“The Global analyst firm Everest Group has released a comprehensive, 165 page report (available here) covering global service delivery locations, and the report cites Colombia as a nascent location in the global services market. While the country still has only a small share of the IT services market, for example, it is poised to…” Read more.
We have been wondering how service providers will ultimately tap into Service Delivery Automation (SDA) technologies to support their standardized and industrialized shared services offerings. Most have multitudes of in-house developed automations, including macros and the robotic varieties. Some have developed automation routines that can be shared across engagements for either specific processes (e.g., accounts payable) or for common purposes such as login & credentials management. The challenging part for shared services is to get a view across all automations, whether they are provided by macros, robotic or cognitive tools, as well as across clients.
Service providers are approaching this problem differently. Some are happy to just tap into the individual automation tools control panel, while others are looking for a controller of controllers capability. We are starting to hear from more and more service providers that have built the capability – Capgemini and Xerox being among them.
In a recent briefing with Capgemini, we heard about its solution to this problem. Capgemini has developed its own business services automation platform that will ultimately work with most automation technologies, including UiPath and Celaton, two of most recently announced Capgemini SDA partners. The platform is already operational and soon will clock up over a million transactions processed through it and UiPath.
Why a business services automation platform?
The majority of off-the-shelf automation software allow the user to manage and control automations from a centralized feature. This is fine and dandy for that piece of software, but most organizations use several automation tools from different vendors and need to have oversight of operations across all of them. With shared services, there is the added requirement of monitoring and, possibly, metering automated processes that are fulfilled through the shared capability. These features would aid operational quality assurance and transaction-based and volumetric pricing by providing process intelligence through role-based dashboards and reports. This kind of capability takes time to develop. We note that Capgemini’s platform offers the monitoring and analysis capability currently but not fully automated metering.
A central capability to manage, monitor, and measure the performance of automations, no matter where they’re run in the world, is fundamental for shared services. The advantages are clear to see:
- Helps an automation Center of Excellence (CoE) to reuse and share robot codes across engagements as befits a shared services environment
- Replaces a typically uncontrolled mess of home grown automation routines that are classically hidden among different engagements’ project assets and artefacts and consequently:
- Enables IT to keep track of what is running where and implement full version control and asset management best practice
- This allows service providers to have sensible discussions with clients about changing to transaction-based pricing, gainsharing, baselining volumes, benchmarking, and measuring performance against SLAs
- The capability allows the service provider to see what is available and what needs to be added, e.g., add agent assist capability to the mix of RPA for back-office and AI document processing
For the controller of controllers to work, service providers will have to keep interfacing more and more automation technologies with it so that they can manage all of them no matter when and where they are used. Capgemini, for example, is working to connect more automation tools to its control platform. These include virtual agents for answering repetitive questions and smart search.
The shape of things to come
Whether they like it or not, service providers face the prospect of having to do away with much of manual processing of repetitive work and have staff, who will be exception managers and teachers of AI platforms, and will take care of higher value and complex work instead. The outlook for the future is as much straight-through automated processing as possible.
It is good to see how service providers, such as Capgemini, are making good progress on SDA. For many, previously, automation was part of the bigger digital picture, but today having teams of automation excellence specialists has become an imperative.
Ease of system integration and achieving higher transaction integrity at reasonable cost are key parts of driving higher benefits from automation.
We expect to see more announcements by service providers, as they enhance and scale up their automation capabilities.
IBM’s February 2016 announced plan to acquire Truven is yet another in a recent spate of healthcare market mergers/acquisitions. The Truven purchase, IBM’s fourth major acquisition since establishing Watson Health in 2014, offers IBM access to data integration and analytics services and solutions.
Practitioners of global service delivery are continuously diversifying their delivery locations portfolio and looking beyond the traditional choice of offshore locations for expansion. In fact, onshore (source geographies) and nearshore locations witnessed aggressive market activity in 2014-2015, despite often offering higher operating costs than their offshore counterparts. Here are some highlights from Everest Group’s recently released Global Locations Annual Report 2015: Resurgence of Activity Amidst Evolving Propositions.
During 2014-1H2015, nearshore locations (in CEE, Ireland, Northern Ireland, and Scotland for Europe, and in Latin America and the Caribbean for the U.S. and Canada) witnessed growth in terms of new center setups and increasing headcount. This increase in market share was at the expense of the Asia-Pacific region in the global services delivery context.
One of the major drivers of significant growth in these markets is the changing value proposition of these locations. Companies are now looking at these areas for delivery of high-end work, such as analytics for knowledge-based services, judgement-oriented processes for both BFSI and non-BFSI sectors, and cloud and digital in the IT services domain.
Beyond an attractive talent profile, these locations are also enticing due to cultural affinity with source markets, as well as geographical and time zone proximity that makes managing the business easier.
Exhibit 1: Snapshot of market activity (new center set-ups) in major regions
Tier-1 and 2 locations in Chile, Costa Rica, Jamaica, and Mexico led growth in Latin American and the Caribbean.
In the nearshore Europe region, Ireland, Romania, and Poland accounted for the highest number of new center setups – due primarily to highly skilled talent, significant availability of a multilingual pool, and moderate-high savings – driving growth for the entire region.
Onshore delivery experienced significant market activity in locations in the United States, United Kingdom, Western Europe, Australia, Japan, and New Zealand.
Exhibit 2: Number of new center setups by top 20 service providers in onshore locations
Providers have been increasing their presence in onshore locations, although the pace of setups appears to be stabilizing. Several factors have led to this increase:
- Increase in the complexity of services, and lack of adequate talent depth in offshore/nearshore locations
- Increased pressure from buyers to grow onshore presence to enable easier coordination, better alignment/training, etc.
- New regulations around data security, especially in the banking sector, making onshore delivery necessary, or at least preferred
- Willingness of service providers to explore newer models and newer tier-2 locations in onshore geographies
For detailed insights on key changes in the global services sector in terms of delivery and sourcing models, please refer to Everest Group’s Global Locations Annual Report 2015: Resurgence of Activity Amidst Evolving Propositions.
It’s hard to believe that the 2016 HIMSS Annual Conference & Exhibition is upon us! Being held in Las Vegas on February 29 – March 4, it is the largest healthcare IT conference in the world bringing together 40,000+ health IT professionals, clinicians, executives, and vendors. And with more than 1,300 healthcare IT vendors occupying over 1.3 million square feet of space (the equivalent of 22 NFL-sized football fields) in the Sands Expo, it will be easy to get lost physically and in the multitude of discourse and chatter that will be going on.
As I look at the healthcare and life sciences IT space heading into 2016, I expect the following five themes to rule the roost at HIMSS 16:
- Mega mergers, middling impact for providers
Big healthcare client mergers are underway, and they will cause fluctuations in IT services demand. Major IT services clients in the healthcare vertical are pursuing mergers – e.g., Aetna acquiring Humana; Anthem acquiring Cigna; and Centene acquiring Health Net. While awaiting regulatory approvals (which could take until the second half of 2016 or longer) and consummation, these mergers will affect IT services demand growth in this market segment – entailing pull back on awards of new IT services deals, and stalls on previously-planned scope – in turn potentially detracting from revenues previously expected by IT services firms. We have already seen market leaders such as Cognizant raise concerns over possible downward demand pressures arising out of this temporary pause in spending. After merger consummation, a ramp in merger-integration work could enhance consulting demand. Yet longer-term, existing outsourcing revenues from the combined organizations are prone to be truncated. That said, well-positioned IT services firms could capitalize by achieving client merger-induced share gains.
- Will the real patient engagement please stand up?
Patient engagement, population health management, and customized/targeted care have all been doing the rounds in the last couple of years. However, our assessment of the state of patient engagement maturity mandates suggests that most providers lack a coherent strategy. More often than not, care providers conflate ad-hoc and siloed patient-facing initiatives, such as a patient portal or solitary mobile app, as true patient engagement. This couldn’t be farther from the truth. These attempts don’t meaningfully move the needle on patient engagement, and give care providers a false sense of hope and progress. In 2016, health systems and payers will – hopefully – realize that to actualize the patient engagement mandate, they need to constitute a coherent, thought-out strategy that encompasses organizational maturity, culture, multi-pronged initiatives (spanning care management, operational support, internal IT, and omni-channel access), and effective governance mechanisms to keep these disparate moving parts together.
- Data security: keeping healthcare CIOs on their toes
Healthcare industry tailwinds such as big data, BYOD, EHR/EMR, networked devices, mHealth apps, cloud-based technologies, and IoT are adding to the healthcare information security conundrum. There has been a manifold increase in the complexity of managing information assets, specifically Electronic Protected Health Information (ePHI) and IP. The data sharing requirements for the Meaningful Use program and the Affordable Care Act will only compound the security challenges for healthcare organizations. The frequency, severity, and velocity of cyber-attacks have increased, leaving stakeholders shaken in the absence of adequate response and protection systems. Although CIOs often list security as a priority, historically it has not translated into actual meaningful spending on security initiatives. However, we believe now is time for Chief Information Security Officers (CISOs) to take their place in the sun. Per a 2015 survey conducted by Everest Group spanning over 200 senior healthcare IT stakeholders, more than 90 percent view data security as the key IT challenge, higher than any other pressing concern about their IT portfolio.
- Drug pricing – the Goldilocks syndrome to the rescue?
Thanks to Martin Shkreli, concerns over drug prices dominated the public discourse last year. For the uninitiated, Turing Pharmaceuticals, headed by Martin Shkreli, was widely condemned for raising the price of Daraprim, a drug used to treat HIV patients, by 5,000 percent from $13.50 to $750 per pill. Price increases for branded drugs have outpaced inflation every year since 2006. Even generics prices increased by an average of 9 percent in 2014. The federal government is investigating Turing Pharmaceuticals’ and Valeant Pharmaceuticals’ drug pricing strategies. In a U.S. election year, Big Pharma will be under tremendous pressure to lower drug prices, which could potentially affect new innovation funding. Presidential candidates, Democrats and Republicans alike, have drug price proposals, further intensifying the spotlight on the issue.
- 2016 Presidential elections and the fight for universal healthcare
Both parties in the U.S. presidential race have a number of healthcare proposals on the table. With the high-profile tax inversion mergers by pharmaceutical companies, rising medical costs, and high drug prices, healthcare will remain a key issue throughout the political campaign. This battle will stretch to the Congress as well, given the Senate’s recent passage of a bill that would dismantle core elements of the Affordable Care Act. While a full repeal looks unlikely, parts of the act are still under attack, and the mudslinging is likely to continue through 2016.
I look forward to interesting discussions on these and other topics with clients and the broader vendor community during #HIMSS16. If you’re there in person, feel free to contact me!
“Service delivery automation is a popular topic these days, but at Everest Group we think there’s a great deal of confusion about it and how it really benefits an organisation. So let’s share some plain talk about what it truly is and what it can do for you.” Read more.
In an industry that has changed dramatically over the past decade – expanding beyond a handful of countries, Global Business Services (GBS) pulling together services across an organization under a single umbrella, “as-a-service” delivery models, autonomics and service delivery automation, etc. – one would expect to be hard-pressed to find a component that hasn’t kept pace.
However, one key enabler of effective ongoing client/provider governance has changed little, if at all.
Across the layers of governance, there are multiple monthly and quarterly reports that provide the basis for regular review meetings. But a comparison of governance reports generated over the past year with another set (across different relationships) from close to 10 years ago revealed no major discernible difference in the messaging, format, structure, or – to an extent – the content of the reports. The profound impact of digital and user experience-driven visualization appears to have eluded them altogether!
Some of the issues that were evident in the majority of the cases included:
- High on data, low on context: As a central theme, most reports have too much upfront data with minimal context behind it. “All green” metric performance is never a guarantee of client or provider satisfaction. Honest and open context actually helps avoid uncomfortable situations during discussions.
- Inconsistency of structure across towers: In multi-tower engagements there are often inconsistencies in simple elements like type of charts and terminology used, which increases risk of miscommunication between client and provider.
- Lack of coherence across governance layers: At times, there was lack of coherence and linkage between operational level governance reports and executive/management-level reports for the same outsourcing engagement. Even straightforward items such as FTE numbers and team descriptions failed to tie up in several cases.
- Resistance to evolution: Even if the entire service delivery has gone through multiple iterations of change, the reporting philosophy seems to be the same in Month 6 and Month 48. Just changing the month-to-month line items containing the metrics is not enough.
All this equates to a lot of time and effort utilized in going through data, with some important subjective discussions being lost or pushed to subsequent follow-up sessions. This can cause a high risk of misalignment in objectives and a potential trust deficit. The situation is aggravated if there are new stakeholders inducted into the governance structure who may interpret similar data in different ways!
As a principle, any document intended for circulation to a group of stakeholders should be clear in its objective and explanatory enough for an uninformed reader to understand. It needs to foster honest, engaging discussions, and must be modular enough to avoid re-work in bringing together reports for consolidation.
Some easy to implement practices to consider include:
- Use infographics in the executive summary: It might sound radical, but professionally-rendered infographics can be powerful tools to deliver a high-line summary, as compared with lines of text. They also make for better contextualization and more freedom to change formats on a periodic basis.
- Standardize terms and major assumptions: All service towers and team members preparing reports across the levels of governance should adhere to similar naming conventions. While this appears to be a simple thing, it is surprising to see how often it fails to happen in real life scenarios!
- Apply the relevance thumb rule: Teams responsible for preparing these reports need to regularly assess the relevance of each element for the intended audience, particularly at given moments in time. For example, very detailed incident or missed SLA analyses may be needed for operational governance reports during the stabilization period, but post stabilization, the focus needs to change to other priority areas
- Explore interactive visualization tools like QlikView or Tableau: Organizations have started adopting use of real-time data visualization and reporting across platforms like desktops, mobiles, and tablets. This provides users with flexibility to view dynamic charts based on their preferences. Providers supporting services to mature organizations in which users are comfortable using such tools may want to explore using them to buoy their governance reporting capabilities.
Some of the most conservative companies have had to modernize the structure and layout of even their Annual Reports to keep them relevant and more aligned to changing communication needs. The global sourcing industry should take the cue and look to infuse some change into the very documents that form the basis of their ongoing relationship health assessment!
Thursday, March 17, 2016 | 9 a.m. CST, 10 a.m. EST, 2 p.m. GMT, 7:30 p.m. IST
As you face the current digital revolution, you’ve likely realized that there’s a dearth of real facts and figures. How much of the digital transformation is real? How much is hype?
For the very first time, we are presenting a comprehensive “voice of the enterprise” to help clarify the true nature of digital adoption trends across Europe and North America.
Join Chirajeet (CJ) Sengupta, Vice President at Everest Group, and Jimit Arora, Partner at Everest Group, as they shed light on:
- Is digital all about Uber, AirBnB, and the consumer app with the sexy user interface?
- What does digital mean for large B2B enterprises?
- What does adoption really look like? What does it imply for the future?
- What separates digital-led business breakthrough from the cute-but-not-so-useful digital “widget”?
All this and much more – don’t miss our webinar on Thursday, March 17, 2016!
Who should attend:
- C-level and VPs of European and North American enterprises seeking to leverage digital technology to better engage customers, create new business models, streamline internal processes, drive supply chain efficiencies, and make IT more agile and efficient
- C-level and VPs of service providers who are seeking to better understand the needs of their customers in adopting digital technologies
What you’ll learn:
- The extent and nature of digital technology adoption among European and North American enterprises
- Key enterprise segments for digital adoption and adoption prevalence
- Key implications for European and North American enterprises service providers
- Jimit Arora, Partner at Everest Group
- Chirajeet (CJ) Sengupta, Vice President at Everest Group
There has been a lot of market activity buzz in some offshore/nearshore regions in the last year. Declining local currency, strong sector-aligned growth, and niche offerings from certain locations (e.g., high-end knowledge services work and SI/consulting, cloud, and digital) have all contributed. Let’s take a quick look.
The changing cost proposition
Chile, Argentina, Mexico, Colombia, Brazil, and Ukraine witnessed a steady decline in local currency, making them attractive from offshore/nearshore delivery standpoint.
Exhibit 1: Countries that witnessed significant decline in local currency during 2014-2015
This changing cost proposition enabled tier-1 and 2 locations in India, China, Mexico, and Costa Rica, to grow at a significant rate and thereby become “Star Performers” for various functions on Everest Group’s MAP Matrix™ 2015.
Costa Rica is witnessing surge in IT services along with its sweet spot for BPS and CC services.
Exhibit 2: Everest Group’s MAP Matrix™ 2015 – IT-ADM
Singapore and Poland witnessed growth primarily on account of strong BFSI industry. The domestic / regional BFSI market remains strong (and continues to grow), hence, enabling the growth of back-office sector aligned to these services.
Exhibit 3: Everest Group’s MAP Matrix™ 2015 – Transaction-intensive BPS
Despite relatively high operating costs, Singapore and Dublin managed to grow in terms of new setups and expansion of current setups. Niche offerings in these locations were one of the primary reasons for an upshift in market activity in these regions. For example:
- Growth in Singapore was led by a push from the strong domestic BFSI industry
- Growth in Dublin was driven by increasing leverage for high-end work in knowledge services (analytics), IT-ADM (SI/consulting, cloud, and mobility), and judgment-intensive business processes (primarily aligned with the BFSI industry.)
In the Everest Group’s Global Locations Annual Report 2015: Resurgence of Activity Amidst Evolving Propositions, we evaluate key shifts in the relative positioning of locations from their cost, talent, and risk profile attractiveness for various functions, e.g., Contact Center (English), Transaction BPS, Judgement-oriented BPS, IT-ADM, Bilingual (Spanish and English) and Multilingual (European languages) BPS. The report covers key shifts in the relative positioning of locations from their cost, talent, and risk profile attractiveness. The report also offers perspectives on the suitability of locations under various scenarios – with insights on key risks and rewards associated with each cluster of locations.