The Robots are Coming – Should You Fear or Welcome Them

How does your enterprise compare with peers?

A few weeks back, we opened our Robotic Process Automation (RPA) Pinnacle Model study to enterprises to compare their RPA adoption performances head-to-head. Everest Group Pinnacle ModelTM assessments are unique in that they correlate quantified outcomes and capabilities with a special spotlight on the Pinnacle Enterprises that are outperforming their peers. As part of the study process, we also interview select participants to gather qualitative information about these same enterprises.

Having completed a number of these interviews and looking at some of the early tabulations from those have completed the RPA adoption survey, I’m sharing some of my early thoughts below.

Four thoughts on our RPA Pinnacle Enterprise survey results

  • The robots are truly coming, but the fears about the impact on jobs is way overblown – it is clear from our conversations that RPA is going to have an impact in many different parts of the organization, including both front office and back office, but the number of jobs being impacted is not going to be the primary value proposition. Yes, cost take out will be part of the equation, but it is highly likely it will impact slices of jobs and/or departments that will allow for those employees to be transitioned to higher-value tasks.
  • Improving the job for employees – One of the clear messages that we have heard so far is that employees are embracing RPA. In fact, the branding of these initiatives is about getting rid of the worst tasks of their current jobs and includes names like “Smart Automation” and “We Innovate.” In fact, many of these employees are already implementing their own home automations like Nest, Alexa, Google, Rachio, etc. and are becoming quite comfortable with these quality of life improvements automations. One of the enterprises we spoke with actually talked about seeing improvements in their employee retention rates when they were included in these initiatives and allowed to improve their own jobs. However, change management has not been “easy,” and companies have adopted various ways to create awareness about the benefits of RPA and how employees can use it to be more effective in their jobs. Some of the examples of approaches include workshops, training programs, newsletters, project of the year, and hackathons.
  • The real skirmish is between the business units and IT for ownership – one of the interesting aspects of this analysis is to see where the study participants reside in their organizations. In the conversations, it becomes apparent the business is the one driving the conversation and IT has been the reluctant partner. But I got the sense this was changing pretty quickly, and IT was beginning to see the light that they have to be part of these implementations for a variety of reasons. Also, organizations have internally gone through a debate as to whether to approach this is an IT project or a business process redesign. We will be interested in hearing how your organization is thinking about this. Participate in the study.
  • We are just getting started – we can see it in the data and with our conversations, enterprises are running multiple RPA initiatives and projects are spread across RPA implementation stages. At least 65% of respondents are in the process of scaling up their RPA efforts or running steady-state automations. However, the majority of enterprises are still in their rookie year when it comes to setting up RPA CoEs (or expanding existing automation CoEs). The implications is that the initial proof of concepts projects are seeing enough promise that formal teams are being stood up to begin the scaling process.

Source:  everestgrp.com-The Robots are Coming – Should You Fear or Welcome Them

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The Battle for Jobs: Staying Relevant in the Robotics Age

With robots potentially as not only your coworkers but also your competition, what capabilities and unique talents are essential to keep your job?

We asked the co-chairs of IAOP’s Global Human Capital Chapter: What skills do humans need to compete with robots?

 

KPMG

A recent KPMG white paper titled Rise of the Humans states that automation and robotics will transform jobs according to two main dimensions – Cognitive Automation and Cognitive Processing & Robotic Automation.

The authors said Cognitive Automation changes fall into two main areas: the Leveraged Professional, which enables the people of lesser qualifications to perform at substantially higher levels, e.g., a paralegal giving attorney-level advice, or allowing a lower qualified professional deliver a world-class output. Second is the Connected Worker, which affords everyone in a specific role to access technologies and the best ideas and knowledge on a topic. An example would be surgeons learning the latest techniques from the world leader in a certain surgical procedure.

Cognitive Processing & Robotic Automation also has two areas: Working at the Speed of Thought says that augmented professionals can work faster, more efficiently with much greater throughput and effectiveness, such as delivering better company reporting and analytical judgment making. The Digital Worker describes the use of technologies to replace entire roles and job types. In particular, jobs in front-line and middle-ranking occupations are likely to see the biggest impact. Digital labor can fully replace or work alongside humans – in a call center, for example.

So it begs the question, what are the skills and talents one needs in the future to be a valued and irreplaceable resource? Like all technology, there are limitations. Jobs which require things like empathy, compassion, or those activities where Emotional Intelligence is needed are expected to remain relevant. There have been numerous discussions and research studies performed debating which is better to have, Intellectual Quotient (IQ) versus Emotional Quotient (EQ).

Robotics is not able to replace emotionally driven activities that are involved in some industries and jobs – such as strategists, performance managers, motivators, coaches, teachers, mentors, etc. As a CEO or manager, a computer can help inform you which decisions to make based on the data, but not how to personally connect and motivate employees to entice and inspire action. Those activities and roles will always be there and we should develop our strategic thinking and look at was to strengthen our EQ. Another human characteristic not easily replicated by machines is creativity or ingenuity.

Professions such as musicians, artists benefit from creativity, while many companies and organizations look to a Chief Strategy Officer or strategic arms of their business to develop new innovative ways of doing things to help grow and meet organization’s objectives. There is a movement among millennials to challenge the “status quo” and their ambition in these areas will serve them well in the future.

Lastly, if we think about leveraging the robots themselves as they join the workforce, the technical skills associated with robotics and automation will become increasingly important. Both making these technologies work, and also how to get them to work together with humans will be crucial. There will be a constant need to configure, deploy, redesign and redeploy these in each organization. The ramifications of robotics and automation are significant, but it is nothing we should fear.

While some jobs will be lost, many others will be created. The more quickly we come to understand how these machines will work and how to leverage them to improve each of our individual jobs and realize what tasks we can perform that are unique to humans, the better we are at becoming irreplaceable.

Accenture

At Accenture, we believe that automation represents an entirely new factor of production that enables people to make more efficient use of their time and do what humans do best – create, imagine and innovate new things. Machines offer strengths and capabilities that are different from – but crucially complementary to – human skills.

Beyond simply eliminating repetitive tasks, automation is supporting humans in complex and creative problem-solving by enabling analysis of dauntingly vast amounts of data and the identification of trends previously impossible to detect. As such, it’s improving the pace and scale of risk analysis and business decision-making at an enterprise level, while enabling employees to achieve significant productivity gains – as much as 30 percent to 40 percent – even in functions that are already automated.

Automation, like any other emerging technology, will change an organization’s demand for specific skills, but it won’t reduce the demand for skilled people.

In the Accenture Technology Vision 2017 companion survey of more than 5400 business and IT executives, 85 percent of executives report they will invest extensively in artificial technology-related technologies over the next three years. So there’s no doubt that as automation and AI adoption continue to rapidly accelerate, so too will the demand for skilled professionals.

Specific skill sets are needed around implementing robotics technology, integrating it with existing systems, and managing change management aspects in order to maximize its business impact. As more advanced capabilities are implemented around the broader constellation of technologies that make up artificial intelligence, skills will also be needed in the areas of computer vision, speech recognition, natural language processing, knowledge representation and reasoning, virtual/augmented reality, machine learning, deep learning, expert systems, biometrics and video analytics in general.

Judgment-based skills and general business acumen to best apply the technology in a broader business context are also needed. Intelligent automation and artificial intelligence feed off data; in fact, they can’t exist without it, so content and data curators, data scientists and analytics experts are also crucial in order for algorithms to learn.

Source: pulsearchives.net-The Battle for Jobs: Staying Relevant in the Robotics Age

Why Corporate Social Responsibility and Impact Sourcing Matter

Everyone’s talking about Corporate Social Responsibility and Impact Sourcing. They’ve been trendy topics in recent years. And yes, we’ve all participated in philanthropic initiatives, whether donating to a charity, volunteering for a fundraiser, getting the staff involved in a cause, running a 5K to support disaster relief, marching in protest, holding a corporate annual food drive, etc.

All of the above are excellent ways to dip our toes in the water of participating in the greater good… and just enough to give each of us the cozies. But these are also just a start.

When it comes to business, buyers want more from the powers that be; they want core value – consistent action and participation. It’s no longer about the quality of a product. Buyers care about society and global issues, and they are zoning in on the organizations proactively supporting these issues. Going forward, customers plan to do business with organizations that weave social responsibility into their entire business models.

It’s no longer about the quality of a product. Buyers care about society and global issues, and they are zoning in on the organizations proactively supporting these issues.

According to a Nielsen survey, two-thirds of global consumers are willing to pay more for sustainably made products. Why? Consumers are trying to be responsible inhabitants of the world, and they expect the same from corporations. Therefore, when it comes to buying, they are doing their research – checking labels, searching websites, reading reviews, watching the news and social media outlets.

On that note… customers, through their social media voices—not to mention their wallets—are letting companies know they need to be on the actionable side of key issues… or else. The public expects an “all hands on deck” approach from their providers in working to solve the most pressing social and environmental challenges across the globe. Otherwise, they will take their business to the competition.

Global Impact Sourcing Award

As a long-time supporter of Impact Sourcing and Corporate Social Responsibility, IAOP and several of its leading members have joined with the Rockefeller Foundation and Global Impact Sourcing Coalition (GISC) to raise awareness, share best practices, test models and measure the progress of this socially responsible business practice. Together, IAOP and the Rockefeller Foundation have launched a new award to recognize industry professionals who are leaders in Impact Sourcing and Corporate Social Responsibility. The Global Impact Sourcing Award will be presented annually at the Outsourcing World Summit, starting at OWS18 in Orlando.

Final Thoughts

Buyers are letting organizations know advocacy isn’t about talking the talk; it’s about walking the walk. It’s about the “why” of Corporate Social Responsibility – the fact that CSR should be an essential core value and must become part of the greater business plan.

Promoting social responsibility should simply be part of an organization’s broader business plan. Being a good corporate citizen is not only the right thing to do, but it’s also good for business. Why? It’s simple. Companies that give back—those that genuinely contribute to humanity and are associated with a cause—people want to do business with them. And that is something that can’t – and shouldn’t – be ignored.

Source: iaoppulse.net -Why Corporate Social Responsibility and Impact Sourcing Matter

CIOs, the age of the algorithm takes hold — for better and worse

The International Institute for Analytics released its annual list of predictions and priorities. Their big prediction for 2018: Companies will experience the pros and cons of what they dubbed the age of the algorithm.

Tom Davenport, co-founder of IIA, fellow at the MIT Initiative on the Digital Economy and the president’s distinguished professor of information technology and management at Babson College, and Bill Franks, chief analytics officer at IIA, said that algorithms are nearly ubiquitous and will proliferate in the enterprise.

The good news is that the age of the algorithm will mark a level of analytics maturity for the enterprise: Algorithms will be easier to access, easier to use, and even self-learning, making it possible for companies to interrogate and take advantage of their data like never before. The bad news is algorithm ubiquity will also lead to complexity, impacting technology buying decisions, enterprise architecture strategies and even how job titles are perceived.

IIA’s 2018 predictions were accompanied by corresponding priorities, providing companies with advice on what analytics hurdles to expect in the age of the algorithm and how they can be avoided.

Prediction No. 1: The age of the algorithm arrives

Algorithms have become ubiquitous and will play a more prominent role in day-to-day corporate activities next year, according to Franks. They are now easy to deploy, easy to access, embedded in applications and can be rented in the cloud, eradicating the careful choices analytics experts used to make about which algorithms matter and how to expend precious processing power. “Today, we’re basically able to go ahead, tee up and test a whole range of algorithms and then pick the best,” he said.

Priority: Automate algorithmic testing

Data scientists should embrace tools that automate the testing process as a timesaver. Franks was quick to point out that using these tools, which companies can build or buy, doesn’t negate the need for data scientists. Problems still need to be well defined, data still needs to be prepared and results of the testing process still need to be interpreted.

Prediction No. 2: AI projects grow, but disillusionment rises

Franks and Davenport disagreed on the latter part of this prediction. Davenport said almost every company he talks to has a portfolio of concrete AI projects underway; he believes companies have moved away from “moon shots” to smaller, easier-to-get-at problems, and that they tend to be bullish on the technology. But Franks believes enterprise AI in 2018 will follow a pattern similar to big data, which started out hot and then fizzled before finding its footing. He sees the lack of AI skills as the biggest contributor to enterprise disillusionment with AI. The talent dearth is especially acute for the more complex forms of AI, such as deep learning. That prowess is even scarcer than data science skills. “As demand rises, that’s going to be a challenge,” he said.

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Priority: Incorporate AI into your plans — rationally and incrementally

The key is to be strategic in how AI is incorporated into the analytics roadmap by making it an extension of what the business is already doing with analytics. “About 90% of AI has a statistical underpinning,” Davenport said, which means the foundation for AI isn’t new to data science departments. The roadmap should include top priorities, including AI, according to Franks. Doing so will give the company a contextual understanding of how aggressive it needs to be with artificial intelligence.

Prediction No. 3: Hybrid analytics

The proliferation of analytics products has given rise to freedom of choice — open source or proprietary tools, on premises or the cloud, or, increasingly, a mix of both. But with added choice comes added complexity, Franks said.

Priority: Allocate resources to determine the right technology mix

Companies will need to think hybrid analytics if they want to remain competitive, according to Franks. In 2018, analytics professionals should start to consider not only what a tool does, but where it best performs and how well it integrates with other technology. And in partnership with IT, they should start building flexible analytical architectures, making it easy to snap in or get rid of tools. Added flexibility will ensure a level of resilience if startups go under, if more established vendors stop supporting a product or if the analytics team makes a bad investment. “The architecture can be an insurance policy,” Franks said.

Prediction No 4: Beware the so-called data scientist

The title of data scientist has become watered down. Reporting tools and data preparation tools often have models baked in, making them easier to use and accessible, according to Franks. “People who traditionally would not have had any ability to claim being an analytic professional/data scientist suddenly, in theory, can say I use tools that do this so, therefore, I’m going to put that on my card,” he said.

Priority: Inventory your analytics skills and define job titles

Davenport suggested companies collaborate with HR to inventory and classify the analytics, data science and AI skills they have in-house. Doing so will help to distribute talent appropriately and pinpoint potential skills gaps. An example of classification is to implement a categorization and certification process for data scientists, with junior data scientists taking on simpler tasks such as regression analysis and senior data scientists taking on complex tasks such as developing new algorithms.

Prediction No. 5: Blockchain is a roadblock for analytics

Blockchain, an immutable distributed ledger, won’t have a profound impact on enterprise analytics programs, according to Franks. But it will pose performance issues when analyzing transactional data. Data on the blockchain is distributed and not centralized, it’s repetitive and compressed, and, unlike SQL databases, it isn’t designed for analytics. Data scientists will have to extract data out of the blockchain format and “make it into something friendly,” Franks said.

Priority: Prepare to analyze blockchain data

Franks said understanding how blockchain works and the new issues the technology presents is a good first step. He suspects that, at least in the short term, analytics professionals won’t have a lot of direct interaction with blockchain data. Instead, they will build “enterprise analytic views” into the data to do the analysis. “Those views can then be updated on a somewhat frequent basis and made into an extract or it can run live,” he said.

Prediction No. 6: Analytics are widely applied to improve data

When Davenport mentioned ditching moon shots for easy-to-get-at AI projects, one example he had in mind was applying AI to the data preparation process. For some companies Davenport has talked to, machine learning algorithms took months and sometimes just weeks to find duplicated records in multiple databases — a project that would have taken humans years to complete. “We hear a lot about what analytics and AI can do, but you don’t hear so much about this one, even though it may be one of the quickest ways to value for a lot of organizations,” he said.

Source: searchcio.techtarget.com-CIOs, the age of the algorithm takes hold — for better and worse

Accommodating GDPR email marketing regulations a top priority

Is AI working for your organization? Can you prove its ROI? Are you in the pilot stage and wondering what key metrics warrant rolling it out for marketing automation and at what point to cut bait?

We can’t answer those questions for you, but we can — and did — ask a number of industry leaders and observers to talk about where AI is going in the next year, as well as how it’s reshaping marketing automation.

One thing’s for sure: If you’re marketing to customers in Europe, you’d better get your act together before the European Union’s General Data Protection Regulation (GDPR) takes effect in May 2018. GDPR email marketing rules could mean a crackdown for businesses that are ill-prepared to comply with them. The regulation carries the force of law, and it harmonizes a patchwork of privacy rules across the EU’s member states.

GDPR email marketing rules remake workflows

Michelle Huff, CMO, Act-On Software: “The GDPR requires that all companies doing business in the EU — or online with EU citizens — protect the personal data and the privacy of those citizens.

A marketer will need to treat cookie data with the same level of protection as they would a customer’s address or birthdate. This means data security and privacy are no longer just IT’s problem. Marketers need to educate themselves on what data they have, how they use it and how it is protected, then limit access appropriately.

The days of exporting a huge CSV file of user data and uploading it to your email marketing platform are fast drawing to a close. For email, the best way not to run afoul of the GDPR [email marketing rules] is to institute tighter controls on email marketing programs.

Express consent must be granted by your customers, for both the data you are collecting and how you will use it. And, once collected, that data should never leave utilities that have been vetted and approved to meet the required level of data security.

The GDPR will have the biggest fundamental impact on marketing in the last decade, and the biggest impact on how companies go to market since the invention of the cloud. The onus is on marketing technology providers to ensure that their users have access to the tools they need to market safely and securely in the new world of marketing under the new GDPR [email marketing rules].”

2018: Year of the unsubscribe

Matt Harris, co-founder and CEO, Sendwithus: “If you weren’t doing double opt-in before, do it now. 2018 will be the year of the unsubscribe.

People are collectively realizing that they’re being bombarded by far too much online content, and unsubscribing or flagging irrelevant email is a fast and easy way to turn down the noise. Not only will double opt-ins help with regulatory compliance, they will ensure you have only interested, engaged and invested customers on your list, which will prevent unsubscribes and spam reports, which will, in turn, protect your reputation.

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From a technical standpoint, a double opt-in requires a simple click to confirm auto-response upon sign up. But you could use the opportunity to collect more data points to further personalize the user experience. A simple — but optional — checklist on the confirmation landing page would allow the user to select preferences, such as email frequency, product categories or content topics.”

Marketing integrates across channels

Joe Stanhope, VP and principal analyst, Forrester: “For 2018, I see a major shift in how marketers orient themselves — and, by extension, their marketing automation efforts — with respect to multitouch, multichannel customer engagement.

Historically, often by necessity, marketing automation and customer interactions have been very siloed by channel. Marketers are rapidly evolving beyond this state, and we’ll see major progress in this area in 2018.

Marketers will view customer engagement less as a series of independent or lightly related interactions, but rather as a continuous customer journey comprised of highly personalized moments that create opportunities to create value between the customer and brand. This approach will necessarily lead marketers to seek advances in their marketing automation capabilities to support the orchestration and delivery of interactions in line with customer journeys across any engagement point, regardless of channel, touch point or device.”

Chat marketing comes of age

Srivatsan Venkatesan, Freshworks product head, Freshsales CRM: “Consumers will prefer chat as a medium over other forms in 2018. Bots powered with context will become the real enablers.

In addition, bots will begin to adopt the look and feel of the application or website you integrate them with, thereby providing a native or personal experience.”

Enterprises struggle with ‘digital laziness’

Daniel Siegel, independent digital product architect: “Trends change every year, but what seems to stick is something I refer to as digital laziness. Instead of fixing the actual, hard and sometimes messy problem, we come up with an easy technological solution.

We prefer a CRM instead of picking up the phone. We prefer an email reminder instead of meeting someone face to face. We prefer a fully automated website and newsletter instead of staying in contact with our clients ourselves. We become lazy because we think the computer is taking care of it.

Now, we can use websites, drip campaigns, newsletters and digital marketing strategies to get more and better clients, but we’ll fail utterly if we don’t assert the fundamental goal we’re trying to achieve. Instead, we have to see the above as tools we can use to reach these goals and augment parts of our businesses.”

Marketing turns to influencers

Collin Holmes, founder and CEO, Chatmeter: “Consumers are tired of traditional, intrusive marketing messages, and [are] instead turning to their peers to influence what they do and buy. Coupled with the rise of ad-blockers and cord-cutting consumers, we can presume that we will all become influencers as online reviews and social sites become prevalent influencer marketing tools over the next few years.

This evolution is already beginning, as we know from the 92% of consumers who report making a purchase after visiting Yelp — a higher conversion rate than search engines and social platforms where most influencers currently reside. This is arguably for the better, as ad, marketing and content providers are facing pressure to be more creative, personal, relevant and timely with content, while simultaneously continuing to manage spend.”

AI marketing wears thin

Matt Nolan, Pegasystems Marketing Automation director of product marketing, Pegasystems: “The term artificial intelligence is being overused and is increasingly wearing thin on marketers who are way ahead of the CRM learning curve and already leveraging much of the AI tech being showcased, [such as] predictive analytics, machine learning, natural language processing and customer decision management engines.

Marketing practitioners, particularly those focused deeply on martech capabilities, see clearly through the veneer put in place by vendors — and know that a lot of the truly powerful AI tech, like deep learning platforms, won’t fully mature and add functional business value for years. So the challenge isn’t finding a place to leverage new AI — it’s finding a way to consolidate and operationalize the AI components they already have to provide a compelling customer experience and keep those individuals engaged.

In a sector with more than 5,000 unique marketing solutions, the average campaign response rate is less than one percent. There’s one question every company needs to ask itself: What are we actually trying to accomplish with our marketing? Because the answer isn’t ‘to run campaigns.’

Campaigns aren’t the end goal, they are just a means to an end. And despite how marketers are driven to behave, the goal isn’t simply to sell products either — that’s shortsighted. Instead, the goal must be to increase revenue and profit for the company as a whole and, ideally, to increase customer satisfaction at the same time.”

Source: searchcrm.techtarget.com-Accommodating GDPR email marketing regulations a top priority

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

What’s The Difference Between “Partnering” And “Outsourcing”?

The terms “partnering” and “outsourcing” are thrown about so frequently …. and in so many contexts …. that it’s hard to nail down an exact definition for either.

These two practices are becoming ever so common among the business community, and although the distinction between them is becoming increasingly blurred, they do have distinguishing traits, which bear consequential benefits and risks.

It has been said that the practice of outsourcing should be looked upon not as a simple customer-vendor relationship, but rather as a partnership where the engaging parties mutually benefit from their agreement. While this may be a sound management practice, and while outsourcing shares many of the same characteristics with strategic alliances, outsourcing should be recognized as its own distinctive tactic.

Outsourcing is the contracting of services via monetary means in order to minimize or limit the resources that would normally be required to perform business functions internally, thus reducing costs.

A partnership, on the other hand, does not necessarily involve monetary payment from one firm to another, or a binding contractual agreement between two companies.

Rather, it is a partnership in which business entities collaborate with one another in order to bring about mutual benefits. This partnership can range from a loose and informal one, to more formal joint ventures, which involve legal measures to set parameters. Such alliances might include practices such as the partnering of manufacturers and retailers in order to reduce logistics costs, or the engagement of hardware and software development firms to create competitive advantage through synergy. Indeed, there are almost infinite ways in which strategic alliances can be formed.

The point here is that outsourcing and the formation of strategic alliances, while similar in some ways, are normally used to achieve different outcomes and involve different methods of binding between the participants.

Partnering will be used more and more in these hard times. If I outsource a job to you, then you are paid a fee to complete your services regardless of the outcome of the project under which your services were rendered. If on the other hand we partner on a project, while you are not a partner per se, I would expect you to provide your services contingent upon the success of our project. If the project failed, you would not get a fee, but if the project were a success, you would expect a much larger fee for your services than if you’d been hired as an outsource.

Source: small-business-resources-cafe.blogspot.com-What’s The Difference Between “Partnering” And “Outsourcing”?