What has happened to the Indian-heritage IT service provider that stoked fear into every Accenture client partner?  “They think like we do” was the declaration one of Accenture’s leaders made at an analyst briefing in 2016.  Well, the slide from grace has been alarming, leading to the appointment of a new leader to stem the bleeding. 

However, when the problems cut this deep, you can’t just apply lipstick to the pig, you need to reconstruct the whole farm, or you can quickly find yourself in the zombie services category alongside the likes of Conduent and DXC, where finding any sort of direction and impetus would be a major accomplishment.

Yes, it could really get this bad, as Cognizant has posted its slowest revenue growth and worst dip in profit margins. Ever. A mere 5% annual revenue growth, when in its heyday it was posting well over 40% (and slipping below double digits was unthinkable until last year). Yes, declining revenue growth is one thing, but declining profit margins is when the panic button gets pressed.

Frank should have left when Elliott came along to poison the well

It’s clear to see why Francisco “Frank” De Souza, the poster boy CEO of the emerging power of the Indian IT Services industry, jumped ship (or more accurately was made to walk the plank a burnt out husk due to the unenviable pressure Elliott Management placed him under to keep the gravy train on the tracks and kick back billions to shareholders.)  If anything, Frank should have considered making a move in 2017 as Elliott started squeezing Cognizant’s margins at a time is needed to keep pace with Accenture’s aggressive digital investments.  He’d grown the firm to over $15bn by then and could have exited with a legacy no one could rival in the tech business. 

And in his place comes IT Services newbie Brian Humphries – well we’re sorry to say this Brian, but the baby you just adopted has got a bit ugly, and is screaming for attention. Let’s just look at the numbers– now we’re going to be generous and forgive Cognizant’s dip in margin, a likely result of a reclassifying activity to meet fresh regulations. But the sinking revenue growth is much harder to look past:

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In 2012, Cognizant invented the Digital concept before everyone else jumped on it.  They were that cool...

In a punishingly competitive market, it looks like Cognizant has started to lose traction. Back in the good old days, the firm could do little wrong by challenging Accenture’s strategy – driving a hard-digital bargain and bringing in design consultancies along with their pony-tailed nose-ringed jean wearing creatives.  In fact, Cognizant can genuinely lay claim to “inventing” digital with its 2012 “SMAC” stack philosophy, which was swiftly followed by Accenture’s 2013 re-branding the SMAC stack as “digital”.

 

But the market has moved on – away from automation point solutions and funky apps to fend off uberized rivals. It’s now about integrating capabilities and meeting clients with legitimate flexibility, a real willingness to find out what they want to buy, rather than keep pestering them

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Posted in: IT Outsourcing / IT Services

We've been pretty vocal regarding the unfocused direction the industry which has called itself "RPA" has taken, and the obsession some of the firms are having with their self-declared valuations. So let's change the story from how much these firms actually believe they are worth to where they need to invest their funding to show they are serious about being part of a transformative industry.  

Don't get us wrong, in software world, it's common practice to get attention that your company is valuable and investors are falling over themselves to hurl money at it - this is common practice in markets that are very focused on selling to IT executives.  And we've seen far more ludicrous "valuations" than the 35x earnings ones the robotic software firms are claiming (just look at Blockchain and AI). 

So why aren't we seeing firms like UiPath shift the focus to the investments and changes they intend to make to propel a truly transformational value proposition with their products?  Especially where the prime target for growth is the business executive who is far less accustomed to a world where his/her suppliers are obsessed with how much they're worth, as opposed to how they can help you take your business through painful change.

It's critical now to shift the vision to reality of making these bot dreams come true

UiPath, more than its competitors, has always pushed the vision of democratized IT. Literally, RPA or a “bot for every worker” and not just a sanctioned crew of IT professionals (or even a sanctioned crew of enterprises) is a brilliant marketing gimmick. However, with UiPath’s hypergrowth and rapid-fire funding, the time has come to connect the dots between a folksy vision and how UiPath can truly enable the transformation of work.

As HFS recently articulated in our blog “RPA is dead. Long live integrated automation platforms”, RPA is being used to automate tasks and prop up legacy processes. Broad business transformation is decidedly lacking and arguably cannot be achieved without supporting tools like artificial intelligence and analytics as well as digital change management to address how change is driven, managed and perpetuated. The one perhaps notable shift in the change winds is the on the democratization front – RPA is being bought and consumed primarily by business units not central IT. However, as enterprises push towards integrated automation, with a higher order of technical complexity of tools and data challenges, IT once again becomes essential. Integrated automation may drive the ultimate democratization – the balance between IT and business operations.

Despite its growth and funding, UiPath is a very long way from achieving this vision

Our recent survey work with "power-users" of robotic software products (what we were calling RPA and RDA) clearly highlights the top three strengths and challenges of the UiPath solution (with sampled comments):

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The Bottom-line: To democratize technology and drive business transformation beyond task-oriented robotics activities, here are 15 key initiatives UiPath (or its competitors) must take on:

1. Must bring IT and business visions together as one integrated approach. Education must focus for technical and non-technical resources – into communities and educational institutions globally

2. Must shift focus to integrated automation – expansion of functionality beyond RPA/RDA to AI and smart analytics. Badging everything as RPA is definitionally incorrect and gives clients no roadmap to follow to advance beyond basic repetitive task, desktop and document automation

3. Must drive digital change management – help enterprises grapple with transformation with its services investments.  Relying purely on Big 4 advisors and service providers for change management will cost clients a fortune and drive many away.  This is a key area UiPath needs to take the lead on.

4. Must include unattended and attended processes (not just focus on attended)

5. The developer ecosystem must be expanded to extend functionality, libraries etc.  Commit to specific goals for how much of the UiPath codebase will be available on Github to build an industry solution skewed against technology-vendor lock-in

6. Demonstrate commitment to building a stronger QA team, and fully transparent local customer support and customer success teams to drive customers (as per the number 1 challenge outlined above)

7. Commit specific sums to meaningful partner relationships with leading service providers and consultants, including opensource partner technical support systems, events, education resources and people to help the industry grow

8. Commit to funding UiPath local academies (building on their online academies) especially in blighted neighborhoods near its biggest offices to bring young coders and potential customers together with UiPath employees for on the job real-world training

9. Must get focused on core business processes by industry, such as supply chain in manufacturing, core banking in BFS, underwriting in insurance, billing in telecom etc

10. Revisit its client engagement model to ensure it is best serving its customer base – its rapid growth in salespeople may expand capacity, but if sales lacks vision, then clients may not be well served (as per comments in our recent survey above)

11. Commits to drawing down technical debt (Every SW company has it, some more than others.  As illustrated above, our customer surveys point out which elements of the UiPath platform and solution are known to need immediate re-engineering and investment

12. Identify and subsidize hands-on automation industry experts and influencers whose independent thinking deserves funding and not just focus on checking boxes with legacy analysts.  The automation industry is being impacted by many unique stakeholders.

13. Kick off an enduring and sustainable initiative modeled after Salesforce's 1-1-1 program (of which the Notre Dame announcement by Daniel Dines was a great a start) 

14. Invest in cross-technology customer events that will expand overall value creation, for example partnering more aggressively with the likes of Salesforce, Microsoft, Amazon, Google etc.

15. Spearhead an Automation Industry Manifesto that shows a clear path for enterprise clients to progress from basic robotic task automation through to integrated automation and then to achieving genuine AI value

Posted in: Robotic Process Automation,  Enterprise Integration Platforms,  Robotic Transformation Software

The biggest problem with enterprise operations today is the simple fact that most firms still run most of their processes exactly the same way as they did 20/30/40 years ago, with the only “innovation” being models like offshore outsourcing and shared service centers, cloud and digital technologies enabling those same processes to be conducted steadily faster and cheaper.  However, fundamental changes have not been made to intrinsic business processes – most companies still operate with their major functions such as customer service, marketing, finance, HR and supply chain operating in individual silos, with IT operating as a non-strategic vehicle to maintain the status quo and keep the lights on.

Enter the concept of Robotic Process Automation (RPA), introduced to market in 2012 via a case study written by HFS and supported by Blue Prism, which promised to remove manual workarounds and headcount overload from inefficient business processes and BPO services.  However, despite offering clear technical capability and the real advantage of breathing life into legacy systems and processes, RPA hasn’t inspired enterprises to rewire their business processes – it’s really just helped them move data around the company faster and require less manual intervention.  In addition, most “RPA” engagements that have been signed are not for unattended processes, instead, most are attended robotic desktop automation (RDA) deployments. Attended RDA requires a loop of human and bot interplay to complete tasks.  These engagements are not the pure form of RPA that we invented – they are a motley crew of scripts and macros applying add band-aids to messy desktop applications and processes to maintain the same old way of doing things. Sure, there is usually a reduction in labor needs - but in fractional increments - which is rarely enough to justify entire headcount elimination. Crucially, the current plethora of “RPA” engagements have not resulted in any actual “transformation”. 

The major issue with RPA today is that it is automating piecemeal tasks.  It needs to be part of an integrated strategy

Real research data of close to 600 major global enterprise shows just how not-ready we are to declare any sort of robo-victory. In our recent survey of 590 G2000 leaders, only 13% of RPA adopters are currently scaled up and industrialized. Forget about leveraging RPA to curate end-to-end processes, most RPA adopters are still tinkering with small-scale projects and piecemeal tasks that comprise elements of broken processes.  Most firms are not even close to finding any sort enterprise-scale automation adoption.

RPA provides a terrific band-aid to fix current solutions; it helps to extend the life of legacy. But does not provide long-term answers. The handful of enterprises that have successfully scaled RPA across their organizations have three things in common:

1. A unifying purpose for adopting automation,
2. A broad and ongoing change management program to enable the shift to a hybrid workforce, and
3. A Triple-A Trifecta toolkit that leverages RPA, various permutations of AI, and smart analytics in an integrated fashion.

So HFS is calling it as we see it. RPA is dead! Long live Integrated Automation. And by integrated we mean integrated technology, but also, and all importantly, we mean integration across people, process and technology supported by focused objectives and change management. Integrated Automation is how you transform your business and achieve an end-to-end Digital OneOffice.

Integrated Automation is not about RPA or AI or Analytics. It is RPA and AI and Analytics.

Business problems are not entirely solved by one stand-alone technology but by a combination of technologies. While only 11% of the enterprises are currently integrating solutions across the Triple-A Trifecta, there is emerging alignment. The supplier landscape is also starting to realize that clients will buy integrated solutions (see Exhibit 1) and examples below:

• RPA products are seeking to underpin AI and data management capabilities. WorkFusion was arguably the first to combine RPA and AI with its “smart process automation” capability. Other subsequent examples include Automation Anywhere with its ML-infused IQBot, Blue Prism announced its AI Lab to develop proprietary RPA-ready AI elements, and AntWorks embeds computer vision and fractal science in its stack to enable the use of unstructured data. What these products having in common is their use of robotics to transform tasks, desktop apps and pieces of processes.  Hence, we need to refer to these "RPA" products as Robotic Transformation Software products which is a far more appropriate description.
• AI and analytics focused products are starting to embrace Robotic Transformation Software, instead of undermining it. IPsoft launched 1RPA with a cognitive user interface. Xceptor’s data-led business rules and AI-based approach to automation leverage RPA to help extend its functionality. Arago is starting to go to the market where it can help orchestrate RPA capabilities within its platform.  
• Enterprise software products are integrating the triple-A trifecta capabilities in their products. SAP Leonardo aspires to harness the emerging technologies across ML, analytics, Big Data, IoT, and blockchain in combination. It also acquired RPA software company Contextor (late 2018) similar to Pega when it acquired OpenSpan in 2016 adding RPA functionality to its customer engagement capabilities.
• System Integrators are orchestrating the Triple-A Trifecta across multiple curated products. This typically combines some of their IP and service capabilities. Accenture launched SynOps in early 2019, offering a “human-machine operating engine.” Genpact’s Cora, a modular platform of digital technologies, similar to HFS’ Triple-A Trifecta, is designed to help enterprises scale digital transformation. IBM’s Automation Platform includes composable automation capabilities that orchestrate responses and alerts between Watson and Robotic Transformation Software solutions. KPMG’s IGNITE brings RPA, AI and analytics tools together with KPMG IP and services.

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Integrated Automation is not just about Technology. It is Technology + People + Process.

The real point of Integrated Automation is actually to move beyond the tools. Yes, the Triple-A Trifecta offers more functionality, but it still does not work unless you change your business, your people, your processes.  Integrated automation is the effective melding of technology,

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Posted in: Cognitive Computing,  Robotic Process Automation,  Intelligent Automation

 At the HFS Summit this week, we asked 200 enterprises if they cared about automation software vendors bragging about self-inflated valuations.  Not a single person did.

The robotic transformation software industry has three problems right now:

i) Defining itself;

ii) Scaling Bots and being Transformational;

iii) Obsessing with this "Funding Arms-Race"... so let's dig in

1) Defining itself correctly... "RPA" is not correct. Most of "RPA" in its current form is incorrectly defined, and this market is dying if it doesn't have a radical overhaul. Only a small portion of "RPA" it is actually “process automation” - most of it is desktop apps, screen scrapes and doc management. RPA in current form is incorrectly labeled and the way forward is to integrate these tools. When we introduced the term RPA in 2012 (with Blue Prism) the focus was on unassisted automation, it was self-triggered (bots pass tasks to humans) and centered on increased process efficiency. Only a small portion of "RPA" today is actually “process automation". Most “RPA” engagements today are not for unattended processes - they are attended desktop automation deployments, a loop of human and bot interplay to complete tasks (not processes). These engagements are not the pure form of RPA that we envisioned back in 2012 – they are a motley crew of scripts and macros applying band-aids to messy desktop applications and processes to maintain the same old way of doing things. We need to refer to these "RPA" products as Robotic Transformation Software products which is a far more appropriate description. Now if these firms cannot partner with their clients and the services ecosystem to support transformative automation as part of an integrated automation platform, this market balloon will burst as dramatically as it got inflated...

2) Scaling bots and finding a transformation story versus a "fixing legacy" one.  The more these robo tools can be used by clients - not only to do things better and more automatically - but also to help re-wire their operations, then we have lift-off to something fr more strategic than merely getting crappy tasks working better and moving data round the company better. If you just work on steady-state fixes without focusing on the real changes needed, we will see many firms stuck in legacy purgatory, unable to switch out bots in the future. Sure, there is usually a reduction in labor needs - but in fractional increments - which is rarely enough to justify entire headcount elimination. Crucially, the current plethora of “RPA” engagements has not resulted in any actual “transformation”. 

As our global study of 590 leaders of Intelligent Automation initiatives, supported by KPMG reveals, barely more than one-in-ten enterprises has reached a place of industrialized scale with RPA - and the word from so many clients is loud and clear that they need help:

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This struggle to get to a point beyond pilot exercises and project-based experimentation could prove to be a serious point of failure for the whole industry.  There needs to be a much stronger melding of enterprises with implementation and consulting capability to fix these issues.  Just like we realized that throwing bodies at a problem does not solve the problem, we need to recognize that merely hurling software at business process will not drive transformation. The real genius lies in understanding what to use when and how. The software also needs to come with support and services. Otherwise, we’re just selling more snake oil and magic. 

3. End this "Funding Arms-Race" obsession nonsense.  Now.  While Automation Anywhere was busy with its Imagine conference in London, on 20th March, "news" about UiPath's self-proclaimed valuation, based on its much-discussed future Series D funding round, was conveniently released the day before, claiming the $3 billion touted last year was now a whopping $7 billion.  It was also widely rumored that UiPath was pushing to announce their Series D during Automation Anywhere's New York event last week.  Here are some snippets from the Business Insider news publication, which was also picked up by Tech Crunch:

So what, pray tell, is the point in all this?

UiPath is putting the whole automation industry under unnecessary pressure. If the UiPath Series D round has yet to be signed, these antics could be placing the negotiating power into the hands of the investors, who can clearly see UiPath's management is obsessed with embarrassing its hated rivals as opposed to focusing on the first 2 items discussed above.  Fortunately for UiPath, they have officially secured Series D this week, but these antics and obsession with fictitious valuations do the industry no favors and put incredible pressures on the automation software companies and enterprise to deliver genuine scale and results on months when the reality is this integrated automation journey will take years.

UiPath is creating the perception that this whole industry is after a short-term cash bonanza.  Our automation industry cares about making these solutions work, and this ridiculous noise about inflated funding isn't adding any value anywhere - this valuation noise only makes most people think these software firms are obsessed with a quick IPO or a quick sale, as opposed to a true long-term journey that will help enterprises enter the hyper-connected age.  I can guarantee you all - right now - that none of today's enterprise operations leaders are basing their robotic software selections off these crazy media-fuelled "valuations".  It is also an entirely separate debate about why robotic software firms with revenues under $200m can claim 35x valuations... stay tuned for that.

I can only hope UiPath CEO Daniel Dines' classy announcement (in Paris) to contribute 1m Euros towards the reconstruction of Notre Dame is an about-turn in this behavior.

Posted in: Intelligent Automation,  Robotic Transformation Software