I started playing Pokemon in college. More or less at the same time, I watched my first sci-fi movie Minority Report, which blew my mind and I started imagining the role of many futuristic technologies including augmented reality (AR). I could have never imagined, 14 years later, the combination of these two (Pokemon and Augmented Reality), Pokemon Go would become such a craze, adding $7 billion to a company’s valuation in just a couple of days. It also leads me to think again about the use of AR in engineering services.
So it’s finally happening. Enterprises are using SaaS applications to run important processes, such as CRM, HR and even Finance. Moreover, some even have an enterprise cloud strategy that requires departments to consider cloud options alongside on premise solutions, as part of process transformation projects.
This is a question you expect to get as a forecaster, and it is not always the easiest to answer. It is always troubling to be asked to speculate on a market size where the outcome is so uncertain. However, this is not speculation upon speculation. This is not like forecasting the impact of Grexit (Greek exit from the EU) – even though this has not happened.
Two years after our inaugural Blueprint in Mortgage BPO Services, we took a fresh look at this industry…here’s announcing the findings of the HfS 2016 Mortgage As-a-Service Blueprint!
The concept of delivering mortgage As-a-Service, using plug and play digital business services is still in its infancy. We’re not quite at “push button, get mortgage” as an industry – and the verdict is out on whether this is the right message to send for a lending environment that is still rebuilding itself, seven years after the 2008 housing crash. How do you do this without raising eyebrows? You’ll have to ask Quicken Loans, as they learn from the backlash of their Super Bowl campaign with that very slogan.
We hear a lot about the cost of healthcare, among these being the high cost of additional treatments or elongated stays when patients fall in hospitals, and of readmissions when people who go home after treatment don’t follow care plans. It’s amazing to think that a solution could involve something as simple, cost effective, and comfortable as clothing, such as a garment made with Hitoe® (That’s hee-toe-ay, not high-toe!).
The world’s largest consulting firm by revenue, Accenture, has announced the purchase of 160-employee MOBGEN, which provides user experience-focused end-to-end digital services, with an emphasis on mobility strategy, creativity, and technology. The company is based in Amsterdam in the Netherlands and has offices in Spain. Accenture has been on a roll purchasing revenue-generating assets, and this addition to Accenture Digital is intended to “deliver rapid iterations for advanced mobile and IoT services,” and “strong roadmaps, agile development capabilities and scalable solutions” for European clients.
The most "tangible" value of cognitive automation, in today's consumer-centric enterprise, is the use of the virtual agent, where customer engagement is increased without heavy incremental investments in support staff. This isn't about simply replacing a real customer service rep with an avatar, it's augmenting the existing customer experience, usually using the same or similar resources.
For example, if you have a bad travel experience, or purchased a product that wasn't quite what you expected, the chances are you would simply shrug it off and get on with your life - and probably avoid using those same sellers again in the future, if given the choice. However, if those sellers used interactive technologies that were very familiar, or very easy to find and use, where you could simply type in your issue, in your own time, without the need to pick up a phone and wait in some queue (or write some email to some anonymous address), you may just find the effort to input a couple of lines saying "my experience just wasn't that good".
That information is critical to the seller - and how they choose to deal with it could make the difference between them winning out or losing in this market. Just think about how easy Uber, AirBnb, Amazon et al make it for you to deal with them - you will continue to use those services because the digital customer experience is just so much better... they make you feel like they listen. Customers today like effortless interaction, where they just need to click and type what they want in their own time - and what makes it come alive is when they feel they are engaging with someone and not merely sitting in a queue as an open help desk ticket number waiting to be closed.
If you get a chance to kick the tyres with one of the most exciting cognitive virtual agent solutions, IPSoft's Amelia, you start to realize that customer service can be radically improved by incorporating the virtual agent to augment the real one. And the beauty of this is, the sellers do not need to spend huge incremental sums to increase their consumer engagement - they are essentially doing a lot more with what they currently have using smart cognitive technology.
So it's no surprise that I got just a little bit excited when Amelia's mothership enterprise, IPSoft, announced a comprehensive partnership with Accenture to build an industry leading practice in the cognitive customer experience. So sit back, relax, and enjoy this discussion between myself, IPSoft's CEO, Chetan Dube and Accenture's Chief Technology Officer, Paul Dougherty.
Phil Fersht, HfS CEO and Chief Analyst: So let's get straight to the point here, Chetan and Paul. Why have you come together and what is so unique about this partnership?
Paul Daugherty, CTO, Accenture: Hi Phil - great to be here. Let me start and then Chetan can add in. You know that the immediate reasons we've come together, the obvious reason we came together is we see a real market with our enterprise clients for artificial intelligence based solutions. And we've been working with Chetan the team at IPsoft for a while and with Amelia we see a real potential to be at the vanguard of working with IPsoft to pioneer new use cases in terms of using AI to tackle business problems in a new way. So the first reason is we see the market we see the technology being ready. We are excited about what IPsoft has done with Amelia and we see an opportunity. I guess, stepping back from that, this is also to me a very important step in what we are seeing in the evolution of enterprises really transforming to the digital economy.
And Chetan will remember a lunch we had when we met for the very first time. We got very excited as we talked to each other a couple of years ago about what we saw as AI evolved and as the digital technology revolution continued, we saw a point coming where AI would allow companies to really rethink the way that they do business and rethink the way that they conduct business processes within their organizations. And that's I guess why this is such an important relationship from my perspective strategically, because we are starting to see as we move through the digital revolution as we help clients transform they need new approaches and new solutions to deal with the speed of business, to deal with the masses of data that they have, to deal with the new demands that they have as they move to the digital wave. And we see Amelia really serving a purpose there and helping to really rethink and revolutionize the way we conduct some of the business processes. That’s the way I’d answer it. Chetan, I’d be interested in your view on it, too.
Chetan Dube, CEO, IPsoft: Yeah. I would echo what Paul said. Yes, I remember that lunch, Paul, when we had brainstormed. AI is totally disrupting everything. But what is required for true value creation for the companies? Some have realized tremendous value and the others have been somewhat slow to realize value creation in their digital quest. What is required? Well, you do need the digital labor component.
But that's not all that you need. You need business transformation—and Accenture brings business transformation brilliance. And there are many companies that are experts in strategies and there are many companies that are experts in implementation. Accenture is one that amalgamates both. Couple that with cognitive technologies and you have the potential of realizing the true outcomes that were promised by the digital age. So that's what brought us together. How high the technology is going to allow some people to soar is going to be determined by the people who are captaining the ship. And in this case we have an incredible deal of confidence in Paul and his team at Accenture and how much transformation they will be able to bring by harnessing true cognitive abilities together.
Phil: So Chetan, for our global audience which might not be so familiar with Amelia, can you briefly summarize its value and potential? What can Amelia do which other cognitive solutions cannot?
People love status; that's just the nature of the beast. But wanting something and then going out and getting it can be an insurmountable hurdle. So sometimes people need to clarify what they want and why they want it. If you see yourself as a leader, have a quick look at the "five questions mirror." If you can't get past this list honestly, save yourself some time. You’re not a leader. That’s not all bad—you can still do something cool and be popular some place.
Our research shows that India is the most popular destination for ER&D centers and now we’re seeing Indian Prime Minister Narendra Modi’s “Make in India” program accelerate ER&D center investments in India.
In the old days of labor arbitrage centric outsourcing (which of course doesn't happen anymore) we had two quite clearly defined sets of service provider -
The offshore providers, which rarely interacted above director level and did the low end lift and shift routine work.
The integrators, which worked primarily with the IT and operations leadership to do the higher end work the ERP integration, often overseeing some of the offshore service providers to make sure they were doing their job.
Then the likes of Accenture, IBM and Capgemini realized the offshore firms had eaten their lunch and they rolled out their own offshore delivery functions in 2005-2010 to circumvent the heavy flow of dollars to the Indian-centric majors. Accenture and IBM managed to catch up and compete on price when they needed to, while Capgemini really needed to acquire IGATE last year to be more effective as an offshore provider, in addition to being an integrator. Meanwhile, you had the likes of Deloitte, PwC and E&Y, which chose to stay out of the offshore game and sell integration capabilities as consultants, rather than managed service outsourcers. The losers in all of this were the traditional IT/BPO services providers, such as HP(EDS), CSC, Xerox(ACS) et al whose lunch was eaten by the offshore providers, struggling to compete on price, scale and flexibility.
Then along comes Digital and Automation as the new value drivers and suddenly the game is changing again – labor arbitrage is still a key cost lever, but it needs to be balanced with automation to drive down the cost and increase the productivity even further, while the broader goals of the ambitious C-Suites are to create real digital capabilities to create their markets, not play constant catch up to avoid being disrupted.:
So what are these two emerging groups of service provider?
OneOffice Enablers - focused on designing and enabling the digital customer experience and tying the front to the back to make it all happen (see below). This is
There is a lot of buzz about ServiceNow technology. Thousands of developers and partners made their pilgrimage to Knowledge 16, ServiceNow’s customer event in Las Vegas. Service providers are starting to standardize service delivery on the ServiceNow platform and M&A is helping to build out service providers capabilities, as in the case of CSC acquiring Aspediens. Even though ServiceNow tends to position itself as the Enterprise Cloud Company, industry stakeholders are rather enthusiastic about the single data model, the embedded workflows and new ways of collaboration. As such, ServiceNow has the potential to evolve into one of the key building blocks for moving toward As-a-Service because its core value proposition centers on clients accelerating their time to value through faster actions and interactions, overcoming clunky legacy solutions like ITSM.
Buoyed by such buzz and enthusiasm, ServiceNow is aiming to expand the notion of service management to evolving into the “third estate between CRM and ERP,” providing a new cloud-based level of efficiency between the front and back offices. Thus, there are many touch points with the HfS notion of the OneOffice: Digitally driven enterprises must create a Digital Underbelly to support the front office by automating manual processes, digitizing manual documents and leveraging smart devices and IoT where they are present in the value chain. As a result, ServiceNow can be part of a broader innovation ecosystem in which the ability to orchestrate and integrate will become the pivot for creating value and differentiation. Nonetheless, as HfS has stated repeatedly, it is not just about the technology or solution ideals of the As-a-Service Economy, but about the change ideals in equal measure.
Here is the crucial question: How are organizations advancing their innovation agendas?
The recent HfS ServiceNow Services Blueprint highlighted two key issues in that respect: First, ServiceNow itself has been slow in embracing the notion of an ecosystem that goes beyond treating partners as mere sales channels. Thus, co-innovation with partners around vertical offerings and other innovation had not been high on the agenda. This is starting to change though, which is critical as the notion of the As-a-Service Economy is predicated on a collaborative partner ecosystem. Second, there are issues for service providers as well to address as many clients were unhappy with the lack of innovation driven by their supplier. The most successful projects were those in which clients drove the innovation process. This points to a crucial aspect for the journey toward the As-a-Service Economy. The eventual success is less about the technology building blocks and more about a change in mindset.
As the ServiceNow Services Blueprint shows, many clients need help in understanding the direction of travel. What vision do innovations like ServiceNow support? One compelling example for such a change in mindset came on a recent visit to an Atos delivery center in Barcelona that is supporting the 2016 Rio Olympics. It is a shift in mindset because Atos is treating the Olympics as a transformation project. The firm’s executives summarized the challenge of this project by comparing it to a business of 200,000 employees, addressing 4 billion customers, operating 24x7, in a new territory, every 2 years. To deal with such a complexity condensed to a short time frame, Atos did two things: First, it switched its service management to ServiceNow, which is a bold move given the scale of the project and the relative immaturity of the platform. Second, to be able to manage the heterogeneous supplier landscape, Atos is leveraging the SIAM methodology. Furthermore, it is migrating the infrastructure to a centralized cloud delivery model to drive down cost while enhancing agility.
To further highlight the intensity of the project, during London 2012 there were in excess of 255 million IT alerts without a major incident at the Games. This underpins the outcome orientation of the project. What counts to the client is managing a unique complexity without any hiccups in the quality of service delivery.
The Bottom Line: ServiceNow is standardizing service orchestration
ServiceNow has the potential to evolve into one of the key building blocks for moving to As-a-Service, but service providers need to engage proactively with clients to demonstrate the direction of travel as well as leading with a comprehensive innovation agenda. Moves of service providers to standardize broader service delivery on ServiceNow as part of service orchestration strategies reference an increasing maturity on this journey.
Over the next 12 months, we expect a broad maturation across the industry with accelerated levels of M&A. As a result, ServiceNow will continue to be the center of many innovation projects extending to scenarios involving security and IoT. However, we urgently need more reference cases demonstrating the lessons learned from projects to be able to conclude that ServiceNow is the new black—and it’ll last longer than a few episodes in Netflix.
The shake up (and potential shake out) of the services market is continuing with 2016 starting to show the unravelling of the winners and the losers more clearly. The following chart shows revenue growth and margin performance of the leading IT and multi-process BPO services providers – these providers are publicly traded, provide quarterly financial results for the services business. Each chart shows the data for the twelve months leading to the end of March (or closest prior month, in the case of providers whose fiscal periods are not aligned with regular calendar quarters).
We live in times where there is a lot of perceived fast-moving change, but what’s the reality for most traditional businesses? Let’s be honest, technology is changing a lot faster than humans, so how can we be more realistic and practical about looking ahead?
Much focus has been placed on shiny new clean sheet, ‘born digital’ companies such as Uber, AirBnB and Tesla - well funded ‘full stack’ architecture business entities, which have a major marketing messaging advantage in being new, futuristic and being seen to challenge the status quo of how things have been done.
Guts, determination and spirit – a touch of daring do? No people. It takes revenues. Cold hard cash. No more, no less. This is one of those times when it is all about the money.
That said, being on the list or not, shouldn’t make a service provider look good or bad – hopefully market forces mean that better/cheaper providers rise through the ranks, but it isn’t necessarily so.
So I’ve penned a short FAQ:
Can we make a mistake?
We are human and from time to time this happens – just send me an email and with your thoughts and we’ll correct. By all means call me names on twitter – but I may shout back…
We can miss companies from time to time and define where revenues go incorrectly. And, occasionally, spell your name incorrectly ;) Also we may define things differently from you – we are trying to compare like with like as closely as possible. Remember this is an estimate – so if you have further guidance, I’d be happy to have a conversation to let you know how we came up with any of the numbers.
I should be on the list / What do you have to do to get on the list?
Sending us evidence (a financial report or two, would help) that shows latest annual revenues. We use calendar years for our lists usually, so something that shows the relevant quarters would work. But happy to have a discussion with any private firms – just so we can properly establish position. I am not a miracle worker so private companies that don’t publish results and don’t provide guidance may not make the list.
How much do I need to bribe you to change my position?
It pains me to say it but no – we just can’t. The pesky tax man (and our boring accountant) frown on it ;)
That said it is also free to be on the list – you just need to demonstrate that you have the revenues to make it. But I will check against public sources and validate.
I really want to be part of this but I just don’t have the revenues yet – is there anything I can do?
I am writing some short profiles on up and coming providers – let me know what your story is and we may feature you. Although we are mainly interested in IT services and BPO – so although I personally am fascinated by cool software. A software company’s story may get bumped…
Also we may start breaking out new lists – HRO providers, Customer Care, etc… any suggestions are always welcome.
SYNNEX-owned Concentrix today announced a definitive agreement to buy Canadian born Minacs, previously owned by Indian conglomerate Aditya Birla Group and presently owned by two private equity firms. HfS estimates the combined entity will easily surpass $2bn in 2016 and is a singificantly show of force to the rest of the contact center industry.
I think I just read one of the most (brutally) honest and practical articles by a guy called Len Kendall, an LA-based marketing executive with a clear penchant for writing. His piece is based on two premises:
The market no longer allows for employing older workers who deserve higher salaries
Technology is killing jobs at a very fast pace that will only continue to accelerate
OK – we all kind of know this. But where this gets interesting is where the discussion shifts to what he constitutes “expensive” workers.
"Thanks to advancements in technology, jobs are becoming more automated. Assuming that we can eventually automate all basic jobs and allow artificial intelligence to conduct more skilled work, there will only be a need for a small group of educated, experienced, but inexpensive workers."
So what counts as “expensive” workers?
Group A – low-skilled, but still expensive. Large populations of low-skilled workers (varying in age) who require lots of benefits. Companies will look to replace groups of ten or even hundreds of people with one computer to reduce costs. This is the premise