Can Infosys be the one to challenge Accenture's digital services dominance?

April 23, 2018 | Phil Fersht

It took a while, but we've finally seen the cards being played from Infosys' new CEO Salil Parekh - and it's a concerted digital play to offer clients an alternative to Accenture.  Make no bones about it, the intentions are crystal clear to reverse the course Vishal Sikka set with a software-centric "product" approach, and follow the Accenture model of creative digital services supported by technology-agnostic execution.  The firm, once affectionately dubbed the "Indian Accenture", has gone full circle to reclaim its mantle and revitalize itself as one of the key services alternatives to enterprise clients seeking high-value digital capabilities enabled by industrial-scale technology execution. Infosys has never been one to go about its business quietly - the firm likes to make big bold statements and attack the industry with a swagger - and, after a full year of navel-gazing as Sikka's reign fizzled out, amid a very public media obsessed with scrutinizing every private jet excursion and every former SAP executive's departure package, Salil has made his play in typical Infosys style.

With the chest-beating battle cries coming out of the firm's Q1 results, Salil and his new founder friends believe they have the credibility, brand and global presence to slip in front of its rivals, notably Cognizant, TCS and Wipro, and to make up for lost ground and quickly assert their presence in this digital race for client supremacy.  The (surprisingly open) stated effort to sell off their product acquisitions Panaya and Skava (and likely more), the recent acquisition of creative agency WONGDOODY, famous for its Superbowl ads, and its 2017 addition of London-based product design agency, Brilliant Basics, gives Infosys a creative digital footing in both US and Europe.  

So can Infosys break out of the pack to challenge?  Let's take a look at the Digital Services market...

There's been enough noise and confusion regarding what constitutes digital and which providers are truly breaking ground here, but the stark reality is that Accenture has made a relentless concerted acquisition strategy to dominate this market from the onset, and the current race is on from the rest of the service provider community to challenge them:

Click to Enlarge

Digital services provide the natural evolution of traditional IT and business services firms, while products-plus-services is a struggle

For all Vishal's intelligence and vision, the reality became very clear towards the later stages of his tenure as Infosys CEO: traditional IT services firms will always struggle to become products-plus-services firms as they simply do not have the channel to market, the sales structure or the culture to sell these offering at a one-to-many scale. "SAP has 45,000 clients while we only have 1,200" was his realization.  Services juggernauts like Infosys are never going to scale effectively down to the lower middle market, hence need to deepen their footprints with large clients which are profitable to manage in their global delivery model.  And remember Accenture's aborted attempts to make a mid-market play?  

A one-to-few model may work in very specific areas such as procurement (Accenture and Procurian) or healthcare (Cognizant and TriZetto), but these investments are substantial and require a significant amount of time, focus, and investment to make viable.  This is why Salil made the aggressive decision to abort Panaya and Skava - these require a massive effort to deepen sales and delivery capability to make these investments truly worthwhile and pivot Infosys into a much more specialized direction. The realistic growth for a firm like Infosys is in winning big-ticket enterprise services accounts on long-term deals that require significant scale and transformation.  There is a reason TCS is leading the services industry in valuation - it has its tentacles firmly wrapped around large, multi-year client relationships and is not bogged down in discreet product acquisitions.  

Digital services represent the high-value end of the services business where firms like Infosys can embed themselves for many years if they get this right - the ability to design, manage and deliver the customer engaging front office, supported by a digital underbelly, support organization and predictive analytics (as we at HfS term the "Digital OneOffice").  It is that ability to enable clients to respond to the needs of their customers in real-time: Digital is the wow factor that is setting apart today's services firms.  The reality is most of these providers are competent at delivering IT services at scale to meet whatever KPIs were agreed at the onset of a contract.  So the differentiation is that ability to help enterprise clients delivery the digital experience for their own clients - and you can only really do this if you have absorbed sufficient design and consulting talent at scale. Digital is much more about a services experience than a specific product experience - there are many apps and tools clients can use, but it's how they are aligned with the business strategy that really matters.  This is why Accenture's technology agnostic strategy of the last two decades is the one so many services firms are now following.

The Bottom-line: Accenture created the digital services market and there is no clear contender to take them on from an end-to-end services standpoint.  Infy has as good a shot as any of its key rivals

Three small-scale acquisitions are merely a statement of intent, but the hard work starts now - and it is a serious about of hard work!  While WONGDOODY and Brilliant Basics are very credible firms and get Infy on the map for digital design and media services, Salil and his cohorts need to savage the market with some further significant investments if it wants a place firmly at the big boys' table. Cognizant has done an excellent job taking its SMAC stack into a very meaningful effective digital offering, and currently is pushing Accenture the most aggressively, with focused offerings and marketing.  Wipro has made some admirable efforts with Designit and Appirio to win some notable deals and has been very focused on this space, vastly improving its communication and positioning with clients.  The reality is, no one has come anywhere close to rivaling Accenture's scale with digital and we need to see a lot more than some small agency investments if any of these firms want to make a realistic play at Accenture's dominance.  Firms like Infosys now have to bet big if they want to do more than pay lip service to the new wave of technology-focused offerings.  A major consulting acquisition, such as a Booz or AT Kearney, could make the difference, but will likely be a one-shot deal to make or break their strategy, and we all know how messy these services-plus-consultant acquisitions can get.  

The bolder play is to go after one of the large creative media/advertising agencies that offers clients and scale that get Infosys immediately to the table.  Firms like AKQA, BBH, M&C Saatchi, Ogilvy & Mather, Sid Lee and the Miller Group (to name a few) would deliver immediate credibility and digital design capability to a firm as ambitious as Infosys.  Infosys has the swagger to pull something like this off, but has never faced such a test of focus as it does right now - it has picked its path, now the firm needs to pace some serious, eye-catching investments to stay true to its word.  Most importantly, the Founders needs to stay true to Saili and not have him experience the wheels come off like they did for Vishal - that is not a road Infosys can afford to go down again, as next time there won't be a forgiveness factor from its clients or the industry at large.

Posted in: Digital TransformationDigital OneOffice

10

1 Comments

We're becoming obsessive social networkers with a huge appetite to learn from each other

April 15, 2018 | Phil Fersht

Remember that 70's movie "Logan's Run" when, in the 23rd century, the population and the consumption of resources are maintained in equilibrium by killing everyone who reaches the age of 30?  They found a simple fix to solve their problems. Today, we seem to be entering a similar situation with employment and intelligent automation: why not just retire everyone at 40 to protect those valuable employment resources? It sounds far easier than building a ridiculously long wall or pretending all these magical new jobs will appear from nowhere in a couple of years... 

Everyone, seemingly, is obsessing with the current swirl of anxiety infecting our whole career outlook, with relentless discussions raising our stress levels as we figure out how to "adapt" ourselves to a world where bots are going to do so much of our work at some indefinable moment in the future.  

It's just not cool to be normal anymore...

Whether we're mindlessly getting our hourly endorphin rush from those lovely social media sites that keep pulling us in, or dozing through yet another mind-numbing panel on the "impact of intelligent automation" at some horrendous conference we just had to go to (listening to people who previously had nothing to do with "automation" and have since become overnight luminaries), or simply chatting with colleagues in the office... there is now a constant angst that

Read More »

Posted in: Digital OneOfficeTalent in Sourcing

6

1 Comments

Gartner fails spectacularly with its 180 degree flip on the impact of AI Automation on jobs

April 07, 2018 | Phil Fersht

Whiplash alert: You may have noticed how Gartner recently flipped its core messaging from automation/AI being a seismic job destroyer to being now a job-creator.  And both times, they just can't seem to back up the rhetoric with actual facts.  Plus, they don't even seem to be able to define consistently what they actually mean by "AI Automation". 

Remember when Gartner claimed that automation and AI were not only going to replace a third of jobs by 2025, but many of us would be reporting to a robo-boss at some stage this year?  Well, guess what folks, they've now performed a complete 180-degree flip, claiming that millions of new jobs will be created after 2020, far outweighing their previously predicted gargantuan job losses (courtesy of LinkedIn).  Wow:

Let's dare to look back in time to hold Gartner to account

Peter Sondergaard, Gartner's Head of Research, predicted one in three jobs will be converted to software, robots and smart machines by 2025.  Yes he actually said that at his own Symposium, and even added, "New digital businesses require less labor; machines will make sense of data faster than humans can."  However, unlike the good old days when analysts could get away with all flavors of outlandish grandstanding soundbites to spice up a conference, these predictions tend to hang around the internet these days.  While many people love to keep spinning new headlines everyday, in the hope #fakenews is now the #realnews, some of us still have memory banks that last longer than one week, especially when CIOs spend billions of dollars for this type of council.  

And then who can forget this almighty whopper from Fran Karamouzis, a vice president and distinguished analyst at Gartner:

By 2018, more than three million workers globally will be supervised by "robo-bosses".  Excellent, so Fran's surely keeping her fingers crossed that the robo-boss takeover is even more imminent than Donald Trump's interview with Robert Mueller...

Gartner's new claim why AI and Automation will create this massive net gain in jobs

When Gartner put out this far more positive news, I was so excited, and couldn't wait to hear their new rationale:

Click to read full press release

"Many significant innovations in the past have been associated with a transition period of temporary job loss, followed by recovery, then business transformation and AI will likely follow this route," said Svetlana Sicular, research vice president at Gartner. AI will improve the productivity of many jobs, eliminating millions of middle- and low-level positions, but also creating millions more new positions of highly skilled, management and even the entry-level

Read More »

Posted in: Cognitive ComputingRobotic Process AutomationIntelligent Automation

31

1 Comments

Fed up with the AI nonsense? Well here's your reality check...

April 05, 2018 | Phil Fersht

Fed up with even the hype being so overhyped, that even The MIT Media Lab is severing ties with a brain-embalming company that promoted euthanasia to people hoping for digital immortality through “brain uploads"?  Yes really. 

Then waste no time as we plan to steer you back to some version of reality next week with an unvarnished, unsponsored, unpuffed view of the world, where any spin if countered with a powerful forehand down the line:

Click here to reserve your virtual seat now!

Posted in: Cognitive ComputingRobotic Process AutomationIntelligent Automation

0

0 Comments

It's not all about mindset: The lack of IT talent is the biggest roadblock to reaching the Digital OneOffice promised land

April 02, 2018 | Phil Fersht

If I had a dollar every time an executive bemoaned their firm’s inability to “change their mindset”, to do anything differently to escape their habitual ways of running operations.  And if I had a further greenback for every advisor who bemoaned how idiotic their customers are, because they “just don’t have the deep expertise to fix their underlying data structure", I would have long retired to the Trappist Order to brew very strong beer for connoisseurs with beards (that doesn’t actually taste very nice, but it's just so beardy).

Surely the perfect desired outcome, even if it tastes like crap

It's all about bringing the operations closer to the customer, and lacking IT talent is a major impediment to achieving it

Getting to the point here, it’s one thing demanding your employees change how they approach their jobs to benefit your firm from deploying advanced automation and cognitive tools, but entirely another if you don’t have the technical expertise to put them to work.  It’s one thing to design a leading-edge digital interface with your customers, but it’s rendered pretty useless if you don’t have the capability to integrate it with your operations to provide customer support, get your products and services to them and harvest their data to keep making smart marketing decisions to stay ahead of demand. It’s one effort to redesign processes around your customers, entirely another to redesign your operational infrastructure to make it actually happen

We recently interviewed 100 C-Suite executives from major enterprises and split the discussion across both business and IT leaders.  While the industry obsesses about whether C-Suites know where to where to invest, what are their desired outcomes etc., we don't focus nearly enough on the impediments preventing them from achieving these goals.  We focus far too much on firms' short-term spending on tools, and not enough on defining the ultimate outcomes and drawing up real investment and change management plans to get there. As we recently discussed, if we only focus on the means, we will never arrive at the end. To address this, we presented the OneOffice Concept to understand what is holding back both business and IT leaders from reaching the promised land of perfect real-time symmetry of their business operations staying ahead of their customers’ needs:

Click to Enlarge

The Bottom-line: The Right Brain only functions when it's in sync with the Left Brain 

As we have widely discussed, four-out-of-ten customers (see earlier blog) going through initial deployments of RPA software are struggling to meet the business cases and cost savings goals.  And when we bring hundreds of enterprise leaders together at our HfS Summits, the story is consistent: business struggling with change, but they struggle even more with aligning the right technical expertise to work alongside their business talent.  Simply put, today's firms are struggling with having IT depth to take their ambitious C-Suites where they want to go.  So where do we go from here?

IT is at the heart of C-Suite strategy - it's a business discussion that only works with the right IT capability.  You only needed to eavesdrop on the many C-level discussions at Davos to know the IT discussion is firmly at the core of the business. Being able to satisfy your customer's digital business needs is where it's all heading.  I was recently talking their the Group Finance Head at HSBC and his whole focus is on two elements - having the best digital app delivery and providing the best customer experience, which is incredibly challenging for any business environment grappling with differing compliance needs across borders, and ever-demanding customers wanting to do all their banking on an iPad.  However, while this is a challenge, it is also a massive opportunity for the ambitious who get their business design and IT skillset equation right.  

Finding the right partners is more crucial than ever.  There is a massive opportunity to lead in the world of IT services, provided you can plug these skills gaps.  The challenge is breaking out of the traditional sourcing model to access niche talent across the globe in areas such as crypto-technology, Python development, Lisp, Prolog, Go and C++.  While most traditional firms still rely heavily on bread and butter IT services delivered at scale from regions such as India, the emergence of talent in Central and Eastern Europe, China and parts of South America also need to be brought into play.  The IT services world will be a very different place in a couple of years as boutique firms offering niche skills come into the fore.  Not to mention the emergence of crowdsourcing for IT talent.  Having really savvy IT leaders who can cobble together crack teams on-tap to solve their IT headaches is already becoming a huge differentiator for many firms.  The will also be a role for the super services integrator, who can pull together teams for clients to work with them on complex projects.

Simplification of business operations is the real key to future success. In short, there is no silver bullet to solve these endemic issues companies are facing to break out of legacy ways of working, but being able to align a determined mindset shift on the business side with smart IT skills to bring it to reality, is the only true way forward for firms who know their days are numbered, if they cannot change their inner workings to get somewhere near a OneOffice end-state.  The future is really all about simplifying operations to bring them completely in line with the world of the customer.  Hence, successful businesses need IT folks who can think logically to simplify business operations through the use of automation, cognitive, AI and digital.  It's not just about software packages and APIs, it's about both business and IT staff learning to understand each other's strengths and challenges better.  It's really not rocket science, it's about learning to simplify business models to stay ahead of your customers' needs and not giving your competitors a window to take you out of your market...because that may already be happening to you.

Posted in: Digital OneOffice

13

1 Comments

And there went another April Fools' Day...

April 01, 2018 | Phil Fersht

I hope you enjoyed our little blockchain fools' fun today, but here is possibly the greatest ever from BBC Sport...

Posted in: Absolutely Meaningless Comedy

0

0 Comments

How blockchain will change the world in many more ways than you realize. It’s cataclysmic

April 01, 2018 | Phil Fersht

We all know that Blockchain has emerged as the world's leading software platform for digital assets, however, new research is demonstrating its value could go even further than merely digital assets. Blockchain can reinvigorate parts of your infrastructure that have been under-performing for years to have a dramatic increase on the satisfaction of your partners, your customers and possibly even your employees…

HfS research’s new findings indicate that many enterprise back offices are in dire need of a complete transformation in order to come close to achieving the desired outcomes of their partners.  Yes, folks, the impact of blockchains is causing many flagging enterprise assets to stand to attention, desperate to reclaim their former splendor and glory.  According to one automation governance lead from a major consumer products firm, “Why rip and replace legacy assets when you still have plenty of mileage to glean from your trusted old systems?  Ever since we got on the Blockchain Program, we’re rediscovering the ability to perform in a manner I’ve not experienced for at least twenty years.”

As with every technology magic bullet, the conversation always reverts to “hammers finding nails”, as many executives long to revive the glory days of shaving more off their bottom line in order to achieve more attractive results.

To this end, a financial controller of a FORTUNE 20 bank declared, “I had practically given up on ever meeting the demands of my various partners.  Every time we were asked to perform, we just couldn’t connect the pieces.  We tried every solution on the market, every tool off the shelf, even some special robots… we were a hammer trying to find a nail, but the nail just wouldn’t find the hole.  Until we were introduced to blockchain, and suddenly everything changed…”.

There’s something about the nature of a distributed ledger that enables even the most seasoned of industry executives to re-live the days of their youth, a revelation that has put the wind up Pfizer, whose market is the latest to be on the verge of disruption.  According to one disgruntled Prizer executive, “We are very concerned about the impact of Blockchain on our business lines.  We have been warning customers of the serious side effects a Blockchain is going to have, with its sheer processing grunt depleting energy resources to an alarming extent.  We advise affected customers to call their on-demand service provider for urgent support, especially after more than four hours of vigorous non-stop blockchain activity that is showing no signs of slowing down.”

HfS analysts also caught up with a leading executive from IBM, John Holmes, who added, “Thanks to blockchain, there is a huge opportunity to get our firm back on course for some serious straight line growth.” 

And when we managed to get Accenture blockchain guru, Peter North, on the phone who revealed, "Blockchain promises high performance delivered and we aim to deliver that high performance. Delivered."

Even President Donald Trump has confirmed the future potential of Blockchain in a recent series of tweets where he argued ‘It’s the best. The greatest. Just great. I’m so glad I came up with idea before Cambridge Analytica and Facebook. But seriously, Ivanka, is there any way we can delete some of the data on there? Yes those blocks called Stormy, delete them.’

And of course... this was an:

Read More »

Posted in: Blockchain

6

1 Comments

Automation delivers the means, OneOffice provides the end

March 21, 2018 | Phil Fersht

The biggest issue with most companies, when it comes to planning their operations, is that most do not have an ideal endstate in mind. They struggle to define success beyond finding some shiny new activity that will get them from where they are today to a state of greater productivity and/or lower operating cost.  However, our new research with 100 C Suite execs reveals that their real goals are to get better data to drive their businesses forward while aligning their operations to their business goals.  Technology solutions are enablers to achieve these goals, they provide a means, but they do not provide the outcome, which is where so many enterprises are going wrong these days.  

Without a defined OneOffice endstate, automation strategies will always run out of steam

Even with offshore outsourcing, the endstate was rarely defined – it was simply to meet the next set of metrics before figuring out the “what’s next”. Were companies really envisaging running their operations in a similar way as before, merely with lower cost resources and some standardization of processes? But at least outsourcing was relatively predictable – it was defining how much work to move to the service provider and how many staff were needed to keep the operation ticking along to meet a desired set of metrics. With automation, entirely new metrics are in play, and it’s currently a random crapshoot how most companies are dealing with this. From manhours per year eliminated, to processing time reductions, to actual headcounts being removed, and even improvements in compliance and data accuracy, the "new metrics" that enterprises are toying with to find that next piece of "success" are becoming foggier than

Read More »

Posted in: Digital OneOfficeRobotic Process Automation

2

1 Comments

The top 5 enterprise blockchain platforms you need to know about

March 16, 2018 | Phil Fersht

Now most of you have finally realized that blockchain means something more than some weird disruptive currency you completely avoided buying when it could have netted you millions, we need to get much more familiar with the actual enterprise platforms being developed, where the true potential of this ledger technology can be unleashed on our enterprises, supply chains and industries.

So we asked our blockchain boffins Saurabh Gupta and Mayank Madhur to take a deeper look at the top 5, namely: Ethereum, Hyperledger Fabric, R3 Corda, Ripple, and Quorum. Please note that Bitcoin does not make it to our list of top 5 platforms. In fact, it does not make the top 10 list when we talk about enterprise application of Blockchain. 

The objective of our research is to understand blockchain platforms that show promise in solving complex business problems:

Click to Enlarge

#1. Ethereum. Mature Smart Contracting Cross-Industry Platform

“Ethereum is a platform that makes it possible for any developer to write and distribute next-generation decentralized applications.”

-          Vitalik Buterin, Co-Founder, Ethereum

Founded by the 22 year old Russian-Canadian Vitalk Buterin, Ethereum is one of the most mature blockchain platforms available today. Known for its robust smart contracting functionality and flexibility, it is used widely across multiple industry use-cases. It has the largest number of use-cases available today (50%+ in our sample set). Along with Hyperledger Fabric, Ethereum has developed a large online support community as well has frequent product updates and enhancements.

The Ethereum Enterprise Alliance (EEA), a non-profit organization is now over 250+ members strong and connects Fortune 500 enterprises, startups, academics, and technology vendors with Ethereum subject matter experts. Despite its widespread adoption in enterprise use-cases, it’s important to realize that Ethereum is essentially a permissionless (or public) platform that is designed for mass consumption versus restricted access (typical requirement for privacy requirements in enterprise use-cases). It is also PoW (proof-of-work) based which is not the fastest (resulting in potential latency issues) and is an energy-sucker. Though it might change its consensus algorithm to the fast PoS (proof-of-stake) in future versions.

#2. Hyperledger Fabric. B2B-focused Modular Blockchain Platform

“As new technology develops, there is a call for standards. Participants want to focus on time and effort and investment to build solutions versus worrying about the framework. This is the rationale for open standards…we are pulling together the most exciting portfolio with a multi-

Read More »

Posted in: Blockchain

0

0 Comments

Farewell the Godfather of Time...

March 14, 2018 | Phil Fersht

Posted in: Cognitive Computing

0

0 Comments

RPA is officially the shiny new silver bullet: 53% of the Global 2000 are planning significant RPA investments to slash costs in 2018

March 11, 2018 | Phil Fersht

While we were discussing the confusing realities of the RPA hype at the HfS FORA Summit, we got a sneak preview of the interim data from the 2018 State of Operations and Outsourcing Study, conducted in conjunction with KPMG, where 250 interviews with Global 2000 operations leaders have now been completed. 

We asked them where their investment priorities were currently lying when it comes to 2018 cost reduction:

Click to Enlarge

So it's abundantly clear all the hype about rampant adoption has been warranted, and we can hang our hats on our recent enterprise robotics software and services forecast, which now appears conservative, increasing with 47% growth to $1.46bn this year (click here for full forecast):

The Bottom-line: RPA has succeeded in being positioned as the "easiest silver bullet to target that next wave of cost take-out".  Now let the real fun and games begin...

We have discussed, argued and deliberated the true value, impact and effective ways to run RPA software for many, many hours here on HfS... for over five and a half years.  And you only need to read our recent work to conclude that "RPA often starts out like a teenage romance, with a lot of enthusiastic fumbling around that ends quickly, frequently leading to disappointment".  And you can also read the RPA Bible, which preaches best and worst RPA practices to such an extent, you'll need to visit your local RPA Rabbi, Bhikkhu, Priest or Mullah to find your soul again.

The real issue, here, is that the majority of enterprises are taking the plunge and investing the dollars, with 81% actually taking RPA seriously, and 53% very seriously.  So what's going to happen in a few months when those ambitious CIOs and CFOs ask to see real, tangible demonstrations of the resultant cost takeout?  Can C-Suite leaders quickly learn to love metrics that are tied to growth, value and effectiveness, as opposed to a simple reduction in operating expenses to feel rewarded for those expensive bot licenses? Are operations leaders generally going to be ready to quantify the value effectively?  Can they really convince their superiors that there is true value impact beyond merely offering up headcount elimination? 

What's more, what if headcount reductions were promised to offset investments, and adopters have failed to free up the workload that can enable them?  And can they reward the staff, who cooperated in the automation work, by getting them "retrained"?  Is there really a plan?  While the "one human to oversee every 10 bots" is becoming the latest robo-governance rule-of-thumb, how real is this?  Or are we just all bull*****g ourselves about the future, and merely circling the hype to stay relevant today?  Do we really care about our companies anymore, or are we more obsessed with adding big sexy initiatives to our CVs?  Is this really anything different to yesteryear, where you needed to have an SAP rollout on your CV to be a credible CIO, or oversaw a 1000 FTE outsourcing deal to prove you were worth that $1.2m/ year GBS salary (yes, that's what some get...).  In this world of #fakenews, does anything really matter anymore, when we can spin our realities into whatever shiny new thing is out there?  

One thing is clear is that the back office needs to be submerged into the value end of the organization.  There is little more headcount elimination to be had for most companies - sure, there are still many areas that have too many people working on too few valuable tasks, and technologies like RPA are terrific tools for breathing new life into legacy systems and creating digital process flows, where before there was only spaghetti code, manual workarounds and swamps of data polluting the corporate underbelly.

One thing is clear, it's very murky out there, and all we can really do is hatch a semi-realistic plan and try and stay on top of it as the future unravels in front of us...

Posted in: Robotic Process Automation

23

1 Comments

Findings from #HfSFORA: Half of firms' staff will be impacted by automation and 40% of them have no idea what to do with them

March 07, 2018 | Phil Fersht

So here's the biggest issue facing enterprise operations in the next couple of years:  what to do with staff impacted by automation.  Our brand new 2018 State of Operations study, conducted with KPMG, over half the Global 2000 firms surveyed believe transactional roles will be significantly impacted by automation within just a two-year timeframe:

So we thought we'd poll the 120 buyers at the new York FORA summit this morning as we asked them what they intended to do with their impacted staff:

While a good portion are already thinking about "retraining" their impacted staff to take on analytics work (21%) and help manage new tech such as RPA and ML (16%), the vast majority (40%) are just honest and reveal they just don't know.  

Bottom-line:  We have to plan for automation better

As automation fever takes over business operations (and we'll reveal that data next), my one plea to industry is to plan this better.  CFOs and CIOs investing $ millions in bot licenses and consultants to implement them will be expecting a return on their investment, and if operations leaders do not have a concerted plan to use the freed up man hours, you can be sure there will be intense pressure to reduce even more heads than may have been in the initial plan.

Posted in: Robotic Process Automation

1

1 Comments

Meet the Business Romantic: Tim Leberecht

March 01, 2018 | Phil Fersht

Have you ever mixed business with romance?  Oh dear, that could be taken the wrong way, but our keynote speaker next week at the HfS FORA summit New York, Tim Leberecht, has literally written the book on the subject.  Tim's session next week is one that will breathe new energy into our narrative, and the title "How to Thrive in the Robotic Age Without Losing Your Humanity" just about says it all!

So let's hear a bit more from Tim about why he's such a sought-after speaker and visionary on the future of work and the impact of AI...

Phil Fersht (CEO, HfS): Tim, we're very excited to have you as one of our keynotes in New York.  So maybe you can give us some insight into how you have become a "Business Romantic.”

Tim Leberecht (Founder of The Business Romantic Society): Education-wise, my background is in the humanities and professionally, in marketing. Initially, I set out to write a book about meaning, and specifically the power of brands to serve as one of the few remaining arbiters of meaning in our societies. As I was looking into the principles of meaning-making, I realized that they were all, in effect, romantic principles: keep the mystique, foster intimacy, embrace solitude, seek adventure, suffer (a little), and so on. I had this epiphany: “Wow, I am a romantic!” In fact, I realized that romance had been the defining quality of my career—I just hadn’t been able to articulate it. The term “Business Romantic” nailed the tension I had felt all my professional life, and since the book came out in 2015, it has proven to be provocative and fruitful. Opposites attract, or as one of the interviewees for my book said: juxtaposing opposite poles make each of the poles more attractive. I haven’t met anybody yet who hasn’t had a strong reaction to the word “romance:” people either oppose it or aspire to it.

Phil: So the theme of the conference is "Learning to Change in the robotic era"... what's your view on how we humans must adapt with all the technological change occurring? Is it more about attitudes that skillsets?  

Tim: It’s both, Phil. There are some grim reports out there, such as Bain’s recent study that predicts 30 percent of all US jobs will be automated by 2030, with the rewards of automation going mostly to the top 20 percent of earners or savvy AI investors. McKinsey estimates that 30 percent of 60 percent of all tasks in existing jobs can already be automated. Futurist Gerd Leonhard proclaims that “if you can describe your job in one sentence, chances are you might get automated,” referring to the high likelihood of process-oriented, linear, routine-based work being automated.

Entire professions will feel the consequences: not only factory workers or call-center agents but also legal research assistants, accountants, notaries, investment managers, or management consultants. While exact estimates are still disputed, clearly, massive changes to work and society are underway, and we are just beginning to grasp them. AI will dramatically alter both process and offerings in almost every industry. Every profession will have to evolve and embed AI and robotics in their processes.  AI and co-bots will become our new co-workers, and those parts of our work that can be done more efficiently will be taken over by them. Many of us will lose traditional employment, the rest of us will have to get used to hybrid work environments and collaborating with AI (and perhaps even having AI’s as bosses).

We’re definitely in a race with the machines, and it’s not one we can win unless we remind ourselves of our inherently human qualities that AI isn’t able to emulate yet: vulnerability, imagination, and character. We are elusive, inconsistent, elastic, and often erratic beings—we remain unpredictable and can change our beliefs and emotions. That makes us hard to deal with but also constitutes the very engine of progress. It’s not technology, it is our changing hearts and minds, our ever-evolving values, that is the source of innovation.

We will need to acquire not only new technical skills, but also new emotional ones, as we’ll be facing an increasing loss of control, of agency in the traditional sense. Deloitte says that 63 percent of businesses need leadership skill development for the digital future, and that many of these skills are “soft skills.” Our identities and interactions will become more fluid, as boundaries between man and machine, internal and external reality, digital and physical world continue to blur. To thrive in this age of machines, we will have to learn (again) to appreciate beautiful work and how to our work beautifully—with heart, character, and intuition. This what romanticism can teach us.

Phil: And what's your view of this "singularity"?  Is it real, Tim, or just hype?  What is the real pace of change and disruption, as you see it?

Read More »

Posted in: Analytics and Big DataCognitive Computing

0

0 Comments

It's an automation slaughter with Lee Coulter

February 27, 2018 | Phil Fersht

Lee Coulter: One big automation fish...

One character who will light up our New York HfS FORA Summit next week (and not just with a cigar) is the irrepressible Lee Coulter.  While Lee could have hung his hat on leadership roles at GE, Kraft and Ascension Health (where he still oversees their shared services as his day job), he has taken it upon himself to become one of the leading voices behind the Intelligent Process Automation (IPA) movement, as Chair of the IEEE's working standards group on IPA and Founder of Agilify, a newly launched automation services business, already boasting 32 clients. 

With so much going on in Lee's world, I thought it high time to catch up with him before we hear his dulcet tones next week... 

Phil Fersht, CEO and Chief Analyst, HfS Research: You've been the self-styled Godfather of Intelligent Process Automation, brandishing a cigar, as opposed to a Kalashnikov... why did you take on this mantel, how did this evolve during your recent years with Ascension into this new firm, "Agilify"?

Lee Coulter,  CEO, Ascension: That’s quite an image. I think my role chairing the IEEE Working Group on Standards in Intelligent Process Automation was probably what did it. We started over five years ago on our automation journey. The hype and confusion was literally driving me batty. So instead of getting into a war of words, I decided the best answer was to get the competitors to not want to be left out of a standards effort. It was in everyone’s best interest to work together. That first standard (IEEE 2755-2017) was really a hallmark and the next one (P2755.1), coming this year, will have a far greater impact. That work has created great relationships across the continuum that have been helpful in bringing automation to Ascension.

The idea for Agilify came about during a conversation with a GBS colleague when he wanted to bring his team on site for a third full day to meet with my team. I told him, “Hey, I think you’ve

Read More »

Posted in: Robotic Process Automation

0

0 Comments

#NASSCOM_ILF 2018: An industry stuck in #fakenews limbo, desperately needing to change the channel

February 22, 2018 | Phil Fersht

Stability and modest growth should be the best thing that has happened to this industry:  companies can plan for the future with greater predictability and make smarter investment decisions.  Instead, we’re suffering from a culture of endless hype, copycat marketing and an addiction to hypergrowth. 

NASSCOM’s annual India Leadership Forum is always a good bellwether for testing the temperature of the global services industry – and the 2018 rendition this week in Hyderabad served up some real pearls of wisdom (yes, Hyderabad is the world’s leading refiner of pearls).

Getting to the point, the services industry has never found itself in a worse state of bewilderment and confusion.  After last year’s sense of looming disaster with President Trump’s proposed Visa reforms, at least the industry has something collective to hang onto – a common fear of being politicked out of business.  However, with that panic pretty much diluted, what has been left is a conflicting range of moods, ranging from confusion to depression to uncomfortable modest growth, alarmingly untrue #fakenews, and a never-ending plethora of meaningless buzz words, which have become so deepset in the fabric of our industry, most of us are resigned to using them, as it’s the only language left to communicate basic sentences to each other.

So let’s try and shed some light on the confusion, based on some of the terrific conversations we had this week:

The Indian IT industry is struggling to cope with “modest growth”.  With NASSCOM bravely predicting something in the 7-9% range, most credible analysts are predicting 4-5% for the short, medium and long-term.  The reality is, the whole DNA of Indian IT has been borne out of hyper-growth, offering genuine riches to ambitious executives who could project-manage their way to a very nice condo in Bangalore or Gurgaon.  The gravy train has now firmly ground to a halt, and most of the lovely folks remaining are still coming to terms with their salary increases slowing down, or disappearing altogether.  And many are just pleased to cling to their jobs. The level-headed executives have accepted they are now looking at a more modest outlook for their firms and their own futures, and are making some adjustments, while others are still clambering around trying to find the next hype bandwagon to hitch to their next career move (and payrise).  Did I hear the words AI, Blockchain, or RPA anyone?

“Digital” provides a sugar frosting for restating revenues as something that is not traditional IT.  While we managed to have about 30 structured meetings with service providers, GICs and tech firms, the term “digital” has become so meaningless, it now ceases to be used in any coherent sentence. It seems to be purely a term now for convincing investors and Wall St analysts that, somehow, traditional services revenues have become something mysterious and new that will set services firms on a new pathway to returning to hypergrowth… and very soon. In reality, "digital" is all about designing new revenue channels for customers using emerging interactive technologies.  It’s all about collapsing internal silos within business operations to service customers’ emerging digital needs.  If you’re telling me that 50-75% of IT services revenues are now “digital”, then please tell me where all the billions of dollars of app testing, app management and IT infra revenues mysteriously disappeared? 

Services has fallen hook, line and sinker for its own #fakenews.  Suddenly, every services provider has developed the industry’s leading competency for delivering automation, artificial intelligence and blockchain… overnight.  While, barely a year ago, exactly the same firms were the industry’s leading maestros at serving up “digital transformation”.  Amazing how they could source thousands of experts, and convince so many clients to make this all possible in barely a few months.  Until recently, most providers declared they were adopting a “wait and see” attitude to approaching some of these areas, but now are in there fully-fledged and firing on all their lovely blockchain cylinders.  Puhlease ladies and gents!  At least, in days gone by, most providers would be relatively honest about their core areas of focus and expertise.  Now it seems perfectly acceptable for many just to stare you in the eyes and just lie… what on earth has driven us to this place?

DXC continues to baffle everyone.  Can someone please explain what DXC is supposed to be doing?  I love the Accenture-esque TV ads, but I am still clueless as to what this firm is actually doing to be the next big thing in the industry.  While I was very happy with the DXC branded gifts for writing notes and charging my phones, I would rather just get a little postcard explaining what on earth this new-fangled services business is supposed to be doing that is so special…

Sourcing advisors have just fallen off a cliff.  Yeah – they just weren’t present.  Barely a couple of years ago they still trawled these halls with their promises of big deals (or would try and sell you some “research” to make a few bucks).  Now they have all but disappeared from the equation.  Maybe their absence is the most notable sign that the good ol’ days are firmly gone forever, and it’s high-time to wake up to something approaching a normal, stable industry?

The Bottom-line: There are some seriously cool things going in in the world of technology services; we just need to unearth them and change the narrative

There is a lot of goodness this industry is capable of achieving if we can just get out of our own way.

For starters, we're seeing the fastest revenue growth from several middle-tier providers who are big enough to go after some large complex deals, small enough to work on new concepts with clients and lack the legacy business to focus on going after greenfield disruptive opportunities that the big guys cannot consider.  We are seeing some of the major providers unearth new gold by taking ambitious clients to new places of business value, with a high-risk / high value mindset, using technology that is here today and working with them as a trusted long-term partner.  We’re seeing real advances in automation, machine learning and digital enablement that are here today – they are now a reality, not some future innovation that is still some years away.  We are also seeing a feverish desire from many clients to experiment with blockchain, despite the fact it’s still a long way from providing many meaningful business applications today. 

The present is now the future and this should be the most exciting time ever to be innovative, courageous and entrepreneurial.  So let’s stop trying to pretend to be something we’re not and focus on the real potential that is staring us in the face.  Everyone’s tired of the #fakenews… it’s time to change the channel!

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT Services

18

1 Comments

There's no FTE hell with Chris Caldwell

February 19, 2018 | Phil Fersht


The good old customer BPO business has taken quite a battering in recent years, where the same old usual suspects have embarked on selling predominantly the same old voice services, with most choosing to compete with ever-cheaper global locations to prop up their fragile profit margins. While many of the services majors have chosen to steer clear (or quietly exit the market), the importance of creating an amazing customer experience has never been so critical to customer-facing businesses.  Something has gone sorely wrong here...

In an era where every firm aims to be "digital" (and has a Chief Digital Officer to boot), the focus on engaging customers with both digital and voice communications has taken center stage... yet, these legacy call center practices continue to hound the services industry as most of the call center firms continue to fight it out to the lowest common denominator: who can delivery average customer service as cheaply as possible?  But you can't just blame the service providers alone for this behaviour:  many of the FORTUNE 500 propagate this behaviour by playing everyone off to squeeze every last drop of cost (and subsequently value) out of their delivery capability... preferring to talk a big digital customer experience game than truly investing in one.  

One leader in the space who has taken it upon himself to declare war on these legacy practices is Concentrix President Chris Caldwell, who has masterminded the impressive growth of the firm over the last 12 years, which has included some major acquisitions, notably, the IBM contact center business, BPO firm Minacs and the Australian digital outfit, Tigerspike.  The company today boasts annual revenues greater than $2bn with over 100,000 employees globally.  Having observed this rapid rise, I thought it high time to invite Chris on here to share a bit more about his story and his views on why this industry needn't be an FTE hell any longer...

Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Chris. It's great to finally get you here on HfS. I would love to hear about your journey on how you wound up running the Concentrix business.

Chris Caldwell, President, Concentrix Corporation: Of course, Phil, It's bit of an interesting story. I’m not sure if anyone starts out saying that they are going into a career to beat your business, or a call center business. But I worked for a parent company, SYNNEX where I was looking after M&A and the diversification of their business model from the core distribution business. One of the businesses that we bought, very small at the time, was a BPO business, about 30 people which was barely doing over $1m a year and had begun to lose money after some time. And my boss who was the CEO of the other company, said to me, 'you bought it, you fix it.' That was the start of the BPO business and that's when I took over Concentrix at the time. I then had to learn the call center business very quickly; figure out how to grow it and do something with it, which happened in approximately 2005.

Phil: Chris, you then went through this much, much larger acquisition of the IBM call center business in 2013. Can you talk a bit about how Concentrix got to that point, the relationship with SYNNEX, and how things have really progressed since you made that major acquisition?

Chris: Sure, It’s interesting. When we originally invested in Concentrix it was to provide additional services to SYNNEX vendors. SYNNEX is an IT distributor and I can still remember

Read More »

Posted in: Business Process Outsourcing (BPO)CRM and MarketingDigital Transformation

2

1 Comments

The digital worker survival guide: it's much more about attitude than skills

February 12, 2018 | Phil Fersht

Yes, people, as we inch towards the dreaded singularity, we will continue to be bored silly with arrogant diatribes describing how “humans can stay relevant”.

Do we really need to hear this daily splurge of pontifications from business leaders in Davos about reskilling the workforce, without any real practical advice on what that reskilling is?  I would argue this is more about culture and attitude, than training students to learn new programming languages and data analyst skills. The latter will come naturally as the needs of the workplace change, my view is that it’s the former which poses the real challenge: how can we enlighten people to change their working attitudes to make them much more valuable and irreplaceable to their employers?  Anyone can fix a line of code within hours, or slam in some new software, it’s what you actually do with the tech that really counts. 

It's what you do when your boss isn't looking, that makes you less predictable and more valuable 

It’s not just about performing predictable tasks, it’s also about helping your firm devise new ways of doing things – that is the magic that makes staff valued.  The truth is the singularity is

Read More »

Posted in: Design ThinkingDigital TransformationSourcing Change Management

10

1 Comments

Automation to impact 750,000 low skilled Indian jobs, but create 300,000 mid-high skilled jobs by 2022

February 03, 2018 | Phil FershtJamie Snowdon

A lot has changed in the last year... especially when it comes to automation: it has now become the broadly-accepted efficiency tool for cost leverage with operations.

Every customer has RPA project managers and automation leads hungry for data, advice, and ideas. Every service provider has RPA embedded into their service delivery models, and every credible advisor has a practice that is working with multiple clients to make this happen. The Armageddon days of talking about robots taking our jobs are over - these are now the reality days where we can see exactly what's going on with automation and AI, and accurately estimate how it's going to impact the services industry in the next few years.

There will be impact, but it's manageable provided we focus on new skills and value.  

In short, the global IT and BPO services industry employs 16 million workers today.  By 2022, our industry will employ 14.8 million - a likely decrease of 7.5%* in total workers (see our research methodology below).  This isn't devastating news - we'll lose this many people through natural attrition, but what this data signifies is this industry is now delivering more for less because of advantages in automation and artificial intelligence.  The new data also shows how job roles are evolving from low skilled workers conducting simple entry level, process driven tasks that require little abstract thinking or autonomy, to medium and high skilled workers undertaking more complicated tasks that require experience, expertise, abstract thinking, ability to manage machine-learning tools and autonomy.

Click to Enlarge

The low skill routine jobs are getting increasingly impacted, and our new demand data shows an acceleration in RPA tools (a 60% increase over the next year) where service providers are the largest adopters into their own service delivery organizations.  We expect to see a more rapid impact on routine job roles which is most notable in 2022 as companies take time to build the impact of RPA into service contracts and figure out how to turn work elimination into hard savings than merely soft efficiency savings.  With barely a 50% satisfaction level, this will take 4-5 years to see the real cost benefits in terms of job elimination.  Most of the short-medium term benefits are being seen in increased efficiencies and more digital process workflows.  All major service delivery locations are expected to be impacted at the low-end, but the higher the wage costs, the higher the expected role elimination (750,000 roles in India and a similar number in the US):

Click here to Enlarge

Medium skilled roles are picking up across the board, especially in roles that are customer/employee facing with the need for more customized support, the ability to handle

Read More »

Posted in: Cognitive ComputingRobotic Process Automation

17

1 Comments

No longer that great? The USA’s stagnation is spurring genuine global innovation, with data and AI at the core

January 31, 2018 | Phil Fersht

Having spent the last 15 years of my life in the US before recently returning to my British homeland to focus on the global expansion of HfS, I think I have earned the right to offer a view on how global innovation will evolve in the coming years. So let's have a real State of the Union look into global battle for economic and digital supremacy.

For decades now, Silicon Valley has driven technology innovation, US corporates dominated business innovation, and US healthcare was the paragon of high-quality patient care. Everyone looked to the US for innovation, leadership and entrepreneurship.  Hell, there was nowhere else in the world I could have founded and made HfS a success eight years’ ago… people in the UK used to sneer at new brands, ideas and anything that cut against the legacy business establishment. But Americans liked shiny new things, they embraced entrepreneurship and new ideas, and welcomed foreign talent.  The US was the world’s innovator, the world’s entrepreneur… it was the place where ambitious people aspired to flourish.  All good things happened in America – it’s where dreams were hatched and made real.

Fast-forward to present day and all this is changing before our eyes

Tech innovation is no longer confined to a politically exhausted, entitled and overpriced Silicon Valley.  Israel is becoming a leading hub for security, blockchain and AI start-ups and talent.  India’s startup scene is especially vibrant as ambitious IT talent grows frustrated with the monolithic outsourcers and seeks to join emerging tech firms and get involved with AI development environments such as Python, R, Caffe, Google TensorFlow, the Azure ML Workbench, Amazon's Sagemaker etc. In China, real cooperation between the government and its tech giants is significantly positioning the country’s advancements as an AI leader.  Meanwhile, Estonia is already putting its entire population database on a blockchain platform as part of its plans to build a digital nation, and even Dubai is declaring it will be a Blockchain city run by smart contracts by 2020.

The abhorrent cost of talent in Silicon Valley, coupled with the extremely negative politics

Read More »

Posted in: Analytics and Big DataSourcing LocationsPolicy and Regulations

10

1 Comments

No time to get TWITCHy... but which providers are ready to bounce back?

January 27, 2018 | Phil FershtJamie SnowdonOllie O’Donoghue

Knowing full and well that predictions can bite you on the arse isn’t going to stop us making them! Particularly when the financial reports pour in from some of the biggest movers and shakers in the services industry confirm what we are thinking.

What do we know now?

Unlike the Trump-esque games of ‘I told you so’, we’re not going to pass off something everyone knows already as a prediction (and then immediately congratulate ourselves on doing such a good job at getting a prediction bang on the money).

First up, we need to talk about what we already know; most of the big providers have already posted their results and they make for interesting - and upbeat - reading.

Let’s start by taking the TWITCH providers (Tech Mahindra, Wipro, Infosys, TCS, Cognizant, and HCL). By now, all of these providers, barring Cognizant and Tech Mahindra, have submitted their financial reports for Q4 2017. This gives us a decent picture of the state of the market in general—a topic tackled in greater detail in our latest 2018 market primer—but, suffice it to say, we are starting to look at the IT services market more optimistically - for the first time in years. Our expectations that all of the major providers would report reasonable growth figures have largely been met, a sure sign of the market finally reaching the tipping point. In short, we’re leaving behind much of the turmoil-ridden restructuring of the market from traditional and legacy services to the as-a-service and digital models enterprises now consume with increasingly insatiable appetites.

TWITCH is the winner?

Even so, there are winners and losers, and the pick up in market growth is not shared equally. Wipro, for example, is bucking the trend somewhat by reporting weaker growth than its contemporaries. Similarly, TCS is pushing a more consistent growth line, but the increase of a few percentage points doesn’t quite match the considerable spike other providers are seeing.

HCL’s continued growth has come as somewhat of a surprise to us. While the firm has a strong track-record as an IT services major, there were expectations that the emergence of increased digital uptake would leave the firm struggling to mirror its rivals. Central to this thinking is the fact that the firm has acquired digital capabilities less voraciously than some of its peers, and many of the larger acquisitions, such as Volvo IT, are now mature enough that we would not expect to see them contribute enormously to revenue growth. However, HCL’s continued growth

Read More »

Posted in: IT Outsourcing / IT Services

3

1 Comments