Updated: Aug 25, 2021
It’s late summer, 2021, and we’re at a turning-point in the world of consumer and employee engagement.
And when a series of announcements flickered like summer lightning across the customer contact ecosystem this July, I was reminded that harbingers of our current storm of change arrived in waves some fifteen years ago....
Fifteen Years Gone
It was the beginning of the summer of 2006, and the coffee machine in the office was beckoning me with particular urgency.
So I fired up the power, brewed an extra strong cup of mud, and started writing, “East of Eden: Homeshoring’s Place in an Imperfect World.” It seemed reasonable to suppose that the home-based agent model would soon feature in the business process outsourcing (BPO) industry like never before. As I explained in that piece:
Wage earners have officially arrived at a point far from economic paradise, and service providers need to stay attuned to the changes that could affect their businesses. The trends that… would catalyze a surge in homeshoring appear to be playing out in dramatic fashion in mid-2006. At the same time, other trends are emerging…. customer care will continue to undergo a paradigm shift in the United States (and internationally) because of key macroeconomic trends, and homeshoring will grow to ever greater heights. These economic trends impacting home-based agents are indeed systemic and will have long-term implications.
Times were changing in some fundamental way that wasn’t necessarily easy to grasp back then. America was still recovering from September 11, mired in a mess of its own creation in the Middle East. On top of that, U.S. troops were wandering around Central Asia, baffled, just like the Russians and Brits before them.
And back in what had been branded “The Homeland,” America had only recently emerged from a dotcom boom that had spiraled into a dotcom crash, featuring the eventual collapse of the likes of Enron and Worldcom.
That summer, gas prices would climb to new highs. Commutes were becoming increasingly expensive and traffic was getting worse. But everything was fine, you see, because the housing market was on a tear. One day that summer, a breathless coworker rushed by me on her way to the fax machine. She was buying a new condo, she said, before it was too late. What was I waiting for?
Because in 2006, housing prices never went down, you see. Especially in light of these innovative new electronic tools called collateralized debt obligations that were sliced into these things called tranches.
Amazingly, all this human folly was being outdone by the wrath of Nature. Images of the December, 2004, earthquake and tsunami in the Indian Ocean shocked the world. By August, 2005, Hurricane Katrina was flooding a major American city. And then something called avian influenza, also known as the bird-flu, started appearing in the headlines. It was a chronicle of too many deaths foretold; man was encroaching deeper into the corners of a warming planet and strange new viruses were festering not only in far-off jungles, but in the recesses of many a virologist’s mind in far away laboratories. Soon enough, we were told that the first human-to-human transmission of the H5NI strain of the avian influenza likely occurred when seven members of a family in Sumatra became infected after contact with a family member who had worked with infected poultry.
My office didn’t have a window, so I’d take a break every now and then and walk outside for some air. I was a 30-something analyst plugging away in the salt-mines of the Aughts. A few miles away, angry cars with patriotic bumper stickers chugged along the Massachusetts Turnpike, coughing out emissions. Coworkers from surrounding suburbs pulled into their parking spots while others drove off for a sandwich special at Subway. The heat and co2 wavered over the pavement in their wake. The North American heatwave of the summer of 2006 was roasting most of the U.S. and Canada, killing at least 225 people.
I missed my twenties. Time was going too fast. What had happened to the Nineties, anyway?
We paved paradise and put up a parking lot.
The world, Heraclitus once said, is a living fire.
What Hand Dare Seize the Fire?
What Heraclitus had meant was that everything changes. Constantly. It’s the nature of things. And by the mid-2000s, Nature sure seemed awfully angry. Meantime, we human beings kept screwing up a lot, in ever more surreal, sometimes ridiculous, ways. Much of it seemed to have something to do with technology: an Internet-sparked investing craze gone bad; hijackers discussing plans on newfangled cell phones; guided missile systems flinging fire from warships, warplanes, even drones.
What the hand dare seize the fire? the visionary poet William Blake had once asked.
The answer seemed obvious... American technology was leading the way. Weren’t we still the world’s sole Hyperpower? As our troops dominated the battlespace, Silicon Valley would drive us to still greater heights.
Recall that technology platforms were coming into their own at the time, spawning this thing called Facebook, this other thing called Twitter, over which you could send out things called tweets. Soon enough, the iPhone would appear, attacking our attention span with a Shock and Awe not unlike Rummy’s attack on Baghdad.
All the while, globalization was in high gear, meaning we were offshoring more and more of just about everything. We’d told the Chinese to join us in capitalism’s kitchen, that the oven of international trade would fatten the pie for all of us.
“Come join the feast!” we’d urged them. "It will be good for you."
So China said, “Hmm, yes, OK,” and switched on the coal factories, turned up the temperature… and boy did we get international trade.
And the pie did indeed get bigger… for both China and the United States. Other countries too.
And yet. It seems some parts of America felt forgotten, even abandoned. Some citizens had a question: in light of all this globalization, was somebody up on Capitol Hill going to make sure American workers got a slice of that wonderfully fattened pie?
Perhaps in the form of some universal healthcare, for example?
After all, wasn’t our middle class slowly dying out there? They might need some coverage.
Especially if there was something like, oh, I don’t know… a global pandemic?
The Death of Homo Economicus
Skip ahead fifteen years to the summer of 2021.
Here in the U.S., the Covid19 pandemic seems to be ebbing, if fitfully. Mostly because many of us have been vaccinated with this thing called mRNA messenger technology. Still, as of this Thursday morning, August 12, America has lost 635,219 lives to the pandemic, and counting.
And according to a recent study, one-third of those deaths and around 40% of all infections can be linked to a lack of health insurance. For every 10% increase in a county’s uninsured rate, the researchers found a 70% increase in Covid infections and an almost 50% increase in Covid deaths.
To try and get through this crisis, most of the world has been homeshored since March, 2020. And here in the U.S., only now does it seem we’re gradually reemerging from our Netflix bunkers, blinking into the summer sun, like lost souls wandering out of Plato’s Cave for a look around at an utterly changed world. Variants be damned.
The landscape we glimpse now features dazzling network effects as far as the eye can see. It's a blinkered arcade. As Daniel Schmachtenberger might put it, Homo Economicus seems to have perished, the rules of supply and demand under assault by speed and scale. In effect, all those network dynamics have helped create functional monopolies in the form of Big Tech. Supply has gained such power that it’s manufacturing demand for things people think they need rather than that which they know they must have.
Alas, this manufactured demand has cornered the market. Attention is being harvested endlessly across a seemingly limitless tech horizon. Attentionalism is the new landlord (the three of you still reading this piece understand that all too well). Human minds and human relationships seem to be stumbling forward through the tinder of a crackling Internet that’s lighting-up a warming world of distraction. Having influenced the market to the point of domination, financial capital has built castles glowing across the skyline, from China to the U.S.
Behold Amazon, which averaged 42.5% growth year-over-year on its online marketplace for four straight quarters throughout the global pandemic. Shopify, its software helping merchants set up online shops, has grown into a $188 billion market cap company as ecommerce sales climbed. At the beginning of lockdown in March, 2020, unprecedented numbers of creators and influencers flooded to Patreon, which saw a 100% month-over-month growth in video podcasts, writing, and journalism, and a 200% growth in music; within a couple of months, the platform had one hundred thousand new contributors.
Grocery-delivery services have been in particular demand over the last year. Founded in 2012 by Apoorva Mehta, Instacart is one of the most prominent examples. And while DoorDash continues to be the market leader in food delivery, Uber’s food delivery service is growing rapidly; it’s been bigger than its ride-hailing business for the last year, generating a whopping $26 billion in gross bookings in the U.S. and Canada (helped in part by acquisitions such as Postmates).
Meantime, all our time foraging online is supporting more online ad spend. In a new quest for fire, digital media is taking share from traditional media. According to data and analytics company Standard Media Index, overall U.S. spending on digital ads rose 71% in the second quarter of 2021 compared with the same period the year before, while broadcast and cable TV spending saw only 31% growth in the same period.
Even the events industry that we analysts love so much has been shaken and stirred. Hopin, a London-based startup founded in the summer of 2019, has seen incredible demand for its virtual events software. It went from eight employees in March 2020, to over 400 one year later. A few months ago Hopin announced a $400 million Series C investment led by Andreessen Horowitz and General Catalyst. It’s now in talks with investors to raise more funding at a $7 billion valuation. It’s one of the fastest growing software startups in history.
In fact, the pandemic has driven an unpredented boom in technology investments. As The Information points out:
U.S. VC firms have raised $74 billion so far this year, nearly topping last year’s record of $81 billion. At the current pace, the total raised will clear $100 billion for the first time this year, according to PitchBook’s estimate. That’s nearly the total raised in 2011, 2012, 2013 and 2014 combined…. Today, longtime private tech investors like university endowments and foundations have been joined by an increasing number of insurance companies, corporate balance sheets and family offices, among other investment vehicles. After realizing the positive impact the pandemic had on tech stocks compared to industries that suffered, such as real estate, more investors grew interested in VC investing.
In short, with a majority of purchases now taking place online, companies face a set of new realities. Organizations realize it’s all about agility and resilience. Intelligent automation and digital strategy must be at the center of organizational planning. There’s no going back.
Because a world of massive interconnection sparking untold levels of purchases and questions has come sooner than many thought. And a set of ambitious companies are positioning themselves to service this emerging kingdom of techno-consumerism.
Fifteen years after I imagined BPOs wandering east of Eden to find sanctuary amidst our imperfect world, July, 2021, struck me as a particularly consequential month for a flourishing engagement ecosystem.
Sitel Group and SYKES
In mid-July, 2021, Sitel Group announced that – through a wholly-owned subsidiary – it would acquire all of SYKES’ outstanding shares of common stock at a purchase price of $54 per share (representing a premium of 31.2% over SYKES’ last recorded closing price). The transaction was valued at approximately $2.2 billion. Expectations are that almost $4 billion in revenue will be generated from the new combination.
Seeing the news, I was reminded that back in the summer of 2006, Sitel’s merger with ClientLogic was still months away. Indeed, at the time, Sitel had just 39,000 employees working in ninety-one contact centers globally, and its revenue from the year before was just over U.S. $1 billion. In addition, in August, 2005, the company had announced the refocus of its risk management business unit, Sitel Risk Management (pre-charge-off collections), to meet changing market demand. As a result, some of that business, such as that operating out of a facility in Atlanta, Georgia, would be moving to lower cost nearshore and offshore locations.
For its part, back in 2006, SYKES had just 17,000 employees and its revenue was over U.S. $495 million. And it was in January, 2005, that SYKES had announced its decision to take half of its call center business out of India due to inadequate rates of return (it had been in Bangalore since August, 2002, with Delta Airlines). Still, the company was emphasizing it wasn’t abandoning its recent and aggressive relocation strategy, which would mean the continued closing of call centers across rural America, with the opening of new facilities in lower cost cities overseas. In fact, that July, 2006, the company would announce the acquisition of Centro de Interaccion Multimedia, SA (Apex), a customer contact management solutions and services provider headquartered in the City of Cordoba, Argentina.
The race offshore was in full stride.
But even as providers like Sitel and SYKES were globalizing at an increasing rate, I was writing a lot about the need for providers to also put major investment into the work-from-home model right here in the United States (and in other global locations where it made sense). Clearly the mid-Aughts was a time to think more deeply about where and how we work. At the time, I found SYKES to be one BPO provider that was pondering the logic of such a strategy in earnest. It took a few years, but by 2012, SYKES would acquire home-based agent provider Alpine Access.
SYKES, it seems, had a longer-term vision to evolve into a more agile and resilient operation. The company seemed to understand that the BPO game was shifting beyond simply the globalization of labor, accelerating into entirely new realms of technological capability. That became even more clear when, years later, in October, 2018, it acquired the intelligent automation (IA) and robotic process automation (RPA) capabilities of Symphony Ventures. Bringing on Symphony was a means to reimagine work across the front, middle, and back offices.
And then came a further catalyst called Covid19. By November, 2020, SYKES had responded in part by launching SYKES Digital Services (SDS), consolidating capabilities that spanned automation, self-service, insight analytics, and digital learning. Leadership emphasized that the goal was nothing less than to “reimagine the future of work.” The integrated structure positioned SDS to anticipate and then meet the needs of clients through operational excellence, a focused and programmatic approach to digital transformation that aimed to “supercharge” workforces, improve the CX, and generate results at scale.
Meantime, SDS also would leverage the expertise of its Qelp acquisition to serve customers on their preferred self-service channels, providing efficient and effective support experiences on smartphones and other devices. SDS also would take another business, TalentSprout, to help engage and support employees with essential work-at-home structures and training. And SDS would leverage its Insight CX Analytics tools to help enable the collation of disparate, unstructured data in pursuit of connecting process dots, gaining efficiencies, and increasing customer lifetime value (CLV).
SYKES knew that all of this would serve to augment its March, 2016, acquisition of ClearLink, a business combining machine learning and human ingenuity in the name of improved marketing (from awareness to conversion), sales solutions (pairing online options with call- and chat-based services), and data science solutions (delivering actionable insights by using AI to analyze, extrapolate, and predict future outcomes).
And by this July, 2021, we would learn that this reengineered SYKES would soon be joined with a reimagined Sitel. Sitel’s Enterprise Experience Platform, EXP+, will be at the core of the strategy of an utterly new entity. The cloud capability is designed to simplify the delivery of end-to-end CX services through integrated, scalable, vertical-specific solutions.
As Olivier Camino, Global Chief Operating Officer and Co-Founder of Sitel Group put it:
Post-pandemic, the forces of digital disruption and dynamism are accelerating. A new world is emerging with the rise of the work at home model, and the need for valuable emotional connections and conversations between brands and their consumers has never been so important. With our expanded geographic footprint and greater capacity to serve customers, we will be better equipped to help our customers navigate the rapid changes within the industry.
President and CEO of Sitel Group, Laurent Uberti, added that:
By joining forces with such a healthy, profitable and financially solid U.S. brand that also has a stellar reputation, we will further enhance our global reach…. we will be a more competitive BPO player with a wide range of CX products and solutions, leveraging EXP+, the Enterprise Experience Platform from Sitel Group, especially with the addition of SYKES’ CX solutions in digital, social media, and robotic process automation (RPA), through their suite of digital transformation capabilities such as ClearLink and Symphony.
The new Sitel, in other words, will seek to respond to our rapidly changing, unpredictable world by processing vast amounts of information and solving a range of problems in real-time, at scale. Sitel now joins industry leaders Teleperformance and Concentrix in a battle for size and reach, seeking any small advantage by weaving the EX and the CX into a unified whole.
Hello, transformation in search of efficiency, agility, and resilience.
Zoom Acquires Five9
What’s become abundantly clear is that enterprises are demanding a common platform for both customer and employee communications. So on July 18, when Zoom announced it was acquiring cloud contact center software company Five9 for $14.7 billion in stock, the move was not unexpected. There had been chatter about it for months. The $200 per share purchase price was a modest premium (about 13%) over the last recorded Five9 closing price. Five9 CEO Rowan Trollope will stay on as CEO of the Five9 business unit and a president of Zoom.
The world of contact center as a service (CCaaS) and unified communications as a service (UCaaS) are being aligned. Five9’s CCaaS solution will enhance Zoom’s already broad communications platform. By bringing customer care capabilities and business communications together, Zoom will move closer to being able to offer what it calls, “the customer engagement platform of the future.”
Some companies already have integrated UC and CC to some extent, some have even integrated video into their contact center apps; but up to now, most have not leveraged full integration. As Rowan Trollope noted, using video during a customer interaction is already happening organically, and the integration of Five9 with Zoom’s video platform is going to be attractive to many companies.
Zoom CEO Eric Yuan put it this way:
The trend towards a hybrid workforce has accelerated over the last year, advancing contact centers’ shift to the cloud and increasing demand by customers for customized and personalized experiences. Today, enterprises not only need to enable customers to engage via their preferred channel, they need to empower their teams to accomplish more, and do so with empathy, purpose, and connection.
Craig Walker, CEO of Dialpad, offered his own thoughts on the deal, waxing poetic via Twitter:
…all business communications (meetings, phones, contact centers) should all be driven by a single platform and operate within one app. Getting rid of silos for businesses and IT departments is a huge opportunity. Nobody wants to hop from WebEx for meetings, to Mitel for phone, to Genesys for contact center. It made no sense and all of those services should be offered by a single, modern platform that does it all….
… I mean all the features you need to communicate and collaborate delivered through a single pane of glass, with AI at its core. The fewer clicks the end-user has to make, the better. Today’s news shows me that the evolution of communication that our team was predicting turned out to be true. We call it Pangea internally, and Zoom’s purchase is an effort to get to that unified state.
Well said. Enterprises that leverage the same provider for both UC and CC for whatever combination of contact center, voice, video, messaging, WFO, and AI are sure to see tangible performance improvements. Note too that it was just last year that Five9 acquired Inference Solutions to gain interactive virtual assistance capabilities. As such, one also wonders what the potential might be for AI to drive ever increasing business value to the new entity’s platform as AI extends its reach in the contact center world and beyond.
Ultimately, the deal also means that Zoom might soon be able to add contact center to its half a million customers, as Rowan Trollope indicated they hope to. If that happens, those enterprise clients will be able to experience a more unified front and back-office, an entirely new kind of cohesion.
Still, as The Information notes, “this deal doesn’t answer a question that has hovered over Zoom all year: What does it plan to do with all the cash piling up in its coffers?.... Assuming Zoom maintains its recent rate of cash generation… the company could have $7 billion in cash by the time the deal is expected to close next year.”
Although M&A is a complicated process, integrating technologies and cultures, Zoom and Five9 have been partners for quite some time. They’ve had much success going to market together in sectors such as retail and education. They know each other well. The integration of these two clouds should be fun to watch.
Salesforce Completes Acquisition of Slack
There was more news to come. On July 21, 2021, CRM software provider Salesforce announced that it had completed the acquisition of collaboration hub Slack Technologies, Inc. Salesforce was clear about the logic behind the move:
Companies around the world have learned one thing over the past year—if you don’t have a digital way to connect with your employees, customers, and partners, you don’t have much of a chance of surviving…. This is a once-in-a-generation opportunity to rethink and reshape everything about how and where we work. That’s exactly what the combination of Salesforce and Slack is all about—creating the business operating system for the new world of work.
It seems Salesforce CEO Marc Benioff is determined to see that every organization is able to, in his words, “deliver customer and employee success from anywhere,” and he referred to Slack as the “trailblazing digital platform for the work anywhere world.”
Stewart Butterfield, Slack CEO and Co-Founder added that, “We have a once-in-a-generation opportunity to rethink and reshape how and where we work. Salesforce and Slack are uniquely positioned to lead this historic shift to a digital-first world.”
And Bret Taylor, Salesforce President and Chief Operating Officer, offered that, “We’ve learned over the past year that the workplace isn’t snapping back to the way it was. Together, Slack and Salesforce Customer 360 will give every company in the world a single source of truth for their business and a single platform for connecting employees, customers, and partners with each other and the apps they use every day.”
The vision is one of a single platform that connects employees, customers, and partners with each other and their apps, within their existing workflows.
Vitally Gets in the Game
And then there is New York-based customer success company Vitally. Founded in 2017, its SaaS platform automates repetitive tasks involved in customer interactions. On July 21, 2021, we learned the company had raised $9 million from Andreessen Horowitz, which will be used to scale and market the venture.
According to TechCrunch, Vitally:
…unifies all of that customer data into one place and flows it through an engine to provide engagement insights, like what help customers need, which ones are at risk of churning and which to target for expanded revenue opportunities. Its software also provides automation to balance workflow and steer customer success teams to the tasks with the right customers so that they are engaging at the correct time.
Vitally co-founder and CEO Jamie Davidson notes that the company was not fundraising when Andreesson came calling. But Andreesson appears to have seen an opportunity to reimagine how SaaS companies deliver customer success.
It sounded familiar. In a recent blog on Alvaria, I discussed private equity’s drive to invest in the future, because, “Today, the demand for frictionless online experiences has intensified at a startling rate. That demand will push even more investments in our new cognitive revolution, with financial capital determined to accelerate the process.”
Medallia Acquired by Thoma Bravo
July, 2021, just kept on giving. Because on July 28, software investment firm Thoma Bravo announced the acquisition of Medallia, a customer and employee experience management provider, for $6.4 billion (although news also broke that the former attorney general of Louisiana is investigating the “adequacy of price and process” in the proposed sale).
Should the deal go through, Medallia, which went public in the summer of 2019, will revert to a private company. Thoma Bravo, with its portfolio of technology and software firms, will offer support in the form of capital and sector expertise.
In the words of a managing partner at Thoma Bravo named Scott Crabill, Medallia's SaaS platform leverages proprietary AI to help companies, "better understand their customers and employees and drive meaningful business growth at scale." And its ability to provide personalized and predictive insights, "has become mission-critical in a rapidly expanding universe of structured and unstructured data, where more and more business is transacted digitally."
The news release goes on to ask, “What does it all mean?" The answer is clear. "More confidence in the software that allows businesses to collect customer data, measure customer sentiment, and suggest and create actionable outcomes for communicating and cultivating lifetime customer relationships.”
As I pointed out in the aforementioned blog about Alvaria:
In other words, the private equity industry seems to now fully recognize CX and the employee experience (EX) as essential differentiators in a world of increasingly commoditized products and services. Revenue growth in hyper-competitive environments will depend in no small part on the extent to which technologies can provision a seamless experience for customers and employees hot-wired with high service expectations.
Qualtrics Acquires Clarabridge
Not to be outdone in this July’s fireworks, on July 29, Qualtrics announced that it has added to its experience management platform by acquiring omnichannel conversational analytics company Clarabridge in an all stock deal worth $1.3 billion.
The Qualtrics platform enables organizations to ask customers and employees questions about how they’re feeling about their company, products, and brand experiences, and then use the insights from that data to take action across the business.
For its part, Clarabridge offers software that is able to analyze massive volumes of indirect customer feedback captured from unstructured sources such as social media posts, support calls, chats, emails, and product reviews. In revealing nuances such as emotion, effort, and intent, the AI powered-software featuring natural language understanding (NLU) enables companies to see how they’re perceived by customers and promptly respond to any issues.
The new combination will enable companies to understand what customers and employees are saying, delivering personalized experiences at significant scale. Qualtrics now calls itself, “the world’s number one Experience Management (XM) provider and creator of the XM category.”
In Greek myth, Prometheus steals the fire of creative power from the workshop of Athena and Hephaistos and gives it to mankind. Prometheus’s punishment for defying the gods is to suffer at the hands of Zeus. In Western tradition, the story represents human striving in the search for scientific knowledge. It all sounds oddly familiar.
By the end of the decade of the 2000s, human folly and the whims of nature had joined together to upend ideals and expectations. In the West, the social contract had been shattered at the same time that Nature had decided to lash out at human beings like never before.
Fifteen years later, we seem to have reached a reckoning of sorts. Today, even as the U.S. finds hope in its vaccines, The New York Times points out the “growing gulf between wealthy countries returning to normal and poorer nations sinking deeper into crisis.” The situation is growing desperate for some 270 million people in need of food. Certainly for the BPO industry, such realities must be top of mind.
The environment too is under siege, from California to southern Europe. Last week a raging wildfire fed by high winds destroyed the small Northern California town of Greenville. What’s become known as the Dixie Fire blazes on and is now the second-largest wildfire in recorded California history. And as I write, a record-breaking heatwave in southern Europe is ripping across parts of Turkey and has transformed Greece into what its prime minister has called, “a powder keg.”
So we shouldn’t be shocked to wake up this past Monday morning to news of a new UN climate report, approved by 195 governments and based on more than 14,000 studies – “the most comprehensive summary to date of the physical science of climate change” – stating that the past five years have been the hottest on record since 1850. And there’s more:
The changes in climate to date have little parallel in human history, the report said. The last decade is quite likely the hottest the planet has been in 125,000 years. The world’s glaciers are melting and receding at a rate ‘unprecedented in at least the last 2,000 years.’ Atmospheric levels of carbon dioxide have not been this high in at least 2 million years. Ocean levels have risen 8 inches on average over the past century, and the rate of increase has doubled since 2006.
Is it any surprise that protestors are out in the streets across the world, shaking a fist at humanity and Nature alike? It’s almost existential. It’s all going too fast. It’s as if we need a Hardy, a Dostoevsky, a Huxley, to help us understand what’s going on.
One thing seems certain. The 2020s will be filled with paradox. Because even as protests spiral outward and societies grow less coherent, private enterprise seems to be coming together in an attempt to make its own internal worlds more efficient and empathetic. As people become more disoriented in their private lives, wandering ever deeper into a universe of structured and unstructured data, their work and consumer lives will be enmeshed in an increasingly automated world. As we grow less able to juggle the jumble of real and fake news coming at us, organizations will grow more effective at processing information in ever more amazing ways.
Perhaps the signs were there all along. Back in the summer of 2006, Sam Palmisano, then CEO of IBM, was in Bangalore, India talking about something his company was calling the “globally integrated enterprise” (GIE). He’d just published an article about it in Foreign Affairs magazine. Palmisano told the 10,000 gathered IBMers that he was abandoning IBM’s existing organization, in which product silos and geographic entities operated independently and were more competitive than collaborative. He wanted worldwide collaboration that would be agile and client-centric. IBM, Palmisano said, had increased its Indian workforce from 9,000 to 43,000 in just two years. And over the next three years, he told the crowd, IBM would invest $6 billion more dollars in the Indian subcontinent.
I was particularly interested because I’d been invited to attend an IBM analyst event in New Delhi at roughly the same time. The GIE was, IBM said, a business model that had emerged from massive socioeconomic changes that were occurring throughout the world in the 1990s. At the heart of it all was the Internet and the laying of a global network of communications cable; for IBM, “Together, they made it possible for knowledge work to be performed anywhere in the world where skilled people could be found to do it.”
From 2006 to 2008, IBM expanded its presence and shifted work to Asia, Latin America, and Eastern Europe. The company set up a network of global delivery centers with standardized processes and outputs in India, China, Brazil, and other countries. It sought radical simplification – eliminating, standardizing, and automating work while simplifying workflows.
By 2012, IBM had relocated most of its software operations to India and its Indian operations grew from 3,000 to 100,000 employees.
The catalyst for the GIE and its philosophy of shared services was operational efficiency, and that meant the creation of an integrated supply chain. For IBM, the globally integrated enterprise would be a new kind of commercial organization, responding to a new era in global economics.
Globalization was everything.
And then came Covid.
What a difference fifteen years makes.
Or does it? In 2021, IBM and every other corporation faces a strange new landscape full of yet more questions. Whereto globalization now? IBM is responding in kind. It has 380,000 employees working together in Slack, with numerous workflows across Salesforce Sales Cloud and Service Cloud. Reflecting on the Salesforce and Slack combination consummated in July, 2021, IBM’s current Chairman and CEO Arvind Krishna, promised that it, “…will help us become more connected, more productive, and more innovative so we can better serve our clients.”
There’s a new reality of hybrid, ever more mobile work before us. Alphabet recently approved requests from roughly 85% of the 10,000 employees who asked to relocate or work remotely, demonstrating the kind of flexibility companies may need as they reopen physical offices in the wake of Covid. That’s smart, because indications are that the global pandemic may be helping spur a productivity boom for those companies savvy enough to seize the opportunity:
A working paper by Jose Maria Barrero, Professor Davis and Nicholas Bloom that is based on a survey of 30,000 workers finds that widespread working from home could generate a 4.8 percent boost to productivity relative to the pre-pandemic economy, but that only 1 percent of that should be expected to show up in the official statistics. The reason? Much of the gain comes from time saved commuting, and official labor productivity statistics do not include commute time in the “hours worked” denominator. In effect, the pandemic forced a lot of innovation around office work practices to happen far more rapidly than would otherwise be the case.
Interestingly, at the end of 2020, I wrote about the possibility of an impending productivity boom in “Gatsby’s Return?”. Fifteen years after the summer of 2006, it seems we’ve finally gotten the message about new ways of working and living. We’re homeshoring in an imperfect world just east of Eden en masse because we have no choice.
Even so, with all this efficiency and productivity, important questions keep coming. And it appears that Christopher Mims, tech columnist for The Wall Street Journal, is asking some of them. He has a new book, Arriving Today, due out in September, 2021. Based on the description, we all should probably read it:
We are at a tipping point in retail history. While consumers are profiting from the convenience of instant gratification, rapidly advancing technologies are transforming the way goods are transported and displacing workers in ways never before seen…. The scope of such large-scale innovation and expended energy is equal parts inspiring, enlightening, and horrifying. As he offers a glimpse of our future, Mims asks us to consider the system’s vulnerability and its resilience, and who shoulders the burden, as we hurtle toward a fully automated system—and what it will mean when we are there.
In the end, it seems to me that as more and more homeshored souls in the U.S. continue to emerge from online lives Covid coerced them into living, their time outside may not last. Because we learned one other thing this fantastical July of 2021 – the likes of Facebook’s Mark Zuckerberg and Epic Games’s Tim Sweeney have big plans to draw us all back into Plato’s Cave, something they’re calling the “metaverse.”
It’s supposed to be the next stage of computing. In the words of Cathy Hackl in Forbes:
Welcome to the metaverse, alternate digital realities where people work, play, and socialize. You can call it the metaverse, the mirror world, the AR Cloud, the Magicverse, the Spatial internet, or Live Maps, but one thing is for certain, it’s coming and it’s a big deal…. So what happens when the world becomes a billboard, robots have spatial reasoning and virtual assistants own the relationship with the consumer?
If that description is correct, our future engagement landscape will be lit with so many fires of possibility that not even Prometheus himself could imagine it.
I suppose all we can do is stay tuned.
Image credit: kronstadtrevolt.com