Phil Fersht
 
CEO and Chief Analyst 
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Wow... the UK really is becoming an attractive nearshore sourcing location
July 28, 2019 | Phil Fersht

While the UK government is busily doing a tremendous job destroying the country's position as one of the world's great financial centers and multi-cultured commercial environments, one unlikely scenario is unraveling: the steadily devaluing currency, availability of labor (especially in its former manufacturing cities), and adequate education system is placing the country up the league as, now, the third-most attractive location to source business operations and IT support.  This is according to the brand new data from the HFS 2019 State of Operations and Outsourcing study, conducted with the support of KPMG, where we interviewed 355 operations leaders from 355 of the Global 2000:

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Bottom-line: As value from low-cost labor levels out, the focus shifts to increased complexity and talent closer to the business

As we reveal more of the new survey data, you'll see a prominent shift away from enterprise intentions to invest in traditional outsourcing pivot towards a strong desire to find partners which can support technical complexity in AI, hyper-personalization, and automation.  Net-net, enterprises need support staff close to the business with the ability to understand process and technical complexity that they have never before needed.  This doesn't mean that popular locations like India and Philippines will see their service industries plummet, it just means outsourcers and GBS leaders need a healthier balance of onshore/nearshore/offshore to bring it all together.  It also signifies a shift from "outsourcing" to "expertise partnering" that changes the location playing field significantly.  While the USA and China are no surprise as their host the world's largest economies and businesses, the UK is the surprise mover, as political conditions have created a more competitive market to invest in support services. 

Watch this space for more as we drip-feed you this incredible data over the next few weeks...

Accenture, KPMG, Cognizant, Atos and TCS lead service delivery on Microsoft AI and Google AI Platforms
July 22, 2019 | Phil FershtReetika Fleming

We've reached a stage where we can start to assess the capability of leading service providers to deliver comprehensive services across key AI platforms, especially Microsoft's Azure AI platform and Google's emerging AI platform suite.  So without further ado, let's ask HFS' Research Vice President, Reetika Fleming, how she fared leading the two major Top 10 efforts this year...

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Reetika - how are services around AI platforms progressing?  And specifically, what have you learned with regards to Google and Microsoft platforms?

We’re continuing to see AI ecosystems evolve around the big cloud vendors – Microsoft, IBM, AWS, and Google. From our recent deep-dives into the AI services alliances developing around Microsoft and Google, I can tell you that there are different strategies at play here. Google and Microsoft themselves have their own strengths and priorities, and the SI and consulting alliance partners are collaborating with them in different ways.

  • Google’s portfolio of AI components, such as text-to-speech and computer vision, is a great starting point for a fundamental development layer. Google’s AI R&D leadership is

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Want to survive the AI era? YOU have a simple choice to make...
July 07, 2019 | Phil Fersht

When it comes to staying relevant in today's workforce, let’s get to the heart of the matter – YOU have a simple choice to make:

  • Do nothing and be part of the “Frozen Middle”. Decide you can’t be bothered to learn anything new, so make sure your firm has the same attitude (or has a thin veneer of innovation masking a cesspool of lethargy and love of perpetuating legacy processes and business practices). And ride this next wave of hype out for a few years before you can quietly ride off into a comfortable sunset, or…
  • Become a change-driver. Decide you have to get ahead of emerging technologies and their massive impact on business ecosystems and make sure your firm has what it takes to sponsor your burning ambition to drive cultural changes, new learning and ability to rethink how business processes and practices are wired.

Once you decide which of these two categories which you wish to belong, then make sure you’re in the right company to execute your survival plan… otherwise, leave and find one that is.

Because the data from the recent World Economic Forum jobs study shows half of enterprises are being held back because their staff fails to understand the disruptive changes in their industry, and an alarming 37% of enterprise leaders do not feel their current

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Is your Robotic Software really supporting business transformation at scale beyond piecemeal projects? Time to have your say...
July 06, 2019 | Phil FershtSaurabh GuptaElena Christopher

Are you as confused are we are with some of the recent analyst matrices floating around the industry this year?  Some products are performing completely differently depending on the analyst and how they "define" the market and whatever methodology they used to score each product.

However, one thing is clear:  at HFS we ensure we rely on a lot more than a briefing and a handful of rose-tinted clients served up by the suppliers themselves.  We reach out across our global network of power users (enterprise clients, advisors, and service providers) to get the true unvarnished experiences of robotic software. 

This is why we scrapped the 2x2 matrix last year and went for a direct ranking of suppliers, based across three critical variables:  execution, innovation and the voice of the customer.  HFS subscribers can click here to access the full 2018 RPA Top Ten report. 

On 2018, we introduced the "Voice of the Customer" to rank the leading RPA products across the experiences of 352 power users

In short, there are growing questions about whether "RPA" can deliver transformation on the promised ROI and outcomes, especially as most RPA initiatives continue to be small and piecemeal, with truly scaled RPA deployments are rare (only 13% of client boast any true scale to date). The industry is still struggling to solve challenges around the process, change, talent, training, infrastructure, security, and governance - hence our shift to re-categorizing and

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The present and the future is... Robotic Business Outsourcing
June 24, 2019 | Phil Fersht

BPO (Business Process Outsourcing) grew up because of all the exceptions enterprises have to process that were not able to be absorbed into the standard ERP software.  Yes, we found people equipped to do this work at lower wages housed by efficiently run service providers.  And that work we couldn’t initially send to the BPO providers we just found manual workarounds to get it done until we eventually found an outsourcer who would find a model to take on that work for you.

However, just as many enterprises were running out of places to find (yet) more and more hidden costs they could quickly remedy through (yet) more outsourcing, along came their perfect new toy to unearth costs they had never thought possible to eliminate: RPA.  

Yes, folks, this stuff is just the thing to keep you occupied for the next few years to keep your greedy CFOs at bay - and even includes the word "robot" to conjure up images of human work

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Blue Prism buys Thoughtonomy. Clearly a great deal for…Thoughtonomy
June 20, 2019 | Miriam DeasySaurabh GuptaElena ChristopherPhil Fersht

Blue Prism yesterday announced the acquisition of Thoughtonomy, a SaaS-based integrated automation platform with Blue Prism RPA baked into its core. After six years and much flirting with potential suitors, Terry Walby’s Thoughtonomy successfully exits into the welcoming arms of Blue Prism. This was always the logical end-game for Terry's business, which he bootstrapped from day 1 and tirelessly pushed at the automation world. HFS was particularly inspired with the firm's work at the UK's National Health Service (NHS) (which you can read here). 

Essentially Thoughtonomy is RPA + cognitive capabilities + cloud. Net-net, Blue Prism is buying a cloud (SaaS) wrapper for its own product; arguably, it could have (and should have) built that itself, but decided instead to pay a tidy sum. However, this cloud wrapper puts Blue Prism in the ring with Automation Anywhere's V12 cloud product, which is drawing a lot of plaudits from enterprise users (our forthcoming Robotic Transformation Software Top Ten will reveal its performance across several hundred enterprises). More importantly, it increases Blue Prism’s attractiveness as an acquisition target itself by upgrading its cloud-readiness from “available cloud reference architecture” to a legitimate SaaS-based offering.  We touted Blue Prism as a potential target for IBM three years ago, and with a scalable cloud story and IBM/s major pivot around Cloud with its RedHat acquisition, surely this Cloud-ifying of Blue Prism makes the firm even more attractive to them.

Finding the synergies to justify the price tag – cloud with a potential side of cognitive capabilities, but the focus is too UK centric

Now, Blue Prism can contend with Automation Anywhere’s claim that “BotFarm is the first and only enterprise-grade platform for scaling bots on demand”. The midmarket can benefit from Blue Prism’s RPA technology, with very little setup cost or initial investment.  Mid size companies that considered automation out of their reach can enjoy the democratizing effects of cloud, avoiding the hassle of on prem infrastructure.

The shopping basket also contains Thoughtonomy’s gross assets, reported at 31 May 2018 as £5.6m and established relationships with Thoughtonomy’s big-name clients including NHS, AEGON, and Sony. Partner implementation and reseller arrangements are in place across many of the usual suspects in SI and consultancy such as Computacenter (from where Terry Walby moved to IPsoft before setting up Thoughtonomy).

Like Blue Prism, Thoughtonomy is UK based so there’s not much by way of additional footprint synergies to be realized. Blue Prism, therefore, will only be adding a limited new channel and will have to rely on its existing sales and delivery channel to make this acquisition pay off. The US market is where the bulk of new demand for automation solutions is surfacing, and Thoughtonomy isn't adding to Blue Prism's US team, which is under huge

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She's bright and breezy... HFS hires Miriam Deasy!
June 18, 2019 | Phil Fersht

Miriam Deasy (see bio) joins HFS as Research Director, Integrated Automation 

Just when you thought this little analyst firm wouldn't dare add another rock star brain into our "Triple A" coverage (analytics, automation and AI) we've gone and done it again, adding Miriam Deasy to our global analyst team (based in UK) to cover integrated automation and AI platforms, alongside the likes of Elena Christopher, Reetika Fleming, Tapati Bandopadhyay, Melissa O'Brien, Saurabh Gupta, Ollie O'Donoghue and myself.  Miriam has develop a career across the world of technology and services with roles at EDS (HP) and Amdocs back in the day, before taking out time to raise two boys and a girl William (12), Kayleigh (10) and Darragh (9) before making her move to the analyst world with IT and telecoms firm Ovum three years' ago.

Miriam adds to our growing Irish contingent (from one to two), brings deep sense of wit and

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Wipro needs a bold and differentiated strategy to elevate its middling market position post-Premji
June 12, 2019 | Phil FershtJamie SnowdonSaurabh GuptaTapati Bandopadhyay

We all remember when Jack Nicklaus played his last Masters, and when Sir Alex Ferguson managed his last game for Manchester United. These guys were godfathers of their trades, not unlike Azim Premji has been for IT services, the man who oversaw a firm which diversified from diapers and vegetable oil into one of the largest IT services firms in the world. However, when they retired, they left a legacy that enabled many to follow in their footsteps (albeit noone has come close yet). Premji's legacy, which forever is written into the annals of IT services folklore, is still unfinished, which may be a good thing for his successors... there is still a lot of work to do to get Wipro to the place Premji always envisaged. 

The current market situation facing Wipro's leadership

To recap, Wipro’s Executive Chairman, Managing Director and philanthropic champion Azim Premji is retiring by end July. His son and Wipro’s Chief Strategy Officer, Rishad Premji will

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When did you earn the right to stop learning new skills and abilities?
June 02, 2019 | Phil FershtOllie O’Donoghue

When you have to listen to literally hundreds of people a day spouting advice about reskilling, unlearning, change management, relearning etc., I am going to respond with “great, so what are you doing yourself to stay ahead of today’s digital environment and increase your value as a superstar worker?”  You may love to pontificate constantly weird definitions of digital transformation on twitter and harp on about today's digital talent needs, but do you truly practice what you preach?

Is it just me, or have we entered an environment where everyone loves to talk about change, but most aren't actually doing anything (themselves) about it?

I mean, if your accountant hadn’t bothered to brush up on the latest tax changes, or your personal trainer didn’t know how to use a Fitbit, you probably would seek to replace those relationships in your life.  So what gives IT professionals the right not to learn Python, or learn how to deploy data management / automation tools?  And what gives business executives the right not to learn how to use non-code analytics tools to help their decision-making, or social media products to help them communicate in the market?  And operations executives the right not to learn low-code automation and AI apps that can help them free up people-hours on work that adds no strategic value to the business?  And who told sales and marketing executives it was fine to ignore really learning the products / services they were selling because all they had to do was to follow a set of pre-defined processes to do their job effectively?

Why have so many of us become so complacent?

It just seems that the majority of workers today just think they need to learn to follow a few processes and that’s all they need to do to command a tasty salary and remain employed for years and years…. so few people actually realize that the whole nature of people value is changing for enterprises – they just love to do things the same old way they have always done them, and simply cannot be expected to learning anything new.  "We just don't have the talent in-house to do that" is the constant whine we hear from enterprises; and "our IT managers are project managers, not consultants" is what we hear from service providers.  Then why don't you train them?  Is our agonized response.  Why does everything have to stay paralyzed in this constant vacuum of sameness

Much depends on the approach our enterprises take to driving change

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 decades 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 procurement, 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.

As our Hyperconnected journey illustrates, many industries have now reached a place where they have maximized all their delivery methods for getting processes executed as efficiently and cheaply as possible.  They have tackled the early phases of digital impact by embracing interactive technologies to help them respond to their customer needs as those needs occur, whether electronic or voice.

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In short, most enterprises have been able to keep pace with each other without actually changing the underlying logic of processes.  Simply doing things the same old way has been enough for many, until a competitor comes along with an entirely unique way of servicing your

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The Life of Brian: Prettying up a baby that's got a bit ugly
May 11, 2019 | Phil FershtJamie SnowdonOllie O’Donoghue

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

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