Cindy Carpenter is Research Vice President, HfS Research (click for bio)
So the providers are upping the ante with their acquisition push of late, with Accenture augmenting its regulatory capabilities in pharma with the pick up of Octagon, and IBM making a strong move into recruiting services with Kenexa. Infosys now pipes in by focusing on the tech consulting side with the acquisition of global SAP consulting shop Lodestone. HfS new Research Vice President, Cindy Carpenter joined this morning’s analyst call to investigate further…
Will Infosys Be Able to Get the Lodestone Horses on the Right Track?
Infosys’s acquisition of management consultancy and SAP integrator Lodestone Holdings lines up perfectly with their long-term strategy of moving to higher value services, but this acquisition is a risky way to grow these capabilities. Management consulting firms are usually seen as poor acquisition targets, because the assets go home every night. If they’re not happy, they can usually find plenty of opportunities elsewhere, and the value of what you’ve bought may decline very rapidly. This goes double when the acquiring company is in another country from the acquiree. (We need only look at Capgemini’s struggles with consulting acquisitions in the U.S. to underscore this point.)
Infosys understands the challenge of managing consultants well. On the analyst call discussing the transaction, Infosys Consulting CEO, Steve Pratt, commented that “good consultants are like thoroughbred race horses” – they can be temperamental, but get them excited and point them in the right direction, and they’ll do great things. He also noted that they need a “collaborative environment” and a lot of freedom. This is a very different culture from the culture of most Indian IT outsourcing companies, which tend to be structured and hierarchical, with an emphasis on following methodology, process control and predictability. So how has Infosys grown its integrated consulting and technology business? Very carefully. From its inception in 2004 until just this past year, Infosys Consulting has been a separate company, incubated and nurtured along different rules, operating models and margins. Infosys Consulting is now up to 30,000 employees and part of the parent company, but it still has a distinct footprint (mostly United States) and delivery model (about 30% onsite/70% offshore) compared to the legacy Infosys technology business.
The key to success in this acquisition will be bringing the same kind of understanding of different organizational cultures and models to the integration of Lodestone into the Infosys business. Lodestone’s 750 consultants operate from 17 countries today, but India is not one of them. The company has 200 clients, which means either that their consulting engagements are very small on average, or that they are claiming past and active clients. Contrast this with Infosys’ 711 clients to about 150,000 employees, averaging about 210 employees per client, mostly for ongoing, multi-year engagements.
If Infosys wants to reap downstream revenues from Lodestone’s consulting engagements, it will have to teach Lodestone employees not only about Infosys’ services, but also introduce them to their global delivery model and how to work effectively with their new colleagues in India. Ronnie Hafner, Lodestone’s CEO, has no concern about his employee’s inexperience in this model, but Infosys does plan to groom Lodestone consultants to cross-sell the Infosys offerings and provide training in the Infosys methodology. Remember that they are thoroughbred racehorses – mostly German and Swiss – and give them plenty of room to run.
Key Takeways:
On the positive side, this acquisition fits Infosys’ strategic goals beautifully:
It continues to grow Infosys’ management consulting capabilities and ability to deliver higher services, moving from commodity software maintenance to integrated business platforms.
It adds onsite management consulting teams in Europe (and adds a few consultants in Asia-Pacific and Latin America).
It adds domain knowledge and experience in the verticals of life sciences, auto and manufacturing, where Infosys has a relatively small footprint.
It strengthens Infosys Consulting’s SAP’s practice, bringing it up to 10,000 employees and $1 billion in revenues.
Points for caution:
Infosys will have to bring some of its best consulting and business transformation skills to its own acquisition, if it wants to reap the synergistic value for its global services strategy.
Lodestone’s consultants are widely dispersed, increasing the challenges of integration and retention.
Take the claim that Infosys is acquiring 200 new clients with a grain of salt. Infosys will have an opportunity to introduce itself to these companies, but they may be past clients, too small, or uninterested in India-based services.
Recommendations for Infosys:
Acknowledge that you are bringing together three very different cultures in this acquisition: the EU management consultant culture of Lodestone, the global systems integrator culture of Infosys Consulting, and the India-based technology firm of the legacy Infosys business. You’ve just paid about $450,000 per consultant – now is not the time to waste that recruiting cost. Consider:
Making it a goal to get 1/3 to 1/2 of all Lodestone clients to one of your India delivery centers in the first year, to meet their new colleagues and learn about the Infosys global delivery model and capabilities.
Assigning a buddy from Infosys Consulting to each consultant in Lodestone, whose job it is to provide coaching about their new organization and learn about Lodestone’s capabilities
Bringing together delivery managers from Infosys Consulting, Lodestone and Infosys India to build out new, integrated offerings by vertical. Support new relationships among counterparts with face-to-face working sessions in different geographies.
Cindy Carpenter (pictured above) is Research Vice President at HfS. You can access her bio accessed here.
“How do we re-brand outsourcing” was the rallying cry at the NASSCOM BPO Summit in Gurgaon, India, this week. Easy – let’s call it something else… with two-thirds of the buyers and providers voting to drop the term, all we have to do now is agree on a super cool new set of words, and the industry’s current image problems will soon become old wives’ tales.
So let’s take a look at the renaming options each industry stakeholder group has voted for (this is for BPO – we asked about ITO separately) :
The beauty of this table is that it doesn’t require a whole lot of analysis. Buyers are so at a loss for alternatives, they couldn’t think of much else and “Outsourcing/BPO” actually came top. Most of the providers just want to swap out “outsourcing” for “services”, while most advisors stuck with BPO, with a growing number, mainly the management consultants, pushing the Global Business Services badge (even though GBS is supposed to represent all forms of sourcing being managed under a holistic governance framework).
The outsourcing industry has a lot of work to do, if it wants to “re-brand”
There is far too much “believe our own bullshit” going on and this industry needs to change how it perceived before it can effectively “rebrand”. People in the industry are complaining that the ignorant masses confuse “outsourcing” with “offshoring”. Well, I hate to be the bearer of bad news, but isn’t the vast majority of ITO/BPO dependent on offshore labor to make the economics work? We should probably just call it “offshore outsourcing” to be even more accurate (eek!).
Look – we all want non-linear growth, to focus on business outcomes, value creation and innovation. We desperately want this industry to be making fast progress in overcoming the four challenges of the HfS 50 Blueprint Document.
The Four Blueprint Challenges facing the outsourcing industry:
» Challenge #1: How can we overcome this singular focus on cost that strips the industry of its value?
» Challenge #2: How can we leverage outsourcing as one of a variety of vehicles to achieve business objectives?
» Challenge #3: How can many of the service providers invest smarter in their account management teams?
» Challenge #4: How can buyers and providers really partner to foster innovations into business process outcomes?
Until these four challenges can be tackled, rebranding the word “outsourcing” is a futile task. Re-branding is all about changing perception – hence, today’s business leaders must be able to associate “outsourcing” with business value creation and true value-partnerships with service providers which are instituting new capabilities into their businesses.
The Bottom-line: Once the outsourcing industry can prove to the world it is evolving, we can use smarter terminology
Yes, “outsourcing” as a term doesn’t convey business value creation, or innovation, or achieving nimble global operations, but this industry needs to demonstrate it is genuinely moving away from the labor arbitrage model, before we can rightfully name it something different. Yes, many new client/provider relationships are now moving in this direction, but we need to see more of it – and have more of it communicated to industry.
Personally, I like the term “business services partnering” as – in many cases – the entire function is not actually outsourced – only elements of it, so in effect these engagements are partnerships with providers to deliver operations, not the outsourcing of operations. Don’t get me wrong, the “O” word will go away – and we – at HfS – will only use the term when we have to , but the industry needs to prove it is winning the battle of the Four Blueprint Challenges before we can genuinely use new terminology without feeling like we just applied some more lipstick to Ms Piggy.
Remember our recent post “Caught in the xeno-bamia crossfire, these are dangerous times for the outsourcing industry“? Well, our new survey on the toxic “O” word has resoundingly proven that negative politics really does sway opinions, as an overwhelming majority of American enterprises want the word scrapped, which is in stark contract to European firms, who are largely happy to keep it:
Now look what you’ve done, President Obama! In all seriousness, Europeans are obviously a lot less bothered by terminology – there is simply a lot less toxicity surrounding the term. The big question is whether these feelings will die down after the US election, or whether the “O” is forever poisoned unto perpetuity? The plot thickens… stay tuned for more
All the stakeholders in the outsourcing industry have finally spoken – 871 enterprise buyers, providers and advisors – in an unprecedented study of broad opinion as to whether it’s finally time to drop the term “outsourcing” for business and IT services.
HfS Research has reached out (see survey) to its unique community of services and operations professionals, and can finally reveal the answers we have long been searching for – that it’s time to re-brand the industry formerly known as outsourcing, with 61% of the industry stakeholders voting to drop the term:
Half of the enterprise buyers responding have over $5bn in revenues, 73% are significant influencers, and most of them have many years of experience with “outsourcing”. HfS would like to thank all of you who took the time to share your opinions on such a pivotal issue.
What’s immediately revealing is that close to two-thirds of buyers and providers are fed up with the term, and the fact it’s almost impossible to remove the image that outsourcing is only about the offshoring of labor, as opposed to engaging with service providers to create business value. The advisor community is evenly split, with a good number of them enjoying the fruits of advising on outsourcing transactions – changing the “O” word is bad for business for many of them. Conversely, there are also many management consultants who would like to remove the term, as it often prevents them from having meaningful and productive discussions with clients, who run a mile when the “O” word crops up.
But what alternative terms have each stakeholder community suggested to replace the “O” word? And what will the termination of the “O” word mean to industry stakeholders? Will they lose their identity, or is this the beginning of a new era?
The Charles Street Jail (today aptly named the Liberty Hotel) is where tomorrow’s sourcing industry will be shaped this October
It back! And this time its bigger and badder than ever. In fact, this time it’s gonna be so bad we’ve hired out a Bostonian prison* to confine the brain power and restrain the inmates.
The outsourcing industry power brokers gathered at our HfS 50 Executive Council event this past April in New York City for a two-day working session we dubbed the “HfS Sourcing Blueprint Sessions.” With insight provided by HfS Research’s analyst team supporting collaborative sessions involving 41 enterprise outsourcing leaders, who were later joined by a select group of executives representing six of the leading service providers, the HfS 50 Executive Council collectively authored the seminal Blueprint Document for the sourcing industry. Now it’s time for the “Blueprint Sessions 2.0” being held in the city of Boston this October 23-25…
Putting the four blueprint industry challenges into action
This time, there is no get out of jail free as we whip out the magnificent Blueprint Document which so many of you sweated over, to put the recommendations into practice over two and a half days of working sessions:
» Challenge #1: How can we overcome this singular focus on cost that strips the industry of its value?
» Challenge #2: How can we leverage outsourcing as one of a variety of vehicles to achieve business objectives?
» Challenge #3: How can many of the service providers invest smarter in their account management teams?
» Challenge #4: How can buyers and providers really partner to foster innovations into business process outcomes?
We are determined to make the HfS 50 Executive Council the absolute best resource and intimate community for today’s sourcing leaders. Beyond the extraordinary peer networking we encourage, we want our participants to gain tangible opportunities to improve their operations and access the best research and data to support their planing, and we intend to use the Council’s efforts to drive real change in the industry. Oh – and the food and booze will be something to behold…
We are very close to capacity for our upcoming Blueprint Sessions 2.0 taking place October 23-25, 2012 in Boston event so Register Now to secure your spot!
*The Liberty Hotel, Boston, is an example of how a prison can be converted into a five star hotel and meeting venue
Lot’s of reverberations in the rapidly-consolidating talent management services and software world with IBM’s $1.3 bn scoop of RPO and talent software firm Kenexa. The acquisition places IBM in pole position as a Recruiting BPO services provider, however, the big question now is whether it will next acquire a cloud talent platform, or invest in developing the existing Kenexa software.
While some software purists are not overly impressed, we believe this move is significant from a BPO perspective:
Filling the talent gaps has taken center stage as a business requirement. Gaining access to better talent and improving capabilities has become the most elevated business outcome requirement from business operations leaders, as emphasized in our recent global business services study, which we conducted jointly with PwC.
Talent management is a core business management competency. Access to leading edge talent services, analytics, content and software needs to be pervasive across business functions and not solely confined to the HR department. Having firms such as IBM and Accenture pushing Recruiting BPO and talent services at their C-Suite relationships is vital to move the talent management needle into strategic business discussions.
The talent game needs to be about business outcomes, not tactical inputs. While IBM clearly has work to do developing a talent management Cloud platform, we believe it is the business outcomes of the integration of social, analytics, talent software and BPO services which clients really care about most – not solely the tactical elements of a software product.
HfS believes IBM is likely to be eyeing a further acquisition in the talent management software space as Kenexa brings a very strong Recruitment Process Outsourcing competency and IP in employee engagement and compensation, but was still developing out its cloud platform. HfS estimates that two-thirds of Kenexa’s revenues are Recruiting BPO services and about a third directly related to cloud revenues. With a $20 billion cloud budget to spend, talent cloud suites such as Cornerstone OnDemand and SilkRoad are surely being evaluated as potential targets.
August 22nd was a traumatic day for HP for two reasons:
1) It just had a quarter that makes the Boston Red Sox* look good, taking an $8.9bn loss, fuelled by a massive write-down from its 2008 EDS acquisition and a couple of billion in severance costs from its recent layoff.
2) It cancelled its September global analyst summit. We haven’t seen this type of thing happen since the days of the dotcom bust. A major tech services provider wimping out from facing the analysts at the last-minute?
OK – so the financials were immensely horrible. Having to admit to its shareholders that it paid an obscenely high price for EDS, combined with managing the integration so poorly it’s barely worth a quarter of what it paid for it in today’s market is a bitter pill to swallow. But hey – we’re a forgiving world, right? We love a comeback story, right? Can’t HP become the Bill Clinton of the services business? Didn’t John Travolta resurrect his acting career quite well after Two of a Kind?
Instead, someone in HP has made the decision to run and hide – to cancel their September analyst event, where we had already planned our pub crawls with our friends flying over from Europe, where we were prepared to open our hearts to Meg to find some semblance of hope for the future of the firm.
We know HP is in trouble, now we want to know the recovery plan
As someone told me yesterday, “Meg has to focus on nothing but cost-cutting over the next couple of years”. Well, we know that is the case, but surely there is a growth plan in there somewhere too? Surely HP can share where it sees its future and how it plans to lead the market once again? There was a $2bn profit in those results once you took away all the write-downs….
Sadly, refusing the face the world and communicate the growth plan only fills us with even more dread for the future of the firm. It sends the wrong message. We made the point, with the recent layoffs, that Meg Whitman is doing what she was hired to do – straighten the ship, re-energize the management talent and getting HP on a roadmap to competitiveness. We know HP needs to gets its financial ship in order, so there’s not a lot else to hide, is there? Is confidence with the leadership now so low, that it can no longer take a few pots shots from the analyst peanut-gallery?
What concerns me now is the speed of the needed change HP has to go through here. When IBM hit trouble in the early ’90s, it laid off a (then unprecedented) 60,000 employees, which started its recovery process (around 100,000 employees were let go in total that year – about a quarter of its workforce). HP’s recent restructuring surgery has likely used too blunt a knife to make the sweeping changes it needs, to gets its act together – barely 8% let go at $1.8bn in costs? Doesn’t sound like the sweeping changes it needed to right the ship…
The Bottom-line: Hiding from the analyst community only sends a negative message to the world
Clearly, Meg is realizing she has to perform a lot more aggressive surgery than this to right the ship. However, shying away from the global analyst community sends the wrong message. HP has a lot of positives to sell us – I sat through an interaction discussion this week with one of its BPO leaders and there is still a great customer-centric culture, a solid market footprint and some glimmers of hope for future client wins. We talk to HP customers all the time and their main concern is the direction the firm is taking – not the current performance managing their day-to-day IT and business services needs.
Meg – you need to face the world and share your ambitions. Hiding under the covers only fills us with fear for the firm and all it stands for…
The picture above is taken from a famous British advertising campaign for “HP Sauce” which is actually a very popular “brown” sauce in Britain (tastes a bit like Worcestershire sauce). The campaign that depicts how how awful life would “without HP”
*Readers from the United Kingdom can substitute said analogy with “Liverpool FC”.
Now if someone had told me a couple of years’ ago that Big 4 consultants would start acquiring firms with names such as “Ant’s Eye View” I may have remarked that you may still be suffering from those over-indulgences of the ’60s and ’70s.
However, we are now living in an age where things like this are actually happening… so without further ado, here is HfS’ social business impressario Jonathan Yarmis on why PwC just went and bought a social business strategy firm with a hallucinogenic name…
So what on earth’s an “Ant’s Eye View” …and why did PwC acquire one?
On August 14, PwC announced its intent to acquire social media strategy firm Ant’s Eye View (AEV). There are all sorts of reasons to dismiss this acquisition – this is neither the first nor the last acquisition we’ll see by big companies attempting to acquire their way into the social business space – but we’re actually guardedly optimistic about this one.
From its inception 3-1/2 years ago, Ant’s Eye View has been more than an opportunistic company. With its focus on real-life practitioners and with a sweeping vision for the impact of social business, AEV is differentiated from the thousands of agencies chasing “the next hula hoop.” Time will tell whether AEV can preserve its distinctive culture under the PwC umbrella but the parties are entering this relationship with their eyes wide open. Despite these concerns, we nonetheless expect PwC to be able to drive at least some incremental traffic and awarenessto AEV, so If you’re a PwC client looking for an agency to help develop a social strategy, I’d get in the AEV queue quickly (after, of course, talking with HfS).
The Social Gold Rush
Seemingly anyone who has more than 50 friends on Facebook or 500 followers on Twitter has set up a social business consultancy. Noted social media observer Peter Shankman penned a blog post a year ago entitled “I will never hire a ‘social media expert’ and neither should you” (http://shankman.com/i-will-never-hire-a-social-media-expert-and-neither-should-you/) where he noted the similarities between the original dot com furor and our new fascination with social media. Back then, numerous agencies popped up with names like Scient, Viant and Agency.com. Many of them got acquired, at astronomical (and in retrospect, insane) valuations; a few exist in quasi-independent status to this day.
We’re now seeing a similar frenzy in the social media space. From big acquisitions like Salesforce.com’s acquisition of social media monitoring powerhouse Radian6 and Microsoft’s acquisition of social platform company Yammer all the way down to acquisitions like this one, there’s a feeding frenzy to acquire social media skills and market presence. Unfortunately, most of these deals are focused on the latter: companies who were slow to react to the explosive growth of social media are now buying their way into the market. Ultimately, those kinds of acquisitions may bring along a few clients but the ability to scale the acquisition, or even retain the existing client base, is questionable at best. These kinds of acquisitions simply don’t scale, the skills of the people acquired are of great variability (and the better ones are often the first to go), the IP acquired is scanty at best and the integration into the acquiring company is often problematic.
Reason for Optimism
Against this largely negative view, we actually believe PwC’s acquisition of Ant’s Eye View stands to be better than most. What differentiates AEV?
The founders are very well-regarded practitioners, with a passionate belief in the transformative nature of social media. This is not just a company chasing the next hula hoop.
From the beginning, the founders had a vision of building a big company that was able to deliver against the transformative vision. CEO Sean O’Driscoll called it a BHAG: “big, hairy audacious goal.”
AEV has built a roster of top-level practitioners. They didn’t want a bunch of self-proclaimed “social gurus.” They focused on people who had practical experience at top brands (and often brought those brands along as clients). We’re familiar with some of their people and have spoken with people familiar with the firm’s efforts and there is universal praise. These guys are good.
AEV approaches this deal with eyes wide open. This isn’t a deal for the AEV founders to cash out while the cashing’s good. Instead, they have a significant understanding of the growth opportunities PwC affords them, opportunities that they just wouldn’t have had given their own organic growth plans.
Concerns and Caveats
Despite all this, there are numerous caveats in any acquisition like this.
This doesn’t dramatically change PwC’s “social chops.” With specialized expertise like this, there’s no easy way to build this out into a broader PwC capability. The acquisition will certainly give AEV greater reach but their ability to scale with the scope of the opportunity just doesn’t exist; they can’t answer every PwC partner’s call. If they push too hard, it could actually hurt their value proposition. That said, our discussions with O’Driscoll indicate not only an awareness of this risk but a strong belief that the business can scale and that PwC will facilitate that growth..
O’Driscoll talks proudly about AEV’s focus on culture from the beginning. In his blog post announcing the acquisition, O’Driscoll writes “We have a lot to be proud of, but perhaps what I’m most proud of isn’t the work we did, but the way we did our work. We created a culture and environment that inspired us. We knew right away that in order to hire the best people, we needed to be the best place to work. Culture wasn’t an accident at Ant’s Eye View, we co-developed it as a team and it’s resulted in bonds that will have a lasting impact on all of us.” What happens when that vision meets PwC’s enormity? Promises of autonomy and representations of understanding of the unique cultural environment last until the first missed quarter or deadline or change in management. Fortunately, both sides are going into this with solid understandings and insights. For instance, O’Driscoll talked candidly about talking to many potential suitors, most of whom he walked away from because of poor cultural fit, particularly in the advertising/agency space. And in our conversation, PwC Advisory Partner Tom Puthiyamadam voiced all the right things about PwC’s support for the AEV approach and culture.
Key Takeaways
In summary, while we look askance at many acquisitions in the social media space, PwC’s acquisition of Ant’s Eye View is better than most. AEV is a well-regarded firm with more experience and intellectual rigor than we typically see. If PwC was going to acquire anyone, they really couldn’t have done much better than this, and AEV seems to have done its diligence in selecting an acquirer. Time will tell how effective PWC is in opening doors for AEV to its clients’ CMOs and whether AEV’s distinctive culture, to so critical to its success, can survive in a big consultancy known for its risk-averse culture and accounting legacy. If you’re a PwC client looking for an agency to help develop a social strategy, I’d get in the AEV queue quickly (after, of course, talking with HfS).
We are obviously fervent believers in the impact social will have on wide swaths of how we’ll do business in the future. It is beyond the scope of this document to convince you of that imperative. If you’re not a believer, well, you’re probably not reading at this point anyhow.
HfS Recommendations for Buyers of Social Media Solutions
It will take some time for AEV to scale up with PwC’s reach, resources and capabilities. In the interim, if you can’t get onto AEV’s list of current engagements, you should look at their approach to this business when you evaluate other potential provider partners.
Focus on practitioners with real-world experience as opposed to self-appointed social gurus
Deep industry/vertical knowledge. Regulatory considerations among many other factors make it such that one-size-fits-all approaches do not work.
Focus on process and frameworks. While we’re still in the very early stage of the evolution of thinking around social business, it’s not so early that you can’t look for emerging structure. Providers with real IP and processes are likely to provide more durable value than those who merely exist for “Imagineering.”
HfS Recommendations for Service Providers
Jonathan Yarmis is Research Vice President at HfS (Click for Bio)
In our conversations with service providers, we’re struck by how serious they are about the opportunity afforded by social technologies…and the depths of their uncertainty about how to approach the business. Even while you build out your own organic capabilities, you’re likely to pursue acquisitions to supplement your capabilities. The Ant’s Eye View acquisition could serve as a template for what to look for. You want companies that have:
Real, referenceable clients;
Deep, compelling vision;
Intellectual property and replicable processes; and
Strong culture.
You will have to balance the inherent tension among:
Letting the business continue to grow on its own trajectory,
Injecting your own capabilities and functions (and overhead) into the company, and
Mining their approach and processes for incorporation back into your own business (at the cost of their single-minded focus on growing their own business).
There are clearly trade-offs involved but if you don’t balance appropriately, you won’t realize the full benefit of your expenditure and may in fact destroy the value proposition.
The most exciting change in the world of outsourcing has been the increased focus on services that are based on expertise augmentation and a genuine return on investment (which is why so many people want to use a different terminology).
And when we get into areas right at the cutting edge of revenue generation for clients, such as marketing and media, where clients need access to capabilities they may not currently have to gain a competitive edge, we can see where the future lies for the business services industry. One of our most talented analysts, Reetika Joshi, has been investigating the world of digital media and its major potential for third party services…
At HfS Research, we have expressed our views time and again about the strong potential of outsourcing marketing services in today’s complex marketplace. Last year, our research has revealed growing interest by buyers and an expanding gamut of services offered by service providers as they test out their value propositions. One of the hottest marketing services sub-segment has to be digital marketing. Digital media marketing is in a state of constant change, and most organizations have yet to fully explore the growing potential. Naturally, this is where our work took us next, to decipher the different components of digital media marketing, the companies in the marketing and advertising value chain that need help, and the companies that are stepping up to provide it.
Advertisers traditionally engage with ad agencies to manage the companies’ creative processes when the advertisers choose not to manage the processes directly. With the growth in online advertising, the responsibility naturally fell to the agencies to pick up the pace and rapidly develop digital capabilities. Granted, the end objectives of running traditional and digital campaigns are similar, and the work is synergistic as the same key messages are put out across channels. However, on the ground, there are fundamental differences in the type of capabilities needed for these two service areas. Exploiting analytics, emerging technologies and growing social media channels sound obvious to an outsider, but advertisers and their ad agencies are not geared to tackle digital in the same way as traditional media. The lack of specialized talent, strategic alignment and scale are the key challenges inhibiting many advertisers and agencies from running optimized digital campaigns.
We have seen a sharp increase in interest by organizations in leveraging external partnerships for improving marketing operations, especially in digital media. Bringing expertise and improved outcomes to their clients – not just less expensive solutions – is a driving factor. Together with Centro (a media logistics company), HfS Research is undertaking new research on how marketers and their agencies are re-thinking their operations strategies to accommodate the growing importance of digital media. Our latest report highlights a winning strategic partnership in digital media logistics and the challenges it entails. By working with Centro, a mid-size ad agency was able to master digital media operations and offer comprehensive solutions to their clients, gaining >50 percent productivity and significant cost savings ($300-400,000) along the way. Centro introduced accountability and thought leadership in digital media for the client, provided dedicated specialized digital teams, drove efficiency and effectiveness, and enabled the agency to focus on overall media strategy. For the last three years, Centro has essentially acted as their client’s strategic and tactical digital team, helping them transform from a creative boutique into a full-service marketing communications agency.
Reetika Joshi is Principal Analyst, BPO and Analytics Strategies (click for bio)
HfS Research believes that there is undeniable merit in working with external digital media specialists. Given the rapid change in the technology landscape and the growing reliance on digital advertising, marketers and ad agencies need to rethink their operations strategies to address these issues. With growing opportunity, a range of digital media operations specialists have emerged in the last ten years. Advertisers and agencies that are keen to get expert help must do their due diligence. HfS recommends the following key differentiators when evaluating digital operations specialists:
The use of enabling technologies to effect automation and workflow optimization. Technology-enabled platforms are especially valuable when they work across the digital advertising value stream, streamlining your operations and saving time and money;
Deep digital advertising expertise that doesn’t just take your process level tasks off your hands but also advises you on how to realize your/your client’s goals through digital strategy;
Strong industry relationships (e.g., local and industry-specific publishers) to give you better quality buys for you/your clients.
You can access the HfS Research case study covering the challenges of tackling digital media operations by clicking here.
Lot’s of reverberations in the rapidly-consolidating talent management services and software world with IBM’s $1.3 bn scoop of RPO and talent software firm Kenexa. The acquisition places IBM in pole position as a Recruiting BPO services provider, however, the big question now is whether it will next acquire a cloud talent platform, or invest in developing the existing Kenexa software.
August 22nd was a traumatic day for HP for two reasons:
