanced statistical analytics platform. We also received a tremendous amount of cooperation from (almost) all of the providers above, as we went through this exhaustive process to understand their concrete plans for the future, get really deep with their current client relationships, their overall vision and their appetite to evolve and invest into higher-value areas of CEM BPO.
Rich Lechner is tasked with defining IBM's sourcing strategy (click to access his new research paper)
When you have over $100 billion in software, services and systems revenues and 440,000 staff worldwide, what can be simpler than running sourcing engagements for clients? Meet the man tasked with formulating a sourcing strategy for the firm: Rich Lechner, another one of these tech guys who should probably have become an industry analyst after 10 years of writing code, but somehow found himself piecing together the many facets of the world largest computing company to help devise this roadmap. We were fortunate enough to drag Rich away from his electric powered Tesla to spend a few minutes sharing his experiences with us from over three decades with Big Blue…
Phil Fersht, CEO HfS Research: Rich, great to have you talk to our readers today. You’ve been in IBM for over 30 years – did you ever expect to stay at one company for so long.. and how have you winded up doing what you’re doing today?
Rich Lechner, Vice Business & IT Services Marketing, IBM: First of all thanks for having me. It’s hard to believe it’s been that long. I will say that I feel like I’ve worked in many different parts of the industry but had the luxury of working for one great company. In the sense that I started out as a microprogrammer working on ATM’s and check processing machines and then went into a range of software development, strategy and sales roles for mainframes, OS/2, distributed systems management, Linux and eBusiness. I then moved to the hardware part of our business where I had the privilege of leading sales and marketing for mainframes for several years globally as well as working in our storage business. I then had responsibility for IBM’s broad portfolio of sustainability capabilities including green datacenters, water management, supply chain optimization, smarter traffic or smart buildings. And then finally coming to services. The common theme has been leveraging technology and innovation to address real world challenges and bringing differentiated value to clients.
Phil: In your recent research study “Why Partnering Strategies Matter” (HfS readers can download their copy here), where you surveyed 1350 participants, you talk about sourcing motivations and how they’ve shifted and why sourcing strategies need to shift with them. Can you expand on this some more?
Rich: As a leader in business and IT services, IBM works with many clients around the world and increasingly we were encountering customers who were looking not just to shed cost or to outsource some component of their environment, whether it be infrastructure, process or application, but rather increasingly they were also looking to acquire capabilities to address some need that they have. In many cases these needs were driven by the desire to harness important forces like social, mobile or big data in order to fuel growth and drive market expansion. And so in seeing that in our own engagements, we commissioned an extensive piece of research with a third party to assess partner strategies. The survey involved clients who had experience in outsourcing some element of their environment and there was broad participation across geographies, industries, and customer size. What we found was that clients were, in fact, increasingly looking to acquire capabilities that mattered most and not just to outsource a non-critical piece of their business for cost or efficiency benefits. And that those organizations who were being successful at doing that were seeing significant financial benefits of their business. They were also behaving significantly different in terms of the objectives they were setting for the partnership, the capabilities they were looking for in their partners, and the way they were executing the relationships.
Phil: You talk a lot about optimizers and innovators as contrasting partnering strategies. What do you mean by these terminologies and why are they different?
Rich: The study focused on clients who had experience outsourcing some element of their environment – in fact they could identify over 80 discrete elements of their infrastructure or set of applications and processes. One dimension of measured how broadly they’re outsourcing or leveraging partners. The second dimension was what was their primary motivation: was it primarily for cost take out and operational efficiency? Those who cited that as their primary reason we characterized it as “optimizers”. “Innovators” were those clients who said that their primary objective in developing a sourcing partnership was to achieve a business outcome; to gain access to innovation; for assistance in harnessing some new technology like social or mobile; were looking to expand globally; , or who were looking for a partner could infuse a culture of innovation into their organization. It is important to note that across all segments cost takeout and efficiency were important. But the relative priority varied between the innovators and optimizers and what the innovators did with the cost savings was significantly different in that they chose to not just throw those savings to the bottom line, but they were consciously leveraging efficiency to fund innovation in growth in other parts of infrastructure.
Perhaps most interesting was that the research showed that those clients who were broadly partnering for innovation had substantially better financial performance relative to those who were partnering in a very narrow fashion with a primary focus on cost optimization. The ‘ienterprise innovators’ saw 2x the revenue growth and 5x the profit growth compared to the ‘focused optimizers’
Phil: Rich, in terms of enterprises achieving measurable business outcomes from sourcing, I was reading about how metrics have been tied more effectively to outcomes in your paper. Did you learn more about how sourcing can improve a company’s access to critical data that they didn’t have before?
Rich: Phil, we found markedly different behaviors between the optimizers and the innovators. The innovators were looking for business outcomes beyond operational efficiency and they were far more likely to to define metrics that were directly tied to business outcomes. So for a retailer it might be the revenue per store or inventory turns. It might be subscriber retention rate for a telco or bed utilization for a hospital. So, the metrics for the partnership were very outcome based and by doing that, these innovators were also finding that to achieve those kinds of outcomes, they had to look more holistically. They needed data, or operational data, and they had to be able to link the financial drivers to the specific key process indicators and metrics, business metrics, and then needed to be able to aligning the relevant elements of their business and IT environments, the infrastructure components, the applications, the processes across those businesses that affected those outcomes. And then to develop a partnering strategy that allowed them to affect those in an integrated way.
Phil: You also talk a lot about integrated governance. I would love to hear a bit more about your thoughts here – we’re obviously looking a lot at evolving global business services frameworks at HfS. Do you think there is something unique evolving here, or is this more lipstick on the same old pig?
Rich: I think there is significant evolution with the governance model required to meet the expectations of the innovators. If you think about traditional focus on operational governance, you’re really focused on service quality and continuous improvement. Of course that’s foundational and will always matter. As does the tactical and functional governance focused on some of the business relationship and fulfillment against contracting services. But – as you begin to move into the space of business outcomes and partnerships premised upon outcomes then there is an additional need for strategic government that’s really focused on the alignment of the business strategy in the transformation of a client’s business. This to me is incremental to the governance model that most clients are putting into place as they form a relationship with their partners or their outsourcing vendors.
Phil: Rich, not many people have been as close to the technology and service model shifts as you have really over three decades. What’s really different today? I mean, are we seeing similar inflection points than the ones we saw in the 80’s and the 90’s… or do you think things have really moved on in the last few years?
Linking inputs, execution, cost of ownership and outcomes… Rich Lechner's automotive strategy
Rich: I think, in some regards, we’re seeing many of the same trends continue, but the emergence of several key forces: big data, the instrumentation of everything, the ability to analyze in real time all aspects of your interaction with your clients or of some of your business. The expectations of end consumers, based on the emergence of things like social and mobile. And Cloud as not only an important technology, but acting as an accelerator to the adoption of services. If you think back to client server computing two decades ago, it changed the way that IT capabilities were acquired by organizations. Prior to the emergence of client server, computing capability was sort of the exclusive domain of the IT organization, but now departments were able to acquire servers and storage and pc’s to perform critical business functions independently and it fundamentally changed the way that IT was acquired and applied inside business. Cloud is having the same sort of transformative affect. Because it’s allowing any individual or organization to acquire capability as a service, whether it be a process, an application or a bit of infrastructure as a service. Those forces coming together are creating this opportunity for significant transformation, but increasingly clients realize that they don’t have all the capabilities they need to address these issues or the opportunities that these forces present. And so what’s really changed is the acceleration of some of these traditional trends with these new forces.
Phil: Ok, so try and look out ten years from now… What do you think the world of sourcing is going to look like when we peer that far into the future based on everything you have lived through over the last few years?
Rich: I noticed that said “sourcing” which is great, because I think the idea of taking the “out” out of outsourcing will occur very rapidly and in fact it is already occurring. What I mean by that is that it will become much more prevalent for companies looking to acquire or source a key capability that they lack as opposed to shedding something that is noncore. And we are seeing that occur already and that will happen very rapidly. Secondly, I would say I think if you look ten years out, increasingly today we talk about infrastructure as a service or software as a service I think that you will see everything as a service. The idea of any capability, whether it be marketing insights or compute capacity or real time analytics of consumer behavior or what have you as a service will be the norm. Everything as a service will be what people will be sourcing. Again whether it be infrastructure, or application or processes, or industry insights, or marketplace insights, or technology.
Phil: Rich, it’s has been very refreshing to hear from somebody like you who has been so close to the industry for so long, so I do thank you for your time, and I look forward to sharing your thoughts very much with our readers.
Rich: Thank You, Phil – a pleasure to share some thoughts and I hope your readers find the time to reads our new research paper.
Rich Lechner (picture above) is Vice President for IBM’s Business and IT Services Sourcing.
