Category Archives: Pipes

Pipes

10 Golden Rules for Good Benchmarking | Sherpas in Blue Shirts

Originally posted on the National Outsourcing Association (NOA) blog


Insights from the NOA “Benchmarking” Special Interests Group with Everest Group

Benchmarking is a worthwhile endeavour. When conducted properly, the practice will give you a baseline indicator of where your business is currently, where it is headed on its current trajectory, where you need to be to maximise gains and how you can get there.

Benchmarking can also act as the catalyst for a more fruitful long-term outsourcing relationship, by highlight areas that must be focused on moving forward. On the other hand, it is not the solution to every problem that relationship might have. The term is frequently misunderstood and the practice is even more frequently misused.

At the NOA’s Special Interests Group on Benchmarking in association with Everest Group, benchmarking experts led a roundtable discussion on when benchmarking is necessary, how it is best carried out and what the practice does to help business relationships between clients and their providers.


Read more on the NOA blog

 

Supply Chain Management BPO Grows 25 Percent, Offers Immense Opportunity to Buyers, Providers | Press Release

Rapid growth of SCM BPO—25 percent CAGR since 2010—spurred by large, North American organizations and manufacturing sector. 

DALLAS, April 10, 2015—BPO in Supply Chain Management (SCM) has grown from a nascent practice to an emerging one in a very short span of time. This practice grew at over 25 percent compound annual growth rate from 2010 to 2014, and the market size currently stands at US$1.0-1.2 billion.

In terms of adoption trends for SCM BPO, the following buyer categories are the primary drivers:

  • Adoption is led by North American organizations (65 percent)with Asia Pacific being the region with the highest growth;
  • Large-sized organizations (revenue exceeding US$5 billion) represent 69 percent of buyers; and
  • The manufacturing vertical leads in adoption (40 percent market share).

Currently, core SCM BPO processes focusing on delivery are the most frequently included in SCM BPO agreements. In the future, control tower based solutions are likely to continue to gain traction. Also, as supply chain analytics become more complex, big data analytics is likely to impact the market significantly.

These results and other findings are explored in a recently published Everest Group report:  “Supply Chain Management (SCM) BPO—Annual Report 2015: SCM BPO: An Idea Whose Time Has Come.”

***Download a complimentary 14-page preview of the report*** (Registration required.) This preview summarizes report methodology, contents and key findings and offers additional resources.

The full report analyzes the global SCM BPO market, focusing on:

  • Market overview and contractual activity
  • Global growth and adoption trends
  • Solution characteristics and emerging trends
  • Service provider landscape

“In the past, organizations tended to compartmentalize procurement, logistics and inventory management, but now companies are seeking third-party providers who offer comprehensive SCM BPO offerings,” said Swapnil Bhatnagar, Everest Group practice director. “The potential is huge, so service providers are responding quickly, developing offerings that blend technology augmentation, reporting/compliance capabilities and analytics to transform the supply chain operations of their clients.”

*** Download Publication-Quality Graphics ***

High-resolution graphics illustrating key takeaways from these reports can be included in news coverage, with attribution to Everest Group. Graphics include:

  • Supply chain management: Out of the shadows
  • Supply chain management BPO contracts often paired with other functions
  • The supply chain market shows increasing interest in control tower solutions to enhance supply chain operations.
  • Analytics: A potentially disruptive force in supply chain management

***Additional Resources***

 

The cloud scores NIH approval for gene research

After pushback from researchers, the National Institutes of Health has reversed course and now will allow researchers to use cloud services to store and analyze content from the Database of Genotypes and Phenotypes, a key asset in genetics research. The NIH had viewed the use of the cloud as a risk to the privacy of the research participants.

Of course, the cloud systems must meet the data-use and security standards set forth by the NIH. For the most part, the larger cloud providers, such as Amazon Web Services, Microsoft, and Google, comply with these requirements.

To read this article in full or to leave a comment, please click here

Service Providers are Killing the Goose that Lays Golden Eggs | Sherpas in Blue Shirts

GeeseFlickr” />

I blogged last year about the growing anti-incumbent bias in the services industry. That’s not to say that clients are biased against incumbent providers, but there are more clients who want to switch out providers than there used to be. This is true across every segment of global services (applications, infrastructure and BPO). We can trace at least some of this client mindset back to providers’ actions that are similar to the farmer in Aesop’s Fable who killed his goose that laid golden eggs. In their haste to get more golden eggs (more profitability), providers unintentionally kill the golden substance inside their goose (existing client base).

At the heart of the issue is providers’ wrong view of their clients. As a result, they take actions that cause clients to believe the provider exploits them, as the actions benefit the provider’s revenue. When a client believes the provider is only interested in maximizing its revenue, the client no longer sees the provider as a trusted advisor.

Here are three examples I’ve observed in which providers appear to act for their own interests, which results in clients no longer trusting them.

  1. The provider moves from an FTE-based model to a transaction-based model, but the provider’s revenue stays the same. Basically the provider finds a way to charge the client more for volume, which wouldn’t need to happen under the FTE-based model. Clients see through that, and the provider loses its trusted position. Clients realize the provider is exploiting them rather than serving them.
  1. The provider moves to a productivity model, promising to support portfolio apps at lower cost through a managed service. What actually transpires? The provider nickel-and-dimes the client, which ends up paying more money over time. Functions that were delivered in the FTE model are now a la carte, outside of the new model; so the client actually pays twice for the service.
  1. The provider flattens out its factory model and optimizes it to use junior resources instead of senior resources. The net result for the client is churn in the provider’s resources, so the provider doesn’t build client or industry knowledge. On top of the churn, the client actually ends up with lower productivity because junior people now do what senior people were doing.

And that’s how providers kill the goose that laid golden eggs.


Photo credit: Flickr

 

Value Leakage in Outsourcing Contracts | Market Insights™

value leakage_pricing 2015

Value leakage can have significant consequences – as much as 38-50% of total spend

More information on pricing

 

Does Pricing Vary by Industry? | Market Insights™

pricing variation by industry_pricing 2015

Providers and buyers frequently ask if service pricing varies by client industry. The answer? It depends on the outsourced function.

More information on pricing

 

Premium Pricing: Justified or Not? | Market Insights™

pricing premium analysis_pricing 2015

Analysis can help to assess whether a value-add premium is justified in an outsourcing relationship, as well as to identify potential options to reduce the extra cost

More information on pricing

 

Analyzing Pricing? Be Sure to Consider Deal-specific Factors | Market Insights™

gap analysis_pricing 2015

In conducting price benchmarking, it is important to consider deal-specific factors that can impact pricing, as an apparent excessive price could be appropriate

More information on pricing

 

HP Rebuffs Public Cloud Market Exit Reports – ComputerWeekly | In The News

“HP has dismissed reports that it’s planning to exit the public cloud market, after one of its senior vice-presidents admitted the supplier has given up trying to compete with the likes of Amazon, Google and Microsoft. However, that’s not to say the company may not have a stab at taking on the public cloud behemoths directly later down the line, according to research vice-president for Europe at IT market-watcher Everest Group, Sarah Burnett.” Read More.

 

New RightScale Features: Manage Existing Instances, Orchestrate Any AWS Service and More

Whether you’ve spent your winter shoveling snow, avoiding the ice, or taking military showers (we’re looking at you, California), spring is now officially here. So it’s time to try out some of the coolest new features from RightScale. Here is a summary of the capabilities we’ve added over the last…

Click the blog post title to read the full article.