nasscom bpm summit 2016 session ii: is your digital strategy achieving cohesion and coherence

The Services Research Company

Is your Digital Strategy achieving Cohesion and Coherence?

Phil Fersht Chief Analyst & CEO, HfS [email protected]

NASSCOM BPM SUMMIT, September 22ND 2016

Overview:• 20 years’ business experience in the global IT and business process

outsourcing and shared services industry • Coined the “As-a-Service Economy” in 2014• Industry analyst, author, speaker, strategist and blogger• Advised and cogitated on 100’s of global IT services, BPO and shared

services engagements• Meddles with the largest global network of enterprise services and

operations professionals

Career Experience:• Practice Lead, IT Services & BPO Research, Gartner, Inc• Global BPO Marketplace Leader, Deloitte Consulting • Consulting Practice Lead, IDC Asia/Pacific• IT Markets Practice Lead, IDC Europe

Education:• BS with Honors in European Business & Technology, Coventry University,

United Kingdom • Diplôme Universitaire de Technologie in Business & Technology from the

University of Grenoble, France

[email protected]

Phil Fersht, CEO and Lead Analyst, HfS Research

mailto:[email protected]

mailto:[email protected]

Get tweeting!

#nasscombpm

© 2016 HfS Research Ltd.

…With a More Serious Side Too! www.hfsresearch.com

• World’s largest taxi company owns no Taxis:• Uber• The most popular media owner creates no content:• Facebook• Largest accommodation provider owns to real estate:• Airbnb• Largest phone companies own no telecom infrastructure:• Skype, WeChat• World’s most valuable retailer has no inventory:• Alibaba• Fastest growing banks have no actual money:• SocietyOne• The world’s largest movie house owns no cinemas:• NetFlix• Largest software vendors don’t write the apps:• Google• The most popular emerging research firm doesn’t sell research reports:• HfS

Data is eating the world!


Value LeversOf

As-A-Service

The What: The Modern Business Infrastructure

Data

DataData

Data

Data

Data

IntelligentAutomation

Efficiency, Labor, Data Augmentation

Software Platforms

Standardize processes, Scale, Write Off Legacy

Self Learning,Cognitive

Continuous Process Improvement, Innovation

Core Digital

Holistic View of CustomerOneOffice

Cost/Expertise/Scale

GlobalLabor

Shared Services, GICS

Centralization/Efficiency


The Innovation Killer Org Chart


8. Plug & Play Digital ServicesPlug into “ready to go” outcome-focused, people / process / tech solutions with security measures and consumption-based pricing

The How: The “As-a-Service” Approach to Operations

The AS-a-Service Economy

1. Write-off LegacyAdopting mindset to overhaul obsolete processes and write-off technical debt. A preparedness to invest in change

2. Design ThinkingDefining and prioritizing outcomes and “working backwards” to re-invent processes

3. Brokering CapabilitySource and manage expertise by pulling all available levers to optimize capability gaps

4. Collaborative EngagementIdentifying and motivating suppliers as business partners to achieve desired outcomes

5. Intelligent AutomationEmbracing automation and cognitive computing to augment human performance

6. Actionable & Accessible DataApplying forward-looking insights to real-time data with meaningful business context

7. Holistic SecurityProactively managing data across the entire service chain of people, systems & processes

Chan

ge

Idea

lsSo

lutio

n Id

eals


C-Suite Directives on Operations: Doing more, faster, with what we have

Drive down operating costs

Cost effective, flexible services

Better address risk and regulation

Accelerate speed to market with new products

End-to-end process optimization

Real-time data-driven insights

Improve the quality of operations talent

Restrict the recruitment of labor where possible

Invest in process automation and robotics to reduce reliance on labor

62%

49%

29%

29%

26%

24%

18%

13%

11%

33%

45%

40%

31%

48%

43%

30%

23%

25%

19%

22%

21%

24%

37%

29%

26%

12%

18%

5%

9%

16%

35%

38%

Mission Critical Increasingly Important Emerging Not a Directive

How critical are the following C-Suite priorities/directives, in terms of shifting from a Cost Focus to a Value Focus with your operating model?

Source: HfS Research and KPMG LLP, 2015Sample: 168 Enterprise Buyer Executives from “Achieving Value Beyond Cost” Study, 2015

Digital and Cognitive are Driving Enterprise Operations

Deploying intelligent operations to align the front office with core business will have the biggest impact

Cognitive computing is becoming a critical component of our future operations strategy

New digital technology initiatives are radically changing the way we manage business operations

24%

28%

32%

46%

44%

43%

70%

72%

75%

Somewhat Agree Total

Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371

Senior Management Driving Customer First Thinking – but they are unsure who will be their partners Please indicate whether you agree or disagree with the following statements about YOUR Intelligent Operations mind-set today

Sourcing of As-a-Service models will be delivered by the existing landscape of service providers

Sourcing of As-a-Service models will largely be delivered by a constellation of new providers

Sourcing of As-a-Service models will be driven by an operations-first, or “process first” strategy

Moving to Intelligent Operations will allow our process interaction costs to decrease dramatically

Sourcing of As-a-Service models will be driven by a “customer first” strategy

31%

34%

38%

42%

48%

53%

55%

53%

50%

45%

16%

11%

9%

9%

7%

Agree Neutral Disagree


The Path: The “Intelligent OneOffice” emerges from Digital + Automation

The Digitally-Driven Front Office

Mobile, Social/Interactive, Real-time actionable data, Design Thinking

Digital UnderbellyIntelligent Automation of manual processesDigitization of documentsIoT

Intelligent Digital Support FunctionFront office-aligned IT, Finance, HR, Procurement, Supply Chain

Intelligent Digital Processes Predictive & Operational Analytics, Cognitive.

The Customer-first Digital Organization

The Enabling Intelligent OneOffice

The Nervous System, incepting & Processing

all Inputs

The Neural System

The Circular System

© HfS Research 2016 (Proprietary)

A state of non-denial unravelling? Greater urgency to change the model from LeadershipHow quickly will your core enterprise functions adapt to become Intelligent Operations?

We are already there

Within 2 years Within 5 years Within 10 years Never

6%

50%

37%

6%2%

7%

36%

44%

9%

4%

SVP + VP and Below

Over half of upper management (56%) want

change within 2 years


Issue: Most Buyers view Service Providers as Execution Shops…

A vital partner that plugs critical gaps in terms of skills, global scale, domain knowledge and

technology

A great vehicle to drive down costs and improve efficiencies

An access to cheap labor, but little value beyond that

General disappointment

28%

52%

17%

3%

Source: The HfS Working Summit for Service Buyers, December 2015 (Sample 53 enterprise outsourcing leads)

Buyers: What do you really think about service providers?

© 2016 HfS Research

Source: “Making that leap from effective to strategic BPO/BPM" Study, HfS Research 2016Sample: 343 Industry Stakeholders (Enterprise Buyers = 115, Advisors = 55, Service Providers = 173)

Barely half of today’s buyers are looking to their providers for value beyond operational support

Delivery center locations

On-site account managers

Sourcing “fresher” talent

Continuous improvement programs

Consulting skills for process redesign/reimagining

Data scientists and analytics skills

Cognitive computing platforms

Process automation tools

Design thinking capability (e.g., methodologies, tools, expertise)

25%

27%

28%

71%

86%

95%

89%

91%

89%

10%

30%

31%

71%

83%

90%

72%

90%

83%

14%

16%

17%

34%

39%

43%

44%

47%

48%

Buyers Advisors Service Providers

Which capability attributes from service providers will be the important 2018? (more important or much more important)


Are Providers avoiding Making Automation Investments? What are the three most important investments that you want a BPO service provider(s) change to make between now and 2018?

Advertising and marketing in your own geographies

Changing out the leadership of the BPO service providers

Investing in “highly verticalized” subject matter experts

“Cannibalizing” revenues on existing FTE contracts by adding automation to solutions and passing savings to existing clients

Building proprietary technology tools for process automation and analytics delivery

Training solution architects and client teams in Design Thinking methodologies

Expanding the pool of skilled analytics professionals

Partnering with the leading third party process automation and cognitive engines

42%

37%

38%

21%

5%

42%

5%

1%

3%

10%

17%

47%

17%

17%

47%

43%

0%

15%

26%

29%

34%

34%

36%

38%

Buyer Advisor Service Provider

Source: “Making that leap from effective to strategic BPO/BPM" Study, HfS Research 2016Sample: 343 Industry Stakeholders (Enterprise Buyers = 115, Advisors = 55, Service Providers = 173)

The Service Providers will bifurcate into two groupings

Back Office OutsourcersEfficiency, Automation, Labor Arbitrage and Scalability

OneOffice EnablersData Orchestration and Human Collaboration


Many Buyers want their Service Providers to work with themHow would you improve the quality and outcomes from your current service relationship?

Letting go and giving up more higher-value work to our service provider(s)

Threatening to entertain competitive bid(s) to force your current provider(s) to up their game

Bring back more work in-house and improve it ourselves

Roll out an automation strategy in tandem with our provider

Bring in a specialist advisor to recalibrate our relationship(s) and get us on the right course for As-a-Service

Not a lot – we paid for “cheap and cheerful” and that’s what we’re stuck with

28%

13%

9%

45%

4%

2%

Source: The HfS Working Summit for Service Buyers, December 2015 (Sample 53 enterprise outsourcing leads)

Work as a team: Heal the disconnect and unrealism between leadership ambition and middle management operational challenges... Internal and external

Think big! with an attitude to write-off legacy. Incremental fixes clearly do not work – for all stakeholders. Stop retro-fitting!

Become a student again: This is about humans creating more creative value, finding more problems through collaborating and learning how embrace the Digital and Intelligent Automation tools available

This is not about jobs going away, it’s about the nature of work changing. A third of today’s workforce is made up of Millenniums seeking different work experiences

To create a new experience in the industry and for results… we must be brave to begin writing-off or legacy or we’ll never evolve…

Actions to drag ourselves into the As-a-Service Economy

Welcome to the Panel!

Ian Maher, Hanover Insurance

Jeremy Nixon,NYK Europe

Stephen ManningDual Group

What does a "Digital Strategy" mean to your organization?

How easily could your organization be "Digitally Disrupted" by a new age competitor? What measures can/should you take to safeguard such potential disruption?

How on earth should enterprises coordinate all the value levers of As-a-Service?


Value LeversOf

As-A-Service

The What: The Modern Business Infrastructure

Data

DataData

Data

Data

Data

IntelligentAutomation

Efficiency, Labor, Data Augmentation

Software Platforms

Standardize processes, Scale, Write Off Legacy

Self Learning,Cognitive

Continuous Process Improvement, Innovation

Core Digital

Holistic View of CustomerOneOffice

Cost/Expertise/Scale

GlobalLabor

Shared Services, GICS

Centralization/Efficiency

Can we really break down the barriers between front and back offices? And what role does BPM services play as a driver / enabler?

The Path: The “Intelligent OneOffice” emerges from Digital + Automation

The Digitally-Driven Front Office

Mobile, Social/Interactive, Real-time actionable data, Design Thinking

Digital UnderbellyIntelligent Automation of manual processesDigitization of documentsIoT

Intelligent Digital Support FunctionFront office-aligned IT, Finance, HR, Procurement, Supply Chain

Intelligent Digital Processes Predictive & Operational Analytics, Cognitive.

The Customer-first Digital Organization

The Enabling Intelligent OneOffice

The Nervous System, incepting & Processing

all Inputs

The Neural System

The Circular System

© HfS Research 2016 (Proprietary)

What will be the true impact of Intelligent Automation and Digital on jobs in our industry? Should we be worried?

How should we craft careers for our talent? Can we become an exciting industry for the younger generation?

My BPO role is fundamental_x000d_to business

performance

BPO today is an exciting career choice

BPO has a defined career_x000d_track and a certain

future

63%

13%13%

69%69%69%

83%

53%

34%

91%

76%

49%

To what extent do you agree / disagree with the following? (Agrees to a great extent)

1 in 8 professionals new to BPO view an exciting and long-term career path

< 2 Years 2 to 5 Years 5 to 10 Years > 10 Years

Source: ”Talent in BPO" Study, HfS Research 2015Sample: Enterprise Service Buyers = 192

Experience:

Top skills in 2020 shift to critical thinking, creativity and Emotional Intelligence…

Source: Future of Jobs Report, World Economic Forum, 2016

What’s really overhyped in this market – and what could use more hype?


Source: “Making that leap from effective to strategic BPM/BPM" Study, HfS Research 2016Sample: 343 Industry Stakeholders (Enterprise Buyers = 115, Advisors = 55, Service Providers = 173)

Automation over-hyped. Buyers like Innovation Centers!

Innovation centers

Cognitive Computing

Platform based BPO

Analytics

Gain-sharing / outcome based contracts

Design thinking

Process Automation (RPA)

21%

20%

12%

4%

15%

12%

17%

21%

7%

7%

17%

21%

7%

17%

3%

6%

10%

11%

11%

18%

25%

Buyer Advisor Service Provider

What trend do you see as being the most over-hyped in the BPM marketplace of 2016 (pick one)?

And finally… If you could be the Emperor of Outsourcing for one week, what is the ONE change you would command on our industry?