Monthly Archives: Jun 2018

Concentrix gets up close and personal with Teleperformance with its Convergys acquisition

June 29, 2018 | Phil FershtMelissa O'Brien

One of the worst-kept secrets in the world of call centers finally went from gossip to reality as Synnex Corp added Convergys to its acquisition portfolio to roll under Concentrix.  As we covered here in 2013, IBM spun out its call center business to the Concentrix brand and - almost five years on - will merge forces with Concentrix under the leadership of Chris Caldwell (recently interviewed here).

So, from 10,000 people (just 5 years ago) to being very close behind the market leader, let's see how the call center market is shaking out right now:

Let's just get right to the nub here... what's good and not-so-good about this lovely marriage?

Pros

  • The price tag is extremely attractive - especially when compared to $1 bn for Intelenet, which is a much less heritage firm in the market.  At these investment levels, this appears like an amazing deal for Synnex, especially with its track record of making sound investments over the past couple of decades.
  • We now have a very strong rival to Teleperformance at the top of the market.  If Teleperformance had made this move, it may have been game over for a lot of these firms.
  • Convergys was stuck and needed a new direction - and here is one with an exciting young firm.  Convergys is a great, traditional contact ctr firm, very dedicated to its craft, but has been hurt by  low-cost competition and struggled to maintain its edge in recent years.
  • Scale can be priceless in a commodity market. When an industry is commodotizing like call center, it's often better to operate at a larger scale, so you can ringfence your legacy business and invest in strategic clients who want to work with a co-investment mentality. Geographical expansion and diversification will help the merged entity drive greater cost synergies and variety for clients.
  • Similar business ethos. As both core contact center service providers, both have a strong global operating model for consistency of services as well as a training and employee-focused culture. The challenge will be integrating the two together, but are generally aligned in terms of employee centricity and ops excellence.
  • Convergys has a very loyal client base that identifies with the firm, its culture, understanding of call center agents, and its understanding of their needs.
  • Microsoft partnership. Convergys has a very promising partnership with Microsoft and capabilities to harness Cortana and other apps.  CNX will need to nurture this relationship.
  • Good technology assets. Convergys brings a solid IVR business and some very popular agent portal platforms.
  • Gives Concentrix strong market visibility and helps shed its "we used to be IBM" tag. For Concentrix, this could help them carve out the message of what they’re doing and want to be in the market. For Convergys, lends some sense of direction in the post Andrea Ayers era.
  • An injection of fresh thinking and new ideas.  Chris Caldwell has a terrific opportunity to take his ideas to a very significant level if he can get this right, especially with acquisitions such as Tigerspike in the digital design space, and Minacs in marketing analytics and support.  Chris has a bold view of where the industry needs to go - this should be a terrific challenge for him and his team.
  • M&A can buy time to take control in a commodity marketplace. Large mergers like this create the perfect distraction to make some discreet investments, keeps the shareholders at bay for a few quarters and can (potentially) help them focus on retooling the offerings and sharpening the whole approach. However, this depends entirely on decisive leadership and swift, focused transition and very strong communication to investors and shareholders.

Cons

  • Is bigger really better? This acquisition seems to be more about bolstering scale and size, with Convergys having little to show in terms of proprietary IP or differentiated offerings (Contrary to Concentrix's investments in Tigerspike and Minacs). However, in a market that has been largely stagnant for years, any movement like this can help shake things up.
  • Convergys lacks a diversification in clientele with AT&T/Comcast being an enormous piece of CVG’s business. Telcos are typically the epitome of butts on seats deals—why choose a company that’s practically half telcos?  Maybe this explains why the price was so attractive.
  • Client overlaps in large accounts will impact some revenues, i.e. Cisco.
  • The potential for culture clash. Concentrix comes out of IBM business and Convergys is essentially a traditional telco out of Cincinatti Bell … one has a background of tech and innovation and the other a very conservative and risk-averse culture. 
  • Convergys’ revenues have been decreasing the last couple of years.  Call volume fluctuations and trying to compete with cost-focused customers and several butts-in-seats service providers in low-cost geos, has made it very challenging to focus on value-based deals.
  • Appetite for automation in Convergys core industry puts ever more pressures on sustain margins and growth. For example, Convergys' strongest vertical, telcos, are increasing their self-service interactions and automation, and have the strongest appetite in the industry for increasing Robotic Process Automation investments, in addition to their outsourcing focus.
  • Desperate mid-tier providers. Many of the midtiers service providers may make the whole situation worse, by forcing price points even lower out of sheer desperation. Let's be honest, we're in a rat-race and the game is all about who can survive the next 18-24 months to emerge ontop.  
  • Low-cost IT/BPO offshore providers making subtle moves into the contact center space as digital customer needs accelerate. We're already seeing many of the Indian heritage firms chasing after call center deals they would not have looked at a couple of years ago. They can be especially effective with "chat-only" engagements and with clients wanting to buy into a strong cognitive / automation story.  Large IT-centric outsourcers, such as Techmahindra, HCL  and Cognizant have been seen picking off some impressive wins with clients, especially where there are very strong IT elements.  BPOs such as EXL and WNS have been much more active in the customer service segment, and EXL is making an impressive repositioning of itself as a digital intelligence provider, with some impressive depth in insurance, utilities and healthcare sectors.

The Bottom-line: As long as this "traditional consolidation" is short-term, this could pave the way for a OneOffice future for the winning contact center providers

Let's cut to the chase here - Convergys is a great call center provider, but lacked the leadership and investment to break into the digital era effectively.  This merger may just provide that opportunity for a very talented employee base with a terrific customer culture.   For Concentrix, they needed one big play to get up-close-and-personal with Teleperformance, and this is the move.  Plus, the price was really damn good, and we're surprised why others with huge financial backing didn't make the move, such as Sitel or Arvato.

On the negative side, these contact center heavyweights appear to be doubling-down on size and scale, rather than pursuing a true OneOffice vision for digital customer engagement. We are more excited about some of the smaller acquisitions happening in the space, such as Webhelp’s recent Sellbytell acquisition from Omnicomm and SYKES’ pursuing digital marketing with Clearlink – connecting the pieces in the front office as marketing, service and sales continue to overlap and converge, and using the vast amounts of customer data they process to better engage with customers. 

The large contact centers can’t seem to get out of their own way—they talk about providing digital, analytics and CX consulting focused services, but the reality is that the bulk of their business is still traditional contact center. Despite some real capabilities, salespeople aren’t incentivized to sell a different way, and customers aren’t ponying up to partner and buy a different way.  Continuing in this paradigm is a short-sighted view… look at what is happening with eroding revenues from the telco sector now, the most mature of the contact centers will eventually happen in other sectors, such as retail and banking. In addition, the wave of "chat only" deals are increasing and threatening the life out of the traditional voice business. Providers like Teleperformance and Concentrix don’t have to disown their core business – there’s always going to be a huge market for traditional interaction management, however, adding some truly differentiated digital offerings would be a much smarter long-term strategy.

Net-net, this is a massive coup for Synnex and the Concentrix management teams - and Convergys has found a good home to focus on the future with confidence.  However, we would like to see some significant investments in intelligent automation and digital technologies to drag contact center BPO into the OneOffice era. Let's hope these guys can work it out, as there is a real war on between the legacy cost-obsessed approach and the OneOffice approach...

Posted in: Contact Center and Omni-ChannelDigital OneOffice

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The definitive RPA product benchmarks: The overall picture across 359 superusers

June 24, 2018 | Phil Fersht

In case you've been asleep for the last month, we recently announced the industry's most comprehensive analysis (by far) of RPA product functionality, covering AntWorks, Automation Anywhere, BluePrism, Kofax, Kryon, NICE, Pega, Thoughtonomy, UiPath, and Workfusion.

Premium HfS subscribers can access the HfS Benchmarking Report: Detailed Assessment of the 10 Leading RPA Products here

We interviewed 359 superusers of RPA products (172 enterprises, 87 RPA advisors and 100 service provider RPA practitioners) across 40+ customer experience dimensions across the following 6 key dimensions: 

  1. Features and functionality
  2. Integration and support
  3. Security and compliance
  4. Flexibility and scalability
  5. Embedding intelligence
  6. Achieving business outcomes

Here is how the overall satisfaction for RPA customer experience came out looking across the products

Click to Enlarge

 Key Highlights

  • RPA’s core functionality works but deployments are not as easy as promised.
  • RPA products offer adequate client support and training but IT skills are required. Some RPA products have made significantly more investments than others around client support.
  • Most RPA products performed well on security and compliance related assessment.
  • RPA products have shown satisfactory flexibility but clients are still confused about pricing models.
  • RPA products are not as intelligent as they claim to be (at least not yet!).
  • RPA satisfaction is middling. Clients have largely realized cost savings, but speed-to-market has not met expectations.

Take time to delve into the realities of RPA and some of the findings may just surprise you:

Premium HfS subscribers can access the HfS Benchmarking Report: Detailed Assessment of the 10 Leading RPA Products here

Posted in: Robotic Process AutomationIntelligent Automation

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You just can't lose... with Chris Boos. Time for an AI reality check

June 22, 2018 | Phil Fersht

There aren't too many people you can listen to today where you feel all those sticky layers of hype just fall away from your brain, as this guy actually knows what he's talking about and (as we English love to put it) he just doesn't mince his words. So, after a terrific meeting with Hans-Christian (Chris) Boos, Founder, and CEO of leading AI platform vendor arago, I pinned him down to share some of his views with the HfS crowd...

Phil Fersht (Founder and CEO, HfS Research): Chris - you've been a terrific guy who adds so much energy and colour to the intelligent automation industry... but can you shed a little light on your story?  How did you find yourself setting up the business in 1995?  Was the focus on intelligent automation back then?  I thought we were all going nuts about ebusiness!

Chris Boos (Founder and CEO, Arago):  Phil - I originally wanted to do AI research at a university and then I saw how slow academic research is today with the way it is financed. I chose to do it inside a company instead. We could control the pace there. We setup arago to research general AI and my belief has always been that general AI is all about automation. If it is intelligence – even the quite boring artificial version – I guess you could say that smart automation was my goal, then.

Most people are surprised about the research phase. But if you look at most people who are doing significant work in AI they all plan or have done a roughly 20-year research phase. The

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Posted in: Cognitive ComputingIntelligent Automation

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Accenture, IBM, Cognizant, Infosys, Wipro and TCS lead the first Digital OneOffice Blueprint

June 10, 2018 | Phil FershtMelissa O'BrienAnirudh PillalaSaurabh Gupta

Digital is all about an organization's ability to respond to the needs of their customers as those needs happen - or even be smart enough to anticipate those needs before they happen. This is all enabled by interactive technologies to create those touchless interfaces with the customers.  Smart analytics and AI enable organizations to anticipate these needs based on the ability to recognize patterns and inferences over time, but nothing can really substitute for human intelligence to bring customers, suppliers and employees closer together, unimpeded by frustrating silos and legacy processes. 

Remember, every broken process chain, or poorly converged dataset, slows down an organization's ability to do business in real-time and stay ahead of its market.  Traditional barriers between front, middle and back offices hinder the true ability of companies to operate in this real-time, responsive and anticipatory digital fashion, which is why we coined the term "OneOffice", where the unification of digital business models, intelligent automation, analytics and creative talent is happening before our very eyes.

The HfS Digital OneOffice Framework (see below) describes how organizations must integrate their digital customer interfaces with their operations in order to fulfill and anticipate their customers' needs. It is the organizational end-state to survive and succeed in a world where digitized processes dictate how responsive, agile, cost-effective, predictive and intelligent firms have to be to stay competitive.  

To this end, we have delved deep into all the four dimensions of the Digital OneOffice, and conducted deep analyst discussion to aggregate service provider performance at delivering the sum of the Digital OneOffice parts:  

  1. Digitally driven front office
  2. Digital underbelly
  3. Intelligent digital support functions
  4. Predictive digital insights

HfS Premium subscribers can click here to access their full copy of the 2018 Blueprint Report: Digital OneOffice Services

Click to Enlarge

So how did the Winner's Circle service providers fair?

Accenture

Strengths

  • Well-rounded portfolio across OneOffice: Accenture has the best performance overall across the OneOffice portfolio, and a breadth of industry expertise to complement it. Accenture placed in the Winners' Circle for each of the Blueprint studies used to compile this OneOffice assessment.
  • Strong marketing operations capabilities to support integrated digital OneOffice offerings.  Accenture has 16,000 business-focused staff dedicated to delivering digital marketing assignments - a considerable asset that goes well beyond the firm's IT delivery.
  • Strong intelligent automation capabilities. Acquisition of GenFour and exciting partnerships, with significant investments, with the likes of Automation Anywhere, Blue Prism and IPSoft.
  • Winning with thought leadership: Accenture is well-known as a thought leader across many of the change agents as well as within individual industries. 
  • C-Suite relationships beyond IT.  Digital business and intelligent automation decisions are largely being driven by both IT and business C-Suite executives in the Global 2000.  Accenture has the combination of strategic relationships outside of IT, in addition to the managed services execution. 
  • Leveraging creative assets for CX and UX design: Accenture has developed an industry-leading focus on becoming a customer experience expert, as evidenced by its 30+ design agency assets, by the broadest portfolio of digital design assets in the services industry (click here for a full list of digital M&A in services.)

Challenges

  • Size can work in its disfavor: Its size and success have given Accenture a reputation as a premium, high cost, and less responsive organization. In particular, for smaller companies, just this perception in the market can steer buyers instead toward more niche specialized agencies and the attention, flexibility, and experience they receive from a smaller provider.
  • Finding the right culture balance: Accenture is well known for its results-driven, traditional consultancy culture, which will need to be balanced out or effectively blended with the more left-brain focused acquisitions in order to retain creative talent and remain generally effective.
  • Proving to the industry it can deliver the end-to-end Digital OneOffice portfolio: There is no doubt that Accenture can pick up strategic work and execute for clients, but being able to demonstrate to the industry it can deliver both the strategic design integrated with complex operational delivery - at scale - is still in its infancy.  Many of its competitors will fight hard for execution work where Accenture is delivering the high-end design and consulting. It needs to demonstrate the "one-stop OneOffice shop" is where it wins.

IBM

Strengths

  • Strong intelligent OneOffice offering: Market leading capabilities to drive the OneOffice underbelly (automation, security, cloudification) and neural networks (AI, smart analytics, blockchain, and IoT). Impressive development of credible global automation capability and several notable early wins.
  • Portfolio breadth: End-to-end and scaled IT and business process services across front, middle, and back-office.
  • Horizon 4 investments: Very strong investments and IP in horizon 4 (and beyond) technologies that will shape the future (e.g., Quantum Computing).
  • Design Thinking: Has made some considerable investments in recent years, but needs to align more aggressively with OneOffice approach
  • Watson: The analytics/cognitive powerhouse has a significant role to play as a cognitive virtual agent, an analytics resource that has huge scalabiity and a long-term investment area for firms with deep interests in their cognitive capabilities.

Challenges

  • Size can be a disadvantage: IBM is a large and complex organization, which makes it hard to seamlessly deliver all that it has to offer.
  • Translating tech to business outcomes: IBM is often perceived as a technology powerhouse, but one lacking the business translation and context to successfully apply emerging technologies.
  • Agility: Lacks the nimbleness and flexibility of smaller players.
  • Focus on cognitive may impede its ability to compete for design-focused end-to-end deals:  IBM has substantial credibility to drive analytics-driven, cognitive/automation projects, but its lesser focus (over the last couple of years) on true digital design may see it lose out to firms such as Accenture and Cognizant, where digital is firmly established at their core.

Cognizant

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Posted in: Digital TransformationDigital OneOffice

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To keep receiving HfS updates, make sure you register now!

June 10, 2018 | Phil Fersht

Still enjoying life now GDPR's cleaned up your inbox, but now realize HfS is the one you just cannot live without?

Let's be honest, you probably do need to keep up-to-date with the finest change-agent research on RPA, blockchain, AI, and much more, right? Then you really must register here to receive HfS' content, or update your email subscription to keep receiving us.

Posted in: Digital TransformationDigital OneOfficeIntelligent Automation

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And time for a real Infosys Saliloquy...

June 07, 2018 | Phil Fersht

Salil Parekh, recently appointed CEO and Managing Director for Infosys took some time out of his busy schedule during his client partner conference to catch up with me to talk about his vision for all things Infosys and the future of services…

Phil Fersht, CEO and Chief Analyst, HFS Research: Welcome to your first HfS interview Salil! Maybe you could take us a little bit back to your early career. When did you get the appetite to lead one of the largest IT services firms in the world? You know, was this something you always wanted to do? Was this planned, or have you always been an opportunist?

Salil Parekh, CEO, Infosys: Thank you, Phil, this was quite an un-planned scenario for me. So, maybe when I finished with Engineering, a Master’s in Computer Science, and I was working with a consulting firm for years. Then we got acquired by a consulting and tech company, so I’d basically been in the same company for 25 years. And then this opportunity showed up a few months ago. It’s a tremendous privilege to have this opportunity. It’s one of those things you dream about, in your career, as you sort of think, ‘Maybe it’s possible,’ but when it happened, at least, for me, it was completely unplanned. So I’m delighted to be here, I wish I could plan such things, but I can’t [laughter].

Phil: So, how would you compare this new Infy experience with Capgemini, you know, both global services powerhouses, one with a Parisian epicentre, the other one Bangalorian, so – what haves been your observations?

Salil: Well, I think, Cap’s a fantastic company. I think I would focus much more on the strengths

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Posted in: Buyers' Sourcing Best PracticesDigital Transformation

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Finally the industry has credible RPA product benchmarks from 359 superusers

June 01, 2018 | Phil Fersht

As am sure most of you noticed, HfS quietly released the most comprehensive customer satisfaction benchmarking of the 10 leading RPA solutions, authored by Saurabh Gupta, myself and Maria Terekhova.  We covered 359 super users of RPA products (enterprises, advisors and service providers) across 40+ customer experience dimensions across the following 6 key dimensions: 

  1. Features and functionality
  2. Integration and support
  3. Security and compliance
  4. Flexibility and scalability
  5. Embedding intelligence
  6. Achieving business outcomes

As an example, here is how dimension 6, "Business Outcomes" came out looking across the products:

So why did we undertake this research?

Our industry is plagued by many consultants with limited depth in RPA, who have no access to product level data that supports the tough decisions facing enterprises. In addition, most analysts deliver these 2 x 2 matrices which offer very limited insight or value (and all look remarkably similar). It’s time to dispel myths and provide enterprises with unbiased, credible and highly statistically significant data. The HfS RPA customer experience benchmarks are designed to help enterprises with RPA product selection as they formulate their intelligent automation roadmaps.  

It's more than a report... it's an online RPA decision-support tool

In addition to the report, HfS is also launching an online RPA decision-support tool for enterprises to enable client-specific due diligence on RPA providers. This tool will allow HfS clients to customize the decision criteria and associated weights from the available 40+ customer experience dimensions. It will provide clients a customized report detailing the top three RPA products that the client should consider, based on the rich insights that HfS collected as a part of the RPA study. HfS analysts are also supporting RPA clients through collaborative ThinkTank sessions, half-day workshops designed to problem-solve and validate strategies. These ThinkTanks go beyond the data where HfS analysts can share HfS IP, perspectives, and experiences on RPA tool selection, best practices, and common pitfalls to avoid.

So take time to delve into the realities of RPA and some of the findings may just surprise you

The industry is still struggling to solve challenges around the process, change, talent, training, infrastructure, security, and governance. Our mission at HfS is to dispel this confusion and uncover the truth to successful RPA deployment. It's time to separate the hype and propaganda from reality - and here is the reality!

Premium HfS subscribers can access the HfS Benchmarking Report: Detailed Assessment of the 10 Leading RPA Products here

Posted in: Robotic Process Automation

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