by IBA Group for IBA Group
Posted on March 28, 2017
A recent Raconteur report explored some of the key trends driving outsourcing today. The six key trends identified are:
1. BPM not BPO; Business Process Management means taking over entire services for clients and working as partners, not like a supplier.
2. New Frontiers; many new markets are offering services, particularly in African countries that have not engaged much with global IT in the past.
3. Local Government; a wave of global austerity is forcing governments globally to explore outsourcing.
4. Changing Contracts; the long-term 20-year deals are over.
5. Cyber Security; Companies need more help than ever protecting their information and their supply chain.
6. Transformation; more than ever, outsourcing is being used to completely change companies and to help them explore new business models.
These are good observations, although it is not mentioned that both IT outsourcing and Business Process Outsourcing have been dramatically changed by innovations such as cloud based services and the app store culture. Delivering IT services today is far closer to offering products to customers than it used to be – bespoke development still exists, but is far less common.
However, the problem I really have with the six trends is that the report appears to give them equal weight. They are all listed with an appearance of the same importance, whereas I believe that the first point is entirely reshaping the outsourcing market.
Many technology services are so complex today that large companies will almost certainly not have expertise in-house. Think about complex Big Data analysis as a good example. Designing and building the database systems is hard enough, but to make sense of it you need data scientists. Most companies don’t have any of these skills just sitting around waiting to be used.
The Customer Service marketplace is another good example. Customer Service used to mean managing a contact centre. It was quite a dull and repetitive process and could easily be managed in-house or could be outsourced to a service provider that could provide the service at a lower cost. Now there is an enormous amount of technology involved in managing customer relationships – ERP for supply chains, CRM for managing interactions, Big Data for analysing trends and social interactions. Managing customer relationships now is far too complex for almost any company – other than the biggest – to handle without going to an expert.
Outsourcing is becoming an essential strategy for this reason. Companies need to hire expertise. These clients really need the expertise of the supplier to help build their strategy. The days of lining up three similar suppliers and then asking which one will offer a service at the lowest price are largely over. Supplier relationships now are far closer to partnerships where both companies want the business to succeed.
We all know this from our personal life. You know that there might be a cheaper plumber or a cheaper car insurance company out there, but you also know that if you go for the cheapest then the service will not be good. This thought process has now entered into the enterprise outsourcing space. In fact, the term outsourcing no longer really reflects the partnership nature of these corporate relationships today.
Perhaps it’s time to say that outsourcing is dead, but partnership is alive and well?
Companies across the world will recall February 28th 2017 as a bad day. It was a day when their patience was tested beyond anything most executives can remember in years. It was the day that the Amazon Cloud went down.
The Amazon Web Services (AWS) Simple Storage Service (S3) service now accounts for an enormous amount of Internet traffic. There are many major players in Cloud services, such as Microsoft, Google, and IBM, but AWS is the biggest. In fact, AWS is so big that their cloud revenue is about twice the total of those three other companies.
Forrester Research predicts that the cloud marketplace will be worth $236bn by 2020 – that’s up from around $95bn in 2016. So it is clear that this is an important market. It’s growing fast and it has changed the nature of IT services and IT outsourcing. Companies are now keen to buy end to end services that can be delivered over the cloud, rather than requiring infrastructure and software on site.
However, the AWS service failure in February shows that some companies have become complacent about the cloud. It was a simple human error by an engineer at AWS that took the service down for over 4 hours and affected millions of people. Why were so many companies taken by surprise and why did nobody have a backup plan?
This feature in Database magazine asks all these questions and suggests a few pointers for executives who want to mitigate against a similar disaster in future.
In general, cloud services are more reliable than setting up infrastructure inside your own office. Companies like Amazon invest enormous amounts to ensure that network and power outages are avoided. However, as we have seen, problems can happen and if your service needs to be available to customers 100% of the time, how can you offer your own guarantee when you can never be 100% sure that your own infrastructure providers will deliver?
In my opinion, the three best tips from the Database feature are:
1. Monitor services yourself – don’t just rely on your supplier. You might notice service issues before the cloud supplier ever tells you something is wrong.
2. Have an alternative provider ready – it’s expensive to duplicate, but if you really cannot afford any outage then mirroring may be required.
3. Communicate – make sure that you tell customers you have a problem so they can come back later or otherwise delay their interaction with you. By saying nothing, customers will expect a normal level of service.
IT services has been transformed by cloud based services and because it generally improves the reliability of services executives have often been blinded into believing these services can always be relied on. Mostly they can, but it’s worth remembering that even the biggest and best planned networks can fail. What would that mean for your business?
by IBA Group for IBA Group
Posted on March 6, 2017
If there is one thing that global business hates, it’s uncertainty and with all the political changes of the past half year there is plenty to go around. President Donald Trump is making endless policy pronouncements on Twitter, the UK plan for Brexit appears to be a process that will take years to resolve, and with several major European elections this year we may see even more populist leaders emerging.
One thing for sure is that the global IT and IT outsourcing business involves the movement of skilled people to places where contracts are operating and the movement of projects to people. For years there has been a constant flow of both. Sometimes the work itself can flow from a client to supplier in a remote location. Sometimes the IT supplier needs to send teams to the client. There has been a two-way flow of skills and work for many years that has created a global industry with several international clusters of expertise.
The approach President Trump is taking in the USA may give an indication of how many countries want to operate in future – with a drastically reduced inflow of people, no matter how skilled they are or how required those skills are.
In the first instance this appears to be a big concern for the Indian IT companies who account for over 70% of all H-1B visas in the US. The H-1B visa is used to allow highly skilled workers to temporarily work legally in the US. 85,000 visas are available each year and 230,000 applications are made. At present they are randomly allocated, as all valid applications are from highly skilled people anyway. Trump plans to make it much harder for companies to get the H-1B, although the exact criteria change remains undefined.
Similar fears exist for companies operating in the United Kingdom. It is clear that the free movement of EU nationals will end as Brexit is agreed, but it remains unclear how EU nationals already living in the UK will be treated. Will they be allowed to stay in return for the right of UK nationals living inside the EU to stay there? At present nobody knows and it is this uncertainty that is bothering many inside industries such as IT, that are used to a steady flow of skills across borders.
There could well be an upside for companies that specialise in nearshore IT services, if the Indian IT players find that they are going to start being seen as too far away from their customers, but for now the future remains uncertain. What is clear is that some of the largest companies in the world depend on sourcing IT expertise globally, yet some of the biggest governments in the world don’t appear to be listening to the companies that create the jobs.
CIO magazine is usually a good place to explore future trends that will affect the global IT industry and right at the end of 2016 they published a good list of issues affecting IT outsourcing. We are already a month or so into 2017, but it’s still worth taking a look at this list of ten key trends that anyone in the IT outsourcing area needs to be aware of.
From the ten, the three that really stood out for me were:
1. Security; more than ever, security is a major concern. Companies can fail because of security breaches and with links between companies under scrutiny this requires a strategy that explores people, processes, and technology.
2. Automation; more services are being delivered automatically and more customers will expect to see IT costs reduced with an increased delivery because of automation.
3. Cloud; it’s about far more than just raw power and storage. Entire critical services are now cloud-based and it’s becoming unusual for companies to want anything other than a cloud-based solution now.
The CIO list also suggested that IT suppliers will pivot and start offering additional services, such as consulting, but I would suggest that this is just part of a wider change taking place.
We are moving on from a traditional client and supplier type outsourcing arrangement to partnership or co-sourcing. I know that suppliers have talked for years about partnership, but I mean genuine partnership where the contract between companies is not strictly about what can be delivered, it includes provisions for how to innovate and how to make the deliveries better. If the two companies start working together, rather than one just selling a service to the other, then we are no longer talking about pivoting services, there is the potential to build new products and services together – as if the two companies are functioning as one.
That’s going to be one of the biggest changes in IT outsourcing in 2017 and I’ll comment more on how this might work in one of my next blogs.
by IBA Group for IBA Group
Posted on January 31, 2017
In an interview to the TTG magazine, Aleš Hojka, CEO of IBA CZ and IBA Slovakia, speaks about solutions and services that any company can benefit from.
When I look at your business card, IBA strongly resembles IBM, doesn’t it?
You are right. Originally, IBA was founded in Minsk in 1993 as a joint venture with IBM. The brand and logos of the company are deliberately similar and as IBA was growing, it shifted to a direction different from IBM. New branches emerged, the first one was created in the Czech Republic, and the product portfolio has changed considerably. Although today IBM does not own any of the IBA Group branches, a very close cooperation continues.
For IBM, we implement both internal projects, for example one of the most remarkable is the Learning Portal, as well as other within our core expertise in portals and mainframe. In cooperation with IBM, we work for the end customers and bring them the best of both companies. Anyway, now we operate as two separate entities in the Czech Republic being even competitors to some extent.
Worldwide, IBA has over 2,500 employees with about 120 in the Czech Republic and still expanding. We have our own development centers in Prague, Brno, and Ostrava. The entire IBA Group is headquartered in Prague and now has offices in 11 countries, including the United States and South Africa, with IBA Slovakia among the youngest.
So what is the crucial area of your activity?
We dominate in portals, document management, mobile applications, and more. Most often, we use Java and .NET, though not avoiding enterprise and open source solutions, but mainly listen to our customers and assist them while providing deployment and maintenance of our solutions in their environment.
Whom do you mostly supply the solutions and what can we expect from them?
Our customers are large financial institutions, telecom operators, and government institutions, as well as manufacturers and distribution companies. Primarily due to our own development, we can offer advanced solutions for a company of any size.
For example, for Česká pojišťovna, we have developed a part of a mobile application that helps people deal quicker with car accidents. To be more specific, it finds the nearest service station, facilitates provision of all data that the insurance company may need, and etc. For T-Mobile, we have created an intelligent contact form with a prompter that allows for self-servicing in most cases. As soon as the user has finished typing a request, an answer is suggested, as well as other information that might be of interest. With our solution, T-Mobile receives roughly by 30% of emails less, which is a huge number and great cost savings on their call center operations. For the Generali insurance company, we provided a secure online consolidation of insurance with suggestions throughout the process. For Moneta, we created a fully responsive loyalty portal Bene +. The content adapts to the screen size of a device, either a mobile, tablet or desktop, with no need of development for each platform separately.
And what is your activity in the tourism sector? Do you have any customers in this area?
Not yet, though indirectly, we actually operate there as well, for example, within the projects for the regional authorities or the National Heritage Institute. But as I say, we are capable of meeting the requirements of any customer. Document management is used almost everywhere. Let’s say, a solution intended for invoice workflow covers the whole lifecycle from scanning a document to the data entry via processing, approval only after payment, and archiving, with all the stages automated and transparent.
Or the so-called Big Data, which is the processing of large volumes of data and keeping track of customer behavior. When a user logs into a social network where there’s a lot of personal data and then visits some other website, these tools recognize the user and offer him or her an advertisement of related products, for example, on news portals. For travel agencies and rental companies, we can offer the integration of their systems into a large retrieval system like Booking.com or TripAdvisor. Identity Management may also be of great necessity, thus providing security system and preventing unauthorized user access.
This system facilitates the work of administrators and also makes personal client data safe from leakage.
For the customers engaged in tourism, we can offer the services where we are truly the market leaders. From simpler websites and intranets with e.g. a review of attendance through complex client loyalty portals where each user sees different data, to the solutions like an anti-corruption subportal that we have created for the Department of Defense and that guarantees absolute anonymity. A portal may also serve as a planner of human resources, which could be useful especially for companies with a large or frequently changing number of permanent or temporary employees.
Integration with social networks may also be of interest. Our expertise on how to use the information that people make available on a variety of networks for targeted advertising may be useful everywhere, including the tourist sector.
The British technology magazine Computer Weekly recently published analysis by Professor Ilan Oshri of Loughborough university on how the European nearshoring market is adjusting to a more mature environment. In particular how different markets are aiming to distinguish themselves from the pack.
I wrote about this research from Loughborough university last month, but the constant push to regionalisation rather than globalisation – as I mentioned in my last blog – made me find this research again. In the context of the political activity in Europe and the USA, this is worth visiting again as it is taking on increased importance.
Anyone who has attended a nearshoring or outsourcing conference in Europe knows how the various regions promote themselves. PowerPoint slides are loaded full of statistics demonstrating government support, a steady flow of graduates, great local companies, and a low cost of doing business. In most cases though, the consistently positive messages from one presentation could be used by another country without anyone noticing that the message had changed – because the message in each pitch is largely the same.
Professor Oshri suggests that we should take it as read on the basic measure. Most European countries have good airports and a supply of graduates, so anyone considering nearshoring will be looking at other factors – the companies and trade bodies in those regions should appeal to these factors:
– Higher Value; what higher value can working in your region offer? What sets your companies or country apart? Are there particular industries you excel in or skills that are hard to find?
– Ability to partner; suppliers today need to move on from the traditional client-supplier relationship and become a part of the value chain. They need to be true partners, not just hired help.
– Innovation; many companies today are looking to their suppliers for advice on innovation. Innovating throughout the supply chain is becoming much more common – are you able to innovate for your clients?
In short, Professor Oshri is suggesting that when companies look to nearshoring regions they are looking for much more than just a low cost place to do business. If you are still marketing your region as low cost with a great airport then you might be losing business just because you are not looking ahead to the type of relationship companies really want.
In an environment where managers are thinking in detail about how to ensure processes are closer to home, this is more important than ever.
Try thinking of how your location is different. What differentiates you from the others? Focus on this, even if it is a niche difference. It will make all the difference in a nearshoring market that is growing fast as companies focus more on developing regional partners rather than long distance offshoring.
by IBA Group for IBA Group
Posted on January 16, 2017
There was an interesting analysis of the trend towards regionalisation published in business magazine Forbes just before the recent holiday season. It explored how the Brexit vote in the UK and the election of Donald Trump as the US president might change business behaviour.
Politics went through something of a shock in 2016 and 2017 may hold further surprises in Europe with elections in the Netherlands, France, Norway, the Czech Republic, and Germany all coming soon…
But what does Forbes mean about a change in business attitudes and how does it affect those in the IT business?
The answer lies in the growing nationalism seen in the USA and many European countries. There is a growing desire to show that jobs are being created and managed close to home, or at least closer to home than before.
In European technology circles this is likely to manifest itself with less trust in technology suppliers from Asia – particularly China and India. Many of these companies are highly professional leaders in their industry, but as consumers start becoming more wary of strategies such as outsourcing and offshoring, it is likely that managers buying IT services will look closer to home. As Forbes suggests, the trend will be towards European regionalisation, not globalisation.
It is unlikely that markets such as the UK or Germany will create enough new technology professionals to ensure all work can be performed locally – and the cost would be prohibitive for most organisations anyway – but these consumer attitudes will favour technology companies in Eastern Europe.
The Central and Eastern Europe (CEE) region has long marketed itself as a European alternative to China and India. Allowing European companies to work with partners that are close enough for a day trip to be possible. Now they will have an additional advantage, the growing political and social unrest about long distance offshoring.
It’s good news for European technology companies as Europe remains close – organisations in Europe buy 69% of their goods from other European companies. The USA may be a more complex scenario as President-elect Trump has already talked about scaling back drastically on the H1B visa that most foreign IT professionals use when working in the US.
Whatever happens with the politicians, the direction of travel is clearly towards nearshoring as a preferable solution. The era of the world being completely flat appears to be over. Welcome to an era of regionalisation.
by IBA Group for IBA Group
Posted on December 19, 2016
The Big Data market has transformed how most IT services are bought and sold. Often the customer is a business leader, rather than the CIO, and services are already available, rather than needing to be designed from the ground up.
IT leaders often look at other companies to see what they are doing, it’s usually known as best practice, but what if the entire market is in a state of flux? Some IT companies are now delivering radically different solutions to others. Innovations like the app store concept and cloud based solutions are changing the way that IT services are delivered globally, so how can changes in the Big Data market change how the entire IT industry behaves?
Techrepublic magazine recently outlined some important changes in how IT leaders think about their marketplace. Think of these 5 different changes as examples of what is changing and how it can influence the behaviour of IT leaders:
1. Off the shelf analytic solutions like Watson from IBM have been customised to be used across many different industry verticals. It’s the same system, but modified for different environments and it can therefore offer immediate results. Everyone is looking for a rapid return on investment today.
2. Commodity hardware offers a great platform for storage if you are going to keep your data and analytics system internal, rather than in the cloud.
3. More companies are relying on their suppliers for expertise and innovation today. These are true partnerships now, not just outsourcing arrangements where the cheapest supplier gets the project.
4. Analytics reporting systems like SAS are still important because they have been tested and developed over so many years, but also because the users are really familiar with the way these systems work. Familiarity is important.
5. Real time processing systems are changing the way that physical infrastructure is designed and deployed. Look at SAP HANA for an example of how systems using memory in new ways are now feeding back into the design of the physical servers and databases.
What do you think about the lessons from Big Data? Have you seen other ways in which IT is more generally changing because of the way that Big Data is influencing IT strategy? Please leave a comment here.
by IBA Group for IBA Group
Posted on December 12, 2016
Is there a new world of nearshoring emerging in Europe? A recent feature by Ilan Oshri of Loughborough University in Computer Weekly has suggested that the market is changing fast, in particular as a reaction to every country sounding the same when making their sales pitch.
We have all been to those conferences where one country representative is talking about the advantages of their region over others, but when several regions do the same type of talk they do all sound the same. We have great people, we have universities, we have great companies. The same check-box of advantages is always ticked for every presentation about outsourcing to a particular region – so what is changing?
First, there is a big wave of repatriation taking place. Projects that were outsourced to far off locations are coming much closer to home so nearshoring is becoming a much more important strategy for European companies.
Second, a wider array of services can be delivered by suppliers today and this is especially true when the supplier is relatively close to the customer, so the range of services offered through nearshoring deals is becoming more diverse.
Third, companies are increasing their expectation on suppliers. A supplier is no longer just the lowest cost way to get a job done. Many suppliers are the expert in their field and are delivering a service that the client simply could not perform internally anyway. The clients are now expecting suppliers to offer ideas and new innovations. Nobody is talking about innovation as a nice to have function these days, it is becoming an expectation of nearshoring that the supplier can come up with ideas on how to do business better.
Professor Oshri raises some very interesting points in his article. He believes that nearshoring locations still attempting to compete on labour price are thinking with a very short term view of the world. The ability to offer expertise and advice to clients will become the single biggest advantage and this may also require clusters of expertise to develop. He cites some examples of regions where competing firms are operating in the same physical location, so even if it does not sound logical, it does mean that for each specialist activity there are areas where clients can go and confidently find the expertise they need.
I believe that we are seeing a new type of nearshoring emerging and all three of the points raised by the professor are playing out across Europe today. The final point is the most important though. Clients used to be so powerful that they could pick and choose and drop suppliers at will. Now the suppliers have some very detailed knowledge that the clients cannot manage without. Real partnerships are developing and that will lead to genuine innovation.
What do you think about the ongoing development of nearshoring in Europe? Please leave a comment here.
by IBA Group for IBA Group
Posted on November 30, 2016
On November 27, the organizers of the 13th sport competition among IT companies IT Spartakiada 2016 announced the results of this year’s tournament. IBA Group won the second place, following their successful performance in 2015.
Sixteen teams participated in the competition this year. For the first time in its history, IT Spartakiada was held in two stages, with the tournament starting in spring and finishing in autumn. In its spring stage, the participants competed in laser tag, swimming, poker, and indoor football. In autumn, the teams clashed in karting, kicker, bowling, table tennis, volleyball, and basketball.
IBA won the tournaments in kicker and bowling and occupied the second place in laser tag, poker, and swimming. The karting, table tennis, and indoor football teams finished fourth, while the basketball team ended the competition at the fifth place. This allowed IBA to finish at the second place in the overall standings.
Winners of IT Spartakiada are determined by the minimal sum of points scored by teams in their top seven sports. EPAM was the winner of this year’s competition, while ISsoft won the bronze.
Congratulations to our colleagues! We are proud of their success and wish them many more great achievements in the future.