Mark Kobayashi-Hillary

Accenture dumps the Tiger

2009-12-14T17:18:04+00:00

It’s the biggest story in town that consulting and outsourcing giant Accenture has dumped Tiger Woods as their brand talisman.

It’s for a good reason too.

Over the years I have often used the Tiger and Accenture example when talking to IT suppliers about how to approach a new market – particularly when a company from Asia is trying to appeal to European or US buyers.

I’d look at their advertising ideas and then ask them: "Why do you think you need to pack a page full of all that information? Look at Accenture. All they do is stick their logo on a photo of Tiger Woods."

And it's because of that strong brand association that Tiger has got the bullet. Tiger was a winner. He was a legend. He was so good at golf he was more like a machine. He was not really all that friendly, but he was efficient and always delivered. All the kind of values an IT services company wants to be associated with.

How could the brand association work now? If a firm put their logo on the Tiger today, it would mean associating their delivery of IT services with someone who is flaky, lets down those closest to him, and has very dubious morals.

Accenture have made exactly the right decision to cage the Tiger, but who could they possibly choose as a new brand ambassador?

European providers are back on top

2009-12-14T16:44:37+00:00

The business advisory firm Equaterra has just published some interesting new research that explores how end-users are becoming more satisfied with outsourcing in general. The underlying theme is that the suppliers are maturing, becoming more sophisticated, and better able to work with their clients.

Four of the top five suppliers are European, with one Indian firm. This is a reversal of the 2008 survey where four Indian firms occupied positions at the top. It seems a wild swing in fortunes and is possibly less to do with offshore outsourcing and more to do with the way individual firms have reacted to the recession by increasing intimacy with existing clients.

What everyone really wants to know is who did well – and poorly. So to quickly summarise, the suppliers with the highest levels of client satistaction were Capgemini, Cognizant and Computacenter. Those at the bottom of the class were HP/EDS, Verizon Business, and CSC.

Examining the human side of outsourcing

2009-12-04T16:41:00+00:00

Dr Stephanie Morgan, psychology lecturer at Kingston University and author of The Human Side of Outsourcing, is conducting a survey with the National Outsourcing Association.

Stephanie’s book is an interesting departure from the usual outsourcing canon. Instead of focusing on how to make the business processes work well, she has focused on the human aspect – the fact that outsourcing usually involves a big change in how people work and getting people to understand and support this change is usually the critical factor in making an outsourcing strategy really work.

This new study is a continuation of Stephanie’s research into how culture and psychology affects the entire outsourcing industry. It’s called the cultural focus survey and you can participate by clicking this link. It’s a short survey, so you won’t be held up for hours with pages of questions. Do take a few minutes to complete the survey though, as this kind of thinking and research is essential – and often overlooked.

Will the next government embrace offshoring?

2009-11-27T10:16:30+00:00

In my last blog I mentioned the 2010 British general election, and this morning I was chatting on the phone to Dr Roger Newman, head of UK Manufacturing and Digital Convergence Relationship Management at Mahindra Satyam. I took the opportunity to ask him for some of his views on the 2010 election and how it might affect the climate for sourcing.

Roger believes that the public sector, in general, has a lot to learn from the private sector IT and IT-enabled services business. He said: “It would make good sense for the public sector to learn some of the lessons of the private sector. The private sector has learned that you can make significant savings and improve efficiency – and improve quality - with a global sourcing model.”

It’s true. A lot of lessons have been learned about how to make these services work across borders. Roger went on to explain: “I think perhaps a change of government might make the environment right for doing more. At present I think people [in government] are still worried about the loss of jobs and upsetting the public, but I think with a new government, and if the economy picks up, then you will see a new approach to the public sector. Let’s face it, if you take a step back, they haven’t been doing a great job with their IT spend.”

That’s quite an aggressive vote of support for more offshoring, and an expectation that a Conservative government will behave in a markedly different way to the present Labour administration. I asked Roger specifically about offshoring and whether he really feels the public sector will do more of it: “I think there will be more of an exploration of that. There is a global sourcing industry out there. The government realises that the economy is global. Money comes back into the UK from places like India. It’s not like you are just throwing money abroad. It does come back again.”

It’s understandable that a firm headquartered in India would support additional offshoring, but I’m not convinced that a Conservative government would instigate a new wave of offshoring in the public sector, even if they end up securing a landslide election victory next year.

It could just be that Mahindra Satyam, along with every other firm that may potentially benefit from future government contracts, are now currying favour with the Conservatives and rejecting any relationships with Labour – expecting those present ministers to all to be cast adrift to the Job Centre soon.

But lobbying aside, it still seems far-fetched to expect the British public sector to embrace large-scale offshoring in 2010. More shared services perhaps, but I still can’t imagine a new Prime Minister wanting to take on the wrath of The Sun and the public sector unions over offshoring.

An NHS prescription for successful shared services

2009-11-27T09:56:34+00:00

So what’s going to happen in UK politics in 2010? There will be a general election and the received wisdom is that there will be a change of administration as Labour is getting tired and the Tories are in the ascendancy.

But will there be a big shift in government attitudes to outsourcing and shared services?

I think so, regardless of the party. If Labour does manage to survive then they will need to sort out the public finances after a crippling two-year economic downturn where we have ended up nationalising high-street banks and printing money just to stay afloat. If the Tories gain power, they will want to draw a line under the previous administration (naturally blaming them for the mess as any new government does) and start afresh with a new approach to public sector services.

So it really doesn’t matter who wins the election. Any new leader is going to form a government that faces a huge public sector borrowing record and there are only minimal savings possible through further efficiency. Something is going to have to change.

I had lunch yesterday with a senior executive from Steria and we were talking about the joint venture they created with the NHS a few years back. It’s now a mature service offering back-office shared services such as finance and accounting to NHS trusts and all run as a 50/50 venture between the Department of Health (DoH) and Steria.

It’s not likely that any new government will start offshoring services. It’s still seen as taboo to send public sector work offshore, even if it reduces how many tax pounds need to be spent. So it’s highly likely that more and more shared service ventures will be the approach. The approach taken by the DoH and Steria allows the public sector to benefit from private sector experience of managing shared services, but with the close involvement of both public and private – it’s not rampant outsourcing for the sake of slashing budgets. Profits from the joint venture are returned to the NHS, so there is an ongoing incentive to keep making it work better.

The NHS and Steria partnership has been going for about four years now, so it’s well known, but even so, if public sector leaders want to see a case study in how a partnership with the private sector can work in their favour they could do a lot worse than exploring what NHS Shared Business Services has achieved.

Recognition from the opposition

2009-11-25T16:14:04+00:00

I’d never usually mention Computing archrival Computer Weekly in this blog, but there is something happening today that’s rather interesting.

This blog, yes this blog in Computing, is shortlisted for the best consultant or analyst blog at the Computer Weekly IT Blog Awards 2009. The awards dinner is tonight so if you are going to be there then why not send a message to me on Twitter so we can say hello in person?

I don’t hold out much hope of actually winning an award. I never even knew I was on the shortlist until I went to vote for the awards myself and noticed my own name among the potential winners. That meant I didn’t have much time to formulate a "vote for me" campaign across all the internet sites I might have some influence on.

And in any case, it would be strange for archrivals to be giving each other awards. A bit like that Paul McCartney song "Pipes of Peace" where the German and English soldiers come out of the trenches to play a game of football on Christmas day during World War One.

However, it’s an honour to be nominated and I hope it shows that there are a lot of people out there in the industry who appreciate that a personal view on what is happening in the sourcing market can be a really effective way of cutting through the news agenda.

Thanks for reading, and voting, and normal service will be resumed on the blog once I stop telling you about these awards!

Can outsourcing bring Playboy back to rude health?

2009-11-25T12:00:14+00:00

Playboy doesn’t crop up often in Computing. For good reason you might say, but here is an outsourcing story connected to the famous men’s magazine.

They are losing around $8m a year at present. Clearly the guys who used to buy it "just for the interviews" are no longer buying – probably finding entertainment on the internet instead of on a magazine shelf.

Playboy has agreed to outsource every business function of the magazine, except for editorial, to American Media. They will handle the production, circulation, advertising sales, and marketing.

The plan is to immediately reduce losses to around $5m, and to get the title back in the black by 2011.

It’s a good example of outsourcing being used to save a failing business, rather than just to strip out costs for the sake of shareholder value, but isn’t the Playboy empire just a bit dated anyway?

Serving the needs of the Twitterati

2009-11-24T13:55:25+00:00

I wrote about BT on my personal blog recently. Not for any business reason, though I have done some work with them in the past, but just because I was pleased with the customer service they offered me as an individual customer via Twitter.

The comment received a lot of attention, so I thought it was worth reiterating here with the questions more directed to the outsourcing element of this story.

For BT to be supporting users via Twitter demands some highly trained agents who are empowered to quickly fix customer issues without the usual (painful) step-by-step approach we have become accustomed to with call centres.

Many of those processes and steps have been built into the support process so the actions of the agent can be tracked, and to prevent mistakes or wasted time. But most of us hate having to use a Frequently Asked Questions screen before the company allows us to send a problem. It often feels as if there are walls placed between you and a customer service email address or phone number because the firm wants you to spend hours fixing something a knowledgeable adviser could fix in seconds.

Monitoring what people are saying about a brand in Twitter and then proactively stepping in to help people when they have problems and are shooting off negative tweets is an excellent way to offer direct help, and can turn a negative experience into a very positive one with a brand.

But how does it scale up once the average consumer – rather than just the internet-literate – starts firing comments online and expects instant service from a consumer firm like BT? Obviously it doesn’t just affect BT, but they have dipped more than just a toe in the water and it’s clearly their own staff in northern Ireland that are managing the Twitter interaction.

Will we start seeing a proliferation of business process outsourcing firms that presently manage contact centres integrating this type of feedback management into their service list? And if so, then how? This kind of service demands deep knowledge of the services available and very fast service, while also operating in a very public forum where all users can see the messages. The agents working in this way really need to know what they are talking about.

So which contact centres are starting to offer Twitter management as an outsourced service already?

'Closed book insurance' deals open new chapter for Indian services providers

2009-11-23T14:58:20+00:00

Back in July last year, the Indian tech giant HCL purchased Liberata Financial Services – creating a new firm, HCL Insurance Business Services. That move appears to have paid off as HCL announced a new contract win today offering

policy administration, finance, actuarial services, IT operational support and call center services to the closed book business of Equitable Life. Service should begin in March 2011 and the deal is estimated to be worth around $200m.

Closed book business is the management of insurance policies that are no longer sold, but they continue to need support because they have an active life up to a defined time, like a policy where an amount is paid on a future date. Clearly closed book business is not strategic or sexy – but it needs to be maintained, as the insurance company will have a long-term commitment to each policyholder.

HCL are clearly pleased that their investment in Liberata has paid off, and no doubt they will want to start expanding this business by seeking out other companies struggling with closed books of business. But the news of the contract win today reminded me of the news back in 2006 that the Pearl insurance group was working with another large Indian tech firm, TCS, to create Diligenta.

That venture was also aimed at winning closed book business, and was interesting because TCS took on a 12-year contract to transform and manage the existing Pearl systems; Diligenta would then use that real experience of transforming one insurance company to pitch for similar business in the market.

It sounded like a great business plan three years ago, but a quick look at the Diligenta web site only shows a single client that has come on board since then.

That leads to a number of questions. Did Diligenta over-promise what they could deliver in the closed book area? Or, is it hard for them to pitch for work when they are already managing the Pearl account – would other insurance firms prefer to set up their own joint venture, or find their own tech supplier? Or was it just the downturn in economic activity in general over the past couple of years that prevented much investment in large-scale change programmes?

The HCL deal is a large deal. Not quite on the scale of Diligenta, but it positions HCL alongside TCS as having access to very large closed book system management in the UK insurance market. That’s disappointing for Diligenta, but exciting for those who would prefer some competition in the insurance technology market rather than having it all sewn up by a single super-supplier.

What’s interesting to observe regardless of this single contract win, is that both TCS and HCL are becoming significant employers of British staff working in the insurance industry, away from their own roots in the IT services space and offshoring. Bringing their combined expertise to the sector can only be a good thing and does start shifting perceptions of these brands as being less about ‘Indian tech’ and more about ‘global services’.

The two sides of offshoring

2009-11-19T12:42:54+00:00

Yesterday was the start of the National Outsourcing Association annual sourcing summit – it continues in London today.

I was chairing a session that included an examination of the economic benefits of offshoring. Ian Brinkley, Knowledge Economy Programme Director of The Work Foundation, and Peter Skyte, National Officer of the trade union Unite, were both speaking. They each gave a position statement for a few minutes followed by a debate.

What I noticed immediately was that Ian focused entirely on traditional economic indicators, GDP, exports, and imports… that kind of thing. And his information was all correct and valid, in particular he reminded the audience that the UK exports more knowledge services than it imports, and service imports from India are actually a tiny percentage of all service imports.

Ian had some useful data, reminding the audience that the general fear of offshoring usually overplays the size of the issue. But Peter took a different approach and talked about the political, cultural, and social changes associated with offshoring. He was concerned about structural unemployment in the UK and enforced changes to society in places such as India.

Neither was rejecting the value of offshore outsourcing, but they had very interesting and different approaches to examining the value of international service exports.

After the talk, I met someone I know at Cognizant and he said that my own blogging on offshoring has become very negative in recent months. I was surprised. As we spoke he elaborated on what I had been writing in earlier blogs and I think that his complaint is that I have been writing more from Peter’s view, rather than Ian’s.

Rest assured, I’m generally in favour of working internationally and finding expertise wherever it exists using strategies such as offshoring. But I also agree with Peter – there are longer-term consequences we should be thinking about because the development of hi-tech international services is still in its infancy.

The societal changes we are seeing go far deeper than just economic gain and it’s not being negative to suggest we explore further.