www.outsourcing.com www.IRPAnetwork.com

Chicago May 2, 2014

EXECUTIVE ROUNDTABLE SERIES

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8:30-9:00 Registration, Continental Breakfast & Networking

9:00-9:15 Welcome & opening remarks Raheem Hasan, CMO IRPA Frank Casale, Founder & CEO IRPA/OI Peter George, Attorney, Baker & McKenzie, LLP

9:15-10:00 Robotic Process Automation: The Emergence of Digital Labor, its Impact on the CIO and the Coming Shakeup among All Service Providers Globally - Presented by Josh Langford, Vice President, Midwest, IPsoft

10:00-10:15 Networking Break

10:15-11:00 Challenges and opportunities related to managing multi-vendor relationships and the impact that new technologies will have on the outsourcing ecosystem, Presented by John Lytle, Director, ISG

11:00-11:30 Roundtable discussion & Event Wrap up

Today’s objective is to both educate and learn!

© 2013 The Outsourcing Institute – Confidential

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Founded in 1993, The Outsourcing Institute is a neutral professional association

dedicated solely to outsourcing.

Largest Network of Outsourcing Professionals in the World

with 70,000+ members

−the largest group of buyer executives globally

Outsourcing.com is one of the most trafficked outsourcing

websites on the internet

−Consistently ranked in top 3 when Searching Outsourcing

and other key phrases

© 2013 The Outsourcing Institute – Confidential

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“At the center of the global outsourcing ecosystem”

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IRPA helps business leaders position themselves at the cutting edge of knowledge work technology.

Get the latest trends, expert interviews, best practices and commentary from the pioneers and thought leaders of robotic process automation.

The Institute for Robotic Process Automation (IRPA),

located at IRPAnetwork.com, is an independent professional

association and knowledge forum for the buyers, sellers,

influencers and analysts of robotic process automation.

5

IRP

A S

ERV

ICES

Services for Providers

• Sponsorship opportunities to publish and promote thought leadership, company profiles, case studies and video segments.

• Goal: Increase marketplace visibility, drive education and awareness.

Content Marketing

• Promote partnerships and alliances through virtual (webinars) and live events (conferences and roundtables).

• Goal: Facilitate networking opportunities with buyers, providers, analysts and influencers.

Event Marketing

•Go-to-market program development (sales tools, lead generation programs, analyst outreach).

•Goal: Drive growth.

Sales & Marketing Advisory

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Robotic Process Automation:

The Emergence of Digital Labor, its Impact on the CIO and the Coming Shakeup among All

Service Providers Globally

Presented by: Josh Langford Vice President, IPsoft Midwest

The Digital Labor Opportunity

McKinsey predicts over the next decade 1/3 of

this market will be replaced by digital labor

Knowledge Worker market is $9 Trillion

and represents 9% of Global Workforce

and 27% of Global Wage Base

$3 Trillion Industry will be replaced by innovation in

technology products, services, and software

Technology Heat Map

The Technology Heat Map is dynamic and suggest both risk and opportunity to the market participants in the coming years.

Issues th

at are on

the D

esk o

f Tech

no

logy

Lead

ers

Big Data

IT Consumerization

Talent Management

Cyber-Security

Internet of Things

Unified Communications

& Analytics

Commercial Market Trends

The pace of change in today’s market is exceeding our collective pace of learning. Services and pricing are changing, but our commercial models were not designed for this new world.

Pace o

f Ch

ange >

Pace o

f Learn

ing

Business Alignment

Technology & Services

Business Practices

We are here Growing

Misalignment

Market Disconnects Where is the misalignment?

Pricing • Pricing vectors for services are

dramatically dropping as Service Providers begin to implement

• Labor Automation • Big Data and Analytics • Software Tools & Platforms

Innovation • Normal commercial relationships (i.e.,

contracts) limit innovation by eliminating or severely restricting:

• Transparency • Risk Taking • Shared Failure • Shared Reward

Commercial Constructs • 1,000 page contracts with prescriptive

SOW’s, SLA’s, and pricing does not work well in a dynamic and sometime ambiguous market.

• More collaborative and dynamic approaches are required.

Wave View of Technology Trends: Virtualization

The common theme in today’s changing technology landscape is Virtualization. Cloud Computing leading to the virtualization of physical compute, Digital Labor leading to virtualization of labor.

Wave V

iew o

f Tech

no

logy

Tren

ds - V

irtualizatio

n

Big Data Unified Communications

IT Consumerization

Automation Of Knowledge Work

Talent Management

Cyber-Security

Big Data & Analytics

Mobile Internet

Current Cresting Wave

Virtualization of physical computing leading to greater reliance on network technologies.

New Wave Forming

Virtualization of technology labor resources leading to a full reliance on network technologies.

Increase in Network-Enabled

Architecture

Reliance on Network-Centric

Architecture

This will put Network Technologies center stage in coming years.

Network Centric Service Delivery Evolution N

etwo

rk C

entric Serv

ice Delivery

Evo

lutio

n

Network As Communications

Network Enabled Compute

Network Centric Business Platforms

Past Present Near Future

The role of the network will have increasingly central role in the delivery of business platforms and service delivery. Cloud Computing – Phase 1. Digital Labor – Phase 2.

History of Models in One Chart Su

pp

ly C

hain

F

rom

On

e to M

any

As technologies evolve, Functional Out-Tasking and Service Integration will emerge as the growth areas for Third Party Services. SI Management is strategic.

Multi Tower

One Neck To Choke

Model

Tower 2

Tower 3

Tower 4

Market last 3 years

Importance of Labor Arbitrage

Importance of Software, Platforms, Labor Automation,

Scalability

FUN

CTI

ON

AL

OU

T-TA

SKIN

G Tower 1

Next 3-5 years

Serv

ice

In

tegr

atio

n

Strategic Out-Tasking Players

EMC

Akamai

VMWare

Hitachi

IPsoft

Oracle

SFDC

Amdocs

Amazon

Xerox

IBM

Etc.

Strategic Tactical

Sourcing Evolution Labor Wave Theory So

urcin

g Evo

lutio

n L

abo

r Wave T

heo

ry

Think of the market progression from the left hand side of the chart to the right in two waves: Wave 1: Labor Arbitrage; Wave 2: Labor Automation

Wave 2 Characteristics Wave 1 Characteristics

• 15%-30% cost take out

• Model is scalable to the extent that you can scale labor

• Custom/complex, legacy :“Your mess for less”

• Access to Low Cost Labor necessary to provide continuous value

• Revenue/Profit correlated to People

• 40%-75% cost take out for relevant functions

• Model is scalable and is largely independent of labor growth

• Transformative – New way of doing business

• Access to “Rocket Scientists” who can codify manual processes

• Revenue/Profit NOT correlated to People

Wave 1 Labor Arbitrage

Wave 2 Labor

Automation

The Road Ahead

Polar Shift in the Relation of Technology & Labor P

olar Sh

ift in th

e Relatio

n o

f Tech

no

logy

& L

abo

r

Bu

sin

ess

Pro

cess

Te

chn

olo

gy

Peo

ple

Bu

sin

ess

Pro

cess

Te

chn

olo

gy

Peo

ple

Big Data

& Analytics

Moore’s Law

Cognitive

Polar Shift Old: Technology Supports Labor New: Labor Supports Technology

Today Tomorrow

Cognitive Technologies: Sci-Fi Meets Reality C

ogn

itive Tech

no

logies: Sci-F

i Meets R

eality

Language comprehension • Nuance Technologies

Language production • Narrative Science – news articles written by bots

Understanding • IPsoft’s Amelia – avatar with a neural processor capable

of dynamic process grafting

Pattern Recognition • Opera Solutions – signal to noise data parsing

• Google Brain

Subjective Assessment • IBM Watson

Synthesis of Complex or Large Scale Data • Google Car

Self Aware Systems • Kurzweil’s Singularity

Innovation will Transform the Business Landscape In

no

vation

Form

ula

Essential Ingredients = Risk Taking + Acceptance of Failure

Individuals

Are Creative

Groups

Deliver Innovation

Business Knowledge + Execution Skill

Innovation = Creativity + Business Knowledge + Execution + Essential Ingredients*

* - 1 part Risk Taking & 3 parts Acceptance of Failure

Innovation over the next few years will:

•Virtualize physical labor into logical labor

•Reduce the role of Labor in the Supply Chain of Services

•Expand the role of Expert Systems and AI into the ecosystem

Dynamic Market Changes: Two Sides of the Coin D

yn

amic M

arket C

han

ges – T

wo

Sides o

f the C

oin

Risk Reward

Two Sides of the Coin

Marginalization Diminishing Returns Obsolescence Existential

Profit Expansion Significant Returns Market Leadership Relevance

Change is neither wholly good or bad. There are two sides of the coin when it comes to change – Risk on one side – Reward on the other. There is no Reward without the corresponding Risk – the preverbal “no free lunch” axiom.

One Defines the Other

Minimizing Risk Minimizes Reward

The goal is not to minimize risk in a changing market, but to understand the nature of the changes in the environment and Manage Risk and Capitalize on Reward.

GOAL: Manage Risk & Capitalize on Reward

The Zero Concept T

he Z

ero C

on

cept

Zero Concept

Zero Cost

Zero Cycle Times

Zero Defects

Cost Cycle Time Defect Rate

Time

As Cost, Cycle Times, and Defect Rates trend to zero from their current levels, the businesses that are supported by the underlying Service Delivery models will themselves transform into new businesses and new business models.

Digital Labor: Waves of Value D

igital Lab

or: W

aves of V

alue

The primary impacts of labor automation in the business case are obvious: lower cost, shorter cycle times, improved quality, etc.

The secondary and tertiary waves, enabled from Service Delivery Telemetry, are less obvious, but can dwarf the primary impacts.

Lower Costs Reduce Cycle Times

Improved Quality

Consequential Benefits Big Data Monetization

Business Transformation Revenue Opportunities

Process Redesign Through

Big Data/Analytics

More Less Benefits Visibility

Digital Labor

Begets

Service

Delivery Telemetry

Base Business Case

Primary Secondary Tertiary

Questions?

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© 2014 Information Services Group, Inc. All Rights Reserved. Proprietary and Confidential. No part of this document may be reproduced in any form or by any electronic or mechanical means,

including information storage and retrieval devices or systems, without prior written permission from Information Services Group, Inc.

Outsourcing Institute: TechNext Innovation Briefing John Lytle, Director

02 May 2014

Building Collaboration & Integrating Disruption

Multi-Vendor Sourcing in a New Age

© 2014 Information Services Group, Inc. All Rights Reserved 25

Agenda

1. The Multi-Sourcing Trend

2. Benefits and Challenges of Multi-Sourcing

3. The SMAC Factor

4. Service Integration: Key to Success

© 2014 Information Services Group, Inc. All Rights Reserved 26

ISG Research shows that outsourcing contracts are getting increasingly smaller in total contract value and increasingly shorter in duration.

The Multi-Sourcing Trend

► The ISG Outsourcing Index – a quarterly analysis of sourcing contract activity – shows a consistent trend towards higher deal volumes, smaller deals and shorter terms.*

► This trend is being driven by clients’ interest in leveraging specialized capabilities and developing best-of-breed service delivery models.

*Spike in “mega-deals” in Q1-14 an anomaly

24 31 36

68 70

57

1,063

673

482

2013 2008 2004

$5-39M $40-99M $100M +

Comparing Broader Market Contracting Awards ($B)*

Grouping in ACV Contract Size Bands

$153

$185 $179

$55 $57 $55

$11 $13 $14

2013 2008 2004

© 2014 Information Services Group, Inc. All Rights Reserved 27

Multi-sourcing shakes up the competitive landscape and offers significant potential benefits, but also creates risks.

Implications, Benefits and Challenges of Multi-Sourcing

► Competitive implications of multi-sourcing include:

Increasing fragmentation of the marketplace as vendors focus on developing specialized capabilities

For clients, challenge becomes knowing the players and finding the best solution

For service providers, challenge becomes differentiating themselves in an increasingly crowded field

► Potential benefits of multi-sourcing include:

Ability to leverage best-of-breed capabilities

Flexibility in bringing new providers in and exiting others

► Potential challenges include:

Facilitating collaboration among multiple vendors with conflicting agendas

Ensuring integration across the service delivery chain – defining ownership, roles and responsibilities

© 2014 Information Services Group, Inc. All Rights Reserved 28

Keys to Success: Service Integration

As IT and outsourcing evolved so too did the Integration of IT Services:

The evolution of Service Integration

ITIL first published IT is delivered

in-house

Large single-source/ Prime contractor deals. (Provider acts as integrator)

ITIL v2 and 3 Early 2000s, SI

overlooked Late 2000s SI

sourced as a discrete function

Global awareness and interest in SIAM SIAM models

mature and vary

The evolution of Outsourcing

Outsourcing is a business strategy

Outsourcing is in vogue Long duration

(~7-10 )

Lift and shift

Diversification of supply base Drop duration

(~5 – 7) Rise of Eastern

based Providers

Multi-sourcing in vogue Shorter

duration (~5 years)

1980s 1990s

Monolithic

2000s

Bipartisan

2010s

Pluralistic

2020s

Confederate

Focus on plug & play, flexibility, scalability, automation Standard

interaction model

Functional out-tasking New

technology based players Duration – 3

Years

© 2014 Information Services Group, Inc. All Rights Reserved 29

Automation and SMAC = Multi-Sourcing on Steroids

AccessISGTM

Momentum Automation Survey 2013

Big Data and Little Devices – Hospitality Firms Seek a Competitive Edge

© 2014 Information Services Group, Inc. All Rights Reserved 30

The Exponential Need for Service Integration

Integrated Demand – Supply Dynamics

Security

LAN / WAN

Collaboration

App Maintenance

Salary/Benefits

Workplace

Sales

Purchasing

Claims Processing

Service Integration

Distribution

. . .

Business Services

Service Desk

Facilities

End User Equipment

. . .

Payment Processing

PM Services

Component Services

Who will correlate Service Levels?

Who will manage cross-provider

incidents? Who will ensure

capacity is meeting demand?

Who will hold Providers

accountable?

Who will assure change

orchestration?

Who will drive end to end continuous improvement

Who will manage cost to value?

New players, more automation, XaaS solutions … the ability to orchestrate services becomes more complex.

© 2014 Information Services Group, Inc. All Rights Reserved 31

Imperatives for successful Service Integration

Success in Service Integration is dependent on having clarity of the Target Operating Model – which is based on measurable objectives and controlled by disciplined Governance.

Derived from ISG‘s Target Operating Model

Drivers Objectives Measures

End-to-end Service Management Processes in the right depth and breadth for operational control

SIAM Model that meets organizational and functional requirements

Supportive Contract language and incentives for collaboration

The right Components in terms of business service/ process enabling Data, Application and Technology Architecture

Clear Roles & Responsibilities in the context of the overall Target

Operating Model (TOM)

Skills or Competencies required to perform SIAM

Common Tools for integrated processes and data transparency

Correlated Reporting and data management

Business Architecture

Data, Application & Technology Architecture

© 2014 Information Services Group, Inc. All Rights Reserved 32

Having a holistic map and detailed definition of all Service Integration functions is key to establish a solid end-to-end business value oriented service delivery.

Scope of Service Integration – Services Framework

Service Strategy, Planning & Control

Corporate Support Functions

Legal Audit Compliance Procurement Human

Resources Finance

& Controlling Communication & Change Mgt.

Risk

Dem

and

(Bu

sin

ess)

Sup

ply

Internal and External Service Delivery

End User Computing & Collaboration

Hosting

Data and Voice Network

Application Developm. & Maintenance

Business Services (HR, F&A, etc.)

Service Integration and Management

Project Delivery

Program & Project Mgt.

Cross-Functional

Aligning Services to Business Needs

& Aggregating Demand

Management of Service Delivery (Internal & External)

Business Value Management

Demand Mgt.

Request Mgt.

Customer Satisf. Mgt.

Pricing and Chargeback

Service Catalog Mgt.

Systems Integration

Supplier Management

Contract Mgt.

Commercial Mgt.

Performance Mgt.

Relationship Mgt.

Service Desk Services

Service Lifecycle Mgt.

Project Portfolio Management

Service Portfolio Management

Sourcing Strategy & Lifecycle Management

Enterprise Architecture Management

Security Policy & Standards

P P P P P

P

P

P

P

P

S P

P

P

S

S

S

P

S

S

S

S

P

S = Service P = Process

OPERATIONAL INTEGRATION

Initial focus

SERVICE INTEGRATION AND MANAGEMENT (SIAM)

Today‘s focus

© 2014 Information Services Group, Inc. All Rights Reserved 33

ISG’s Prediction: The Future of Sourcing

Multi-Sourcing and confederation brings new players, more automation, provides room for XaaS solutions.

Internal Shared Services / Captives

Function

Function

Function

Function

Function

All Towers

OR

Infrastructure ADM BPO Function(s)

Tower

Tower

Tower

Tower

Importance of Labor Arbitrage

Importance of Software, Platforms,

Labor Automation, & Scalability

Function

Social Media Collaboration

Mobility BYOD

Analytics & Big Data

Cloud

Computing & Storage

Service Integration

Strategic & Selective Sourcing Multi-Sourcing Confederation

MARKET 5 – 10 YEARS AGO LAST 5 YEARS NEXT 3 TO 5 YEARS

www.isg-one.com

Information Services Group is a leading technology insights, market intelligence and advisory services company, serving more than 500 clients around the world to help them achieve operational excellence. ISG supports private and public sector organizations to transform and optimize their operational environments through research, benchmarking, consulting and managed services, with a focus on information technology, business process transformation, program management services and enterprise resource planning. Clients look to ISG for unique insights and innovative solutions for leveraging technology, the deepest data source in the industry, and more than five decades of experience of global leadership in information and advisory services. Based in Stamford, Conn., the company has more than 800 employees and operates in 21 countries.

knowledge powering results®

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Please Visit Us

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www.outsourcing.com

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Join the IRPA and OI networks to get the latest trends, expert interviews, best practices and commentary from thought leaders.

Frank Casale fcasale@outsourcing.com

Raheem Hasan Raheem.hasan@irpanetwork.com

Dan Goodstein dgoodstein@outsourcing.com