Phil Fersht
 
CEO and Chief Analyst 
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OneOffice: Where data is the strategy, automation the discipline, AI the refinement
March 07, 2021 | Phil Fersht

While the last year has blown our minds with the sheer amount of change it has invoked on our professional and family lives, what is has achieved - more than anything - are these two factors:

  • No more flashy bullshit. There is no room for solutions that are confusing, designed to make people look special, but ultimately pathetic in real value and execution.  
  • Data and processes are inextricably linked. The focus on value has shifted firmly to the strategic value of data and how designing processes can help you achieve the data outcomes that create the value.

Bottom-line: We need to understand that data is the strategy and how the data cycle works to get us ahead of our markets. Here are five steps we must take:

  1. Get The Data to Win In your Market. This is where you must align your data needs to deliver on business strategy.  This is where you clarify your vision and purpose.
  2. Re-think processes to get the data, Then you must re-think what should be added, eliminated, simplified across your workflows to source this critical data.
  3. Design your new operational workflows in the cloud. There is simply no option but to have a plan to design processes in the cloud over three-tier web-architected applications.  In the Work-from-Anywhere Economy, our global talent has to come together to create our borderless, completely digital business.  This is the true environment for real digital transformation in action.
  4. Automate processes and data.  Automation is not your strategy.  It is the necessary discipline to ensure your processes provide the data - at speed - to achieve your business outcomes. Hence you have to approach all future automation in the cloud if you want your processes to run effectively end-to-end.
  5. Apply AI to data flows to anticipate at speed. Once you have successfully automated processes in the cloud, it is easy to administer AI solutions to deliver at speed in self-improving feedback loops.  This is where you apply digital assistants, computer vision, machine learning, and other techniques to refine the efficacy of your data.  AI is how we engage with our data to refine ourselves as digital organizations where we only want a single office to operate with agility to do things faster, cheaper, and more streamlined than we ever thought possible.  AI helps us predict and anticipate how to beat our competitors and delight our customers, reaching both outside and inside of our organizations to pull the data we need to make critical decisions at speed.

RPA is alive...With Super Marios to the rescue
March 02, 2021 | Elena ChristopherPhil Fersht

We've been pushing our concept of Native Automation hard these past few weeks, where it's imperative for organizations to embed an attitude to automation workflows deep into their operations. So what better to promote this native adoption, than to get it for free from the world's juggernaut desktop software institution, Microsoft?  And does this spell trouble for the likes of UiPath and AutomationAnywhere's desire to IPO... now RPA is practically free for all?  They now have little choice but to prove their value beyond RPA.

RPA is not dead, as previously stated. Thanks to Microsoft, it’s going mainstream.

In line with day one of its annual Ignite events, Microsoft announced that it would immediately offer a free version of its Power Automate Desktop robotic process automation (RPA) application. This is available for complimentary download starting today. Additionally, it will

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Welcome to Nischala-land!
February 24, 2021 | Phil Fersht

 

Many of you saw we recently hired the analyst industry's first "storyteller"... and do we have some stories to tell!  Nischala Murthy Kaushik has joined us to drive a crisp and enticing narrative for our industry during these turbulent times of change, which she will attempt to fit between her yoga and meditation sessions, and her amazing dinners with hubby Saurabh and young ladies Naisha and Tanishka. 

Nischala will curate the HFS 2025 vision and values to the industry using her substantial social media presence - she was recently named among the Top 20 LinkedIn Voices for India. In addition to working closely with our research team, she is a blogger, thinker, and provocateur in her own right including bylines in Huffington Post and The Economic Times, with a strong focus on inclusion and diversity.  So let's find out a bit more about HFS' latest acquisition...

Phil Fersht: Hi Nischala - we are extremely happy you have chosen to focus the next phase of your career with us.  But taking a step back, can you talk about your early years and why you chose a career in the IT services industry?  Was this the career you always wanted?  

Nischala Murthy Kaushik - Phil – Firstly, Thank you for being instrumental in my career shift. I look forward to working with you and the HFS team for the next phase of my career.

Time travel into the past is always a nostalgic experience. As a kid, I aspired to walk down a new career path in line with the seasons – from a genetic researcher to a doctor, to starting my own business venture (my extended family has lots of doctors, entrepreneurs, and some both!),

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The 9-to-5 job is officially dead... Work-from-Anywhere becomes our new reality
February 18, 2021 | Melissa O'BrienPhil Fersht

With companies the size and stature of Aetna, Amazon, Nationwide Insurance, Microsoft, and Unilever committing to the hybrid work model well beyond Covid-19, where home working is encouraged, you know a seismic shift to the corporate work culture is firmly underway.  Simply put, most firms are enjoying the lesser reliance on expensive corporate real estate, combined with the novel environment to design and automate processes in a cloud model – because there is simply no choice but to embrace digital head-on if they are to survive.

The true benefits of digital are all about scaling your business at a speed and cost-efficiency that keeps you ahead of your customers’ needs.  It’s all been about breaking the cycle where you had to keep adding people to ensure growth – for today and tomorrow, it's about doing more business from the same (or less) resources. 

OneOffice is the mindset to put real digital transformation into action, and there has never been a burning platform like the Work-From-Anywhere (WFA) revolution to force this change

Some of the world’s largest enterprises still have up to 100% staff working from home and have managed as a remote workforce for a year now.  A recent HFS study of 400 Global 2000 enterprises reveals that barely more than a third of enterprises intend to return to an office-based corporate model:

Office-based environments will never return to pre-COVID levels: We will have a significant Work-from-Anywhere workforce

 

Click to Enlarge

It is very unlikely that most enterprises will return to full-time office work, and the ramifications are plentiful and we evolve into Work-from-Anywhere

This is a complicated puzzle to solve, especially for large enterprises with a wide breadth of business functions and roles.  This essentially leaves us with four pivotal questions to answer:

  • The 9-5 workday is dead, but what does the new workday (and workforce) actually look like?
  • How can businesses prevent burnout while ensuring productivity at the same time?
  • How can workers adapt their skillsets that will stand them in good stead in this emerging environment?
  • And how do they ensure employee satisfaction while making the right decisions for security and business stability?

The new mentality is all about measuring outcomes from getting work done, as opposed to the inputs of resourcing for work

The nature of work is fundamentally changing, and if companies manage this shift effectively, it will change the work environment for the better for ambitious enterprises.  What’s needed is a solid grasp on what the long-term pivot to a ‘work from anywhere’ means to businesses, and a plan to make the remote workforce a part of the Digital OneOffice mindset.   Ideally, these changes switch the mentality to an outcomes-focused model where all that really matters is that work gets done and customers and employees are satisfied, regardless of where either is physically located.

The why, the what, and the how of Work From Anywhere in 2021... and beyond

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Ready to walk the Sanjay way?
February 07, 2021 | Phil FershtSarah Little

 

It's time to make Sanjay Jalona a services household name in the IT services industry. He made the jump from leadership positions at Infy to CEO and Managing Director of LTI in 2015. When I pulled up their stock chart I had to rub my eyes - thought for a moment that I was looking at the acceleration of COVID across the globe. But no, that's the 5-year snap of LTI's stock growth. Sanjay has lead LTI through an IPO in 2016 to continued momentum in growth across capabilities today.  

The COVID landscape has created massive pivots across the industry, so I was deeply curious where he was taking risks and deep dives for the future – as he will say, the capabilities where he's "throwing the kitchen sink." And speaking of the kitchen sink, we touch on everything from leading and learning with Shoshin (a beginner’s mind) to the positive changes sweeping India. Let’s begin:

Phil Fersht, CEO and Chief Analyst, HFS Research: It’s great to see you again, Sanjay, and have you join us for an HFS conversation. This is the first time we’ve had a “live” discussion, so it’d be great to have you introduce yourself a bit to our network – a little bit about Sanjay Jalona, how you ended up running a business like LTI, and a bit about how you started out. Did you always want to do this, and was this what you dreamed of? And then we’ll talk a bit more about the industry and where things are going there.

Sanjay Jalona, CEO and Managing Director of Larsen & Toubro Infotech (LTI): It’s always a pleasure to talk to you, Phil. I grew up in a small town, up north in India – six hours’ drive from Delhi in the foothills of the Himalayas. My father worked for a pharma company all his life. I studied there in a Hindi Medium school, and then went to study computer science at BITS Pilani. After that, for the last three decades, I have been involved in nothing else but the technology business.

So, I guess I’d reckon that I would completely be useless outside this industry [laughs]

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SAP acquiring Signavio is a cheap play to migrate enterprises onto S4/HANA. Instead it just handed the market to Celonis
February 01, 2021 | Phil FershtReetika Fleming

Why we think SAP acquiring Signavio is a non-event and actually frees Celonis from its SAP shackles to inspire its loyal following

The initial buzz from SAP leaders with its Signavio acquisition all points to helping its clients migrate from legacy systems onto cloud-based S4/HANA applications. While that is a worthy goal, SAP needs to embrace how to support both non-IT and IT clients with rapid process redesign, if it is to stand any chance of reclaiming former glories that are long-distant memories in today's high-octane environment. The German software giant has an IT-centric view of the world, where instead we need technology and business to come together to become fluent in understanding the data they need to be effective in their markets.  To create this data, processes need to be designed to deliver data at speed, and these need to be automated in the cloud to keep their enterprises functioning.  Once processes are flowing beautifully in the cloud, you can deploy all sorts of ML and AI tools to gather increasing amounts of intelligence to anticipate your own needs - and your customers - ahead of time.

Until a decade ago, SAP was, perhaps, the most significant brand and voice in enterprise technology.  The German software supremo was the enterprise backbone, the system of record, the “way of doing things” for the majority of the FORTUNE 1000.  Back then, Microsoft was already entering rigormortis as a decrepit office suite, SFDC wasn't much more than a fancy way of managing your contacts, while Workday was confusing everyone with “thin memory”, and Oracle was just a weird collection of tired con-fused software firms run by a guy who resembled a tech billionaire version of Donald Trump.

Since then, the SaaSy likes of Salesforce, Workday, and Coupa have long-driven a narrative that you had to run your processes in the cloud, while SAP labored to catch-up as a “Cloud player”.  Then came the digital juggernauts of Microsoft, Amazon, and Google to ratchet the world of enterprise technology into a very different place, where data is king and it doesn't matter how unstructured it is.

SAP has long-lost its enterprise appeal as the process connoisseur’s tech suite of choice

SAP is a symbol of a long-forgotten time when people’s careers were tied to it, when enterprises thought being locked-into an on-premise software suite was considered a strategically smart thing to do.  Hell, any IT bigwig worth their salt needed SAP plastered all over their resume. But those days faded away after 2010 as the cloud took over the core processes in smart enterprises.  

SAP made its long-rumored acquisition of workflow and process intelligence vendor Signavio official last week. The move has implications not only for the two merging tech companies, but also the market leader in process intelligence, Celonis, that until now, enjoyed a close and successful partnership with SAP. In addition, Celonis has cultivated many strong partnerships with the likes of Accenture, Cognizant, Genpact and IBM.  Will they gravitate towards as SAP-owned Signavio?  And will SAP’s army of customers really take this seriously enough to fight their CFOs for yet more cash to pump-prime the Waldorf machine?  The depressing answer for both SAP and Singavio is simply:  no one really cares.

Why SAP needs all the help it can get to earn credibility as a process orchestration and intelligence player

Every enterprise leader has taken a hard look at their business processes over the last year, seeking ways to streamline and automate tasks and get data on what is working and what broke in the move to remote working. What started as an exercise in somehow keeping the lights on in the pandemic economy, has started to turn into wider initiatives that will have a long-lasting impact. Many enterprises in our research have expressed that ‘there is no going back’, and post-pandemic, they will need a far smarter operating model, technology stack, and data-driven business processes. At the heart of this stack, for most companies, is a hodgepodge of various versions of aging business systems, fragmented over regions and markets, that are responsible for the majority of transactions that keep the business running.

Business leaders seeking their own glory on “digital transformation” and process efficiencies have implemented a plethora of bolt-on tools around core applications over the years, including business process modeling, workflow management, document and content management engines, and of course, robotic process automation. Process intelligence tools have been the latest addition to this mix. In particular, process mining technologies that use transactional system-log data (such as from SAP) to power their analytics and machine learning models.

Why Celonis was so good for SAP customers – and will still be for some time to come

The two principal uses of process mining tools that significantly help enterprises with their SAP estates include:

1) Helping operations leaders make the most of their current ERP  and other source systems, find process bottlenecks and inefficiencies, and redesign processes such as order-to-cash and procurement

2) Helping IT teams with systems migration, such as a move to S4/HANA, where the mining technology can be used to map and monitor as-is and to-be processes, and user adoption over time.

Just with those two points, we can see why SAP’s partnerships in this space have gotten deeper in the last few years and got to a point where SAP felt the need to directly invest in a solution of its own. Hence its acquisition of Signavio.

SAP needed to partner with the likes of process intelligence leader Celonis and UiPath (which acquired ProcessGold) to keep its technology ticking, and provide its customers more process visibility and automation. Now it has the ability to define how a fully integrated BPM, workflow, process mining, and automation capability can augment its core technology, beyond what third-party platforms and a host of SAP-specific products have been able to achieve.

Weaning any client with years of experience off of their beloved Celonis to switch to an inferior product owned by SAP is not going to happen… so good luck with that folks!

When it comes to process augmentation, SAP is lightyears behind the market.  In 2018, It made a low-budget attempt to enter the Robotic Process Automation (RPA)  market with Contextor, a small little-known France-based RPA product to augment SAP Leonardo’s intelligent technologies portfolio.  Nothing has been heard of them since, with no examples of SAP playing in the process automation space.  It’s been a bust.  So if SAP can’t make head nor tail of the most base form of process automation (RPA), why does it think it can take the market by storm acquiring a product which is ranked 13th in process intelligence software:

 

Simply-put, all the hard years the Celonis founders spent driving around Germany selling the software to SAP customers in a VW Camper (yes, I actually know this!), ensured that Celonis has firmly established itself as the process mining solution of choice, necessitating several years of investment, training and change management from its loyal clients. So why on earth would these process-obsessed customers flock to use the industry's thirteenth best solution?

Why Signavio? Its collaboration hub and process simulation capabilities couldn’t be more timely for operating in the pandemic economy

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UiPath will finally find its true path as IPO beckons. Now can its leadership develop some humility to embrace this incredible opportunity?
January 24, 2021 | Phil FershtElena Christopher

Having introduced RPA to the world in 2012 I have (sometimes grimly) clung to the belief that RPA will eventually find its path to be a vital cog in the enterprise technology potpourri.  Blue Prism opted for the comfort of floating on the London stock exchange less than four years later in 2016, where its founders and key stakeholders opted for a modest payday, rather than make the really bold play of floating in the Big Apple and making themselves known as the pioneer of automation software.  The other two major robotic software candidates, Automation Anywhere and UiPath then proceeded to demonstrate their beauty to the big iron software giants, which all opted to seek out cheap acquisitions to scratch their RPA itch, with SAPAppian, Microsoft, and IBM all settling for small-scale tech additions, rather than making the multi-billion dollar investments AA (Automation Anywhere) and UiPath were demanding. 

So with only $450m actually being invested in RPA acquisitions from the tech sector, the $1 billion+ UiPath has been burning through (and a not-dissimilar amount with AA) clearly indicates IPO is the only realistic path forward 

It's easy to blame Covid on many things, such as the negative impact it has had on my performance in cleaning the kitchen, but one thing has been clear:  Covid amplified situations where enterprises were struggling or doing well.  In UiPath's case,  pre-Covid they tried to force a market situation before their market was ready... all they needed was the patience to wait for their market to open up for them and keep the robotic love story emerging among its starry-eyed clients. However, during 2020 UiPath far outstripped all its competitors because it has an employee base to upsell, and it made its solutions the easiest for services firms and consultants to implement. The efforts made to push their platform into as many clients as possible pre-Covid has paid real dividends with sales cycles severely restricted to those clients who already use your software.

Step up UiPath, your time is now

UiPath’s potential IPO has been whispered about for a couple of years now, but pre-Covid, AA was widely expected to be the first to IPO. With UIPath's stellar sales performance in 2020, the race to IPO has clearly swung towards UiPath as it has considerably outpaced both AA and Blue Prism in terms of license sales, and you just can't IPO when your sales performance is flagging.

To this end, in mid-December Bloomberg reported and UiPath eventually confirmed that it filed a draft registration statement on a confidential basis with the SEC for a proposed public offering of its Class A common stock.  While the filing may be confidential, UiPath is making sure the buzz about it is anything but.  If the likes of Microsoft, Oracle, and Salesforce are failing to see the value of acquiring the firm with a very, very effective services partnership strategy and rampant installed base, then it"s time to open up to the public where there is well over $1 trillion of funds just primed for a tasty investment in a tech firm that has captured the excitement of the Global 2000.

Ultimately, IPO is the only path forward for UiPath. It has received more than a $1B in funding and its investors would like some return. And when valuation makes you a "deca-corn" it's tough to find a buyer. Public markets to the rescue. While we’ve been VERY vocal about our view that RPA is in no way transformative, there is a ton of “now” value to be reaped from helping enterprises prop up legacy for another couple of years.  Their investors have always been very clear that the “now” value of RPA is what makes it investment-worthy. And in a pandemic, clearly more so.

All the ingredients are there for UIPath to IPO and change its mindset 

Meanwhile, UiPath continues to invest in its product functionality both organically and via M&A, driving capabilities beyond core rules-only RPA to help it better grapple with unstructured data and support process intelligence. However, HFS sees zero chance of UiPath ever realizing its vision of a robot for every human (which we affectionately refer to as a thinly veiled plan for a license for every client employee) or at least not in its current incarnation which is still predominantly unattended. Microsoft, which just completed the native integration of Winautomation from its acquisition of Softomotive is tracking much more in this direction (Clippy2 anyone?) and has a massive base of desktop users to convert.  Nor is UiPath poised to become the “new ERP” as suggested in their recent 2021 predictions – largely because RPA alone, despite the upgrades, does not possess enough functionality to be the epicenter of process and workflow orchestration that sits atop existing enterprise apps.    

As for the IPO path, UiPath has been adding customers hand-over-fist, generating massive growth figures. UiPath would be successful by every measure if they could crack the customer scale code. But that’s the challenge – they won’t. RPA has an expiration date that kicks in with legacy modernization. It doesn’t scale not because it can’t but because enterprises don’t need it to. Enterprises can keep using the same 50 bot license and get what they need year on year. 

Bottom-line: @UiPath holds the attention of the RPA industry vying to become the first public multi-billion-dollar robotics platform to float on the #NASDAQ.  Now its leadership must show maturity and embrace reality. Their time is now .

While it's easy to criticize anyone in a market that is still flying by the seat of its pants, we have to give UiPath credit for outpacing all its competitors over 2020 and finding itself in pole position to IPO as early as next month.  When you consider the only other recent tech IPO was the long-established Cloud firm Rackspace, the market will welcome the market leader in robotics software and make its investors very happy after a  frustrating three years of confusing marketing, fantastical narratives, and an incredibly poor ability to win the hearts of many influential analysts.  But you know HFS, we can dish it out, and we can also take a punch or two.  But we always err on the side of reality, and the reality here is that UiPath will succeed in being the first robotics platform to IPO.  It has become the automation platform for many of the leading service providers, and while scaling has been a real challenge, UiPath is winning that battle.  The company actually refuses to talk to me or my brilliant colleague Elena Christopher these days because its leadership couldn't stomach some hard truths we dished out to them pre-Covid (and refused to spend a few minutes digesting data on 372 enterprises).  But that's OK - if you want to control all the narrative and cannot find the humility to take a few punches when you need to take them, you only need to look at other leadership disasters to see where that attitude takes you.  Huge egos and inability to listen will see anyone fail.  Creating a narrative everyone can believe in, embracing your critics and designing a strategy we call all learn to love are the keys to success beyond IPO.

So this is a time to embrace the hard-won success of Daniel Dines and his team to see RPA finally establish itself in the "work from anywhere" enterprise tech stack.  Now let's hope they can control their egos a bit better to embrace the much more lucrative industry that awaits them.

The proposed Atos-DXC takeover is papering over some very deep cracks from a bygone era
January 10, 2021 | Phil FershtTom Reuner

The IT services market has arrived at its most critical infection point in 20 years, where the role of service providers that survive the Covid era will be those that have made the shift from support firm (Phase 1) to a business partner (Phase 2).  We've talked about this services shift ever since Tom Reuner and I were young analysts.  And we're not very young anymore.  Especially Dr. Reuner.  

So why on earth is Atos bidding to make some wild takeover of DXC?  Let's understand the burning platform driving this

When the first major tranche of IT support deals evolved to a heavy dependence on India as a delivery location to exploit lower-cost labor at scale, made possible by the original Internet revolution. In the early days of the offshore era, the more ambitious traditional IT services firms, at the time, developed their own global delivery models with the goal of staying relevant, in the face of emerging competition from the "Indian Pure Plays" (as they were known in those days).

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OneOffice is all about anticipating customer needs before they even know what they are...
January 09, 2021 | Phil Fersht

OneOffice is all about putting the customer front and center by having end-to-end processes automated in the cloud enabling great AI to help you make winning decisions...

Introducing the Tech Stack to power Native Automation, Data and Process Design: The OneOffice Platform
December 30, 2020 | Phil FershtElena ChristopherTom Reuner