Monthly Archives: Dec 2021

Five personal changes that will make 2022 more energizing and successful than 2021

December 27, 2021 | Phil Fersht

Well, there went year two of pandemic living and we’re still figuring out how to stay focused, motivated and successful during times where we’re one turgid video call away from screaming uncontrollably just to see what reaction we get.  So what can we do to change it up in 2022, which surely will be better than 2021, which was much better than 2020?

1. Accept the fact that today’s predicament will be over soon.  As much as we have been drilled with the knowledge that the world will never go back to pre-pandemic levels of travel and physicality, our careers and our businesses will stagnate and likely lose effectiveness if we just give in to a world of soul-crushing video calls and allow ourselves to drift away on our islands of remoteness.  This is a time to make more efforts than ever to stay in touch with friends, colleagues, clients, peers, etc.  As much as you can, please make plans to meet with people physically when we get past the next (and hopefully final) weeks of this.

2. Keep relationships personal and less bloody awkward.  Remember how great it was when you could have a candid conversation with someone?  Seriously, not everything needs to be some turgid video conference call where we all stare at each other awkwardly, wondering if we should actually look into each others’ eyes or that light on our webcams.  I still struggle with that one… moreover, what happened to the 1-1 conversation where we could just listen to each other and talk without others glomming on? 

3. Park the ego – for good.  Seriously, everyone’s fed up with egos.  We all have them, but being able to keep them buried somewhere is more important than ever.  Everyone’s so sick of people constantly trying to tell you how amazing they are because they clearly don’t hear it enough from others.  Sorry to be blunt, but if you need to keep reassuring yourself openly about your own brilliance you may not be that brilliant…. That may have worked in pre-pandemic world where it was all about showboating at conferences, but those days are long gone.  Now, this may be hard for some, but try praising others and they might even praise you back…

4. Be humble and get sh*t done.  It’s incredible how many folks who were quiet as mice in the old world are now front and center of business activity.  Why? Because the watchwords today are all about being solid collaborators, rolling your sleeves up, and actually doing stuff.  I think we are all exhausted with the blowhards who talk a big game but never follow through on anything.  So after a good conversation, follow up with the things that were promised, make sure you have an agenda for your next discussion, and show that you actually want to get things done. The days of lip service are well and truly done.

5. Stop working when you lose energy and focus – it’s imperative to work smarter now.  This is happening to all of us – we’re so engrossed and glued into the multiple electronic discussion threads going on, we’re actually becoming really unproductive.  I am as guilty of this as anyone!  Nothing beats the uninterrupted time when you can execute on work that needs to be done, so when you find yourself flagging, needing a mental break, then take a f*cking break.  Go work out, play with your dog or child, have a drink, go for a run or cycle ride… Trust me, burnout comes from an inability to switch off.  Remember in the old days when you took a week or two off work and were able to clear your inbox in the morning when you returned to work?  It’s even worse today when you can spend excruciating hours discussing things that could be decided in minutes if we all took a step back and worked smarter.  At the end of the day, you will be judged on what you achieved for your firm, not how many hours you spent trying to achieve it.

Posted in: Digital OneOfficeGlobal Workforce and Talent



Ready for a 2022 vision? Watch this space...

December 26, 2021 | Phil Fersht

Posted in: None



On the first day of Xmas, my PE sent to me... a Process Intelligence firm that Microsoft didn't want

December 23, 2021 | Reetika FlemingElena ChristopherPhil Fersht

Automation Anywhere buying FortressIQ is a less-than-exciting combination. It seems like too little too late for AA to jump into the process mining/intelligence world, and a quick cash-out for FortressIQ Founder, Pankaj Chowdhry, who just wanted out and was running out of time and money - and losing all hope of an eventual acquisition by Microsoft.  RPA and process mining are different beasts and not one where the process intelligence market leader Celonis has successfully (or intentionally) combined, and where UiPath, the RPA market leader, has struggled, with its acquisition of ProcessGold.  So what makes AA and FortressIQ think they can succeed where many others have failed?  Is this what the market demands?  Do these firms really understand who their customer is? 

So let's weigh up how these offerings fit together and whether this merger has any real potential.

The acquisition seems like a Hail Mary for both firms 

Automation Anywhere just announced its acquisition of process intelligence vendor, FortressIQ. In their statement, the software firms pledge to “build the automated company, together”. But in that declaration lies our first impressions of the limiting potential of this combination. The acquisition feels like a knee-jerk reaction to the current market trend of using user activity data to find, measure, and monitor RPA opportunities. In HFS’ view, the use of enterprise process data can be far more impactful and address larger change programs as businesses push towards digital and cloud modernity.   

Automation Anywhere was very late to the market trying to develop its own process intelligence capability, Discovery Bot. When the vendor eventually launched the solution earlier in 2020, its key differentiator against other existing tools was simply that it was built within the AA platform and integrated with IQBot and other AA components. Discovery Bot was eventually offered as a complimentary solution for existing AA clients and signals the vendor's lackluster efforts to catch up with the fast-growing process intelligence market. Acquiring FortressIQ now feels late in the game to bridge the same gap from 3 years ago which Discovery Bot struggled to fill. 

FortressIQ on its part seemed poised for a possible Microsoft tuck-in acquisition. The software giant invested in FortressIQ’s 2020 Series B round through its venture fund, M2, and the companies deepened their relationship earlier this year. The companies saw a natural synergy around the Power Platform and were focusing their efforts on process discovery to support Power Automate use cases. The timing of the Automation Anywhere acquisition seems to suggest FortressIQ ran out of time waiting for Microsoft to pull the trigger, and secure its future with a competing partner. All while the vendor fought for market share alongside process intelligence pure plays, such as Celonis, that have grown to dominate the market.  

Submerging process intelligence into the automation bucket is selling short the technology’s potential 

FortressIQ’s original messaging was around “Data-driven insights powering transformation across your extended enterprise” – automation was one lever, but the technology has far wider applicability. If this acquisition is just about enabling automation, we’re going to call it, it will fail. AAI needs to think bigger. It can make FortressIQ part if its stack for the process discovery hookup, but using the power of process intelligence just to find automation opportunities is a massive undersell. UiPath already learned this with ProcessGold in the last two years. UiPath struggled with selling a process mining product and naturally fell back on the obvious sell of positioning as an add-on to RPA. ProcessGold is a proper mining tool so that link was never clear, as opposed to analyzing user activity data with discovery tools and finding RPA opportunities. Which helped Celonis drive over them. Now UiPath more actively decouples them.  

As for our friends at AA, they need to be clear about what they want to do with FortressIQ. Is it just a conduit to automation? If that's it, then what a waste. Even Kryon, which pioneered the combination, has realized that it has to decouple process discovery from automation. Automation MAY result from process intelligence insights, but it's only one potential option. Structuring and orchestrating your business processes using data, real time process monitoring, and anticipating changes, transactions, and interactions to deliver superior customer experience are all more holistic approaches where process intelligence can and should be used. Automation is the discipline through which enterprises can achieve these goals, but it cannot be your entire strategy as a company, and what you preach as a technology vendor.  

The value propositions on process intelligence and RPA are not aligned and aren’t hitting the same set of stakeholders. Technology firms must become comfortable getting out of their comfortable ‘categories’ and create solutions that their clients actually need. 

Process mining is a CFO-level sale with a transformation focus – hence the likes of Celonis preaching working capital optimization and supply chain agility. The level of visibility into the state of operations that process intelligence tools offer, immediately make them appealing to business executives. RPA typically is addressed at two to three rungs down from the CFO to do quick fixes to legacy systems. The value propositions don't mesh – unless you use the tools purely for automation projects.  

By contrast, the Celonis and Servicenow partnership is a bold attempt to create products that bring the CIO+CFO worlds together.  It’s not a surefire win, but it's in the right direction to create something differentiating, blending operationalizing data science with the ability to design workflows in the cloud. Another example is startup Soroco that is exploring how technologies like automation, process mining, and discovery can impact multiple change programs, help remote teams be more effective, and drive more visibility into how work gets gone in an organization through its ‘work graph’ proposition.  

FortressIQ lines up with Automation Anywhere’s push on cloud enablement, but won’t be a panacea 

We acknowledge joining hands with cloud-native FortressIQ supports AA’s continued focus on cloud. But that won’t make it successful. The automation vendor forged a Google Cloud partnership earlier this year, where its Automation 360 platform became available on Google Cloud, with AA becoming Google Cloud’s preferred RPA partner. However, since the announcement, we have seen little sign of upside for something differentiating in the cloud from AA and - quite frankly - with the flagging update of GoogleCloud enterprise offerings, it's hard to see where RPA fits into the conversation, especially when the Microsoft's Power Automate focus has been so much more widespread and effective.

Will enterprises care? If you’re in the market for an emerging technology solution, use this as an opportunity to revisit your process strategy 

As always, the sign of a good acquisition is that it ultimately needs to add up to more value for clients. What does the AA-FortressIQ combination mean for enterprises? Not a heck of a lot:  

  • Existing AAI clients who want process intelligence are already likely using something else rather than trying to manage with the bundled Discovery Bot.  
  • And FortressIQ clients are definitely already using RPA - and sure, some of it is AAI, but they were RPA agnostic.  

The big win for enterprises will be to consider this an opportunity to think bigger than automation. Automation, ultimately, is the solution to bad or overly manual processes. Process intelligence allows enterprises to reclaim visibility and understanding of their processes and enables them to optimize them - which may or may not involve automation. However, given AAI's core focus on automation, we're skeptical this will happen.

Posted in: Digital OneOfficeRobotic Process AutomationIntelligent Automation



Accenture, TCS, IBM, EY and Capgemini lead the way in the HFS Top 10 Rankings for IoT Service Providers

December 06, 2021 | Tanmoy MondalMayank MadhurPhil Fersht

The pandemic has shown the importance of connectivity and visibility for enterprise resilience and operations management. As IoT is a key building block of connected systems, IoT initiatives have become a strategic lever for enterprises and received significant investment commitment. With clear business benefits, IoT adoption has gained significant traction with scaled IoT engagements.” says Tanmoy Mondal, Practice Leader, HFS

Mayank Madhur, Associate Practice Leader, HFS adds “IoT usage has been propelled up by its convergence with different emerging techs such as AI, Blockchain, and Cloud, driving the next wave of digital transformation helping to create new business models. COVID-19 has shown that we have been using IoT use cases piecemeal, making fragmentation across the IoT industry. The real benefit of IoT will be when it can connect seamlessly with other devices to benefit the user using the interoperability feature.”

The HFS Top 10 Rankings for the IoT Service Providers 2021 is out! HFS defines IoT (internet of things) services as any service provider engagement aimed at enabling a physical asset to generate or communicate data to a centralized platform with the goal of driving insight into ways the recipient enterprise might raise operational efficiency or increase revenue through the creation of new products or services.

The HFS Top10 Internet of Things (IoT) Service Providers 2021 report examines service providers’ role in the evolving IoT landscape. We assessed and rated the IoT service capabilities of 15 service providers across a defined series of innovation, execution, voice of the customer, and HFS OneOfficeTM alignment criteria. We spoke with Mayank and Tanmoy, the analysts behind this comprehensive study to learn about their perspectives and insights from working on the report.

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To download a copy of the report, please click here.

Phil Fersht, CEO and Chief Analyst, HFS Research: So, Mayank – My first question to you is around understanding the IoT market. Please can you share key highlights as we step into 2022?

Mayank Madhur, Associate Practice Leader, HFS Research: The global pandemic has

Read More »

Posted in: The Internet of Things



Who’s going to buy cut-price Kyndryl?

December 02, 2021 | Phil FershtTom Reuner

Kyndryl:  A $19bn business smack-dab in the critical legacy cloud market, with a remarkably puny market cap of $3.5bn

The financial markets have fired warning shots across the bows of Kyndryl’s management. To be more precise, it's more a barrage of artillery fire, as investors obsess with bashing tech firms that sustain the old, as opposed to their hugely inflating the valuations of the shiny new tech stuff. What they tend to forget is that much of the old can't be ripped and replaced overnight as the majority of the Global 2000 is in a desperate rush to hurl their legacy into the cloud:

Our Pulse study of 800 Global 2000 enterprises clearly illustrates two factors that dominate the focus of leaders:  moving operations into the cloud at speed and training staff to understand how to balance digital business needs in a virtual environment.  Surely there is still some value left in the likes of a Kyndryl as firms demand immediacy of cloudification and a desperate need to plug talent gaps fast?

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In short, Kyndryl has started life as a separate entity with still-colossal revenues of $19 billion. After a lackluster first earnings report the market cap was a mere $4 billion, which has now slipped even lower. However, these warning shots are not just a worrying sign for Kyndryl’s new management, but also for service providers weighed down by legacy infrastructure services such as Atos, DXC, and the like.  With tech infrastructure commoditizing faster than knock-off AirPods on Amazon , the need to support rapid complex enterprise change is where the focus is firmly shifting, and where these traditional infrastructure providers can help.

Kyndryl is guiding the markets on the larger addressable market and operational efficiencies

Executives at Kyndryl were suggesting that the separation from IBM would more than double their addressable market from $240 billion pre-spin to $510 billion by 2024. Intelligent Automation, data services, cloud services, security and resiliency are said to be the segments that would drive an expansion of 7% CAGR growth in those segments. The key levers for this expansion are meant to be upskilling of talent around cloud capabilities, a more energy-efficient operation of data centers, and a strong increase in the application of Intelligent Automation. However, in its first earnings statement, perhaps not surprisingly, the big picture is still that of decline, with revenues in Q3 decreasing YoY to $4.6 billion.

While the launch of Kyndryl was underwhelming both in terms of communication as well as conveying a compelling investment thesis, executives were pointing to the new partnership with Microsoft as a reference point for new strategic options after the separation. Furthermore, the company announced a tuck-in acquisition of Samlink, a Finnish service provider focused on financial services (very familiar to Cognizant). Yet, despite this progress, the (ridiculously) low market capitalization is hanging like a millstone around Kyndryl’s neck as there are several IT services firms that can easily digest an acquisition with this price tag, confident of quickly upping that $3.5b valuation to at least $10b. First off, opportunistic M&A moves.

Possible Scenarios. Which firm has the cojones to aggregate legacy infrastructure?

The purists will argue that Kyndryl is a dead asset unless someone revives its mojo, is prepared to cannibalize it’s own assets, and move legacy workloads to the cloud.  But surely there are some juicy clients to be won over and profitability to be eeked out if Kyndryl is handled with surgical gloves.  Moreover, let's not forget about the awesome talent that came across from the IBM divestment including the leadership of the respected Martin Schroeter who knows this business inside and out, and will now have the chance to make some incisive changes outside of the IBM shackles..  

So let’s examine the suitors which would have little problem raising $3-5bn to seal the deal:

  • HCL: Hindustan Computers Limited has a long history of gobbling up commodity IBM service and product lines with the purchases of the Lotus and Domino and previously the Tivoli support business from IBM. Furthermore, it is infrastructure-centric and has long ruled the roost for low cost efficient offshore-centric infrastructure support. With Lotus, for example, it has demonstrated it can extract value from even outdated technologies that have a long shelf life and could take more than a decade to sunset. Yet, the level of integration of an acquisition like Kyndryl is on a vastly different level from anything HCL has experienced, but the firm is gaining confidence with leading complexity at a global scale with massive engagements with the likes of Xerox, Chevon and Exxon.

HFS verdict: We consider them the favorites to make this acquisition with its IBM history and strong heritage and appetite for infrastructure services. It's hard to see them not fancying their chances to make this a super-lucrative venture for themselves and become one of the largest service providers around.

  • Atos: Atos already got its fingers burned with the DXC takeover proposal, which was three times the price, but the same revenue base as Kyndryl. But probably more importantly, it has a power vacuum as the new CEO will only take the helm in January and this purchase is seismic in all dimensions. But there are lessons for Atos to be learned as it is seeking strategic partners for its infrastructure business. However, the most significant appeal for Atos would be the immediate US shop window Kyndryl gives the firm, and an excellent array of client-facing talent to nurture the business. It is indeed a less risky bet that DXC was earlier this year. 

HFS verdict: The new CEO transition will likely derail this for Atos.  However, they could move fast seeing Kyndryl as a bargain replacement for the DXC-sized hole in its aspirations.  A definite possibility.

  • Capgemini: Kyndryl pushes a lot of the right buttons for Cap.  Firstly it would give its infra business a much-needed injection of scale.  And secondly, it finally puts to bed its difficulties getting a strong IT services brand in the US, which has plagued the firm for almost two decades.  A third reason is that Capgemini has grown through many acquisitions and has gotten good at them in recent years, with IGATE and Altran standing out. 

HFS verdict: Cap has made its OT+IT bed and this deal seems a bit too left-field for their new direction. A distinct possibility, but it's likely Cap will shy away from a major infra play in this market.

  • Infosys: Infy has a war chest that could easy cover the price tag, and a pandemic-induced thirst for cloud deals that could easily take the firm down this path.  What’s more, the firm has developed a strong US presence in recent times and can realistically look at absorbing the culture of a Kydryl as it explores where it next directs its focus after three very successful growth years.  On the flip side, Infosys has perennially struggled with acquisitions in the past. Still, Nandan, Salil and Ravi could find themselves needing to roll the dice here while the opportunity is there.

HFS verdict: Makes a lot of strategic sense, but previous acquisition horrors will likely hold Infy back here.  However, a bold move is on the cards after such a strong growth surge, and recent successes with its Cobalt cloud launch and mega Daimler cloud engagement might just tip the balance in their decision-making.

  • Cognizant: The Hudson Yards-led firm may fancy adding some serious infra to its armory as it continues its impressive 2021 rebound and absorbs several smaller acquisitions from the last couple of years.  Brian Humphries is a strong M&A guy and will surely be feverishly running the numbers over this Kyndryl beast, but you have to question whether it has the appetite for dishing out several billion just as the firm is back on a healthy growth trajectory. However, IT infrastructure is an area where  Cognizant could make serious inroads with a power-play like this.  Don’t rule them out.

HFS Verdict:  A definite dark horse in the race, but you have to doubt whether Humphries wants to take such a huge gamble just as the firm has found a strong growth-groove and new leaders settling in to the firm.

  • Google Cloud Platform:  GCP needs access to enterprise clients - plus could support its expanding Google docs/collaboration platform.  It's well-known in industry circles that GCP came close to acquiring DXC a couple of years ago for this very reason.  With the gap between AWS and Microsoft Azure still widening in the enterprise space, you could certainly see Goog making a renewed play.

HFS Verdict:  GCP is an outlier possibility, but you have to question why it hasn't made any moves into infra cloud services since its dabble with DXC.  The price tag is certainly digestible for Google, but you have to think it has shifted focus away from making a major services acquisition - and Thomas Kurian taking the helm definitely shifts the onus to software and not services.

  • NTT or any of the Japanese juggernauts: While any of the large Japanese conglomerates like NTT or Hitachi are pushing strongly on innovation, the attraction could lie in getting access to clients in North America and Europe whilst tapping into an international talent pool. This would be more akin to Lenovo buying the PC business of IBM.
  • Other tier 1 Indian heritage service providers:  Wipro could be tempted, especially with the bold moves taken by Thierry Delaporte.  However, this is likely too much to swallow after Capco, and memories of Infocrossing probably still give Azim Premji heartburn.  TCS doesn't buy anything, but probably should one of these days.  LTI could be a wild card with its recent cloud success and ambitions to break into the top tier.
  • Private Equity: Scenarios could be manifold from asset stripping to creating synergies for a set of portfolio assets. Fundamentally, it would be opportunistic but not strategic.
  • Other Hyperscalers: Probably more of a wild card. The logic could be getting access to clients, transforming them, and consequently upselling to them. If anything, Chinese hyperscalers like Alibaba or Baidu. But even that needs a lot of fantasy.  There were some Google rumors, but we just don't see it

Kyndryl must strike back with clearer communication and more strategic moves

The more likely scenario is that Kyndryl will seek to calm investors' nerves with a much more compelling investment thesis. That would require a more imaginative strategy, beyond an expanded addressable market and improved operational efficiencies to improve its flagging profit margins (see below). For instance, outlining bold investments in innovation or strategic partnerships with Chinese hyperscalers are the messages and actions investors want to see being made. Thus far, communication has focused on infrastructure being the core for innovation. Yet, this is ignoring the elephant in the room: it is a margin-sucking core. The following chart provides the context of the operating margin of IBM’s two services business lines, with Global Technology Services being the core of the spun out entity:

 The Bottom-line:  It's likely we'll see some acquisitive moves on Kyndryl in a market short on talent and great at adding sugar frosting to commodity work

Infrastructure services provide us with a classic example of the Innovators Dilemma - should firms prioritize meeting clients' immediate needs versus focusing on future innovations that could create opportunities in the future?  IBM has made the difficult and (probably) correct decision to spin out its legacy infrastructure assets. Yet, the communication behind the launch of the new company Kyndryl has been underwhelming, lacking a fresh vision for its assets. Therefore, unsurprisingly the financial markets have not been remotely excited by the new company, with a revenue to market cap disparity that is even worse than Conduent and Unisys. Atos and other providers, held back by legacy, can glean valuable lessons from those experiences. It's been many years since we've seen a firm the sheer size of Kyndryl is finding itself in such a position where so many suitors will think they can find some gold in it.

Posted in: Cloud ComputingDigital TransformationIT Outsourcing / IT Services