How is Business Analytics Used in the Real World?

IBA Group
Mark Hillary

As I have mentioned in the last couple of blogs Business Analytics (BA) is about using data and models to make better decisions. This can help governments to improve policymaking and companies to develop better strategies. The aim is to use information to improve the day-to-day performance of the organisation.

But what are the real business decisions being taken with BA tools and how does the data analysis process improve the decisions?

    – In the airline business, employees and aircraft need to be in the right place at the right time to maximise efficiency. This is a complex planning procedure when things are going right, but when a flight is delayed or a key staff member is ill or a plane requires unscheduled maintenance then the knock-on effect can be huge. Analyzing the possible options is a great example of how BA can influence real decisions.
    – Hotels want guests in their rooms as often as possible. Empty rooms in a hotel mean lost profit and a hotel that quickly sells out a particular night may have been able to charge more for the rooms on that evening. Analyzing past customer behaviour, the competition, and other influencing factors such as big sport or music events in the neighbourhood is another classic example of how data can feed into a specific business decision – how much to charge for a room.
    – Banks and finance companies need to make quick decisions about whether to lend money to a particular customer based on limited information – such as the salary. However there are many other factors that could determine whether the individual is good for the loan or not and these can all be quickly factored together to provide a decision.
    – Supermarkets always seem to have full shelves these days. Can you remember Saturday afternoons where many big supermarkets would run out of important products? With the entire history of each product and how it sells in each store it is now far easier for supermarket managers to ensure they are ordering the correct stock levels.

These are just four entirely different industries, but in each one it is clear that Business Analytic tools are changing how managers make decisions in those companies.

Better decision-making leads to increased efficiency, a better use of existing resources, and the opportunity to perform better – to earn more by delivering a better service. For this reason, managers in all industries should be thinking about what Business Analytics can do for them.

Selecting the Right Business Analytics Partner

IBA Group
Mark Hillary

IDC is one of the leading global industry analysts, so it’s always interesting to see their own guidance on choosing a supplier. Their recent report ‘IDC MarketScape Excerpt: Worldwide Business Analytics Consulting and Systems Integration Services 2014 Vendor Assessment’ focused exclusively on the questions you need to ask when searching for a Business Analytics partner.

1. Pay attention to domain knowledge. Over the years, some service providers have built deep industry expertise across certain business needs.

2. Create a culture of analytics. It is not enough for you to have access to the right data, you need to create the processes that can make use of this data across your entire organization.

3. Don’t neglect the basics. Companies often find they have data issues once the migration has commenced, which will then delay the entire migration project. Stop and avoid all these roadblocks by taking the data cleansing stage seriously so the migration can run smoothly.

4. Align the strength of your supplier with project success. If you find a good match then ensure that your partner gets stronger as the project succeeds.

Of course, point 5 from IDC was to utilize their own research when selecting a supplier. Most of these points are what any manager with a good experience of outsourcing would be planning anyway, but it cannot be stressed enough that good planning for the migration and creating a culture of data analytics are essential for success.

Business Analytics and Big Data

IBA Group
Mark Hillary

Business Analytics is a topic that is often confused with Big Data. While the analysis of Big Data is related to the continuous analysis of business information through an analytical process, they are related concepts rather than exactly the same thing.

There are various kinds of analytics to start with:

Descriptive Analytics: how to gain insight from historical data, creating reports and scorecards that give a better vision of some existing data.

Predictive analytics: modeling through the use of predictive models and machine learning – allowing the system to learn what might happen next based on the data that is being studied usually in real-time.

Prescriptive analytics: taking a large data-set and attempting to create decisions, choosing possible paths, simulating what might happen if certain decisions are taken.

Decisive analytics: this supports human decision-making with very visual analytic information that helps the user.

So the field of Business Analytics is more related to the process of taking data and either modeling outcomes or predicting what may happen next, rather than just attempting to spot trends in a large data set.

Business Analytics is really a tool that can support executives to make better decisions by supporting their decisions with data, rather than just estimates or guesses. By using actual data from the business and modeling potential outcomes based on decisions that could be taken, the data can help to support the direction a business leader should take.

This type of process has existed for a long time, but it has been the creation of vast pools of business data – the move towards a Big Data environment – that has really stimulated the need for improved Business Analytics. The increased amount of data has provided more information that can be analysed and yet has also made it more difficult to reach a conclusion on the right decisions – without better analysis.

Frontend versus backend. Where to begin?

IBA Group
Alexei Zagorsky

This article opens a series of discussions devoted to frontend development. Until recently, this part of the development job was not treated properly. By this series, I intend to present my view of the modern trends in the development of user interface, as well as technologies that are used in web development.

It common knowledge that the internet is built on a client-server architecture. A server is a powerful remote computer or a group of computers called ‘cluster’ or ‘cloud’. Server software installed on a server serves customers. This software is also called ‘server’. With regard to WWW, it is a web server (Apache, IIS, nginx and other), i.e. a software complex that receives HTTP requests from customers and returns HTTP responses, typically with the requested data.

Operations related to processing of server data are called backend development. The following server programming languages are designed for backend development: PHP, Perl, Python, Ruby, ASP.NET, and Java. An important part of the operation of server programming languages is interaction with the database management server (BDMS). DBMS keeps well-organized information that is accessible at any time. The most popular DBMSs for WWW are MySQL, IBM DB2, Microsoft SQL Server, Oracle, PostgreSQL, FireBird, and MongoDB.

A client is generally speaking any device that enables the user to access the internet, including desktop, laptop, tablet, and smartphone. From a technical perspective, a client is a web browser that transmits to a web server HTTP requests for the resources specified in URL, as well as displays server responses in the form of HTML pages, files, media streams or other data.
Any user application needs a convenient and functional interface.

It is especially relevant for a web application because it is used by people who have different qualification and knowledge levels, as well as work in different professions. It is also essential that web interface work well from all modern browsers, including those on mobile devices. Thus we come to the frontend concept.

Frontend development is creation of the client part of a web application. Until recently, this application part was treated without due respect. Most efforts were focused on the server part of a project, such as business logic, data, and security. A frontend developer was perceived as ‘the guy who makes the project look more attractive’. It is quite clear that it is a misperception.
A modern frontend developer is ‘a Jack of all trades’, an expert in his or her domain and in many adjacent domains. A frontend developer writes code for a website, creates user interface, deals with usability, web design, and has an idea of the theory of colors. A frontend developer must have an excellent knowledge of HTML5, CSS3, JavaScript, and Ajax. Experience in such popular JavaScript frameworks as jQuery, Google Web Toolkit, Prototype, TwitterBootstrap, and many others are also of use.
Frontend developers deal not only with specific concepts and tasks, but also with abstract thinking. They belong to those few who are able to make a bridge between mathematics and art. As they are able to unify these two disciplines and apply user experience to logic processes, they are very valuable employees for any IT business.

Therefore, the current trend is to pay more attention to frontend development. In the following article, I would like to discuss the technologies that give a website a modern look and feel, and contribute to its powerful functionality.

Reshoring

IBA Group
Mark Hillary

The calls for companies to explore reshoring keep getting louder, led largely by a new sense of nationalism in Europe that was on show during the recent European elections. Many voters are rejecting internationalism in favour of wanting to see more business done close to home.
There has also been a change in the cost of doing business in Europe. In fact, the FT reports that the UK is now the cheapest manufacturing location in all of Western Europe.

But in all the reports about reshoring becoming something of a trend, the focus is always on manufacturing, not the IT or IT service market. Intellectual services appear to be purchased from the best possible location and the talk of reshoring this year has not changed this.
The way IT services are purchased is certainly changing. The concept of an app store being taken from the consumer market and applied to enterprise systems is becoming a reality and cloud-based computing power on demand is becoming normal.

These differences in the way that IT projects are planned and delivered will ensure that customers continue buying from the best global location for their own needs. With most technology projects today the emphasis is on the required skills – if you can’t find them nearby then it’s only natural to look overseas and hi-tech services operate on a global platform.

So it is true that Panasonic is thinking about moving manufacturing back to Japan, and Otis moved their elevator production from Mexico back to the USA, but in IT development it looks like the future will remain global – bits and bytes can be delivered online unlike cars, DVD players, or elevators.

Mobile Applications As You Do Not Know Them

Vitězslav Košina
IBA Group

Mobile devices, mobile technology and mobile applications are widely different. Every now and then, we see Android smartphones of various designs and sizes that are extensively used mainly for communication, entertainment, and sharing in social networks. In business, we come across legendary iPhones and iPads with advanced applications often tailored to the needs of a particular company. Windows Phones are gradually creating their segment in the mobile market. The spectrum of mobile platforms is even wider and a variety of using mobile devices is broad as well.

Entertainment and business are only two out of many aspects of mobility. Mobile devices are also of considerable practical importance. They are able to meet specific user requirements at the right time and place. Thus, mobile applications become the right hand in finance (smart banking) and insurance.
Think, for instance, of the mobile application Pojišťovna for an insurance company. It is a case of value added insurance services, a new channel to customers, an interactive communication tool, and a useful helper in crisis situations such as traffic accidents. The hybrid extension of the Pojišťovna application allows for the search of contracted services. The developers applied an innovative approach focusing on user-friendliness while minimizing the need of additional adjustments and costs associated with future updates. This part of the application for a Czech insurance company is developed by the IBA CZ team.

Usable application may be of help to everyone
Application Pojišťovna (Insurance Company) is available not only for the clients of Česká Pojišťovna. Anyone interested in practical assistance in crisis situations is able to download it. The number of downloads is the best evidence that it makes good sense to have the application and that it brings real benefits to its users. Currently, more than a hundred thousand users run the application on their mobile phones. And the download continues, as well as the app’s gradual improvement and its enhancement with new features.

Certainly, the application is available for download from the App Store and Google Play. It is possible to get the app for Android, iOS, and Windows.

Relevant help, no need to click to another application
Mobile application Pojišťovna provides much more than just a quick and easy access to information about products and services of Česká pojišťovna. As a bonus for current and future clients, the application offers assistance when in a car accident, when looking for contractual services or places of interest (including contacts and opening hours). Technical solution involves a combination of generally known mobile applications and a website built on the Liferay technology. The result is a hybrid application that is used as an easy-to-manage web application. The user does not need to visit the website because all the functions are controlled directly from the mobile application.

To view a website through the mobile application, the so-called Webview components are used. All standard operating systems are nowadays equipped with them. The benefit of this solution for the application owner is a significant reduction of time-to-market when deploying new or editing existing content in the mobile application and thus potential cost savings. In fact, the deployment is not subject to a regular release cycle of mobile applications (up to several days for iOS), yet it is subject to a regular web publication activity. In extreme cases, it can take a couple of minutes. At the same time, the website owner doesn’t have to maintain and publish several versions of the app (iOS, Android, Windows Mobile) when making changes in the content.

This technological approach may not be suitable for all mobile scenarios. However, for a selected set of scenarios it can significantly save costs and time of publishing new content in mobile applications.

Mobile web: advantages in many situations
Depending on the position context, a mobile application can provide relevant information associated with the situation. In case of Pojišťovna, it will specify the closest branch offices or available points of service. In case of the Bene+ loyalty program, it is the list of current rewards and discounts offered by GE Money Bank to its loyal customers.

Bene+ is a GE credit card loyalty program and is another example of using mobile web to increase customer comfort. In addition to general information about the loyalty program, the participants of Bene+ immediately get the list of places where their discounts and bonuses can be used and see their locations on the active Google maps.

Unlike the Pojišťovna application, Bene+ is not a genuine mobile application, it is a full responsive website. It is available for mobiles and desktops, although technically it is a different solution. The thing they have in common is that both the part of mentioned Pojišťovna application and Bene+ website are created by the IBA CZ development team and are built on Liferay technologies.

See also earlier publications on mobile technologies:
Development and testing of mobile sites and applications
Mobile applications: HTML 5 versus native solution

Development and testing of mobile sites and applications

Jana Albrechtová
Vítězslav Košina
IBA CZ

In the first part of the series on mobile applications, we mentioned a record growth of the mobile market. It is currently developing at a dizzying pace not only in terms of the number of users or mobile devices, but also from the perspective of technology development.

Mobile technologies bring new possibilities of interactivity, including the context of time and place. They offer new channels and forms of engagement, new ways of communication, and new opportunities for trade, including data collection and processing, and remote operation.

In the previous article, we spoke of the need to be mobile simply because your readers, website visitors, customers, business partners, and suppliers are mobile. In this article, we look into how to become mobile.

Mobile use

Beginning a mobile project

Development of a mobile application should be preceded by a thorough analysis. The target market, end users, their behavior, and the devices that are in use should be identified. It is the alpha and omega of every project. Budget estimation and assessment of the expected benefits play a prominent role, too.

The mobile market is characterized by high diversity, a variety of different types of mobile devices, and a wide range of used platforms. In addition to several basic browsers that are in wide use, some specific browsers are installed on a limited number of devices. Different browsers in combination with different operating systems, platforms, and mobile devices bring about hundreds of possible combinations. This increases possibilities of regression errors. Testing of mobile applications is therefore a much more complicated task than testing of PC applications. We know this from our experience in real projects.

Android versus iOS and more…

The most popular mobile platform is Android, covering about 70% of the market. It is followed by Windows and iOS used on iPods and iPads by Apple. These hold about a 12-percent market share. Some users apply specific platforms that vary greatly in behavior and requirements. For example, iOS users form a small group, but they spend more on mobile applications. As a result, they generate the largest portion of revenues.

Creating mobile applications for iPhone can therefore be commercially advantageous despite the numerical superiority of Android in the Czech market. Developing for iPhone is also simpler because iPhones are available only in two dimensional variations. Also, iPhones go through a rigorous approval process by Apple.

“When customizing applications on Android, one should expect a high probability of regression errors. An application tuned for functioning on one device, may cause errors when functioning on another device”, explains Tomáš Běloch, tester at IBA CZ.

 

Testing in practice

Testing of mobile applications is comparatively simple.

First of all, it is worth identifying the device on which the application will be mostly used. The device should cover the market in terms of its diversity and cover most of the users of the target groups. Then one needs to define the types of devices on which the application will function (smart phones, tablets, etc.), operating systems (Android, iOS, Windows), particular versions of the operating systems, and the size of the screen and its resolution.

When it comes to a mobile web application, one needs to identify the most widely used browser.

Virtualization tools may be helpful when testing applications on various platforms.

Web is the basis

If mobile applications should be commercially successful, in many cases it is useful to create a mobile web. Even when designing a website, it is preferable to start with its mobile version (the principle “mobile goes first”). One needs to make emphasis on key services and simplify communication with the clients.

Just as HTML is the foundation of any website, it is also the foundation of any mobile solution. While the user experience and sophisticated interactive features are the domain of native applications, HTML 5 is usually the easiest and fastest option for creating mobile applications. Such application can later be converted into a hybrid form when the user’s view seems to be native.

Hybrid applications are developed as a web application that ensures versatility and a possibility to use on many different types of devices. If HTML 5 is unable to cover all the requirements, native programming is applied. Web applications in a hybrid form combine a simple user interface typical for a web application and the functionality specific for a native application.

See also:
Mobile applications: HTML 5 versus native solution

Is Reshoring the Future?

IBA Group
Mark Hillary

Earlier this year at the World Economic Forum in Davos British Prime Minister David Cameron gave a speech that highlighted reshoring as a key objective of his government. In his speech Cameron said:

“In recent years there has been a practice of offshoring where companies move production facilities to low cost countries. We’ve all seen it. We all know it’s true. And it will continue.

But there is now an opportunity for the reverse: there is now an opportunity for some of those jobs to come back.”

Cameron focused mainly on the manufacturing sector. He cited examples such as the Horby model company bring production back from India to the UK and Raspberry Pi computers moving production to Wales.

What he said makes sense for these companies. By reducing the complexity in a manufacturing supply chain there is the opportunity for these companies to react faster to the market than if their products needed to be ordered many months before delivery.

Cameron went on to acknowledge that this is not a simple argument. He is not describing an ‘us’ v ‘them’ world:

“…I’m not saying there is a finite number of jobs in the world and that our success depends on some kind of tug of war to win them back at the expense of the East.”

But Cameron’s concept of reshoring is very focused on companies and processes that require a physical product delivery. He talked about call centre jobs moving closer to home, but the change in call centre strategy over the past decade has been well documented – people prefer to have their calls answered closer to home.

For many other professional services there is effectively now a global market. Graphic designers, advertising, accounting, and IT professionals are now operating within a global community of expertise and with instant delivery of products via the Internet there is no supply chain difficulty.

So it doesn’t seem like the UK government focus on reshoring will affect those companies or individuals supplying technology expertise. These services are usually sold based on the expertise required, not simply on a low price alone – allowing a global search for the best possible skills wherever they may be found.

Mobile applications: HTML 5 versus native solution

Jana Albrechtová
Vítězslav Košina
IBA CZ

With the rise of the mass use of mobile devices the importance of mobile applications has grown dynamically. They are applied in a variety of areas, such as trade, finance, travel, transportation, media, and education, and go far beyond being just about fun or communication in social networks. When used for remote work, they are helpful in solving different operational problems and in receiving information in real time.

Mobiles Spread

The spectrum of mobile technologies is as wide as that of mobile devices. On the one hand, there are purely native applications built specifically for an operating system of a specific mobile device. On the other hand, there is a universal HTML. In terms of user-friendliness, HTML 5 is catching up with native applications. In terms of cost-effectiveness, it often surpasses native applications. Each technology has its advantages and disadvantages.

In this article, I would like to familiarize you with the current issues of mobility and give a high-level comparison of native applications and HTML 5.

Mobility rules the world
According to statistical data, about one third of the Czech population uses smartphones, a phone with its own operating system. Mobile operators report that up to 80% of phones sold today are smartphones.

According to estimates, the penetration of mobile devices in the Czech Republic will double in the near future. However, we are still a few years behind the most advanced countries of the world. In Sweden the world’s leader in the use of smartphones, the penetration is already more than 70%.
Globally, about 37% of users have moved their normal activities from a desktop to a mobile device – a mobile phone or tablet.

In addition to smartphones, tablets hold a significant and steadily growing share of the mobile market. Their penetration in the Czech market climbed to 8% in 2013. It is also worth mentioning eReader or Smart TV that follow smartphones and tablets in the list. However, in terms of interactivity they ‘stand in the shadow’ of smartphones and tablets.

The agency ZenithOptimedia has carried out a research on the spread of mobile technologies in 19 countries, namely: Australia, Brazil, China, Denmark, France, Ireland, Israel, Japan, South Korea, Canada, Germany, Hungary, Netherlands, Norway, Russia, Spain, Sweden, Great Britain, and USA. The following chart shows some of its findings and shows the situation in the Czech Republic.

Penetration of mobile devices by country
Hand in hand with mobile devices, the mobile internet comes. According to Cisco estimates, the mobile internet traffic will grow by a factor of 26 by 2020. We also anticipate a significant increase in the speed of the mobile internet.

Emphasis on UX and mobile context
Mobile devices differ from desktop computers mainly in terms of user interface. Their screen is smaller and the control is less accurate because of touchscreen. The size and mobility also entail a limited battery life. Another feature is unstable internet access because connection is made from different places with different coverage and speed.

With the development of mobile platforms, User Experience (UX) is growing in importance. UX causes the need for the device to have an intuitive interface, be easy to use, provide high quality interactivity, and offer different effects.

A key aspect of mobile devices is mobile context that is the context of place, time, and user. The phone knows its location through GPS. It can adapt to specific conditions. It offers interaction with the environment, is good for remote operation, both online and offline. Mobile devices are used during natural disasters, serves not only for emergency services, but also for example for insurance companies to reimburse damage.

Specifics of mobile devices
• Smaller screen compared to PCs or notebooks
• Touchscreen with less precise control
• Limited battery life
• Unstable or slow access to mobile networks
• Emphasis on usability
• Mobile context

Native applications
Native applications are built to suit mobile devices or to be more exact, for a specific operating system (Android, Windows, iOS, etc.), offering a high degree of interactivity, sophisticated design, and user friendliness. Running in native code, this system is fast, reliable, and able to work with all features of the phone.

Use of native applications, however, faces the problems of diversity of the mobile market and of fragmentation of its users. For each platform and hardware, you need to create and test its own native solution. The application must also adapt to the constant updates of the operating system. This the advantage of native applications becomes also their fundamental shortcoming.

HTML applications
Universal HTML offers web solutions as an alternative to native applications. Although designed primarily for a desktop, HTML 5 is able to meet the specifics of mobile devices. HTML 5 overcomes the disadvantages of an original website. It can work offline and is able to control the basic functions of mobile phone’s hardware.

An important difference between native applications and web solutions is the way users access them. While a web application is accessible to anyone, has its URL, and takes into account search engine optimization, a native application is available at special stores (Google Play, AppStore). They are accessible to potential users but should be downloaded first.

Users can see native applications as an icon on the desktop. They can also interact with the user via push notifications. Web applications are normally started via web browser.

The following diagram illustrates the benefits of native and web applications in several key areas (the better the solution, the higher the proportion of the total scale is).

Native vs. HTML5 apps

Be mobile
Given the universal spread of mobile devices, the question is not whether to be mobile, but how to be mobile. Before choosing between a web or native application, a thorough analysis of the target market and user behavior should be conducted, as well as financial objectives and expected benefits be assessed. For ease of presentation, web solutions are suitable. Complex applications with a high degree of interaction usually require native applications.
It is also necessary to take into account the development and testing costs for different platforms. Based on the experience from the projects implemented by IBA CZ, testing of mobile applications is up to three times more expensive than testing of desktop applications.

“In practice, the use of HTML 5 became very quickly a universal rule. In many cases, it is the fastest and most effective solution. There are also ways to turn it into a native app”, explains Pavel Šafář, consultant at IBA CZ.

Big Data: buzzword or technology trend?

IBA Group
Mark Hillary

Big Data is often viewed as a big buzzword, but it’s a technology trend that is affecting everyone in their daily life – as well as changing the way enterprises need to organise their systems.

Ninety percent of all the data that exists in the world today was created in the past two years, according to analyst firm IDC. The average American office worker generates 5,000mb of data every day just by working on documents, sending emails, or downloading videos. By 2015 the amount of data we are creating now will have doubled – we are exponentially creating more and more data faster and faster.
You might think that these figures sound exaggerated. How could I have created thousands of megabytes of new data just by going into the office today? It’s easy with emails being copied and shared and presentations today requiring more images and more video – the enterprise has moved on from an era where text alone was enough.

The figures from IDC suggest that data creation will have grown by 2000% between now and 2020. And regular consumers create 75% of all this new data. This is because 87% of American adults constantly publish their location – often unknowingly – via their mobile phone and 65 billion location tagged payments are made in the US annually.

As more consumers carry more devices with the ability to measure and record more information, often automatically uploaded to the Internet, there is a sea of data being created and it affects every possible business and industry in every location.

Organisations in many industries are now facing pressure to explore Big Data, to find how they can get value from mining the information they have on clients and transactions, but it needs tools and expertise to get right.

This is one kind of enterprise project where it is almost certainly better to outsource the work to an expert than to try performing in house. You can buy some tools and make an attempt at examining the data you have, but if you don’t know how to configure those tools or where to start looking then your Big Data project might just turn out to be a big mistake.

Visual web, Big Data and enterprise technologies

IBA Group
Mark Hillary

Our last blog mentioned the growth of the visual web. This is an important trend that is changing how content is consumed on the Internet in general, but is also changing the expectation of how managers consumer content within organisations.

2013 was the year that images surpassed text as the most popular means of communicating online. Pinterest, Tumblr, Instagram, and Facebook have become the most popular ways to communicate and these tools are largely visual.

Storing and managing all these images is becoming an enormous big data problem too. There is a growing need to take control of Big Data that is becoming more urgent each day. Ninety per cent of all the data that exists in the world today was created in the past two years, according to analyst firm IDC. The average American office worker generates 5,000mb of data every day just by working on documents, sending emails, or downloading videos. By 2015 the amount of data we are creating now will have doubled – we are exponentially creating more and more data faster and faster.

Figures from IDC also suggest that data creation will have grown by 2000% from now to 2020. And regular consumers create 75% of all this new data. This is because 87% of American adults constantly publish their location – often unknowingly – via their mobile phone and 65 billion location tagged payments are made in the US annually.

All this automatically published information combined with images and video mean that the way we communicate is changing fast. This affects the way companies hire, the way they market their services, and the way they communicate internally.

Enterprise technologies will need to reflect the established public networks if corporate communication – internal and external – is going to succeed in future.

How important is visual information in your business?

IBA Group
Mark Hillary

How important is visual information in your business? What do you think of as visual anyway – a chart on Excel or some other reporting system?
The most recent funding round for Pinterest boosted its valuation to around $3.8bn, which sounds like a lot of money for something that just looks like a visual scrapbook on the web.

When Mark Zuckerberg of Facebook bought Instagram in 2012 for $1bn many commentators thought that it was outrageous – Facebook had overpaid for a phone based photo-sharing service that didn’t even have a website.

Facebook eclipsed that deal recently when they purchased Whatsapp for $19bn. Whatsapp is a text messaging tool that is popular all over the world, but particularly in fast-growing developing nations such as India and Brazil. But what is really different about Whatsapp is that it allows easy photo and video sharing – it is not just a tool for texting, it offers a complete visual experience too.

Take a look around the Internet. It is becoming more visual. Many bloggers are choosing to just create a video instead, or to create a blog that only contains photographs.

Photo network, such as Flickr, offer free space to users that measures in the terabyte – unthinkable amounts of space just a few years ago, yet now it’s almost essential because the Internet is becoming more visual and more focused on mobile devices as the tool that is used to consume content.
This means that companies using the Internet need to consider how their own information can be reflected. How do you publish corporate reports and information when the trend for information use is becoming more visual?

Consumers are getting used to ‘reading’ Instagram and Pinterest in the same way they used to read the newspaper and this is affecting corporate life. A manager today will not want to read a dense report packed with numbers. Visual information has always been useful, but now it’s essential if you want to convey a message within your organisation.

Visual reporting

IBA Group
Kirill Degtiarenko

We live in the era of Big Data. These days everyone is overwhelmed with information. There’s no time to read and analyze the data that come to us from different sources. This is where data visualization can help.

According to Visual Teaching Alliance, “it is hard to argue with the observation that the generation of students now moving into and through our educational system is by far the most visually stimulated generation… In fact, research shows that 65% of our students are visual learners.”

They say a picture is worth a thousand words and we see how images today seize the online content. People and companies document their lives with photos. The web is turning into a visual landscape.

Data visualization is already mainstream. As a result of visual presentation, complicated and potentially dull information becomes easily understandable and comprehensible.

The BI market is also shifting, from tables and spreadsheets to diagrams and infographics. It is inherent to a human being to perceive visual images quicker than plain text or numbers. We “read” graphical information several times quicker than data in a spreadsheet. The user can see the key data at a glance and therefore make efficient analysis and a grounded decision.

Clarity and ease of grasp make a report efficient. Based on visualized data, it is possible to make a timely and grounded management decision. High quality visualization enables managers to achieve good business results.

A report title should be also catching and reflect the essence of the report in a clear and concise form. Diagrams serve as a good tool for data visualization. Color serves to highlight certain details and make selected data easy to remember.

The following is an example of how a complicated spreadsheet turns into a visual report.

Spreadsheet Visual report1 Visual report 2

Offshore Outsourcing is About Finding the Best Talent

IBA Group
Mark Kobayashi-Hillary

Offshore outsourcing (often called offshoring) often gets a bad press. Many people assume that offshoring must be all about finding the lowest cost service and therefore the world is engaged in an endless race to the bottom, searching for lower and lower costs.

It’s not like that at all. An interesting article in the business magazine Forbes challenges the conventional wisdom on outsourcing. For instance, even though the US and Europe account for about half the economic activity of the entire world, only about 10% of the global population lives in these two regions.

This means that there are an enormous number of highly skilled people outside the wealthiest nations on earth. Working with this talent is essential because of the difficulties involved in finding these people locally.

And many companies are more globally oriented today. If you wanted a new logo designed in the past then it would be done by a local designer, now it’s done anywhere in the world based on finding a designer you like. Any intellectual task can now be performed anywhere in the world so the issue today for companies of all sizes is that if you are not working globally then how are you finding enough skilled resource to keep you ahead of the game?

And finding the right talent to support your team back in headquarters is only half the story. If you want to expand to new markets, what could be better than working with a team of people in those new markets to give you a footprint and a first step into the new region?

Offshoring has often been misrepresented, but it is now an essential part of corporate strategy that aims at making the skills of the entire world available to clients, wherever they are located.

Finding SAP Expertise Just Got Easier

IBA Group
Mark Kobayashi-Hillary

What is the most common reason any company will work with a technology partner through an outsourcing deal? The most common response is often because it costs less than hiring the expertise internally, but this is not always true – cost is sometimes a driver, but not always.
Flexibility is usually a more important driver. Flexibility to find expertise exactly when and where those skills are needed, especially when the skills don’t exist internally.

When a big project is being designed and created it may be that particular technical skills are only needed for the implementation. It makes no sense to hire the expertise internally in the same way that you probably go to your local car dealer when your car needs a service rather than doing all the work yourself.

SAP is a great example of this principle. Founded in 1972, SAP is the world’s largest business software company having more than 55,700 employees in 130+ countries. Today, more than 183,000 customers in 130+ countries use SAP software on their workstations. SAP is a very popular business tool, but the companies using it don’t need to keep SAP experts on their own payroll all the time – it makes more sense to work with a partner like IBA when the expertise is required for planning and a new implementation.

IBA has worked on the application of SAP projects since 1996. There is now a team of highly–skilled professionals with almost two decades experience in diverse and mission-critical SAP projects.

This principle can be applied to any technical tool, but SAP is one of the most popular business systems used globally. IBA has the expertise and can deploy consultants and even run your technical help desk for questions related to SAP and all for the lifetime of your project deployment.

In this case, outsourcing allows you to tap into a large talent pool. You can get the right SAP skills in the right place at the right time – every time.

Read more about SAP experience within IBA.

German Outsourcing Association Research Promotes Eastern Europe

IBA Group
Mark Kobayashi-Hillary

The Outsourcing Journal published a research paper last year focused entirely on the merits of ITO and BPO in central and Eastern Europe.

Organised by the German Outsourcing Association this is an interesting paper with contributions from across the CEE region, including those of particular interest to IBA, such as Belarus and the Czech Republic.

Stephan Fricke, CEO of the German Outsourcing Association wrote about the future for outsourcing in the introduction to the paper: “The future looks bright for CEE IT and business process service providers. Why? Because, speaking for our home market Germany, the demand for IT skills and business process knowledge will not decrease. Quite the opposite is predicted, which is not difficult to explain. The current situation in Germany, where companies are unable to fill desperately needed positions in IT and higher qualified jobs as engineering is caused by failed educational policy and there are no signs that the government has efficient tools to manoeuvre against.”

Fricke went on to add: “So German companies will be forced to look outside their borders for IT-project support and the most accessible destination for that is the CEE region.”

Once again a major trade association has pointed out that far from sourcing being just a low-cost way of doing business, companies in Western Europe need to look beyond their own borders to grow quickly and expand. CEE-based companies like IBA are well placed to work with companies in countries such as Germany – to help them succeed as Europe enjoys economic growth once again.

New Technologies Coming in 2014

IBA Group
Mark Kobayashi-Hillary

Welcome to 2014 from IBA. This is going to be an exciting year! Not only is the European economic recovery really starting to pick up – with the UK probably leading the way – there are new technologies that are coming onto the outsourcing scene and becoming really important.

An article in CIO magazine highlights the top 10 outsourcing trends to watch out for this year.

IT outsourcing experts say: “this could be the year customers — and a few robots — take greater control of the IT outsourcing space”.

Our favourites from the CIO list are:

Hybrid offshoring; offshoring will continue to be an important trend, but many companies will explore how they can do it partly themselves and partly with a supplier – in a more blended way than before.

The cloud being grounded; the cloud is here to stay, that cannot be denied, but many companies have jumped into cloud-based services without realising that they often need a complete culture change, not just a technology change. It’s likely that some companies will step back and plan better for the cloud this year.

Lower cost consulting; we all know that most consulting is overpriced and many companies that deliver services can provide great advice as well as delivery – this is going to become a more popular consulting solution this year.

Of course CIO mentions several more trends, but what do you think will be the big outsourcing stories of 2014? Leave a comment here or tweet us on @ibagroup.

Is Offshoring Now Moving to Nearshoring?

IBA Group

Mark Kobayashi-Hillary

It’s interesting to see the Indian press recently reporting research from the Wharton School in the USA on the offshore outsourcing climate in India. The Wharton data reports that many companies are exploring how to reduce their offshore outsourcing strategy – now preferring to find ways they can reshore or nearshore the processes.

This makes sense. Outsourcing for an enormous cost reduction may have been a driver a decade ago, but it’s not possible in the India or China of today. Service quality has become far more important as supply chains have become more complex and this does mean that many companies now want to keep their team closer.

This general shift in strategy does lend itself to technology experts positioned in central and Eastern Europe. The Indian technology boom of the 2000s will not persist into this decade if the more general business strategy is to start keeping valuable assets closer to home.

It is not always possible or desirable to undertake every technical task in the immediate vicinity of the head office of an organization, but the nearshoring option does allow companies in Europe to work across the rest of the continent.

In the past the nearshoring versus offshoring debate was always nuanced by the difference in cost, but now that many companies are actively trying to find a way to keep their team closer together, it seems the value of remote offshoring is declining.

Nearshoring in Europe – The IBA Group Webinar

IBA Group
Mark Kobayashi-Hillary

IBA Group recently hosted a webinar on nearshoring in Europe with me and the team from ‘Outsource’ magazine. You can listen to the entire webinar recording here.

This blog is a text version of my own talk during the webinar. I edited the talk as I was speaking during the webinar because we were a little short of time – it was better to talk less and spend more time on the Q&A – so here is the full version of what I prepared to say during my own presentation:

On this webinar today we are going to talk about nearshoring.

Nearshoring and offshoring and rightshoring are all phrases used quite interchangeably in this industry and many of these phrases were invented by analysts – who then sell you the research that allows you to understand the terminology.

So, I’d like to keep things fairly simple. I’m also aware that if you are on this webinar then you probably have a good idea what we are talking about and you will be more interested in the polls and Q&A than the introductions.

There is no strict definition on how close nearshoring needs to be so this is not an exact science, but a good rule of thumb is whether it is possible to visit your supplier and get home all in one day.

Now this does apply to European clients interested in working with suppliers in central and Eastern Europe so it’s probably the best definition to work with. The Americans consider Mexico to be a nearshoring destination, but you try going from Boston to Monterrey and back in a day.

As I said, none of these definitions are an exact science.

When IBA asked me to join in with this session today I looked back at some of my books and writing on outsourcing to see how often I had mentioned nearshoring. In my 2004 ‘Outsourcing to India’ book I couldn’t find a single reference to nearshoring and even the 2007 book I wrote for the British Computer Society didn’t feature it as a distinct type of offshore outsourcing.

But when I looked at my Talking Outsourcing book, which is really just a summary of all the best bits I wrote for Computing magazine between 2006 and 2009, it is mentioned several times and identified as an important trend – the way ahead.

Nearshoring was clearly an accepted business strategy during the past decade, but it has only evolved into a practice that is separate from offshore outsourcing more generally in the past five years – the post financial crash period of time.

We should not forget how far outsourcing has come in the past decade. It’s now a standard, accepted strategy for businesses in any industrial sector and to reject the opportunities of working with an expert partner is now seen as highly unusual.

Look at the IT market globally. There are so many more platforms for IT systems to run on today, from wi-fi enabled televisions to the apps on your phone. None of this existed a decade ago when we were all talking about parceling up IT development projects and sending them off to India.

Look at a classic business process outsourcing task like customer service. A decade ago this would have meant paying for agents in a call centre and possibly including some email support in the contract. Now customers expect information immediately available before they make a purchase, they want information when in the middle of a purchase and they want to be able to contact you after a purchase – for support or complaints. And all of this communication can take place on email, phone, chat, Twitter, Facebook, or any other social network you care to name.

In both the IT and BPO markets there is far more complexity today in terms of platforms that can be used and how services need to be delivered.

This reinforces the classic reasons for working with a partner rather than trying to do everything in-house:

• You can contract for a service or project knowing that the partner you choose has the skills needed to deliver – you don’t need to search for those skills and then keep them fresh.
• Your partner will have experience of delivering similar projects to other companies. This expertise is extremely valuable when the market is changing so fast.
• The total cost of getting this expert resource should be less than the price of doing it yourself, when considering all the complexities in delivering tech projects today.

When we talk about offshore outsourcing, we always get back to the cost argument. However, I think the argument that you can always save a bundle of cash when outsourcing belongs back in the early part of the last decade.

If you want to find a high quality partner with experience and expertise in the service you need and you want them to deliver successfully without failure then that will not be cheap. It will probably be slightly cheaper to use a partner than to build the capabilities internally, but you can go to market immediately with a partner, you can hand a lot of the project risk to your partner, you can pay as parts of the project are delivered.

There is a big difference between the cost of a project and the value of that project and I’m sure this is a topic that will be mentioned today.

As we see offshore outsourcing now settle into its status as a regular part of management strategy, nearshoring in Europe is becoming an important trend and is worth exploring further – and there are a few reasons for this:

The Euro crisis has stabilized. The situation in the Euro zone is far from rosy, but this is mainly due to a lack of economic growth and the pain of austerity in southern Europe. Nobody is talking about Grexit today.

The EU is expanding. There has been no change to the expansion strategy and the more nations included in the club – there are now 28 – the easier it is for cross-border transactions and labour movement to take place.

The low cost offshoring model is over. Companies want their suppliers to be physically closer, similar in management culture, and reliable.

Last year the business magazine Forbes predicted the end of IT and BPO offshoring to India within 8 years – so that leaves another 7 years left to run.

I wouldn’t believe that all offshoring to India is about to die out as Forbes predict, but the market has entirely changed from what we knew a decade ago.

Do you remember executives rubbing their hands together when they looked at the cost of IT in India? They would double the size of the team to get over the issues of slower delivery from such a remote location.

But costs have increased. It’s no longer a cost reducing strategy to just offshore everything to India.

This is applicable in many markets today. I recently met the Brazil CEO for a major Indian IT service provider and he told me that it’s cheaper for them to hire technical experts in the USA than in Brazil. They are building out their team in South America not to take work from the USA, they want to bid for business in South America and they know that the clients want a great team with experience – and they want that team close by.

The IT market is also changing compared to those days when a big project could be specified and then sent off to a development team. Agile development is far more popular today, teams want to release code weekly or every few days – not every 6 months. The IT teams need a client that is close and involved and rapid development lends itself much more to a nearshored business model.

I think that we also need to include a couple of further points in our discussion:

. app development is entirely different to traditional IT development. Immediate global shop window and nobody cares where it was developed. Angry Birds is from Finland. Ustream is from Hungary.

. markets like odesk are allowing small teams to be built then broken apart so small IT projects can be delivered using a virtual team – no need to outsource at all.

But nevertheless, in the corporate world and manager that needs an IT project to be delivered today is unlikely to be exploring an option where the partner is on the other side of the world. Even where a company that originated in India or China is concerned, they will be offering more local delivery from Eastern Europe. Nearshoring is clearly one of the most important strategies today if you want your offshore outsourcing programme to succeed.

Eastern Europe is becoming a tech hub

IBA Group
Mark Kobayashi-Hillary

Several business magazines and journals have been focused on growth in Central and Eastern Europe over the past few months. The main angle of the observations is that the CEE region has moved far beyond the traditional role as a lower cost alternative to undertaking technology work in Western Europe and is now fostering a hub of talent that should be sought after by the world.

There are now a number of successful startup companies from the region that are dominating their own niche. Ustream from Hungary is a great example. People all over the world are using the Ustream app to live stream events direct from their phone to the Internet without ever questioning where the app came from.

And even in the more traditional IT service sector, the talent available is some of the best in the world. The CEE region regularly ranks at the top of the world for educational achievements in maths, science, and technology. In the 2013 Google Code Jam competition, 16 or the 24 finalists were from Eastern Europe.

The IT service sector is already strong and mature and the startup sector is growing. All the major European accelerators are now regularly visiting the CEE region and looking for companies to invest in. This growth in the innovative startup sector will only make the wider IT community stronger as the CEE region becomes a place that people want to include on their CV. Have you explored some of the opportunities available from companies working in the CEE region yet?

What Are the Secrets to IT Outsourcing Success?

IBA Group
Mark Kobayashi-Hillary

A recent article in the TechTarget publication, Microscope, explores the secrets to creating a successful IT outsourcing relationship. Many managers have experience of outsourcing these days – it’s no longer the secret it once was, but are the secrets to success still the same as they used to be?

The Microscope feature focuses on these three attributes as the most important:
– Partnership; work towards a partnership as two companies working together, not behaving like a powerful client paying a service provider.
– Flexibility; reach an agreement and write your SLA, but don’t reach for the contract every time something unusual happens – be flexible enough to help each other.
– Ability to change; your business will change over time, so work towards a long relationship that might be very different to where you started.

These are three great pointers, like maxims for getting outsourcing right. The industry has moved on a long way from the old days of screwing down suppliers to very tough conditions and not allowing them to make a profit, but there is a key point not mentioned in the feature.

Location of supplier remains important. There are some great IT suppliers all over the world, but if you need to work closely with your supplier and you want the ability to meet with them regularly then it would be best to not have that part of the team a 12-hour flight away.

If you are trying to create a genuine sense of partnership, rather than just a client/supplier relationship then nearshoring still works far better than remote offshoring. People are people and people want to see the people they are doing business with – in person.

Rightshoring Decision-Making Process

On October 4, 2013, Professional Outsourcing published a video interview with Sergei Levteev, IBA Group Chairman. In the interview entitled Rightshoring Decision-Making Process, Levteev shared his perspective of rightshoring.

PO: Hello, Sergei. Could you introduce yourself please and your title and role at IBA?
SL: I’m Sergei Levteev. My position in the company is Chairman of the Supervisory Board. It is clear that I’m responsible for all strategic questions in our company, namely finance, investment, and marketing policy.
PO: Could you tell us a little bit about the services that IBA provides?
SL: We are an IT company and our main direction is to provide outsourcing for different projects in different countries. And these are various services: from programming development to support of these programs, migration, and consulting. This is our main activity.
PO: Ok. What is IBA expertise in outsourcing?
SL: First of all, it is necessary to say that IBA was a pioneer of this business in Eastern Europe and now we fulfill projects on five continents in more than 40 countries already. The size of these projects that we are doing starts from a few people and is up to thousands of men/months. And duration is also sometimes quite big: from a few weeks up to a few years. We are covering by our services various platforms. During these years, we have really created partner relations with our major customers.
PO: We are here to discuss rightshoring. What’s IBA definition of righshoring and why is it important for organizations?
SL: In my point of view, mainly you should make a choice between different destinations. In the past, outsourcing was practically equal to Indians. Now, more and more understanding is coming that companies from Eastern Europe where we are present and have our main development centers can fulfill these tasks, probably with a bigger advantage for the customer. Also, it is necessary to add that different expertise and a high level of this expertise is present in Eastern Europe just now. And it is one of the advantages of this direction when you are looking for rightsourcing.
PO: How should an organization approach the idea of rightshoring if they’re looking to outsource?
SL: First of all, to look for references about an organization with whom you are in contact. IT outsourcing is not so easy, it is not so easy to describe what’s necessary to do. There should be some level of trust and this trust is coming from the reference of organizations that already have experience of working with such company. Second point is that it’s necessary to find the right expertise. You know, it’s not possible to cover all expertise that is present in information technology. Some companies specialize in one direction, some are active in another. And it is the right expertise that should be found in various proposals. Once again, I would like to add that some level of common understanding should be found between an outsourcing company and a company which is looking for outsourcing. It means that the same words, the same descriptions should be understood absolutely similarly. This is very important.
PO: So, it’s quite a complex decision–making process then. It’s not just deciding on cost or vertical expertise or a region, is that right?
SL: Sure. Of course, cost is very important because we are on the market and should be competitive. But it’s also necessary to understand what is behind this cost. And very important here is the reference that a service provider can present to the outsourcers. Also, it’s very important to understand that nobody can provide a full range of services and every company has some specialization. It’s necessary to find the right service provider who had expertise for years in a particular technology.
PO: Finally what are the pitfalls around right shoring — what should organisations avoid?
SL: First of all, outsourcers should understand that relations with a service provider will be different than with their own staff, especially when it is an offshoring service, which is the most economical type of outsourcing. An outsourcer feels that it will be absolutely similar, if he has no experience so far. It will be necessary to create such relations from the beginning. Second point is the necessity to pay attention to the items which are not written in the contract. For example, attrition rate of the service provider. We’re proud that in our case we have one of the lowest attrition rates among IT service providers. It’s also an important point that it is necessary to create common understanding for the terminology, for any words you are putting in the contract or any agreement. Sometimes outsourcers and service providers understand the same words differently. I think these are three major points in this case.
PO: Thank you, Sergei.

IBA Group Holds an Event in London to Celebrate the 20th Birthday

IBA Group
Mark Kobayashi-Hillary

Last week, IBA celebrated their twentieth birthday with a fantastic event in London. I was invited to host a part of the evening where some great insights into outsourcing in the years ahead were shared by a range of experts.

The venue for the event was the Wellington Arch. An incredible building in central London that I have travelled past for years and never knew that the public could go inside. From outside it looks just like an enormous statue, but there is a hidden door leading to a network of rooms.

Sergei Levteev, the IBA Group chairman introduced the evening by talking about the foundation of the company twenty years ago. Martyn Hart, the chairman of the National Outsourcing Association (NOA) then talked about the NOA twenty years ago, when outsourcing was a new word – most companies were still talking about Facilities Management.

Then there was the competition between expert commentators. Each expert was asked to deliver a five-minute talk on how they see outsourcing changing over the next twenty years. The audience had voting cards and could choose their favourite, so the audience was listening intently and ready to choose their winner.

You can click on YouTube here to see the four talks for yourself.

The four speakers competing in the event were:

  • Martyn Hart, Chairman of the National Outsourcing Association
  • John Garratt, Editor of IT Europa
  • Derek Parlour, Head of Commercial at National Rail Enquiries
  • Colin Beveridge, industry analyst at Better Practice.

And who won? The audience on the evening chose Derek. His friendly and casual start to the talk led to some great insights into the way suppliers and clients will need to interact in future and the audience warmed to his theme.

If you watch the videos then why not let us know on Twitter which presentation you enjoyed the most?

 

Developing your mobile strategy

IBA Group
Mark Kobayashi-Hillary

Developing a mobile strategy can be a complex time for any company. The last thing you want to worry about is issues such as operating system or technology platform, which is where the expertise of a company like IBA can help, but there are some important decisions to make before you even think of building a mobile tool.

The initial strategic decision you need to think about is whether to build a mobile-friendly website or to create an App. There are advantages and disadvantages to each solution and the correct path will depend on the type of service you plan to offer, but to summarise these are the questions you should be thinking about:

• How immediate do you want the tool? Do you think people are prepared to install an app or would they prefer to just find it online on a website without needing to set anything up on their phone?

• Do you need compatibility across all devices? If you build an app it will only work for a single operating system (Android, Windows, Apple IOS) so you need to build several versions to reach all phone users, but a well-designed website can work on any device.

• How often will it need to be upgraded? If you plan on frequent upgrades then it could be problematic to design as an app as you are asking the user to frequently upgrade their phone applications. With a website it would be automatic.

• What is your budget? It’s a lot cheaper to build and maintain a mobile website than a suite of mobile apps for various operating systems.

But apps have their place. When you need the specific power available on a particular type of device then only an app can tap into that system. If you are building a tool that will be used often then an app can be a better interface – think of how you access Facebook on your own phone. And apps can be designed to also work offline – something not at all possible for a website.

This is the first step on a mobile strategy. There are various technological questions to resolve before working on a solution, but if you have not considered how your service will be used then the technology itself cannot be planned or designed.

CEE Getting More Attractive Than India and China

IBA Group
Mark Kobayashi-Hillary

This blog has often explored the relative advantages of working with IT companies in the CEE region. The Central and Eastern European Outsourcing Association summarises the benefits of the region as:

• Considerable budget savings;
• Ability to focus on core competencies;
• Extensive experience of an outsourcing subcontractor;
• Speed increase in projects tasks solutions;
• Reduced capital investments;
• Full-time access both to IT innovations and high-qualified IT experts;
• Internal processes optimization;
• Improved manageability.

That’s a long list of benefits. But what are the downsides of outsourcing today? There are far fewer downsides that there used to be. It’s true that handing tasks to a partner means you need to monitoring them outside your organisation and agreeing on specific measurable targets, but all managers today are used to working with some form of Key Performance Indicators – even for internal measures of success.

Since 2003 the Eastern European IT market has become one of the most promising markets in IT outsourcing, demonstrating dozens of positive examples of companies the decided it would be better to stay in Europe rather than far across the world to India or China.

According to the Tholons report “2012 Top 100 Outsourcing Destinations“, Eastern (and Central) European countries are now around a quarter of the entire list of most attractive places to work with.

China and India are now facing sharp increases in costs just as Europe is remaining a lower place to do business. The future looks bright for those who consider Europe – and the CEE in particular – as a great place to undertake their IT business.

How is outsourcing changing the IT market today?

IBA Group
Mark Kobayashi-Hillary

Outsourcing is changing fast. Cloud computing, the consumerisation of IT, and trends such as BYOD have all changed the way the CIO plans for IT needs and engages with IT partners.

Outsourcing used to be about literally dealing with ‘my mess for less’. A company with an internal business or IT process would hire an expert service provider who just performed the same function – hopefully making it better or cheaper over time.

Now that IT has become so integral to the function of modern companies, the IT suppliers have become trusted delivery partners. The client company simply cannot deliver without the expertise of their IT partner.

But IT can be procured in many ways today. The iPhone has taught consumers that apps can be installed when needed and deleted when they are not. Services like Gmail have taught consumers that very important systems can be web-based – there is no need for expensive locally installed software.

All these lessons are flowing back into the enterprise and changing how companies want to procure technology. But with the supplier community so well entrenched, how is this going to change the outsourcing market?

This Computer Weekly feature explores some of the questions, but one thing is clear, expert suppliers of solutions are still needed. As these changes flow from the consumer market to the enterprise it is likely that companies will need partners to be closer and more reactive than ever – this looks good for suppliers based in Eastern Europe rather than far from their clients.

Eastern Europe to Dominate the IT Outsourcing Market

IBA Group
Mark Kobayashi-Hillary

A recent article in the IT Outsourcing News explores the various reasons it can be worth exploring the Eastern European IT market. Of course, all the usual benefits are listed:

• Considerable budget savings;
• Ability to focus on core competencies;
• Extensive experience of an outsourcing subcontractor;
• Speed increase in projects tasks solutions;

And many more, but I don’t want to just list the general benefits of outsourcing here. What was more interesting in the article was the reference to the analyst and research firm Tholons Company report ‘2012 Top 100 Outsourcing Destinations.’

Eastern European countries (the CEE region) have covered around a quarter of the list of the most attractive countries for Business Process Outsourcing (BPO) destinations from all over the world.

Considering the relatively small size of the CEE region compared to the rest of the world, to see a quarter of the best global BPO destinations in the CEE region does indicate that the region has some special advantages. The Tholons view of the major reasons for this CEE dominance is:

• Relatively low costs since a number of countries are not EU members; the manpower and well-established infrastructure allow customers to reduce their budget without losing service quality.

• Proximity to their permanent clients from Western Europe due to convenient geographical location, visa-free or simplified conditions (depending on a specific country) for EU citizens.

• Convenience in communications and control – almost all CEE representatives are located in the same or very similar time zone with no communicational barrier as English has remained to be an international language in CEE for quite a long period of time.

• Similar set of rules in business making process: ISO standards are adopted as state acts in the majority of CEE countries and are obligatory for some industries.

• A very high educational background as normal.

So don’t just take our word for it that you should be exploring this region. When analysts produce lists of the best places to do BPO and over a quarter of the locations are in CEE it should make the world take notice.

Despite the Economic Difficulties, IT Workers Are in Demand

IBA Group

Mark Kobayashi-Hillary

Karl Flinders of Computer Weekly published some research recently that explored the development of the CEE outsourcing market in some depth.

One of the standout statistics was around the cost of doing IT work in China today, with an average programmer earning about $20,000 a year. This shows that China can no longer be considered a low cost destination for IT outsourcing and of course there are all the associated problems of distance, language, and culture.

But what I found really interesting was the demand for IT workers predicted across Western Europe. Despite the economic difficulties, IT workers are still in demand and the data published in Computer Weekly shows that by 2015 there will be a deficit in many European nations. For instance, the UK will need 55,000 more IT professionals that it will have, Germany will need 75,000 more, and Italy 55,000 more.

With the costs soaring for IT work in Asia, and Western European countries still needing an enormous amount of IT work – and not having enough IT workers – the argument for working with companies based in Eastern Europe is obvious.

When companies with a good reputation and great expertise can be found just a short flight away – close enough for a day trip – it makes sense to explore this option for many more reasons than price alone. As the example of average costs in China demonstrates, IT outsourcing is today about a lot more than low cost offshoring. Europe needs to work together to plug the skilled worker deficit.

The Continued Threat of Outsourcing

IBA Group
Mark Kobayashi-Hillary

HR magazine published a feature earlier this month titled “lower-skilled jobs still threatened by outsourcing to Europe” – the kind of headline that compels a reader to read on, but the story isn’t quite as described.

The feature is extremely confused for a number of reasons. First, the writer is not just talking about low-skilled jobs – he uses the comparison of experienced IT industry workers to contrast different salaries across Europe. Then secondly, he talks about how salaries in Germany, France, Belgium, and Ireland are up to 57% higher than in the UK.

This confuses me. IT professionals on £42,000 per year are not low-skilled workers and if there are many countries in Europe paying higher salaries than the UK then surely those are the places where most skilled workers will go anyway?

And I would question this data. I have a lot of Irish friends and they are almost all figuring out how to leave Ireland. It is impossible to believe that pay and conditions are better there than in the UK.

The most confusing thing is that this is now 2013. Europe expanded to the east in 2004, almost a decade ago. It feels very strange for the media to be talking about how jobs are threatened by outsourcing when Europe itself is a free trade area that encourages businesses to work across borders – with the free movement of people a key part of the union.

I was recently in a bar talking about the continued expansion of the EU to two senior executives from Austria. I asked them how they felt about Bulgaria and Romania joining the union – they immediately responded enthusiastically and suggested that it will make business with these two important markets a lot easier.

This is the complete opposite of the British reaction – where a fear that thousands of people will flood to London from the new EU member states is still the normal reaction. Only the British press appears to be still fearful of the European Union, with this ‘jobs threat’ headline just the latest example I have read.

There are more British people living and working across Europe than Europeans working inside the UK. So why does the media fear this European jobs threat? It seems that many British people are capable of venturing into the world to find where the opportunities exist.

The East is Rising

IBA Group
Mark Kobayashi-Hillary

International analyst firm Gartner recently suggested that IT Outsourcing this year would be worth around 697 billion Euros. That’s an enormous amount of business and IT service companies are all keen to find a way to enjoy taking a percentage of that global spend for themselves.

While countries like India, China, and the Philippines have dominated the international outsourcing market, there are many locations in Central and Eastern Europe that are now snapping at their heels. Serbia, Romania, Albania, and Croatia are all examples of locations where many IT specialists are located and yet their cost is lower than experts with the same skills in Western Europe.

A recent report on the software development and IT outsourcing industry in Ukraine determined that over the last eight years, the volume of software development and IT outsourcing services in Ukraine has grown by a factor ten.

According to the research findings, in 2011 the volume of IT outsourcing and software development services provided in Ukraine reached US$ 1.1 billion and the number of IT specialists working in the industry reached 25,000 people with 20% growth.

But in many cases, many small companies with no international footprint are located in these countries, ready to do business, but unsure how to find clients in the west. It’s no good just being a lower cost if you have no way to develop relationships with potential clients in the west of the continent.

The East may be rising in importance and certainly worth a look if you are considering outsourcing your IT services, but the companies that are based in the CEE region need to build better relationships with the clients in the west. Without this, they will forever be seen as just a lower-cost alternative to local IT experts and that is a long way from the truth.

Tholons Top 100 Features Many CEE Cities

IBA Group
Mark Kobayashi-Hillary

The latest Top 100 Outsourcing destinations research published by international advisory firm Tholons makes for good reading if you want to explore Eastern Europe. No fewer than sixteen different cities in the region are described in a report that covers the entire globe.

Kraków in Poland was described now as an ‘established’ location for offshore outsourcing, with the rest described as emerging, aspiring, or on the radar. Kraków and Dublin were the only European cities in the top ten on the Tholons list – with the other eight all being from Asia.

This is a great result for the CEE region in general. Tholons lists many cities across Asia and Latin America, but to find so many cities of interest to the outsourcing community all clustered together in Eastern Europe does demonstrate that a cluster of expertise is developing.

All the cities listed have the great advantage of being close to potential clients in Western Europe and being close to other great delivery centres in the CEE region. With some locations better at ITO and some better at BPO, it’s encouraging to see so many cities all in one single region.

With experts such as Tholons shining a new spotlight on Eastern Europe, it cannot be long before many other cities in the region start being recognised for their delivery capabilities too.

Outsourcing in 2013

IBA Group
Mark Kobayashi-Hillary

The analyst firm Horses for Sources is conducting their annual survey on the state of outsourcing in 2013. You can participate in the survey here and I would recommend adding your voice because this is one of the best annual summaries of what is going on in the sourcing industry.

One of the biggest changes I have observed over the past few years, and one that is accelerating at present, is a reduction of the offshoring concept – meaning that the world feels a lot smaller and that it is now normal to perform various tasks for a company in many locations.

If you go back a decade or more, an offshore IT delivery centre felt very much like it was in another location, a place where you might not expect senior executives from the client firm to be based. India is a good example – it was a low cost software production centre and executives only ever visited on business trips.

Eastern Europe is the same. There was a clear divide between where the clients were located and where the delivery centres were being developed. But this has all changed and Eastern Europe has changed much faster than locations like India.

It’s still a big journey for an American or European executive to get over to India and despite offshore delivery from India becoming common, there is still a clear divide once you arrive in the country and see a shining new software factory right next door to a slum.

It’s almost a decade now since countries like Poland and the Czech Republic entered the European Union and all these nations to the east now feel like an integral part of the continent – even more so now that the Eurozone is struggling. Ukraine grew over 5% last year and the Czech Republic almost 2% so these places to the east are really helping Europe as a whole.

We are already seeing a situation develop where Eastern Europe becomes a market for Western Europe to work with, rather than a place to locate lower-cost services. How long before it looks far more attractive to invest in the east?

Ukraine Steps Up the Heat

IBA Group
Mark Kobayashi-Hillary

New data from real estate experts Jones Lang LaSalle has indicated that Romania and Ukraine are becoming far more important players in the Central and Eastern Europe outsourcing market – challenging the more traditionally dominant Polish market.

Ukraine was highlighted in the research — the value of its IT outsourcing market hit $1bn in 2011, the Financial Times reported earlier this month, up tenfold in the last decade.

Among those major companies setting up in Ukraine, according to Kyiv Post, is Nestle, which recently opened a service centre — right across the border from Poland in Lviv.

You might ask why a real estate company is releasing data on the ITO and BPO industries and how they could be offering analysis on the growth of the hi-tech service sector. Growth in these markets needs people and offices and so one of the business areas with their finger right on the pulse of which region has the most interesting growth prospects is the commercial real estate sector.

They know where companies are investing before the companies themselves make a big noise about their own success – so markets like Ukraine are clearly now developing a momentum worth watching closely.

Poland may remain dominant in the BPO and call centre market, but this enormous growth in IT spending further east is a sign of where the smart money is heading.

Outsourcing and the US Presidential Election

IBA Group

Mark Kobayashi-Hillary

For the past few US presidential elections, outsourcing offshore has been a major topic of debate. Usually the rhetoric revolves around which potential president will be tougher on offshoring than the other.

At the last election there was talk of new tax hikes for companies purchasing services from other overseas companies – but of course nothing happened, this really is just electioneering.

The USA remains the most powerful economy in the world even after the financial meltdown starting reshaping world finances. American products produced by companies such as Boeing and Microsoft sell all over the world. These products are also developed all over the world – business today is a global network of companies selling products and services across borders.

The offshore outsourcing debate during US election campaigns has always been full of hot air, playing to a domestic audience that likes to think of American companies employing only American workers, but the world economy is no longer just concerned with domestic politics.

If Dodge wants to sell cars outside the USA they need to employ people in the markets where they want to sell. If Microsoft wants to ensure their products work correctly across all the major markets of Asia, they need to employ people in those regions.

And when it comes down to IT expertise, the USA has plenty of that – it’s the birthplace of every modern giant in technology from Google to Apple, but that doesn’t mean there is not technology expertise outside the USA. If an American company wants to employ the services of an IT expert outside of the USA then that’s their choice – it’s a straight decision based on competition.

And the USA remains a powerhouse so they should welcome international competition – it will only help them to raise their own game.

Is It Time to Stop Using the Word ‘Outsourcing’?

IBA Group
Mark Kobayashi-Hillary

Technology industry analyst HfS Research has launched a survey asking whether they should stop using the word ‘outsourcing’ in their coverage of the industry – and even whether the technology services industry should entirely stop using the word. Is it a dirty, tainted word?

Most involved in technology outsourcing have moved on from the old days of labour arbitrage or augmentation. Service providers like IBA don’t just pitch themselves as the cheapest offshore service providers; they position themselves as the experts in whatever they do. They promote specific areas of business and expertise.

The buy-side clients commissioning work (or outsourcing the work) from the service providers know that they are buying in expert services, usually services they could not perform in-house. They don’t want the cheapest provider – they want the best for their business.

But the political rhetoric has barely changed. As the US presidential election approaches, outsourcing is still considered a dirty word for politicians and a way to score a few cheap votes by patriotically insisting that they would ban it forever. But we all know that US politicians say this at every election.

These same politicians probably calculate their budgets using Microsoft Excel and broadcast information using Cisco services. They fail to see that any large technology company is already working with global resource and any company starting today with a need for some technology development will consider hiring suppliers from all over the world.

It’s not that outsourcing is about shipping work off to cheap economies; it is that the Internet has created a global marketplace. If the marketplace is global then that can create both problems and opportunities back at home, but how come the politicians rarely focus on the opportunity of small niche companies being able to reach a bigger market?

So do you agree with HfS? Is it time the industry stopped using the term outsourcing and if so, what would be better word to replace it?

Texting in the UK

IBA Group
Mark Kobayashi-Hillary

The British communications regulator Ofcom just published a new analysis of telecommunications in the UK and there were some interesting results. After years of constant growth, Britons are now making fewer calls on their mobile phones, but the number of text messages sent has increased dramatically.

So the British are texting more and speaking less – is it significant?

It shows a marked change in the way people are communicating today. For instance, the survey notes that 58% of British adults send at least one text message a day, yet only 49% engage in a face-to-face conversation on a daily basis.

The argument for texting is easy – it is an asynchronous mode of communication. In short, I can send a text and not worry about disturbing the person, they can respond in their own time. A call is intrusive – it demands immediate attention. I personally ignore my telephone if I am busy with work because to endlessly be picking up the phone each time it rings would mean I never actually achieve a thing – other than answering calls from people who assume I am free to talk.

But it is significant to see that the number of calls is actually dropping and it is a worry for the mobile phone industry. They don’t make much money on texts – they are usually bundled into a contract, so voice calls are dropping and many are learning how to use their 3G connections to make a call bypassing the phone company.

But the most shocking news from this survey has nothing to do with phones at all. Can it really be true that half of British adults do not have a conversation with another person for an entire day? Maybe they should pick up the phone and call a friend…

Everest Research Says Eastern Europe Is the Place to Watch

IBA Group
Mark Kobayashi-Hillary

The research and analysis company, Everest Group, just published their latest Market Vista: Q1 2012 report – a quarterly focus on global outsourcing and offshoring activity and it shows that despite troubled times in many business markets, outsourcing is holding steady.

First quarter global transaction volumes reached about US$3bn in annual contract value (ACV), an increase of 11 per cent over the previous quarter. Compared to Q4 2011, the global market saw a 9 per cent increase in Business Process Outsourcing (BPO) transactions while IT Outsourcing (ITO) transaction volumes remained about the same.

83 per cent of the deals signed were new transactions showing that there is still plenty of business coming through – it is not just about companies renewing their existing outsourced contracts.

Some key points noted in the new report include:

• BFSI (banking, financial services and insurance) sector leads the market in transaction volumes with an increase of 12 percent while the MDR (manufacturing, distribution and retail) vertical saw a 9 percent increase. Transaction increases also were recorded for public sector, energy and utilities, and telecom verticals, but the healthcare vertical saw a large drop in deals signed during the quarter.

• Transaction volumes decreased in North America, held steady in the United Kingdom and increased significantly in Rest of Europe.

• Offshore activity saw 30 delivery centres established across captives and service providers in the first quarter compared to 29 in the previous quarter. With significant activity occurring in Latin America and Eastern Europe.

This latest research shows that the offshore outsourcing market remains strong, despite economic and business uncertainties in the market today. It is also worth noting that Everest see significant activity in Eastern Europe – this is a key region to watch at present.

IBA Choir Performs at Minsk Philharmonic Society

On June 3, a joint concert of the IBA’s choir Concordia Chor and the Swedish choir Boo Cantabile was conducted at the Minsk Philharmonic Society. The concert was organized within the framework of the 3rd international festival of amateur choirs Guki Leta (Sounds of Summer), and with support from the Embassy of Sweden in Belarus and the Belarusian Union of Musical Workers.

The concert consisted of two parts. In the first part, the Swedish choir performed under the management of Helena Engardt and in the second, the IBA’s choir conducted by Galina Kazimirovskaya.

See video of Boo Cantabile

See video of Concordia Chor, solo by Grigory Zasmuzhets

See video of Concordia Chor

See video of Concordia Chor singing with Boo Cantabile

IBA Choir Performs at Minsk Philharmonic Society

IBA Choir Performs at Minsk Philharmonic Society

IBA Choir Performs at Minsk Philharmonic Society

IBA Choir Performs at Minsk Philharmonic Society

IBA Choir Performs at Minsk Philharmonic Society

See more pictures at IBA Group’s Facebook page

The Technology Olympics

IBA Group

Mark Kobayashi-Hillary

It is a mere two months to the start of the London Olympic games, an event that has cost at least £9bn to stage, with a large part of that budget taken up in infrastructure costs, including technology.

But one of the most interesting technological aspects of this event is that it will be the first ever Olympics where social media is a part of the event and will help to form the opinion of a global generation.

It is true that tools like Facebook and Twitter were around for Beijing 2008, but they had not reached the ubiquity of today and tools like the iPhone were still in their infancy. Right now you can use Twitter to follow the chairman of the London 2012 Organising Committee. You can follow the athletes as they train for the games and even ask how it is going. You can ask the pundits for their predictions and get involved in planning how you are going to watch the games – whether it is the big screen in Hyde Park or down the pub.

Can you just imagine how many smart phone photographs are going to be uploaded on the 3G networks around the London Olympic stadium in the seconds and minutes following the 100m sprint final? I guess there will be at least a million photos of that single event uploaded – how many more photos and video from London can we expect during the games itself?

London is going to be special for this reason. It is going to be the first truly interactive games where the people will broadcast the event – not just a presenter in a TV studio talking to passive viewers. This will be the biggest backchannel of conversation, speculation, and debate ever witnessed – and it’s all going to be driven by London, showcasing our capital city to the world.

Although we often think of the technology around the Olympics in terms of contracts to big companies to build communications infrastructure, at this event it is going to be all about the people watching the games, rather than those on the track.

IBA and Modern Art Museum Launch Exhibition of Collages

On May 2, IBA Group and the Modern Art Museum of Belarus opened an exhibition entitled Hanns Baum: 18 Years in Belarus. Collages. Assemblages. The exhibition features selected works by the German artist Hanns Baum who spent 18 years in Belarus working as IBM coordinator at IBA Minsk, the largest development center of IBA Group.

See a series of video clips (in Russian and German) of the opening event and the press conference.

Valentin Kazan, IBA Vice president, introduces Hanns to journalists at the press conference.

Natalia Sharangovich, museum director, says that Hanns’ works are a reflection of Belarusian reality and introduces Sergei Levteev, IBA president, who recalls the changes that have happened at IBA since Hanns first came to Belarus.

Hanns Baum describes his works and creative process.

Zinaida Britch, a veteran of IBA, speaks about the influence that Hanns’ creative work had on IBA employees.

Hanns speaks about Minsk when working on assemblages.

Hanns gives a master class 🙂

Hanns gives portraits to IBA co-workers

Installation

Press conference

Valentin and Hanns

Press conference

Sergei Levteev

Hanns Baum

Zinaida Britch

Natalia Sharangovich

See more pictures of the event and Hanns’ works at IBA Group’s page on Facebook