{"id":1626,"date":"2010-09-15T14:47:00","date_gmt":"2010-09-15T14:47:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/salvino-091610\/"},"modified":"2010-09-15T14:47:00","modified_gmt":"2010-09-15T14:47:00","slug":"salvino-091610","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/salvino-091610\/","title":{"rendered":"Sal-sourcing in the real world, Part I"},"content":{"rendered":"
\"\"<\/a><\/p>\n

Mike Salvino, Group Chief Executive for Business Process Outsourcing, Accenture <\/p>\n<\/div>\n

One of the great double-acts in the early years of the BPO business was always the Kevin Campbell\u00a0and Mike Salvino show (<\/strong>read our interview from last year<\/strong><\/a>). \u00a0…And it still is!<\/strong><\/p>\n

Not too many people have been on the front lines of the BPO business since the very early days (remember Exult, anyone?), so it was no surprise when Kevin yanked Mike out of Hewitt Associates in 2006 to have him join him at the helm of Accenture’s outsourcing business.<\/p>\n

Now, neither of these guys are your typical silky-smooth Savile Row-clad consulting partners – they’re wholesomely\u00a0direct and open about the trials and tribulations of succeeding in a very complex global environment. \u00a0Their impact on Accenture is notable – not only among many industry observers, but also many of their clients.<\/p>\n

Mike Salvino – or simply “Sal” to his friends and colleagues, has brought a real air or pragmatism to Accenture, where he now leads the firm’s global BPO business. \u00a0And while everyone else was getting carried away with mixing Cloud computing with nanotechnology (at a recent analyst meet), Mike’s response was simply “well, how about those clients who are just trying to get some results out of their business process deal today”. \u00a0I realized, then, it was high-time to have Mike on here to grace us with his views of the real world, and he kindly ducked away from his son’s basketball practice to spend some time with us…<\/p>\n

Phil Fersht:<\/span><\/strong> Mike, since you\u2019ve been on the front lines of the BPO industry from the early days in the 90\u2019s, how do you think things have changed in the last decade? What\u2019s different today compared to 10 years ago?<\/span><\/p>\n

Mike Salvino:<\/strong> Let\u2019s look at this across a number of different factors. If you dial the clock back 10 years, BPO was about pure cost savings and non-core transaction activities. So in 2000, clients were supposed to define what was core to their businesses and then get rid of everything that was non-core.\u00a0 In the early days of HR BPO I remember having debates that there was no way service providers could do things like recruiting, learning or even expatriate administration because clients viewed those processes as core and would never want to give them up.<\/p>\n

The early deal shapes were around having the service provider take on people from the client and try to scale them, versus leveraging the provider\u2019s assets for the client\u2019s benefit. From a geographic standpoint, it was unheard of to have processes delivered from India, the Philippines or Eastern Europe. People wanted to keep their processes close, and were mostly just trying to get it right using onshore resources.<\/p>\n

Moving the clock ahead 10 years\u2026any time I see a \u201ctake the people\u201d-type deal, I see a red flag. If a provider is pursuing this type of engagement, it is either just trying to get the business or flat-out doesn\u2019t have the capability to do it — and it\u2019s really hard to win business-wise doing those types of deals. The major players in the BPO industry are not taking on large numbers of people from clients.<\/p>\n

In addition, BPO providers have proven they have moved beyond the \u201ccore vs. non-core\u201d categorization as we\u2019ve been able to push our offerings all the way into the front office. A great example is Navitaire, Accenture\u2019s wholly owned subsidiary for the airline industry. Through Navitaire, our robust solutions are providing the leading edge to nearly every phase of low-cost airline industry.\u00a0 We\u2019re the back office for these airlines. We\u2019re their middle office, which is the scheduling of flight crews and planes from end-to-end. And we\u2019re their front office, running their reservations, ticketing and customer loyalty systems. Ten years ago this would have been unheard of. Now, people are more attuned to looking at these kinds of processes if somebody else has a better mousetrap.<\/p>\n

Finally, this is now clearly a global business. Back in 2000, I wasn\u2019t sure how global it was ever going to be. Was BPO just about taking people from a client and going to a different location in the same city? Or could you get leverage and scale and do it globally? In 2000 \u201cfollowing the sun\u201d meant that we could do the work for our client before our client woke up, depending on where the client was. Now with a global footprint, we can literally move the work around the world as we need to. We clearly do this today while before it was just a concept.<\/p>\n

Phil Fersht:<\/span><\/strong> So now, at present day coming off the recession, we seem to be moving into a new era where some of the deals are getting smaller, more incremental. A lot of clients seem to want to move piece by piece rather than the whole ship at once. How are you seeing the landscape changing?<\/span><\/p>\n

Mike Salvino:<\/strong> I think things went a little over-the-top before the recession. Billion dollar deals were being done and we are just not seeing that right now. Today it\u2019s all about the client\u2019s business case, the dollars and cents. We can choose any process we want as long as we can show a business case. Then, obviously, if we show a business case, we need to follow up with the delivery capabilities and referenceable clients. This makes it hard to get into potential new areas, but some clients are very focused on what they want us to deliver to them. So they are willing to go into those new areas, such as clinical-data management or engineering services, processes you could say are going to be the core of BPO. Whatever the process, clients want us to help define the business case, and then they want us to put skin in the game around delivering on that business case. And that\u2019s fine, because I think they are clearly separating the pretenders from the real contenders.<\/p>\n

We do see the deals getting smaller, but we also see the deals being more bundled in terms of F&A, procurement, sourcing and even some HR. We also see them more bundled with IT. But we\u2019re seeing clients more frequently wanting to first do a \u201cpilot\u201d, and then scale from there.<\/p>\n

Phil Fersht:<\/span><\/strong> Accenture has made a lot of noise in recent talks around bundling processes across towers. You mentioned you\u2019ve been doing deals where you\u2019ve seen alignment among procurement, F&A and bits of HR. Do you see this mixed bag continuing to proliferate? How is that developing?<\/span><\/p>\n

Mike Salvino:<\/strong> It\u2019s not developing the way we once thought it might. Before the downturn, we felt we could do bigger deals by bundling all the services together at the outset. But what we are seeing is, if we successfully deliver F&A for a client, it gives us the door to swim upstream into procurement and extend that into an F&A and procurement deal. Then, if we\u2019re good at doing the procurement, it allows us to get into the sourcing strategies, which then allows us to get into the demand forecasting and demand generation areas.<\/p>\n

Bundling is happening, but over an extended period of time.\u00a0 We are not going in with a huge bundled deal with all these processes at one time.\u00a0 What we\u2019ve seen over the last 18 to 24 months is many of our new bookings are extensions. Extensions are not just expanding the existing work, but instead extending our clients into new work. So for example, we are Microsoft\u2019s back office. We are touching HR, we are touching procurement, we are touching F&A and we\u2019ve done that over the course of four years. But you aren\u2019t really seeing RFPs hit the street for everything under the sun, unless it\u2019s someone trying to sell its captive operations. <\/em><\/p>\n

Phil Fersht:<\/span><\/strong> We\u2019re hearing a lot of noise, particularly from the ITO sector, on developing BPO competency around these IT\/BPO synergies. We\u2019re certainly seeing them in vertical areas, like your Navitaire example. How are you seeing this coming together of technology-enabled BPO? Is it more hype because you\u2019ve got IT services companies trying to develop pockets of BPO, or do you generally see this as a way solutions are going to develop in the future?<\/span><\/p>\n

Mike Salvino:<\/strong> I think it\u2019s real. It\u2019s hard to ignore, because we have existing IT and people are buying new ways to deal with that IT. Then you\u2019ve got newer technology coming down the pipe\u2026cloud, analytics, mobility. We have to figure out how that\u2019s going to affect BPO and whether or not it\u2019s going to be another game changer. But no matter which direction the IT companies go, they still have to process transactions. You can\u2019t be in this business without processing transactions.<\/p>\n

BPO companies know how to process transactions, and are trying to apply technology to those processes. But some of the IT companies are saying, \u201cWe have technology and are trying to get it into the BPO business. We can naturally jump into BPO.\u201d\u00a0 However, it\u2019s not that easy. If you don\u2019t have the processing knowledge, it\u2019s very hard to figure out how you\u2019re going to make the technology work. I think the biggest effect on the industry from a technology standpoint is as much about the cloud and mobility as it is about analytics. Most people continue to talk about analytics, which is important, but cloud and mobility could change the whole game.<\/p>\n

In Part II, we’ll ask Mike about his view on the future direction of the industry and the emergence of industry-focused offerings and Cloud Business Services<\/span><\/em><\/p>\n

Mike Salvino (pictured) is Group Chief Executive for Business Process Outsourcing at Accenture. \u00a0He is responsible for the firm’s BPO growth platform, and its comprehensive portfolio of cross-industry and industry-specific business process outsourcing (BPO) services globally. \u00a0He rejoined Accenture in 2006 from Hewitt, where he served as global sales and accounts co-leader for Hewitt\u2019s HR outsourcing group. He also served as president of the Americas region for Exult Inc., responsible for the company\u2019s business in the United States, Canada and Latin America, prior to that company\u2019s acquisition by Hewitt. \u00a0You can access his full bio here<\/a><\/em>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Mike Salvino, Group Chief Executive for Business Process Outsourcing, Accenture One of the great double-acts in the early years of…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,51,835,79,88,836,91,832],"tags":[675],"organization":[],"ppma_author":[19],"class_list":["post-1626","post","type-post","status-publish","format-standard","hentry","category-business-process-outsourcing-bpo","category-cloud-computing","category-f-a","category-hr-outsourcing","category-outsourcing-heros","category-procurement-engineering-supply-chain-outsourcing","category-saas","category-sourcing-best-practises","tag-salvino"],"yoast_head":"\nSal-sourcing in the real world, Part I - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/salvino-091610\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sal-sourcing in the real world, Part I - 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