Monthly Archives: Jan 2018

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

January 31, 2018 | Phil Fersht

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

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

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

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

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

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Posted in: Analytics and Big DataSourcing LocationsPolicy and Regulations

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

January 27, 2018 | Phil FershtJamie SnowdonOllie O’Donoghue

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

What do we know now?

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

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

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

TWITCH is the winner?

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

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

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Posted in: IT Outsourcing / IT Services

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Has the IT services biz reached its tipping point as the Digital OneOffice emerges?

January 19, 2018 | Phil Fersht

Surely not, folks... but did the flagging IT services business finally find rock bottom... and we're now working our way back to something resembling (gasp) growth

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According to our latest market size and forecast, Q3 2017 showed real signs of genuine improvement in the services business. It is consistent with the gradual upward trend we've been monitoring over the past 8 quarters (with the exception of Q4 2016), when the market dipped due to concerns around Brexit and Trump. We've been observing an increasingly significant number of Digital OneOffice type deals, and it seems we may have finally reached an inflection point where these “OneOffice style” engagements are driving more growth than the legacy is sucking out of the market.  

How we define OneOffice IT Services

The OneOffice framework is all about collapsing the barriers between front and back office to create OneOffice with unified outcomes, centered around customer impact.  OneOffice IT supports this framework. As such, OneOffice IT Services is split into two main components – operational services and professional services:

 

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i) Managed / Operational OneOffice IT Services

The difference between traditional operational services and OneOffice operational services is the business model of the services itself and the manner in which the service is delivered. Operational OneOffice services can include both application management and IT Infrastructure focused services. OneOffice services use an evolved service delivery model that shifts the business model towards outcome realization and consumption, so would include hybrid and

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Posted in: Cloud ComputingDigital TransformationIT Outsourcing / IT Services

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RPA often starts out like a teenage romance: a lot of enthusiastic fumbling around that ends quickly, frequently leading to disappointment

January 12, 2018 | Phil Fersht

Yes, folks, that was one of the key takeaways one of the delegates pointed out at the FORA Summit in London last month, where a very mature conversation took place about the real future of operations in this lovely robotic age (download your full copy here). 

This packed-out event was attended by 120 senior executives, the majority being senior buyside enterprise clients, joined by the CEOs of the leading automation solutions vendors, practice leaders across the leading service providers and global advisors. and the HfS analyst team.  This was a chance to get beyond that deluge of wooden marketing and sales hype that is murdering our sanity… and get to the real nub of the of the issues plaguing a confused – and fumbling – industry.

Ten Big Takeaways from the Discussions

1. RPA needs to move beyond the teenage romance stage. One delegate pointed out that RPA often started out like a teenage romance – a lot of fumbling around with enthusiasm that ends quickly, often leading to disappointment. Past events have focused on the importance of change management to the process, however, our recent study of 400 automation buyers shows that a lack of clarity around the business case is the major barrier to RPA adoption (change management rears its head after all the fun and games of implementing the software):

2. RPA hype is over and it's nearing time to retire the term in favor of Digital Operations and the emerging Digital Workforce. Hype needs to move from replacement to enablement. The benefit of automation and AI are not reducing the workforce, but enabling machine to human and human to machine interaction. Helping enterprises and governments make better decisions with data. Building a more virtuous cycle with automation, decision making and data.

3. The Pace of Change Cannot Be Slowed – If You Aren’t Disrupting You Aren’t Surviving. Companies that view disruption as an opportunity and are not complacent are the most successful. Paranoia about the world ahead is your friend – driving staff to innovate and

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Posted in: Robotic Process Automation

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How the Blockchain Six-Pack is changing how we think about business transactions, storing data and new revenue models

January 06, 2018 | Phil Fersht

Our Chief Strategy officer, Saurabh Gupta has been pioneering new research and vision across distributed ledgers, blockchain and smart contracts.  In his latest POV, entitled "The Blockchain Reality Check. Where are we, and what can we expect in 2018?" Saurabh dives into what we describe as "Blockchain Six-Pack", which describes six built-in features of blockchains that manifest into a disruptive potential over the long run for enterprises, when leveraged intelligently in relevant business use-cases. Net-net, the Blockchain Six-Pack is changing the way we think about business transactions, data storage, and even industry value chains and associated revenue models:

  1. Distributed shared data over Peer-to-Peer (P2P) network reduces single points of failiure. The most fundamental difference between DLT and the way we store data today, is that Distributed Ledgers do not have a central administrator. A distributed ledger is replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions. This allows information to be available across the network in a fully transparent and autonomous way, reducing single points of failure and enabling far better collaboration.
  2. Consensus-driven trust cuts out the middle-man. In blockchains, there is no need to trust the middle-man as you don’t have one. Trust is driven by consensus algorithms such as proof-of-work (PoW) or Proof-of-Stake (PoS) or some variation of these. As a result, we don’t need to worry about unreliable, inaccurate, dishonest or overpriced intermediaries.
  3. Immutable transactions ensure trust. Each block in a blockchain contains a timestamp and a link to a previous block. By definition, blockchains are inherently resistant to modification of the data. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority creating a single source of truth.
  4. Hashing-based data ensures integrity and security. All records are individually encrypted. Blockchains use cryptographic hash codes to verify data that drives up integrity and creates strong resilience to cyber-security concerns
  5. Automated smart contracts promote touchless interactions across process chains. Several blockchains also offer ‘Smart Contract’ functionality. These are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that obviate the need for a contractual clause. This allows contracts to auto-execute based on pre-set conditions or triggers and allows for much higher levels of straight-through It can even allow the millions of IoT devices to work autonomously
  6. Permissioned and permission-less flavors give enterprise users flexibility. Much like public and private clouds, blockchains can be private (permissioned), public (permission-less), or somewhere in between (hybrid). These flavors give enterprises the flexibility to choose their solution based on their needs and preferences. Permissioned blockchains enhance privacy and take less computational power (so have higher throughput) but lack the Utopian trust that permissionless blockchains, such as Bitcoin, can bring.

Blockchain’s inherent features give it the potential to drive new touchless business models and disrupt existing ones by removing the need for intermediaries in the long-run.  This results in significant increases in the speed, security and reliability of executive processes, transactions and interactions on both micro and macro scales.  The potential is enormous, provided blockchains are adopted, sensibly regulated and executed effectively. However, HfS expects a five to seven-year horizon for blockchain to delivery fully, given the nascency of the technology and associated challenges.  In addition, media hype and fake news, in addition to negative activity from threatened legacy stakeholders and other economic impacts, could impede adoption.

What can we expect from blockchain in 2018?

In the near term, we do expect blockchain initiatives to drive significant business impact and create a frenzy of excitement as ambitious businesses jump on the potential of new technology developments like never before. Use-cases around traceability through provenance and asset tracking, digitization of contracts leading to faster settlements, management of private data and digital identity will drive significant efficiency and effectiveness gains in existing business models. Blockchain can also become a source of competitive differentiation in the medium term by re-imagining IT infrastructure that is shared and decentralized, re-defining transaction management that is transparent and immutable and driving additional trust in multi-party collaboration. 

We might not see the true disruptive potential of blockchains over the next 12-18 months, but we will see it become much more than a conversation topic with several use-cases that are generating tremendous business value for its constituents. And let’s not discount the levels of hype that tend to drive our industry in new directions, especially when the tech works.  While digital, AI and automation have been the flavors of 2017, blockchain is gearing up to lead the hype in 2018, as enterprise leaders search for new levels of value that have genuine, proven business applications.  

So don’t sit back and assume that the world is not changing, because very soon this funnel is going to flip. Go ahead and investigate blockchain!  

HfS subscribers can click here to download our new POV: "The Blockchain Reality Check. Where are we, and what can we expect in 2018?"

Posted in: Security and Risk Mgmt.

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Ready to Learn to Change in New York this March?

January 04, 2018 | Phil Fersht

Dear Friends - it's time to push the biggest events button in 2018!

Oh yes... we're excited to trigger the first nuclear tranche of speakers for the Future of Operations in the Robotic Age (FORA) Summit in New York, March 7-8.  The summit will span the entire two days with the theme "Learning to Change" rocketing the conversation.

The tech is here and is being proven, but are we really, truly ready to disrupt our underlying corporate DNA to exploit it to its full potential? Can we really change how we operate, think, collaborate and focus to embrace the new wave of data-driven transformation that is engulfing us? In true ballistic HfS style, we are bringing together some of the finest minds from enterprise buyers, academia, technology and BPM services to share how change can be realized - and how to venture outside of our comfort zone to get there. As always, this is a non-salesy sharing of best practices and research between the key industry stakeholders.  No cardboard cutouts, plastic booths or dodgy salesmen... honest!  

Do apply here to save your seat ...space is limited and filling up fast.  Let's push some great big buttons, people...

Apply here to save your seat 

Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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2018: Why the full-time job will never be so precious, as the gig economy crumbles and judgment work is digitized

January 01, 2018 | Phil Fersht

The new “rules” of the workplace are being defined as computers are frantically being programmed to take the lead in the workplace, when it comes to judgment and intuition. We humans need to be the idea generators, the motivators, the negotiators, and the trouble-shooters to fix computer errors, if we want to govern our emerging digital environments. In short, we need to get closer to our firms, be more tightly integrated and intimate with work performance than ever before… which means the role and tenure of the much-derided middle-manager in the Dilbert Cartoons could be taking on a whole new potential twist - and a whole new (potential) level of relevance.

I would go as far as declaring 2018 as a new beginning of the value of the full-time employee – where alignment with the mission, spirit, culture, energy and context of an organization has never been so important.  We are seeing the value of contract work diminish as so much “outsource-able” work is so much easier to automate and global labor drives down the cost of getting things done quickly and easily.  Business success is more about investing in the core than ever - and that core includes the people who are the true pieces of human middleware to hold everything together.

The onus is circling back to the value of being a full-time employee, who needs to value the fruits of having a predictable income and adapt to the changing balance of how humans need to work with computers.

Remember when the rise of the gig worker was supposed to revamp how so many of us worked, as we escaped the shackles of the “evil employer”?

Almost two decades ago, the internet was creating the independent worker, as exemplified in Dan Pink’s timeless bookFree Agent Nation: How America’s New Independent Workers are Transforming the Way We Live” became the seminal guide for what is now known as the “gig worker”.

Furthermore, unless recent research from McKinsey of 8000 workers can now be categorized as fake news, 162 million people in Europe and the United States—or 20 to 30 percent of the working-age population—engage in some form of independent work today. And a recent study from freelance site Upwork (which undoubtedly wants to hype the impact of gig world) cranks up the numbers even further, claiming that a staggering 50% of US millennials are already freelancing, before declaring the freelance sector will comprise the majority of the US workforce within a decade.  Wow.

So are the days of being gainfully employed really disintegrating before our very eyes?  Or is the gig hype beginning to atrophy for many people?

The gig economy is becoming a tough place to craft a living if many of the new reports are to be believed.  And it’s not just about driving Ubers, delivering food orders and contracting for logistics firms – i.e., working for businesses that exploit the gig economy to drive down labor costs and improve services.  It’s the freelance gig economy where people forge a living writing code, supporting content development, delivering consulting work on-demand etc.  Even that lovely Upwork research admits: “While finances are a challenge for all, freelancers experience a unique concern — income predictability. The study found that, with the ebbs and flows of freelancing, full-time freelancers dip into savings more often (63 percent at least once per month versus 20 percent of full-time non-freelancers)”.  So even if the most biased of sources admits most gig workers can’t cover their living costs, we can conclude that those “Free Agents”, which McKinsey describes as the gig worker sector using gig work as its primary income, are not in a sustainable earning situation.

Today, it’s a buyer’s market for gig work

You only need to spend a little time on LinkedIn to observe just how many people are now marketing their wares as solo free agents, or as part of a company bearing their name.  It’s abundantly clear that so many people have decided to set themselves up as independents, that the market for gig talent is saturated and it’s become a “buyers’ market” for gig work.  Whether I want to commission a crack consultant to validate some RPA software, hire an analyst to endorse my product, commission a writer to produce a white-label assessment of an emerging market, produce a go-to-market strategy for my business, redesign my website, my logo, or just have someone support my business on a part-time basis… today, I am spoiled for choice.  I barely need to hire fulltime employees these days, unless they are truly core to keeping my business ticking along – and I can create real competition to get the work done for much lower costs than a few short years ago.

On top of the risks of commoditizing gig work, we have to contend with the impact of automation and Machine Learning to stay relevant and worthy of earning a paycheck

We’re not in a world rejecting human work, but a world where work is rapidly changing – and the skills of the dynamic middle manager has never been so important. In short, the increasing availability of computing power to crunch massive amounts of data, coupled with advancing tools to tag and label data and workflow clusters with breakthrough programming in languages such as Python for syntax and R for data visualization, are the game-changers that will increasingly impact how we get work done, as we develop continually smarter algorithms to keep teaching computers to do the work of the human brain.

What's more, the rapid development of Machine Learning (ML) environments such as Google's TensorFlow, the Microsoft's Azure Machine Learning Workbench, Amazon's Sagemaker, Caffe and Alibaba’s Aliyun are becoming the new environments driving armies of coders and developers to align themselves with ML value - desperate to stay relevant (and well paid) against the headwinds of commoditization of legacy coding and app development.

As ML takes over judgment and (eventually) intuition, the human-value onus moves to interaction, agenda-setting, problem defining and idea generation

In short, the disruptive ML techniques are teaching computers to do what comes naturally to humans: to learn by example. Today’s emerging ML tools use massive amounts of data and computing power to simulate neural networks that imitate the human brain’s connectivity, classifying data sets and finding patterns and correlations between them.

Net-net, pattern-matching jobs are increasingly being affected by ML – vocations such as radiologists, pathologists, financial advisors, lawyers, procurement executives, accountants etc. are all being challenged as judgment work is (gradually) being replaced by smart algorithms.  However, as elements of these types of jobs are being affected, other job elements become even more important, namely interacting with other humans, creating, setting the agenda, defining and finding the problems to go after.  They motivate, they persuade, they negotiate, they coordinate. They are the dynamic conduits of driving information and ideas in an organization and will be increasingly in the driving seat as Machine Learning advancements increasingly take hold.  The digital middle manager who can bring a team together and lead people in the right direction does not exist and likely never will…. I’d be amazed if we saw one emerge soon.

Fulltime employment is now becoming a premium situation

Having predictability of income, healthcare costs covered, guaranteed paid vacation time - and a constant supply of work to do - is fast becoming the dream scenario for the disgruntled gig worker.  So here’s a thought – go get a JOB.  Or if you’re in a job and wanted to try the gig work thing… spare a thought for what your ideal situation looks like, because last time I looked, most firms are doing everything they can to avoid hiring well-paid staff… especially if they can get the work done much cheaper from desperate gig workers.

The Bottom-Line: Five steps to keeping your job:

i) Become the conduit of ideas and information that is irreplaceable right across your organization. So we’ve now come full circle, where the value of having people really close to the business is becoming more important than ever, as computers perform more and more of the routine and judgement based tasks. To the point, the value of the full-time employee goes both ways: companies need people who really understand their institutional processes, their quirks and ways of getting things done… who are onhand to troubleshoot mistakes, but also there to keep the ideas flowing to keep the business ahead of its competition and close to its customers.  “Human middleware” is becomimg the real OneOffice glue to break down those siloes and help govern a slick business operation from front to back office.

ii) Develop a positive attitude by finding aspects of your job you do like.  Your full time job is likely the best gig-work you will probably ever get, so even if you hate your boss and most of your colleagues, ask yourself if you’d prefer scrapping around for the boring work other companies prefer to outsource.  Focus on the interesting stuff you can do and keep reminding yourself that the grass is rarely greener elsewhere.  Unless you are a whizz at Python development, the chances are your job-hopping days are numbered and you need to figure out how to stay put and make it better for yourself.

iii) Motivate yourself and become a real motivator.  Being motivated - and helping to motivate others - is probably the least computerizable trait of all.  If you aren’t motivated, you are placing yourself at risk when your leadership assess which of their team then want to take them forward into the future.  If you really can’t get yourself excited about what you do, or your company just demotivates you in such a way you can’t dig yourself out of your rut, then you may need to take that Python course and brush up your resume…

iv) Let the computers take the lead and become the controller to fix mistakes double checking, intervening when the computers do something dumb.    Humans and computers make different kinds of mistakes, so we really need to bring humans and computers together intelligently to cancel out each other’s mistakes. Fighting automation and ML is a lost cause, especially when your firm is completely bought in to the concept and it rolling out bots and working on developing smart algorithms.  Just let these things take the lead and them figure out how to make them functional and monitor their errors, ad computers will always keep making them.  You can’t fight innovation, but you can nurture it, manage it and troubleshoot it.  

v) Find your pareto balance and stop whining. Nothing in life including your current or prospective employer will be perfect. Focus on the 80% that is right, versus making yourself (and others around you) miserable by the other 20%. There is rarely a perfect fit where workers only get to focus 100% on all the things they love to do… there has to be this 80/20 compromise, or you will be forever hopping around trying to find a workplace nirvana that doesn’t exist.  And it today’s social world your reputation follows you around like never before… and employers are steering clear of the whiners at all costs.

Posted in: Design ThinkingDigital TransformationHR Strategy

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