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PaaS, be Warned: APIs are Here and Containers Are Coming | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

A few months ago, Workday, the enterprise HCM software company, entered into the Platform-as-a-Service (PaaS) world by launching (or opening, as it said) its own platform offering. This brings back the debate of whether using PaaS to develop applications is the right way to go as an enterprise strategy.

Many app developers turning from PaaS to APIs

While there are multiple arguments in favor of PaaS, an increasing number of application developers believe that APIs may be a better and quicker way to develop applications. Pro-API points include:

  • PaaS is difficult and requires commitment, whereas any API can be consumed by developers with simple documentation from the provider
  • Developers can realistically master only a couple of PaaS platforms. This limits their abilities to create exciting applications
  • PaaS involves significant developer training, unlike APIs
  • PaaS creates vendor platform lock-in, whereas APIs are fungible and can be replaced when needed

Containers moving from PaaS enablers to an alternative approach

In addition, the rise of containers and orchestration platforms, such as Kubernetes, are bringing more sleepless nights to the Platform-as-a-Service brigade. Most developers believe containers’ role of standardizing the operating environment casts strong shadows on the traditional role of PaaS.

While containers were earlier touted as PaaS enablers, they will increasingly be used as an alternative approach to application development. The freedom they provide to developers is immense and valuable. Although PaaS may offer more environment control to enterprise technology shops, it needs to evolve rapidly to become a true development platform that allows developers focus on application development. And while PaaS promised elasticity, automated provisioning, security, and infrastructure monitoring, it requires significant work from the developer’s end. This work frustrates developers, and is a possible cause for the rise of still nascent, but rapidly talked about, serverless architecture. This is evident by the fact that most leading PaaS providers, such as Microsoft Azure, CloudFoundry, and OpenShift, are introducing Kubernetes support.

As containers get deployed for production at scale, they are moving out of the PaaS layer and directly providing infrastructure control to the developers. This is helping developers to consume automated operations at scale, a promise that PaaS couldn’t fulfill due to higher abstraction. Kubernetes and other orchestration platforms can organize these containers to deliver portable, consistent, and standardized infrastructure components.

All is not lost for PaaS

However, given strong enterprise adoption, all is not lost for PaaS. Enterprises will take significant time to test containers as an alternative to a PaaS environment. Moreover, given that no major PaaS or IaaS vendor other than Google owns container technology, there is an inherent interest among large cloud providers such as AWS and Azure to build something as an alternative to containers. No wonder most of them are now pushing their serverless offerings in the market as an alternate architectural choice.

Which of these architectural preferences will eventually become standard, if at all, is a difficult pick as of today. Yet, while it’s a certainty that infrastructure operations will completely change in the next five years, most enterprise shops aren’t investing meaningfully in the new tools and skills that are required to make this shift. Thus, the futuristic enterprises that realize this tectonic shift will trample their competition. No ifs, ands, or buts about it.

What has been your experience with containers, APIs, microservices, serverless, and Platforms-as-a-Service? Do you think you need all of them, or do you have preferences? Do share with me at [email protected].

Sourcing Professionals Have a Tough Job | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

If you are a sourcing professional, you have our deepest respect, because now, more than ever, your job is a tough one. The sourcing industry is changing fast, disrupted by emerging technologies, shifting talent requirements and evolving service provider capabilities. Moreover, fluctuating geopolitical and legislative issues are causing enterprises to rethink substantial, long-held sourcing strategies and provider relationships. Sourcing professionals face formidable challenges in the global economy as the new year approaches and they look for better strategies in an industry experiencing unparalleled turbulence.

Technology is Changing the Game

It used to be that a sourcing professional’s No. 1 responsibility was finding a way to get the work done as cheaply as possible. Not any more. Technology has changed the game. In nearly every industry, digital technologies are driving the development of innovative products and services and improved customer experiences. To keep pace in this digital world, enterprises are now pursuing a digital-first rather than arbitrage-first strategy. In fact, the global services market has seen a threefold increase in digital-focused deals.

Automation, once merely a service delivery tool, is now “front end,” with enterprises demanding strategy, vision and strong Proof-of-Concepts (POCs) for advanced automation in 33 percent of all application services contracts in 2016. Similarly, artificial intelligence, cognitive computing and robotics will soon begin to pervade the enterprise portfolio and will eventually become mainstream in sourcing landscape.

Talent Requirements Are Shifting

The increasing adoption of digital strategies is changing the workforce skills that enterprises seek, and, in turn, forcing sourcing professionals to revamp their location portfolios in the midst of a dynamic landscape. Location options for traditional global sourcing continue to expand, and new locations are emerging for unique talent demands, such as digital capabilities.

Geopolitical Disruption Adds Complexity

Sourcing professionals also must anticipate and react to numerous geopolitical disruptions that keep the sourcing landscape shifting like windblown sand. In the past year, for example, we have seen a significant decrease in demand from the United Kingdom given the uncertainty with Brexit; uncertainty about healthcare legislation in the US has dampened the healthcare sourcing market; and the uncertainty due to visa reforms has led to increased local hiring and onshoring in the U.S.

The Provider Landscape is Constantly Changing

Sourcing professionals also are challenged to stay abreast of changes in the provider landscape. Mergers and acquisitions are on the rise, and leading providers are making fundamental changes to their talent and service delivery models. Between April of 2016 and March of this year, Everest Group witnessed 40 acquisitions to expand digital capabilities, 140 alliances between providers and technology providers or startups, and the setup of 35 new centers and digital pods to help clients rethink their digital strategies.

Data for Sound Decision-Making

In the midst of this complexity, buyers of global services are tasked with making critical decisions. Recompeting an outsourcing contract, selecting a location for a global in-house center, or contracting for new tech services—these are the types of decisions that can significantly impact an organization’s performance and an executive’s career.

That’s why Everest Group has announced that it is doubling down on its commitment to provide fact-based comparative assessments. We’re consolidating our comparative analysis offerings – previously offered under a variety of product names – under our flagship PEAK Matrix brand, which will now evaluate services, solutions, products and locations. Additionally, we’ll be expanding the market segments addressed to include new functions, processes and industry verticals. Read more about it here.

In the midst of all the complexity and change that sourcing professionals face, one thing remains the same: Everest Group is your source for the fact-based analyses you need to make informed decisions that deliver high-impact results.

The Tyranny of Service Providers’ Global Rate Cards | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

As their enterprise clients move to digital business models, which are clearly superior in productivity, business alignment and speed, legacy service providers seek to shift their offerings to the new digital world too. Seems like a great match, right? So, what’s the problem? The problem is the service providers are accustomed to a very profitable offshore factory delivery model. Inconveniently, the new digital business models don’t align well with this old tried-and-true mainstay. Even more disturbing for the service providers is that the new delivery models look to be less profitable than the mature offshore talent factories. I foresee increasing pressures on margins and some potentially unrecognized consequences that will impact clients.

Two reasons for the margin paradox

 
As the services industry rotates from the old labor arbitrage model to digital business models, service providers expect to achieve higher margins than their typical 40 percent gross margins. Why? Because the digital models deliver a higher level of value. They are better aligned against clients’ business results and are delivered at a faster rate. So, why are providers shifting to digital not getting even close to maintaining the margins they enjoyed in the labor arbitrage space? 

One reason is the price of digital talent. The skillsets for the disruptive technologies are rare and command a higher price. Plus, there is a scarcity of talent with skills and experience in implementing the new models.
  
A second factor is the difference in teams doing the work. The digital world requires persistent teams that remain over time and are located onshore; the arbitrage world depends on low-cost labor in offshore teams that churn over time.  

Read more at my CIO Online blog

Building Capability For Successful Business Transformation | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

Many studies over the past decade reveal the high rate of failure in business transformation initiatives. I think that’s a daunting record that signals risk for companies considering transformation. Even so, I’ve worked with companies that succeed in major transformation. So, I blog frequently about some of the most significant principles for approaching these initiatives, de-risking the journey and the factors influencing success or failure. Recently, I spoke with an executive who is driving a major, company-wide transformation initiative at an energy company. What they’re doing is noteworthy and a model your company may wish to follow.

The company’s transformation initiative arose because the CEO realized the business needed to be more agile to survive and prosper in this new age of flexible energy production. In addition, except for the IT group, bench marking revealed gaps in departments and business units compared to world-class performance.

Principle: Go Slow To Gain Buy-In And Build A Culture For Change

As the executive explained to me, the CEO understood that successful transformation would first necessitate building a culture of change into the organization – a belief in their ability to transform. Rather than starting with large structural changes, they first created a simple but powerful framework to build the capability for change. The framework focused on starting with smaller initiatives that allow employees and leaders to learn how to drive projects, succeed and build belief in their ability to deliver.

Read more at my Forbes blog

How to Become a Digital Pinnacle Enterprise | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

Transformation goes beyond applying new digital technologies

In years past, in the midst of some hype and some reality, enterprises applied digital technologies to existing processes with the goal of reducing costs, improving quality, and increasing efficiency.

But today, digital native companies – such as Fin Techs, Uber, and Airbnb, with origins in the digital space – and traditional enterprises that rapidly moved towards digital maturity, are causing significant disruption in an already disrupted environment. Their successes are driving today’s enterprises to not only improve but also transform their businesses to deliver value to customers in completely new manners, at radically different price points, and at breakneck speeds.

As presented by my colleague Michel Janssen in his recent blog on Digital Pinnacle Enterprises, the enterprises that are more mature in their digital transformation capabilities have a far greater chance of delivering the necessary business outcomes.

Digital Pinnacle Enterprise differentiators

Interestingly, it is not the choice or implementation of newer or different technology that distinguishes these businesses. Rather, they stand out because of their moves to establish a more collaborative culture, their shift to embracing innovation, their clear approach to move past technology implementation to adoption, and their willingness to change core business processes. These leading companies realize that success in digital transformation is not an event, but a journey.

Executing on those differentiators – culture, innovation, technology adoption, and business model change – is highly complex, cannot be accomplished in one big bang effort, and is more time sensitive than traditional multi-year IT project plans allow. A journey carefully mapped out to efficiently accelerate the impact of digital efforts is required. Elements of this journey include:

  • Establishing a vision for where you would like your enterprise to be digitally. While it will be virtually impossible to predict the exact form it will take, you can well articulate the characteristics of your future aspirations. For example, you can determine whether you want to establish a micro-segmented customer experience, or be able to rapidly introduce products into the market that are responsive to your customers’ evolving desires.
  • Deciding on the priority elements required for your success and, informed with data, determining the characteristics of your target operating model. You will obviously need to make decisions regarding your required technical capabilities, but business process changes, and funding, adoption, and accountability approaches are equally critical to achieving your goals. Determining priorities will also provide guidance into which elements of your business require little change focus as they are anticipated to have minimal impact on your business results.
  • Building a journey map to close the gaps between where you are today and the priority elements of your target operating model. The focuses should be on delivering results as quickly as possible, and remaining agile enough to respond to the evolving business requirements.

Moving at the speed of digital is no longer a nice-to-have

Enterprises that are succeeding in today’s environment understand that their underlying information technology and business model approach must move at the speed of a digital world. They recognize they must be designed for a world in which customer demands are routinely and rapidly changing, and enabling technologies available to them, and their competitors, are evolving even faster. They are prepared to embark upon a journey whose destination is only partially known at any given time, and to shift approaches, as needed, along the way.

IT Services Opportunities with the NHS: Patient Care and Advanced Technologies | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

It should come as no surprise that global services activity in the U.K. has dropped significantly in all sectors in the aftermath of the Brexit referendum. Indeed, according to our Transaction Intelligence database of sourcing deals, in the healthcare space, the U.K.’s National Health Service (NHS) awarded 13 outsourcing deals in 2015, 11 in 2016, but only four in the first half of 2017.

However, our research indicates that the policy of patient-centric care introduced by the National Institute for Health and Care Excellence in 2012 is likely to drive ample long-term opportunities for innovative IT service providers that offer technology enablers.

EG KTFor example, under the NHS’s RightCare initiative, the NHS may look to accelerate the adoption of value-based care. Funding is focused on allocative value (how well assets are distributed to different areas of healthcare), technical value (how well resources are used to achieve valid outcomes), and personalized value (determined by how well an outcome matches patient expectation). Additionally, with increasing demand for telemedicine, NHS trusts will be on the lookout for providers that develop mobile applications aimed at remote healthcare management to support the growing importance of care at home for chronic conditions.

A robust cybersecurity network is equally imperative in the wake of recent instances of data breaches such as the March 2017 WannaCry attack, in which the medical records of 26 million NHS patients were hacked. Service providers can help the NHS protect its IT infrastructure from malicious cyber attacks by offering threat intelligence solutions, threat detection and mitigation applications, Blockchain-powered Electronic Health Records (EHRs), and persona-based security platforms.

While third-party providers can profit from these long-term opportunities, they need to be cognizant of the changing competitor landscape, particularly from tech start-ups that are testing the waters to realize potential demand in the U.K. healthcare sector. For instance, DeepMind, a London-based artificial intelligence start-up, worked with the NHS in 2016 on technology to improve care coordination.

To take advantage of growing consumerism in the U.K. healthcare space – e.g., e-Referral and e-Consult services – we recommend that IT service providers increase their investments in growing technological areas such as security, mobility, analytics, and IoT. But first and foremost, they must offer services that focus on patient care. Doing so would help the NHS avoid a repeat of its failed National Programme for IT, which was aimed at cost savings and efficiency, but was abandoned after nine years at a cost of £10 billion in 2011.

We will continue to watch this space and actively share our thoughts and perspectives. In the meantime, you can stay up-to-date on our latest insights in the healthcare domain through our dedicated research on the Healthcare & Life Sciences sector.

Three Characteristics of Digital Pinnacle Enterprises | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

Earlier this week, we announced our new Pinnacle ModelTM assessments, which provide deep analysis on the capabilities top-performing companies have leveraged, and the journey they’ve taken, to become the crème de la crème.

Now, to sate your bated breath, here are the results of our first assessment on organizations’ adoption of digital strategies and what sets Digital Pinnacle Enterprises apart from their peers.

Many people equate the word “digital” with “technology.” In the consumer world, they might think about the cool new mobile phone they just bought, the home entertainment streaming device that’s on their wish list, or how to carve out the time before the end of the year to turn their abode into a smart home. In a business context, cloud computing, robotics for their factory or their business processes, or a new customer interaction application may come to mind.

But one of the key findings from this analysis is that technology in and of itself isn’t Digital Pinnacle Enterprises’ biggest differentiator. Rather, Digital Pinnacle Enterprises stand out for making a strategic impact through their digital transformation efforts. Their track record for accomplishing business outcomes such as disrupting the industry, improving customer experiences, increasing market share, and launching innovative products and services, were significantly better than their peers.

And the value their digital transformation projects deliver are measurable and quantifiable. For example, as I mentioned in my previous blog, one banking client reduced its customer onboarding process from 16 days to 9 minutes. A retailer reduced its SKU management efforts by 80 percent, while simultaneously improving accuracy. And a software company saw improved invoice processing that reduced direct FTEs by 67 percent, and decreased customer calls to the help desk by 20 percent.

Digital pinnacle enterprise characteristics
Our analysis showed three key capabilities that Digital Pinnacle Enterprises have leveraged to realize these types of outcomes.

  1. Culture: Digital Pinnacle Enterprises have invested extensively in adopting and embracing an innovation-focused culture. They have partnered in startups to source new innovation across their product and services portfolio, and established a centralized team responsible for sourcing ideas from vendors, startups, employees, and customers. Their peers did not.
  2. Technology adoption practices: Digital Pinnacle Enterprises have built management practices around the evaluation of new innovative technologies such as big data analytics, cloud, DevOps, cognitive computing, and artificial intelligence. Their peers did not.
  3. Process Re-imagination: Digital Pinnacle Enterprises have defined current and future states of key internal processes, and worked with their process owners to identify waste. And…you guessed it. Their peers did not.

Of course, technology is a required core of any organization’s digital initiative. But those that have reached the pinnacle have focused on the key capabilities required to achieve real, measurable transformation.

I hope this has given you some food for thought on how to elevate your company to a Digital Pinnacle Enterprise. I also hope you’re hungry for more, because over the next few months and quarters we’ll be discussing very specific disruptive digital technologies and other market hot topics in additional Pinnacle Model Assessments. Bring your appetite!

Digital Transformation’s Impact on IT Shared Services | Sherpas In Blue Shirts

By | Sherpas in Blue Shirts

Enterprises realized value in IT shared services organizations for the past three decades. Over the past two years, I’ve delved into the nuances of capturing the promise of digital transformation. As I think about the impact of digital transformation on shared services, it becomes clear that shared services are in for substantial changes.

I blogged before about SaaS and SaaS-like products driving the collapse of the IT technology stack (server, operating system, middleware, applications, etc.). For those of you who have not read or can’t remember what I wrote, the following is a quick recap. Much of the innovation in technology over the last few years has been aimed at integrating and automating the IT stack. For example, SaaS combines the infrastructure middle layer of the database and applications layer into a single consumable product. In doing this, it automates and integrates many otherwise automatous components, resulting in lower TCO and tighter alignment with business functions. It may be less clear that this same collapsing IT stack will inevitably set in motion other significant changes in both the enterprise IT organization and it business model.

Enterprises created IT shared services organizations to centralize IT functions, professionalize services and sell high-quality services back to the enterprise at lower prices. The concept worked well improving the reliability and performance of IT, lowering unit cost of IT components and creating a professional team of technology experts for the wider organization to rely on. These enterprise IT functions naturally aligned around the technologies they supported broadly organized by infrastructure, middle ware, application maintained, application development, security, project management and so forth. Each functional team organizes around creating high quality functional services which are then resold to the broader organization. All of this makes a great deal of sense until we consider the collapsing stack which now integrates and automates much of what the functional teams currently do.

Read more at my CIO Online blog

Browse all my blogs at peterbendorsamuel.com

Omnichannel CX: Conquering the Challenges | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

Customers have stopped thinking about channels. It’s the experience that matters to them now – regardless of the channel they choose at any point of time. Thus, it’s no surprise that 73 percent of buyers responding to Everest Group’s 2016/17 Contact Center Outsourcing (CCO) surveys and interviews rated omnichannel as their top priority for adoption, and that 23 percent of buyers want to integrate the face-to-face customer touchpoints with their contact centers.

Omnichannel is a Priority for Adoption among CCO Buyers

CCO omnichannel CX adoption

Regardless of this intention, very few enterprises have achieved delivering a true omnichannel experience or built competitive advantage through exceptional CX.

Six Challenges Enterprises are Facing in their Transition to Omnichannel CX

Challenge 1: Lack of strategic leadership support: Most omnichannel transition efforts lack direct involvement from senior leadership to prioritize investments, communicate urgency for transition, and mitigate any implementation roadblocks. This contributes to misplaced priorities and execution inefficiencies.

Solution: An internal transition team consisting of experienced senior leadership can be set up to manage and drive the organization-wide change towards omnichannel.

Challenge 2: Inadequate focus on human capital challenges: Omni-channel investment decisions are primarily focused on technologies and solutions. But even with sophisticated tools and technologies in place, lack of investment in human capital makes it difficult to practically achieve the desired outcomes.

Solution: Organizations need to place equal importance on investments in human capital and begin their omnichannel transition efforts by assessing the talent requirements to manage omnichannel CX.

Challenge 3: Organizational skills gap for omnichannel: IT teams often lack the necessary skills to support the integration of tools, channels, and databases. Contact center managers also require upskilling on sophisticated technologies, systems, and processes to effectively manage omnichannel contact centers. Agents, usually trained in supporting individual channels, have limited knowledge to work across multiple channels.

Solution: Enterprises should conduct a gap analysis to identify training requirements for the existing talent at all levels of the organization, with the necessary skills for omni-channel and hire for new profiles. They should also revise employee performance metrics and align the incentives with common omnichannel KPIs

Challenge 4: Historically siloed functions and channels: Lack of integrated front-office functions such as sales, marketing, and customer service with back-office functions such as business intelligence, reporting, procurement, inventory management, etc., makes it impossible to create a unified view about customers.

Solution: Back-to-front office integration is crucial for a great end-to-end customer journey. The first step to achieving this is through customer journey mapping for all end-to-end processes to identify changing behaviors, capture unmet expectations, optimize processes, and encourage cross-functional collaboration.

Challenge 5: Lack of clarity on requirements for data integration from all channels: Enterprises are not clear about the business and operational needs to support data integration across all channels. Management of disparate CRM, voice and other technology systems also hinder integration.

Solution: Enterprises need to assess the implications of data standardization and integration across channels and identify an appropriate mix of tools to achieve integration of disparate datasets and applications.

Challenge 6: Incompatible legacy systems: Most legacy systems in enterprises, especially CRM systems and voice technologies, are incompatible with omnichannel platforms and solutions. This leads to inconsistency in capturing and transferring data to achieve a unified view of customers in a single platform.

Solution: Enterprises should adopt non-invasive omnichannel platforms and solutions that can seamlessly communicate with their legacy systems.

To learn more, check out Everest Group’s two-part study on omnichannel customer experience: “From Multi-Channel to Omni-Channel Customer Experience,” and “Delivering Omni-Channel Customer Experience.” Both include checklists to help enterprises successfully plan and execute their transition to omnichannel. And, please feel free to share your omnichannel experiences with us: Katrina Menzigian ([email protected]) and Jayapriya K ([email protected].)

Global Services’ Pinnacle Enterprises – How Did They Become the Best of the Best? | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

Companies like Amazon, Apple, Disney, GE, Starbucks, and Tesla are considered by most as the best of the best in their industries. The ways they became the “coolest kids” are the stuff of business school case studies, countless news articles, and lunch room / board room discussions around the world.

Of course, there are many less iconic enterprises that have unlocked the performance excellence code. For example, a leading global bank recently reduced its customer onboarding time from 16 days to 9 minutes. Yes, you read that right…from 7,680 minutes to 9 minutes, assuming an 8-hour business day. Wouldn’t you love to know how it achieved that mind-numbingly positive business outcome, and how you could extrapolate what it did into your organization?

Therein lies the rub. You might read a case study that explains how it implemented an enterprise-wide automation platform that helped it transform operations. Seeing that automation was the core of its solution, you might access benchmarking studies to better understand best practices and how your business compares. Broadening your research, you might also access high-volume surveys that gather opinions and intentions on automation.

But none of these tools reflect actual performance or the capabilities this organization – or others achieving such remarkable results – has brought to bear to become the best of the best. They lack the insight you need to accelerate your impact in measurable ways.

We believe that to understand a topic, you need to directly compare and correlate business outcomes with the capabilities required to achieve those results. Our new Pinnacle ModelTM assessments do just that.

Pinnacle Model for Enterprises

The assessments paint a picture of the capabilities the “cool,” “it” companies – what we call Pinnacle EnterprisesTM – have leveraged and the journey they’ve gone through to realize superior business outcomes. They’ll arm you with the self-discovery of comparison that will help you design a change roadmap to be competitive today – and tomorrow.

Recently. we released a complimentary assessment of our first Pinnacle Model assessment results, which are for Pinnacle Enterprises adopting digital strategies. Spoiler alert: the capability that distinguishes the Pinnacle Enterprises from their peers isn’t their actual technology deployment.

And as 2018 approaches, we’ll use the Pinnacle Model to tackle other hot topics.

PS: For our service provider friends: When we talk about enterprises understanding their unique paths to accelerating their impact, I challenge you to think about how your differentiated capabilities can help accelerate the journeys of your clients and prospects.