Phil Fersht
 
CEO and Chief Analyst 
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Can Infosys be the one to challenge Accenture's digital services dominance?
April 23, 2018 | Phil Fersht

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

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

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

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

Click to Enlarge

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

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

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

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

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

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

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

We're becoming obsessive social networkers with a huge appetite to learn from each other
April 15, 2018 | Phil Fersht

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

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

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

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

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Gartner fails spectacularly with its 180 degree flip on the impact of AI Automation on jobs
April 07, 2018 | Phil Fersht

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

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

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

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

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

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

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

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

Click to read full press release

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

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Fed up with the AI nonsense? Well here's your reality check...
April 05, 2018 | Phil Fersht

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

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

Click here to reserve your virtual seat now!

It's not all about mindset: The lack of IT talent is the biggest roadblock to reaching the Digital OneOffice promised land
April 02, 2018 | Phil Fersht

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

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

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

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

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

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

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

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

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

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

And there went another April Fools' Day...
April 01, 2018 | Phil Fersht

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

How blockchain will change the world in many more ways than you realize. It’s cataclysmic
April 01, 2018 | Phil Fersht

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

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

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

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

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

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

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

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

And of course... this was an:

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Automation delivers the means, OneOffice provides the end
March 21, 2018 | Phil Fersht

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

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

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

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The top 5 enterprise blockchain platforms you need to know about
March 16, 2018 | Phil Fersht

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

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

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

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

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

-          Vitalik Buterin, Co-Founder, Ethereum

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

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

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

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

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Farewell the Godfather of Time...
March 14, 2018 | Phil Fersht