Category Archives: Outsourcing

What Makes Healthcare Different? (Part Two of Two)

Bill Huber Blog

Bill Huber, Managing Director – 

What Makes Healthcare Different? (Part Two of Two)

The dramatic changes transforming the Healthcare industry are having a dramatic impact on outsourcing service providers, as payers and providers increasingly focus on new delivery models and the integration of disruptive technologies. I recently spoke with HCL’s Healthcare head, Gurmeet Chahal on the concept of “Patient Centricity” in today’s environment.  Our conversation continues below, as Gurmeet discusses what makes Healthcare different.

BH For you as a service provider, what is different about healthcare from other areas?

GC: We have a very strong domain-led technology which is consistent across all of our verticals. In healthcare, we believe that we are unique in the degree to which we work across the entire healthcare ecosystem. This gives us the capability to be front and center. An example is how we are leveraging our strong medical device expertise to create next generation solutions that benefit patient, payer, provider & the device manufacturer.

BH: How are regulatory changes driving increased use of service providers?

GC: The Healthcare industry is among the most regulated. New regulations do have impact on IT services consumption. As an example ICD10 had driven growth in IT services, and is expected to have an ongoing impact in areas like RCM going forward based on the complexity of codes. All of the quality, compliance and regulatory mandates require payers/providers to upgrade their existing IT infrastructure and in some cases to build entirely new capabilities.

BH: As applicable to your services, what are common priorities for both payers and providers?

GC: We believe that new business models are emerging that encourage the payers and providers to improve collaboration. The first is based on the need to drive distinctive customer experience management. This is what will differentiate both in the long run and drive patient retention levels
Secondly, to run effective care management, claims information is insufficient. The payers need to integrate clinical data, lab data, etc. This means that they need a flexible, agile and external focused operating model.
Lastly, both payers and providers have a string need to reduce cost while improving care quality, and to accomplish this while investing in new capabilities such as analytics, social, mobility and so on.

BH: What are the things that HCL is doing to address these priorities?

GC: HCL’s approach is twofold. First, we leverage our strong technology and process capabilities, and secondly, we are investing in frameworks and accelerators where we are leveraging domain experts. For example, we have come up with a solution that we call Member Experience Management. This allows our customers to build a multichannel engagement and communication strategy. It provides a framework the gives a single view of the customer and drives the customer experience. It includes a view of workflow, CRM, infrastructure, next generation CTI Similarly, we have a solution called population care management, which allows providers to engage and drive the medical protocols that they have designed for a population pool

BH: You offer services across infrastructure, applications and business services. Is there a natural evolution among these services when you are engaged with a healthcare client?

GC: It’s very rare that we see a customer take a big bang approach of bundling the whole thing. A lot of times, we get engaged in a business solution kind of discussion. For example, in a successful population health management program, you will need a specialized application, underlying infrastructure and analytical and business services. In these cases, it’s an integrated solution with all three layers. If you look at the conventional towers of ITO. There was a lot of application development work that was happening given the exchange readiness rush. Currently there is a surge in developing front end transformation and analytics capabilities. There is a recognition that a lot of cost can be saved by outsourcing basic infrastructure and in back office functions like claims processing. While there is need and desire to move on all tracks, depending on customers’ readiness there may be a phased approach.

BH: What are unique service levels for HCl associated with healthcare? Are any of these outcome-based? 

GC: We have a number of outcome-based examples. One of the solutions that we have is a combination of applications and BPO in fraud, waste and abuse. The contract is linked to recovery through the process. Another example is revenue cycle management where a focusing on improving customer satisfaction year over year.

BH: Final thoughts?

GC: There is so much change happening in health care, but I believe that this is a great opportunity for healthcare to transform itself. There is a lot of change, but this is the opportunity to gain from this change. It is very rare to see any industry witnessing so much change at one time. On a recent airplane ride, I sat next to a retired IT executive. When I explained what I was working on, he said, “I’m really jealous. Your industry is going through so much. Through technology, you can make such an impact on the lives of humans. I wish that I had that opportunity.” That has stuck with me. We should be grateful for this opportunity, and it’s time to make that impact and gain from this change.

Patient Centricity in Healthcare Outsourcing (Part One of Two)

Bill Huber Blog

Bill Huber, Managing Director – 

It’s no secret that the Healthcare industry is undergoing massive changes, and that these include the solutions that outsourcing service providers are bringing to the market.  Last week I caught up with HCL’s Healthcare head, Gurmeet Chahal to discuss these trends and current areas of focus for HCL.

Bill Huber: HCL has referred to something called “Patient Centricity” in describing its services approach in healthcare. Can you describe what that means in practical terms?

Gurmeet Chalal: As you know, right now, the healthcare industry is undergoing what are perhaps the most dramatic changes of any major sector. HCL looks at healthcare in light of this transformation and sees enormous potential for innovation, with a focal point for that innovation around the patient. We are achieving results by converting technology platforms, capturing and organizing data and providing services that are focused on transforming the insights from the data to outcomes for the patient with the goal of improving the patient’s experience. We believe that this ultimately needs to be done over the lifetime of care for the patient.

Our approach is based on connecting the insights obtained through HCL’s rich experience of working with both payers and providers, along with a heritage of working with the medical device industry, and of course, pharma. Utilizing technology, analytics and services, and leveraging our global scale and partner relationships, we are able to bring clinical insights together. At HCL, our culture is focused on “ideapreneurship”, involving individuals who take accountability on behalf of our customers. Part of this is how we use cross functional teams and have built the “4I” framework which enables us to stitch data into a unified fabric and build an intelligence layer on top through our understanding of business data and analytics. For example, think of a medication adherence strategy. If the patient is adhering to a prescribed medication regime, presumably the patient will benefit through improved health, the payer will benefit through reduced cost of care, the provider will benefit through improved patient outcomes and lower readmissions, and the pharma will benefit through improved market share. The combination of technology, analytics and services makes this possible through enablement of better monitoring, tracking and follow-up with patients and caregivers to improve regime adherence.
In addition to our aforementioned relationships, HCL has its own provider business in India. It comprises the country’s first nationwide networked multi-specialty clinics in affiliation with Johns Hopkins Medicine International. This provides us with our own unique insights that will fuel research that will become increasingly important for providers in the US as the Asian population increases here.

BH: You mentioned your “4I” framework. What is that?

GC: It’s about how you obtain and what you do with the right Information. The four “I”s refer to Intelligence, Interaction, Integration and Insight. So, we have a strong Intelligence layer, comprising patient segmentation, benchmarking, analysis and simulation and the like. Then we have an Interaction layer, which is multi-channel and includes social media, mobile, in person and web. Third, there is an Integration layer which collects and organizes information from multiple sources, including from Pharma, from labs, from providers and so on. For example, through a partner, we have built a platform that enables integration of data from over 160 medical devices in real time. Lastly, there is the Insight layer, which provides actionable care and business recommendations.

Will RPA Swing the Innovation Pendulum Back to Providers?

Perpetual Motion

Jeff Augustin, Managing Director –

My colleague Mike Slavin recently made some provocative statements to CIO magazine, saying, in effect, that outsourcers were, for a number of reasons, doing a poor job at delivering innovation to clients. Further, Mike opined that many client organizations are reacting to their disillusion by seizing the reins and taking functions related to innovation back in-house.

Pretty harsh words – but the fact is I agree that Mike’s comments accurately reflect today’s reality. That said, I believe a longer-term perspective puts things in a different light. While insourcing may indeed be a viable innovation strategy today, in my opinion that will change, and in the relatively near future. And the main driver for that change will be autonomics and Robotic Process Automation (RPA).

Specifically, every transaction engagement I’m involved in today has an element of RPA, cognitive computing or autonomics. I’m also seeing all the major providers developing impressive – and certainly innovative – proprietary RPA solutions to compete with off-the-shelf offerings from Arago, BluePrism and IPsoft. As RPA continues to gain traction and as these solutions are implemented, disruption of existing service delivery models will intensify, as processes are decomposed and reconstructed to incorporate new digital capabilities, as well as new roles and skill-sets for human workers. Putting that puzzle together is going to require innovation that few enterprises are going to have in-house.

Consider too the business plans of many of the providers, which call for significant sustained growth, but supported by very limited growth in staffing. Clearly RPA has to drive that model, and clearly the commitment to invest and build the knowledge is there.

In this context, while we may be seeing a pause in innovative energy from the service provider community, I suspect it’s the pause that happens before a pendulum swings back full-speed the other way.

For more information on this and related topics, you can download a recording of last week’s “Sourcing Savants” webinar. Sponsored by Horses for Sources and moderated by CEO Phil Fersht, the panel discussion included experts from leading advisory firms who discussed a wide range of issues facing the industry.

Provider “Neutral?” Really?

African elephant female and her baby elephant balancing on a blu

Jeff Seabloom, Managing Director ·

If you walked into a Mercedes dealer and said you wanted to buy a luxury car, you’d be surprised if the sales person suggested you try the Cadillac dealer across the street. After all, the guy’s job is to sell Mercedes and he has a vested interest in you buying one.

Yet, client organizations consistently hire consultancies expecting to get unbiased and objective recommendations on technology solutions. And they do this even though the firms they’ve engaged often stand to reap significant financial benefits if one particular solution is chosen over another – particularly when it comes to implementation of the chosen technologies and business applications.

Consider the scenario: An enterprise shopping for a business application system – say, claims processing for insurance – hires a consulting firm to assess requirements and alternative options. The firm comes in with impressively smart people, robust methodologies and detailed templates. Requirements are gathered, teams are formed, RFXs are written and questions are posed and answered. The rigorous process results in the selection of a package, and – surprise! The consultancy conducting the assessment, RFX, evaluation and selection turns out to be the very one best qualified to manage the implementation. Before you know it the bus has pulled up and the billing has commenced.

The surprising frequency with which this dynamic plays out should lead client organizations to ask some questions: Were the requirements tailored? Did the RFX reflect the customer’s requirements? Or the consultant’s capabilities?

The broader question is, why? Why hire a company to provide “objective” advice on buying something that that company sells? It’s like walking into a Mercedes showroom and expecting to hear about Cadillacs.

Service Integration: Own it or Outsource it? (A Perspective from London)

Outsource In-House Signboards

Chris Lawn, Director

Service Integration and Management (SIAM) refers to the framework or service wrap that converts a bunch of discrete technology-based “towers” from various suppliers into a set of seamless, business user-oriented, end-to-end services.

Getting SIAM right is imperative in today’s increasingly multi-sourced world. While bringing together a disparate team of specialized providers can certainly yield benefits, successfully orchestrating multiple services from multiple vendors presents a daunting challenge.

One key consideration is how SIAM services – that is, the specific function of managing the multi-vendor service delivery environment – are best delivered.

The two logical extremes for SIAM delivery can be characterized as “provide it in house” on the one hand, and, on the other, to “outsource it.”

Which approach is better? I moderated a debate on this question at a recent event at the Ritz in London, in conjunction with Alsbridge’s expansion in the European market. To summarize:

The case for in-house multi-supplier governance: Customers are best qualified to understand business requirements and direct this understanding to encourage appropriate competition and innovation from providers. Further, customers benefit from building and retaining critical skills and competencies and keeping them in-house. And, since multi-source new governance models are just a natural development of the roles of the existing procurement and contract management teams, it makes sense to retain that function. Ultimately, if the contracts for the various providers on the team include clauses to mandate cooperation, end-to-end services and joint innovation, then the client only needs to add a management layer to ensure that the suppliers deliver on the their obligations.

The case for third-party multi-supplier governance: Managing a multi-vendor environment is highly complex and specialized work that requires a team with skills and experience that many customers can’t attract and retain. Specifically, third-party suppliers will have already invested in the tools and the offshore back office capabilities necessary to implement cost-effective and reliable governance. Also, given the potentially contentious nature of inter-supplier relations, the governance team must be able to navigate the operational and commercial sensitivities surrounding IP sharing, knowledge transfer and joint ownership of end-to-end SLAs. Finally, an objective and independent third party can play a critical intermediary role to encourage collaboration and mediate when client/supplier conflicts occur.

So, on the face of things, both approaches appear to have merit. So which is better? The answer – as anyone who has ever worked with consultants can guess – is that It Depends….

Specifically, it depends on the nature of the multi-sourced model, and on the maturity level and existing organizational structure of the client organization.

For example, at the London event, executives from large organizations with significant outsourcing experience said they tend to focus on an in-house approach to managing SIAM, since their scale and expertise equip them to field the required numbers of staff with specialized skills. That said, outsourcing part of the SIAM function is frequently a consideration: over half of these executives said they were contemplating the use of a strategic partner to support their SIAM environment, but were unlikely to fully outsource this function.

In contrast, several attendees representing smaller companies from the retail and logistics sectors had either not yet considered SIAM opportunities, or had experienced serious problems during implementation. The consensus here was that specialist advice is needed to support SIAM implementation, and that a SIAM outsourcing partner should be considered by smaller or less mature companies taking their first foray into outsourcing.

In a nutshell, then, there’s no single answer to the question of how best to manage SIAM. But given the prevalence of multi-vendor operating models, it’s increasingly imperative that the question be asked.

Contractual Discipline – a Financial Services Imperative

Photo of Wooden file cabinet

David England, Director

“The best contract is the one you never have to pull out of the drawer.”

That adage describes the idyllic sourcing relationship of old – one built on trust, open communication and aligned objectives. In such an environment, specific contractual terms and obligations rarely need to be called upon, since both sides understand their roles and are committed to success.

While a nice sentiment, the idea that detailed scrutiny of contracts needn’t be a top priority is rapidly becoming a dangerous anachronism. This is especially true in the Financial Services sector, where increasingly rigorous regulatory requirements are raising the bar of third-party risk management to unprecedented heights. In today’s environment, any bank or other financial institution that fails to rigorously document its contractual obligations regarding supplier oversight and compliance, and to thoroughly demonstrate its due diligence in ensuring that those obligations are met, faces the prospect of significant fines and penalties.

Anyone who doubts that the stakes are high should refer to Bulletin 2013-29 from the Office of the Comptroller of the Currency (OCC), which states that a “bank should adopt risk management processes commensurate with the level of risk and complexity of its third-party relationships.”

What that ultimately means is that banks must demonstrate adherence to regulatory standards and are liable for risks occurring at any point throughout the entire sourcing lifecycle. All information associated with the relationship must be captured, documented and accessible to regulators to ensure due diligence and compliance at each phase.

Three key issues raised include:

Pre-contracting documentation: Under emerging guidelines and standards, all activity occurring before a contract execution must be captured, documented and accessible. Specifically, communications during initial planning, RFP development and provider evaluations are subject to regulatory scrutiny to ensure that evaluations of suppliers were properly conducted.

Organizational communication: The contracting process typically involves multiple organizations – IT, vendor management, compliance and audit, for example. Seamless handoffs are imperative, but in most enterprises, standard contracting review processes either don’t exist, are imperfect or are rarely observed. This increases the risk that one department will mistakenly assume that its rigorous compliance processes are followed by other departments. The result is actions slip through the cracks. Rigorous oversight of contracting practices across business units is therefore imperative.

Prioritization: The contracting process creates a Pandora’s Box of potential compliance violations. Simply identifying and addressing them haphazardly will lead compliance teams down a series of gopher holes. While this approach will extinguish ad hoc sparks of risk, unattended bonfires will likely be blazing elsewhere. Standard, disciplined approaches are needed to identify risks and rate them by various criteria, such as likelihood and scale of monetary, brand and customer impact.

Bottom line: the notion that rigorous oversight of specific contractual terms is secondary to a relationship of trust – if it was ever true in the first place – is no longer valid. Today, trust and innovation must be built upon a foundation of contract discipline that clearly defines, specifies and verifies mutual obligations from the outset of the relationship and throughout the sourcing lifecycle. Without that foundation in place, clients and providers place themselves in significant peril.

Put differently, a contract that’s been sitting in a drawer for several years will lead to some very unpleasant surprises when the regulators come calling.

The Year Ahead – Two Imperatives

2015 New Year Concept

Chip Wagner, CEO

As we indulge in the seasonal habit of taking stock of the past 12 months and looking ahead to the next 12, I think it’s safe to say that 2014 can be characterized as a “year of disruption.” We’ve talked a lot about game-changing technologies, new service delivery models and the end of business-as-usual. In terms of preparing for 2015, I propose that we think of a “year of the new normal.” In other words, if we’ve agreed that our world is changing, it’s now incumbent upon us – particularly “us” as sourcing advisors – to know what the new rules are and to get on with it.

In that spirit, here are some thoughts on two central challenges facing enterprise buyers, service providers and third-party advisors in 2015.

Leveraging autonomics/RPA: Client interest in intelligent machines is growing rapidly, and service providers are scrambling to get on the autonomics bandwagon, either as aggressive leaders eager to seize the opportunity, or reluctant followers who see the writing on the wall. Preliminary data shows that Robotics Process Automation (RPA) solutions are already having an impact on IT services pricing. The challenge now becomes smart implementations that achieve optimal benefits. As we learn more about intelligent systems, it’s becoming increasingly clear that the value proposition is by no means straightforward – we’re not talking about a clear-cut x percentage reduction in labor requirements. Rather than eliminating discrete and clearly defined “jobs,” RPA solutions will eliminate specific functions and time-consuming tasks, so enterprises will have to figure out how to reallocate portions of existing resources and utilize additional bandwidth. RPA results, moreover, will vary, based on enterprise maturity level and service tower. Business cases and forecast models must take these variances into account, as well as factor in implementation and long-term support costs.

Finding the right partners (and customers): Clients increasingly require service providers who have broad and deep knowledge of their industry, and who can apply technology and operational expertise to address industry-specific regulatory issues, competitive pressures and customer requirements. In this environment, enterprises must identify providers who have the right mix of capabilities and proven expertise. Providers, meanwhile, need to articulate their value propositions and hone their go-to-market strategies to identify the best opportunities. Put bluntly, clients can’t afford to pick a provider who doesn’t have the right stuff, and providers can’t afford to chase deals they won’t win. To remain relevant, advisors need to focus on and invest in industry knowledge.

Disruption on Steroids: Notes from the Robosphere

Chip Wagner,  CEO, Alsbridge

The prevailing notion that Robotic Process Automation (RPA) is an “industry game-changer” was reinforced for me in a big way recently, when I had the distinct privilege of co-chairing Automation Innovation 2014. Sponsored by the Institute for Robotic Process Automation (IRPA), the conference gathered buyers, providers, practitioners and thought leaders to discuss topics ranging from long-term societal implications of intelligent computers to near-term impacts on labor arbitrage-based service delivery models.*

Perhaps the most valuable lesson from this day-long learning experience was the humbling realization of how much more homework we all need to do. In addition, I was struck by a number of specific observations various speakers offered regarding new ways of looking at smart machines and how they are changing our world. These nuggets of insight helped to crystallize my thinking around what these changes look like and to articulate some of the questions we need to ask in order to more effectively help our clients and partners navigate the challenges and seize the opportunities that await.

For example, we’ve tended to look at autonomics as driving a certain percentage reduction in personnel requirements, and you tend to visualize that as a straightforward decrease in staffing numbers. In his presentation, Phil Fersht of HfS Research argued that the point is not that RPA will reduce a staff of 100 to a staff of, say, 60. Rather, it’s that a staff of 100 will have their individual workloads reduced by 40 percent each, as certain mundane and repeatable functions are off-loaded to smart machines. It’s a subtle distinction, perhaps, but an important one, as it allows you to envision change from a new perspective. Specifically, you can now ask, what new and different things can my staff do with 40 percent more capacity? How can I reconfigure my processes and delivery model to best leverage that increased capacity?

Entrepreneur Hans-Christian Boos, Founder and CEO of arago, offered a similarly fresh take. Rather than thinking in terms of RPA delivering cost reduction, he suggested we think of it as creating time. Here again, you have a different lens through which to view the potential for redefining service models and delivering value in a way that’s truly transformational.

So maybe that idea of a “different lens” is the real point here – with RPA, autonomics and intelligent computers (or whatever else you want to call them), you’re not talking about applying technology to do what you’re doing better. You’re talking about doing things in a completely new and different way. And we’ve reached a point where the next step is to show (rather than tell) what that “completely new and different way” looks like.

In any event, those of us who are serious about making a mark in this space have our work cut out for us. Let’s get to it.

*Hats off to IRPA Founder and CEO Frank Casale for having the vision and chutzpah to launch the IRPA enterprise, and to his team for putting on a first-rate event in NYC from beginning to end.

Head Out of the Clouds – When a Premises-Based Contact Center Makes Sense

Businessman standing and hiding his head behind an empty cloud

Mark Minorik, Director

Cloud-based contact centers offer a variety of potential benefits, including cost savings, flexibility to align with business needs, improved customer experience and opportunities to increase revenue.

In certain situations, however, traditional premises-based contact centers might be a better fit than a SaaS or cloud solution.   For example, an enterprise that requires uninterrupted and continuous availability – such as mission-critical emergency services or air-to-ground communication – may want to eliminate possible failure points within an IP network.  In this case, a premise-based solution might be a better choice than cloud.

Another possible scenario favoring a premises-based solution is where an enterprise has recently made large capital investments in upgrading their internal contact center applications (e.g. call/work distribution) and may not be able to reap financial and/or other benefits by migrating to cloud-based services. Similarly, early adopters and users of beta or emerging product (multi-modal applications) may find that cloud providers can’t adopt and/or deploy new software or services in a timely or cost-effective manner.

Companies that require highly custom or unique feature functions (e.g. unlimited skills) to run their business may not be viable candidates for the cloud, as some of these feature may not be available. Understanding the solution and roadmaps from both premise and cloud providers is critical when evaluating service models and options.

Non-US markets where regulations dictate local use, or where data and IP voice and transport are limited or have poor track record of availability, may be a poor choice for cloud-based services. Knowledge of the market and the geolocation of the contact centers is imperative when charting the roadmap and making decisions.

Finally, while enterprises rarely require end-to-end control of their environment, those that do find that cloud and outsourced solutions will generally fall short.  Assessing the reasons for control and conducting due diligence on management and operating models can help determine the choice between premise and cloud solutions.

As with any technology investment, analyses of service levels, capabilities, operations, functionality, cost, and other critical services and components, such as disaster recovery and continuity, are essential when comparing cloud-based to premise-based contact center solutions.

Mark Minorik is an Alsbridge Director, Transformation Services.

Global Brand? Who Cares?

Apps In Sphere Pattern - World Of Mobile Applications

By: Jeff Seabloom

We often see large global enterprises whose brands are household names single-sourced to a provider of commodity services and products. Given their size and prestige, client executives expect star treatment (and they should). They also expect that vendors will bend over backwards to give them the best deal, price and service delivery possible, simply because having them for a customer is a real feather in their cap. When providers say they’re offering the best deal possible, clients take those assurances at face value.

That’s a mistake. In reality, client complacency and lack of competitive tension in the sourcing portfolio is a license for the service provider to print money.

Focusing on contractual terms and existing pricing can expose opportunities to drive significant savings. The starting point should be comparison against market standards: how does pricing stack up against what peers, competitors and top performers are paying? When executives see the variance, they’re often shocked to learn that brand prestige has no impact on the competitiveness of hardware pricing. And even clients who have done recent competitive assessments are surprised by how quickly market pricing moves.

Recent shifts in virtualization and converged infrastructure, for example, are providing significant competitive options, and providers of those services need to be held to a higher competitive position. The technology shifts companies expect are becoming earthquakes, and are happening in shorter intervals and with more impact (can you spell O365?) To respond to these fundamental changes, large companies need to better utilize third-party expertise, benchmarking data and industry best practices to drive cost out and add value.

Regulatory mechanisms should also be explored. The fact is, many service providers – especially those that do business with the government – are subject to market-defined pricing guidelines. Clients should ask questions regarding these types of arrangements, and expose the hidden opportunities that can be found there.

If a rigorous analysis finds that the pricing variance from market standards is minimal, the ability to negotiate a reduction of even 2-3 points is significantly material, given the size of many contracts – when millions of dollars in fees are involved, large savings should be expected in return.

The takeaway here is that, while size, scale and name recognition can be a plus at the negotiating table, they don’t add up to a free pass that justifies abdication of responsibility for due diligence and contractual oversight.