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Press Releases

The Sourcing Market is on the Up and Up: Everest Group Reports Rise in Global Outsourcing Demand, GIC Activity and Service Provider Revenues in Q2 2018 | Press Release

By | Press Releases

Sourcing center setups at all-time high in Q2, driven by increased location activity in Nearshore Europe, Middle East

The global sourcing industry experienced a lucrative Q2 2018, marking notable rises in outsourcing demand, setups of global in-house centers (GICs) and service provider revenues compared to Q1, according to Everest Group. In addition, Everest Group reports that overall location activity was at an all-time high (87 setups of delivery centers by GICs and service providers during the quarter) due to significant increases in Central and Eastern Europe (CEE) and the Middle East.

Everest Group discusses these and other second-quarter developments in the sourcing industry in its recently released Market Vista™: Q3 2018 report. The quarterly report highlights the trends in the fast-evolving global sourcing market, exploring the key developments across outsourcing transactions and Global In-house Centers (GICs), as well as location risks and opportunities, and service provider developments.

“We’re coming off a great second quarter for the global services industry as a whole,” said Salil Dani, vice president at Everest Group. “For starters, location activity was at an all-time high and transaction activity rose in comparison to Q1. More than two dozen of the world’s leading companies announced plans to expand or set up new centers, which is a strong indication that enterprises anticipate that the market will continue to validate their sourcing strategies in the near future. We expect that this positive momentum will continue through the remainder of the year, which suggests the global sourcing industry will post significantly improved metrics compared to 2017.”

***Register for Complimentary Webinar***

Everest Group will review the findings of the “Market Vista: Q3 2018” report in a webinar to be held on Wednesday, August 29, at 9 am CDT. In addition, Everest Group presenters will address the results of a brief survey the firm recently conducted with leading service providers to gauge their market perspectives for the remainder of 2018 and into 2019. Register here for the complimentary, 60-minute webinar, “Service Provider Vantage Point, Plus Q3 2018 Market Vista™ Briefing.”

Additional highlights from the Market Vista: Q3 2018 report:

  • There was an uptick in outsourcing deals in the Banking, Financial Services and Insurance (BFSI) vertical, driven by U.S. tax reforms. Healthcare outsourcing transactions also surged, driven by declining enterprise margins.
  • Outsourcing activity across North America and Rest of the World (especially Asia, Australia and New Zealand) increased notably over the last quarter.
  • The “Technology and Communication” sector remained the most active and accounted for more than one-third of the total market activity in Q2. The manufacturing sector witnessed an increase, accounting for 25 percent of total setups as compared to 18 percent in the previous quarter.
  • Digital services continued to dominate the outsourcing activity relative to pure traditional services, representing 61 percent of transactions compared to 39 percent, respectively. Automation was the most prevalent digital component employed by new or expanded GICs, with deployments in 52 percent of Q2 setups and expansions.
  • Tier-2/3 locations in the U.S. witnessed significant growth in new center setup activity for both transactional and transformational work, driven by low-cost skilled talent availability.
  • CEE accounted for more than one-third of the total GIC setups and expansions, with Ireland and Romania remaining the preferred nearshore locations in the region.
  • Middle East and Africa (MEA) gained traction during the quarter, accounting for nearly 10 percent of the total GIC setup and expansion activity. The majority of the centers that opened in this quarter in this region support R&D/engineering functions of the parent company.
  • Both global and offshore-heritage service providers saw an increase in revenue and operating margin.
  • Service providers point to a gap in digital skills as a key growth challenge and are utilizing multiple approaches, including alliances and acquisitions, and exploring talent models to mitigate risk.

***Download a complimentary 14-page abstract of the report findings here.*** (Registration required.)

Next-Gen Solutions Add Fuel to Fire of Blazing Recruitment Process Outsourcing Market—Everest Group | Press Release

By | Press Releases

As enterprises face unprecedented talent acquisition challenges, recruitment process outsourcing soars as one of the fastest growing outsourcing markets in the world, growing at 15% for the past three years

The Recruitment Process Outsourcing (RPO) market is one of the fastest growing outsourcing segments today, with growth hovering above 15 percent consistently for the past three years, according to Everest Group. Although the solutions applied in RPO have been slowly evolving for nearly two decades, the adoption of next-generation technologies is expected to surge and significantly alter the RPO market landscape in the near future, adding fuel to the fire of an already blazing RPO market.

Enterprises today are facing unprecedented challenges in talent acquisition, suffering from significant pain points such as forecasting workforce requirements, adapting to the changing nature of the candidate base, developing effective branding, and responding to rapid development in technology. According to Everest Group, RPO service providers are seizing this golden opportunity to help enterprises meet recruitment challenges with next-gen technologies like advanced analytics, benchmarking and workforce planning.

Evolving use cases of digital technologies in talent acquisition include the following:

  • Analytics: Use cases include spend analytics, supplier analytics, workforce analytics, peer benchmarking, and social media analytics to source, screen and engage candidates
  • Natural Language Processing (NLP): Chatbots can leverage NLP to improve candidate experience by engaging with candidates right from the sourcing and screening phases all the way to the interview scheduling and onboarding stages.
  • RPA: RPA can be used to parse key words in resume screening; automate job postings in job portals, banner advertisements and direct emails; and update all instances of workflow when a change is needed.
  • Machine Learning (ML): ML can be used to conduct first-level screening, including checking the relevance and quality of experience and the cultural fit of the candidate. ML also assists analytics applications with identifying and leveraging the most suitable sourcing channels.

“The technology in the RPO market to date has been largely focused on improving the efficiency of specific talent acquisition processes and has been limited to dealing with structured data,” said Vishal Gupta, practice director at Everest Group. “Going forward, we’ll see next-generation technologies such as RPA, analytics and AI that can deal with unstructured data and deliver insights and probabilistic solutions. The impetus to be on the front edge of this wave is driving significant technology investment on the part of RPO service providers. We’re also seeing more and more service providers embracing the RPO+ value proposition, offering value-added services such as employer branding, talent communities, and talent consulting services. These capabilities will become important differentiators in a fiercely competitive market where more than 700 deals are up for renewal in the next three years.”

These and other research findings are explored in a recently published Everest Group report: “Recruitment Process Outsourcing (RPO) Annual Report 2018: Orchestrating the Digital Talent Acquisition Symphony.” This research provides a comprehensive coverage of the market across dimensions such as evolving RPO value proposition, market overview, key trends, solution characteristics, buyer adoption trends, and digital in talent acquisition.

Other key findings of the report:

  • The RPO market touched the US$3.3 billion mark in annualized contract value in 2017.
  • As the RPO model gains maturity, the marketplace is witnessing the entry of hither-to unknown buyers. Industries such as retail, healthcare and pharmaceuticals, as well as small-sized buyers (less than 3,000 FTEs) are entering the market in increasing numbers, leading to new avenues for service providers to tap.
  • Total Talent Acquisition (TTA) is increasingly getting a prominent place in the discussion around the talent needs of enterprises. While still in its early stages, service providers would do well to develop TTA capabilities with an eye to the future.
  • North America continues to occupy the lion’s share of the market with the UK and Australia being the other major markets. Continental Europe and Asia Pacific are emerging markets with good potential for the future.
  • The competition in RPO remains intense, with not many players having a dominant market share, both in terms of number of deals as well as hires. With a large number of deals coming up for renewal in the next three years, service providers will have to be on their toes to maintain their market share as competition intensifies.

***Download a complimentary 10-page abstract of the report here.***

With Aware Automation, Enterprises Can Achieve 35% Cost Savings as Compared to Traditional Automation Approaches—Everest Group | Press Release

By | Press Releases

72% of enterprises cite IT infrastructure services as a key hurdle to becoming digital-first enterprises; new Everest Group report describes how ‘Aware’ automation—underpinned by AI and analytics—can solve this problem

According to Everest Group, aware automation can help achieve more than 35 percent cost savings as compared to traditional automation approaches and can help enterprises realize significant improvements in business operations and user experience.

With IT infrastructure complexity at an all-time high, Everest Group has found that 72 percent of enterprises cite infrastructure services (IS) as a key hurdle in becoming a digital-first enterprise. Most enterprises believe that their IT infrastructure services are not moving fast enough to support and drive the future of their business.

“Aware” automation holds promise for resolving the challenges and complexity of traditional IT infrastructure. Aware automation is a concept wherein automation systems are underpinned by artificial intelligence (AI) and analytics, making them conscious of the environment and capable of driving self-configuring, healing and evolving IT infrastructure services.

“The trinity of analytics, automation and AI can make the infrastructure run the way business needs it to, without requiring significant oversight or bandwidth,” said Ashwin Venkatesan, practice director at Everest Group. “So, in essence, this next-generation automation can make infrastructure services ‘invisible’ rather than a glaring nightmare that causes executives to lose sleep at night. Already in the last two to three years, we’ve witnessed intelligent automation making enterprise inroads, backed by a rapid proliferation and maturation of solutions in the market.”

Everest Group offers a featured analysis of aware automation in its newly released annual report on Cloud and Infrastructure Services: “AI Stands to Make IT Infrastructure Services ‘Invisible’.”  This research deep dives into the cloud and IS landscape. It provides data-driven facts and perspectives on the overall market. The research covers cloud and IS adoption trends, demand drivers, and buyer expectations. The research analyses buyer challenges, describes trends shaping the market, and provides an outlook for 2018-2019 for the broader IT as well as cloud and IS market.

Highlights of the Cloud and IS market analysis:

  • The global information technology services (ITS) market is expected to continue its modest growth rate of approximately 2 percent per annum. The collapsing of the traditional IT stacks across the previously siloed layers of applications and infrastructure is driving the demand for consulting services.
  • Emerging technologies are disrupting the infrastructure services market. There has been increased market momentum for the adoption of these technologies that are facilitating the enterprises’ journey toward digital transformation.
  • The United States takes the lion’s share (90 percent) of the deal volume emanating from North America, which itself continues to dominate the global market share (37 percent). The Nordic region witnessed an uptick in deal volume (30 percent of the deal volume in Europe), taking over the lead from the United Kingdom.
  • While the Banking, Financial Services and Insurance (BFSI) industry dominates the ITS market share (23 to 27 percent), the healthcare and life sciences vertical witnessed an above-average growth to take over a larger share of the market (8 to 10 percent), beating the retail, distribution, and consumer packaged goods (CPG) sectors.
  • Accenture and IBM continue to dominate the ITS market.

***Download a complimentary 12-page abstract of the report here.***

78% of Enterprises Fail to Scale and Sustain Their Digital Transformation Initiatives. Everest Group Says ‘Old School’ Operating Models are to Blame | Press Release

By | Press Releases

New Everest Group report finds enterprises are adopting digital and seeing initial success, but struggles come in scaling and sustaining the transformation effort.

As many as 78 percent of enterprises today fail to scale their digital transformation initiative and achieve the desired return on their digital investments. Despite increasing digital adoption by enterprises and reports of initial successes, enterprises are struggling to scale and sustain their transformation efforts. According to Everest Group, a misalignment between an enterprise’s digital strategy and its “old school” operating model is often to blame.

“In recent years, enterprises increasingly have been undertaking digital transformation initiatives, leveraging digital tools to improve revenue, reduce costs and enhance customer experience,” said Yugal Joshi, vice president, Information Technology Services, at Everest Group. “Enterprises are typically quite encouraged by initial successes, but the majority don’t actualize the return on investment they envisioned in the long term. The struggle comes when enterprises try to scale and sustain their transformation initiatives. Typically, one of the biggest problems lies in ‘old school’ forms of operating models. If the enterprise’s operating model is not modernized and aligned with the digital strategy, the desired returns from a transformation initiative simply cannot be achieved.”

The following findings are also symptomatic of the all-too-common misalignment of operating model to digital strategy:

  • 73 percent of enterprises failed to realize sustained returns on their digital investments.
  • 69 percent of enterprises consider organization structure as a barrier while scaling up their digital initiatives. A complex organizational structure reduces transparency and creates silos, making it difficult for organizations to sustain their digital initiatives.
  • 82 percent of enterprises do not have a culture of collaboration and innovation. Lack of 360-degree communication channels and innovation culture leads to poor adoption of any change as the organization battles fear of uncertainty.
  • 87 percent fail to implement their change management plan for digital transformation.
  • 89 percent have a narrow scope of technology investments limited to particular products or functions. This impedes the organization-wide, long-term view required for digital transformation.

Everest Group has assessed the digital transformation success and failure cases of more than 328 enterprises to arrive at the best practices that enterprises need to adopt to transform their operating model into a digital operating model. The findings and recommendations are shared in the newly released report, “Digital Services – Annual Report 2018: Future Operating Model to Scale Digital.”

In this report, Everest Group introduces a simple “FIRE” framework that describes four key characteristics of the type of operating model needed to support digital transformation:

  • F: Fluid organizational structure—the enterprise should aim to create a self-organizing, ownership-driven and skill-centric organizational structure.
  • I: Innovative systems and culture—the enterprise should enable experiments, leverage technology, crowdsource ideas, and value the taking of measured risk as an asset
  • R: Responsive-by-design workplace—the enterprise must improve communication and collaboration and digitize internal processes
  • E: Experience-centric focus—the enterprise must move beyond siloed technology investments and identify areas across the value chain where end-to-end digital transformation efforts are required.

The report also describes in detail an approach and roadmap enterprises may use to transition to a digital operation model.

***Download a complimentary 12-page abstract of the report here.***

US P&C Insurers, Hammered by Natural Calamities, Leverage Technology to Lower Costs, Improve Customer Experience—Everest Group | Press Release

By | Press Releases

Other profitability drivers for Property & Casualty Insurers include product innovation, underwriting excellence, fraud control and effective capital management

U.S. property and casualty (P&C) insurers, hammered in 2017 by one of the worst years for natural disasters in recorded history, face uncommon margin pressures and are struggling to find strategies for profitable growth. U.S. P&C insurers are not alone in this struggle as insurers throughout the world face additional margin pressures such as modest growth in investment income, continued geopolitical uncertainty, increasing customer expectations, the rise of non-traditional competition from InsurTechs, and heightened complexity of risks.

Nevertheless, Everest Group counsels that P&C insurers can convert challenges to opportunities. Specifically, P&C insurers can employ these five key strategic levers to achieve profitable growth:

  • Product innovation, particularly in coverage, pricing and services
  • Underwriting excellence and fraud control, especially using predictive analytics, artificial intelligence (AI), Internet of Things (IoT) and blockchain
  • Effective capital management, such as investing in profitable segments, targeting low-risk customers and developing greater capital self-sufficiency
  • Leveraging technologies (such as mobility, telematics, automation and AI, drones and blockchain) to expanding digital use cases to middle- and back-office operations
  • Delivering excellent customer experiences through omnichannel services and self-service, straight through processing (STP), on-demand products and bundled services, and faster and simpler customer-facing processes.

“Property and casualty insurers are facing macro and micro challenges that make it difficult to achieve profitable growth,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “As a result, they are expanding their partnerships with BPO providers from just outsourcing of administrative tasks to more value-added services delivered through a blend of operational understanding, technology knowhow, and domain expertise.”

The P&C insurance business process outsourcing (BPO) market consistently grew at approximately 13 percent from 2015 to 2017, and the market growth is only expected to accelerate in the future as P&C insurers seek strategies for profitable growth in a heavily dynamic market.

A few BPO service providers are stepping-up to assist insurers in mitigating their present challenges. Service providers are leveraging domain expertise for consulting and design thinking services, technologies such as automation for increasing operational efficiencies, and analytics for greater value-addition. These are over and above the usual cost savings that are associated with an outsourced delivery model.

Everest Group explores these findings and others in a recently published report: “Property and Casualty (P&C) Insurance BPO: Embracing Growth Through Digital Empowerment.” This report provides comprehensive coverage of the global P&C insurance BPO market, including adoption trends across geographies and buyer size, factors impacting the market, key solution characteristics, emerging trends and service provider landscape.

***Download a complimentary abstract of the report.*** (Registration required.)

Enterprise Adoption of RPA Exceeds 100% Growth in 2017, Buoyed by New Buyers of All Sizes, Industries—Everest Group | Press Release

By | Press Releases

High business value, low risk, sophisticated vendor offerings to propel 90% RPA market growth annually

Robotic Process Automation (RPA) continues to expand its reach and client base as more enterprises become aware of the benefits of the technology. Enterprises of all sizes and industries are testing the RPA waters, eager to keep pace with their peers in the technology adoption curve. Enterprise adoption of RPA, as indicated by the number of enterprise clients served by independent RPA vendors, achieved a 105 percent growth rate from 2016 to 2017, according to Everest Group.

“RPA offers many benefits and few risks,” said Sarah Burnett, vice president at Everest Group. “Using RPA, companies can reduce costs and achieve faster processing and improved quality. The risks are low, because the technology is non-invasive and easily remediable. The market is in its early stages of high growth and adoption, with most enterprises testing the water at this stage.”

Among current RPA deployments, desktop automation (attended RPA) is the most prevalent, followed by server (virtual machine) deployments (unattended RPA), which typically sees robots run according to pre-defined schedules or process related automatic triggers. Much less common is the use of cloud for running RPA deployments, but adoption of this model is increasing as the market grows.

RPA software typically comes with centralized robot management and robot performance analytics. More advanced features include auto-scaling, dynamic load balancing and context awareness. At the nascent stage of emergence is cognitive RPA, which is RPA integrated with artificial intelligence technologies, robot voice and vision interfaces, predictive and prescriptive analytics, automation of judgment tasks, and self-managing and self-healing robots.

“We expect an extrapolated high-growth curve for the next several years as vendor offerings get more sophisticated,” added Burnett. “For instance, we already see vendors building out capabilities in the areas of computer vision, pre-built automations, self-healing systems and auto-scaling systems, just to name a few.”

The RPA software market overall witnessed a growth of 92 to 97 percent in 2017 to reach US$480 million to $510 million. The market is expected to grow between 75 and 90 percent annually up to 2019.

These findings and more are discussed in a newly released Everest Group report, “Robotic Process Automation (RPA) Annual Report 2018 – Creating Business Value in a Digital-First World.” This research explores RPA market size and growth, buyer adoption trends and key learnings from early adopters, RPA solution characteristics, technology trends, the RPA technology vendor landscape, and the future outlook for 2018-2019.

Some of the findings are:

  • Small- and medium-sized enterprises have accelerated the pace of RPA adoption and now together account for a major portion of the market.
  • Industry-specific processes continue to see the highest adoption of RPA.
  • North America continues to be the largest RPA market; however, Europe and the United Kingdom, together, accounted for the highest growth among major markets.
  • Buyers generally have a high satisfaction level with RPA vendors, but they expect the vendors to improve their support, analytics, and cognitive capabilities.
  • The majority of RPA buyers are still in an early adoption phase, as they continue to test the technology before scaling up.
  • Attended RPA has a higher adoption maturity and installed base in terms of licensed volumes. However, unattended RPA is driving the highest growth due to cloud-based deployment.
  • Automation Anywhere, Blue Prism, and UiPath are the top three vendors in terms of RPA license revenue and account for over one-third of the total market revenue.

***Download a complimentary abstract of the report.*** (Registration required.)

Everest Group Identifies ‘Pinnacle GICs,’ Digital Capabilities That Exemplify Best-of-the-Best Global In-House Centers | Press Release

By | Press Releases

Digitally mature GICs vastly outperform others in delivering strategic impact, operational improvements and cost savings.

Everest Group has deemed 11 enterprise Global In-house Centers (GICs) as Pinnacle GICs™—GICs that are achieving superior business outcomes because of their advanced digital capabilities. More importantly, Everest Group has analyzed what these Pinnacle GICs are doing well and is sharing the secrets of their success.

Many GICs are playing a key role in driving their enterprises’ digital agendas, thanks to the rise of next-generation technologies such as mobility, analytics, cloud, automation, and other enabling technologies. While most GICs are in the early- to mid-stages of digital adoption, some GICs have performed better than others by building and orchestrating differentiated capabilities and deriving superior outcomes.

Everest Group’s Pinnacle Model™ approach explores what the very best GICs are doing in terms of real impact and then correlates the capabilities required to achieve those results. By examining what these Pinnacle GICs have in common, others can learn how to succeed, whether they desire to make incremental changes or achieve major transformations.

Everest Group studied the digital adoption journey of 54 GICs, examining five key capability areas—scale of operations and penetration across digital segments, breadth and depth of services, digital talent, operating model and level of influence, and innovation. When those key capabilities were correlated with business outcomes, 11 Pinnacle GICs rose to the top.

As a group, the 11 Pinnacle GICs significantly exceed other GICs in three key outcome areas:

  • Cost impact: Pinnacle GICs generated 53 percent ROI from digital initiatives, while 44 percent of other GICs are yet to achieve ROI at all.
  • Operational impact: Pinnacle GICs achieved 46 percent improvement in operational metrics, compared to 19 percent by other GICs.
  • Business impact: 68 percent of Pinnacle GICs generated significant strategic impact, compared to 37 percent of other GICs.

“We found that Pinnacle GICs as a group are 1.8 times more invested than other GICs in supporting multiple business units with digital capabilities and 3 times more likely to provide end-to-end support within digital segments,” said Michel Janssen, chief research guru at Everest Group. “These discrepancies illustrate in a striking way that the GICs that are investing in and applying digital capabilities with breadth and depth across their organizations are reaping drastically superior outcomes in the marketplace. The bottom line for enterprises is that embracing digital is an imperative, not just an opportunity, and the speed of digital adoption is critical to derive maximum impact.”

Everest Group’s recently released report, “Digital Maturity in GICs: Pinnacle Model™ Analysis 2018” describes the journeys of these best-of-the-best companies, provides insights into the key enablers needed to achieve desired outcomes, and points to the investments required for the greatest speed to impact.

***Download a complimentary abstract of the report here.*** (Registration required.)

“Our Pinnacle Model assessments show organizations exactly who is succeeding and how,” added H. Karthik, partner, Global Sourcing, at Everest Group. “One of the most valuable aspects of this research is that we are able to identify Pinnacle Accelerators™, which are specific methods organizations can use to accelerate their digital transformation journey. Armed with clear points of comparison and insightful recommendations, organizations are better equipped to prioritize where to invest their time and resources and plan their own path to the top.”

About the Pinnacle Model

Everest Group’s proprietary Pinnacle Model™ assessments, which include input from executives from leading Fortune 1000 companies, compare internal capabilities to desired business outcomes, such as disrupting the industry, improving customer experiences, increasing market share, and launching innovative products and services. By highlighting what the best—Pinnacle Enterprises™—are doing, these performance studies help organizations plot a journey from their current position to where they want to go, prioritize investments of time and resources for maximum impact, and accelerate change.

85% of Banks Claim Digital Transformation as Priority, But Most Are Merely ‘Digital Washing’—Everest Group | Press Release

By | Press Releases

Banks are increasingly adopting automation, cognitive/AI, analytics and blockchain, but too many banks mistake digital projects (mostly in the front-office) for digital transformation

Everest Group reports that 85 percent of banks have digital transformation implementation as a priority for 2018, driven by the need to find efficient ways to address challenges in the industry such as cost pressures, eroding top lines, uncertainty and instability in the geopolitical environment and decreasing customer satisfaction. Unfortunately, in the rush to find digital solutions, many banks are mistaking digital projects for digital transformation.

According to Everest Group, 81 percent of banks are implementing digital projects focused primarily on their front-offices; only the remaining 19 percent are actually going for true transformation by optimizing and integrating their front-, middle- and back-office operations.

“Those 81 percent of banks who have only invested in front-end application of digital technology are engaging in what we call ‘digital washing’—claiming transformation achievements when they are in fact far, far away from true transformation,” said Manu Aggarwal, practice director at Everest Group. “True digital transformation requires connecting the dots between the front-, middle-, and back-office processes to achieve key business objectives. Moreover, it is not an isolated implementation of technology. Rather, it’s an ongoing process where changes in technology and alignment to goals need to be continuously checked.”

In examining the digital transformation strategies within the banking industry, Everest Group identified the following trends:

  • Strengthening competitive position, building market share, acquiring and retaining customers, and generating cost savings are some of the major factors for adopting digital technologies.
  • Market facing front-office processes lead the demand for adoption of digital services, mainly targeting customer experience.
  • Some of the key levers of digital adoption include Automation, cognitive computing and artificial intelligence (AI), analytics, and blockchain.
  • While the adoption for automation, AI and analytics is primarily driven by lending, retail banking, and cards and payments, most activity in blockchain is happening on the commercial banking side.

These results and other findings are explored in Everest Group’s recently published report: Banking BPO Annual Report 2018: Digital Transformation or Digital Washing: Looking Beyond the Hype. The report addresses digital washing and the key considerations for successful digital transformation. It also examines the levers of digital adoption within the banking industry, with an emphasis on automation, AI, analytics and blockchain.

***Download a complimentary 11-page abstract of the report*** (Registration required.)

Digitalization Levers Take Center Stage in Addressing Supply Chain Issues — Everest Group | Press Release

By | Press Releases

Enterprises must leverage analytics, cloud computing, control tower technology, IoT and MDM solutions to control cost, remove process inefficiencies, manage risk, and address uncertain customer demands.

Enterprises drove 15 percent growth of Supply Chain Management (SCM) Business Process Outsourcing (BPO) in 2017 as they sought to reduce high operating costs, address evolving customer demands, and manage risk and compliance. The solution to much of these problems, according to Everest Group, is digitalization.

“Enterprises can struggle with broken supply chains for many different reasons, not the least of which are siloed operations, inefficient processes and lack of visibility” said Vikas Gujral, practice director at Everest Group. “Enterprises that adopt digital solutions to combat these challenges are achieving better supply chain efficiency at lower cost. We have identified analytics, cloud computing, control tower, Internet of Things (IoT) and master data management (MDM) solutions as the emerging drivers for success in the SCM BPO market.”

  • Analytics: Analytics capabilities will help streamline supply chain operations through actionable insights to enhance visibility and control. However, despite the growing adoption, analytics penetration within supply chain remains low when compared to procurement.
  • Cloud: Cloud is becoming a major disruptive force for seamless supply chain operations, because it enables agile operations, cost containment and increased collaboration. Cloud ties all underlying pieces and technologies together, forming the basis for the supply chain of the future.
  • Control tower: Control tower—a central platform which tracks, monitors and directs activities across the supply chain—provides better visibility, cost benefits through accurate demand forecasting and inventory management, and reduced cycle time. Organizations have started realizing the benefits of control tower solutions, leading to cases of increased implementation.
  • IoT: IoT, coupled with other technologies, forms another key building block of efficient supply chain operations. IoT is valuable in numerous applications for alleviating supply chain woes and preparing enterprises for the future.
  • MDM: Demand for visibility, efficiency and smarter organization is increasingly creating the need for better data management. Consistent increase in MDM FTEs indicates greater focus on data management services

These results and other findings are explored in a recently published Everest Group report:  “Supply Chain Management (SCM) BPO—Annual Report 2018: Moving Toward a Digital Supply Chain Ecosystem.” In the report, Everest Group analyzes the global SCM BPO market in 2017, focusing on the state of the market, market size and adoption trends, and the service provider landscape.

Key Adoption Trends:

  • Market size and growth: The SCM BPO market is now estimated at US $1.5 billion and is expected to grow at a similar pace in the future.
  • Geography distribution: North America is the key geography in terms of SCM market share, followed by Europe. Asia Pacific registered the highest revenue growth in the market.
  • Industry adoption: While manufacturing still leads the adoption in SCM outsourcing, newer industries such as travel & logistics have seen an uptick in adoption.
  • Buyer size: Although large buyers still form the majority, SMBs and midmarket buyers have awakened to the benefits of outsourcing.
  • Pricing: FTE-based pricing witnessed the maximum inclusion, very closely followed by hybrid pricing.
  • Sourcing dynamics: Although onshoring has seen an uptick from past years, offshore/nearshore delivery still forms the major chunk of the SCM BPO market.

***Download a complimentary 10-page abstract of the report*** (Registration required.)

Legacy IT Systems Weigh Down ‘Digital First’ Efforts of More Than Half of Enterprises—Everest Group | Press Release

By | Press Releases

80% of enterprises’ application modernization efforts are limited to ‘lift-and-shift’ rather than meaningful changes to the underlying architecture; enterprises need to invest in intelligent sentient architecture if they are serious about digital transformation

More than 54 percent of enterprises aspiring to digitally transform blame their slow-moving efforts on the constraints of legacy systems. A key, but too often disregarded, component of those legacy systems is the architecture of enterprise software, according to Everest Group, which reports that 80 percent of enterprise efforts to modernize their applications is limited to a “lift-and-shift” approach as opposed to the adoption of modern software architecture practices which would considerably accelerate digital journeys.

“With a traditional software architecture approach, the enterprise focus is on ‘how’—basing their software architecture on the technologies they want to adopt,” said Yugal Joshi, vice president at Everest Group. “Instead, enterprises should focus on the ‘what’—user expectations and business outcomes—as they design and modernize their software architectures. Unfortunately, enterprises aren’t hiring the right talent to accomplish this.”

Joshi explains that a wide chasm exists between the next-generation architecture aspirations of enterprises and the skills of their enterprise architects. Unfortunately enterprises are not moving fast enough to fill this gap. For example even for hiring next-generation architects, 5 percent of enterprise architects are expected to have expertise in containers, 10 percent in microservices, 15 percent in DevOps, and only 1 percent in serverless technologies.

These next-generation technologies and development approaches are key foundational elements for creating sentient architectures, software architectures that are agile and responsive to business needs. Sentient architecture systems are driven by the 3Ds of design centricity, dynamic adaptability and discrete structures:

  • Design centricity: Systems need to be intuitive and should be designed collaboratively rather than being the responsibility of the enterprise architect alone.
  • Dynamic adaptability: The architecture should be adaptable so that it can be easily refactored or re-architected, without requiring a massive time-consuming investment to deliver value to customers.
  • Discrete structures: Software should be composed of discrete components that are granular in nature and can be integrated with other components when required. This will require architects to break down application components into software-enabled services that are independent, distributed and loosely coupled.

These results and other findings are explored in a recently published Everest Group report: “Application Services—Annual Report 2018: The Future of Architecture is Intelligent.” This research provides fact-based analysis of buyer trends by geography, industry and revenue size. It analyzes major trends impacting the application services market and provides an outlook for the year ahead.

 Key Findings About the Applications Services Market

  • Stand-alone application deals continued their upward trend, constituting two out of every three deals signed (67 percent). Bundled deals that combined application services and infrastructure services also witnessed a slight uptick (11 percent from 9 percent), suggesting that enterprises are beginning to find more value in the convergence of these layers than in the silos.
  • The declining deal size trend saw reversal, and the deal sizes for application services grew by over 25 percent this year, compared to the previous year. This is indicative of a vendor consolidation exercise where a lesser number of service providers are getting the larger share of client’s spend.
  • Application services deal duration continued to be dominated by deals with durations of less than three years (40 percent); deals with a duration over five years constituted only 16 percent of the deal volume.
  • New contracts took up a slight majority (52 percent) in contract type, suggesting that the trend of anti-incumbency and customer dissatisfaction prevails.
  • Surprisingly, deals with consulting in scope dropped sharply to 43 percent of the deal volume. However, 55 percent of deals included system integration in scope, suggesting that the precipitous drop in consulting deal volume might be an anomaly.

***Download the Complimentary 11-page Abstract*** (Registration required.)