Predictive analytics, when combined with artificial intelligence, can assist organizations with their risk management, as well as their planning and optimization.
Several years ago, we launched an innovative new way for an enterprise to contract for services, the Request for Solution (RFS). It was conceived of as a way to harness the service provider community’s best thinking in situations where a client couldn’t or didn’t want to be prescriptive. It was an alternative to traditional RFPs that would still lead buyers and sellers to strong, sustainable relationships with market-correct terms and conditions but leave much more of the solution decisions up to the bidders.
We thought it would be an overnight success. We thought buyer and sellers, in what was a stale outsourcing marketplace, would embrace it. They didn’t. We built it, but nobody came.
Over the years, we helped a few progressive clients with RFS processes, but the vast majority of the deals in the industry continued to happen the old-fashioned way. In the past six months something has changed. I’ve seen an impressive surge in demand for RFS processes. I’d say that close to 50 percent of the new deals we see are using the RFS method, or a hybrid method that combines RFP and RFS. Why is this happening, and why now?
It’s easy to be prescriptive when solutions are standard. Today, more and more buyers want bespoke solutions, so what works for company X may not work for company Y. A key criterion for buyers, whether they admit it or not, is feeling unique, and they want a solution that feels customized for them.
The technology changed, so nobody can claim they’ve done it many times before—it is too new. Yesterday’s marketplace was built on more or less thirty years of fairly well-established and consistent commercial and technical practices. They had evolved over time, but they weren’t turned upside down until recently. With the recent advances in cloud, automation, social and mobility, no provider can demonstrate vast experience, so a buyer is more open to letting them experiment and propose their own creative solutions.
Companies are more comfortable with outsourcing than they ever have been. Before, buyers wanted everything locked airtight to avoid as much risk as possible. It was hard to believe that anyone could handle any given function better than “us,” so we created parameters, rules, processes and hard lines never to be crossed. Today, there are no rules. Sure, clients expect to be kept compliant with regulations and some standards—but what are the standards for something that has never been done? The RFS serves these clients well. And more and more large companies are willing to enter a true partnership with their providers to innovate. You see it everywhere—the Internet of Things, engineering services, social media.
The new technologies are hitting the mainstream, but they are still new. What did we think of the cloud three years ago? Scary. It had all kinds of security, privacy and architecture issues. The cloud today? Table stakes. But that still doesn’t mean it comes in only one flavor. Engaging the creativity of the market can often yield the very best ideas, and the RFS process is designed to allow a buyer to benefit from the ideas of multiple providers, regardless of who they actually select for the work.
The value of intellectual property is declining. This is not something I welcome, but I believe it is a reality. Information is readily available to anyone who is sufficiently motivated, and buyers and sellers of IT-enabled services realize that these aren’t the areas to focus on for protecting the secret formula. The RFS encourages sharing of ideas that would have made us all very uncomfortable just a few years ago.
I don’t believe the more traditional RFP will go away. How many large companies still have mainframe? How many have truly adopted a BYOD policy? There will always be a place for the RFP. In fact, as the pendulum swings and we discover and authenticate the best practices of the emerging technologies, we may swing back to the RFP. The service provider industry, through sheer size and exposure, has far more capability to think big thoughts and turn them into actionable ideas than any single one of their clients. Why not harness all that capability? If you want to prescribe your solution, the RFP will always be there to support you. If you want to engage a broad community in developing the solution, the RFS is the way to go. More and more of my clients are going that way.
The outsourcing industry is adapting and changing rapidly. Outsourcing companies are now much closer to their clients, as technology enables clients and outsourcers to be more connected than ever before.
This technology evolution has also impacted the demand for IT workers, with more companies requiring skilled workers on a project basis. However, whereas an outsourcing company used to begin working with a client and completed any project tasks that were required, outsourcing teams have started to take on an advisory role too.
Outsourcers are now offering ideas to the client and are conversing about what could make the project better, more cost effective and efficient. So, why have outsourcers taken on more of an advisory role in recent years?
Objective Insight
The outsourcing relationship used to involve the company stating what they needed and the outsourcer simply complying with the request. However, outsourcing is no longer this one-way relationship: the company that is outsourcing can gain so much more than just IT support.
The outsourcing company is able to provide objective insight on where the project is heading and can advise on improvements and potential challenges. It is important for both the client organisation and the outsourcing team to align their strategies at the beginning of the partnership to ensure that they work together and optimise their offerings. For this, communication must be clear as collaboration must be two-way.
However, the role of an outsourced or nearshored team is to offer and share their knowledge and expertise with the client company, rather than make decisions and create conflict with them.
Ease of Communication
Location is often overlooked in favour of choosing an outsourcing company based on their specialties. However, it is essential to consider proximity when outsourcing IT services in order to ensure efficiency of the project. Companies are beginning to nearshore to maximise the collaboration potential between the organisations and to enhance the communication. A closer proximity means more meetings with the client and a shared language helps to avoid miscommunication when discussing intricate details that can only encourage a closer working relationship.
Greater communication enables the move from compliance to guidance as, today, outsourcing organisations are much more likely to engage with clients on a business level, taking on more responsibility and talking to department heads.
More Than Just Writing Code
Outsourcing is no longer about simply writing the code, but rather understanding the client’s challenges and providing a solution that may offer them business agility. For this reason, today an outsourcing company should try and understand the non-technical challenges their client is facing and possibly even invest in business analysis and account management skills.
In light of this change, it is important to look at this new relationship between outsourcing and the client to see how it can be optimised for both sides, ensuring that it is mutually beneficial.
True partnerships—in outsourcing and beyond—are based on trust, so building a collaborative two-way relationship can maximise its positive impact on the business. Ensuring that a trustworthy rapport is in place allows projects to progress faster and with greater efficiency as both companies speak freely for the best of the project, each helping and informing the other.
As the pace of transformation ramps up in the technology industry, the chasm is widening between the number of roles that need to be filled and the number of relevantly qualified resources to fill them. Technology is changing the world and our lives at such a rapid pace that it’s hard for companies to keep up with the shifts caused. Examples of major technology shifts include the Internet of Things (IoT)and apps (cloud-based and mobile). By 2020, it is predicted that 7.6 billion people will have 100 billion connected devices that run 1 trillion apps.
Technology shifts open up, which is good for business, but this creates larger workloads for software development departments. The challenge is that companies lack the technology, skills sets, resources and strategies to manage their workforces effectively. It’s predicted that by 2020 over 80 percent of companies will rely on temporary or contingent workers to fill skills gaps as the battle to recruit talent intensifies. As the pace of transformation increases in the technology industry, companies are struggling to find the people they need, with many claiming that graduates are leaving university without relevant skills and talent. In the same time span, the U.K. is expected to have a shortage of 800,000 tech workers.
The Traditional Offshore Outsource Model is Broken
Due to the current and impending shortfall of IT professionals for the U.K. market and the challenge to find talent, other issues will arise in the form of retention. Supply and demand are already an issue and companies will enter bidding wars to lock down the best IT and digital professionals. Retention will be a problem as IT professionals will accept better paying jobs, so how to secure and keep digital talent must be addressed. The traditional outsourcing model to offshore companies will no longer suffice. With AI developments happening so quickly, it no longer makes service or commercial sense to offshore as it once did. It is no longer true that a supplier who can muster thousands of cheap resources (which are not as cheap as they used to be) represents a compelling proposition.
What is the answer?
When considering outsourcing, which companies will have to do to fulfill demand, they will need to think carefully. Leveraging a nearshore model is becoming very popular. Companies can use nearshore delivery centers with best-in-class experts who are trained and up to speed with the latest technologies and software development tools and methodologies. The nearshore model is proving to be very successful and companies that leverage delivery centers can use several engagement models from managed teams, extended teams and managed projects. This model is proving to be more cost effective, with an increase in quality and speed to market.
Gone are the days when companies can afford to wait for multiple attempts before getting it right. With the velocity of change and the speed at which things need to be done, using an onshore model with a trusted advisor is the key. To lock down and secure resources for the long term, companies should look to partner with outsource providers that have pioneered, built and managed teams that eventually become fully owned assets of their clients (while ensuring that the culture of their client is fully embedded from the outset). This will enable companies to build, recruit and retain their digital talent for an automated, tech-driven future.
This is the first installment in a series on IT service automation by Pink Elephant expert Jan-Willem Middelburg. The series follows the journey of a fictional global CIO as he realizes that his well-regarded IT organization must radically change the way it delivers IT services. The first chapter below, “Dear CIO, are you ready for the self-service generation?” describes the encounter that sets the CIO on his quest.
It is 9 p.m. and you are staring out the boardroom window across the millions of lights of the city. You are looking back on a day packed with meetings… again. In the morning, you met with the IT steering committee, the risk auditors and the CFO. Your afternoon was filled with your deputy CIOs, each fighting to receive a portion of next year’s budget. It is that time of year again.
As you pack your briefcase and start toward the elevators, you notice the intern still working away. A typical millennial with the latest headphones and a million devices scattered across his desk. The guy was “lucky” to have been chosen out of hundreds of applicants for the summer internship at the CIO Office and, so far, he has been a tremendous asset to your team. The speed and agility with which he can complete complex analyses has frequently surprised you, and you have already decided that you will probably hire him after the summer. You look at your watch and decide it is time to send him home.
You walk over to his office and slowly tap against his screen. The intern lowers his headphones and immediately sits up straight, realizing the global CIO is addressing him. “Tomorrow’s a new day, time to go home,” you hear yourself mutter and the intern immediately looks at his watch, which lights up as he turns his wrist. The intern presses some last buttons on his machine and accompanies you to the elevators.
As you ride the elevator, the silence is uncomfortable, and you start some small talk: “Having a late dinner with your girlfriend tonight?” The intern quickly looks at his phone and replies with a smile: “Dinner should be at my friend’s house in 28 minutes,” he answers. “My girlfriend is staying at her parents this week to finish the paper for her online degree, so we decided it’s better to Airbnb our place for the week.” When the elevator door slides open, you keep wondering what the guy next to you just said.
Right there, at the parking lot in the pouring rain, you realize that you need to make your enterprise ready for the self-service generation. Not just for the young intern who grew up with technology, but for your customers who will also expect the services of your company to be available immediately and with the push of one button.
When you reach the main entrance, you see that it is raining cats and dogs. Your car is parked in one of the executive parking spaces only a few yards away, but you see that even the small distance will get your suit soaked. At the same moment, a small car pulls up at the entrance and the intern opens the door to the back seat. You suddenly realize that the guy already booked an Uber while he was closing his computer upstairs. There’s no thunder as you run for your car, but you feel like you’ve been struck by lightning.
As the intern steps into the Uber, you ask one more question: “Do you still ever call anyone?”
The intern replies: “Just my parents; they are very traditional. Have a great night, boss!”
Right there, at the parking lot in the pouring rain, you realize that you need to make your enterprise ready for the self-service generation. Not just for the young intern who grew up with technology, but for your customers who will also expect the services of your company to be available immediately and with the push of one button.
From service management to IT service automation
The next morning you wake up energized. You order an Uber to take you to work, and whilst you are in the backseat of the car, you reflect on the situation with the intern from last night. Everywhere in the world, new service providers are popping out of the ground with “disruptive” business models. Spotify, Uber, Booking.com and Netflix are some of the main examples that everybody is talking about. They are able to attract massive groups of users and — like the intern — many people like to use these services, because they are instantly available with the click of one app or similar interface.
As you think about this a little more, you wonder what would happen if you could make the services in your organization available in a similar way with IT service automation. What if your employees could select their IT services by themselves and order them as easily as booking a rideshare service? Is provisioning a test server really so much different from booking a driver?
For years, you have worked really hard to achieve operational excellence of all global IT services. Your service catalogue is well-defined and you have consistently managed to reach the targets of your service level agreements (you became CIO for a reason…). You have a very effective and efficient Service Desk that delivers services all over the globe with high satisfaction levels. So, what is the difference between your organization’s services and the services your intern likes to use?
In a traditional service model, the user interacts with the service provider at every step, from request and proposal through paying the invoice and sending feedback. In the automated service provider model, the self-service portal — a technology layer — automates many or all of the steps.
As your Uber drives into the parking lot of your office, and your driver swipes that he has completed his ride, you suddenly realize the difference: The services your organization offers are control-oriented and frequently include manual steps. The services Spotify, Uber, Booking.com and Netflix are offering are user-oriented and completely automated.
The new “rules” of the workplace are being defined as computers are frantically being programmed to take the lead in the workplace, when it comes to judgment and intuition. We humans need to be the idea generators, the motivators, the negotiators, and the trouble-shooters to fix computer errors, if we want to govern our emerging digital environments. In short, we need to get closer to our firms, be more tightly integrated and intimate with work performance than ever before… which means the role and tenure of the much-derided middle-manager in the Dilbert Cartoons could be taking on a whole new potential twist – and a whole new (potential) level of relevance.
I would go as far as declaring 2018 as a new beginning of the value of the full-time employee – where alignment with the mission, spirit, culture, energy and context of an organization has never been so important. We are seeing the value of contract work diminish as so much “outsource-able” work is so much easier to automate and global labor drives down the cost of getting things done quickly and easily. Business success is more about investing in the core than ever – and that core includes the people who are the true pieces of human middleware to hold everything together.
The onus is circling back to the value of being a full-time employee, who needs to value the fruits of having a predictable income and adapt to the changing balance of how humans need to work with computers.
Remember when the rise of the gig worker was supposed to revamp how so many of us worked, as we escaped the shackles of the “evil employer”?
Almost two decades ago, the internet was creating the independent worker, as exemplified in Dan Pink’s timeless book “Free Agent Nation: How America’s New Independent Workers are Transforming the Way We Live” became the seminal guide for what is now known as the “gig worker”.
Furthermore, unless recent research from McKinsey of 8000 workers can now be categorized as fake news, 162 million people in Europe and the United States—or 20 to 30 percent of the working-age population—engage in some form of independent work today. And a recent study from freelance site Upwork (which undoubtedly wants to hype the impact of gig world) cranks up the numbers even further, claiming that a staggering 50% of US millennials are already freelancing, before declaring the freelance sector will comprise the majority of the US workforcewithin a decade. Wow.
So are the days of being gainfully employed really disintegrating before our very eyes? Or is the gig hype beginning to atrophy for many people?
The gig economy is becoming a tough place to craft a living if many of the new reports are to be believed. And it’s not just about driving Ubers, delivering food orders and contracting for logistics firms – i.e., working for businesses that exploit the gig economy to drive down labor costs and improve services. It’s the freelance gig economy where people forge a living writing code, supporting content development, delivering consulting work on-demand etc. Even that lovely Upwork research admits: “While finances are a challenge for all, freelancers experience a unique concern — income predictability. The study found that, with the ebbs and flows of freelancing, full-time freelancers dip into savings more often (63 percent at least once per month versus 20 percent of full-time non-freelancers)”. So even if the most biased of sources admits most gig workers can’t cover their living costs, we can conclude that those “Free Agents”, which McKinsey describes as the gig worker sector using gig work as its primary income, are not in a sustainable earning situation.
Today, it’s a buyer’s market for gig work
You only need to spend a little time on LinkedIn to observe just how many people are now marketing their wares as solo free agents, or as part of a company bearing their name. It’s abundantly clear that so many people have decided to set themselves up as independents, that the market for gig talent is saturated and it’s become a “buyers’ market” for gig work. Whether I want to commission a crack consultant to validate some RPA software, hire an analyst to endorse my product, commission a writer to produce a white-label assessment of an emerging market, produce a go-to-market strategy for my business, redesign my website, my logo, or just have someone support my business on a part-time basis… today, I am spoiled for choice. I barely need to hire fulltime employees these days, unless they are truly core to keeping my business ticking along – and I can create real competition to get the work done for much lower costs than a few short years ago.
On top of the risks of commoditizing gig work, we have to contend with the impact of automation and Machine Learning to stay relevant and worthy of earning a paycheck
We’re not in a world rejecting human work, but a world where work is rapidly changing – and the skills of the dynamic middle manager has never been so important. In short, the increasing availability of computing power to crunch massive amounts of data, coupled with advancing tools to tag and label data and workflow clusters with breakthrough programming in languages such as Python for syntax and R for data visualization, are the game-changers that will increasingly impact how we get work done, as we develop continually smarter algorithms to keep teaching computers to do the work of the human brain.
What’s more, the rapid development of Machine Learning (ML) environments such as Google’s TensorFlow, the Microsoft’s Azure Machine Learning Workbench, Amazon’s Sagemaker, Caffe and Alibaba’s Aliyun are becoming the new environments driving armies of coders and developers to align themselves with ML value – desperate to stay relevant (and well paid) against the headwinds of commoditization of legacy coding and app development.
As ML takes over judgment and (eventually) intuition, the human-value onus moves to interaction, agenda-setting, problem defining and idea generation
In short, the disruptive ML techniques are teaching computers to do what comes naturally to humans: to learn by example. Today’s emerging ML tools use massive amounts of data and computing power to simulate neural networks that imitate the human brain’s connectivity, classifying data sets and finding patterns and correlations between them.
Net-net, pattern-matching jobs are increasingly being affected by ML – vocations such as radiologists, pathologists, financial advisors, lawyers, procurement executives, accountants etc. are all being challenged as judgment work is (gradually) being replaced by smart algorithms. However, as elements of these types of jobs are being affected, other job elements become even more important, namely interacting with other humans, creating, setting the agenda, defining and finding the problems to go after. They motivate, they persuade, they negotiate, they coordinate. They are the dynamic conduits of driving information and ideas in an organization and will be increasingly in the driving seat as Machine Learning advancements increasingly take hold. The digital middle manager who can bring a team together and lead people in the right direction does not exist and likely never will…. I’d be amazed if we saw one emerge soon.
Fulltime employment is now becoming a premium situation
Having predictability of income, healthcare costs covered, guaranteed paid vacation time – and a constant supply of work to do – is fast becoming the dream scenario for the disgruntled gig worker. So here’s a thought – go get a JOB. Or if you’re in a job and wanted to try the gig work thing… spare a thought for what your ideal situation looks like, because last time I looked, most firms are doing everything they can to avoid hiring well-paid staff… especially if they can get the work done much cheaper from desperate gig workers.
The Bottom-Line: Five steps to keeping your job:
i) Become the conduit of ideas and information that is irreplaceable right across your organization. So we’ve now come full circle, where the value of having people really close to the business is becoming more important than ever, as computers perform more and more of the routine and judgement based tasks. To the point, the value of the full-time employee goes both ways: companies need people who really understand their institutional processes, their quirks and ways of getting things done… who are onhand to troubleshoot mistakes, but also there to keep the ideas flowing to keep the business ahead of its competition and close to its customers. “Human middleware” is becomimg the real OneOffice glue to break down those siloes and help govern a slick business operation from front to back office.
ii) Develop a positive attitude by finding aspects of your job you do like.Your full time job is likely the best gig-work you will probably ever get, so even if you hate your boss and most of your colleagues, ask yourself if you’d prefer scrapping around for the boring work other companies prefer to outsource. Focus on the interesting stuff you can do and keep reminding yourself that the grass is rarely greener elsewhere. Unless you are a whizz at Python development, the chances are your job-hopping days are numbered and you need to figure out how to stay put and make it better for yourself.
iii) Motivate yourself and become a real motivator. Being motivated – and helping to motivate others – is probably the least computerizable trait of all. If you aren’t motivated, you are placing yourself at risk when your leadership assess which of their team then want to take them forward into the future. If you really can’t get yourself excited about what you do, or your company just demotivates you in such a way you can’t dig yourself out of your rut, then you may need to take that Python course and brush up your resume…
iv) Let the computers take the lead and become the controller to fix mistakes double checking, intervening when the computers do something dumb. Humans and computers make different kinds of mistakes, so we really need to bring humans and computers together intelligently to cancel out each other’s mistakes. Fighting automation and ML is a lost cause, especially when your firm is completely bought in to the concept and it rolling out bots and working on developing smart algorithms. Just let these things take the lead and them figure out how to make them functional and monitor their errors, ad computers will always keep making them. You can’t fight innovation, but you can nurture it, manage it and troubleshoot it.
v) Find your pareto balance and stop whining. Nothing in life including your current or prospective employer will be perfect. Focus on the 80% that is right, versus making yourself (and others around you) miserable by the other 20%. There is rarely a perfect fit where workers only get to focus 100% on all the things they love to do… there has to be this 80/20 compromise, or you will be forever hopping around trying to find a workplace nirvana that doesn’t exist. And it today’s social world your reputation follows you around like never before… and employers are steering clear of the whiners at all costs.
This time last year I wrote in these pages about the year ahead for outsourcing. The key trend I focused on was an increase in partnership with clients and suppliers getting much closer—and that seems to have taken place throughout 2017. One major driver for this has been the change in how consumers become aware of a product and then convert into customers…what marketing professionals call the ‘customer journey.’ Think for a moment about the classic customer journey. A potential customer would see some advertising or some type of marketing campaign, search for additional information, compare products, eventually make a purchase and possibly follow up with a call or email to the customer service team if they have a problem.
Now this experience is much more complex—the way that customers learn about products and access information has completely changed. A consumer might learn about your products by seeing information on a social network, reading a review site, viewing an online recommendation by a previous customer, receiving an email or any number of other ways. This has also dramatically changed the way that customers purchase products too, with many brands offering online or in-app purchase options.
This dramatic change in consumer behavior has affected outsourcing relationships because it has quickly changed many aspects of business, including how:
Brands need to promote their products
Brands need to offer an omni-channel experience, so customers can locate information and make purchases in many different ways on different channels
All these dramatic supply chain changes affect CRM systems, ERP, stock control and how internal corporate departments like customer service and marketing can function
The rapidly changing nature of how companies are structured has led to a need for deep expertise. Brands that are trying to blend their marketing and customer service function have found that it’s a much easier proposition to do this with a partner that has very deep knowledge of how an omni-channel sales, marketing and service environment can work. This leads to a much closer sense of partnership between the client brand and the suppliers delivering IT, customer service or marketing services. These suppliers have started behaving much more like partners because that’s truly what they are in this modern environment.
I think this trend will continue. We are still in the early days of truly exploiting an omni-channel business environment and most companies are still figuring out the implications for their IT systems, public messaging and customer service processes.
When I think forward to 2018, my natural first step is to see what the suppliers and bloggers are saying, but to be frank, I was a little disappointed in my most recent scan of the 2018 outsourcing trend articles. I identified three trends that are predicted frequently:
A renewed skills shortage driving more outsourcing
Suppliers focusing more on specific expertise rather than offering an all-around service
The price vs. quality debate strongly supporting quality as more important than price
I believe these trends could have been published in any end of year prediction list for the past decade so it’s a surprise to see many business journals just focusing on the same old topics. I believe that in addition to the continuation of the partnership trend I predicted last year, there will be a couple of strong trends—especially in Europe.
1. GDPR: The EU General Data Protection Regulation (GDPR) will be enforced beginning May 25, 2018. This completely changes how companies across Europe can store and work with data. It is the biggest shake-up in how companies can use data since the 1990s and essentially puts power in the hands of the customer. If you cannot tell your customer in clear and simple terms why you want to capture and use their data then you are no longer allowed to capture it – and fines in the millions will hit those who ignore the new rules. Many companies that are scared of the legislation will turn to their partners for assurance that their systems are compliant.
2. Data Analysis and Security: Yet even with the GDPR rules and compliance, there will be a renewed focus on capturing more data on customers, analysing it in much more detail, and creating personal experiences or generating business decisions from this information. This leads to a need for increased security, which, from the perspective of data capture, is covered by a new GDPR-compliant approach. But it more generally needs an entirely new approach to security because this information will sit at the heart of your future business. Once again, this is such a dramatic change in practice and procedures that many will focus on working with trusted partners to get this right.
To some extent, these trends are self-reinforcing. There is a great desire for companies to understand their customers better, which requires more data, more insight and better data analysis. However, this also requires GDPR compliance, and by working with expert suppliers in a close partnership all these business benefits can be safely delivered.
I believe that 2018 will be an exciting year for those in the outsourcing community. Partnerships will be deeper and the expertise that the supplier community has in data analysis, and the management and security of data will be sought out more than ever before.
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