Tag: next generation global services

Is Mobile Banking the New Banking Reality? | Sherpas in Blue Shirts

Move over, Angry Birds. Your standing as “the largest mobile app success the world has seen so far,” (as stated on February, 18, 2011 in MIT’s Entrepreneurship Review) is giving way to mobile banking apps.

Indeed, apps from American Express, Bank of America, Capital One, Wells Fargo, Westpac, and others rank among the top apps on iTunes and the Android play store, with tens of millions of downloads already under their belt! And there’s little surprise about that…photograph your check and then have it deposited directly into whatever account you want, or send money to people via their email addresses or mobile phone numbers. Isn’t that cool?

Thanks to the increased adoption of smart phones and innovative technology, banking today has become so convenient. With innovations such as near field communications (NFC), mobile wallets, and a number of customized applications being developed and adopted, the mobile banking landscape has undergone a rapid transformation. In fact, according to The Federal Reserve Board, as of November 2012, 28 percent of all mobile phone users and 48 percent of smart phone users in the U.S. had used mobile banking in the past 12 months, an increase of 7 percent from December 2011.

Here’s a brief overview of the current state of mobile banking:

Current adoption and growth: 

Mobile Banking

The past year saw a number of banks expanding and upgrading their mobile banking application features to keep up with extremely strong and growing demand. For example:

  • Bank of America recently launched new services such as mobile remote deposit capture, person-to-person payments, expanded contactless payment functions, and a mobile component to its BankAmeriDeals merchant rewards program. It also recently began testing payments executed via QR codes with five merchants. In fact, its mobile banking app (Bank of America – Version 4.3.229) was among the top 10 Android apps upgraded by customers during the week of July 29, 2013. The new version allows customers to:

    1. Make payments to credit cards using checking accounts at other banks
    2. Add/edit/delete bill pay accounts
    3. Add own email/mobile number to receive money from others
    4. Send money to people and small businesses via their email addresses or mobile phone numbers
    5. Utilize the Call Me Now feature (for Platinum Privileges clients)
  • BNP Paribas recently announced that it will be launching a full-service mobile bank in Germany, Italy, France, and Belgium. Its Hello Bank is the first bank designed specifically for mobiles, and BNP aims to have 1.4 million customers for Hello Bank by 2017

  • Citibank is the first financial establishment to put up a mobile banking app in the Asia Pacific region. Initially launched in Hong Kong in 2008, the app is now available in 12 regional markets. Citi is also looking to invest in improving its mobile banking capabilities in 2013

So how exactly are people using mobiles for banking? While some of us stick to basic services such as checking bank statements and paying bills using our smart phones, “smart banks” have started using mobile banking for marketing their products and services. As mobile phones become more functional, they have evolved from being tools to enhance customer service to being vehicles for revenue growth.

But there are some barriers to adoption. Concerns about the security of mobile banking and the possibility of hackers remotely accessing consumers’ phones have been the two major reasons which have limited the use of mobile banking. While consumers are slowly building trust and becoming more open to adopting mobile banking, the possibility of a new mobile deposit fee some banks are considering might be off-putting to end users.

Having said that, Everest Group believes more customers will use mobile banking applications as the explosive growth of smart phones and tablets continues. As banks evaluate the level of investments they must make to keep pace with customer expectations, they will also need to identify key opportunity areas, use mobile channel functionality as a competitive differentiator to attract new customers and retain existing ones, and ultimately expand market share.

Work-at-home Staff: the Feather in Cloud Contact Centers’ Cap | Gaining Altitude in the Cloud

Our last blog on contact centers focused on how next generation technology can drive new sources of savings in contact center operations. Now let’s turn our attention to how cloud-based contact centers create the opportunity to fundamentally rethink the traditional staffing model.

Hosting a contact center in the cloud removes certain technical limitations that dictate the location of your workforce, in particular the need for a centralized working site for employees and equipment. The consequence of this new freedom is the ability to decentralize your workforce, replacing traditional call center employees with work-at-home (WAH) agents. Among contact center services providers, such as Alpine Access, Transcom, and Xerox, we already see WAH agents as part of the delivery model. While a WAH model can significantly reduce the capital costs associated with renting and maintaining a facility and IT equipment, the more interesting – and to some organizations, highly enticing – implications are in its inherent flexibility.

Cloud-based contact centers eliminate the geographically imposed restrictions of physical call centers, allowing employees to simply login from wherever they may be. Thus, in a WAH staffing model, the pool of potential workers is limited only by the availability of skill sets. In fact, the pool for specialized skills becomes larger as workers with unique skills located out of the reach of centralized call centers can now integrate into virtual contact centers through the WAH model. Removing the geographical limitations of call centers also presents opportunities for workers who may have had challenges joining or remaining in the workforce due to age, physical disability, or the need to stay close to home. Due to both of these phenomena, the WAH model reintroduces domestic sourcing as a viable option.

Cloud-based contact centers also allow businesses greater staffing flexibility, as full time employees (FTEs) can be augmented with contract or temporary labor to meet fluctuating capacity requirements on a daily or seasonal basis. This approach also reduces cost obligations such as healthcare, retirement, and other benefits required by FTEs. While organizations may choose to use a high ratio of contractors or temps, Everest Group recommends they retain a minimum level of FTEs, WAH or otherwise, to ensure their ability to provide a base of capacity.

There is another more ambitious possibility for businesses willing to brave a next generation business model. A cloud contact center could be paired with a third-party staffing agency to provide the required number of agents on a daily, weekly, or monthly basis. These sorts of relationships are already forming in the marketplace. For example, staffing and talent firm Manpower Group has a specialized contact center recruitment practice.  Using next-gen forecasting tools to anticipate demand and utilization, a company could embrace a total ”as-a-service” approach to its call center/s, wherein both IT capacity and the staffed call center agents are dynamically scaled against demand, people, and platform-as-a-service (PaaS.) Theoretically, this approach would attain the greatest possible efficiency, matching costs of call center agents and IT bandwidth to demand.

The WAH model has long been associated with additional benefits, such as lower attrition rates, access to specialized and hard-to-find skills, and the ability to offer 24/7 service at lower costs. However, until now, the technical challenges of managing a large number of WAH agents have limited the scope of adoption. We expect this to change, with more organizations using WAH agents in new ways, enabled by the ease and cost-effectiveness afforded by next generation contact center technologies.

Photo credit: Markus Spiering

What Global Services Can Learn from the NFL Salary Cap | Sherpas in Blue Shirts

For readers who are not sports fanatics…the U.S. National Football League (NFL) – and many other professional sports leagues around the world – must abide by a rule called a salary cap that places a limit on the amount of money each team in the league can spend on player salaries. Every year, this results in the team owners dismissing still productive players, in part due to expected changes in future performance, but largely because they must cut players with salaries above what they can afford in order to stay under the league-mandated salary cap for the entire cost of the roster. Invariably, this means changes to the teams’ make-up from year to year, as their rosters are rebuilt to compete in the new season.

So, what does this have to do with global services (and how can you justify reading about football while at work)?

Looking at the salary cap as a cost benchmark – which for each NFL team sets in motion a range of forces that define which teams are successful – provides some interesting lessons for the global services industry.

1. Talent models: build through the draft

The price of experienced talent in the NFL limits the teams’ ability to use that talent while still staying underneath the salary cap. Although a team could build itself entirely with 6+ year veterans, it would have to do so with almost all of them being average or below average performers. It simply could not afford to have higher paid, above average performers. And, while few top-notch players are important to each team, they’re not necessary in every spot on the roster.

Entry-level players provide teams the opportunity to find high-potential talent and utilize it before a market develops to buy it away. They also enable teams to experiment with larger volumes of comparatively cheaper talent. And, of course, once a player gains experience and can test the open labor market, the highest bidder wins, so the player is automatically paid above what the average bidder felt was the market value.

So, entry-level talent helps fulfill key roles because the diamonds in the rough are beginning to emerge, and because the market is not able to overpay for this talent in the earlier years of their careers. In the NFL, the winning teams are built based upon key talent that is found in the draft and supplemented with signings of select players from other teams.

Global services face a similar dilemma: entry-level talent is comparatively affordable, whereas experienced talent that is known to perform above average comes with a high price tag.

Implication for global services: sourcing talent from colleges and other education programs is essential to building a competitive cost structure.

2. Management: coaching matters – a lot

Since teams are experiencing greater than ever churn in their roster of players, it is becoming increasingly apparent that a good coaching staff is critical and can rapidly change the performance level of its team. In most cases in the NFL, whether a new coaching staff will be successful is evident quite quickly – generally within two years.

In order to be competitive, a coaching staff must both develop the entry-level talent from the draft and help mold together the entire team to perform at or above their collective level of capability. This often means pushing newly drafted talent (which they must be able to identify early on) into bigger roles than what seems ideal at the time.

As a result, teams with a capable and stable coaching staff are often able to sustain above average performance over multiple seasons – and members of these coaching staffs become prime candidates for bigger roles on other coaching staffs which are looking to turn around performance.

Implication for global services: ensure a management model that can rapidly develop new talent, (invest in the right training, etc.), and increase the overall performance level…operational expertise may not be enough.

3. Culture: it must endure beyond changes in players and coaches

With expected change in players and coaching staffs, the longest-term success comes from establishing and nurturing a culture that can both sustain itself over time and help raise the performance of players above what may be their natural, individual ability.

As hardcore fans of the NFL know, many of the high priced veterans that sign with other teams fail to live up to the expectations and may be cut in only a few years. Why? Some is due to physical decay or inability to step up to fill bigger shoes. However, the change in team culture – expectations, offensive/defensive schemes, attitudes…the way things are done – can also limit a player’s ability to perform at a high level.

By contrast, teams with strong cultures can often find average players and attain above average results – assuming the average players were correctly identified as being a good fit with the “system” (or culture).

Implication for global services: build a culture, (and supporting tools, processes, etc.), that relies not only on superstars, but rather on the ability of many team members to perform above their expected level – including that of the superstars.

So, draft smart, coach well, and build an enduring culture. And, if you’re seeking ways to refine your global services skills, you might want to spend some time watching the NFL teams’ strategies…the draft begins on April 25.

Note: apologies to our non-North America readers and those who don’t follow the NFL. We understand that calling our violent game “football” is an insult to all fans of FIFA, the World Cup, etc. – we simply can’t help ourselves.

The Next Generation | Sherpas in Blue Shirts

Originally published in HRO Today

Talent is clearly the true differentiator in the 21st century. Having the right talent at the right time and in the right place is even more paramount in the current economic situation. However, organizations will need to understand the megatrends impacting the talent market, including the demographic shift, generational differences, globalization, and changing workplace requirements and expectations. Organizations need to align their talent acquisition strategies to remain successful in the long run.

The success of recruitment process outsourcing (RPO) in creating value for buyers is evinced by the rapid growth of this market over the last few years. The RPO market has reached $1.4 billion in annual contract value (ACV) in 2011, and the market is expected to continue on a high-growth trajectory.

RPO has the potential to create value and impact at three levels: cost, business, and strategic. In the early stages of RPO (RPO 1.0), it addressed the cost and the business impact considerations focusing on elements that are low hanging fruits and easy to measure and quantify. The next generation of RPO (RPO 2.0) addresses the cost and business impact on a holistic basis and also starts to create strategic benefits for organizations. It calls for taking a comprehensive approach to talent acquisition—inclusion of internal and external hire management both as well as wide process inclusion—in particular and talent management in general. It requires identifying, impacting, tracking, and measuring more strategic metrics that are business-outcome oriented.

Read more in HRO Today


The Whys, Hows and How Nots of Buyer-Driven Service Level Redesign | Sherpas in Blue Shirts

Understanding the importance of effective service level agreements (SLAs) that are practical and create business value, most buyers design contract SLAs that are generally within provider’s control, are measurable, promote convergence of interests, and usually have a proper baseline. However, many buyers feel a need to reassess and redesign their service levels at some point during their contracts’ lifecycle.

Our interactions with a large and diverse group of buyers and service providers have shown that service level redesign is typically driven by one or more of four key reasons:

  1. Unmet or wrong SLAs: Service providers typically meet their contractual SLAs. When they don’t, it generally implies a flaw in the SLA design that needs to be addressed. For example, buyers may be capturing the wrong metrics. Or, they may have established the wrong targets for the right metrics.
  2. More business value: Buyers believe they are achieving insufficient value from their sourcing engagements, in terms of cost, flexibility, responsiveness, business alignment, etc. They may spend too many people and financial resources on defining service levels, yet fail to see material benefits from the service levels.
  3. Requirements change: Buyers’ business and IT requirements may have changed during the contract period – e.g., a newer baseline, regulations, evolving technologies, delivery models, provider capabilities, etc. – and these must be reflected in newer service levels. On the flip side, incumbent providers or competitors may be offering better engagement terms, payment options, or delivery models than when the contract was originally inked.
  4. Sourcing strategy change: Buyers that earlier outsourced to just one provider may be experimenting with multi-provider sourcing, and the different capabilities, services, and delivery models must be reflected in the SLAs when the services are split among providers.

The core of the SLA redesign process is to understand the mistakes made during contracting and execution. It also requires an effort in visualizing at least three to five years into the future understanding the IT environment that will be sufficient to cater to the business demand. Therefore, this also requires an understanding of evolving business needs.

The process itself consists of four steps, as outlined below:

SLA Redesign Process

This process is relatively easy for buyers that early on missed the basics of good SLA design such as practicality, manageability, collectability, measurability, etc. Understandably, it is harder for buyers that are satisfied with their provider’s performance but want to evolve the relationship to the next level to extract more business value.

Yet, whichever category they fall into, we have time and again seen buyers reducing the number of SLAs, believing it will lead to lesser complexity, simpler governance, and reduced cost. However, doing so may not solve the problem as they may end up removing even the “must have” SLAs.

Additionally, we frequently see buyers incorporating metrics that on the surface appear good but in reality cannot be concretely measured or clearly defined, such as innovation, collaboration, next generation delivery, etc.

SLA redesign is a challenging task that  must take into account not only cost and efficiency, but also the evolving competence of service providers, peer benchmarks, an understanding of the past, knowledge of business priorities, and, above all else, analysis of its necessity.

What have you experienced with SLA redesigns? What were your drivers, challenges, results, and outcomes? Do you have good, bad, or ugly to share with your peers?

Cloud and Outsourcing, an Alliance for a Newer Evolution | Gaining Altitude in the Cloud

Originally published on Global Services

In most cases, leveraging cloud delivery models, be it in application, infrastructure, or platforms, implies being served end-to-end by an external vendor unlike the typical “do-it-yourself” products. Therefore, in a way, the cloud is driving the IT consumption towards an “external vendor” model, which is also a type of outsourcing.

Most of the discussions around cloud’s impact on outsourcing services take a monolithic view of the industry. The focus is to take an extreme position, such as “outsourcing is dead”, or perform a very broad analysis based on the evolving role of CIOs, changing demand in enterprise IT, cloud eating into traditional sourcing, etc. This makes for good reading but is not necessarily a thoughtful analysis of the real impact. The need of the hour is to drill down into each type of global sourcing service and analyze the impact of cloud delivery models.

To analyze the impact of cloud delivery models on globally-sourced services, one needs to understand both of these in the right context. For IT outsourcing and the impact of cloud, there is a need to differentiate between the type of services delivered such as application development, application implementation, application maintenance, “keep the lights on” infrastructure services, service-level driven managed services, and transformational services. Cloud delivery models will have a spectrum and not a binary impact on this market. Different services, providers, business models, and investments will see different opportunities and challenges.

One major “non-technology” challenge from cloud models is the shifting of budgets from a typical IT department to businesses. Everest Group and Cloud Connect Enterprise Cloud Adoption Survey indicate an increasing role for business users in deciding IT spending. As outsourcing providers have access generally to IT and procurement departments, they will witness significant challenges to penetrate the business side of a buyer in accessing “business IT” budget. Moreover, enterprise IT shops that have so far not outsourced, may directly leverage a cloud service, reducing the potential role of an outsourcing provider. To pre-empt this, the provider may need to offer integrated cloud and outsourcing services.

The relevance of cloud models should also be seen from newer or existing investments the buyers make in enterprise IT. For transforming the existing investments (e.g., ERP, CRM, other business applications, and infrastructure) to the cloud, it is difficult to believe that typical global sourcing buyers will prefer any other vendor over the enterprise-class providers. For example, if they have to transform ERP platforms to a cloud infrastructure, they would generally prefer a renowned enterprise class ERP and cloud service provider over a pure-play cloud hosting provider.

Read more on Global Services

Remote Infrastructure Management – “Gearing Up for the Big Leagues” | Sherpas in Blue Shirts

Everest Group’s just released research on Remote Infrastructure Management (RIM) services shows that the overall infrastructure services market, which was already undergoing significant changes due to various factors, is being further disrupted as RIM adoption takes center stage.

Let’s take a step back before we talk about RIM’s current state. Over the years, our RIM-focused research analyzed the growing challenges offshore providers, who pioneered RIM industry, faced in offering services that went beyond typical low-cost infrastructure monitoring. As their aspirations grew, and more buyers became willing to engage, those providers began offering newer RIM services, such as delivering from offshore locations those infrastructure services typically provided at onshore by competitors. Yet, the core value remained remote low-cost helpdesk and status quo monitoring of infrastructure assets, which experienced a significant growth across buyer landscape.

However, now we are witnessing substantial growth in the adoption of offshore infrastructure services that are moving beyond the typical RIM offerings. Our discussions with various buyers have revealed a clear evolution in the delivery and market messages of offshore infrastructure providers. Most of them are marketing and selling their portfolio of infrastructure offerings as “new service X,” “new service Y,” and “RIM,” unlike earlier years when they solely focused on RIM as a generic brand for all infrastructure offerings. This messaging effort is backed by changes in delivery model, engagement terms, transitioning process, investment in tools/automation, and various other related initiatives.

One example of this strategy is the willingness displayed by large offshore providers to open nearshore and onshore delivery centers to serve bigger customers. The typical 100 percent offshore ratio in RIM is dropping to around 80-85 percent as the providers offer higher value-added services that are normally delivered from client locations.

Remote Infrastructure Management Services

We are now seeing RIM providers gearing up to enter this new, big league. While cost savings is still the core tenet, their strategy is to move up the value chain, grab larger market share, and create more “downstream” opportunities for pure RIM services.

Traditional infrastructure and managed service providers that were already facing challenges due to stagnation in their core market and reduction in mega size, multi-towers, multi-years deals, are getting further squeezed by RIM providers. RIM providers are squarely part of this disruption, and are tweaking their delivery model, market messages, buyer engagement strategy, and investment focus to exploit this opportunity.

Application Outsourcing Market Update 2012 | Gaining Altitude in the Cloud

Earlier this year, Everest Group conducted its annual study of high-value Application Outsourcing (AO) deals to gain insight into how a range of parameters correlate with deal activity in the AO market. The study, which is part of our Application Outsourcing Market Update 2012 report, analyzed 320 AO deals across a combination of 17 multinational corporations (MNCs), Tier-1 offshore and Tier-2 offshore providers.

Application outsourcing 2012: key findings

  • Buyers: Buyers across geographies appeared to be expanding their AO portfolios. Smaller buyers signed a larger number of new deals, and larger buyers leveraged their maturity of engagement with AO service providers to sign a greater number of renewals. While North America continued to hold sway in AO adoption with the largest number of deals, Europe appeared to be a strong engine of growth for service providers, on a year-to-year basis
  • Service providers: As the AO market grows in size, there appears to be growing similarity between the sales strategies of MNCs and offshore providers. The offshore providers, over the years, have gained strong traction in AO. MNCs appeared to be tweaking their strategies to expand in this market, which has been the mainstay for offshore providers
  • Cloud computing: Cloud computing continues to be increasingly adopted in AO deals. The major components of the cloud service engagements we analyzed were transformation and implementation of business application portfolios

The new drivers of AO

Overall, the AO market appears to grow from strength to strength. When analyzed on key parameters such as geography, type of buyers, and deal type, the study results deliver interesting insights. From adoption of next generation concepts of outsourcing like cloud computing to the increased flexibility that service providers are showing in designing deals, a number of new AO trends are clearly emerging.

To find out more about these trends and other details on the AO market, please read the Application Outsourcing Market Update 2012 report.

Pick or Pass on BPaaS? | Gaining Altitude in the Cloud

While buyers have typically approached, evaluated, and made third-party business process service delivery sourcing decisions at the operational level, and separated out decisions on the underlying software applications and/or technology infrastructure, they are increasingly realizing the value of looking at IT and BPO in an integrated manner.

Enter Business-Process-as-a-Service (BPaaS), a model in which buyers receive standardized business processes on a pay-as-you-go basis by accessing a shared set of resources – people, application, and infrastructure – from a single provider.

There are many potential upsides of BPaaS…but is it right for your organization? The answer lies in evaluating the model based on a holistic business case that looks at a range of factors including total cost of ownership (TCO), the nature of the process/functional area under consideration, business volume fluctuations, time-to-market, position on the technology curve, and internal culture and adaptability to change.

Let’s take a deeper look at the TCO factor, which must be analyzed in terms of both upfront and ongoing costs for all three layers of service delivery.

TCO cost elements to evaluate BPaaS versus traditional IT+BPO model

For our just released research report, Is BPaaS the Model for You?, we developed and used a holistic evaluation framework that compared TCO for BPaaS and the traditional IT+BPO model across three buyer sizes: small (~US$1 billion revenue/5,000 employees), medium (~US$5 billion revenue/20,000 employees), and large (~US$20 billion/100,000 employees.)

Our findings?

Small Companies

BPaaS brings big benefits. It is independent of deal duration, delivers 35-40 percent savings compared to traditional IT+BPO, enables leverage of the provider’s economies of scale, provides access to otherwise cost-prohibitive technology, and allows entry into BPO relationships that as stand-alone’s lack the necessary scale. Small buyers are also highly amenable to BPaaS’ process and technology standardization requirements.

Medium Organizations

BPaaS is pretty impressive. It delivers 25-30 percent savings over the traditional IT+BPO model, which while less than what small buyers reap is still significant in driving a successful business case. Medium buyers’ increased scale allows them to capture some of the economies of scale benefits even in the traditional IT+BPO model, thereby having a lower differential between the two models.

Large Enterprises

BPaaS is not too shoddy. While it only provides ~10 percent cost savings compared to traditional IT+BPO, the absolute differential in cumulative TCO can still be substantial given the high base. And, in certain buyer-specific situations such as technology enhancements, exploration of new BPO/IT infrastructure relationships, and expiration of legacy technology licenses, BPaaS can be a good model for large buyers to evaluate. But…their tendency to balk at following a tightly defined, standardized approach – unless significant configuration features offset a good portion of customization needs – reduces BPaaS’ appeal for them.

As you see, our evaluation framework shows an inverse relationship between buyer size and cost savings from BPaaS – i.e., the larger the buyer, the lower the percentage savings. In fact, as buyer size increases, the scale benefits of renting versus owning infrastructure and applications can dip into the negative column over ten years. Of course, the assumptions in our BPaaS to IT+BPO model analysis are ideal, and your organization’s individual reality may be quite different.

To learn more about how to evaluate BPaaS’ applicability to your company, select a BPaaS provider and solution, and implement the selected solution, please read our report, Is BPaaS the Model for You?

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