Outsourcing Advisors: 6 Tips for Selecting the Right One

When it’s time to outsource, selecting the right outsourcing advisor may be the single most important decision you make—one that sets up your future relationship with an IT services provider for success or failure. Given that IT outsourcing transactions are complex and vendors are savvy at setting them up to their advantage, solid sourcing advice from a third party can help to level the inherently uneven playing field, particularly for less experienced IT services buyers.

But deciding which sourcing advisor is right for you is trickier than it may seem. All sourcing advisors are not equal. A big name firm may not give you the attention you need. A start-up may not have the depth of experience you require.

“There has never been as great a need for outsourcing advice as there is today, and there has never been such a plethora of advisors competing to give their advice,” says Phil Fersht, former AMR analyst and author of the outsourcing blog Horse for Sources. (Fersht now works for vendor Cognizant Technology Solutions.) “Whether you are a highly-sophisticated enterprise with your outsourcing experience or a complete novice, you will most likely have to engage a third party at some stage during the outsourcing lifecycle, whether it’s simply to administer and negotiate a complex contract or to hold your hand through the entire evaluation process.”

There are some general qualities that make for a good outsourcing guide. “The very best advisors are not only guardians of the clients’ interests, but are also excellent facilitators, who understand both sides’ perspectives, risks and interests, and can work creatively and constructively to find solutions that permit both sides to succeed,” says George Kimball, an outsourcing attorney in the San Diego office of Baker and McKenzie.

Here are six tips to help you choose your outsourcing consultants wisely.

1. Know your goals. “Make sure you define your basic sourcing strategy before selecting the sourcing advisor,” says Richard Matlus, research advisor for Gartner IT Services and Sourcing. For example, is your impetus for outsourcing to reduce costs? If so, adds Matlus, select an advisor that will help you achieve that goal. Some advisors excel at holding vendors’ feet to the fire on prices, while others specialize in other areas.

2. Bigger is not always better. Outsourcing advisors come in all shapes and sizes, from the big name firms that charge correspondingly high fees to independent individuals with lower hourly rates.

“When dealing with third party advisors, you usually get what you pay for,” says Fersht. “However, we have seen situations where enterprises have paid top-dollar for third-rate advice and others where customers received great service from one of the smaller, cheaper firms.”

A large, well-known consultancy may be a good option, but don’t make the decision based on name recognition alone. Now more than ever, there are great lower cost options available, thanks in large part to experienced sourcing advisors who were laid off during the economic downturn and who are now in business for themselvesand, as such, available at a large discount to you.

3. Get personal. You hire a consultancy, but you work with a consultant. “The individual advisor in charge of the project is at least as important as the firm,” says Kimball. “The (best) firms all offer good people, sound methods and a wealth of experience, but individual chemistry between advisor and client is crucial.”

Adds Matlus, make sure you’re not getting stuck with the rookie.

4. Check—and double-check—those references. You’ll want to talk directly and discreetly with multiple clients of your prospective sourcing advisor who are at least a year into their negotiated outsourcing deals. They’ll be in the best position to tell you whether the advisor’s guidance was worthwhile. The best references, as always, will come from people you know and trust.

“References from enterprises not put forward by the advisor are even more valuable,” says Fersht. “Try networking with peers at other companies who have experience working with outsourcing advisors.”

Make sure the references you talk to were involved with the consultancy at the start, or better yet, are those who’ve had experience working with the individual professional who would lead your process, adds Matlus.

5. Test drive the tools. Take a close look at the processes and methodologies the advisors use. The advisor should have a proven approach for taking enterprises through the outsourcing lifecycle.

“Ask them specific questions on how they applied it in previous client cases and how they would work with you during each stage of the cycle,” says Fersht. “You will learn a lot about how much they have thought through your issues when asked how they will apply their methodology to your specific situation.”

The better the advisor’s tools, says Matlus, the better and more expeditious the sourcing process will be.

But don’t forget about the need for flexibility, as well. “Look for the ability to vary usual methods to suit circumstances and client needs,” says Kimball. “One size does not fit all, especially now.”

6. Investigate conflicts of interest. There’s no doubt that you want an advisor who engenders respect from the vendor community, but when consultants get too cozy with providers, you lose.

“They must be focused on your best interests, not theirs,” says Fersht. “Investigate other business divisions and service lines within the advisory firm to ensure where their interests lie. Also prod them about their relationships with outsourcing vendors to make sure you’re getting an independent view of the market.”

Source: cio.com-Outsourcing Advisors: 6 Tips for Selecting the Right One

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4 steps to prepare employees for robotic process automation

After the 1938 radio drama War of the Worlds proclaimed “the Martians are Coming,” reports alleged that people ran panicked into the streets. Today, something not too dissimilar is happening with the adoption of robotic process automation – software robots that execute processes in the same way a person does.

But this is no hoax. In fact, research from ISG Insights finds that more than two-thirds of business operations leaders plan to deploy software bots by 2020. And the potential for impact on employees is huge.

Yet the prospect of automation doesn’t need to be met with panic. The fact is, when properly explained and launched with employee involvement, automation can greatly benefit both employees and the companies they work for.

Sadly, most initiatives that are designed to improve business performance fail because the organization doesn’t adequately prepare its employees for the change. To make this type of initiative work, here’s four key steps:

Demystify the Robot

Let’s face it: people are terrified that robots will take over their jobs – and take over the world. How could employees not be suspicious of robots? Help employees understand what RPA is and what it is not. RPA software is configured to eliminate mundane tasks associated with many business processes – the tasks most employees would gladly relinquish.

Few people relish the “swivel chair” rekeying of information between and among applications or extracting data from one system to validate it against another. Employees should view RPA “bots” as teammates, willing and able to perform repetitive tasks without complaint and with unmatched speed and accuracy.

Use Employees for Their Brains

Business leaders can create enthusiasm and support for RPA by engaging employees in developing the RPA strategy and including them in evaluating opportunities for automation. Employees know precisely where bottlenecks or redundancies occur. Their imagination and vision can be a means to rekindling the creative capacities that may have been stifled while performing recurring processes.

Adhere to the adage that involvement leads to commitment. Involving employees at a higher level creates excitement around what is possible and helps them understand where and how they might fit into a changing organization.

Identify Talent to Guide the RPA Journey

Unquestionably, the quest for cost reduction is a driver behind automation adoption. And with good reason. The ROI on a typical investment is more than 500 percent. Yet, many don’t understand from the outset the impact automation can have on speed-to-market and revenue cycle improvements and how it can lead to new opportunities for employees to perform higher-value work.

Train and reskill employees to become process assessment experts and help them acquire skills related to managing virtual workforces. Case in point: a premier insurance company recently deployed RPA and was immediately able to bind more policies faster and more accurately simply because it could process broker requests for quotes by eliminating tedious work that underwriters had been performing.

Ultimately, management retrained and redeployed workers to accommodate the increased demand for policy binding.

Communicate Early and Often

Including employees in defining the impact of RPA on their jobs and the related upskilling opportunities is critical. It should be non-negotiable. The possibility that RPA will eliminate human workers is not a definitive and inevitable outcome.

Give employees the opportunity to self-identify the roles within a process that are likely to be eliminated. Typically, RPA is deployed as part of a larger business process made up of a series of mundane or repetitive tasks that do not fall to individual employees. When employees and their managers begin to understand the operational complexities of RPA, they can work together to identify opportunities for creating new jobs that require new skills.

While RPA may start in a specific business unit, its impact and operating results will spread rapidly once it is proven. Formalize a communication strategy and structure for discussing RPA and be prepared to take the message company-wide. Stay in front of the message. Failure to do so will result in employees coming to their own conclusions and creating their own networks to hypothesize the impact of robotics.

Cutting costs will always be essential for competing in the global economy – and robotics are here to stay. But along with the opportunity to automate and streamline processes comes the responsibility to prepare employees. Who better than existing employees to help lead the charge into RPA?

Source: information-management.com -4 steps to prepare employees for robotic process automation

7 hot IT outsourcing trends — and 7 going cold

As IT organizations become more strategic, so too do their partnerships with IT outsourcing providers. Digital transformation, automation, and the data revolution are not just shaking up how IT operates, they are greatly impacting the kind — and quality — of services under contract with IT outsourcing firms.

Here is a look at the technologies, strategies and shifting customer demands shaking up IT outsourcing right now and the once-hot developments that are beginning to cool. If you’re looking to leverage an IT outsourcing partnership, or want to make good on the market for IT outsourcing as a provider yourself, the following heat index of IT outsourcing trends should be your guide.

Heating up: Rapid software development

IT organizations are increasingly looking for partners who can work with them as they embrace agile development and devops approaches. “Organizations are rapidly transforming to agile enterprises that require rapid development cycles and close coordination between business, engineering and operations,” says Steve Hall, a partner with sourcing consultancy Information Services Group (ISG). “Global delivery requires a globally distributed agile process to balance the need for speed and current cost pressures.”

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Cooling down: IT services silos

As companies embrace new development methodologies and infrastructure choices, many standalone IT service areas no longer make sense. “In the past, companies may have sourced app services from one provider and secured cloud services from another,” says Ollie O’Donoghue, senior research analyst with HfS Research. “Now, thanks to new methodologies like devops and the increased ‘cloudification’ of business infrastructure, the lines between distinct IT services are blurring. Service providers and clients are far more likely to procure a blend of IT services to deliver business outcomes from a single vendor [rather than] contracting segments of IT out to a range of suppliers.”

Digital transformation is driving demand away from compartmentalization and silos of service delivery and toward frictionless integration, says David J. Brown, global head of KPMG’s Shared Services and Outsourcing Advisory.

Some IT service providers are becoming one-stop shops for their clients through brokerage services or partnership agreements. “Offering clients a full spectrum of services from best-in-class providers is enabling providers to broaden the scope of their offerings, and clients to select the technologies and services that suit them,” says O’Donoghue. “Even large providers which formerly cornered the market with proprietary technology are starting to champion vendor agnosticism in a bid to offer clients impartial, best-in-class IT services.”

Heating up: Cloud integration

Enterprises are moving more workloads to the public cloud, but continuing to run certain applications in dedicated private cloud environments for security, regulatory or competitive reasons. So they’re looking for providers that can seamlessly manage and integrate their hybrid cloud environments, says Rahul Singh, managing director with business transformation and outsourcing consultancy Pace Harmon. “Increasing adoption of software-as-a-service models for specific applications (such as Salesforce and Workday) creates further operational complexity for enterprises,” Singh adds.

Cooling down: Traditional remote infrastructure management

Over the past decade, the offshore delivery of infrastructure management services — from network services and help desk support to server maintenance and desktop management — became mainstream. But remote infrastructure management (RIM) is no longer a growth industry for IT services providers; it can’t compete on price with the public cloud, where adoption rates are growing at compound rates of 25 percent a year. “Almost every enterprise is taking a cloud-first strategy,” explains ISG’s Hall. “Service providers are shifting to cloud management services; but with the double whammy of integrated devops, even this is a short-lived venture.”

Heating up: Talent wars

An increase in consultancy-led engagements and the subsequent demand for more specialists and advisors in IT outsourcing is inspiring IT service providers to turn their attention to talent acquisition and retention, according to analysts at HfS Research. “The challenge of recruiting and retaining the talent necessary to deliver high-quality services has been brewing for some time,” says O’Donoghue. “The spectrum of skills in demand is becoming more focused, [and] providers seeking to compete in the modern marketplace will need to work harder to attract talent.”

Cooling down: Labor arbitrage campaigns

Sourcing IT services in the lowest-cost locations is no longer a competitive advantage, as clients demand use of automation and tools to drive efficiencies instead. “Organizations are driving massive productivity improvements through technology, not labor,” says ISG’s Hall. “Developing a solution that is based on low-cost labor won’t even get a CIO meeting in today’s market. Top IT leaders are driving massive digital transformation projects, and most service providers have adapted their message and core capabilities to be more than low-cost labor.”

Geography is becoming increasingly irrelevant to outsourcing decisions, says Marcos Jimenez, CEO of Softtek US and Canada. “Customers demand providers who are responsive, flexible, innovative and able to leverage emerging technology and solve business problems. They don’t care about where the work is done.”

Heating up: Automation results

Cost savings based on human labor are being supplanted by those delivered by so-called “digital labor.” Enterprises are demanding automation capabilities from their outsourced providers. “Automation not only provides increased efficiencies, but also brings proactive capabilities to deal with issues before they become business-impacting events, which adds significant value to enterprises beyond the typical cost reduction opportunities,” says Singh of Pace Harmon.

Automation is taking hold across middle and back-office functions that have been traditionally outsourced. “If you want to compete, you must automate,” agrees ISG’s Hall. “This is causing disruption in traditional sourcing models and driving service providers to make big bets and commitments on future pricing.”

Innovative clients and providers are taking an “automation first” approach, says Rajeev Tyagi, chief operating officer for Softtek US and Canada. “Rather than identifying human activities within an IT or business process that can be automated, enterprises will use digital labor as the starting point,” he says.

Cooling down: Automation hype

The results of automation are also becoming more transparent. Service providers are now expected to detail the iterative efficiencies that automation will create for clients, says Jamie Snowdon, chief data officer for HfS Research. Unfortunately for providers, that means they can no longer keep the savings to themselves. “Undoubtedly, as newer forms and blends of automation technologies enter the marketplace, vendors will be increasingly required to share the benefits with their well-informed clients,” says Snowdon.

Heating up: Captive offshore delivery centers

With technology becoming a competitive differentiator across industries, every company is becoming a tech company — from automakers to oil and gas providers to retailers. And that’s leading a broader swath of previous IT outsourcing customers to set up their own captive technology services delivery centers offshore, says Hall of ISG. “To compete and scale, enterprises want ‘badged’ resources, which means captives are back as a popular model to accelerate the adoption of automation and maintain the intellectual property for cutting-edge solutions.”

Cooling down: Low-cost service desks and call centers

Likewise, in an era that values superior customer and employee experiences, companies are placing more emphasis on the resources and technology employed to operate their internal service desks and customer-facing call centers.

“Call center consolidation and the desire to partner with strategic vendors continues, but call volumes are still high,” says Jimit Arora, a partner at Everest Group. “While virtual agents and chat bots are becoming prevalent, we see companies being reluctant to expose customers to these technologies just yet. They don’t want blow-back akin to interactive voice response system.”

Meanwhile, “the workplace of the future has made the service desk relevant again,” says Hall. “ CIOs and IT leaders quickly realized that outsourcing the ‘face to the business’ to a third party may not be in their best interest. Look for more creative, on-site and integrated solutions as organizations integrate a complete workplace solution into their delivery models.”

Heating up: Populism and protectionism

Concerns about U.S. immigration reform and the impact of Brexit are driving some IT and business services back to domestic locations, says Stan Lepeak, director of KPMG’s Shared Services and Outsourcing Advisory.

Cooling down: H-1B panic

However, anxiety about potential changes to the H-1B program in the U.S. has been allayed — for now. “The Trump Administration’s early saber rattling appears to have sparked renewed interest in artificial intelligence and robotic processing as ways to reduce cost and eliminate jobs without offshoring,” says Dan Masur, partner in Mayer Brown’s Technology Transactions practice in Washington, D.C. “[But] other administration policies and objectives appear to have eclipsed outsourcing issues, at least for the moment.” Many of the biggest users of H-1B visas were already increasing their American hiring prior to the last election.

Heating up: Business-based metrics

One of the biggest changes facing the IT services industry in this period of business transformation is how to quantify services. Contracts are shifting from traditional input or transaction models to those built on business metrics andresults. “We’ll soon see a move from traditional arrangements — like FTE models — pushing beyond convoluted outcome-focused metrics and into the heart of the client companies with business-linked metrics,” says Snowdon of HfS Research. “We can expect more deals to focus on specific outcomes measured by business metrics.”

Client expectations are rapidly evolving. HfS analysts are seeing client engagements begin with a particular business challenge, with prospective vendors asked to tailor a solution to them. The result is an increase in consultancy-led engagements, which carefully design solutions for the customer.

Cooling down: IT services industry growth

Secular forces have driven the outsourcing industry into significant deceleration. The results of the second quarter of 2017 have yet to be announced, but the top 20 publicly traded IT services companies saw 2.1 percent year-on-year organic growth in the first quarter, according to the Everest Group. “This is the lowest growth number in the last three years, and represents an industry that is witnessing significant pressures due to digital technologies, pervasive automation, new business models, and immigration-related concerns,” says Everest Group’s Arora.

The top five Indian IT companies have experienced seven straight quarter of growth deceleration with a forecast growth rate of less than seven percent over the next 12 months, according to Arora. The key will be to evolve from arbitrage-based models to those built for digital transformation, which will require all providers to spend capital on new capabilities.

Source:  cio.com-7 hot IT outsourcing trends — and 7 going cold

Industry and academia – the recipe for AI innovation

Academia and industry at first glance appear to be strange bedfellows. One focuses on the theoretical and conceptual, whilst the other is driven by the practicalities of deadlines, goals and ultimately, profit.

I’m in the privileged position of working on both sides of the fence. I’m Professor of Computer Science at the University of San Francisco as well as Chief Scientist at SnapLogic, a provider of application and data integration software. I have worked on AI in both of these roles, and throughout my 20 year career I’ve come to the realisation that, when it comes to driving innovation, these two distinct spheres need to work together.

AI promises to be the most important technology of the future, and if the lofty ambitions and out-of-the-box thinking of academia can find synergy with the can-do attitude, urgency and resources of industry, we’ll see an explosion in its applications. In fact, I believe that AI and ML technology won’t just be a nice feature but will be a requirement for all applications go forward.

Data, Data everywhere

This collaboration between industry and academia has been growing for some time and, like most things in technology, it all boils down to the data. For the first 10 to 15 years of my career I was on the traditional academic track, and whenever we were undertaking research or publishing papers, there was always one consistent stumbling block – we lacked real world data.

That all changed around 10 years ago with the emergence of social and search. The Google’s, Twitter’s and Facebook’s of the world were challenged by data growth problems that exceeded the capacity of conventional database technology, so they built custom solutions to house their vast datasets.

Of course, the large search and social companies didn’t curate all of this user and behavioural data for the distinct purpose of fuelling AI development, but they saw the potential that it held. The tipping point came when the likes of Twitter first invited academics to analyse this data. Suddenly and unexpectedly, a treasure trove of real world data was made available to academics. All that theoretical machinery that we had been developing in academia could be realised as real recommendations and meaningful predictive applications. Ph.D.s in academia started going into industry and working with real data, fuelling further theoretical developments and so on and so forth.

Many of the latest and most promising developments in AI have been forged through this symbiotic relationship, and if it can be strengthened, we’ll see many more breakthroughs in the pipeline.

Cultural Cross-pollination

The positive effects of academia and industry’s relationship aren’t solely limited to datasets. Cultural cross-pollination is, in my opinion, a vital aspect for driving further innovation in the field.

I’ve briefly alluded to this above, but it’s hard to imagine cultures much more different than industry and academia. As someone who was, for the majority of their career, primarily an academic, I’ve experienced first-hand how these two worlds differ, and how, on an individual level, being exposed to the other side of the coin is an enriching experience.

This is perhaps best illustrated with an example. I first joined SnapLogic in 2010, when it was a much smaller company than it is today. This was my first foray into industry, and I was tasked with building a prototype for a machine learning project to be implemented into our data integration platform. The prospect of putting my code in front of my new colleagues, industry veterans, unsettled me.

As someone who had been coding since the age of twelve or thirteen, it wasn’t a lack of skills or experience which caused this reaction, rather the prospect of doing so in a wildly different environment to that which I was used to. In academia, code is rarely reviewed. There isn’t an audience, it’s just an aspect of the job you complete. In industry it’s much more purpose-driven. There are goals and deadlines and milestones. Your work must deliver value for customers.

In the end everything was fine, and that code I wrote still exists in the platform to this day, but it shed some light on how sheltered we are in academia from the realities and stresses of industry. By spending time in industry I learned how to adapt to a different type of coding environment, and am a more well-rounded professional as a result.

These cross-cultural benefits are something I’m bringing into my classroom to better prepare my students for a career in industry. I’m now teaching some of the realities of building production software, which many academics might forego. We’re also bringing some of my students to work on-site at SnapLogic, on real-world AI projects, for course credit.

By exposing these younger people to industry in the earliest parts of their careers, rather than far later on as I did, the next wave of computer scientists will be equipped with not only the curiosity of the academic, but the practicality and work ethic of industry. This, I hope, will spur the next great developments in AI.

The AI future

I strongly believe that AI will have a huge impact on the world of business in the years to come. It will make companies more efficient, freeing up resources to be invested in other areas to enhance existing products or develop new ones. It will change job roles and allow employees to focus on more human tasks that rely on human skills, such as emotional insight, rather than burdened with rote, repetitive tasks.

However, it’s going to be an incremental process, and it won’t happen overnight. If we’re to have any hope of accelerating the timeframe, we’re going to need academics and industry pulling in the same direction, pooling their talents and resources and working in sync. The building blocks for this relationship are already in place, and both sides stand to benefit.

Source: itproportal.com-Industry and academia – the recipe for AI innovation

Why large enterprises are working with smaller IT services providers

I recently had the rare opportunity to have a long, honest conversation about the outsourcing industry with a client of my firm, but not one of my direct clients. We were seated next to each other on a flight, and being trapped in a metal tube at 35,000 feet allowed us to trade opinions and experiences in a way no agenda-driven meeting ever could. I was enlightened.

The client, a deeply experienced applications executive, was in the process of moving his entire application portfolio from a legacy, multibillion-dollar-in-revenue IT services provider to a much smaller provider. And he was thrilled with the new level of service, dedication and quality he was receiving. It had not occurred to me until that moment that this is not an isolated incident.

His rave reviews were for a particular provider, but this same phenomenon is happening everywhere. Small providers like Tech Mahindra, Syntel, L&T Infotech, NTT Data, Softtek, Mindtree, Globant and many others are not only competing vigorously for outsourcing business in the Global 2000, they are winning it! Competition is good for the industry and good for customers. A bigger pool of qualified contestants raises everyone’s game.

Why are big companies working with small providers? What is driving this phenomenon, and why now? There are some old reasons with new twists and some altogether new reasons. Here are the top four:

1. Customer intimacy, dedication and superior service. Smaller providers have used the big-fish-in-a-small-pond argument for decades, but now the benefits are actually making themselves known. It’s rumored that some clients have been taken for granted by their super-large providers, but I think another subtle novelty is at play here. Now that buy-side enterprises have more mature management practices, they can work more successfully with less mature organizations. And these organizations make up for any potential lack of capabilities with hunger, humility and passionate dedication.

2. Near-shore effectiveness. As technology teams are asked to work better, faster and cheaper with agile methodologies, being in the same time zone helps. Having the same socio-cultural references is invaluable for the design and execution of anything that touches the human experience, such as graphical user interfaces, websites and mobile and social applications. Of course, not all small providers are near-shore, but those that are can stake a claim to some high-growth niches that suit them just fine. Those that aren’t are still finding niches to dominate, such as next-generation enterprise resource planning systems and complex, industry-specific applications that never used to get outsourced. It turns out “digital” is big enough for all of us.

3. A leveled playing field. Much like the cloud leveled the playing field for infrastructure services (nobody has an advantage when everything is new), digital has done so for the rest of the industry. It’s much easier to work with a new provider when nobody can claim years of experience, especially if that provider shows a greater willingness to take risks and support your business outcomes.

4. Big companies want what little companies have. If you are used to serving the middle market, then you are used to working with more agility and you are more likely to work on programs that contribute to revenue growth. There just aren’t enough dollars to fund back-office stuff that has little impact on the top line. Small providers have been working successfully with smaller clients for years, and now the big buyers want in on that action. Remember, today’s startups are “born digital,” and they will be the dominant, large companies in just a generation from now.

There are more, equally powerful reasons to consider small providers, but the most powerful one may have been articulated by the executive on that airplane: “I can’t imagine ever going back. They are easy to deal with, they fix their mistakes fast, they know what they are talking about, I sleep well at night, and I’m having fun at work for the first time in years.” What’s not to love?

Source: cio.com-Why large enterprises are working with smaller IT services providers

Why have so many sourcing advisors failed with automation?

Remember when sourcing advisors has become the “new analysts” and dominated so many outsourcing discussions? Remember when it was the norm for clients to bring in the sourcing specialists whenever they needed a deal done, not only to get a good price, but also to make sure they selected the right partner and had a strategic view of the future? Remember when most advisors were not only contract experts, they were also strategists, researchers, sounding boards and respected brands you could hang your hat on… Just look at our 2011 study when advisors lorded the influence over everyone bar direct peer feedback:

Fast forward to today, with all the sourcing advisors doubling-down in RPA to compensate for the drying up outsourcing deals and confidently hoping their outsourcing clients will immediately turn to them to help them grapple with the new outsourcing-cum-automation model. Surely their ability to craft deals for clients will put them in pole position to take their clients down the RPA path…

Let’s visit our brand new (still-in-the-field) study on the 2017 State of Automation, and it’s telling us a very different story when we spoke with 56 enterprises actually deploying RPA:

Less than half the RPA buyers view either consultants of sourcing advisors as influential in their automation sourcing. Even conferences are impacting automation buyers more.

So what’s gone so wrong with advisors in automation?

Credibility. Suddenly many advisors who were previously hawking their deep understanding of HCL versus TCS’s FTE rate cards are now suddenly adding their names to white papers on automation and trying to insert themselves into serious client conversations about said topic. It’s just not credible.

Smarter clients. The swirl of information over social channels is so intense these days that most clients’ knowledge isn’t that far behind the experts. In many cases, you’ll learn more about RPA talking with a client in beta mode than an advisor or analyst trying to impress you at a conference. That is why internal channels, such as procurement and plain old desk research is such an influence factor these days.

Archaic focus on headcount reduction. Just because you could create simple cases for headcount reduction with “take the people” outsourcing, doesn’t mean you can deploy the same draconian strategy to automation. Even the most clueless governance executive knows you can just fire people before you programmed some manual activities into a piece of software. Sure, there are serious productivity gain to be gleaned over time through the digitization of manual processes, but to tie this to immediate headcount takeout just doesn’t work.

Competition from service providers. For the first time, sourcing advisors and service providers are going head to head, and automation is the promoter of the fight. When clients want to understand RPA and a partner so help them roll it out, they need people who are in the game for the long haul, not a broker to dip in and out and get a deal done. Many of the sourcing advisors are just not transformation people – they are great at helping clients plan their outsourcing weddings, but marriage guidance councilors they truly are not. Service providers depend on long-term, complex and often messy relationships to keep them employed and busy… and RPA really fits the bill. While it poses significant threats to their margins over the long term, they cannot afford to be not playing in the automation game. What’s more, most the BPO service providers are rapidly running RPA in their own delivery organizations, which is giving them the experience and lower cost base to be effective.

The traditional consulting model doesn’t work with RPA. The advisors are struggling to scale up talent bases that can understand the technology and deal with the considerable change management tensions within their clients. RPA is murky and complex, and not something you can train bus loads of 28-year-old MBAs to master overnight. Meanwhile, we are seeing some advisors simply do some brokering of RPA software deals for small fees, only to make a hasty exit from the client as they do not have the expertise to roll-out effective implementation and change management programs.

RPA specialist consultants few and far between. Pure-play RPA advisors are explaining this is not quite so easy and requires a lot more of a centralized, concise strategy. There are simply not enough of these firms in the market, especially with Genfour having been snapped up recently by Accenture. With only a small handful of boutique specialists to go around, these firms can pick and choose their clients and command high rates. Quality RPA advisory boutiques, such as Symphony Ventures, are literally turning business away as they cannot scale fast enough to cope with the demand.

Advisors are not producing research. There’s a reason why procurement folks, analysts and simple desk work actually sit above advisors in the new data – clients want product specific benchmarks and real experienced advice that they are simply not getting from the advisors. All the advisors are putting out is the same of tired “drama” about robots replacing workers, and how to think “strategically” about RPA. While I like some of the stuff I see coming out of the likes of McKinsey, KPMG and EY, it’s just not giving me the real deal about which RPA vendor I need to be working with, how these tools truly stack up against each other and how I can actually build a bloody bot. That is why many clients are getting more reality from attending a conference than the lovely lunch they just got bought from their nice friendly consulting partner.

Turgid, hackneyed marketing doesn’t work anymore. Cheesy pictures of robots and the same endless stream of 300-foot view puff that sounds just like the last piece you read on LinkedIn by some weird dude who you can’t actually recall allowing into your network, isn’t helping matters. These advisors are relying on their brand and past reputation for credibility in a world where clients want to see some meat on the bones.

The Bottom-line: Advisors need a vastly different approach to automation to avoid complete irrelevance in this market

This industry has literally entered into a destructive war over automation, and the need for credible, independent and experienced advice has never been so in demand from customers. The skills to make automation a feasible profitable reality are few and far between, while greedy corporate leaders demand cost savings that simply are not achievable if their organizations fail to make the necessary investments and partnerships. Did companies become world class at HR overnight because they bought an expensive Workday subscription? Or stellar at sales and marketing because they slammed in a Salesforce suite? So why should they become amazing at cost-driven automation simply because they went and bought some licenses from an RPA vendor promising bot farms and virtual labor forces?

RPA and Intelligent Automation have sparked a major war in the worlds of outsourcing and operations, where many battles are being fought – and the winners will be those who are in this for the long haul, who can absorb some short-term pain in order to benefit from the larger spoils further down the road. While automation is killing outsourcing today – costing many people their jobs, their reputations and destroying the profitability of legacy engagements, those who can hunker down, focus on self-contained projects where they can fix one broken process at a time, can get stakeholders onside by demonstrating meaningful, impactful outcomes without major resource investments, will be the winners.

Advisors who can win out are those who can take their clients through this journey – one process chain at a time, evaluating all the right solutions and developing milestones that are realistic. Sadly the easy gigs where you could roll out of bed for a couple of million in billings are now extinct. The key is to play the long game, invest in the new skills you need to be truly credible in this market, and produce credible research that gets down and dirty in the weeds, not that 300 ft helicopter view that everyone’s heard over and over again…

Source: hfs-Why have so many sourcing advisors failed with automation?

Smaller IT Services Providers Win More Deals

Many years ago, I had a client—a tough, salty engineer—who had risen to become Chief Operating Officer (COO) of a global Fortune 100 enterprise. He was widely feared by just about everyone. My first meeting with him was rough, and the CIO smiled when I briefed him on my session. He said most meetings with the COO went this way.

But the experience wasn’t all for naught. While in the COO’s office, I noticed a large plaque on his bookshelf that read, “In God we trust. All others, bring data.”

So, for my next meeting, I came armed with charts and with the data that backed up the charts in my briefcase. The meeting went well, and my firm stayed engaged on that transformation project for almost two years. Lesson learned.

My last post, about the gains smaller providers are making in the marketplace, was easily the most popular since I started contributing to CIO.com. It made me a lot of new friends on LinkedIn. Yet I repeated my mistake: I came with anecdotes and no data, which is a particularly unforgivable error, since my company collects and reports on this data every single quarter.

Today, I am addressing my mistake and sharing that data with you:

Source: ISG Outsourcing Index®

As you can see, the numbers support the hypothesis I laid out in my previous post. We track awards worth $5 million or more, and we track them by provider size. The smallest tier includes companies with less than $2 billion in annual revenue. The next tier includes companies with between $2 and $10 billion in annual revenue. And the third tier includes everyone else.

Source: ISG Outsourcing Index®

Our most recent findings show the share of deals won by the smallest providers has risen by 10 percentage points over the past five years, and this segment’s upward trajectory has been sustained and even accelerated a bit in the last two years. Perhaps most telling, as a group, providers with revenues of less than $2 billion won almost 400 more deals last year than their competitors in the group just one tier up.

While this is great news for smaller providers, the data do not tell the whole story. Over this same period of time, the average deal value has gotten smaller while the cost of sales has remained constant, so these service providers are working VERY hard for their wins. But we all know that, once inside a large company, providers find it much easier to expand, so we should expect that, even with lower total contract values, it is only a matter of time before some of these small players begin to graduate to the next-highest revenue band. Even with these caveats, I’m sure you’ll agree the achievement of these Davids in a hypercompetitive field of Goliaths is remarkable.

Source: cio.com-Smaller IT Services Providers Win More Deals