Cloud contract negotiation with Microsoft for Azure can be complex. By better understanding the cost reductions available at the contract and resource/functional levels, enterprises can maximize their return on investment. Read on to decipher the discounts and get the best cloud value from Azure.
You can also reach out to schedule a briefing with an Everest Group analyst for guidance on how you can uncover Microsoft Azure discounts and drive significant cost savings. Reach out
Microsoft’s public cloud offering, Azure, grew more than 20% year-over-year in 2022, driven by its long-standing partnerships and deep technical integration across different product portfolios with major enterprises. Over the years, Microsoft has successfully onboarded many existing O365, M365, etc., customers to Azure while attracting a new set of customers. To get the most value from this popular platform, procurement organizations must be aware of the nuances of cloud contract negotiation with Microsoft for Azure.
Cost is an important factor in an enterprise’s decision to move to Azure or any other public cloud. Locking in the right discounts is crucial to lower cloud operational costs and maximize the value generated from cloud. Enterprises should be well-versed in the types of discounts offered to prevent value leakage in their contracts.
Like the other major hyperscalers, Azure uses a dual-layer discounting approach as follows:
Azure Commitment Discount – This discount is built into Azure’s contract and is typically contingent on the following criteria:
Customer’s total spend commitment
Length of the engagement
Prior relationship with Microsoft
Strategic value (logos and markets) to Microsoft
Contracting route – Direct (Enterprise Agreement) or Indirect (via Cloud Service Provider)
Resource or functional level discounts – Also known as programmatic discounts, enterprises can take advantage of these reductions by committing to spend a certain amount of time or money on cloud resources.
Microsoft estimates the following discounts are possible using these approaches:
Reserved instances – By committing to one- or three-year consumption terms for Windows and Linux virtual machines (VMs), customers can expect cost reductions of up to 72% versus pay-as-you-go rates
Azure savings plan – With a committed spend of a fixed hourly amount on compute services for one or three years, customers can save between 11-65% on pay-as-you-go rates
Spot instances – Customers purchasing temporary VMs for low-priority workloads from a pool of unused spare capacity can get significantly deep discounts of up to 90% compared to pay-as-you-go rates
Azure hybrid benefits – This option can help customers save up to 85% in license costs by reusing on-premises licenses
In addition to discounts, credits, incentives, and regular promotional programs run by Microsoft also can help enterprises lower their cloud expenditure. Enterprises also should investigate these options to optimize their Azure investment.
By optimizing IT architecture to realize resource and functional level discounts and effectively negotiating contract-level discounts, procurement teams can ensure they get the maximum value from an enterprise’s Azure investment.
To better understand these discount categories on Azure and discuss other cloud contract negotiation tactics, please reach out to [email protected].
Schedule your briefing with an Everest Group analyst for guidance on how you can uncover Microsoft Azure discounts and drive significant cost savings.
As the insurance industry undergoes a paradigm shift post-pandemic, digital transformation can improve customer experience and engagement. Insurance intermediaries have an exciting future ahead if they can successfully adopt Artificial Intelligence (AI), mobile apps, big data, and analytics to better understand their customers and provide personalized products. Partnering with service providers will help insurers overcome barriers and improve efficiencies. Read on to learn more.
Insurance intermediaries (agents and brokers) play a crucial role in the industry by helping customers find the best insurance policies to suit their needs and connecting insurance companies to potential customers.
The overall intermediary market is vast with nearly 500,000 licensed intermediaries registered in the US, according to the National Association of Insurance Commissioners (NAIC), and 12,000 insurance brokers registered in the UK. The market is valued at more than $130B in the US and £13B-plus in the UK, as per IBISWorld and the UK Financial Conduct Authority. McKinsey estimates that 84% of sales in US property and casualty and 90 percent of US life policies go through agents or brokers.
This industry is undergoing a paradigm shift post-pandemic due to the increased adoption of digital direct-to-consumer (D2C) channels, remote work, and other trends. The intermediary business is evolving to maintain its growth momentum with rapid execution of quote to bind, hyper-aware consumers, increased competition, and declining margin profile.
Digital transformation is taking center stage on the intermediary side of business due to factors like the increased availability of customer data, demand for customized products, the rise of low-code/no-code solutions, increased use of self-serve options, increased use of D2C channels, rise of embedded and usage-based insurance, telematics, analytics, and advanced risk management solutions.
Role of service providers in helping intermediaries overcome barriers
While these changing industry dynamics push intermediaries towards adopting digital transformation, they still face the following barriers:
Legacy systems and processes: Insurance intermediaries have used outdated systems and procedures for many years, and the migration to modern systems is further delayed by a lack of funds
Resistance to change: Some insurance intermediaries are unwilling to adopt innovative technology and business models or lack the right knowledge and experience with digital technologies
Resource constraints: Putting modern technologies or business models into practice may require a substantial cash commitment or access to specialist skills that are unavailable with today’s talent crisis
Regulatory constraints: Various regulations like personal data protection, sales standards, and solvency requirements limit intermediaries’ flexibility and ability to innovate
Data security and privacy concerns: Intermediaries must safeguard sensitive client information and adhere to several data security and privacy laws
Shifting consumer expectations: Insurance customers demand more information than ever before and expect customized products through their preferred channel (digital, in-person, sales partner), better user experiences, shorter turnaround times, and digital touchpoints for the end-to-end process
Competition and customer retention also hamper the growth of intermediaries.
Service providers can help intermediaries overcome these barriers as illustrated below:
Digital technologies transforming insurance intermediaries
The following technologies can help intermediaries enhance the services they provide to customers:
Digital onboarding with interactive workflow and digital policies: The entire intake process should be digitized, reducing the intervention needed by intermediaries and showing customers the complete user journey from bind to quote. Insurance policies that allow electronic signatures also will accelerate the overall process.
Artificial Intelligence (AI) and Machine Learning (ML): Applying AI/ML for chatbots, fraud detection, personalized recommendations, and other processes can help insurance intermediaries enhance customer experience, boost efficiency, and offer more customized services.
Mobile technology and User Experience (UX)/User Interface (UI): To meet customers’ increasing desires to access services on the go, intermediaries need to provide access to policies and the ability to submit claims and pay bills available via mobile devices and applications.
Big data and analytics: Leveraging data and analytics will help intermediaries better understand their customers and provide more personalized recommendations. For example, agents may use data on a customer’s driving habits to provide personalized auto insurance recommendations.
Real-time insurance quotation and comparison tools: Using innovative technologies that automate the insurance underwriting process will allow intermediaries to deliver real-time insurance quotes and pricing comparison tools. Digital tools leveraging algorithms and data analytics will help agents/brokers instantly evaluate risk factors and determine
Claims management: Insurance intermediaries can play a key role in automating the claims management process by helping customers with online claims filling systems, automated claims triage, automated claims adjustments, and real-time communication.
By partnering with service providers or using third-party platforms and tools to accelerate their use of modern technologies, insurers have the potential to achieve large-scale cost savings and headcount reduction benefits. Depending on the adoption, insurers can achieve cost arbitrage generating a Return on Investment (ROI) of 1.5 to 3 times.
Intermediary of the future
Insurance intermediaries’ future likely will be shaped by a combination of technological advancements, changing consumer behaviors and expectations, regulatory developments, and economic conditions.
Intermediaries need to adapt to the following five changing trends to thrive:
Embrace digital innovations: The Internet of Things (IoT), AI/ML, blockchain, big data analytics, and other innovations increasingly are becoming mainstream and changing the way intermediaries operate and evolve.
Increase personalization: Data analytics can help intermediaries better understand their customers to provide more personalized recommendations and, in turn, find opportunities to cross-sell and upsell. Insurance plans must be customized to address clients’ unique needs and risk profiles.
Prioritize risk management: By gaining insight into customer risks, intermediaries can offer proactive risk management services. They should also identify emerging risks, such as cyber threats, and collaborate with clients to develop comprehensive risk management strategies and insurance solutions.
Shift to a consultative model: Insurance intermediaries must evolve from their traditional focus on selling policies into offering advice and guidance as consultants. They need to become trusted advisors, providing insights and recommendations to customers, such as risk management, insurance policy options, and financial planning since insurance is often a crucial part of an individual’s financial plan.
Integrate with the ecosystem: To stay competitive and meet evolving customer expectations, agents/brokers have to bundle services and offer financial planning and risk management in addition to traditional insurance products in a seamless customer experience.
Generative Artificial Intelligence (GAI) can deliver efficiency and scale in content production, marketing support, and media channels like never seen before while also spurring innovation. Learn about the opportunities and obstacles of Generative AI in marketing in this blog.
“In my lifetime, I’ve seen two demonstrations of technology that struck me as revolutionary. The first time was in 1980, when I was introduced to a graphical user interface… The second big surprise came last year… from OpenAI… I knew I had just seen the most important advance in technology since the graphical user interface.” – Bill Gates
OpenAI’s introduction of ChatGPT onto the world stage heralded a seismic shift in the path toward intelligent automation. With its ability to create complex and innovative solutions, GAI has become the buzzword in boardrooms and strategy meetings. Enterprises are in an arms race to tap GAI through integrations, in-house development, and investments in start-ups.
Let’s look at its soaring popularity in the illustration below:
From healthcare to finance and from content creation to moderation, GAI has potential use cases cutting across almost every industry. Enterprises are eager to harness this groundbreaking technology’s power to streamline operations, improve efficiency, and unlock new opportunities.
What will the use of Generative AI in marketing mean?
With its impact spread across the marketing services value chain, GAI opens a novel world of possibilities, as illustrated below:
GAI proves to be efficient and effective in marketing services, particularly in content production, marketing support, and media channels. However, as with any emerging technology, it comes with concerns and challenges. Some of the implications and concerns are discussed below.
Content generation
Perceived implication: GAI frees resources for other higher-level tasks that require human attention, such as strategic planning and community building.
Possible concern: Marketers need to weigh the time and efforts required to review and validate the content generated by GAI to ensure accuracy and consistency with brand messaging.
AI-assisted branding
Perceived implication: GAI’s capabilities can improve digital media and also can impact traditional channels in areas of product ideation, branding initiatives, and advertising campaigns.
Possible concern: Despite aesthetic designs and descriptive language, consumers might not feel connected to the products without a sense-check from human input.
Search engine optimization (SEO) and organic search
Perceived implication: Due to the conversational interface, the query results are highly pinpointed, raising the bar for enterprises to focus on contextually relevant content on their landing pages.
Possible concern: The new face of search marketing will rely heavily on AI technology, meaning marketers need to upgrade to real-time AI-driven and intent-based analysis for search to stay competitive.
Intent-driven search marketing
Perceived implication: Search algorithms increasingly will be built around user-intent and intent-driven actions rather than keywords or links.
Possible concern: Instead of focusing on keywords and links as ranking factors, marketers will need to keep updated through intent analytics and stay relevant by providing users with the right information at the right time to drive conversion or engagement.
Lead generation
Perceived implication: GAI can engage with website visitors in real time and help qualify them as leads based on their specific needs and interests. This can help sales teams focus efforts on the most promising leads and improve conversion rates.
Possible concern: Customer-facing GAI tools need to be accurate and handle queries without any biases. Since the answers offered are only as accurate as the training dataset, customer dissatisfaction is always a risk.
Sales enablement
Perceived implication: GAI can provide sales teams with real-time data and insights on customer behavior, payment status, billing cycle, etc., enabling them to tailor sales pitches and ultimately lead toward revenue operations.
Possible concern: Access to consumer touchpoints and lack of transparency in the algorithms raises data privacy issues since whatever is fed into the AI is processed, stored, and re-utilized to improve query responses.
Exploring GAI: some novel use cases
As the market perspective is being developed, GAI is still in the test-and-play phase as enterprises and service providers have started experimenting with potential use cases like the ones below:
AI content creation engine
Branding through Generative AI
Samsung Europe has started using GAI to automate the creation and publication of digital banner ads running across platforms such as TikTok, Instagram, and Spotify
CopyAI, Jasper AI, and Writesonic, to name just a few are helping pioneer personalized marketing at scale by applying GAI solutions in upper-funnel marketing activities
Coca-Cola launched a campaign encouraging consumers to use GAI tools to create artwork for the brand that would appear on billboards
Beck’s, the German beverage brand, put GAI to full use. While ChatGPT was used to develop the recipe and name the brew Beck’s Autonomous, Midjourney developed and created its futuristic packaging, campaign, and imagery
Intelligent chatbots
Marketing and campaign support
Used vehicle seller CarMax is summarizing thousands of customer reviews using GAI
Grocery delivery company Instacart is integrating ChatGPT to answer customers’ queries
Snapchat announced that it is adding My AI, an experimental chatbot to its paid Snapchat+ customers, enabling them to post content with quippy descriptions
Salesforce launched Einstein GPT, a GAI-based CRM technology, that generates personalized emails, supporting the sales team and generates nuanced responses for customer service teams
Attentive AI introduced Magic Message, which leverages GAI for message creation, and automated campaigns to take the manual work out of planning and testing
CMO compass: order out of chaos
Although many enterprises are using GAI as an exploration tool in marketing, realizing the business opportunity will require a customized Chief Marketing Officer (CMO) compass that can help create order out of chaos, as seen in the likeness below:
These four facets can act as the cardinal directions while navigating the GAI conversation.
GAI has rapidly transformed how content creation and marketing support are managed, showcasing a level of efficiency and scale that was previously impossible. In fact, by the time one finishes reading this blog, GAI likely handled hundreds or even thousands of queries and helped develop countless lines of content.
As this technology continues to evolve and mature, we can only expect its impact to grow, ushering in a new era of innovation. Enterprises must exercise prudence and careful consideration as they delve deeper into the potential applications of GAI. Ensuring that responsible implementation and ethical concerns remain at the forefront of their decision-making process is essential.
Generative Artificial Intelligence (GAI) holds the potential to revolutionize the experience design and development process by creating unique personalized marketing content. Read on to learn about the opportunities, challenges, and implications of GAI for enterprises and service providers.
From rule-based systems merely capable of automating set functions to deep learning algorithms that can accurately comprehend natural human language nuances, Artificial Intelligence (AI) undoubtedly has come a long way.
Today, AI is at a juncture where its capabilities are no longer restricted to automating repetitive tasks. Generative AI – the latest version of this technology – has taken the industry by storm this year by entering the arena of human creativity.
Everest Group defines Generative AI as a variant of AI technology based on deep learning Generative Adversarial Networks (GANs) and Transformer models, having the ability to provide convincingly unique content in the form of text, imagery, video, audio, and synthetic data.
Although the technology has been around for the last five decades, it has recently gained momentum due to advancements in hardware computation power, maturity of AI models, and availability of high-quality contextualized training data sets.
Exhibit 1: Definition and evolution of GAI technologyPropelled by investments from giants such as Microsoft, Google, and Amazon, the market is witnessing a huge influx of start-ups focused on consistently identifying and operationalizing new Generative AI use cases.
Exhibit 2: Start-ups pioneering unique use cases in the GAI space
How can GAI help marketers?
As personalization becomes the centerpiece of every marketing strategy, the never-ending demand for real-time contextualized content puts a lot of pressure on creative teams. This is where GAI comes in. Be it content creation or user interface/user experience (UI/UX) design, the technology can create a scalable creative engine for personalized marketing.
The industry is acting fast to streamline the marketing creative process by adopting GAI. Experience leader Adobe has launched the Firefly family of proprietary GAI models that enable image, audio, video, and 3D model creation through mere text prompts. On the other hand, AI leader NVIDIA has introduced the GauGAN tool that can generate realistic images from sketch drawings by artists.
GAI – The brainstorming partner for idea generation across industries
While content remains key, enterprises also are investing in GAI models in vertical markets to power industry-specific use cases to brainstorm and generate creative ideas.
The following industries are rampantly adopting GAI technology:
Manufacturing: General Motors partnered with Autodesk to use GAI to design a new seatbelt bracket that was 40% lighter and 20% stronger than the original design
Healthcare: GAI also is being applied in drug design with companies such as Insilico Medicine using its Chemistry42 GAI platform to generate novel chemical compounds for new medicines
Architecture: Architecture firm Skidmore, Owings & Merrill (SOM) has created a GAI tool called SOM Computational Design for generating design options for buildings
Retail: Levi Strauss has partnered with Lalaland.ai to design hyper-realistic AI-generated model avatars for promoting diversity in terms of body type, age, and skin color
While AI has leaped in maturity from automating unproductive repetitive tasks to generating unique content via human-led prompts, it still lacks the finesse of a human touch. Therefore, the technology can act as a co-pilot for the creatives, but it’s not yet at a stage where it can provide customer-ready outputs through prompts. Instead of instilling fears about the technology replacing humans, enterprises must embrace the magnitude of the impact it can have on workforce productivity.
Mitigating GAI technology risks
The technology is a game changer, but it comes with substantial challenges related to output accountability, model bias, privacy compliance, talent shortage, system integration, and the cost associated with deploying large AI models.
While Italy has banned ChatGPT and other European nations have expressed concerns about the technology, pioneers such as Adobe and Salesforce are relentlessly trying to mitigate these risks by developing plagiarism checkers, establishing compensation structures for creative professionals, upskilling talent, and adopting fair representation learning models to counter model biases.
Implications for service providers
With announcements of Accenture’s GAI Center of Excellence, Deloitte Digital’s dedicated GAI practice, Infosys embedding GAI into software development tools, and TCS developing an in-house enterprise-grade solutioning platform using GAI, service providers need to take a cue and move fast to cement a strong understanding of Generative AI functioning and the ecosystem.
Providers also have to bring top leadership up to speed on the Generative AI landscape, flesh out a detailed narrative discovering enterprise priorities, embed GAI in solution and service delivery for efficiencies and productivity, and harness GAI technology’s true potential by integrating it with business applications.
For more insights on Generative AI, contact Vaani Sharma.
To combat a looming recession, healthcare providers will need to take strategic action, including cutting costs, investing in patient experience, embracing digital technologies, and strengthening outsourcing partnerships. Read on to learn about the healthcare provider trends coming and how service partners can help hospitals and health systems overcome the challenges in an economic downturn.
Reach out to learn more on this topic or ask questions.
As we covered in our last blog, healthcare payers, particularly commercially-focused enterprises, have to brace for the impending economic downturn. The need to survive becomes even more essential for healthcare providers that are already bleeding under financial challenges.
The first half of the fiscal year 2022 was one of the most challenging times for hospitals in the US as they faced months of high-magnitude negative operating margins (Fig. 1). Although the margins stabilized slightly later, 2023 started on a rough note again owing to labor shortages, rising supply chain costs, and lower patient volumes – eventually leading to a further drop in hospital margins. To add to their challenges, the prospect of an impending recession is likely to exacerbate the situation.
As concerns of an impending recession take hold, patients may begin to reassess planned medical expenses in relation to other household costs, particularly when budgets become tighter. This can be particularly challenging for hospitals, especially given the aggressive cost-sharing measures associated with high-deductible health plans (HDHPs), which can pose additional obstacles to their financial recovery.
Recently, 4 in 10 Americans were compelled to delay or skip healthcare treatments, trim regular household expenses, or borrow money due to rising healthcare costs. These pressures will lead hospitals to carefully re-strategize their investments. Let’s deep-dive into some of the changes that hospitals and health systems can expect in a recessionary year.
Fig. 1: Kaufman Hall Operating Margin Index by Month
What healthcare provider trends can we expect in a recession?
Moderate drop in specialized resources demand: An extreme shortage of clinical resources last year led hospitals to depend heavily on expensive contract nurses, extended overtime hours, and more clinical errors, eventually resulting in worse patient outcomes.
While the demand for clinical resources is expected to continue to keep provider leaders up at night, a full-fledged recession might ease the shortage a bit. Several healthcare institutions reported a rise in nurses in the last recession because some retired nurses started working again or postponed retirement.
However, this is not expected to eradicate the labor problem in the long term as the “experience-complexity gap” will only worsen with an increasingly aging population having complex and chronic care needs
Squeezed cost pressure: Hospitals will continue to see cost pressures hitting their margins because of increased baseline labor rates and supply chain costs. The pandemic and ongoing geopolitical issues elevated the supply chain disruption leading to costlier negotiations for specialized medical products. As a result, medical supply prices were up a whopping 46% at the end of 2021, compared to 2019.
Furthermore, it is important to note that healthcare provider businesses face a considerable amount of exposure to labor costs. This is especially true for more labor-intensive provider businesses like home health, personal care services, and hospice, where labor can account for more than 50% of costs.
Unfortunately, while costs continue to rise, reimbursement rates tend to only increase modestly because pricing negotiations with payers take place over multiple years, and government entities adjust pricing annually. While providers may seek to re-negotiate with health plans midway, pricing corrections may not be substantial enough to adequately prepare for the financial frugality that patients may begin to exhibit
Reduced demand for non-urgent/elective care: An impact on household budgets tends to make patients rethink planned surgeries and, in some cases, delay the avoidable, non-threatening ones as well. A survey conducted during the Great Recession found that families with limited financial means prioritized spending on essential non-medical items and decreased their healthcare utilization.
The survey also revealed several concerning trends in healthcare, including patient anxiety due to the inability to pay medical bills, a rise in missed appointments, an increase in significant stress symptoms, and new illnesses and health problems resulting from a lack of preventive care.
Moreover, with reduced patient volumes, healthcare providers may face increased competition for patients, particularly in the outpatient settings, leading to lower prices and diminished profitability. The competition can be further intensified with the entry of players like Walmart and Amazon expanding their retail clinic presence
Greater revenue dip: A recession leads to an increase in uninsured patients which negatively affects hospitals’ revenue streams. During the Great Recession, hospitals suffered a huge rise in bad debt and uncompensated care.
This impact can be more prominent for hospitals with higher exposure to commercial plans. According to the American Hospital Association, the hospital reimbursement rate by private payers increased from 116 percent of hospital costs in 2000 to 128 percent eight years later.
This rate has continued to climb, with hospital systems now charging commercial insurers an average of 208 percent of their costs or even more, findings from a 2019 Rand report that analyzed claims data from private employers in 25 states show.
If unemployment leads to a shift from privately-insured plans to Medicaid, hospitals could lose revenue. While cutting costs to save margins is an option, this might have a spiraling effect as resource and bed shortages would further impact revenues.
These healthcare provider trends will compel suppliers to take a streamlined and targeted approach to survive a recession. Here are some of these strategies:
Four strategies for healthcare providers to combat a recession
Identify cost-saving opportunities: Healthcare providers will have to conduct robust audits to identify cost-saving opportunities across the front-end, mid-, and back-end revenue cycle processes.
By identifying areas where costs can be cut without impacting patient care, providers can take concrete steps to reduce expenses and operate more efficiently. Providers with in-house revenue cycle management (RCM) operations can consider outsourcing as well as offshoring to benefit from cost arbitrage by identifying the right process, delivery, and partnership for outsourcing. In fact, outsourcing medical coding staff alone can save hospitals 25-30% on administrative costs.
Healthcare providers that have partially outsourced operations can consider expanding sourcing partnerships to other segments after a comprehensive assessment. Several health providers, such as Northern Light Health and Owensboro Health, have accelerated their RCM outsourcing plans in collaboration with service providers
Double down on patient experience: With competition intensifying during a recession, healthcare providers can differentiate themselves by investing in initiatives that improve patient satisfaction and loyalty. Providers need strong customer experience (CX) capabilities and to deliver informed and robust patient communication addressing a range of administrative and clinical issues.
Providers should strategically focus on improving awareness of overlapping needs for better relationship management, segmentation, marketing, analytics, product innovation, and engagement. The CX program should be built on fundamentals of personalization, particularly for complex care needs, as every patient has their own needs and preferences.
Healthcare providers should be open to feedback and actively seek to improve the patient experience by conducting patient surveys, analyzing data to identify improvement areas, and implementing changes based on patient response
Embrace digital: Providers will have to invest in future-proofed digital tools, solutions, and innovative portals that not only improve the front-end patient experience but also eradicate redundancies in the back office.
These solutions can span from point-based, pre-configurable solutions to E2E cloud-based artificial intelligence (AI)-enabled platforms coupled with automation and analytics capable of consuming vast amounts of information from data lakes.
A testament to this opportunity can be seen in Norman Regional Health System’s investment in VisiQuate’s AI-powered Denials Management Analytics and Revenue Management Analytics to power RCM operations using analytics.
On the clinical side, providers will have to invest in solutions that provide a comprehensive look into patients’ care journeys through proactive insights. Areas like remote monitoring and population health analytics should no longer be considered the care of the future and must be leveraged now to improve care coordination. Some of these efforts can be channelized in collaboration with health plans to ensure that care gaps are closed in time
Strengthen sourcing partnerships: Healthcare providers should comprehensively review current sourcing partnerships by taking an outcome-focused approach, adopting the right technological solutions, and creating a dynamic communication channel to manage operations and prioritize escalations.
By clearly defining performance metrics and incorporating a robust governance mechanism, healthcare providers can get the right benefits and meet the anticipated objectives.
What does this mean for service providers?
Service providers in the RCM operations space will have to adopt a unique and differentiated go-to-market strategy to solve these healthcare challenges by taking into account individual as well as market-specific issues.
This can be achieved by having a strong resource base with specialized skills and expertise, such as nursing, coupled with the scale that can support providers based on fluctuating demands.
Moreover, service providers also will have to leverage digital partnerships while simultaneously building their core competencies. By taking these steps, service providers can help hospitals and healthcare organizations weather the coming storm.
Deborah Kops Managing Principal, Sourcing Change Executive Advisor, Everest Group
Is it a normal silly season? Or is it a symptom of the times? Business dynamism is at an all-time high, compelling smart GBS organizations to go into continuous change mode.
This year there seems to be more MAC (moves, adds, and changes) in GBS delivery networks than usual. Work is transferring from center to center, often in response to the need to rebalance locations as a result of the Ukraine war. Talent challenges are causing GBS organizations to rethink what goes where and whether it’s time to break the Costa Rica/Cracow/Warsaw/Manila/Hyderabad-Bengaluru-Gurgaon mold and invest in locations that haven’t yet been saturated. And the perennial, the client-giveth-to-the-outsourcer, the client-taketh-away syndrome seems to be in full flow as the BPOs face the same talent and delivery challenges as captive operations do. But that’s another, more complicated challenge for later on—let’s focus on in-house center-to-center transfers.
Is a delivery network switch a non-event? How do you make it so? I’ve been thinking through a challenge that gets almost no airtime but is a fact of life for the majority of maturing GBS organizations—if they always have their fingers on the pulse of the business.
The common wisdom amongst many of the GBS glitterati is that any change in delivery location should be invisible to its stakeholders. Why mount a full-fledged change management initiative when moving bill paying from one location to another should be a non-event?
Wrong. Wrong. Wrong. Ergo, the duck as an analogy. It’s a worthwhile goal to aim for a non-event for stakeholders. But under the surface, GBS had better be paddling like hell. Be prepared, people. A GBS inter-center transfer of work can be a surprising and silent GBS headache.
Here’s what I see as the difference between transition and transfer:
Since the main goal is to make a delivery switch part of silent running and ultimately frictionless, the transition playbook, with its high levels of negotiation, communication, and engagement, is usually not fit for purpose
In a center-to-center transfer, as opposed to a transition, GBS organizations forgo setting up formal channels to “explain or complain”
The focus shifts to users as opposed to the business. In a transition, aligning the business to working differently is critical to success. In a transfer, users usually bear the brunt of the pain
In a transition, employee attraction, training, and institutionalization is critical. In a transfer, the impacts on staff are greater. It means new work, new roles, and often no jobs. The culture of the sending team may be different from that of the receiving team. Since light-out GBS is still a pipe dream, the dependency on people becomes a wildcard in the transfer
Thinking about moving the deck chairs around? Let’s examine what needs to be true to be successful.
First off is the concept of legitimacy. If a GBS is not deemed to be legitimate by its most critical stakeholders—the functions and the business—transfers are a non-starter.
The GBS model must be stable and accepted by key stakeholders. Ideally, GBS should be viewed as a type of managed services model, with full purview over delivery location decisions
A well-defined strategy should be in place, with clearly articulated and previously communicated principles backed with data as to what should go where (also known as sign on the door). This is critical to quash speculative debate about the perceived advantages of Bengaluru (Bangalore) over Bucharest
Any financial implications of the transfer must be calculated and communicated to the stakeholder in advance, such as tax and transfer pricing, in order to maintain transparency. Nothing crushes trust like a bill no one expected in a ramp down and ramp up
If legitimacy is established, it’s time to examine operations to ensure that the ball won’t be dropped in the process of transferring work. Prepare for trouble if you can’t tick off the following boxes:
The impacted processes are standard and stable across the delivery network. The aim here is lift and shift, not fix and shift
SLAs are current, in place, and accepted, with limited deviation expected in the center-to-center transfer
Now, this sounds a bit picky, but if experience is not standard across the network, with such elements as generic addresses, catalogs, and avenues to access GBS in place, you are likely in for a heap of hurt as users struggle to make the switch
There is a reasonable level of process digitization with limited reliance on humans. The higher the automation, the greater the chance for a frictionless transfer
There is no language dependency required for process delivery, or necessary language capability available in the receiving location
Now it’s time to start the action. Make sure the approach is tailored to the change at hand, or in the immortal words of Gilbert and Sullivan, “let the punishment fit the crime.”
Keep your tendency to “tweak” held in check. Remember that the goal is transition, not transformation. Save radical process improvement for another day
Stay flexible. There will be surprises. The transfer plan must be dynamic
Acknowledge and work with cultural differences in the delivery teams. While it’s stating the obvious, delivery pivots on the culture of the team performing the work, especially when it comes to customer experience. Make sure that the impact of the cultural differences in location are understood and addressed
Over-index on the comprehensiveness of knowledge transfer. We think we’d documented the dickens out of our processes, but sadly, that is not always the case. An obsession with accurate knowledge transfer is especially critical when the loss of jobs is part of the plan
Establish realistic timelines. PPT timelines are easy to create, but the reality on the ground is usually quite different. Regulatory, recruitment, office fit out, and other requirements likely will take more time than expected. Plan for it
Develop well-thought-out and targeted communications, escalation, and remediation measures. Sure, you want to play under the radar. But these assets are as important in a transfer as in a transition
Focus on care and feeding of impacted staff. Dealing with staff may be your biggest communications/change challenge. Unanticipated flight or disaffection on either side of the transfer has a high potential for derailing
Acknowledge and manage change implications on vendors and other third parties. Forget them at your peril; they are part of your GBS service ecosystem
Back to the duck. Center-to-center transfers should be seen as graceful and calm as a duck swimming across a pond. But the reality underneath the waterline must be very different, with the GBS organization paddling like all get out to effect a transfer that doesn’t go under.
Generative Artificial Intelligence, threat detection and response, simpler cybersecurity solutions, attack vectors, and identity and access management were among the key cybersecurity industry trends grabbing attention at the RSA Conference in San Francisco. Read on to learn the main takeaways from our analysts who attended the recent event.
The annual RSA Conference (RSAC) lived up to the expectations of being one of the industry’s largest cybersecurity events, with 40,000-plus attendees packing the Moscone Center over four active days. The energizing atmosphere showed the cybersecurity community’s eagerness to meet and socialize again post-pandemic.
Here are the main cybersecurity industry trends we saw at RSAC 2023.
Generative Artificial Intelligence (GAI)
Generative AI stole the show with widespread discussion on the technology in every corner of the trade show floor that continued at social gatherings. Among the many new products launched at the event was Google Cloud’s Security AI Workbench, based on its propriety security large language model (LLM) Sec-PaLM that includes data sets from Chronicle VirusTotal and Mandiant threat intelligence.
In the past few years, advanced AI and Machine Learning (ML)-based technologies and use cases have swept the cyber industry. But we have never seen such a level of hype as garnered by Microsoft’s announcement of Security Copilot, based on OpenAI’s GPT-4 Generative AI. This security analysis feature is aimed at helping security professionals understand threat landscapes and quickly detect and respond to potential threats.
Generative AI’s many benefits outweigh security concerns, especially in the talent-crunched cyber market. It can play a defining role in bringing efficiencies in security operations and scaling talent readiness.
Among potential areas we see Generative AI playing a larger role are summarizing incidents and findings, generating clear and concise reports and presentations, and augmenting human analyst capabilities by tailoring responsibilities to the organization’s landscape and enhancing the analyst experience.
Threat detection and response
Managed detection and response (MDR) and extended detection and response (XDR) providers had one of the largest presences at expo booths. As detection and response emerges as a primary shield by enterprises to protect and defend against cyber attacks, demand is increasing for MDR services.
Further, enterprises demand extensive telemetry coverage across not only traditional touchpoints such as endpoints and networks but also across next-generation touchpoints such as cloud, SaaS applications, and Internet of Things/operational technology (IoT/OT).
Shift from best of breed to ease of integration and management
Cybersecurity point solutions have grown 13 times in the past decade, increasing complexity and slowing enterprise decision-making. Enterprises are demanding a shift from best-of-breed solutions to future-proof solutions that are easy to integrate and manage.
This is creating opportunities for providers to approach the enterprise cybersecurity landscape with a consolidation mindset, drive simplification, and reduce the total cost of ownership.
Attack vectors remain a constant
Vulnerabilities, cyber-attacks, ransomware, supply chain security, software bill of materials (SBOM), and breaches remained the buzz at RSAC 2023. Aggravated by the ever-changing and never-ending regulations, the C-suite is in the middle of cybersecurity action, and cybersecurity providers must focus on boardrooms for budget approvals.
Year of identity
Will 2023 be the year of identity? Identity and access management has risen as an area getting maximum budget allocations and missing the CFO’s axe in the current macroeconomic headwinds. Enterprises are looking to get started with identities to fortify their cybersecurity posture, kickstart the zero-trust journey, enhance customer experience, and drive business outcomes from cyber investment.
Everest Group will continue to investigate this growth area. Stay tuned for our inaugural Identity and Access Management PEAK Matrix Assessment.
Seeing impact sourcing in action at Vindhya e-Infomedia validated to Everest Group that this growing business practice is more than a feel-good story but a win-win for individuals, companies, and communities. Hearing about the positive benefits firsthand from people with disabilities employed at the Bengaluru center left a lasting impression on the analysts who share their perspectives in this blog.
The Everest Group team was excited to see impact sourcing in practice, some for the first time, at Vindhya e-Infomedia, but they also had questions about whether impact sourcing would live up to its promise.
The visit to the Bengaluru center exceeded their expectations and reinforced that impact sourcing is a business imperative in today’s ESG-focused times. Highlights of the trip were meeting Vindhya e-Infomedia Founder and Managing Director Pavithra Y. Sundareshan and hearing from its employees.
Rita Soni with Pavithra Sundareshan, Founder and Managing Director, Vindhya e-Infomedia
Impact sourcing specialist Vindhya e-Infomedia was founded in 2006 with a vision of uniting business with impact. It has centers in Bengaluru, Hyderabad, Nagpur, Mysore, and Krishnagiri (Tamil Nadu) and plans to expand across India and abroad.
Employing people with disabilities as its main workforce, the company provides data entry, claims processing, customer onboarding, payroll, and data management processes to such clients as Airtel, IBM, and SAP AG. With its team of more than 2,400 employees based in cities, Vindhya defies the stereotype that only small companies in India operate Business Process Outsourcing (BPO) centers in rural areas.
Impact sourcing specialists like Vindhya e-Infomedia intentionally hire people from marginalized communities and train them to deliver IT and BPO services. These providers offer economic opportunities to individuals who face difficulties in finding employment, such as people with disabilities, those from marginalized communities or without formal educational degrees, and single parents.
Hiring people from these target groups often requires organizations to enhance their physical and digital infrastructures and/or modify policies to create a conducive work environment. However, the idea is not to create separate work areas for impact hires but rather to bring inclusivity to everything at the workplace – a belief that runs at the very core of Vindhya’s operating system.
Inspiring employee stories
Impact sourcing has the power to change the trajectories of individuals’ lives, as the team learned from hearing about the backgrounds, job profiles, and aspirations of employees at the Bengaluru center. Their resilience, persistence, and tremendous willpower to achieve was uplifting to the analysts who focus their work on impact sourcing.
The team was truly inspired! Here are the stories of four individuals who demonstrated the ways impact sourcing is benefitting individuals, families, and communities:
Vidya Patil
Vidya Patil has been associated with Vindhya for eight years and currently handles banking payment collections and customer communications. Speaking in her native Marathi, she shared: “विंध्या सोबतचा ८ वर्षांचा हा प्रवास माझ्यासाठी अविश्वसनीय होता. अपंग व्यक्ती असुनही, विंध्या येथे नोकरी मिळाल्याने मला आर्थिक स्वातंत्र्य आणि स्वावलंबन मिळाले. या नोकरीमुळे, कुटुंबाबर अवलंबून असणार्या मला, कुटुंबाचा पोशिंदा बनवले. तसेच मला माझ्या भाचीच्या उच्च शिक्षणासाठी समर्थन करण्यासही सक्षम केले. विंध्याहे केवळ कामाचे ठिकाण नसुन; ते माझ्यासाठी दुसरे कुटुंब आहे. माझ्या भावाच्या आरोग्य आणीबाणीच्या काळात त्यांनी दिलेल्या आर्थिक आणि भावनिक आधारासाठी, मी विंध्याची कायम ऋणी राहील”
“The job at Vindhya gave me financial freedom and self-reliance. It has transitioned me from being a dependent to a caretaker and a breadwinner for my family. With this job, I could support my family as well as support my niece’s higher education. Vindhya provided immense financial and emotional support to me during my brother’s medical emergency. Vindhya is not just a workplace but a family itself, and I will always be utterly grateful to Vindhya.”
Aman Birari in conversation with Vidya Patil
Digbijoy Adak
Digbijoy Adak spoke in Bengali about his experiences overcoming barriers to gain self-sufficiency: “আমি দশম ক্লাস অবধি পড়াশোনা করেছি | আমি কম্পিউটার ব্যবহার করতে জানি | যেহেতু আমার পড়াশোনা বেশি নয়, আমি কোনো ভালো সম্মানযোগ্য কাজ পাইনি | জীবন যাপনের জন্য আমি একটা ছোট অর্কেস্ট্রা দলের সঙ্গে কাজ করতাম | এই সময় আমি ভিন্ধিয়া কম্পানি সম্পর্কে জানতে পারি | আমার এক বন্ধু সেখানে কাজ করছিলো আর আমাকে এই ব্যাপারে জানিয়েছিল | আমি এখন খুবই খুশি | আমি ভিন্ধিয়া-তে কাজ করতে পেরে একজন স্বাবলম্বী এবং স্বনির্ভর মানুষ হিসেবে পরিচিতি পেয়েছি |”
“I had completed my 10th grade education and knew how to use computers. However, since I was not highly educated, I was not able to find a good respectable job. I used to work with a small orchestra group for my livelihood. During that time, I came to know about Vindhya. A friend of mine was working here and informed me about it. I am very happy now. I have found a job in Vindhya and have become a self-sufficient and independent person.”
What he did not say directly but implied, is that his disability has been an unjust cause of discrimination in the past. At Vindhya, one’s disability status is not a barrier to a good job.
N Yashoda
Having a hearing impairment does not prevent N Yashoda from excelling at converting documents from paper to digital. With her lip-reading skills and the aid of an experienced sign language translator/guide, Yashoda has fully integrated into Vindhya’s operations.
The Everest Group team with N Yashoda
Madhabi Sardar
Madhabi Sardar has a master’s degree, but a visual impairment prevented her from gaining a decent, well-paid job – until Vindhya. She now heads the braille team and aims to become a singing maestro in the future, showing it’s never too late to dream big.
The real significance of this business practice can be seen in the countless lives touched by the dignity of a good job, as these inspiring and heart-warming stories show.
Impact sourcing obstacles
Like any journey, even this one has obstacles. Impact sourcing often requires an extensive process to access the right talent. Additionally, investments in skilling and upskilling resources pose a challenge in managing high training costs.
The lack of benchmarks to measure key performance indicators (KPIs) or evaluate success makes it difficult to prepare appropriate success stories and business cases for impact sourcing. However, impact sourcing specialists are implementing robust practices to mitigate these challenges, and meaningful collaboration among all involved stakeholders is needed.
The visit was an eye-opening, humbling experience for the team who saw that the benefits of impact sourcing go beyond providing a paycheck but also give individuals a sense of community and belonging.
Aman Birari, Rita Soni and Anik Dutta showing the hand sign for love with Vindhya’s Pavithra Sundareshan (second from the left).
Pavitra’s parting words that impact sourcing is about ‘shared prosperity’ resounded with the analysts. Building partnerships to create an impact that benefits all involved stakeholders is needed to move the practice forward.
Everest Group commitment
The visit reinforced Everest Group’s commitment to advancing impact sourcing globally. As a signatory of the Clinton Global Initiative’s “Commitment to Action,” the firm has pledged to bring in half a million impact sourcing full-time equivalents (FTEs) into the ecosystem by the end of 2025 and has committed its research and expertise to help enterprises frame their impact sourcing strategies.
For more insights on measuring and using data for better business outcomes, register for the virtual roundtable, Measuring the Impact of Impact Sourcing. To discuss impact sourcing, reach out to [email protected], [email protected], or [email protected].
Teleperformance, a global leader in the Customer Experience Management (CXM) industry, has announced its proposal to acquire Majorel, another large rival in the industry. This move is set to reinforce Teleperformance’s position as a dominant force in the market and expand its reach even further. With both companies known for their excellence in CXM services, this acquisition has the potential to deliver an even greater level of innovation to clients worldwide. Read on for more details on the impact of this deal on the CXM industry.
While there is increasing appreciation for the strategic impact to businesses of delivering great customer experiences, a large part of the market is still managing Customer Experience (CX) as it has always done, which is to drive down costs and focus on operational efficiencies. Consequently, Customer Experience Management (CXM) provider margins tend to be lower than in other Business Process Services (BPS) segments, and it is not surprising that in the current uncertain economic environment, providers are focusing on tried and tested strategies such as consolidation to deliver on growth objectives.
Teleperformance further augments its leadership position by scale
The latest in the wave of mergers and acquisitions (M&A) in the CXM industry is the largest CXM services provider, Teleperformance, announcing its intention to acquire Majorel, another sizable competitor, for a total consideration of €3bn. Subject to regulatory approvals, the combined entity will result in revenues of more than €10.2bn and EBITDA of more than €2.2bn if it closes as expected between Q4 2023 and Q1 2024, resulting in Teleperformance achieving its 2025 revenue goal of €10bn two years in advance. The merged entity will be the largest CXM provider both in terms of revenues and FTEs, with nearly half a million employees worldwide.
With Concentrix’s recent announcement to acquire Webhelp, these two CXM behemoths will be more than twice the size of their next largest competitor, Foundever, which itself resulted from a merger of two significant entities (SYKES and Sitel Group). Given their global reach and ability to cater to almost all regions and languages, they will naturally be in consideration by any global buyer of these services that is looking to consolidate its provider portfolio and work with fewer but more strategic partners.
What this means for the CXM and BPS industry
As we have mentioned in our recent blog, we are seeing the rise of global Titans in the CXM industry. While this might mean less choice in service providers or strategic transformation partners for global buyers, it will also lead to cost synergies, operational efficiencies, and enhanced digital capabilities. Adding more scale allows these providers to make more concerted investments in a space which is already seeing the entry of Big Tech and hyperscalers such as Microsoft and Google into CX technology. A greater focus on innovation by these Titans will result in better products, solutions, and services in the industry.
The global outsourced CX market is a highly fragmented one, with the 10 largest providers holding a total of ~30% share of the $100 billion+ market and hundreds if not thousands of other providers making up the remaining 70%. In addition, our estimates put penetration of this market between 30-35%, indicating significant room for growth in the future. Therefore, smaller providers can continue to thrive if they are successfully able to articulate and deliver upon differentiated value propositions such as offering superior products and services, aligning more attentively to their clients’ needs, or specializing in niche areas, whether that is in a particular industry, region, buyer size, or service line.
Within the broader BPS environment, the combined entity of Teleperformance and Majorel will have a stronger Trust and Safety (T&S) portfolio and will become one of the top three T&S providers (with Accenture and TELUS International) in terms of revenues. This, along with deep digital CX expertise, Teleperformance’s recruitment process outsourcing and finance & accounting services, and Majorel’s vertical BPO solutions in banking, insurance, and retail industries, make the new entity a force to be reckoned with in the BPS world, becoming one of the top three providers by revenues in BPS. However, it will continue to remain a CXM specialist primarily as more than 80% of its revenues will be CXM-oriented, at least for now. It will be interesting to see if the combined entity will accelerate the growth of its non-CXM revenues to become known as a broader-based BPS provider in the future.
What to expect going forward
Recent economic headwinds have provided an excellent opportunity for M&A in this market as valuations are once again becoming attractive for a lot of providers. With an enormous push towards digital CX capabilities, service providers are looking aggressively to plug capability gaps, and firms that can help them achieve these objectives are becoming hot acquisition targets. We expect further M&A activity in the next 12-18 months, both big (scale-focused) and small (capability-focused).
However, it will be a mistake for providers to allow M&A and, subsequently, integration activity to distract them from focusing on how generative AI such as ChatGPT can be applied in the contact center environment. This disruptive technology is already showing great promise and has the potential to level the playing field between big and small providers if leveraged responsibly. Despite believing strongly that there will always be a need for human interaction and involvement within CXM, the contact center of today should be quite different from the contact center of the near future, as early as two years from now.
Artificial Intelligence (AI), technology integration, and consumerization are among the key trends driving the future of healthcare, a glimpse into the horizon at HIMSS23 showed. Read on to learn takeaways from Everest Group analysts who attended the recent global healthcare conference.
More than 35,000 healthcare leaders converged in Chicago last week to share ideas, highlight investments, showcase demos, and shape the future at HIMSS23. Technology integration, value realization, and risk avoidance dominated conversations at this year’s more strategic and connected conference focused on finding solutions to urgent issues.
Here are the three main themes we saw at HIMSS23:
Integration is the key to realizing value
Integration was a major topic, as many organizations struggle to stitch together various composable platforms. While microservices have enabled precision and faster outcomes for specific use cases, these independent solutions often do not communicate with each other, which can hinder value realization. Many stakeholders we interacted with highlighted the desire to explore ways to better integrate these platforms.
Generative AI is attracting attention
Generative AI, like ChatGPT, and its potential applications is creating a lot of excitement. Major technology companies such as Microsoft and Google are leading the way in developing innovative uses for AI in healthcare, including creating new health applications. While some early examples of AI in healthcare show promise, such as voice dictation that help doctors document patient information more efficiently, how AI will address broader healthcare challenges such as staffing shortages, physician burnout, and rising costs remain to be seen.
Consumerization of healthcare will continue to grow
Putting the patient at the center of healthcare was another recurring theme, with a focus on designing healthcare systems and technologies that are intuitive and seamless for users. The increased emphasis on user experience has been influenced by the consumer world, where these types of technologies are the norm. The coming years are likely to bring a greater focus on patient portals, wearable health solutions, and virtual care delivery technologies to improve patient/member experience.
How was HIMSS different this year?
The annual HIMSS conference returned to Chicago, with attendees noting a greater sense of urgency and action in meetings versus prior events in Orlando and Las Vegas. A large number of healthcare information and technology companies attending were focused on emerging enterprise priorities around value-based care (VBC) and interoperability.
Leaders engaged in meatier discussions focused on integration, value realization, and risk avoidance. The conversations showed that healthcare enterprises are looking for solutions to get more out of their technology, budgets, and resources in today’s challenging environment.
The large post-pandemic turnout demonstrated the appetite for in-person interaction. Event organizers focused on creating more focused opportunities for attendees to gather and have relaxed and candid conversations with friends, colleagues, and clients, which have been difficult to replicate virtually.
Overall, interacting with industry leaders influencing the next stage in healthcare technology at HIMSS23 was an illuminating experience for Everest Group analysts Abhishek Singh and Manu Aggarwal, who are available to share their insights.
