Tag: next generation global services

Leaders Discussing Market (R)evolution | Gaining Altitude in the Cloud

I attended Mahindra Satyam’s customer conference last week, and after a very difficult couple of years, the company seems to be getting its act together. Most impressive was the group of interesting, forward-thinking people it attracted to fill out its program, which was centered on the emerging “Generation C” and the implications it may have for the enterprise. The thought leaders included:

  • CEOs from leading provider and user companies such as Akamai, Pega Systems, and VCE
  • CIOs and other IT leaders from Abercrombie & Fitch, Apple, Applied Materials, BlueCross Blue Shield, Chevron, Citrix, EMC, Nissan, and OC Tanner
  • A variety of professors from the local tech school, doing what is arguably the deepest thinking globally about some of the most promising innovations of the next decade
  • Leading industry advisors, who helped facilitate discussions on key trends and market changes

I had the pleasure of moderating a lively panel discussion on cloud computing infrastructure opportunities and challenges with Michael Capellas (Chairman and CEO of VCE), Sanjay Mirchandani (CIO of EMC), Michael McKiernan (Head of Global Applications Delivery for Citrix), and George Fischer (EVP of Global Sales and Operations for CA). The vision outlined by these panelists clearly articulated that it is not a question of “if” enterprises will move as much as possible of their infrastructure to cloud architectures, but rather a question of how fast once they recognize it is the only way they will be able to meet the demands of their business users.

The questions they raised related mostly to finding creative solutions to deal with the legacy “sludge” that consumes a disproportionate amount of resources while seldom really advancing the enterprise’s growth aspirations. And they flirted with the audience about what the technology and service provider of the future might entail – think “real time,” “predictive vs. reactive,” and core “ecosystem member” rather than vendor – but stopped short of predicting how the leaderboard for the IT products and services marketplace might change over the next decade.

Who do you think will rise to the top (or stay there) as this market rapidly evolves?

Einstein’s Definition of Insanity and Its Applicability to the Healthcare Solutions Industry | Sherpas in Blue Shirts

Starting with the premise that all providers and all clients in the healthcare industry enter into large, multi-year arrangements with honesty, fairness, and a desire for a successful engagement…why do only a small handful come in on time, on budget, and with measurable outcomes? I think Albert Einstein’s famous statement, “The definition of insanity is doing the same thing over and over and expecting different results,” is, unfortunately, applicable here.

In financial and clinical implementations, ITO/BPO engagements, ADM solutions, clinical transformations, and clinical trial deployments over the past several decades, the providers and clients have been doing essentially the same thing, again and again, and in most cases the engagements have ranged from lackluster to volatile. Yet with all the increasing governmental requirements, major advances in personal and mobile technologies, and demands from patients, customers, physicians and clinicians – and let’s not forget escalating competition – we need to stop the insanity to ensure the problems of the past aren’t continually replicated in the next generation of healthcare solutions.

For healthcare industry improvement or transformation initiatives to succeed, we need methodologies. We need qualified staff to help guide and manage the projects over a multi-year period. And we need to deal with unplanned turnover, inflexible contracts that don’t allow for any change in the client’s strategic direction, ever-shrinking budgets, and the client’s desire to finally have measurable outcomes. So, assuming both sides want to deal in an environment of honesty and candor, and both parties have strong resources, why do we continue to fail? One single word – misalignment.

Misalignment occurs between clients and providers due to differences in objectives, priorities, and performance. For example, if the provider thinks the major objectives are cost and capital expense avoidance, and the client thinks improved service quality, skills and innovation, and time to delivery are the critical success factors, we have misalignment. And the result is relationship tension that can ultimately derail the engagement. Yes, in a perfect world each party knows the other’s objectives. But we don’t live in a perfect world, and so this doesn’t happen often. Combine that issue with the changing landscape the client deals with over a multi-year engagement, e.g., acquisitions, new product offerings, strategic changes in direction, etc., and the relationship can explode quickly. And even if the two parties agree on the business objectives, it does not mean they both give them the same priorities. For example, I know of one particular instance in which the client wanted significant focus on innovation and meeting strategic objectives, while the supplier felt it was doing its job by using low-rate resources. Without understanding these types of gaps, how can we fix the misalignment? We can’t!

We’ve heard similar discussions before, and each fix had a methodology or clever name. But few were implemented, and even fewer were successful. The result is continuation of Einstein’s definition of insanity. As we deal with next generation solutions for the healthcare industry, let’s get sane and change the results by viewing large, complex or strategic engagements from a holistic point of view.

The Facts, not the Fluff and Puff: What Really Happened with Amazon’s Cloud Outage | Gaining Altitude in the Cloud

In the more than 1,000 articles written about Amazon’s April 21 cloud outage, I found myriad “lessons,” “reasons,” “perspectives,” and a “black eye,” a “wake up call” and a “dawn of cloud computing.”

What I struggled to find was a simple, but factual, explanation of what actually happened at Amazon. Thankfully, Amazon did eventually post a lengthy summary of the outage, which is an amazing read for IT geeks, to which the author of this blog proudly belongs, but may induce temporary insanity in a more normal individual. So this blog is my attempt to describe the event in simple, non-technical terms. But if I slip once or twice into geek-speak, please show some mercy.

The Basics of Amazon’s Cloud Computing Solution

When you use Amazon to get computing resources, you’d usually start with a virtual server (aka EC2 instance). You’d also want to get some disk space (aka storage), which the company provides through Amazon Elastic Block Store (EBS). Although EBS gives you what looks like storage, in reality it’s a mirrored cluster of two nodes … oops, sorry … two different physical pieces of storage containing a copy of the same data. EBS won’t let you work using only one piece of storage (aka one node) because if it goes down you’d lose all your data. Thus in Amazon’s architecture, a lonely node without its second half gets depressed and dedicates all its effort to finding its mate. (Not unlike some humans, I might add.)

Amazon partitions its storage hardware into geographic Regions (think of them as large datacenters) and within Regions to Availability Zones (think of them as small portions of a datacenter, separated from each other). This is done to avoid losing the whole Region if one Availability Zone is in trouble. All this complexity is managed by a set of software services collectively called “EBS control plane,” (think of it as a Dispatcher.)

There is also a network that connects all of this, and yes, you guessed right, it is also mirrored. In other words, there are two networks… primary and secondary.

Now, the Play-by-Play

At 12:47 a.m. PDT on April 21, Amazon’s team started a significant, but largely non-eventful, upgrade to its primary network, and in doing so redirected all the traffic to another segment of the network. For some reason (not explained by Amazon), all users traffic was shifted to the secondary network. Now you may reply, “So what…that’s what it’s there for!” Well, not exactly. According to Amazon, the secondary network is a “lower capacity network, used as a back-up,” and hence it was overloaded instantly. This is an appropriate moment for you to ask “Huh?” but I’ll get back to this later.

From this point on, the ECB nodes (aka pieces of storage) lost connections to their mirrored counterparts and assumed their other halves were gone. Now remember that ECB will not let the nodes operate without their mates, so they started frantically looking for storage space to create a new copy, which Amazon eloquently dubbed the “re-mirroring storm.” This is likely when reddit.com, the New York Times and a bunch of others started noticing that something was wrong.

By 5:30 a.m. PDT, the poor ECB nodes started realizing harsh reality of life, i.e., that their other halves were nowhere to be found. In a desperate plea for help, they started sending “WTF?” requests (relax, in IT terminology WTF means “Where is The File?”) to the Dispatcher (aka EBS control pane). So far, the problems had only affected one Availability Zone (remember, a Zone is a partitioned piece of a large datacenter). But the overworked Dispatcher started losing its cool and was about to black out. Realizing the Dispatcher’s meltdown would affect the whole Region, causing an outage with even greater reach, Amazon at 8:20am PDT made the tough, but highly needed, decision to disconnect the affected Availability Zone from the Dispatcher. That’s when reddit.com and others in that Availability Zone lost their websites for the next three days.

Unfortunately, although Amazon sacrificed the crippled Availability Zone to allow other Zones to operate, customers in other Zones started having problems too. Amazon described them as “elevated error rates,” which brings us to our second “Huh?” moment.

By 12:04 p.m. PDT, Amazon got the situation under control and completely localized the problem to one Availability Zone. The team started working on recovery, which proved to be quite challenging in a real production environment. In essence, these IT heroes were changing tires on a moving vehicle, replacing bulbs in live lamp, filling a cavity in a chewing mouth… and my one word for them here is “Respect!”

At this point, as the IT folks started painstakingly finding mates for lonely EBS nodes, two problems arose. First, even when a node was reunited with its second half (or a new one was provided), it would not start operating without sending a happy message to the Dispatcher. Unfortunately, the Dispatcher couldn’t answer the message because it had been taken offline to avoid a Region-wide meltdown. Second, the team ran out of physical storage capacity for new “second halves.”  Our third “Huh?”

Finally, at 6:15 p.m. PDT on April 23, all but 2.2 percent of the most unfortunate nodes were up and running. The system was fully operational on April 24 at 3:00 p.m. PDT, but 0.07 percent of all nodes were lost irreparably. Interestingly, this loss led to the loss of 0.4 percent of all database instances in the Zone. Why the difference? Because when a relational database resides on more than one node, loss of one of them may lead to loss of data integrity for the whole instance. Think of it this way: if you lose every second page in a book, you can’t read the entire thing, right?

Now let’s take a quick look at our three “Huh?s”:

  1. Relying on SLAs alone (which in Amazon’s case is 99.95 percent uptime) can be a risky strategy for critical applications. But as with any technological component of a global services solution, you must understand the supplier’s policies.
  2. Cloud platforms are complex, and outages will happen. One thing we can all be certain of in IT; if it cannot happen, it will happen anyway.
  3. When you give away your architectural control, you, well, lose your architectural control. Unfortunately, Amazon did not have the needed storage capacity at the time it was required. But similar to my first point above, all technological components of a global services solution have upsides and downsides, and all buyer organizations must make their own determinations on what they can live with, and what they can’t.

An interesting, final point: after being down for almost three days, reddit.com stated, “We will continue to use Amazon’s other services as we have been. They have some work to do on the EBS product, and they are aware of that and working on it.” Now, folks, what do you think?

What Will Complete Integration of Electronic Medical Records Require from Service Providers? | Sherpas in Blue Shirts

Many of us remember funny stories about unknowing users trying to actually speak to ATMs in the early days (after all, the ATMs verbally asked the users for their PIN numbers). And most of us wonder – or should – why many of today’s drive-up ATMs have Braille lettering on them! But the fact is, today we can all very clearly explain what they are, and despite irritation at having to pay service charges, ATMs around the world provide us with cash resources and access to our financial data, and an increasing number even enable us to pay household bills or purchase train or movie tickets… the complete package.

Unfortunately, the same can’t be said for Electronic Medical Records (EMR.) Yes, current EMR implementations enable hospitals with storage access for admissions and creation of patients’ medical histories. But a complete, on-demand picture of an individual’s health records? Not yet. Capabilities within a single Integrated Delivery Network (IDN), much less on a global basis? Not yet. Unfortunately, the complicated nature of healthcare organizations – both providers and payers – and their focus on decisions by diverse committee creates politics that struggle to agree on the definition and rules necessary for complete integration of all information, by all appropriate users (i.e., physicians, clinicians, emergency room workers, pharmacists and patients) wherever they are, by whatever device they choose to use.

Many healthcare organizations have completed the first and most costly step, which is implementing the software able to support basic data entry and tracking to perform clinical workflow, and financial, billing, and decision-making functions. But to achieve complete integration – what constitutes the next generation of services – EMR solutions must include:

  • Optimization of the implemented product
  • Efficient data warehousing
  • Application of business intelligence tools to research operational efficiencies, improve quality and safety, and develop new techniques and protocols
  • Integration of medical device data directly into the EMR
  • Interoperability that allows for accessing data wherever it exists, and creating on demand views (e.g., EHR, PHR, P4P, EPM)
  • Compliance for regulatory and safety standards
  • Ongoing support and maintenance for clinical and financial applications

So what must companies aspiring to be high-value integrators do to become next generation EMR service providers? Understand the client’s needs. Provide services that can leverage leading edge solution sets from internal and external sources. Shape a solution that leverages horizontal services, Centers of Excellence (CoEs) and creatively team with leading edge organizations that provide domain-specific products as a part of the overall solution set. Doing so will allow world class healthcare organizations to depend upon world class Tier One integrators to supply all their technology needs. These are necessary requirements for a world-class provider of services to effectively compete now and into the next decade.

The Smart Metering Wave and Its Impact on Utilities’ Meter-to-Cash Process | Sherpas in Blue Shirts

Meter-to-Cash (M2C) is a significant process for utility companies as it not only represents their revenue cycle but also touches the end customer directly. Essentially M2C is the utility industry’s version of the generic Order-to-Cash (O2C) process. These are times of change for the utility industry due to a variety of reasons, the advent of disruptive technologies such as smart metering being one of them.

While the future of smart metering is still being debated, many facts suggest that it’s no longer an “if” but a “when.” For example, the United States in November 2009 directed US$3.4 billion in federal economic stimulus funding to smart grid development. The European Union in September 2009 enacted a “Third Energy Package,” which aims to see every European electricity meter smart by 2022. A recent study by ABI Research projects the global deployment of smart meters to grow at a CAGR of nearly 25 percent from 2009-2014. A combination of factors including regulatory push, intense competition (particularly in deregulated markets), and the business benefits that smart meters offer to utilities’ operations – in terms of tightened revenue cycles and increased customer satisfaction – are driving the adoption of smart meters.

However, deploying a smart metering infrastructure is no small task for a utility as it brings in many fundamental changes to the M2C operations. Managing the cutover from traditional to smart meters, dealing with new network technologies, the diminished role of field services, and the upgrades required to meter data management systems (MDMS) are just some of the key challenges that utilities undergoing smart metering implementation need to overcome. But the even bigger challenge arrives after implementation – how does a utility manage the massive explosion in meter data in the “smart” world? As opposed to meter reads every month or two, we are now talking about reads once every hour that thousands of smart meters throw back to the utility’s MDMS. Even more importantly, how should a utility leverage the data for meaningful business intelligence purposes?

Many utilities have found the answer in outsourcing some of the M2C functions to external service providers that have jumped on the smart metering wave with services ranging from pre-implementation advisory to post-implementation services such as smart analytics offerings. For example, Capgemini‘s smart energy services offering focuses on the requirements of utilities undergoing smart metering implementation. It recently launched a new smart metering management platform – labeled as Smart Energy Services Platform – for utilities to support all the end-to-end business processes necessary for the deployment and ongoing operation of a smart meter estate.

If you’re an M2C BPO provider that hasn’t yet considered including smart metering services in your portfolio, are you still debating the future of smart metering?

Learn more about M2C BPO at Everest Group’s May 10 webinar.

Will the Sun Come out Tomorrow? | Gaining Altitude in the Cloud

Cloud computing promises increased flexibility, faster time to market, and drastic reduction of costs by better utilizing assets and improving operational efficiency. The cloud further promises to create an environment that is fully redundant, readily available, and very secure. Who isn’t talking about and wanting the promises of the cloud?

Today, however, Amazon’s cloud suffered significant degradation in its Virginia data center following an almost flawless year+ long record. Yes, the rain started pouring out of Amazon’s cloud at about 1:40 a.m. PT when it began experiencing latency and error rates in the east coast U.S. region.

The first status message about the problem stated:

1:41 AM PT We are currently investigating latency and error rates with EBS volumes and connectivity issues reaching EC2 instances in the US-EAST-1 region.

Seven hours later, as Amazon continued to feverishly work on correcting the problem, its update said:

8:54 AM PDT We’d like to provide additional color on what were working on right now (please note that we always know more and understand issues better after we fully recover and dive deep into the post mortem). A networking event early this morning triggered a large amount of re-mirroring of EBS volumes in US-EAST-1. This re-mirroring created a shortage of capacity in one of the US-EAST-1 Availability Zones, which impacted new EBS volume creation as well as the pace with which we could re-mirror and recover affected EBS volumes. Additionally, one of our internal control planes for EBS has become inundated such that it’s difficult to create new EBS volumes and EBS backed instances. We are working as quickly as possible to add capacity to that one Availability Zone to speed up the re-mirroring, and working to restore the control plane issue. We’re starting to see progress on these efforts, but are not there yet. We will continue to provide updates when we have them.

No! Say it’s not so! A cloud outage? The reality is that cloud computing remains the greatest disruptive force we’ve seen in business world since the proliferation of the Internet. What cloud computing will do to legacy environments is similar to what GPS systems did to mapmakers. And when is the last time you picked up a map?

In the future, businesses won’t even consider hosting their own IT environments. It will be an automatic decision to go to the cloud.

So why is Amazon’s outage news?

Only because it affected the 800-pound gorilla. Amazon currently has about 50 percent of the cloud market, and its competitors can only dream of this market share. When fellow cloud provider Coghead failed in 2009, did anyone know?  We certainly didn’t.  But when Amazon hiccups, everybody knows it.

Yes, the outage did affect a number of businesses. But businesses experience outages, disruptions, and degradation of service every day, regardless of whether the IT environment is legacy or next generation, outsourced or insourced.  In response, these businesses scramble, putting in place panicked recovery plans, and having their IT folk work around the clock to get it fixed…but rarely, do these service blips make the news.   So with the spotlight squarely shining on it because of its position in the marketplace, Amazon is scrambling, panicking, and working to get the problem fixed. And it will. Probably long before its clients would or could in their own environments.

Yes, it rained today, but really, it was just a little sprinkle. We believe the future for the cloud is so bright, we all need to be wearing shades.

Disruption, Offshoring and Predictions About the Cloud Computing Marketplace | Gaining Altitude in the Cloud

In the 1990s, Jack Welch’s GE recognized it could hire well educated individuals from high-quality universities in India at salaries that were only a quarter of those in the United States or Western Europe. GE committed to building organizations to perform important business support activities in low-cost regions of the globe, and Gecis, now Genpact, was born. In a similar timeframe, entrepreneurs and government policy makers also recognized the promise of leveraging a low-cost, high-quality talent pool and creating attractive, high-paying (relatively) jobs.

Applying the 4:1 cost advantage began slowly as it was applied to only a small sliver of business support activities. But the offshoring industry very quickly took off on a trajectory matched by few industries. And offshoring itself has become a disruptive force, continuing to expand across a wide range of activities and industries, enabling the creation of companies with enormous growth potential and market valuations equal to historic incumbents five times their size in terms of revenue, shaping enterprises of all shapes and sizes, and influencing political and social agendas for both mature and developing parts of the world.

Is cloud computing the next iteration of disruption to hit the services delivery industry? While few have yet grasped the transformational impact it may have on enterprise IT, from a market space standpoint we see a number of analogous characteristics:

  • Emerging analysis and case studies of the economic impact of cloud computing suggest 4:1 or better cost advantage for users. And this is enterprise solutions for public clouds, private clouds, virtual private clouds, and hybrid solutions with select workloads dynamically moving between private and public cloud options.
  • While cloud solutions are in their infancy, the toe testing of workloads driven by what appears to be cheap processing power that can be self-provisioned in minutes is spreading rapidly to other workloads much closer to the core.
  • Leading service providers are achieving VERY attractive financial margins on the core cloud services, much like the Tier 1 offshore IT services players drive superior margins, growth, and market valuations. For example, India-based TCS last quarter put up 31 percent year-over-year growth at NET margins over 24 percent, numbers most firms would kill for. But it appears that the cloud units of Amazon, Rackspace, and others are growing twice as fast, with margins also likely to be substantially higher.
  • The leading providers in cloud sectors – Amazon, Google, Rackspace, Microsoft, and Terramark (Verizon) – are non-traditional services players, similar to the national champions in major low-cost offshoring destinations that built offshoring companies from scratch or entered from non-traditional, only loosely related spaces.

With all these similarities, my predictions are:

  1. Cloud computing will drive massive disruption in the IT services marketplace; large market share shifts will occur, and many legacy providers will be forced to change their business models or suffer extended decline.
  2. The leading service providers five to 10 years from now will most likely be those that were NOT incumbents or players in closely related sectors. Incumbents who embrace the required changes and aggressively attack their legacy book of business with new solutions may contend for leadership; hardware providers such as IBM, HP, Dell, and major Japanese players have unique ingredients that could spice up the mix, but they need to learn from their late entry into offshoring that marketing speak alone will not make a difference.
  3. Leading performers, once to sustainable scale, will outperform followers from legacy environments on growth and profitability dimensions by a factor of two or more (although they may remain smaller for some time). The value creation opportunity for investors will represent a next wave of stars.
  4. IT services customers will be the big winners, capturing up to 2/3 to 3/4 of the “surplus” value. CIOs will ignore the economics of cloud initiatives at their peril, but those who embrace the cloud will find themselves very valuable when the talent war begins.
  5. Benefits will not be limited to economic value – the new leaders will fulfill higher expectations for responsiveness and innovation. Economics will drive adoption, but the early adopters will find speed and flexibility benefits to be the primary value creation levers. These early adopters will experience real business leverage from their cloud IT initiatives, elevating these efforts to a strategic level.

Buckle up! It’s going to be a wild ride up in the clouds…

“The Gambler” and Developing Win-Win Contractual Relationships in the Healthcare Industry | Sherpas in Blue Shirts

As a country music fan, several lines in Kenny Rogers’ hit song “The Gambler” tend to make me think about outsourcing relationships, especially in the healthcare industry, as that’s where I’ve spent the bulk of my career.

“If you’re gonna play the game, boy, ya gotta learn to play it right”

In the 1995 to 2004 timeframe there was a proliferation of outsourcing among healthcare provider and health plan companies. The outsourcing advisory community began to cater to large and complex Integrated Delivery Networks (IDNs) and Academic Medical Centers to ensure they received the same type of world-class outsourcing services that Fortune-rated companies in other industries had already been receiving. As a result, a large number of outsourced ITO, APO and BPO contracts were inked, and the healthcare provider and health plan organizations came to depend on the third-party service provision to more efficiently manage their middle business services and IT needs.

Unfortunately, the healthcare firms got caught in the same conundrum as do all organizations that enter into long-term service delivery contracts. Once SLAs and joint governance models are agreed upon, service providers have little incentive to do anything but satisfy the contractual commitment in the most cost-effective manner. They also rarely get any clear understanding of what more the client may want. On the flip side, as technologies, markets, competitive drivers and growth objectives dynamically evolve over time, service recipients require, and expect, additional value from their providers to meet their continually changing business needs. But they rarely articulate what more they want from their service providers.

This disconnect ultimately leads to a mutual loss, as the original metrics of the contract are quickly outdated, value cannot be measured or realized, the incentives for both parties are misaligned, and a tension-riddled relationship develops.

“You have to know when to walk away and know when to run” (or maybe not)

A case in point: In 2005, a major healthcare provider contracted with a global provider of healthcare technology infrastructure and application sourcing services to support critical Electronic Medical Record, Operating Room, Scheduling and Billing services, all of which are essential for providing patient care and revenue functions. SLAs and a governance structure were negotiated, resulting in a complex, 10-year relationship with delivery defined in the traditional structure. However, as the contract didn’t allow for dynamic and ever-changing needs dictated by the marketplace, enhanced technologies and changes in regulatory compliance requirements, the business value proposition was lost and the relationship was ultimately dissolved. This could have been avoided simply by creating a flexible contracting mechanism that the service provider and service recipient could continually update to meet necessary changes. Yet, when a relationship gets to this point, many buyers believe they must rebid the contract, change providers or bring the services back in-house.

 “You got to know when to hold ’em”

But there is another solution that can result in a win-win situation for both parties. We think of it as service effectiveness, which is a big step up the value chain from traditional service efficiency models. Rather than focusing on things such as unit prices, process output, service levels and delivery risk, service effectiveness addresses those things that are the real priorities for service recipients – business value, process impact and receiving what they truly require, not just what is specified in the contract.

To come to mutual understanding on what service effectiveness means in a given outsourcing engagement – and change the way third-party services are perceived and accepted in the buyer organization – all delivery and recipient stakeholders should provide assessable input on three different dimensions: 

  • Objectives, which include cost savings, improved service quality, focus on core/strategic issues, currency of technology, capital expenditure avoidance, expertise/skills/innovation, and time to delivery.
  • Priorities, which include building trust and confidence, service quality, ease of communication, focus on business objectives, end user satisfaction, win-win collaboration orientation, and strategic involvement.
  • Performance, which includes end user satisfaction, service quality, price competitiveness, relationship effectiveness, and relationship value.

By coming to an agreement on what service effectiveness means to both the provider and the recipient, there’s an immediate return on investment to the bottom line created by keeping current models and relationships in place. This, in turn, avoids organizational upheaval and transitional costs, and creates a mutually beneficial business arrangement via an efficient set of services that provide flexibility, measureable value and terms that ensure success.

How Will the IT/BPO Industry Leaderboard Change? | Sherpas in Blue Shirts

This past weekend, many people were glued to their televisions watching the 2011 Masters Golf Tournament at Augusta National. As the days rolled by, the leaderboard changed in some surprising ways – the young McIlroy slid a long way from Number 1 on Day 1; Tiger Woods finally showed his old spark and stayed steadily within the top 5 throughout the game; and Charl Schwartzel jumped into the front-runner spot to take the Green Jacket.

While we now know the Masters winner, there is significant speculation on the changes in the IT services leaderboard, both today and going forward. The market is rife with questions on where Wipro and Cognizant will end up this season. The discussion on C-level changes at Infosys made a leading Indian newspaper speculate on issues it may be facing, with TCS speeding on and Cognizant being on steroids and catching up quickly. The next day, analysts said TCS would continue to outpace the other TWITCH majors as the quarterly results season starts.

We will know the answers to these questions in the next few weeks, after all companies report their numbers. But the more important long-term question is, what else will change in that leaderboard? Will we see more M&As, new entrants, or exits? And fundamentally, what will the future structure of the IT services industry be, and who will the winners be?

In a recent meeting, a CEO of an IT services company made an interesting point about there being steps at the US$500 million, $1 billion, $5 billion, and $10 billion marks, and that it is progressively challenging to get to the next level. It was clear he was thinking that some, including those in the $2+ billion scale, will struggle to reach the next level, and some will stabilize in their current or adjacent level.

The TWITCH discussion is interesting, but then there are the mid-tier IT players. We are just past the first quarter of 2011, and already three (iGate, Patni, and Headstrong) no longer exist, at least not in their original form. From all we hear or understand, several more may go before the end of 2011.

Then there are continuous speculations about pure play BPO players being shopped about. The rumor that Cognizant will take out Genpact has been around for ages. EXL is up for some action, and the market is abuzz with other speculations. As one of my colleagues recently blogged – will the Indian pure play BPO companies survive in the same shape and form past 2011 or 2012?

Net, net, here is the big picture. Some large Tier 1 players are struggling, mid-sized IT is not necessarily the best place to be, and pure play BPO companies are a vanishing tribe.

All this raises more questions: What is the future structure of the global services industry? Will Accenture, IBM, Dell, the Japanese majors, TCS and probably a few others become the super majors by 2015 or 2020, and will the rest need to find their own places under the sun? What other categories and groups of service providers will exist, and what will their characteristics be, for example, regional specialists, vertical specialists, etc.?

Irrespective of how the industry evolves, consolidation will continue, and the M&A juggernaut will roll. This business generates cash, and doesn’t require a lot to sustain it…so companies will invest in buying capabilities, assets, businesses, and people in attempts to win top spots on the leaderboard.

We certainly are headed for some interesting months ahead. Is anyone betting on who the winners will be at the end of 2011?

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