OneEcosystem organizations must blow-up the archaic leadership mindset to stay relevant

January 18, 2022 | Phil FershtSaurabh Gupta

The needs of enterprises are not rocket science these days – they are based on what they need right now, and the direction of travel for everyone is pretty much the same across the OneEcosystem:

  1. Get your sh*t into the cloud as fast as you can so you can operate and compete
  2. Make sure you know exactly what your customers what and have the tools and know-how to engage with them and impact them
  3. Make sure you have a handle on your security challenges
  4. Make sure you have collaborative partners who can support you (and you them)
  5. Make sure your key people aren’t going to leave
  6. Have a handle on the data you need to be effective, and organize your business functions to get rid of the silos
  7. Create a leadership function to pull this all together for you

We would argue that you’ll mess up 1 through 6 if you haven’t figured out 7. 

These are the roles – and leadership traits – that will make companies much more in tune with their strategic needs and align them to their business operations:


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The Chief Executive Officer:  The CEO should be the leader who drives the infinite mindset across the organization. He/she must continuously define the purpose for the organization and relentlessly drive a fearless collaborative culture that values stakeholder value beyond shareholder value.  As a leader, it’s so easy to obsess with operational functions of the business during times of disruption or distress - in this case, a global pandemic – that it can create knee-jerk, often short-term decisions that could inherently damage your long-term vision, your business’ culture and your raison d'être.  With no defined time horizon, no clearly-defined rules, and with players that may enter and exit at any time, the primary objective of an infinite game is quite simply to keep playing. The goal for businesses is to have the will and resources to stay in the game, through thick and thin.

Having lived and worked through four recessions, I personally understand the rapid change in leadership mindset that can occur when a firm goes from peacetime and growth to one of survival and all-out war.  According to author Simon Sinek, people look to leadership to serve and protect, to “set up their organizations to succeed beyond their lifetimes.” But in the modern landscape, most organizations place an unbalanced focus on near-term results that may ultimately prove to be self-defeating, like casting aside your umbrella in a storm because you haven’t been getting wet. In short, business is no finite endeavor. This pandemic lays plain for all to see the game we are really playing. 

The CEO is the ultimate collaborator, forcing the change that is needed and balancing the desires of the various stakeholders (the board, key clients, key partners, the employees).  His/her team to make this happen must be responsible for the full gamut of their customers, employees, and partners, working with a transformational wizard to bring together the process and technology with the real innovation ingredient:  the people. 

Chief Transformation Officer:  This leader must link front to back office and ensure processes run smoothly across functions to deliver the data/outcomes the organization needs.  This should ideally be someone who understands the challenges of enterprise operations, and how to align them with the market facing/client impact areas of the firm.  Forget the old GBS head / shared services head role, as this just has repeatedly failed to get out of the transactional back-office world and the “finance factory”. This person must oversee both technology and operations, understand the value of automation and AI, be able to design and implement change programs and work closely with the employee experience leader to eliminate the back office mindset from antiquated business functions into one that is aligned with the direction of the business.

Chief Customer Experience Officer:  This is the leader who lives and breathes the world of the customers and obsesses with how to engage them as effectively as possible – right across the entire customer life-cycle.  This ideally is someone who understands how to design customer interfaces, how to service customer needs leveraging both digital tools and physical support and ensuring the entire employee base is unified around (and incentivized on) driving customer impact.  In addition, the CCXO must ensure the marketing mindset is to communicate with the customer, educate the customer, and to develop specific programs that have a real impact on driving customer engagement and business growth.

Chief Employee Experience Officer:  Forget transactional HR, the employee experience leader is the person responsible for making the company a great, energizing place to work, where staff of all backgrounds, ages, experience levels cultures are energized by the values and desired outcomes of the firm.  This individual must be the person who can manage the expectations of the board, the CEO, the shareholders to create a company culture and values that everyone believes in.  Moreover, the CEXO must be intimately involved in the creation and execution of training programs across the firm to attract talent who want to work for a company that will develop them, as well as establishing a culture and values they can identify with.  This should ideally be a strong leader with broad experience of the business and staff development, who knows what it takes to be successful, and who understands how to motivate people beyond pure compensation.  The best leaders today are also great people managers – and the CEXO role must be at the core of the business leadership, not some ancillary executive painting lip service and not having any real impact.

Chief Partner Experience Officer:  As the OneEcosystem environment evolves, the need to collaborate with entities with common objectives, across the entire customer value chain, has never been so prominent.  Partners are no longer just your suppliers. Suppliers are essential partners to deliver your goods/services. Still, the OneEcosystem looks at partners more holistically – partners in the ecosystem involved in providing the customer experience across the entire customer lifecycle.

As such, we believe these five partner ecosystems will evolve:

  1. Supply chain partners, such as suppliers, distributors, or financers;
  2. Industry partners, such as multiple banks collaborating to improve trading, or mobile phone brands collaborating to share components, logistics and manufacturing processes to improve time-to-market;
  3. Cross-industry partners across industries with regulators. For example, regulatory approval in the airline industry between the airline, original equipment manufacturer [OEM], and authorities. Or stakeholders across the healthcare / pharma / retail / regulatory ecosystems to improve the efficacy of vaccines in the Pandemic.
  4. Technology and business services partners. These must fall under the CPXO to plug critical skills and technology gaps that are increasingly needed (with immediacy) in today’s talent-constrained environment.  This is where we envisage a huge cross-over with the transformation leader’s role, where services partners are increasingly critical to driving change at speed.  The CPXO must ensure his/her services partners truly understand (and are embedded) in their core business and understand what their clients – and other key partners – need to collaborate effectively. 
  5. Hyperscaler partners. The increasing influence of Microsoft, Amazon, Google – and others – is becoming significant across all partner ecosystems.  For example, if you are in the consumer goods or retail businesses, you cannot survive without strong engagement with the Amazon channel.  The same is happening where all these hyperscalers control your scalability with the cloud, your security, your data and so on.  They have become huge influencers and enablers of the virtual business, and there is nowhere to hide from them.

The Bottom-line:  The old way of running businesses is fast eroding as we rethink what constitutes success and ambition

Did you ever think your enterprise could move to a 100% work-from-home environment with less than three weeks’ notice? This crisis era of constant change has forced businesses to flex – vastly accelerating the OneEcosystem environment, dramatically cutting redundancies and improving processes at scale. There is a massive amount of change happening, and out of change comes real transformation. After years and years of complacency due to the relentless growth (and papering over the cracks of 2008), all of today’s organizations now finally have a burning platform to change how they operate globally.  In fact, the platform is positively on fire!

Posted in: Digital TransformationDigital OneOffice



You must adapt for the future of work, folks

January 14, 2022 | Phil Fersht

Posted in: Absolutely Meaningless ComedyGlobal Workforce and Talent



Accenture, Infosys, TCS, Wipro, and LTI electrify the HFS Energy Top 10

January 10, 2022 | Josh MatthewsPhil Fersht

The energy industry is experiencing multiple competing fundamental transitions and market forces that threaten to cannibalize many energy providers out of existence:

The political mandates (or attempted mandates) to move more aggressively from fossil fuels to renewable energy, to have broader sustainability across value chains; 

The adoption of digital capabilities to connect organizations and pubic sector bodies across energy ecosystems to stay relevant;

The economic double-shock effects of the pandemic and the oil price crash forcing a dual CAPEX/OPEX crisis;

M&A and divestment activity, questions over what to do with existing assets, and a continuing need to drive efficiencies throughout operations.

Technology service providers catering to the requirements of the energy industry need to balance multiple competing and interlinked priorities. One, they must have a pulse on the industry shifts. Two, they must strategically align their roadmaps to align to these shifts and solve the business challenges that stem from the global context. Three, they should focus on solutions, services, and innovations throughout the value chain—working with the wider partnership ecosystems of providers.

To this end, it's been exciting for us to publish the 2021 HFS Energy Top 10 to provide a comprehensive assessment of the energy industry and its leading business and technology service providers across execution, innovation, and client feedback.

I sat down with Josh Matthews, our Practice Leader for sustainability and energy strategies - and recently returned from COP26 - to learn about the experiences and insights he gained working on the new research.

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To download a copy of the report, please click here.

Phil Fersht, CEO and Chief Analyst, HFS Research: The 2021 HFS Energy Top 10 provides a comprehensive look at the energy industry services value chain. What changes or shifts did the pandemic put in motion?

Josh Matthews, Practice Leader, HFS Research: Demand is increasing across the energy industry value chain, as are the headcounts, revenues, and sustainability services capabilities of the providers in this report.

The fastest growth in demand is for upstream (exploration and production), refining, and retail and marketing services. There is standout growth for upstream asset and data management, refining emissions management, refining process control tech, and market repositioning strategy from oil and gas to energy. This mirrors the overwhelming dominance of the energy transition throughout this study; however, the competing industry demands are borne out in an increase in demand across the value chain for technology and business process services.

Phil: What were your biggest learnings from this research, Josh?

Josh: Both energy firms and their service providers need to balance the energy transition and the multiple, competing, interlinked transitions. They must meticulously align their roadmaps to outcomes, solving business challenges that stem from the global context. Underpinning these outcomes must be focused services and technology throughout the value chain—working with providers’ partnership ecosystems.

Some providers have inherent advantages by being part of enormous conglomerates with deep history and operating expertise in the energy (and utilities) industry; however, independent providers are countering this with their own vast ecosystems. Access to capability is less of a barrier; rather, it’s how clearly you position your unique capability in a market that at times can sound very monotone.

Phil: So, Josh, which service providers are at the top of the list, and why are they there?

Josh: Accenture, Infosys, TCS, Wipro, and LTI top the overall list. The ability to execute and capability with emerging technologies are now just licenses to play. These providers have a vision for balancing all the competing industry demands I highlighted, with sustainability services in particular, and they have standout ambition and scale. A few other notable mentions are Atos and HCL’s innovation initiatives and client engagement, Hitachi Vantara’s ecosystem and voice of the customer, and Capgemini’s growth and alignment with the HFS OneOffice™ vision.

  • #1 Accenture is unmatched in terms of the resources it has for execution and innovation. It backs up its resources with an exceptional voice of the customer and OneOffice alignment—overcoming some of its past challenges to be a frontrunner across all categories. It is leading in the sustainability services ecosystem, which, combined with a meticulous industry focus, means Accenture is well-placed to set the pace as the energy industry transitions away from oil and gas.
  • #2 Infosys’ customers blew us away (frequently). Its historical brand image of delivery is complemented by consulting, innovation, and sustainability capability, as proven in its case studies and reference clients. Every corner of the market may not know it yet—but Infosys will be one of the frontrunners in the sustainability services charge over the coming years, both in the energy industry where it has a deep history and further afield.
  • #3 TCS plays with the best in terms of scale, innovation, and R&D investments. Its combination of engineering and proprietary solutions with a vast range of emerging technologies fits well with impressive internal talent initiatives and all-around industry expertise. Like many “delivery powerhouse” providers, TCS is proving that it has integrated consulting and sustainability capability across the company.
  • #4 Wipro’s narrative and clarity of focus give new life to its strengths in IT services and industry-specific capability—in some part built on a new operating model that gives it fresh alignment across the company and with the HFS OneOffice vision. Sustainability outcomes are embedded in many of its engagements, and Wipro knows exactly what its role is in the energy transition, but at the same time, it has a broad range of capabilities across the whole value chain.
  • #5 LTI talks in a level of depth about the energy industry like no other provider (I’ve worked there myself—LTI will have no trouble engaging with management or plant operators). LTI simultaneously has an impressive partnership portfolio and a clear view of how its parent company, L&T, has expertise LTI can leverage. A focus in part on carbon capture and storage solutions puts LTI apart from most participants in this study.

Phil: Josh, was there anything that surprised you in this study?

Josh: The extent to which sustainability is becoming embedded in energy industry engagements across the value chain—but to say there’s more to do is an understatement, Phil!

There are still frightening amounts of money being thrown into coal, oil, and gas; there needs to be urgency in everything that touches climate change, and the transition can’t happen without energy firms on board. Trust needs to be re-established by the material action of oil and gas firms. They need to be clear on the good and the bad if they’ll ever re-earn the trust of the public and politicians.

Bad actions don’t cancel out the good of renewables investments, but there’s work to do when those investments are still a small fraction of fossil fuel investments. There are global disparities in attitudes to the energy transition, and regardless of what happens at COP26 this November or whether the general optimism about the Biden administration proves valid, there will be a disparity for some time.

Phil: Are there any interesting trends you spotted in your conversations with customers?

Josh: Global differences in oil and gas firms’ narratives to the energy transition (investments aren’t always exactly matched) present a fundamental split. 

One group presents a narrative that fossil fuels’ time is more limited (with regulation and customer perceptions shifting), and those firms are transitioning more quickly toward renewable energy. The second group pitches an acceptance of the role of fossil fuels in the global economy for decades to come and is transitioning more heavily to natural gas, banking on carbon capture, storage, and utilization (CCSU) with some level of renewables investments now and planned in the future.

But I suppose, at the very least, to have every firm talking about the transition as if it’s a given is a small step compared to where we have been very recently. But also, I’m nowhere near giving any of these energy firms a gold star.

Phil: How do you think the energy market will evolve over the next 12 to 18 months?

Josh: The pressure on energy firms to disclose their transition plans away from fossil fuels will only increase—as will scrutiny of their actions that do not align with what we all know needs to happen. It remains to be seen how much COP26 will drive this. I did leave Glasgow with both optimism and the bitter aftertaste that we’re already way too late in transitioning and dealing with climate change for so many.

Phil: How did the recent gas crisis in the UK occur, Josh, and can we expect similar crises to impact global markets in the coming months as we deal with this fractured business environment?

Josh: A classic case of it being a number of factors, Phil: Demand for energy is booming as economies restart “post”-pandemic; less-than-ideal weather conditions for renewable energies like low winds and droughts (hampering wind and hydropower) is highlighting the lack of sufficient investment in renewable energy (especially to meet net-zero targets); low levels of European gas storage and supply crunch from Russia add to the problem. Wholesale prices have skyrocketed - at times roughly doubling - which has seen many firms (mainly smaller firms) go out of business in the UK due in part to a government price cap meaning they cannot account by raising the cost to the end consumer - despite that price cap rising. This is not going away anytime soon and is affecting every industry. Put this alongside supply chain chaos (and prices, for example, the cost of shipping container space) that doesn't have an end in sight (although some out there with a microscope apparently see signs of improvement), and high (relatively to times over the past few years) oil prices at around $80 for a barrel of Brent. Governments and firms across sectors need to secure themselves against such shocks, diversify supply chains and build stores, and ensure their roadmaps layout the journey from here to net-zero and beyond. One sentence makes it seem rather simplistic, doesn't it... 

Phil: What are you looking forward to in terms of developments in the energy industry for 2022?

Josh: I really hope to maintain my optimism that the industry can change and be a part of the global effort against climate change. The more current behavior persists, the harder that will be—even with the investments currently going into the transition.

Part of my optimism lies with the service providers in this Top 10 report. I look forward to working with them in both energy and sustainability contexts to help them help their energy clients make some desperately needed strides forward.

 Phil:  Well let's pray your optimism for the sector stays true during these unpredictable and uncertain times, Josh!  Thanks for your time

HFS  premium subscribers can click here to download our new Top 10 Report: The 2021 HFS Energy Top 10 

Posted in: Digital TransformationEnergy



One must-have New Year's Resolution...

January 03, 2022 | Phil Fersht

Posted in: Absolutely Meaningless Comedy



Five personal changes that will make 2022 more energizing and successful than 2021

December 27, 2021 | Phil Fersht

Well, there went year two of pandemic living and we’re still figuring out how to stay focused, motivated and successful during times where we’re one turgid video call away from screaming uncontrollably just to see what reaction we get.  So what can we do to change it up in 2022, which surely will be better than 2021, which was much better than 2020?

1. Accept the fact that today’s predicament will be over soon.  As much as we have been drilled with the knowledge that the world will never go back to pre-pandemic levels of travel and physicality, our careers and our businesses will stagnate and likely lose effectiveness if we just give in to a world of soul-crushing video calls and allow ourselves to drift away on our islands of remoteness.  This is a time to make more efforts than ever to stay in touch with friends, colleagues, clients, peers, etc.  As much as you can, please make plans to meet with people physically when we get past the next (and hopefully final) weeks of this.

2. Keep relationships personal and less bloody awkward.  Remember how great it was when you could have a candid conversation with someone?  Seriously, not everything needs to be some turgid video conference call where we all stare at each other awkwardly, wondering if we should actually look into each others’ eyes or that light on our webcams.  I still struggle with that one… moreover, what happened to the 1-1 conversation where we could just listen to each other and talk without others glomming on? 

3. Park the ego – for good.  Seriously, everyone’s fed up with egos.  We all have them, but being able to keep them buried somewhere is more important than ever.  Everyone’s so sick of people constantly trying to tell you how amazing they are because they clearly don’t hear it enough from others.  Sorry to be blunt, but if you need to keep reassuring yourself openly about your own brilliance you may not be that brilliant…. That may have worked in pre-pandemic world where it was all about showboating at conferences, but those days are long gone.  Now, this may be hard for some, but try praising others and they might even praise you back…

4. Be humble and get sh*t done.  It’s incredible how many folks who were quiet as mice in the old world are now front and center of business activity.  Why? Because the watchwords today are all about being solid collaborators, rolling your sleeves up, and actually doing stuff.  I think we are all exhausted with the blowhards who talk a big game but never follow through on anything.  So after a good conversation, follow up with the things that were promised, make sure you have an agenda for your next discussion, and show that you actually want to get things done. The days of lip service are well and truly done.

5. Stop working when you lose energy and focus – it’s imperative to work smarter now.  This is happening to all of us – we’re so engrossed and glued into the multiple electronic discussion threads going on, we’re actually becoming really unproductive.  I am as guilty of this as anyone!  Nothing beats the uninterrupted time when you can execute on work that needs to be done, so when you find yourself flagging, needing a mental break, then take a f*cking break.  Go work out, play with your dog or child, have a drink, go for a run or cycle ride… Trust me, burnout comes from an inability to switch off.  Remember in the old days when you took a week or two off work and were able to clear your inbox in the morning when you returned to work?  It’s even worse today when you can spend excruciating hours discussing things that could be decided in minutes if we all took a step back and worked smarter.  At the end of the day, you will be judged on what you achieved for your firm, not how many hours you spent trying to achieve it.

Posted in: Digital OneOfficeGlobal Workforce and Talent



Ready for a 2022 vision? Watch this space...

December 26, 2021 | Phil Fersht

Posted in: None



On the first day of Xmas, my PE sent to me... a Process Intelligence firm that Microsoft didn't want

December 23, 2021 | Reetika FlemingElena ChristopherPhil Fersht

Automation Anywhere buying FortressIQ is a less-than-exciting combination. It seems like too little too late for AA to jump into the process mining/intelligence world, and a quick cash-out for FortressIQ Founder, Pankaj Chowdhry, who just wanted out and was running out of time and money - and losing all hope of an eventual acquisition by Microsoft.  RPA and process mining are different beasts and not one where the process intelligence market leader Celonis has successfully (or intentionally) combined, and where UiPath, the RPA market leader, has struggled, with its acquisition of ProcessGold.  So what makes AA and FortressIQ think they can succeed where many others have failed?  Is this what the market demands?  Do these firms really understand who their customer is? 

So let's weigh up how these offerings fit together and whether this merger has any real potential.

The acquisition seems like a Hail Mary for both firms 

Automation Anywhere just announced its acquisition of process intelligence vendor, FortressIQ. In their statement, the software firms pledge to “build the automated company, together”. But in that declaration lies our first impressions of the limiting potential of this combination. The acquisition feels like a knee-jerk reaction to the current market trend of using user activity data to find, measure, and monitor RPA opportunities. In HFS’ view, the use of enterprise process data can be far more impactful and address larger change programs as businesses push towards digital and cloud modernity.   

Automation Anywhere was very late to the market trying to develop its own process intelligence capability, Discovery Bot. When the vendor eventually launched the solution earlier in 2020, its key differentiator against other existing tools was simply that it was built within the AA platform and integrated with IQBot and other AA components. Discovery Bot was eventually offered as a complimentary solution for existing AA clients and signals the vendor's lackluster efforts to catch up with the fast-growing process intelligence market. Acquiring FortressIQ now feels late in the game to bridge the same gap from 3 years ago which Discovery Bot struggled to fill. 

FortressIQ on its part seemed poised for a possible Microsoft tuck-in acquisition. The software giant invested in FortressIQ’s 2020 Series B round through its venture fund, M2, and the companies deepened their relationship earlier this year. The companies saw a natural synergy around the Power Platform and were focusing their efforts on process discovery to support Power Automate use cases. The timing of the Automation Anywhere acquisition seems to suggest FortressIQ ran out of time waiting for Microsoft to pull the trigger, and secure its future with a competing partner. All while the vendor fought for market share alongside process intelligence pure plays, such as Celonis, that have grown to dominate the market.  

Submerging process intelligence into the automation bucket is selling short the technology’s potential 

FortressIQ’s original messaging was around “Data-driven insights powering transformation across your extended enterprise” – automation was one lever, but the technology has far wider applicability. If this acquisition is just about enabling automation, we’re going to call it, it will fail. AAI needs to think bigger. It can make FortressIQ part if its stack for the process discovery hookup, but using the power of process intelligence just to find automation opportunities is a massive undersell. UiPath already learned this with ProcessGold in the last two years. UiPath struggled with selling a process mining product and naturally fell back on the obvious sell of positioning as an add-on to RPA. ProcessGold is a proper mining tool so that link was never clear, as opposed to analyzing user activity data with discovery tools and finding RPA opportunities. Which helped Celonis drive over them. Now UiPath more actively decouples them.  

As for our friends at AA, they need to be clear about what they want to do with FortressIQ. Is it just a conduit to automation? If that's it, then what a waste. Even Kryon, which pioneered the combination, has realized that it has to decouple process discovery from automation. Automation MAY result from process intelligence insights, but it's only one potential option. Structuring and orchestrating your business processes using data, real time process monitoring, and anticipating changes, transactions, and interactions to deliver superior customer experience are all more holistic approaches where process intelligence can and should be used. Automation is the discipline through which enterprises can achieve these goals, but it cannot be your entire strategy as a company, and what you preach as a technology vendor.  

The value propositions on process intelligence and RPA are not aligned and aren’t hitting the same set of stakeholders. Technology firms must become comfortable getting out of their comfortable ‘categories’ and create solutions that their clients actually need. 

Process mining is a CFO-level sale with a transformation focus – hence the likes of Celonis preaching working capital optimization and supply chain agility. The level of visibility into the state of operations that process intelligence tools offer, immediately make them appealing to business executives. RPA typically is addressed at two to three rungs down from the CFO to do quick fixes to legacy systems. The value propositions don't mesh – unless you use the tools purely for automation projects.  

By contrast, the Celonis and Servicenow partnership is a bold attempt to create products that bring the CIO+CFO worlds together.  It’s not a surefire win, but it's in the right direction to create something differentiating, blending operationalizing data science with the ability to design workflows in the cloud. Another example is startup Soroco that is exploring how technologies like automation, process mining, and discovery can impact multiple change programs, help remote teams be more effective, and drive more visibility into how work gets gone in an organization through its ‘work graph’ proposition.  

FortressIQ lines up with Automation Anywhere’s push on cloud enablement, but won’t be a panacea 

We acknowledge joining hands with cloud-native FortressIQ supports AA’s continued focus on cloud. But that won’t make it successful. The automation vendor forged a Google Cloud partnership earlier this year, where its Automation 360 platform became available on Google Cloud, with AA becoming Google Cloud’s preferred RPA partner. However, since the announcement, we have seen little sign of upside for something differentiating in the cloud from AA and - quite frankly - with the flagging update of GoogleCloud enterprise offerings, it's hard to see where RPA fits into the conversation, especially when the Microsoft's Power Automate focus has been so much more widespread and effective.

Will enterprises care? If you’re in the market for an emerging technology solution, use this as an opportunity to revisit your process strategy 

As always, the sign of a good acquisition is that it ultimately needs to add up to more value for clients. What does the AA-FortressIQ combination mean for enterprises? Not a heck of a lot:  

  • Existing AAI clients who want process intelligence are already likely using something else rather than trying to manage with the bundled Discovery Bot.  
  • And FortressIQ clients are definitely already using RPA - and sure, some of it is AAI, but they were RPA agnostic.  

The big win for enterprises will be to consider this an opportunity to think bigger than automation. Automation, ultimately, is the solution to bad or overly manual processes. Process intelligence allows enterprises to reclaim visibility and understanding of their processes and enables them to optimize them - which may or may not involve automation. However, given AAI's core focus on automation, we're skeptical this will happen.

Posted in: Digital OneOfficeRobotic Process AutomationIntelligent Automation



Accenture, TCS, IBM, EY and Capgemini lead the way in the HFS Top 10 Rankings for IoT Service Providers

December 06, 2021 | Tanmoy MondalMayank MadhurPhil Fersht

The pandemic has shown the importance of connectivity and visibility for enterprise resilience and operations management. As IoT is a key building block of connected systems, IoT initiatives have become a strategic lever for enterprises and received significant investment commitment. With clear business benefits, IoT adoption has gained significant traction with scaled IoT engagements.” says Tanmoy Mondal, Practice Leader, HFS

Mayank Madhur, Associate Practice Leader, HFS adds “IoT usage has been propelled up by its convergence with different emerging techs such as AI, Blockchain, and Cloud, driving the next wave of digital transformation helping to create new business models. COVID-19 has shown that we have been using IoT use cases piecemeal, making fragmentation across the IoT industry. The real benefit of IoT will be when it can connect seamlessly with other devices to benefit the user using the interoperability feature.”

The HFS Top 10 Rankings for the IoT Service Providers 2021 is out! HFS defines IoT (internet of things) services as any service provider engagement aimed at enabling a physical asset to generate or communicate data to a centralized platform with the goal of driving insight into ways the recipient enterprise might raise operational efficiency or increase revenue through the creation of new products or services.

The HFS Top10 Internet of Things (IoT) Service Providers 2021 report examines service providers’ role in the evolving IoT landscape. We assessed and rated the IoT service capabilities of 15 service providers across a defined series of innovation, execution, voice of the customer, and HFS OneOfficeTM alignment criteria. We spoke with Mayank and Tanmoy, the analysts behind this comprehensive study to learn about their perspectives and insights from working on the report.

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To download a copy of the report, please click here.

Phil Fersht, CEO and Chief Analyst, HFS Research: So, Mayank – My first question to you is around understanding the IoT market. Please can you share key highlights as we step into 2022?

Mayank Madhur, Associate Practice Leader, HFS Research: The global pandemic has

Read More »

Posted in: The Internet of Things



Who’s going to buy cut-price Kyndryl?

December 02, 2021 | Phil FershtTom Reuner

Kyndryl:  A $19bn business smack-dab in the critical legacy cloud market, with a remarkably puny market cap of $3.5bn

The financial markets have fired warning shots across the bows of Kyndryl’s management. To be more precise, it's more a barrage of artillery fire, as investors obsess with bashing tech firms that sustain the old, as opposed to their hugely inflating the valuations of the shiny new tech stuff. What they tend to forget is that much of the old can't be ripped and replaced overnight as the majority of the Global 2000 is in a desperate rush to hurl their legacy into the cloud:

Our Pulse study of 800 Global 2000 enterprises clearly illustrates two factors that dominate the focus of leaders:  moving operations into the cloud at speed and training staff to understand how to balance digital business needs in a virtual environment.  Surely there is still some value left in the likes of a Kyndryl as firms demand immediacy of cloudification and a desperate need to plug talent gaps fast?

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In short, Kyndryl has started life as a separate entity with still-colossal revenues of $19 billion. After a lackluster first earnings report the market cap was a mere $4 billion, which has now slipped even lower. However, these warning shots are not just a worrying sign for Kyndryl’s new management, but also for service providers weighed down by legacy infrastructure services such as Atos, DXC, and the like.  With tech infrastructure commoditizing faster than knock-off AirPods on Amazon , the need to support rapid complex enterprise change is where the focus is firmly shifting, and where these traditional infrastructure providers can help.

Kyndryl is guiding the markets on the larger addressable market and operational efficiencies

Executives at Kyndryl were suggesting that the separation from IBM would more than double their addressable market from $240 billion pre-spin to $510 billion by 2024. Intelligent Automation, data services, cloud services, security and resiliency are said to be the segments that would drive an expansion of 7% CAGR growth in those segments. The key levers for this expansion are meant to be upskilling of talent around cloud capabilities, a more energy-efficient operation of data centers, and a strong increase in the application of Intelligent Automation. However, in its first earnings statement, perhaps not surprisingly, the big picture is still that of decline, with revenues in Q3 decreasing YoY to $4.6 billion.

While the launch of Kyndryl was underwhelming both in terms of communication as well as conveying a compelling investment thesis, executives were pointing to the new partnership with Microsoft as a reference point for new strategic options after the separation. Furthermore, the company announced a tuck-in acquisition of Samlink, a Finnish service provider focused on financial services (very familiar to Cognizant). Yet, despite this progress, the (ridiculously) low market capitalization is hanging like a millstone around Kyndryl’s neck as there are several IT services firms that can easily digest an acquisition with this price tag, confident of quickly upping that $3.5b valuation to at least $10b. First off, opportunistic M&A moves.

Possible Scenarios. Which firm has the cojones to aggregate legacy infrastructure?

The purists will argue that Kyndryl is a dead asset unless someone revives its mojo, is prepared to cannibalize it’s own assets, and move legacy workloads to the cloud.  But surely there are some juicy clients to be won over and profitability to be eeked out if Kyndryl is handled with surgical gloves.  Moreover, let's not forget about the awesome talent that came across from the IBM divestment including the leadership of the respected Martin Schroeter who knows this business inside and out, and will now have the chance to make some incisive changes outside of the IBM shackles..  

So let’s examine the suitors which would have little problem raising $3-5bn to seal the deal:

  • HCL: Hindustan Computers Limited has a long history of gobbling up commodity IBM service and product lines with the purchases of the Lotus and Domino and previously the Tivoli support business from IBM. Furthermore, it is infrastructure-centric and has long ruled the roost for low cost efficient offshore-centric infrastructure support. With Lotus, for example, it has demonstrated it can extract value from even outdated technologies that have a long shelf life and could take more than a decade to sunset. Yet, the level of integration of an acquisition like Kyndryl is on a vastly different level from anything HCL has experienced, but the firm is gaining confidence with leading complexity at a global scale with massive engagements with the likes of Xerox, Chevon and Exxon.

HFS verdict: We consider them the favorites to make this acquisition with its IBM history and strong heritage and appetite for infrastructure services. It's hard to see them not fancying their chances to make this a super-lucrative venture for themselves and become one of the largest service providers around.

  • Atos: Atos already got its fingers burned with the DXC takeover proposal, which was three times the price, but the same revenue base as Kyndryl. But probably more importantly, it has a power vacuum as the new CEO will only take the helm in January and this purchase is seismic in all dimensions. But there are lessons for Atos to be learned as it is seeking strategic partners for its infrastructure business. However, the most significant appeal for Atos would be the immediate US shop window Kyndryl gives the firm, and an excellent array of client-facing talent to nurture the business. It is indeed a less risky bet that DXC was earlier this year. 

HFS verdict: The new CEO transition will likely derail this for Atos.  However, they could move fast seeing Kyndryl as a bargain replacement for the DXC-sized hole in its aspirations.  A definite possibility.

  • Capgemini: Kyndryl pushes a lot of the right buttons for Cap.  Firstly it would give its infra business a much-needed injection of scale.  And secondly, it finally puts to bed its difficulties getting a strong IT services brand in the US, which has plagued the firm for almost two decades.  A third reason is that Capgemini has grown through many acquisitions and has gotten good at them in recent years, with IGATE and Altran standing out. 

HFS verdict: Cap has made its OT+IT bed and this deal seems a bit too left-field for their new direction. A distinct possibility, but it's likely Cap will shy away from a major infra play in this market.

  • Infosys: Infy has a war chest that could easy cover the price tag, and a pandemic-induced thirst for cloud deals that could easily take the firm down this path.  What’s more, the firm has developed a strong US presence in recent times and can realistically look at absorbing the culture of a Kydryl as it explores where it next directs its focus after three very successful growth years.  On the flip side, Infosys has perennially struggled with acquisitions in the past. Still, Nandan, Salil and Ravi could find themselves needing to roll the dice here while the opportunity is there.

HFS verdict: Makes a lot of strategic sense, but previous acquisition horrors will likely hold Infy back here.  However, a bold move is on the cards after such a strong growth surge, and recent successes with its Cobalt cloud launch and mega Daimler cloud engagement might just tip the balance in their decision-making.

  • Cognizant: The Hudson Yards-led firm may fancy adding some serious infra to its armory as it continues its impressive 2021 rebound and absorbs several smaller acquisitions from the last couple of years.  Brian Humphries is a strong M&A guy and will surely be feverishly running the numbers over this Kyndryl beast, but you have to question whether it has the appetite for dishing out several billion just as the firm is back on a healthy growth trajectory. However, IT infrastructure is an area where  Cognizant could make serious inroads with a power-play like this.  Don’t rule them out.

HFS Verdict:  A definite dark horse in the race, but you have to doubt whether Humphries wants to take such a huge gamble just as the firm has found a strong growth-groove and new leaders settling in to the firm.

  • Google Cloud Platform:  GCP needs access to enterprise clients - plus could support its expanding Google docs/collaboration platform.  It's well-known in industry circles that GCP came close to acquiring DXC a couple of years ago for this very reason.  With the gap between AWS and Microsoft Azure still widening in the enterprise space, you could certainly see Goog making a renewed play.

HFS Verdict:  GCP is an outlier possibility, but you have to question why it hasn't made any moves into infra cloud services since its dabble with DXC.  The price tag is certainly digestible for Google, but you have to think it has shifted focus away from making a major services acquisition - and Thomas Kurian taking the helm definitely shifts the onus to software and not services.

  • NTT or any of the Japanese juggernauts: While any of the large Japanese conglomerates like NTT or Hitachi are pushing strongly on innovation, the attraction could lie in getting access to clients in North America and Europe whilst tapping into an international talent pool. This would be more akin to Lenovo buying the PC business of IBM.
  • Other tier 1 Indian heritage service providers:  Wipro could be tempted, especially with the bold moves taken by Thierry Delaporte.  However, this is likely too much to swallow after Capco, and memories of Infocrossing probably still give Azim Premji heartburn.  TCS doesn't buy anything, but probably should one of these days.  LTI could be a wild card with its recent cloud success and ambitions to break into the top tier.
  • Private Equity: Scenarios could be manifold from asset stripping to creating synergies for a set of portfolio assets. Fundamentally, it would be opportunistic but not strategic.
  • Other Hyperscalers: Probably more of a wild card. The logic could be getting access to clients, transforming them, and consequently upselling to them. If anything, Chinese hyperscalers like Alibaba or Baidu. But even that needs a lot of fantasy.  There were some Google rumors, but we just don't see it

Kyndryl must strike back with clearer communication and more strategic moves

The more likely scenario is that Kyndryl will seek to calm investors' nerves with a much more compelling investment thesis. That would require a more imaginative strategy, beyond an expanded addressable market and improved operational efficiencies to improve its flagging profit margins (see below). For instance, outlining bold investments in innovation or strategic partnerships with Chinese hyperscalers are the messages and actions investors want to see being made. Thus far, communication has focused on infrastructure being the core for innovation. Yet, this is ignoring the elephant in the room: it is a margin-sucking core. The following chart provides the context of the operating margin of IBM’s two services business lines, with Global Technology Services being the core of the spun out entity:

 The Bottom-line:  It's likely we'll see some acquisitive moves on Kyndryl in a market short on talent and great at adding sugar frosting to commodity work

Infrastructure services provide us with a classic example of the Innovators Dilemma - should firms prioritize meeting clients' immediate needs versus focusing on future innovations that could create opportunities in the future?  IBM has made the difficult and (probably) correct decision to spin out its legacy infrastructure assets. Yet, the communication behind the launch of the new company Kyndryl has been underwhelming, lacking a fresh vision for its assets. Therefore, unsurprisingly the financial markets have not been remotely excited by the new company, with a revenue to market cap disparity that is even worse than Conduent and Unisys. Atos and other providers, held back by legacy, can glean valuable lessons from those experiences. It's been many years since we've seen a firm the sheer size of Kyndryl is finding itself in such a position where so many suitors will think they can find some gold in it.

Posted in: Cloud ComputingDigital TransformationIT Outsourcing / IT Services



Accenture, Cognizant and Virtusa peg the top spots in the HFS Pega Service Providers Top 10

November 28, 2021 | Phil FershtTom ReunerKhalda De SouzaKrupa Ks

The convergence of SaaS and services has re-focused the ROI of software towards achieving defined business outcomes. With so many sophisticated SaaS platforms on the market - many of which offer far greater functionality than most enterprise customers need - the onus is shifting rapidly towards the business value these solutions bring to customers and how they support alignment with a OneOffice mindset. This is a major pivot away from customers simply purchasing what they are led to believe are the best features and functions and expecting miracles. Our new SaaS XXV research initiative is geared towards defining these business outcomes and measuring the leading - and upcoming - SaaS platforms against their customers achieving these outcomes.

So where better to start than looking at the leading services being built around low-code leader Pega....

“The power to simplify: What you need to crush complexity” – This was Alan Trefler’s ( Pega Founder and CEO ) key-note at the PegaWorld iNspire 2021. What stood out for me in Alan’s ~13-minute key-note was how to crush complexity. Simply put, it is about getting the business architecture right! This means an architecture that is organized around the heart of the business, customer and outcomes across the customer journey.

Putting the customer at the center is critical to the success of a transformation to drive meaningful and measurable outcomes. This was also a key insight from our latest HFS Pega Service Providers Top 10 2021:

To learn more about how the Pega market is evolving, what service provides are leading the way and how clients are leveraging Pega, I sat down with analysts Krupa K S and Khalda De Souza to learn about their experiences and insights from working on this report.

Phil Fersht, CEO and Chief Analyst, HFS Research: So, Khalda – My first question to you is around understanding the Pega services market. Please can you share the highlights and significant developments?

Khalda De Souza, Research Fellow, HFS Research: Pega offers integrated back-office and front-office solutions along with automation offerings and a low-code application development

Read More »

Posted in: Robotic Process AutomationSaaS, PaaS, IaaS and BPaaSIntelligent Automation



Job-hopping is only a temporary fix. Remote workers have to emerge from their comfortable cocoons as the Pandemic fades

November 24, 2021 | Phil FershtElena Christopher

We have to stop focusing on the "right now" and prepare for what's happening in the next six months (and beyond).  The Pandemic has created this immediate mentality from people that the situation we're in now is the only thing we should care about, and it'll be the same unto perpetuity. We need to break out of this mindset and accept we're in a temporary bubble... and the real world will quickly emerge in the coming months.  Let's prepare for that world, not the current one, folks.

With all the current panic about job-hopping and attrition, we need to consider we're in a temporary situation, where people have become burned out, and sometimes groping for the shiny and new is just so much easier than fixing the old.  Let's consider why...

It's become abundantly clear that many businesses simply cannot function in a remote model.  It can work for a short period, but ultimately creativity comes from a collective group of people being together physically.  Operations can keep cranking remotely, but for people to learn from each other, develop their relationships and lock heads to come up with ideas. They need to be together physically.

Swapping one cocoon for another is immediate gratification. I believe the current "Great Resignation" is a direct result of people stuck at home staring at a PC screen, desperate for some attention, fed up after 20 months of incarceration in their comfy cocoons.  Sure, they can always claim a pay rise and a new challenge excited them, but I believe the reason for most is the ease of hopping jobs in a talent-starved economy, where a Zoom call or two is all you need to make the switch.  It's just so easy in this bubble... merely swap one cocoon for what seems like an even nicer one.

It’s an attrition bubble. Attrition in knowledge jobs – those requiring IT or business process domain knowledge - has been spiky, but it's temporary and over-blown. Attrition levels in IT and business process services (for example) are now remarkably similar to pre-pandemic levels. The current exodus is more a result of 20 months of a temporary economic boom, pandemic, and employee fatigue than any permanent trend. As the Pandemic recedes in the spring of 2022 we will see people-centric industries quickly stabilize.

In-person work will come roaring back. Regardless of your new normal model – remote-first, hybrid, or in-person – every enterprise must respect and support the value of physicality. People still need physical interaction, education, and collaboration to learn and develop. Whatever your model, it must include a physical element and it must be thoughtfully constructed to ensure desired results. The physicality must be purposeful.  For example, most call centers across the globe are already back up to capacity, all the Indian-heritage IT service providers will have their facilities back to capacity at the beginning of next year, and many financial services institutions are always back to in-office work - as this is the only way they know how to function.  Talent at scale is still a brilliant thing to drive a business forward.

There are notable variations by industry and region. Industries that depend on people collaborating en-masse are already bouncing back to physical environments, or have imminent plans do to so. Work cultures that were very people-driven will bounce back almost 100% and are already on that track (China, India, others). Geos experiencing very / unrealistic high wage inflation will go through a correction when the economy stabilizes / levels off as the Pandemic recedes (i.e. US, India)

Bottom-Line: The pursuit of being perpetually remote is unrealistic

While there is a current huge focus on creating work environments to sustain remote working, it’s unrealistic to think in-person work is eradicated. The new normal may be more hybrid in terms of physical location, but enterprises and employees have to focus on motivating, educating, and helping create employees that are great to work with Jumping jobs is not a long-term solution to burnout and boredom. Neither is the red herring of “remote work” as some new productivity miracle.

Posted in: Digital OneOfficeTalent in SourcingGlobal Workforce and Talent



Data and Decisions services 2021 - Accenture, IBM, TCS, Infosys and EXL lead the way in HFS Top 10 Rankings

November 16, 2021 | Phil FershtReetika FlemingNischala Murthy KaushikDavid Cushman


Everyone we talk to these days has become a data governance obsessive, regardless of their role.  Whether it's ensuring data flows are effective across front to back office to align customer engagement with employee effectiveness, or accessing external data up and down our supply chains to stay ahead of our competitors and cement strategic partnerships.

In short, we need to make our data ubiquitously available, accessible, and mineable - embedding a mindset into our leadership to inspire our people to work together to create an organization that can flip our business models to exploit these seismic market changes. But we can't get the data we need if our critical data is not in the cloud and we don't have the people, partners, processes, technology - and desire to change - to make this possible.

At HFS, we describe data and decisions services as an array of services designed to help customers create a culture of data that drives new opportunities through interactions, insights, and predictive capabilities, giving clients the ability to access data at a speed that drives critical decisions for their business.

This month, we unveiled the 2021 rankings on Data and Decisions (download report here) which clearly show which providers have been able to maximize the value of their data investments during the pandemic:


Click to Enlarge

To learn more, I sat down with Reetika Fleming, Research Leader and David Cushman, Practice Leader at HFS to talk about their reflections and perspectives in working on one of our most exciting and topically relevant research publications,  2021 HFS Top 10 Rankings on Data and Decisions.

Phil Fersht, CEO and Chief Analyst, HFS Research: So Reetika, What did you learn from doing this interesting and topically relevant Top 10?

Read More »

Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)IT Outsourcing / IT Services



Four mindset shifts to operate as OneOffice

November 14, 2021 | Phil Fersht

OneOffice is a mindset where we break down all the silos and barriers that connect customers, employees, and partners. OneOffice is where we have processes that deliver front-to-back dataflows where we can unify our desired outcomes, how we measure success, employee effectiveness, and engage our external partners most effectively. It is how our organizations can function most effectively in today's virtual environment across borders, business ecosystems and complex supply chains. 

To get there is as much a mindset transformation as it is a technological one:

How to approach the mindset changes to operate as OneOffice 

Over the past year-and-a-half, we've gradually let go of the many shackles of the past and realized we're in a new reality, a wholly new environment, where we're all trying to focus on achieving real business outcomes, on values that are important to us, and a new work reality that is intense, high-touch and very real.  The change in the enterprise mindset towards technology has gone through a genuinely pragmatic revolution over the pandemic.

Mindset Shift I. We must align our data needs to deliver on business strategy.  This is where we clarify our vision and purpose. We need to make our data ubiquitously available, accessible, and mineable - embedding a mindset into our leadership to inspire our people to work together to create an organization that can flip our business models to exploit these seismic market changes. But we can't get the data we need if our critical data is not in the cloud and we don't have the people, partners, processes, technology - and desire to change - to make this possible.

Mindset Shift II. There is simply no option but to plan to design our processes in the cloud using scaleable web-architected applications.  If there’s one thing the pandemic taught us, it’s been the necessity to re-think processes to get the data; what should be added, eliminated, and simplified across our workflows to source this critical data. In this virtual economy, our global talent has to come together to create our borderless, completely digital organization. This is the true environment for real “digital transformation” in action. 

Mindset Shift III.  We must ingrain a critical discipline to automate our processes and data so we can function and survive in a virtual environment.  Automation is not our “strategy”, it is the necessary discipline to ensure our processes provide the data - at speed - to achieve our business outcomes. We have to approach all future automation in the cloud if we want our processes to run effectively end-to-end, which means we need effective, scalable technology to make this all possible.

Mindset Shift IV. Once we are automating successfully in the cloud, we can apply AI to data flows to anticipate at speed in self-improving feedback loops.  This is where we apply digital assistants, conversational AI and NLP, computer vision, machine learning, and other techniques to refine the efficacy of our data.  AI is how we engage with our data to refine ourselves as digital organizations where we only want a single office to operate with agility to do things faster, cheaper, and more streamlined than we ever thought possible.  AI helps us predict and anticipate how to beat our competitors and delight our customers, reaching both outside and inside of our organizations to pull the data we need to make critical decisions at speed.

Click to Enlarge

Bottom-line: You can't get the data you need if you don't have the people, partners, processes, technology - and desire to change - to make this possible

Over the past year-and-a-half, we've gradually let go of the many shackles of the past and realized we're in a new reality, a wholly new environment, where we're all trying to focus on achieving real business outcomes, on values that are important to us, and a new work reality that is intense, high-touch and very real.  The change in the enterprise mindset towards technology has gone through a genuinely pragmatic revolution over the pandemic. You can lead a horse to water, but can you get it to drink? OneOffice is about understanding and discovering the data you must have to win in your market - right now in real-time - and in the future - as the market environment keeps evolving. 

Posted in: Digital TransformationDigital OneOfficeRobotic Process Automation



10 Reasons why we launched HFS Research-based Sourcing Advisory Services

November 13, 2021 | Phil FershtSaurabh Gupta

Almost every business has evolved its business model over the pandemic era as their customers' needs are changing to remain effective and competitive in this virtual environment.  And it's been no different for analyst firms like HFS, where enterprises demand immediate help and advice to be delivered remotely and rapidly in an intimate, personal environment.  Analysts must cut through the 3000-foot view and present practical, hype-free advice to customers is they want to be credible.

When it comes to figuring out rapid changes to business operating models, smart enterprises have been demanding immediate insights, data and advice to make fast decisions on partner selection, which services to insource or outsource, how to stay ahead of their data governance needs, how to re-think their processes to get the data they need in a virtual model, and consider how to approach automation and AI to help their operations function effectively and autonomously.

To address this, we've successfully launched our Research-based Sourcing Advisory Services (see link) under the guidance of our President of Research and Advisory, Saurabh Gupta, where we're helping a number of enterprises with our unique approach to helping enterprise customers in this virtual environment.  So what makes us unique and why does our approach to enterprise sourcing support dovetail so effectively with our global analyst business?  Here are 10 reasons why...

10 Reasons why we launched HFS Research-based Sourcing Advisory

  1. The role of analysts and advisors is converging and HFS provides the perfect balance.Our recent research covering the Global 2000 reveals that only 5%* of enterprises are leveraging the Big 4 or Sourcing advisors to handle the entire sourcing process from screening through to implementation and governance. (*Based on HFS Research of 150 C-level executives across G2000 enterprises, 2021).  HFS manages the most highly engaged community of enterprise leaders and applies great research and advisory to help them.  Sourcing advisory needs a fresh, trusted face, and that is HFS!
  2. Mature outsourcing enterprise customers do not need babysitters. Second-generation enterprise clients know how to run the sourcing process. They don’t need a team of full-time onsite consultants to rack up the billings. They mainly need data, expertise, and insights in specific areas where they have gaps.
  3. Welcome to the Virtual Economy, where HFS wins. Covid-19 has proven that sourcing advisory can be done remotely and virtually.  HFS has grown 30% during the pandemic and added multiple new research practices in new areas such as banking, healthcare, cloud/SaaS, and cybersecurity. We have many proof points here at HFS that 'virtual' works!  
  4. Advisors must deliver outcomes, not simply charge for time. Our sourcing advisory is based on fixed fees for definite milestones and results, not T&M, where the consultants are not incented to speed up the process. 
  5. Real research gets to outcomes much fasterYou don’t need an RFI for everything if you already know the market, have exhaustive data on decision dynamics and the supplier landscape. Our existing repository of Top 10 research reports, case studies, Industry Pulse of 800 Global 2000 enterprises, and IP allows enterprise clients to speed up the sourcing advisory process significantly.
  6. The sourcing advisory market is crying out for some innovation. The incumbents are still running sourcing advisory the same way as 15 years ago… as a procurement process designed to beat down the service providers on price. This cultural mismatch is the #1 issue why outsourcing engagements fail, yet no advisor conducts a psychometric fitment between the client and supplier.
  7. Where is the real transformationIs sourcing advisory designed to create outcomes for clients that are slightly better, slightly cheaper, and slightly faster? Is that transformation? HFS Research-based sourcing advisory is driven by the OneOffice mindset of an integrated approach across the front, middle, and back-office to drive employee and customer experience.
  8. The over-templatized process kills creativity. Yes, sourcing advisory needs a methodology, but it can’t be so rigid that it stymies creativity and out-of-the-box ideas. But few sourcing advisory engagements allow creativity and out-of-the-box thinking.
  9. Supplier shopping must go beyond cost-gouging. It’s a common (mal)practice to launch RFPs just to find a lower price point without any real intention to change the incumbent. Again research-based and IP-backed advisory services can prevent such wastage of time and effort across all stakeholders. We don’t encourage competitive bidding just for the sake of it!
  10. We must learn from each other. There is no template for success in today’s world. The best chance of success is to learn from each other and share experiences. Our research deliverables, roundtables, videocasts and events provide an open forum for our enterprise clients to share frustrations and best practices, and we all learn from each other.

Bottom line. The traditional sourcing advisory space is ripe for disruption and HFS is challenging the status quo.

HFS provides the perfect balance between the best research in the industry and experienced practical advice. Our comprehensive repository of Top 10 research reports enables clients to develop supplier shortlists. Each Top 10 report ranks leading service providers across a series of pre-defined criteria across execution, innovation, and voice of the customer. “HFS OneOffice Pulse,” a bi-annual study of 800 global enterprises, is designed to focus on anticipated demand changes for technology and business services. Our diverse suite of data-driven offerings (price benchmarking, contracts database, emerge tech. case study compendiums) give you the tools to predict, respond to, and benefit from changes in the service industry.

Working with us, enterprise leaders will be better-informed, more enabled, and in a much-improved position to anticipate economic, technological, and market challenges.

See how our sourcing advisors can help you. Drop us a line at [email protected]

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesOutsourcing Advisors



COP26: We’ll make it - but too late for so many

November 08, 2021 | Josh MatthewsPhil Fersht

HFS Sustainability Practice Leader Josh Matthews on stage at COP26 with executives from BMW and Accenture (Click to Enlarge)

 Anyone familiar with our analyst team knows how passionately analyst Josh Matthews has beaten the sustainability drum since he joined us three years ago (when no one cared about sustainability).  So we sent him along to the COP26 world climate change global political summit, not only to wake up Joe Biden,  but also to share some unfiltered and uncomfortable truths among all the corporate fluff... so over to Josh for his takeaways...

I left Glasgow and COP26 to the surreal experience of Fridays for Futures demonstrators, pioneers of the school climate strikes we’ve become familiar with, claiming the streets. All generations were represented. It drove home the magnitude of the most pivotal UN climate summit. Having been immersed in business and policymaking circles for a week, I found myself explaining reserved but real optimism (combined with cautious relief and pleasant surprise) to two local activists from Keeping Our Cool, a team aiming to support constructive conversations around COP.

The G20 which preceded COP26 (and honestly the last 6 months or so of sustainability-based research) gave me little optimism on the policymaking front. And for those of you who know my political background, you’ll know I don’t immediately jump to support the current UK government. But (for now) it’s optimism.

We have reason for optimism on two fronts

1. Tangibility emerges. First, the world’s largest and most influential businesses are becoming more serious (and more believably so) about moving from goal setting and ambitious rhetoric to planning their transitions and creating tangible roadmaps;

2. Big businesses will (likely) have to disclose their efforts. Secondly, the UK’s announcement that in 2023, most big businesses must disclose transition plans (it remains to be seen how rigorous or enforced this will be) will hopefully mean all organizations align themselves to sustainability goals - decarbonization to net-zero and beyond, alongside all 17 UN Sustainable Development Goals - and that this standard becomes a worldwide norm.

However, tempering that optimism are two severe problems

1. The most progressive organizations are those who’ve grasped basic concepts. The first problem is that we’re attributing gold standards of sustainability to organizations (and governments) that have grasped simple road-mapping concepts: set a goal, understand your starting point, and plan your journey. We need to quickly reach a point where detailed transition roadmaps are the norm, rather than the top 20% (a generous number). To push us in this direction, organizations like the CDP, a respected environmental disclosure and ratings charity, are moving the bar upwards in their assessments of an organization’s sustainability - and focusing on transition plans, not only commitments, even if those commitments are validated by the Science-Based Targets Initiative (SBTi), a leading voice on net-zero target setting.

Perhaps the biggest advantage we have across sustainability is that we have goals. We have the endpoints of the roadmaps we need to move along. And while we need to reach these goals as soon as we can—and these roadmaps must include rapid action in the next 5-10 years, not just targets set for 2050—this is a massive difference compared to the last decade or more chasing a horribly vague concept of digital transformation. We need to measure and understand our starting points to make these roadmaps. And we need to work together throughout organizations, and ecosystems to both figure out our starting points, and to make these roadmaps happen. I’ll be publishing a more detailed take on what COP26 means for business leaders soon, following the conclusions to the summit.

2. Humanity can be amazing in a crisis—but sadly never fast enough to save everyone. The second problem isn’t one we can fix — we can only limit. I wrote this piece filled with optimism at Glasgow Central station that there’s enough innovation and determination out there between businesses, policymakers, and people to decarbonize and meet net-zero by 2050. If we do so and fall on the right side of the 50:50 chance that gives us to limit global warming to 1.5-degrees, we can avert the very worst scenarios of climate change. But this optimism then came with a bitter aftertaste. Even if we meet these targets, and make massive strides on all 17 UN Goals, so many across the world are currently experiencing what the opposite of sustainability looks like. As time goes by means we become too late to save another person, another ecosystem, or avert another of the damning effects of climate change. What that doesn’t mean, is that that the efforts we all need to make rapidly, each in our own individual and organizational ways, aren’t worth it. We ran out of time to compromise and delay decades ago. I hope and I am optimistic that this really can be the “decade to deliver,” as so many put it—I can’t afford not to be.

Bottom-line: We ran out of time to compromise and delay decades ago 

I hope and I am optimistic that this really can be the “decade to deliver,” as so many put it.  We can’t afford not to be.

Posted in: Governance Practices and ToolsSustainability



Wipro catches a growth mindset with Stephanie Trautman

November 06, 2021 | Phil Fersht

One of the most notable turnarounds in recent IT services history has been the remarkable increase in revenue and profit performance of Wipro since Thierry Delaporte took the helm 18 months ago just as the Pandemic was in full throttle.  Over the past few quarters, the firm has posted close to double-digital revenue growth and will surpass the $10 billion revenue level.  Thierry moved swiftly to make restructure the firm around geographic regions while simplifying its management structure, and he also brought in some new faces from the outside to add fresh ideas, energy and focus to implement his plans.

One of Thierry's recent recruits has been Cincinnati's own Stephanie Trautman, who joined the firm last February from Accenture, to take on the new role of Chief Growth Officer for the firm.  So we coaxed her off the golf course to tell  us a bit about herself, what she's doing for Wipro and why the firm has been making such a strong bounceback in the market...

Phil Fersht, CEO and Chief Analyst, HFS Research: Well, it’s great to get some time again with you, Stephanie, up close and personal. So I guess my first question is going to be, you know, have you always been in the tech business? Can you share a little bit about maybe how your career evolved since you left college? Was this what you always wanted to do?

Stephanie Trautman, Chief Growth Officer, Wipro: Sure, Phil. I’ve spent my entire career in either financial services, technology, or both. I really did not anticipate this career, when I graduated from college. I went back to school to get my MBA, and then started a career at Ernst & Young, and that’s where I kind of got introduced to technology, and really had a passion for it, so have stayed in this industry since then. So I did move around a lot, in my career, but when I did, you know, it was often to either learn something new, or grow my responsibilities, or use my experience for the organization I was joining. So I’m really lucky to have worked with some fantastic organizations, and learned a lot, learned this business, and happy now to be able to help others do the same.

Phil: You’ve got this fancy job title, you’re the Chief Growth Officer, so you head up, what, sales, and marketing, and partnerships, large deals, etc. Can you tell me a bit about what a day in your life is looking like, Stephanie, in this new role of yours?

Stephanie: You know, I’m really fortunate to really love what I do, and I was particularly excited about this role. On a typical day, I’m either meeting with my chief growth office leadership team, talking about how we increase our large deal pipeline, and win large deals, or I’m meeting with Laura and Gurvinder to talk about what we need to do to increase brand awareness, either in the marketplace, or with our advisors and our partners. I spend a lot of time with our ecosystem partners, understanding their strategies, and Wipro, and how we could come together in more impactful ways. And then, you know, in the first, probably, four or five months, I spent a lot of time hiring, which was also a lot of fun, and met some fantastic talent. On the

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Posted in: IT Outsourcing / IT ServicesOutsourcing HerosCloud and Business Platforms



Cognizant is over the Hump... thanks to the Humph

November 02, 2021 | Phil Fersht

One of the most over-criticized service providers of the past couple of years has been Cognizant. The company which rocketed from $1bn-$15bn in 15 years took full advantage of the pre and post-Great Recession offshore boom, the directionless years of Wipro and Infosys, and a lovable arrogance... which even scared the hell out of Accenture.  And all this was achieved with very few changes to its leadership team and an entrepreneurial spirit which was the envy of the IT services industry.

However, with the pressure of the activist investor Elliott Management's buy-back in 2018 shortly after its president and operational architect Gordon Coburn fell on his sword for greasing the palms of Tamil Nadu government officials to obtain building permits, the Cognizant halo quickly faded, and CEO Francisco DeSouza departed with revenue growth slumping to 5% and operating margins heading down to the low-teens.

Brian Humphries' patient approach to change has proven the smarter approach considering the complex structure of the firm 

Enter Brian Humphries in early 2019 (see blog) to take on his first IT services leadership position having spent most his career in telecoms with Vodafone and hardware with Dell and HP prior.  While many people thought Brian would cut deep, he took his time evaluating the firm's long-time leadership - it took the best part of two years for most the old-guard SVPs (known internally as "one-zeros") to take themselves out or require a gentle nudge.  Compare this to Thierry Delaporte who joined Wipro in 2020 and quietly cut 155 VP (and above) level executives after a few short months.  While many onlookers criticized Humphries for moving too slowly, he was trying to develop a renewed spirit, professionalism and culture without a traumatic break from its very impressive past.  Wipro had stagnated for years because of a very stodgy and bureaucratic structure which needed a quick, rapid fix, while Cognizant is more than twice the size and needed a more gradual pivot, especially as several former one-zeros had built huge fiefdoms that were not broken, but in dire need of discipline, direction and realignment with the broader business planning across its global business units which were too skewed to the US market.

Just when things were moving in the right direction, enter a pandemic, a ransomware attack, and the write-down of a disastrous legacy client

When you examine the challenges of incoming CEOs into very large businesses, there are not many which rival the series of events that Humphries has had to endure.  After righting the ship in 2019, along came the deep panic of the global pandemic with the seismic adjustments needed just to keep the wheels on keeping their clients' delivery functioning.  And to rub salt into an already gaping wound, the firm was hit with the Maze ransomware attack, just as its employees were being rapidly transitioned into their work-from-home environments.  And, despite these unprecedented disruptions to its business, Cognizant plowed through the worst of these impacts only to be forced to write off around $150m in Q4 2020 from a disastrous acquisition of Finnish developer Samlink, struck shortly before Humphries took the helm, which was geared at building a shared core banking infrastructure for three Finnish financial institutions. 

Yet, despite these three significant setbacks, Cognizant has risen again, posting three successive high-growth quarters with a strong outlook for Q4 which should see the firm comfortably blow past the $18.5 bn level.  This will see the firm likely finish 2021 as the fourth-largest IT services firm in the world, only being surpassed by Accenture, TCS, and (marginally) Capgemini.  IBM's spin-out of its infrastructure services business (Kyndryl) and DXC's decline will likely make this eventuality happen: 

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The reason for real optimism is that growth in revenue comes with positive movement in operating margins and EBITDA.  With the current issues impacting staff wages and attrition (especially in India), it's critical for providers to maintain strong margin performance to provide that ability to reinvest in staff recruitment, training and salaries:

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Reasons for this robust post-pandemic bounceback

Ongoing acquisitions adding specific expertise across geographic and solution areas.  In 2019 and 2020 Cognizant took specific strides to increase its cloud migration and modernization capabilities with a series of targeted acquisitions across core domains such as AWS, Pega, ServiceNow, Workday, Microsoft Azure and Salesforce.  Examples include Collaborative Solutions, 10th Magnitude, Bright Wolf, and Inawisdom There have also been specific acquisitions in engineering services areas, notably in the product and automotive realms, such as TQS Integration and ESG mobility

Flexible pricing models for apps modernization.  Our multiple discussions reveal that Cognizant’s customers are happy with the pricing models that Cognizant is offering for applications modernization, and are generally happy with the talent.  The growth of digital deals is resulting in Cognizant being able to price “land and expand” pricing models that include gain share, outcome, and risk-based pricing components.

Clients see Cognizant as an "engineering-first" firm.  Focusing on its software engineering DNA and not trying to sound like a low-cost alternative to Accenture, is perhaps a less obvious aspect of Cognizant's pivot over the past couple of years. Several Cognizant clients we recently interviewed mentioned they prefer its focus on staff training and depth/scale of resources and care much less about how much it influences the C-Suite with grandiose ideas.  The new attitude, after the past 18 months of pandemic-induced volatility, has definitely seen enterprises prefer service providers with a roll-up-sleeves approach to drive rapid transitions.

Strong growth outside of US mainstay.  While Cognizant's US business grew 10% over the past year, there has been a significant 17% increase in Europe and 22% across the rest of world. Some key wins in the UK (HMRC and a major UK publisher) and Sanofi (France) contributed to the notable increase in European presence.  The recruitment of Rob Walker to lead UK and Ireland has been a notable addition, who was recently invited to brief the British Prime Minister, and Rajesh Nambiar is proving to be a stabilizing figure in India, amidst all the turbulence and staff attrition currently plaguing the whole Indian tech scene.

Continues to strengthen their capabilities across both the Life Sciences and Healthcare value chains. In Life Sciences, Cognizant's Industry 4.0 push to enhance its manufacturing capabilities is impressive and has a lot of potential. The acquisition of Zenith allows it to combine its IT expertise with Zenith's OT expertise to be able to deliver a full-stack tech integration for all LS manufacturing integration. In addition to this acquisition, it has also partnered with Phillips to be able to use data to connect medical devices, health systems and health plans on AWS using Philips HealthSuite (PaaS). This type of ecosystem connectivity will give Cognizant significant leverage to support clinical trials better, reduce fraud waste and abuse and generally optimze the use of data. 

Challenges Cognizant needs to address

Attrition and wage inflation.  The "Great Resignation" is hurting all service providers with significant reliance on Indian talent and Cognizant is among the worst of the Tier 1's affected with current rates estimated in the high 30 percentile.  While enterprise customers have expressed concern over the current high rates across all service providers, we have yet to see any major delivery issues as a result and impact is being felt more with rising costs due to rising wage rates.  Cognizant has a healthy operating margin and added 17,200 staff over the last quarter, bettered only by TCS (19,690) and Accenture (55,541).  With this aggressive focus on hiring and attention from the C-Suite on combatting attrition, Cognizant should not find itself at any significant disadvantage vis-à-vis its competitors, especially in software engineering areas where its scale and depth are so important in the current environment.

Banking and Financial Services needs an injection of energy.  The sector only grew 5% year-on-year compared to 10% in healthcare and 20% in comms, media and tech.  Cognizant has recently revamped its BFS capabilities with new leadership, new offerings, and a new approach that better emphasizes transformation rather than IT partnership. We applaud the direction but Cognizant has been outpaced in many categories by its competitors. We’d like to see continued progress with consulting-led capabilities helping Cognizant make good on being more than a tech partner. We’d also like to see continued progress with Cognizant's European footprint and nearshore delivery, which is a strategic priority for BFS clients.

Create a compelling narrative for its digital business operations.  Cognizant's $2bn of revenues in the business operations arena (growing at a health high-teens clip) are two-thirds of the entire revenues of pure-play Genpact and double the likes of EXL, WNS and InfosysBPM.  However, few people outside of Cognizant recognize this capability and are surprised to learn the deep plethora of industry process, content expertise, digital business acumen and process automation experience that exists within the firm.  While Cognizant has always done a very good job of marketing its bread and butter tech capabilities, it has perennially struggled for many years to create and articulate a compelling narrative for its operations and process capabilities... which are a well-kept secret.  Key client executives need to know that Cognizant's business operations are a strong alternative to Accenture interactive operations, TCS' banking and insurance process services, or Genpact's CORA AI platform, and so on. In today's virtual environment, the ability to deliver business services in the cloud has never been so critical and having that capability to bridge process and technology services is critical.  Cognizant is well placed to capitalize here, provided it creates an identity for its business operations capabilities and aligns its practice leaders to bring the pieces together for clients across cloud, apps and process.

The Bottom-line:  The negativity is leaving the building and the new Cognizant is quietly emerging

The strong rally over the past year proves there is a lot of life and energy fizzing as the new Cognizant emerges from a slow transition and a very unlucky series of events that threatened the very essence of the organization last year.  Now we need to see the leadership team drive the company forward as we stumble (somewhat) out of the pandemic into a 2022 that could be as volatile and unpredictable as the past 18 months.  One thing is for certain - Cognizant has proved to be a highly resilient animal that has quietly found new energy and footing in this most testing of times.

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



Accenture, TCS, Infosys, IBM and Capgemini leading the way with Native Automation services

October 25, 2021 | Phil FershtElena ChristopherDavid Cushman

We're excited to unveil our eagerly-awaited Top Ten report covering Native Automation Services (click here for your copy).  In short, Native Automation services leverage a range of emerging technologies to create intelligent and automated workflows in the cloud enabling new "native" standards for consistent cross-functional enterprise operations.  Let's remind ourselves that automation is not your strategy.  It is the necessary native discipline to ensure your processes provide the data - at speed - to achieve your business outcomes. Hence you have to approach all future automation in the cloud if you want your processes to run effectively end-to-end.

The report examines the capabilities of 12 service providers. We assessed and rated their native automation service capabilities across a defined series of execution, innovation, OneOffice alignment, and voice of the customer criteria. So let's see how the leading service providers fared:

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Key criteria for rating Native Automation service providers

Native Automation Excellence.  Native automation is one of three enabling capabilities supporting the journey to OneOffice. It covers services that leverage a range of emerging technologies to create intelligent and automated workflows in the cloud, enabling new "native" standards for consistent cross-functional enterprise operations. The top five leaders in our study, Accenture, TCS, Infosys, IBM, and Capgemini, showcased exemplary capabilities across the assessment criteria, demonstrating the inclusion of automation as a standard “native” element of transformed enterprise operations. 

Execution.  Native automation is scaling, but most engagements are still at the front end of the value chain in the planning and implementation stages. Native automation is an essential element of enterprise operations transformation. But remember, the value is from working smarter and solving problems, not from successfully implementing a single-thread technology. The increase in outsourcing and managed services deals points to automation truly becoming a native element of enterprise operations. TCS shone in this category, closely followed bt Infosys and Accenture.

Innovation.  Native automation engagements are becoming more tech-diversified, but robotic process automation (RPA) is still the dominant technology. RPA and process intelligence have become the power couple of automation engagements, packing a powerful combo punch of understanding and automating processes then measuring the impact of the automated processes. Study participants tell us RPA and hyperscalers dominate their partner landscape, with Automation Anywhere (AAI) and UiPath as co-leaders; almost 70% of respondents named them as a top automation partner, followed closely by MS Azure and AWS, reminding us that ecosystems are changing and on-prem was so pre-pandemic.  Accenture dominated the innovation categories, followed by impressive showings by Cognizant and HCL.

OneOffice Alignment.  Service providers say they are delivering OneOffice digital transformation in an average of just 65% of their native automation engagements. This suggests the need to work harder to forge the link between native automation and its essential role in delivering OneOffice transformation. It’s time to walk the walk: Take the OneOffice message beyond the thought leadership and into the deal.  TCS was able to win this category, clearly helped by its merging together of data, process delivery in recent years to deliver a front-to-back experience for many of its automation clients.

Voice of the Customer.  Native automation customers speak, and they want proactive recommendations! One hundred percent (100%) of the customers we interviewed indicated they regard their native automation service provider as a strategic partner. Enterprises largely recognize and appreciate services providers’ proven expertise, skills, innovation, and scale that help make their businesses better. But they want their service provider partners to challenge them and provide more proactive ideas for improvement. Business process and data management services provider EXL was the surprise winner of this category, proving that a deep understanding of clients' institutional processes is so critical when is comes to redesigning workflows.  It is no coincidence its business process management rival WNS also surpassed expectations here, while Genpact was also a high performer.

Bottom line: Automation is the native disciple that sets up the platform to drive AI capabilities to refine your data

Once you have successfully automated processes in the cloud, it is easy to administer AI solutions to deliver at speed in self-improving feedback loops.  This is where you apply digital assistants, computer vision, machine learning, and other techniques to refine the efficacy of your data.  AI is how we engage with our data to refine ourselves as digital organizations where we only want a single office to operate with agility to do things faster, cheaper, and more streamlined than we ever thought possible.  AI helps us predict and anticipate how to beat our competitors and delight our customers, reaching both outside and inside of our organizations to pull the data we need to make critical decisions at speed.

As enterprises grapple with the enablement of their post-pandemic, work-from-anywhere future, native automation is going mainstream. It is rapidly becoming an essential element of enterprise operations transformation—enabling the modernization of work through thoughtful process reinvention and eradication of soul-crushing manual work. Service providers play a critical role in driving transformative solutions and mindset change about how and where work gets done.

HFS subscribers can click here to access their copy of HFS OneOffice Services Top Ten: Native Automation Services 2021

Posted in: Robotic Process AutomationIntelligent AutomationArtificial Intelligence



IBM rebrands its GBS division to emphasize what it actually does: Consulting

October 18, 2021 | Phil FershtSaurabh GuptaElena ChristopherSarah LittleJoel Martin

Almost two decades after its landmark acquisition of PwC Consulting, IBM Global Business Services (GBS) is now IBM Consulting. Just another industry rebrand, you say? Botox for GBS? Not so fast. .

Here are five reasons why this rebrand matters...

1) Clarity is king and consulting dominates what IBM’s services organization does. There have been a lot of misconceptions around IBM’s GBS (Global Business Services) and what the organization does, so part of the positioning with IBM Consulting is to clarify this across the board while pitting itself more aggressively against competitors with deep consulting chops like Accenture, EY, PwC, and Deloitte. With roughly 70% of its $16 billion revenues in the group coming from technology and business transformation projects, this rebranding is aligning the identity of IBM services with the lion’s share of its business activity. Moreover, the term “GBS” is most often associated with centralized internal shared services governance organizations, which is vastly different from the IT and business services where IBM specializes.

2) Simplified organization structure. Behind the rebranding, IBM Consulting also restructured its organization structure to shift from an input/capability-led structure to a more client-centric model. There are now four transformation services blocks that IBM consulting is organized around – customer transformation, employee transformation, finance & supply chain transformation, and industry transformation with cross-cutting cloud services and emerging technology capabilities. All the emerging technology capabilities (automation, AI, analytics, blockchain) are now housed under the same group to try and maximize the value creation opportunity for clients. One of the biggest gripes of IBM clients has been painful navigation across capabilities. This simplification should help.

3) Talent acquisition. There are two roads to travel here for the talent discussion: organic and inorganic talent growth.

a) Organic acquisition. “IBM Consulting” certainly brings more cache than a consulting title within GBS when compared to Accenture and the Big 4. This is an opportunity to strengthen the employer brand at all levels so long as IBM supports it internally with clear consulting career pathways and progression towards a master class of client-facing managing client partner roles. The shift from GBS to IBM Consulting and the strength of its growth should be a boon for IBMs ability to pull talent from top firms during the Great Resignation and straight out of the university gates.

b) Substantive skills and talent growth through M&A. IBM acquired eight firms in since 2019: 7Summits, Expertus, Instana, NordCloud, TruQua, WDG Automation, Accanto #, and Red Hat. Consider this a catalyst for skills-building that accompanies world-class training and assets. IBM ranked #4 in the HFS Employee Experience Services Top 10 report, with notable takeaways on their skills ecosystem. IBM places skills at the center of its people strategy and has a fully scaled internal experience to back it up: half of the revenue IBM earned from 2015 – 2020 is from new areas of the business (e.g., cloud computing, AI, data science, cybersecurity).

4) IBM Consulting leadership has a consulting pedigree and a leader who pioneered the modern-day Accenture consulting model. So many of the leaders within the group came across as part of the 2002 PwC acquisition and have long-since built consulting and managed services practices under the IBM banner.  In recent years, the revenue model has shifted more and more towards consulting and away from commodity managed services offerings where it is increasingly challenging to compete on cost-driven engagements against the likes of the heritage Indian providers and Accenture (with 250,000 of its staff based in India).  Moreover, Mark Foster, the SVP leading the IBM Consulting division, is widely credited as the leader behind the significant growth of Accenture consulting until he left the firm in 2011. He was the pioneer behind the Accenture “diamond client” model, where a laser focus on 150-200 major enterprises has formed the bedrock behind the force that is Accenture today.

5) Divorced from Hardware, finally. With the spinoff of Kyndryl days away, IBM Consulting has clear mandate to focus on business and technology process re-engineering. The Consulting group is free to partner more broadly with hyperscalers, accelerate innovation labs with its Garage services, and be more software first around AI, automation, and emerging technologies like blockchain, IoT, and 5G.  Garage services will become innovation labs for industry-centric consulting services to align technology consulting and software platforms (Cloud Pacs) with industry-centric business transformation for large enterprise customers. Expect a big consulting push around “the cognitive enterprise powered by IBM Consulting” as they meld together Watson, multi-vendor hybrid cloud, Red Hat OpenShift and Enterprise Linux, and Cloud Paks to modernize technology and push with industry-specific software and services offerings.

The Bottom Line:  IBM Consulting now has the structure to take on Accenture and Deloitte, but optics have to be complemented by real talent investment, C-level commitment, technology agnosticism, and client results.

IBM’s shift to emphasizing consulting couldn’t be better timed with a huge talent dearth for outsourcing delivery talent, especially in India.  Our research shows that 54% of the FORTUNE 1000 are racing to stay relevant in the virtual economy, and they need immediate transformational and IT support to make fast decisions.  This lends much more to partnerships with providers with deep onshore talent and a deep consulting pedigree.  If IBM can continue to beef up its consulting presence with organic talent – and perhaps an acquisition or two – there is no reason why IBM Consulting cannot challenge Accenture and Deloitte at the help of the IT transformation market. 

IBM consulting should also make it very clear to its existing and prospective clients that it is not getting out of the “outsourcing” market with this rebranding to “consulting.” The Kyndryl divestiture earlier this year and the contact center divestiture to Concentrix in 2014 provides ample ammunition to its competitors to raise concerns about IBM’s commitment to the BPO and ITO markets which it needs to proactively address,  

Another area where we – at HFS – believe IBM Consulting needs to clarify its position, is with regards to its technology partnerships.  While the firm has been successfully teaming with software firms such as Celonis, Blue Prism and UiPath, it has also had to work with IBM Software which has acquired produces such as myInvenio and WDG, which compete in the market with these firms.  If IBM Consulting can clarify its technology agnosticism in a similar way to the ethos Foster applied at Accenture, there is every chance of success as we venture into unchartered waters.

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



Corporations and individuals must combine forces on this last mile to defeat COVID-19... let us protect each other to return to the lives we cherish

October 14, 2021 | Rohan KulkarniPhil Fersht

“Freedom” appears to be the current central theme of individuals who refuse to be vaccinated against COVID-19m as one of many reasons for refusing to be protected against the deadliest pandemic in over a hundred years. It is essential to recognize that many reasons for not getting vaccinated can be overcome by the enormous data we now have, with over 45% of the world’s population vaccinated with over 6 billion doses.

The data shows that the vaccine effectively prevents deaths and serious illness, the side effects are marginal compared to the effects of COVID-19, and it is the only way to get back to the normal we are desperately seeking to experience again. That translates into supporting all those on the front lines as well as evangelizing vaccinations.

Healthcare workers and teachers are not the villains here

Healthcare workers have gone from being heroes that we cheered at the Pandemic's peak to being threatened, ridiculed, and harassed in recent months. A school association (NSBA), representing locally-elected school board officials that oversee more than 50 million US public school students, has requested the FBI and President Biden to provide them with protection due to the increased threat levels to officials and teachers.

These threats are in response to healthcare workers and teachers encouraging vaccination or enforcing mask mandates, both intended to help protect individuals from contracting COVID-19. In a civil society, threats are a non-starter in any facet. To harass those who protect and cure us of diseases, to threaten those that educate our young minds is unacceptable and unfathomable.

Such behaviors could have profound implications when there is already a high turnover of healthcare workers, sometimes 100% attrition in a typical year, which could very quickly translate into a critical shortage. Our kids are performing below average compared to other OECD countries, and lacking teachers will make the US even less competitive than we are already headed.

We must balance vaccine mandates: If those who are providing services are vaccinated, then those receiving those services must also be vaccinated

The federal government has mandated vaccines to all its employees, as have many states and cities. Corporate America has taken its cue from that mandate to issue its corporate mandates for vaccinations. Many enterprises, including hospitals systems, are issuing ultimatums to their employees to be vaccinated or lose their employment.

The holistic effort to vaccinate vast populations either through free access or mandates appears to be effective with about 66% of the US population over the age of 12 being fully vaccinated and the delta variant on the retreat.

Freedom is a fair concept and must be equally dispensed. If those who are providing services are vaccinated, then those getting those services must also be vaccinated. That would be reasonable to ensure that everybody has a level of protection.

Protect our people to return to business as usual

The airline business has been returning to a level of normality given the strict protocols in place for testing and vaccination. Restaurants in certain cities are experiencing some “normal” due to protocols in place for vaccine evidence. Such examples are beginning to expand across the US and globally.

A critical driver of that return to normal has been the vaccine, which has been highly effective and will likely continue to improve on its efficacy with the boosters. This data is important to support the need for a wider proliferation of vaccines.  For example, recent data from the US shows that 50,000 “breakthrough” cases from the delta variant with vaccinated citizens only resulted in 59 actual hospitalizations. 

Consequently, corporations and small businesses must have the freedom to do what they need to protect their people. Keeping their employees safe is paramount, and if that means mandating vaccines or refusing services to those who are not vaccinated, so be it. This is the path to going back to being in business as usual and enjoying the fruits of freedom.

The bottom line: Freedom must be an equal opportunity right; if individuals choose not to get vaccinated or refuse to mask up because they do not want to surrender their freedom to a mandate, then they must accept not getting healthcare or education, or other services from establishments that have a vaccine or mask policy.

Nurses and teachers are two of our most trusted professions. If we vilify and threaten them how will the rest of the society fair? So, we are calling upon corporations, small businesses, and individuals to help enable healthcare workers and teachers to refuse services to individuals who are not vaccinated and refuse to do so. Healthcare workers must be allowed to refuse treatment in non-emergency conditions as should teachers be allowed to refuse to teach kids who will not be vaccinated or wear a mask in a public setting. In these unparalleled times, we must protect each other to return to the lives we cherish. That is the only way forward.

Posted in: Governance Practices and ToolsHealthcarePolicy and Regulations