Just about 90% of CEOs who participated in a KPMG survey are concerned with the issue of changing customer loyalty, and the majority believe current their company’s products and services won’t be relevant to current customers in 3 years. That means they need innovation – now. They see technology (often referred to as “digital”) as an opportunity to move, but 85% of the surveyed CEOs feel they don’t have time to think about disruption and how to respond to it with innovation. This sets the scene for KPMG’s Analyst day recently in Boston. KPMG looks to bring purpose and passion for helping clients be successful in making innovation a part of the core of their businesses – through a diverse workforce, solutions, and collaboration.
With this backdrop, four themes stood out to us during the day about how KPMG is working with its clients:
A vision for “OneOffice” – work designed to address customer needs using “digital labor” and systems. Digital transformation is (finally) moving from the front office (customer touchpoints) to include the middle and back office (business functions and transactions) – and talk is moving from “how do we use ‘digital’” to “what problem do we want to solve for our customers and how do we use the possibilities of talent and technology to do it.” At HfS, we refer to this concept as “OneOfficeTM” – the need for businesses to break down silos in their organizations to create a more effective data and workflow for business outcomes, so this theme resonated with us.
As we are focused on “ making it real” and providing examples of where it is happening, we appreciated the story that KPMG told about a client they worked with to map out the customer experience. They registered a number of customers on an app and these customers recorded their experience in real-time, as did employees. KPMG captured the data in the Pathfinder tool and used it as input during a journey mapping session with employees from across the organization, front and back office, including a finance director, a customer service manager, and a valet. They talked through the points in time when the customers and employees had a poor experience and came up with ideas that were then prioritized for addressing through the client’s own innovation management approach. What stands out here is the breadth of people included in capturing the experience (customers and employees from different business units and IT) and the way the experience was captured (an app in real-time), which led to in-person workshops to map out various customer journeys and an action plan.
Additionally, staying true to the “ embedding innovation” theme, KPMG trained a number of the employees in departments throughout the client on the design thinking principles and methods used in the initiative. These people are networked as a COE. The team also has access to an analytics tool to continue to capture and analyze data on their journey.
2. A focus on defining and enabling the evolving role of workers and work. “Even in a digital world, humans are still the most important investment, the secret element of our brands, and the magic asset in the company,” said Robert Bolton, capturing the tone of the recent day. One example of a workforce transformation in progress was launched when a client started a discussion about the size and shape of the workforce of the future. This has led to questions such as “How do you know you have the right size?” “How does it have to change because of the advent of RPA and artificial intelligence?” “What are the impact on entry level jobs and the way those jobs provide a launching pad for careers?” “How does it impact learning, training, career paths?”
KPMG is not just working with clients to address these questions but shared its own experience in a changing workforce through the use of digital labor. For example, instead of having new hires who are eager, smart MBAs do mundane and repetitive audit work while they “pay their dues,” KPMG is able to automate much of that work and provide a more stimulating and challenging role for the talent they’re bringing on board. It’s changing the culture and employee work allocation models.
This area of “ digital labor” is one that the shared services and outsourcing group at KPMG is hearing a lot of questions about as well, according to the group’s global head, Dave Brown. Digital labor and cognitive are on the forefront of activity in evolving operating models and defining who (or what) does what. “Digital labor, simply put, is another form of outsourcing,” said Dave Brown.
4. Innovation starts with culture. Innovation needs to be a way of working in companies – it can’t just be siloed in one department or area. Key features of a culture that embrace innovation include diversity – of workforce and partner ecosystem; collaboration; and experimentation (these are also principles of design thinking). Having a culture and environment where it’s “OK to fail” is also a lynchpin of innovation. To provide a “space” and showcase for innovation, KPMG has broken ground for a new facility in Orlando to provide its clients and train its workforce with a multidisciplinary, hands-on, collaborative, high-tech experiential approach. And it’s partnering with the academic community to help develop (via technology, data sets, and case studies) the future workforce during the university years – for example, combining soft skills like teaming, collaboration, and critical thinking with critical technology skills for analytics and the subject matter expertise of accounting.
5. Deep investments in software to improve and automate complex processes. KPMG’s Spectrum unit created several “business intelligence engines” to automate and analyze several complex corporate processes like third party risk, contracts, and regulatory compliance like Automatic Exchange of Information (AEOI.) Beyond Spectrum, other tools KPMG discussed at the event include its KPMG Digital Responder, for security threat discovery and analysis and its KPMG FIRE regulatory reporting automation tool. While the KPMG teams mentioned a number of tools and IP throughout the day, and showcased a handful, a little of it felt “mysterious” – they were referenced by name and not explained or shown. These days when everyone is still exploring what digital really can do for them, showcasing case studies and tools can be really impactful in getting the message across.
What does this mean to you?
Digital transformation and innovation continue to dominate corporate boardrooms as buzzwords. But actually implementing requires a lot of complex detailed decisions that spur significant changes to the ways companies operate every day. What’s impressive about KPMG’s message is the firm’s ability to talk at the 100,000-foot strategy level but then dig into the last mile delivery details.
For clients that already work with KPMG, if you’re not seeing the kinds of messages the firm presented at the analyst day, then it’s time for a meeting with your account team. Talk about how some of KPMG’s new (and even not so new) techniques are being or could be, applied to your engagement. Don’t take it for granted that your account team will automatically propose new ideas so be proactive in asking for innovation.
For non-clients, take a look at Spectrum and other KPMG tools as stand-alone solutions. The Spectrum team told us they do sell the tools separately – they don’t just get embedded into larger services deals. This gives you the opportunity to get access to KPMG IP and operational expertise without having to exit any existing services engagements you have in place.
For an organization that candidly admits it was on the slower end of developing a stake in front office, its recent investments and acquisitions (a whopping 51 in the last 3 years) show that it’s quickly catching up, and also tying together the concepts of front, middle and back office nicely and in a forward-thinking way. Using their own interpretation of OneOffice, KPMG is forging ahead to help clients (and itself) break down the legacy barriers to become more intelligent and responsive client-centric enterprises.
A client asked me recently what happens to attempted transactions that are unsuccessful and do not go through. Does a blockchain implementation capture that data anywhere? The answer, barring the potential of some apps I’m not aware of, is no. Blockchains record completed transactions but attempted transactions that get rejected just go back out into the ether.
From a technology and business operations perspective, this isn’t a big deal. The system works just like it’s supposed to work. But if you’re interested in capturing data on failed transactions so you can monitor for fraud threats or do a forensic investigation if someone manages to execute a fraudulent transaction, then you’ll need a way to capture, store, and analyze the failed attempts.
Also, we need to distinguish a couple of points about blockchain security: 1) In this blog we’re writing about failed transaction attempts, not hacking attempts. Managed security services provider SecureWorks told me, “Hacking attempts are not the same as failed transaction attempts. Security systems don’t often monitor failed transactions in blockchain just as they don’t track failed attempts to use credit cards. The credit card systems capture that data about failed attempts.” 2) We’re writing about individual failed transactions that one particular company would care about. For example, Ethereum has penalties for trying to load bad blocks onto the network that dissuades bad behavior by participants. Also, at the network level, there isn’t a need for a system to capture failed attempts across all the participants, only the ones that pertain to one participant. Because a company wants to track how many times another party has attempted a fraudulent transaction specifically with it, not with all participants.
In essence, a failed transaction in this context is when someone uses stolen or fake credentials to try and create a transaction. This is the same as, for example, someone who uses stolen credit cards – sometimes successfully and sometimes unsuccessfully. It’s not a hacking attempt in the way security professionals think of them. But for those transactions that fail, companies might want to keep track and determine if any further action is needed, depending on the nature and criticality of the process. Actions could include suing the person or company attempting the fraudulent transaction(s) or changing some of the smart contract business logic to prevent such attempts in the future.
This leads us to the crux of the matter: you can’t expect your security team to protect you from threats they’re not able to detect. Instead, detection and monitoring of failed attempts need to be built into the application or integrated at the application level. Then your action plan should follow similar action plans that you follow with other applications regarding attempted transactions.
Bottom Line: As you experiment with blockchain and do some proofs of concept, make sure to ask your application vendor AND your blockchain services provider about blockchain security around failed attempts.
Here are some questions you can ask:
What’s your perspective on security considerations regarding failed transaction attempts?
Do you have any capability to detect and analyze failed transaction attempts? If not, why not?
What recommendations do you have to reduce fraud in your blockchain-based implementations and how are they different from recommendations for other kinds of applications?
The SAP SuccessFactors Influencer Summit, held in California recently, was an opportunity to see up-close-and-personal how the major HR Tech vendor views the concept of transparency, as not all players in this space view it the same way. It was, in a word, refreshing. Mike Ettling, company president, set the tone early by reminding participants what the company committed to the year before so they can be held accountable. Presentations were also ”open kimono” about execution areas they want to be better at in the next year, sharing many plans in detail – not just product plans and strategies (staples at such events) but spending hours on areas like delivery, support and even data centers (partly under NDA due to being within the earnings quiet period).
Throughout the event, speakers offered bold and somewhat surprising statements, and not always ones that blanketly served the software vendor’s interests. Ettling, for example, stated, “no one will be logging into HR Systems in five years time”. Other executives highlighted some subtle aspects of digital disruption; e.g., “it’s all about cloud adoption” (implication: not product adoption), and “trust is central to everything we do” (a great word for a company you’re taking a major journey with, and one which conveys product quality without saying those words).
As to Ettling’s proclamation about what is essentially the “no platform HR Tech platform” in five years, it led to a discussion of one of the company’s product strategy pillars, “Conversational HR.” The concept is to enable your employees to use interaction channels and platforms such as Slack, plus HR bots and “intelligent services” that connect and predict application actions and are embedded into daily work. Intelligent services are designed to transform HR operations through targeted analytics and machine learning, and cutting across relevant business processes. They were announced in August 2015 and there are 40 predefined intelligent services today; e.g., change of manager, employee department or job. This results in delivering a user experience that’s outside the traditional walls of both system modules and singular HR processes, and also involves linking HR and non-HR data. Also of note, SAP SF is now integrating Slack with its Continuous Performance Management functionality so employees and managers interact around, versus execute a process.
Improving the customer experience
The emphasis on usability and the customer experience was evident throughout; e.g., it’s fairly unusual to hear targets like this from an HR Tech vendor: Unlimited scalability, 99.9% availability and 80% of support cases resolved within 2 days. And the company has learned more about “attention to detail” in the mobile experience from its collaboration with Apple. I was also impressed with seeing plans to bring the customer support function into the digital era and make it a more engaging, tailored experience; e.g., by using such mechanisms as guided answers and even a tool for customers to easily schedule 1-to-1 “expert sessions” at a mouse click.
A “Peer Match” capability is now also being leveraged by the base. This is the company’s direct, peer-to-peer connection tool that allows SAP SuccessFactors’ customers to connect and share experiences with their counterparts within other SAP SF customers, from implementation to best practices to thought leadership. More than 227 “advisors” have self-registered and have made 200 connections in short order. Frankly, actively participating in a customer community (and sharing lessons learned for example) is one of the major benefits enjoyed by HR Tech customers of the cloud model, as you are on the same software instance and version. One other example of the customer experience focus is the new Digital Boardroom soon to be in production. It is touch-(boardroom) screen, dynamic, visual, based on multi-sourced data, and SAP SF’s HR Department was the design partner.
Fast take-up of newer capabilities
Continuing the theme of transparency, we learned that 260+ SAP SF customers have enabled or are using Continuous Performance Management: real-time coaching, feedback and learning even though it was more vision than seamless product capability when it was launched just two years ago. That is changing.
And beyond the vendor’s continuing product emphasis on candidate relationship management, internal mobility, better mid-market penetration and removing gender bias in decision making, two other interesting takeaways:
The “marketplace” concept is catching on in the HR Tech space, as now another vendor is making it easier to find and inter-operate with 3rd party apps that are innovative or focus on a specific area of HCM functionality. It’s a great marketing / PR tactic, as current/future competing products probably won’t find their way to the marketplace. 157 apps are available today.
Diversity really does matter to SAP SF, as highlighted in the anecdote shared about a developer asking: “How come in the org chart a blank image (for a vacant position) is always a man?”, thus bringing about a change in the vendor’s org chart.
Outstanding questions
While the presentations and sessions with experts and customers provided considerable information and insights, I’m left with a few additional questions:
Shouldn’t HR Tech vendors also be transparent about their product roadmap prioritization process, not just the roadmap itself?
How can change management be done effectively when you’re so focused on reducing deployment times?
Will SAP SF’s support of more flexible organizational structures cause similar issues that Workday customers experience when interfacing HCM with 3rd party Financial Systems?
Bottom Line:For more than 10 years, SuccessFactors has emphasized cool, innovative features, an engaging, consumer-like user experience – and in more recent years, rolling out a Core HR System and additional Talent Management components (e.g., recruiting and learning). Now, by also addressing issues like diversity and biased decision making, and by embracing and executing on the Conversational HR vision, SAP SuccessFactors is poised to weather uncertain times in general, and maintain its top-tier market position.
And here’s another core finding from our “State of IT Services Survey 2017”, where we spoke to 302 IT service decision makers from the Global 2000 to find out what they think of their IT services and digital consulting providers.
We asked IT decision makers to rate how successful different business units were at engaging with IT. The chart shows the top level results for all the business units.
The good thing is that the majority of business units have a broadly successful relationship with IT, with 66% of responses being successful or very successful – which is encouraging. Although that means 34% of business units don’t have successful relationships with their IT departments – which for Global 2000 organizations in such an increasingly digital age is worrying. Although we are likely seeing the tension of business units’ desire to use IT to operate more dynamically being tempered by their IT departments’ conservative nature to act in a safe operating environment.
HR departments have the worst relationships on average, with 40% of IT managers questioning whether the engagement is successful. This is concerning as IT departments need to demonstrate how technology can be applied in an HR setting – it is not just about buying the latest SaaS product like Workday. Looking at how data can help fuel better decision making for HR leaders, use predictive analytics to identify employee needs and use IT tools to assess potential employees more objectively. HR also has a key role to play in data protection and instilling the right culture of data protection within the organization. Given that employees pose one of the biggest data protection threats, IT should get HR onside.
Bottom Line – good IT fosters good relationships, poor IT fosters poor relationships
What has not detected in our surveys is an inflection point in IT and business unit relationships – whether the reliance from one to the other is increasing or decreasing as when we compare with similar survey work the change is only small on average. However, it does appear that the better relationships seem to be getting better and the worse relationships seem to be getting worse. Given that the choice to use external IT is easier (if not necessarily cheaper) than it has been – the fact that the worse relationships are getting worse is a worrying sign for IT departments. With the growing increase in the functionality and the breadth of SaaS and cloud services, it is not mad to envision a time when a large organization could move beyond the internal IT department toward a matrix of cloud procured products and services. So it is vital that IT continues to foster these relationships – get better or get bumped.
The intersection of Artificial Intelligence (AI) and personalization in HR / HCM offers the opportunity to significantly elevate service delivery, and therefore employee and manager satisfaction and engagement. It also highlights the looming challenge of getting the mix right between human and machine or “bot”-based HR. These critical topics were discussed during our recent Digital HR webcast.
The evidence? Our annual “State of Operations and Outsourcing” study of 454 major global enterprises, conducted with KPMG, just revealed that 52% of enterprises are already evaluating, piloting or implementing robotic process automation (“RPA”) solutions for HR processes. HR executives: Like it or not, the new world of HR Tech automation has arrived, and you need a definitive strategy to deal with it.
How are enterprises approaching RPA in the HR domain today?
We already know that “science” has for years been leveraged in the recruiting domain in the form of assessments that predict the best talent, culture fit, leadership potential, retention likelihood, etc. And with the initial wave of HR chatbots or digital HR assistants converging with many new personalization capabilities to further enhance the user experience, the range of potential use cases linking these two themes for enterprise benefit is only limited by one’s creativity and understanding of operational HR.
Here is a small sampling of what HR Tech buyers will likely see from their vendor partners, and in many cases, sooner than one might expect. HfS Research just published a detailed POV (point of view) with more examples under the categories listed below. It can be accessed here.
HR Tech vendor Beta / early release capabilities
Slackbots: SAP SuccessFactors is now testing “Slackbots.” These chatbots use their new technology partner Slack’s messaging tool within a performance review module to manage various process-related communications and tasks. HR Tech vendors like Zenefits and BambooHR, popular with smaller and medium-sized businesses, also integrate with Slack.
Sourcing bots: Crowded Inc. is a startup sourcing technology provider with a bot that asks questions of software developers applying for a job, and uses their responses to complete an application vs. making them type in the information themselves. TextRecruit is a California startup with a recruiting chatbot named Ari that organizations can use to field questions from job seekers. This allows recruiters to prioritize questions from actual candidates. Finally, Fama, founded in 2015, uses natural-language processing to scan news stories, social media and deeper web content for indications of a higher-than-acceptable risk profile in candidates.
Heavy usage bots: And multiple new chatbots from global ERP and HCM platform company Ramco Systems, and one from Boston startup Talla, are designed to respond to various, typically predictable and common employee HR questions and issues in real time. And if appropriate, the new (digital) HR staff initiates an approval or notification process. Bot-driven PTO-related interactions seem popular with both software vendors.
Right around the corner
HR admin chatbots: Extending the heavy usage bots theme, this category refers to Q&A capabilities using text messages and messaging applications (e.g., Slack), in concert with AI (e.g., natural language processing and machine learning), to manage many of the routine questions that come into HR, Payroll and Benefits departments every day. These include “I joined last week, when is my first check?”, “Our baby is due next week, how can I adjust my Benefits coverage?”, and “How do I know if a planned leave of absence is eligible for FMLA (Family Medical Leave Act) coverage?” These chatbots accept and answer questions in a flow of natural language and provide links to appropriate forms, workflows or content.
Highly personalized onboarding experiences: Given that mentors and courses don’t address much of the social side of getting acclimated, the convergence of personalization and AI will soon lead to having particular colleagues being alerted to welcome the newbie because they have a college or town of residence in common, or the same former company, or similar interests or career goals. This capability should be right around the corner given that all the relevant data is available between the corporate HRMS and tapping into pretty standard social media.
Likely a bit further out (2018/2019)
Reporting line and team member matching: HR Tech platforms can also be expected to make recommendations about who someone should report to, or which team they should join, based on analyzing where that employee tended to be most successful in the past, specifically from a behavioral, personality type or cultural compatibility perspective. Anyone who’s been in the workforce for some time knows there are certain types of bosses – and teams — that bring out the best in them, and others that do not.
Further out still? We shall see
Span of control alerts: An “HR” or organizational design issue that occasionally surfaces for C-suite residents is the span of control of their direct reports and one level below that, as it can get unwieldy at times. Compounding this, what if there was higher than average employee retention risk in the particular department where a manager’s span of control (number of direct reports) was already way above average? If the HR bot could let the senior manager or C-level executive know all this, it would be an example of the Bot leveraging two things: KPI info on desirable span of control for different roles, and as above, one of the humans on the HR staff for complementary consultative support around viable options.
Bottom line
Continuing advances and the obvious momentum building within the Digital HR (including AI in HR) arena highlight three important calls to action: (1) the need for a very symbiotic relationship between human and bot HR staff; (2) the need for crafting a vision for this relationship “asap” and (3) the need to bring together HR Tech customers, vendors and representative end-users, along with HR practitioner and corporate culture experts (and ultimately, perhaps legal advisors) to start developing best practices for this new and exciting frontier.
The time a person has the most interest and insight into an activity is when they’re doing it. Did you just finish helping someone or facilitating a meeting and wish you could quickly get feedback on what the person or attendee is thinking?
What did they like? What did they wish you did differently, more of, eliminate, change, or add? What bright ideas do they have that you just wouldn’t think of yourself? Sometimes people’s quick thoughts and reactions can be the most valuable feedback. In the moment, you are also likely to tap into the “gut reaction” and how they are feeling.
To get feedback in the moment, we’ve been using a design thinking exercise in our HfS Summits. The exercise we use is based on the simple and useful questions in the Stanford d.School toolbox (link).
Here’s how we use it: We put pens and sticky pads on all tables, plus a flip chart or whiteboard somewhere in the room. (When you start to do more design thinking you’ll realize that sticky notes and design thinking go together like water and ducks.) Then towards the end of the day we do this exercise to get feedback to confirm, challenge, and share on our objective.
Our question: How can we evolve the HfS Summit to be more interactive, engaging, and meaningful? In the next 5 minutes, write down what comes to mind to finish the following:
I liked…
I wish…
What if…
Then we encourage attendees to get up and put their sticky notes on the flip chart pad under the phrase that starts the same way. Soon, we have people up and milling around, colorful walls, and energy flowing.
Almost everyone writes something – either because they have something to say or perhaps because they feel peer pressure to perform. By asking these questions, we get specific feedback on sessions, logistics, and content – the good, the bad, and the ugly. The insights, ideas, and feedback also show us themes among what on the minds and in the interests of our attendees, and we see where there are really strong feelings.
This feedback is an addition to the formal surveys. The design thinking exercise engages attendees in a way that the formal survey doesn’t. For example, any event organizer will tell you their frustration with attendees who leave the “what else would you like to see?” or “anything else you want to tell us?” sections blank. But in the moment, when everyone is still engaged in the event, they easily share ideas and commentary.
I often get asked how to get started with Design Thinking. Although the tendency is to attach design thinking to a workshop – and there are proven benefits to taking a day or more out of your regular schedule to do this – you can also incorporate design thinking principles and activities into the way you work on a regular basis. This is one example of an activity that is so easy and simple, that you can immediately start to use it in meetings, in conversations, with sticky notes or even electronic questions in text messaging.
Bottom Line: If you want to understand someone’s experience and get feedback that you can wrap into a future interaction, meeting, activity, or event, ask: What did you like? What do you wish for? What if?
If someone were to perform a literary review of all the blogs and articles written about millennials, they would probably form three conclusions – although they’re great with technology, they’re difficult to manage and are a mystery to many business managers. Of course, sweeping generalisations about an entire generation are often far from the truth.
A Generation reared by radical technological change
Since the first industrial revolution, no generation has experienced as many large technological changes as Millennials. Although dates vary, the consensus is that anyone born in the early 1980s belongs to this generation. So to look at some fundamental technological shifts during this period will give us an idea of the pace of change. In no particular order the following technologies jump out as a source of change for the way humans work, play and communicate:
The internet
E-mail (Although around long before 1980, it’s popularity increased enormously during the period. Incidentally, 1978 saw the first recognised spam email. So Millennials are also a generation that can’t remember a time when their inboxes weren’t full of promises of weight loss, risk-free wealth generation schemes or erm bodily enlargement procedures.)
Mobile phone to smartphone
GPS (I knew someone who had a proper map once. It didn’t actively update, so they got lost a lot)
Social Media
Open Knowledge and Information sources – from Wikipedia to Wikileaks
On demand – Television, Film and Music streaming sites
The point here is that this generation grew up in a world where the pace of change has increased year on year. And I haven’t even mentioned some of the cool technologies and tools just around the corner like AI and Robots.
So if our literary review of all-things-millennial were to dig a little deeper, it’s not surprising to see most commentators discussing the role of technology in the workplace.
Millennials demand a lot from Enterprise Technology
To the distress of some organisations, this generation is particularly demanding of enterprise technology. It’s not hard to see why. For the most part, consumer technology is an essential component of the modern lifestyle – from smartphones to social media to on-demand tv and taxis. Access to these tools and technologies build expectations that most enterprises struggle to meet.
Expectations like omnichannel support structures and intuitive devices and applications are readily met in the consumer market by businesses trying to compete for this demanding groups affections. But the enterprise hasn’t concerned itself with the same market pressures. But it might have to start…
Consumer-grade technology and personalised service
If there’s a broad statement – supported by data – that can be applied to Millennials, it’s that they’re far more mobile than preceding generations. The numbers vary considerably, although some sources suggest the average tenure of a millennial is half that of the current workforce average at between two and three years. Others estimate that this generation could have 20 job changes in their working lifetime – the new workforce is mobile and certainly not afraid to change employers.
Crucially, a mobile workforce mimics the dynamic we can see in the consumer marketplace – choice. Smartphone manufacturers hope customers will choose their device because it offers something more than competing models – improved UI, a better camera, or just a better price. This dynamic can kick in anywhere that individuals are free to choose.
The same principle will undoubtedly have an impact on a person’s choice of employer. Of course, the decision is somewhat more complicated than regular purchases, but choice and experience can be powerful forces. For example, if an individual has worked in a business that fulfilled all their technological needs and then moved to one that offered relatively little, they may begin to regret their choice. Indeed, some anecdotal evidence suggests that Millennials have left jobs that were well paid but poorly equipped for ones with better technology but a lesser salary.
We can see a softer example of this dynamic already at play when employees choose to work from their own consumer-grade devices – perhaps because they perform better than standard equipment. Historically, Bring Your Own Device (BYOD) has been problematic for organisations desperate to mitigate security and governance risks, but this hasn’t stymied demand. Employees are readily making the economic trade-off – “I will risk breaking the rules if it makes me more productive.” Which isn’t an enormous leap from “I will risk moving to another employer if I can be more productive.”
In this increasingly competitive labour market, businesses need to invest in becoming more attractive to potential employees.
Is investing in hiring Millennials enough?
Encouragingly, recent research conducted by HfS and KPMG suggests some modern businesses are keen to invest in hiring millennials. Investment sorely needed in an already competitive market, but attracting talent is only half the battle, keeping them will be the biggest struggle.
As the report astutely points out, a third of today’s workforce is built up from this generation and, of course, that percentage is increasing. As they take a greater labour share, hiring is likely to become less challenging; the hard part will be keeping them from utilising their increased mobility to find a more attractive employer.
For buyers of IT services this augers a stark warning – if services don’t meet the expectations of the new workforce, attracting talent will be tough, retaining it will be impossible.
Luckily, most suppliers are busily building services and solutions that satisfy this consumer-grade demand. For a generation that prefers to work on their own devices, innovative Enterprise Mobility Management solutions are taking form. To meet demand for intuitive applications, customer centric application development and management services are available.
Procuring services has always been a tough job. But it’s now going to become even harder as the most demanding workforce the modern business landscape has ever seen begins to exercise it’s freedom of choice.
Bottom Line: Buyers need to anticipate the expectations of the Millennial labour force, and find a supplier that meets its requirements.
Life in Infosys’s board room can’t be easy these days. Founders continue to throw spammers from the sidelines at CEO Vishal Sikka and its fellow board members, the sales engine is stuttering, and the company has to manage the secular shift toward digitization and automation. Macro issues like H1B visas in Trump land must look like gentle bumps on the road in comparison. As Vishal has singled out automation and AI as the key strategic pillars for Infosys, more clarity around these topics will go a long way in supporting their sales teams. If executed properly, Infosys’ broad set of automation capabilities could evolve into a lever to get the stuttering sales engine running again. It is exactly here where the realignment of Infosys’s automation strategy and the acquisition of Skytree, an innovative Machine Learning startup are focusing on.
A holistic automation strategy could put Infosys back in the driving seat
Infosys strategy on automation can be probably be best described as a rollercoaster ride. Having been a pioneer by being the first service provider to publicly announce a partnership on Intelligent Automation with IPsoft back in 2013, the service provider went in reverse and focused its efforts on proprietary tool sets that are difficult to benchmark with the leading third-party tool providers. Only to move to a hybrid strategy that still focused on proprietary tools yet leveraging third-party tools largely on a pragmatic basis where clients were mandating those options. Then back at the last Confluence, Infosys’ flagship event, the company launched Mana as an automation platform that was meant to revolutionize service delivery. However, ever since Mana was launched its capabilities have remained blurred, and in particular, it was never fully explained how Mana was meant to co-exist or even be integrated with Infosys broader automation assets. There was a lack of cohesion but also communication among the different teams driving automation. For example, the EdgeVerve teams were never quite sure or clear how Mana was impacting them, both in terms of branding but also broader delivery issues. Put in a nutshell, the marketing and communication around Infosys’ automation approach were disjointed. But not only that, the value that assets like Mana bring to clients was undersold as the value proposition was never properly explained. This is not to suggest that Infosys has not made progress with Mana as it has engaged in 150 projects with 50 clients, but given the strategic importance the go-to-market and narratives have to be enhanced. And it is here, where the reorganization and rebranding will focus on.
To overcome some those shortcomings, the company launched Infosys Nia, what it describes as “the next generation of the company’s Artificial Intelligence Platform which converges technologies previously known as Mana, AssistEdge, DEEP and IIMSS along with recently acquired advanced machine learning capabilities from Skytree.” Thus, Infosys demonstrated that it had listened to its customers and the odd analyst. For the first time, Infosys is offering a holistic and more importantly an integrated automation strategy that is leveraging the following building blocks. Putting this in context, Infosys is catching up with peers as we have called out in numerous instances (for details see: HfS Intelligent Automation Blueprint). Fundamentally, Infosys is leveraging and integrating the following five assets into the new Nia platform:
Mana – An integrated artificial intelligence platform incorporating big data/analytics, machine learning, knowledge management, and cognitive automation.
AssistEdge – Provides end-to-end RPA. Uses integrated software robots to automate any high-touch, repetitive processes.
DEEP – (Data Extraction and Enhancement Platform) a platform that ingests heterogeneous source documents or images containing structured & unstructured information, then uses embedded OCR, NLP, and Machine Learning to extract data, validate the correctness of extracted data, and automatically resolve exceptions with high accuracy.
IIMSS – (Infosys Infrastructure Management Services) A unified IT operations command center for datacenter, infrastructure, cloud, applications, security, network and business services. This includes a workbench for lifecycle management and business services assurance. Also, it has an orchestration automation engine for event management, correlation, context-driven recommendations, machine learning & knowledge-based self-learning.
SkyTree – Advanced high-performance Machine Learning with automated selection of algorithms and methods to achieve best possible predictive accuracy. This includes advanced tools for feature creation, feature selection, models, training and an entire workbench for creating new models. SkyTree is also to become a Center of Excellence with a team of ML experts to actively evolve ML concepts and technologies for future use cases.
SkyTree is providing the talent to scale Machine Learning
The recent acquisition of SkyTree, a Silicon Valley based startup, focused on speeding up and scaling Machine Learning, is reinforcing Infosys new emphasis on a holistic automation approach. As the market is starting to shift toward transformational projects and an end-to-end process point of view, the notion of data curation increasingly has to become the starting point for transformational projects, not just a by-product or a secondary motivation. As in particular, RPA will start to commoditize, the value creation but also the differentiation has to come from data-centric delivery strategies. SkyTree’s IP will enhance the deep analytical capabilities of Mana. Having said that, Infosys was very clear that the talent of SkyTree was the key motivation for the acquisition, the IP is rather the icing on the cake.
Infosys needs to drive change management as culture eats strategy for breakfast
As management guru Peter Drucker put it, culture eats strategy for breakfast. With that in mind, it is not enough to fix the automation branding and go-to-market issues, but Infosys urgently needs to drive change management through the organization to make automation demonstrably show results. And this change has to happen on different and disparate levels. First and foremost, Infosys needs to develop a narrative (or even better multiple narratives) what automation and AI mean to different stakeholders. Second, it has to demonstrate that automation and AI are are the game changers for Infosys as Vishal tirelessly puts it. Put it other words, is Infosys proactively pushing automation or is it mirroring its peers in being defensive and only push it where a competitive situation requires such change. And lastly, it needs a coherent strategy of understanding automation of being the pivot for innovating service delivery. With Nia, Infosys has done the first step of doing the latter. But having realigned capabilities is just the first, and most likely easier step. Change management if the harder act to follow.
Bottom-line: It is all about sales execution for Infosys
Having realigned its strategy for automation and expanded its AI capabilities is an important step forward for Infosys, but it will only change the fortunes of the company if Vishal can fix the sales execution issues. As he continuously puts automation and AI as the central pillars of his strategy, the narratives need to be more nuanced and most importantly driven through the organization. Both Nia and SkyTree are important milestones of this journey, but to reach for the skies Infosys has to follow through with all the other challenges that we have called out.
When you’re one of the last vestiges of commercial-free television trying to compete in a media world gone mad on digital and traditional advertising, you need to be pretty savvy when it comes to managing the coffers when you’re still reliant on public TV license frees each year to maintain your program quality. So who better to talk with than the Beeb’s Jim Hemmington, who sits on the corporation’s external expenditure on goods and services, which includes several key outsourcing relationships. We also invited Chris Halward of the Global Sourcing Association (which engages with HfS as its preferred research partner), who leads the GSA’s global standards accreditation program to the conversation…
Phil Fersht, Chief Analyst and CEO, HfS Research: Good morning gentelmen. Let’s get started with the introductions, shall we?
Jim Hemmington, Director of Procurement, BBC: Yes, of course, Phil. I’m Jim Hemmington, Director of Procurement at the BBC. I am responsible for external spending on goods and services. That’s about 1.4 billion pounds a year. It’s about 19% of the BBC ‘s licensing. I look after general procurement as well as outsourcing activity. And just for a bit of context, of the 1.4 billion pounds spent, about half of it is in regular goods and services with about 11,000 suppliers. The other half, or just under 700 million, is with 12 suppliers that are providing a range of outsource services for the BBC. That’s been a big area for outsourcing over the last ten years.
Phil: Thank you, Jim, for joining us. We also have Chris Halward, who’s at the newly rebranded Global Sourcing Association (formerly the National Outsourcing Association). Welcome, Chris…
Chris Halward, Global Standards Director, Global Sourcing Association: Thanks, Phil. I’m the Global Standards Director at the Global Sourcing Association. I’ve been with the GSA for about eight years, focusing particularly on training and development initiatives. This includes the development of various standards and the qualifications that we have
Phil: So, let’s get started with the conversation, and I think maybe Chris, we can start with you. People often talk about outsourcing as something you learn on the job. So, why have standards in global sourcing today? What is the real benefit clients receive from them, in your experience?
Chris: I suppose the first thing to say is that outsourcing can be a complicated activity. There’s more than one party involved, which means there are a lot of different views going around as to how something can best be achieved. With that complexity comes challenges, because it’s often done on an international stage where you’ve got jurisdictions involved and so on. What you need is something which helps people work through that complexity in a structured, organized, and efficient way.
One more thought is that regulators around the world have been particularly interested in outsourcing for all sorts of reasons, not all of them good. They’re very keen to see standards being applied, being adopted as a way of developing people’s confidence in the system. I’m sure Jim has some further views on all of that.
Jim: I think that’s right, Chris. I am looking at it purely from a buying perspective, for the moment. I’ve been working on outsource deals since the mid- to late-80s. And still, at the BBC, we have an occasional problem with an outsource arrangement. What you find is that it’s still the sort of problems you had years ago. Relationships break down because expectations are different, or there are surprises on either side. That might have a commercial or quality impact, with misunderstanding about things like risk transfer and transparency.
Standards align expectations, take out surprises. Having standards allows you to have more transparent and meaningful conversations, and ensures that you’re both acting professionally and in a way that suits each party’s interest. So, if you can get that alignment, you should neutralize, really, all disputes, and you should see much more success in those relationships going forward.
Jim Hemmington, BBC
Chris Halward, GSA
Phil: Okay, so Jim, when you look at your experience at the BBC, with the Global Sourcing Standard, what would you say has been achieved to date? What have been your successes? If you could start today again, would you do anything differently?
Jim: We do have a very mature outsourcing function. We started outsourcing back in ’96, and some of our agreements are now third generation. We’ve learned lots of lessons on the way. But back in 2015, we wanted to get an external view of whether we are good at this activity and where we can learn to be better. That coincided with the emergence of what was then known as the lifecycle, which turned into the standard.
What we found was that when we applied the standard and became accredited to it, we found there were gaps in what we thought were best practices. When we filled those gaps, we started to see some significant benefits coming through. I think one of the big areas where we found the most benefit was the lifecycle approach. Things like business planning going through procurement, the hand-off in procurement into transition, and transition into business as usual. We found we were a little bit clunky in some of those hand-offs. We’ve smoothed quite a few of those now. Our finance procurement that went live in November was the first time we kind of approached a major outsource with a plan and addressed gaps the GSA Standard pointed us towards. We started to see some financial benefits, and I’m confident that as we go to replenish our outsource portfolio, the savings are going to be significant. I reckon between four to seven percent of our spending on outsourcing. Because we’re just getting better at it, and we’ll engage more effectively with the market.
Phil: With a lot of the changes happening in the market, particularly innovations emerging, such as robotic process automation and the impact of digital. How does the standard support disruptions as they evolve? How does it cater to some of these emerging technologies and disruptive business models?
Jim: Okay. Again, from my perspective, I think what the standard does is give you a stable and steady state platform from which you can then explore disruptive technologies. Particularly in areas of transformation, it enables you to take more risk because you can assess things like the impact of disruptive technologies.
Chris: Just to amplify that, Phil, I think one of the things the GSA Standard does is to have a very clear focus on what we describe as Strategic Leadership. It’s about ensuring that the underpinning strategy is as rigorous as it is robust. So, what I have seen in the past is that outsourcing arrangements succeed or fail quite often based on how clear, how effective, and how well-thought-through the underpinning strategy was.
All too often, people tell me about arrangements that don’t work. They’re bemoaning the fact that they didn’t really think these things through. They didn’t look at the options. They didn’t look at whether a particular way of doing things is going to be right. What the Standard does is it really encourages people to focus on that aspect of their sourcing strategy. And to ensure that they continue to concentrate on that aspect throughout the lifecycle.
The other point that links into this is that the lifecycle approach enshrined in the Standard ensures a joined-up approach. That is what Jim was alluding to. You need to address the tendency of going into silos. You’re trying to link everything together so it all flows through and can remain aligned to the appropriate needs of the business. As we know, and HfS Research has talked about it a lot, when things are changing, you need to be really nimble. You need to be flexible, and that’s something that maybe too many organizations over the years have not been able to do. The Standard really encourages them to do exactly that: to be nimble.
Jim: Yes, I agree. Certainly in the BBC, we’ve been reluctant sometimes to adopt emerging and disruptive technologies because of the risks and uncertainty involved. Whereas, I think if you’ve got a standard and you are using that to track the journey and help you understand better how you can manage, you do start to adopt disruptive strategies more readily, and it gives you a competitive advantage.
Chris: I think that as well, Jim. You would probably agree that when you’ve established the Standard within the organization, people in the organization understand how outsourcing works and how it impacts the business. Then it’s much easier to explain to them. They don’t need to understand every single detail of the Standard, but they get a sense of, “What are the important things that we really need to focus on?”
Phil: So, gents, we’ve just completed our annual seminal study on operations outsourcing with the KPMG globally, covering 450 major enterprises. What we got from the study was clear intention to keep expanding the outsource model. There was a notable pullback (see blog) in intentions to invest in offshore resources and instead invest more aggressively in automation initiatives. It sounds a little bit counter-intuitive. How do you increase your outsourcing if you’re not going to increase offshoring? Is this something you believe is a long-term shift? Or do you think this is more about outsourcing leaders needing to be seen as moving beyond labor arbitrage as a prime resource of value? What’s your take on what’s going on here?
Jim: That’s an interesting one, Phil. I don’t think it’s a short-term thing. I think it’s more of a progressive thing. Because you’re right; I think the fact that we’ve offshored is being primarily driven by labor arbitrage. Because that created huge cost savings for us. But now we’re starting to explore automation, and other things are coming down the line.
A couple of years ago, we were having discussions around contract terms, because there were huge capital investments to be made, and the BBC didn’t have cash for capital investments. But so many services now are available, such as the cloud and other sorts of sharing mechanisms. The change continues to be progressive, and I think organizations will now look at all elements of outsourcing. It’s not just labor arbitrage. It’s how technology can be used to improve their outsourcing activity. That, we haven’t seen in the past.
Chris: Let me just come back with a couple of comments as well, guys. Because what I really believe is that globalization provides opportunity. If I’m a business leader of a large, global organization. I have a pool of skills, a pool of labor to draw from across the world. I think in the past, labor arbitrage has clearly been an important driver and has encouraged people to address the challenges of managing offshore arrangements. I also believe there are many reasons why you source from overseas, not just labour arbitrage. Having said that, we have things going on around automation which have given people pause for thought that there may well be other ways of doing things that will deliver the same or more value.
I think we do need to see the apparent paradox as a short-term reaction to the perceived opportunity and risk; that’s become particularly clear over the last couple of years. But I think we also have that long-term, globalization scenario. There will always be a strong case for organizations to collaborate across the whole globe. Wherever opportunities arise, using capabilities from across the globe will add value to their business.
Phil: Okay – so you can both have a stab at our final question! If we convene in three years’ time, do you think we’ll still be talking about outsourcing in the same way? How dramatically will all the changes we’re seeing in the political dynamics and the emergence of new solutions affect the conversation?
Jim: I think we’ll be having very different conversations. I think it goes back to this progressive point, Phil. Just a couple of years ago, we saw outsourcing was all about agreements, with the likes of Capital One and IBM and and all the big guys. Outsourcing now comes from all over the place. It’s coming from different organizations, coming up with different ideas. It’s coming from, as you say, the use of technology and automation.
The link world that we deal with now, where geographical location is not a boundary anymore, means there will be lots of things that we’ll be buying in the future, and my end user, it might be the audience. Or it might be someone in the BBC who has no idea where that service comes from and won’t really care if it’s adding value. I think the term outsourcing will become more and more of an issues sort of term. It’s more of sourcing really and about how organizations are buying the right activity to support their business. I think more organizations are trying to get into sourcing space. The more they can be agile the more innovative they can be.
They’re the sort of conversations that we’re going to have in the future. So, I think the big monolithic contracts and the kind of well-known names at the moment, kind of lead to that. There will be many, many more organizations providing these services. There will be a huge variety of service propositions that organizations can choose to go with, depending on what they want to achieve. So I think it will be a very different industry in the future.
Chris: I’d go along with that, Jim. I think there are going to lots more, probably smaller organizations that will be new sources in the ecosystem. There will be different services required, from client organisations that result from changes in their markets. The BBC is a great example of this given the massive changes that the BBC has had to address in recent times.
I think we’re going through that period where people are suggesting that maybe everybody will sit around and do nothing because robots will do everything. But the reality, I suspect, is that we just come up with more ideas, that we can’t think of at this moment, that take up people’s energies. What we will end up with are sourcing managers who are much more central to an organisation’s success. We’ll need to find different solutions and often, we will need to be finding suppliers of those solutions that are more agile, more flexible. It means that we’ve probably got to have shorter contracts, more flexible contracts.
I think it means that we’ve got to have better relationships between buyer and supplier. Because there’s got to be much more reliance on driving towards outcomes both organizations clearly understand and want to deliver together. That’s the critical thing, and I’m not sure that’s been the case in the past. I think the notion of having an outsourcing standard becomes even more important, because change is much more apparent and complex.
Jim: Yes, I agree. Tracking back to what makes the GSA Standard unique, I think for me, what was refreshing about it is that there are lots of patches and procedures that the BBC adopts to buy goods and services, and lots of organizations that we deal with have their own set parts, too. What the GSA standard does is provide them a very flexible framework on which you can hang your current processes and procedures and align them to very different processes and procedures your suppliers might be adopting.
That’s where you’ve got this sort of ease on the alignment, without having to go through the rigmarole of fundamentally changing the way you do things. What the standard does is provide a central core of activity that just aligns different things to achieve the same outcomes.
Chris: It’s fantastic to hear that. Because we’ve worked so hard over the last few years trying to ensure we have a robust and rigorous standard that covers all the critical areas that are good-quality buyers or providers. Because it’s appropriate for both sides.
Phil: I think it’s great that you could share that with us. I thank you both for your time, Chris and Jim, and I look forward to sharing this interview with our leaders. Have a great weekend.
At WNS’ annual analyst and advisor day this week, the provider explicitly addressed concerns we’ve had about its delivery model – namely that it didn’t employ enough technology in its BPO offerings. WNS has always been differentiated by domain expertise and its flexibility in allowing clients to pick end-to-end or point solutions. This differentiation is particularly noticeable in the insurance, travel and leisure, and utilities verticals and in the research and analytics, and finance and accounting horizontal services.
However, coming back to our concerns, we have consistently observed the lack of focus on technology enablement for its services. In fact, our HfS Buyers Guide on WNS recently called out Operations Product Development and Toolsets as a key weakness for the service provider, writing “WNS is behind the competition on some basic areas of technology support, as well as continued advancements in intelligent automation, beyond macros and even RPA… WNS is on the path with developing toolsets in [multiple industries/functions], and needs to continue to develop the capability, usability, and transparency the solution set offers. HfS believes the service provider would do well to cultivate or hire technology expertise in this area to further complement and perhaps accelerate progress.”
So we were pleased to see WNS share details of WNS TRAC –a business process management (BPM) tool suite to automate processes and make them more effective. WNS TRAC integrates with the client’s legacy system environments — drawing data and information from those systems, and providing efficiencies and insights for industry-specific processes without the need for major system overhauls. WNS also has a range of point solutions for each of its industry verticals, e.g. Verifare Plus, Repax, Qbay in travel. With TRAC, WNS aims to stitch together these point solutions over time into an overarching solution suite for each industry. The service provider has two new F&A clients with whom it is piloting CFO TRAC, describing it as a digital plug and play platform that it will put in at the transaction layer, on top of the clients’ multiple ERPs for greater visibility into end-to-end process and to drive analytics. WNS is also piloting its newly launched Brandtitude reporting and analytics platform with two clients. With this offering, WNS hopes to take its analytics services business into the solution/IP-led era, full of the possibilities of licensing.
TRAC Benefits From A Strong Foundation of Trust-based Client Relationships
One reason we believe TRAC will succeed is that this solution improves already-strong relationships instead of fixing broken ones. Buyer presentations from the analyst day showcased the service provider as a collaborative partner. Multiple clients presented their operations journeys and the role of WNS as an enabler. The client presentations were diverse; across industries and in varying stages of the WNS relationship. Younger relationships already showed promise in increasing the scale and sophistication of the contracts—take for example a utilities company looking to better understand customer sentiment through analytics. The engagement includes understanding propensity to pay and delinquency models, then taking these analytics to the next level in tandem with WNS in creating “personas” for its customer base to improve personalization of service and knowing how to best approach these customers. A client in the online travel space discussed using WNS as a partner in building out its omnichannel capability, using elements of TRAC like its SocioSeer tool, and making it easier for clients to use self-service for booking travel.
The building blocks are in place, now WNS must hone and promote its message.
HfS believes WNS is headed in the right direction with the investments in the last year – strategic acquisitions like Denali and Healthhelp. And technology enablement like WNS TRAC is absolutely necessary for the next level of growth of WNS’ business process business. But to succeed, WNS needs to market TRAC and its benefits clearly and consistently. For example, some executives stressed that analytics (a key aspect of WNS TRAC) is embedded in all BPO engagements and not seen as a standalone business, even though analytics is, in fact, still a standalone business within WNS. In another session, WNS TRAC technology enablement suite was described as a BPaaS solution, which it isn’t. WNS needs to package and deliver its value proposition more accurately and clearly.
Bottom Line: Buyers Need To Be Proactive In Pushing For Automation And Technology Enablement In Their Deals
Call your account manager and ask for a meeting to understand how TRAC could help your engagement and to see a demo.
Start thinking through the business case for TRAC. Once you understand how TRAC can potentially help (reduces cost by reducing labor? Increases process accuracy? Improves process speed?) start to model if the ROI would happen quickly enough to warrant implementing now. You may decide that you can wait until your contract renewal to add TRAC.
Consider negotiating for TRAC separately if possible. If you want to add TRAC now but aren’t at a renewal point, you can always ask to negotiate for TRAC separately from the rest of the deal – WNS tells us that while the tool is primarily to drive better BPM services, but is getting inquiries about using TRAC discretely and is exploring options. This also allows you to see what benefits TRAC brings without blurring the lines between benefits from labor and benefits from technology.
