For goodness' sake, it's Jim Eastlake!

November 30, 2017 | Phil Fersht

Ever wondered how you can get your coffee maker to turn on the airconditioning, while your robotic dog pressure-cleans your car... all with a couple of clicks on your iPhone?  Well, here is the man to give you the lowdown on all embedded intelligence across all connected devices, the man who practically invented the term "IoT" for Gartner during a distinguished career with the Borg, before joining the HfS rebel forces as VP, IoT Technology and Services Research.... Jim Eastlake:

Jim - it's just terrific to be working with you at HfS! Can you share a little about your background and why you have chosen research and strategy as your career path? 

Hi Phil. I think that I can sum that up in one phrase….. 'The Big Picture'.  I began my career at Texas Instruments in 1981. It was a good place to learn the semiconductor business, but TI was very introverted in those days. So, after 6-7 years I decided to join Dataquest, THE preeminent chip research firm. It would only be for a couple of years, then I’d join another semis company. Little did I know that I would become hooked. I loved the opportunity to talk to senior management and strategists from across the industry (Gordon Moore, Charlie Sporck and Jerry Sanders amongst them), focus on the big issues…… and try to figure out what was going on. I’d then formulate my thoughts in research reports that I hoped would educate and inform, and, amazingly, I got good feedback.   

Why did you choose to join HfS... and why now?

The world has changed just a bit since then! We now stand on the cusp of the next industrial age, Industry 4.0 and all that. It is the Professional Services firms that are performing THE vital task of stitching hardware, software and services together. They enable a myriad of “digitalization” projects that deliver huge benefits to society. So, what better place to continue my lifelong exploration of the big picture than at HfS.   

Where is the industry right now, Jim? Are things really that different than five years ago when you started covering IoT?

We’re following a classic saturation curve Phil, and it’s very early days. Things change fast. The industry takes big strides forward all the time. In the past five years, much has changed: platform architectures, security, edge computing, contact T&C’s, formation of industry standards - just everything.

So what can we expect to see from you at HfS... can you give us a little snippet of what you're going to be working on?

Most certainly Phil…… 

After two weeks with the company, I’m deeply into my first IoT Blueprint, scheduled for February publication. We’ve had a wonderful response from participants, so it will be an insightful report. However, feedback from our clients is also focusing my research thoughts on some meaty topics for 2018:

  • What are the top obstacles to IoT adoption, and how can Service Providers help overcome them?
  • What IoT platforms are winning out, and why? And, is there a trend to using “standard” platforms as opposed to a Service Providers’ proprietary offering?
  • What reasoning lies behind the Edge vs Cloud computing decision in a project?
  • Why do customers choose different Providers for different projects?
  • What comprises a true end-to-end IoT solution?
  • What proven business benefits of IoT are emerging in each of the industry Verticals?

And finally, is the analyst industry as exciting as it was 10 years' ago?  

Immeasurably more so, I’d say. Simply because of Digitalization. Change has always represented an exciting time for the industry observers, there’s not been a time like this during my, nearly 40-year, career in the industry. Everything from semiconductors to Services is involved in enabling change that is Societal in scale. Also, on a practical matter, it is now so easy to communicate with clients and to get research to them. Social media, chat rooms, Webex, Skype and the likes provide us with a much more effective communications conduit.  

Jim - it's terrific to have you join us and can't wait to hear about the convergence of OT and IT!

Posted in: IT Outsourcing / IT ServicesThe Internet of Things



Who said change management was critical?

November 28, 2017 | Phil Fersht

Posted in: Absolutely Meaningless ComedyRobotic Process Automation



Welcome to the era of Shock and Awe automation deals... it's the only way

November 23, 2017 | Phil Fersht

Isn't it amazing how history has this habit of repeating itself?  Especially when it comes to services engagements, where the buyer hopes to shed loads of cost and the providers hope to make a handsome profit, while building a utility model to resell similar engagements to many other buyers.

And that is what we're seeing, as the services industry evolves from engagements deriving value from lower wage costs to one which combines lower wages with the RPA arbitrage of repetitive tasks being computerized in software recording devices.  As one analyst firm once famously declared exactly five years ago: "Welcome to Robotistan, Outsourcing's Cheapest New Destination".  Or is it?

The difference these days, is that many of the emerging services engagements are being based more on hope than certainty, where many buyers (often naively) think this is going to be just as easy as lumping the work offshore, and many providers simply have little choice but to sell them the dream, and live through the hell with them, if they want to stay relevant in this market. How else can you build an effective automation-led services model, if you don't have the guinea pig clients to join you on that nice packaged holiday to Robotistan... And, let's face it, how else are both buyers and providers supposed to behave, when there are so few historical benchmarks to set baseline metrics that both parties know are achievable?  Yes people, welcome to the era of Shock and Awe automation deals... it's the only way.

So let's skim over the first phase of RPA:  The discovery phase: "What is RPA?", "Do I use AA, BP or UiPath?", and  "This stuff is easy, let's just PoC it by ourselves". And don't forget the "Our attempts at CofEs always fail, but this time will be different because we've learned from our outsourcing and shared services experiences".  Let's begin the new automation-led journey at the phase where they've selected their products, appointed the CofE lead, and signed a deal with a service provider daring to escort them to the pearly gates of Robotistan:

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The issues that are starting to unravel in this robotic age, is the simple fact that most clients avoided the painful transformation to their data processes and people, during their earlier efforts to source work to lower cost global locations.  They were pretty much able to delight their CFOs with 30%+ savings, without having to do much to change their underlying process architectures (the old "lift, shift then transform" approach usually stopped after the "shift").  The reality of moving into an automation arbitrage environment is that you can't just replicate that work into an even cheaper robotic environment without really figuring out how to do this effectively. 

Bot licenses are not cheap, and simply do not make financial sense for a lot of processes, the way they are currently being operated.  You can simply end up paying $8K a year for a bot that only is utilized for 20 minutes a day, when you could streamline that process into a broader workflow and use that same bot to process a lot more work for the same cost.  Looking at several engagements already in place, clients are committing to significant staff reduction within 12-24 month of contract signing, and many are quickly realizing they are facing some serious complications if they are going to meet the metrics their CFOs are expecting.  Either they end up running operations on desperately thin staff numbers, or they own up that they need to rethink that they need a significant transformation on their data infrastructures, processes and people culture, if they are going to enjoy the delightful fruits of Robotistan.  As several early RPA adopters will already tell you: You need to do MDM before you RPA.

When you talk to some of the leading consultancies in this space, they will tell you that they are making more of their revenues on pre-implementation transformation work, just getting clients into a place where they can do this.  They will also tell you the issues are not about the technology, but much more about the change management necessary to deploy the technology effectively.

The Bottom-line: The early RPA adopters are doing everyone else a huge favor by writing the new rulebook

The biggest issue facing the services industry today is that we have run out of silver bullets, BandAids and scapegoats.  In order to get to Robotistan, you need to finally look deeply into your underbelly of messy processes, spaghetti code, manual workarounds and other funky ways of handling exceptions.  Moreover, you need to look at your people and figure out how to foster a culture of inclusion and innovation. Most enterprises have been stagnating for years, but as the guinea pigs find their way through their shock and awe of having to conduct real surgery - and psychotherapy - on themselves, a new rulebook that guides us through the steps we have to take to learn, think, calculate and act, will emerge that many of the laggards will gleefully follow.  

Posted in: Robotic Process Automation



Sumitomo Group announces the largest-ever RPA deal, but is this really all RPA?

November 20, 2017 | Phil Fersht

Japan is currently the only major developed country that is experiencing a population decline and many of its ambitious enterprises are increasingly desperate to find new means to get work done without over-relying on human labor.

Unlike other developed economies, it is not offsetting population decline with immigration, and most its firms have proven very reluctant to engage in offshore labor arbitrage over the years. In addition, Japan has the largest proportion of elderly citizens of any country in the world. In 2014, 33% of the population was over the age of 60 and this percentage is increasing. Hence, getting the most out of its shrinking workforce to keep their enterprise healthy is of utmost importance to a country which loves long-term planning. No joke, but I was once asked to review a 100-year business plan from a major Japanese conglomerate!

Given its shrinking productive population, combined with its wealth, the cost of labor is high. Consequently, its companies are often the first to adopt new technologies, including artificial intelligence and robotics to increase productivity in a market with severe skills shortages. In addition, Japanese firms increasingly struggle to acquire necessary skills to optimize their technology investments which, in turn, raises the cost of these skills. This is leading to increases in spending with third party service providers that help to fill these skills gaps.

A massive automation-led services engagement is announced, placing RPA in a whole new bracket for value and cost impact

Hence, it was no huge shock when major Japanese financial services conglomerate, Sumitomo Group, announced an unprecedented RPA initiative (see the news release), with savings claimed to be in the hundreds of millions of dollars (also see link on UIPath's website). However, while this is a tremendous public endorsement for the potential benefits of RPA, this appears to be a massive corporate restructuring that is using RPA as a catalyst for labor reduction.  We already have discussed (see link) how Japanese firms love to deploy automation to increase productivity and competitiveness - it's in their DNA as a firm with deep technology and manufacturing roots. In short, most Japanese firms do not suffer from the same negative connotations of automation that their Western counterparts - they are proud to be able to infuse quality and efficiency into their processes.

However, we caution enterprises to take some of the grandiose claims with a bucket of salt, as we've not seen anything near these touted levels of productivity gains yet realized, as outlined by HfS analyst John O'Brien in his latest POV.

It’s being touted by some participating suppliers as the largest-ever RPA implementations worldwide, although, ironically, we don’t yet know how many robots are going to be used.

We understand it’s a significant contract in terms of dollar value, and most of the implementation and transformation work is going to IBM. UIPath is doing the (attended) front office RDA automation and the (unattended) back office RPA automation. Blue Prism has also been involved doing some unattended automation in the back office, but SMBC declined to mention them in their press release (see link) which clearly points to UIPath as the prime automation software partner in the engagement moving forward. 

According to SMFG/SMBC, the attended digital workforce supports the group’s front-office centric activities, enabling the staff to develop the automation themselves and to work alongside the robot by exerting direct command over it. Complementary, the unattended digital workforce targets all the high volume processes that do not require the human touch, working 24 hours per day and 365 days per year to sustain high-throughput, high-intensity processing. SMFG/SMBC has endorsed UiPath as ‘highly usable and scalable’ supporting the initiative during this week’s UIPath conference in New York.

Bottom Line: Massive kudos for RPA being demonstrated at scale, but this appears more like a massive corporate restructuring using RPA as a catalyst for change

There’s no doubt that right now this endorsement from SMFG/SMBC is great kudos for the RPA vendors aiming to scale enterprise-wide – the most jaw-dropping initiative yet that takes RPA to the 9-figure level in terms of perceived monetary value.

However, RPA initiatives, in general, have not nearly met cost savings and productivity targets anything near these touted outcomes.  We’re just not there yet as an industry – sure, many of the more mature deals today are yielding value benefits in the $1m-10m range, once they are being managed effectively, but to jump from these levels to the hundreds of millions is massively far-fetched. 

At HfS, while we believe there are genuine intentions from Sumitomo to leverage RPA to free-up and eliminate human labor, there has to be a much broader corporate restructuring plan, way beyond the digital labor initiative, that will get Sumitomo to these lofty targets. It’s also important to point out that these ambitious enterprise-wide deals are already going on in other organizations – for instance, we understand Blue Prism is involved in a number of projects of at least this size across the globe. But these companies are much less willing to share the details of their programs with the wider community – clients, employees, and shareholders are all going to be impacted in some way by the expectations being set, and whether they are realized or not.

Keeping quiet is often the easier way to avoid the kickbacks when things inevitably go wrong. Whether naïve or not, SMFG/SMBC’s level of disclosure means it's going to be an important test case to assess the success of scaling RPA across the enterprise.

HfS subscribers can click here to view our complimentary analysis on the initiative, by John O'Brien and myself 

Posted in: Buyers' Sourcing Best PracticesCaptives and Shared Services StrategiesRobotic Process Automation



Mike Sutcliff, Digitally Dangerous

November 16, 2017 | Phil Fersht

Accenture's strategy has always been pretty straight-forward:  focusing on its major clients and making sure it stays ahead of the pack, where the marketing is moving. This was pretty much the story when we spoke with Accenture Digital's Group Chief Executive, Mike Sutcliff, two and a half years ago (view blog)... and today all these intentions have been backed up by billions of dollars of bold digital investments, vastly outplaying the competition:

Click to Enlarge

So we hunted Mike down for an update to talk about these massive recent investments and how this Accenture Digital business is shaping up...

Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Mike - it's been a couple of years since we first discussed the big digital push your firm is making.  Can you share an overview of how the market has evolved since then?

Mike Sutcliffe, Group Chief Executive, Accenture Digital: Sure Phil. Thank you for having me. I guess the first thing I would note is that companies started thinking about digital as a channel or a technology, and then they started to understand that they had to design omnichannel

Read More »

Posted in: Digital Transformation



Since when did AI become the job creation antidote to automation's job destruction? Time for an augmented reality check...

November 09, 2017 | Phil Fersht

We seem to have suddenly shifted from the doom and gloom of robots taking our jobs to people proclaiming that AI is going to create millions of new jobs.  And if you haven't endured this latest round of hype, I envy your unique skill in removing fake news from your life.  

Suddenly AI is the antidote to automation!  Really?

Don’t we have a responsibility to inject some reality into this conversation?  Today’s business world is about removing physical touchpoints, about fixing our data, about running processes faster, smarter, more autonomously, and cheaper… So where are the real links between the universities, the politicians, and the businesses?  Why aren’t we really debating this stuff in the senates and parliaments if today's organizations are on an inexorable drive to sub people for better data? Instead, we have academics and "analysts", desperate for attention, making unsubstantiated predictions that are only fuelling the tech firms, desperate to sell their wares without this negative connotation that the real ROI of selling their products is tied to labor elimination.  

Let's just make the call - AI is indirectly and inextricably tied to the elimination of "unnecessary" labor, by nurturing systems that get smarter with each incident and transaction. The smarter and more autonomous your operations become, the more agile and efficient your business becomes. That's not a terrible thing - in fact, you are doing your valued staff a huge favor by keeping them employed and keeping them relevant to your business.  But you are not creating a net influx of jobs into your organization, you are becoming more fluid and competitive.  Sure, you'll probably look to add some Python and R developers, Machine Learning experts, serious data geeks and design thinkers - or you may just pay consultants to do it all for you - but the bottom-line, here, is that you're going to be shedding a lot of your left-brained staff performing jobs that can be artificially automated, at a much faster rate than you'll be adding the data-oriented people you need to digitize your business.  AI is about doing more with less, not more with even more - let's get real.

Don't get me wrong, the possibilities of faster, smarter, touchless data flows between the customer and the operations of the business, are critical to promote competitiveness and survival, but let's stop sugar-coating the true purpose of data driven intelligence - the less businesses need to rely on people and the more autonomously they can run processes, the more nimble and profitable they will become.  Now if these businesses then choose to reinvest their new-found wealth hiring loads more people, I will tip my hat to these purveyors of job hope, but let's fact facts, the companies of the future will be running a lot of smart technology with a smaller group of savvy people to manage it all.  

Let's take our much-loved services industry, which is pretty high up the tech-savvy ladder and comprises firms where efficiency and competitiveness are its very DNA

The global IT and BPO services industry employs 16 million workers today.  By 2022, our industry will employ 14.8 million - a likely decrease of 7.5% in total workers (see our research methodology and full blog here).  This isn't devastating news - we'll always lose this many people through natural attrition, but what this data signifies is this industry is now delivering

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Posted in: Digital TransformationRobotic Process AutomationCognitive



AI is bollocks... or is it?

November 08, 2017 | Phil Fersht

Well someone actually said it - and it may not come as a complete shock that it's come from everyone's favorite RPA evangelist Guy Kirkwood, of UIPath fame. Even more impressive is guy's beautiful command of the English language to describe the latest hyped term "AI", now that most the hypesters have got bored touting the massively disruptive impacts of IoT and digital - and the automation conversations have just got a bit rinse and repeat.  Guy is saying that true AI is when we arrive at the "singularity" (which Ray Kurzweil predicts will happen in 2029), when machines will become smarter than humans, abruptly triggering runaway technological growth, resulting in unfathomable changes to human civilization.

Guy basically claims it's incorrect that we are dubbing the conglomeration of tools, such as NLP, Machine Learning etc as "AI".  While I agree with Guy that the inane use of the term AI is driving me (and many of my colleagues) to scream "Please just stop the bollocks!", my point to him is: what else do we call tools which are all about "the simulation of human thought processes across enterprise operations, where the system makes autonomous decisions, using high-level policies, constantly monitoring and optimizing its performance and automatically adapting itself to changing conditions and evolving business rules and dynamics."  So if this isn't Artificial Intelligence, what is it?

And my further point, here, is that these tools are already here and being heavily piloted and evaluated, according to 400 major enterprises in our recent State of Automation and AI Study:

Sorry, Guy, but while we all want to scream "bollocks!" at all the bollocks, I think we're stuck with AI until the next buzz term comes along =)

Posted in: Cognitive ComputingOutsourcing HerosRobotic Process Automation



The first industry mandates for the Future of Operations in the Robotic Age

November 07, 2017 | Phil Fersht

HfS recently hosted the debut session of the newly-formed Future of Operations in the Robotic Age Leadership Council (FORA) in Chicago. The purpose was to bring together stakeholders across all corners of enterprise operations, services and intelligent automation software arenas to lock heads and map the course of this emerging industry: business operations being fundamentally redesigned by the impact of intelligent automation and digital technologies.  We believe this is becoming known more broadly as the “digital operations industry”.  So let's hear the consolidated feedback from the industry's key stakeholders:

The FORA Mandates, Q4 2017

1) Automation technologies can collapse the barriers between front and back offices

While there’s a lot of noise and scaremongering in the public sphere around job losses, the real story is that automation technologies of various flavors and deployments — RPA, RDA, AI, etc. – are quietly creating a new execution layer on top of the IT “stack,” one that offers a flexible, reconfigurable operations platform for the business.  Freed from the costs and rigidity of legacy systems, savvy enterprise architects see automation technologies, together with the data they capture and generate, as a way to digitally connect their back-, middle-, and front-offices for greater throughput, quality, and responsiveness. 

2) Commercials of engagements must be reconstructed around the economic value of robots

Automation is destroying the traditional FTE-based cost/value equation for service delivery, and we need a new “post-FTE” commercial model, one based on partnership, business outcomes and joint value creation for buyers, advisors, and provides.  The economic value of a robot is vastly different in kind, cost and scale from that of a human being, and is forcing us to rethink the value of different kinds of work – separating rote transaction work from judgment-based work.  Ultimately, this will require all parties to re-think their offerings and value propositions and to demonstrate imagination, creativity and flexibility, while educating their respective stakeholder communities and managing the financial and human impacts.

3) From the C-Suite to the manager, enterprises need people who appreciate and understand the value of data

Success in achieving the OneOffice future requires a blend of strategy, business design, and technology skills to re-think and re-configure core processes with a singular focus on improving the customer experience v. just cutting costs.  Automation per se looks deceptively simple (and is often sold with that promise) but can fail to deliver true value if simply retrofitted on existing processes; coupled with artificial intelligence and cognitive, automation can support new services and capabilities at speed and scale.   But thoughtful tool selection and disciplined deployment is crucial.  And as data grows exponentially, it becomes the essential raw material for every enterprise in every industry.  At every level of the organization – from the C-Suite to manager – enterprises need people who appreciate and understand the value of data and who can identify/extract the most important customer-relevant insights.

4) Businesses must be redesigned from a logical rather than physical perspective

Native digital businesses have demonstrated the value and power of a digital operations approach by thinking about their business from a logical rather than physical perspective – focusing on customer outcomes rather than internal inputs.  They begin with an intense focus on identifying their customers’ most important ‘priorities’ (as distinct from ‘needs’) to design a differentiated and dynamic customer experience.  They then build and optimize a collaborative partner ecosystem to deliver that experience, leveraging specialist capabilities and resources.  The result is a more disaggregated but fiercely cooperative business model.  The challenge for non-digital natives is to re-imagine their businesses from this logical perspective and to demonstrate what one executive called the “willingness to let go.”  That implies – and requires – a fundamental re-thinking around control and governance as well as motivation and reward, supported by deep and enduring commitment to change management.

Download your complimentary copy of the full debrief from the inaugural FORA summit here 

I hope to see many of you in London on 7th December for our next round of pivotal discussions. A big thanks to all of you for your terrific support with the FORA Leadership Council initiative,


Posted in: Buyers' Sourcing Best PracticesCognitive ComputingRobotic Process Automation



Enterprise Automation and AI will reach $10 billion in 2018 to engineer the OneOffice

November 04, 2017 | Phil Fersht

As we brace ourselves for yet another deluge of dodgy automation and AI predictions for 2018, where people just make stuff up and hope we don't remember them in a few months, we thought we'd break the mold and actually release some real numbers based on real adoption trends and real expenditure date on software and services.  We also had the audacity to define the market so this might actually make some sense:

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Robotic Process Automation

As we revealed earlier this year, despite all the ridiculous hype, the global market for RPA Software and Services will pass $400 million in 2017 and is expected to grow to $1.2 billion by 2021 at a compound annual growth rate of 36%. The direct services market includes implementation and consulting services focused on building RPA capabilities within an organization. It does not include wider operational services like BPO, which may include RPA becoming increasingly embedded in its delivery.

RPA Definition: RPA describes a software development toolkit that allows non-engineers to quickly create software robots (known commonly as "bots") to automate rules-driven business processes. At the core, an RPA system imitates human interventions that interact with internal IT systems. It is a non-invasive application that requires minimum integration with the existing IT setup; delivering productivity by replacing human effort to complete the task. Any company which has labor-intensive processes, where people are performing high-volume, highly transactional process functions, will boost their capabilities and save money and time with robotic process automation. Similarly, RPA offers enough advantage to companies which operate with very few people or shortage of labor. Both situations offer a welcome opportunity to save on cost as well as streamline the resource allocation by deploying automation.

Intelligent Process Automation

RPA is only 10% of the true picture when it comes to total spending by enterprises on automating their processes.  The internal training and development, pilot projects and trial implementations, is so much larger than simply software licences and third-party professional services to work the software effectively. We term this broader automation market, beyond RPA as "Intelligent Process Automation".  This market will surpass $6bn this year and more than double over the next four years.  

Intelligent Process Automation Definition: Intelligent Process Automation (IPA) is the use of technology to allow a business function or part of the operation of a process workflow work automatically. It includes the use of RPA, BPM suites, Remote Desktop Automation, screen scraping and custom scripting and related technologies.  IPA comprises of two core elements:

  • External professional services: Relates to all external spending focused on developing business process automation strategies / roadmaps and the use/ implementation of automation with business functions.
  • Internal operational spend:  Includes internal and external spending on automation – change management, IT and operational teams focused on process automation and automation use as part of existing business process management initiatives.

Artificial Intelligence

And the most talked about area is Artificial Intelligence (AI), which is already emerging as a billion dollar market for enterprise operations, and could almost treble in spend in four years.  

AI Definition: AI refers to the simulation of human thought processes across enterprise operations, where the system makes autonomous decisions, using high-level policies, constantly monitoring and optimizing its performance and automatically adapting itself to changing conditions and evolving business rules and dynamics. It involves self-learning systems that use data mining, pattern recognition, machine learning. virtual agents, computer vision and natural language processing to mimic the way the human brain works, without continuous manual intervention.

The Bottom-Line: Automation and AI have a significant part to play in engineering a touchless and intelligent OneOffice

However which way we spin "digital", the name of the game is about enterprises responding to customer needs as and when they occur, and these customers are increasingly wanting to interact with companies without physical interaction. This means manual interventions must be eliminated, data sets converged and process chains broadened and digitized to cater for the customer.  This means entire supply chains need to be designed to meet these outcomes and engage with all the stakeholders to service customers seamlessly and effectively.  There is no silver bullet to achieve this, but there is emerging technology available to design processes faster, cheaper and smarter with desired outcomes in mind.  The concept was pretty much the same with business process reengineering two+ decades ago, but the difference today is we have the tech available to do the real data engineering that is necessary:

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In short, every siloed dataset restricts the analytical insight that makes process owners strategic contributors to the business. You can’t create value - or transform a business operation - without converged, real-time data. Digitally-driven organizations must create a Digital Underbelly  to support the front office by automating manual processes, digitizing manual documents to create converged datasets, and embracing the cloud in a way that enables genuine scalability and security for a digital organization. Organizations simply cannot be effective with a digital strategy without automating processes intelligently - forget all the hype around robotics and jobs going away, this is about making processes run digitally so smart organizations can grow their digital businesses and create new work and opportunities. This is where RPA adds most value today... however, as more processes become digitized, the more value we can glean from cognitive applications that feed off data patterns to help orchestrate more intelligent, broader process chains that link the front to the back office.  In our view, as these solutions mature, we'll see a real convergence of analytics, RPA and cognitive solutions as intelligent data orchestration becomes the true lifeblood - and currency - for organizations. 

Do take some time to read the HfS Trifecta to understand the real enmeshing of automation, analytics and AI.

Posted in: Cognitive ComputingDigital TransformationDigital OneOffice



Are we poised to see a new era of digital operations advisors?

October 29, 2017 | Phil Fersht

Over the last 15 years, we've witnessed the rise and fall of the sourcing consultancy.  Clients needed help finding the right services partners - at the right price points - and the likes of EquaTerra, TPI (now ISG), Everest, Alsbridge were there happily to oblige.  Today, only ISG survives as a credible boutique sourcing advisor, while the Big 4 have moved into developing sourcing practices of their own.  However, new data from our soon-to-be-unveiled, Journey to the Digital OneOffice study, conducted with the support of Cognizant, shows that decision makers for business operations are looking largely to other places to stay ahead of all this change:

However which way we look at this, not even a third of decision-makers are relying on consultants in this ever-confusing market, when you would have thought consultants would be licking their lips at the opportunity.  Don't these guys feed off confusion, hype and nervousness from the well-resourced enterprise leaders, only too keen to pay their rates to get a steer on what to do next?  What's going wrong here?

Consultants just don't do research.  For example, I have yet to see a single set of publications from any of the sourcing advisors examining the performance of the RPA solution vendors.  There are a million best practice pieces, but nothing of actionable substance.  Clients want substance, not just the fluff.  Clients are shifting to soliciting help from firms which can do the work and have the proven knowledge to support it, which is why so many are resorting to analyst reports to figure stuff out.

The MBA bus can't find its usual parking spot in the visitor's parking lot.  As the demand for expertise in areas such as complex operating models, understanding murky automation challenges and being able to design outcomes-focused models is reaching unprecedented

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Posted in: Digital TransformationOutsourcing AdvisorsRobotic Process Automation



The State of Automation and AI Study 2017: 400 operations leaders air the real deal

October 28, 2017 | Phil Fersht

Finally, we can stop freaking out at all these lovely projections, such as "AI will eliminate 1.8M jobs but create 2.3M" in the next couple of years, and "47 percent of total US employment" being at risk and "AI being possibly the last event in human history".  Oh, and who can forget that recent whopper, "96% of clients are getting real value from RPA".

We got so sick of this nonsense, we just went out and surveyed 400 enterprise automation and AI decision makers across the Global 2000, split across IT and business operations functions, and hit them with some very straight poignant questions about their attitudes, satisfaction levels and genuine plans for both AI and Automation across their business operations.

But let's start with the hype: AI and Machine Learning is now one of the most critical strategic directives being dictated from the C-Suite onto the operations function

81% of operations leaders are feeling the pressure from their bosses to reduce the reliance on mid/higher skilled labor, viewing AI and Machine Learning as increasingly important or even mission-critical directives to drive this. Only cost reduction beats this out as a priority, but as we all know, we can't reduce costs much further without investing in our digital underbellies:

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What's clear is that enterprises are frantically evaluating their talent (81%) and looking to collapse these silos in the middle/back offices to improve their customer experiences.  And they see AI, Machine Learning, and process automation as the levers to achieve this. 

So let's summarize the key findings from the study, and you can download your copy here :

  • Automation is the number one strategic priority four-fifths of enterprise C-Suites are placing on their operations. Enterprises see AI and machine learning (81%) and process automation and robotics (82%) as important C-suite directives toward operations strategy – higher than any priority other than cost reduction.
  • 98% of enterprises have an automation agenda, but a third already have embedded it into their service delivery. Every organization today needs to have an automation strategy and that is reflected in the responses in our survey; only 2% suggest not having a strategy as of now, while 20% are in the process of formulating their strategy. Already, 31% of enterprises are integrating automation into the fabric of their service operations. Others are setting up dedicated CoEs (18%) and working with service providers (13%).
  • Corporate leadership and IT are most active driving the automation agenda. Decision making is increasingly being led by the CEO (54%), CIO/IT Director (57%), and CFO/Finance Director (35%). Additionally, a diverse group of automation influencers and stakeholders emerge, notably the finance department (49% consider as influencers), procurement (47%), data center managers (51%) and purchasing managers (48%).
  • Deployments of RPA as well as AI starting to scale out with varying degrees of maturity. RPA is seeing rapid adoption and AI will become mainstream in two years. More than 70% of customers are planning to deploy RPA over the next two years and more than 50%

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Posted in: Buyers' Sourcing Best PracticesCognitive ComputingHfS Surveys: All our Survey Posts



Meet Rajan Kohli... adding the fizz at Wipro Digital

October 25, 2017 | Phil Fersht

If there one service provider who's really got focused over the last couple of years, it's Wipro - not only expanding all its main business lines and making some exciting acquisitions, but also revamping its brand and showing a very focused approach to its marketing and positioning. While several of its Indian-heritage competitors have struggled to differentiate themselves, or just failed to develop a coherent strategy, Wipro has stayed focused on pushing its automation platform, Holmes, and making determined efforts with its digital proposition.  One man who is tirelessly pushing its digitization efforts to a new level is Rajan Kohli - a really nice guy who doesn't mince his words....

Phil Fersht, CEO and Chief Analyst, HfS Research: Good afternoon Rajan - thank you for your time today. We would love to hear more about Wipro's digital strategy. We have been hearing a lot about the opening of your new centers and the recent acquisitions of Designit and Appirio. There really seems to be a lot of energy around the strategy here.  Maybe we could start with a bit about you, Rajan... could you tell us a bit about yourself, your background and how you came to be leading Wipro Digital?

Rajan Kohli, Senior Vice President and Global Head, Wipro Digital: It's a great honour to be speaking to you, Phil. I have spoken to you many times before, but this is the first interview with you specific to Wipro Digital. So thank you.

A brief history about me. I have been with Wipro for 22 years now. I have been through various roles within Wipro in both Sales and Leadership. I was also the Chief Marketing Officer and

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Posted in: Digital Transformation



It's here. The RPA Bible.

October 18, 2017 | Phil Fersht

Tired of all the marketing fluff?  Exhausted by all those top tips?  Well, your wait is over, we teamed up with the robot gurus at Symphony Ventures to put together the ultimate 84-page bible on how to do this robot shit properly.  Nuff said...

Click to download your copy of the definitive RPA Bible: Your practical and technical guide to RPA.

Posted in: Robotic Process Automation



#NASSCOMBPM 2017: The Indian BPM industry graduates from biryani to bhuna, but needs to stop celebrating the past

October 15, 2017 | Phil Fersht

Rohit Kapoor (right), Chair of the NASSCOMBPM Council, hosts his first summit in Bangalore

It was good times revisited in Bangalore last week, where the Indian-heritage BPM (BPO) services firms gathered for their annual reality check, courtesy of NASSCOM, India's leading IT and BPM services body.  We were pleased to get the chance to meet with many of the industry's finest and have some frank exchanges on what this industry must do to stay relevant and keep eking out a growth curve. 

And, similar to the recent HfS summit in Chicago, the conversation has moved rapidly along in recent months with a genuine buzz of excitement about the future.  In short, most folks are stepping out of the comfort zone and attempting to embrace the emergence of technology-driven value levers as part of the very fabric of the future of business process services. However we look at this, we're becoming a data services industry that supports the inexorable enterprise drive towards Digital Operations

The NASSCOM folks fondly remember how we once described the Indian-heritage BPM (BPO)

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Posted in: Business Process Outsourcing (BPO)



Meet F&A's new Big Seven: Genpact, Accenture, IBM, TCS, EXL, Capgemini and WNS

October 12, 2017 | Phil Fersht

Welcome back to the F&A business, which we've been tracking religiously on HfS since our very first blog post more than a decade ago, famously titled "Beyond Labor Arbitrage: The New F&A BPO Frontier".  And how much has changed since then (ahem).  However, what has changed is the rampant excitement about the new arbitrage: RPA, where many clients hope they can still avoid that true process transformation by mimicking those same obsolete processes in a piece of robotic process recording software.  At some point, they will need to stop dodging the transformation bullets and actually make real investments in their underlying process and data workflows, but until that time, let's see how the market continues to shake out in our 2017 F&A As-a-Service Blueprint, so let's hear from the blueprint lead author, Barbra McGann...

The HfS Blueprint is a guide for the service buyer to learn more about what to expect by engaging with a service provider. What does this service provider bring to the table above blocking and tackling? Where does the buyer need to challenge his or her own assumptions or organizational culture to see impact beyond tactical conversion of tasks from human to robotic automation or labor arbitrage? How does the service provider need to engage to provide long-term value – beyond green light SLAs for turnaround time and data accuracy?

This year’s HfS Blueprint: F&A As-a-Service reflects a time of transition as service buyers and service providers move to “finance of the future” – more strategic use of talent, technology, partnerships, and operating models to achieve high-quality, more agile, and insight-driven finance operations. Any company not thinking of how to bring together these elements to impact business outcomes is behind the curve at this point, although it’s not too late to get going. And service providers in this mature services market can play a valuable role in helping broker within and across organizations to develop and/or deliver against a roadmap for “virtual finance.”

The question is not whether or not to use RPA or cognitive computing but how, when, and where

Many service buyers, from our research, are mostly interested in low-cost standard delivery. What will get that next level of efficiency and cost savings – and how does robotic process automation (RPA) play a role in it? What is the balance of RPA versus lower cost delivery centers – movement from 1st to 2nd to 3rd tier cities, to use industry terminology? In too many cases, labor arbitrage conversations are being replaced by robotic labor arbitrage – a combination of lower cost delivery locations and RPA. The industry is at an inflection point -- do service buyers and service providers have a choice to make – (a) move up the value chain with strategic collaboration – defining and addressing business problems, outcomes, and designing appropriate solutions that use digital technology or (b) promise 40-50% further improvement through digitization or automation, a tactical approach. Or is there a combination in play? The industry sits on this knife’s edge today.

Last year many of the finance and operations leads we spoke to for this study when asked about RPA, were, with few exceptions, in one of two camps: had heard of RPA or hadn’t. This year, every client is familiar with RPA and has some kind of status to share, ranging from “discussion” of how and where to use it, working on a business case, or already using it either in-house or with service provider partners. It’s driving change in how the industry thinks about operating models, contracts, governance, partnerships, talent development, and change management. Earlier adopters in the business are realizing that automation for the sake of using the technology or in trial/pilot is not as impactful as when there is a business case for change in partnership with IT to achieve a targeted outcome for a process, e.g., touchless invoicing.  There is a disparity in the market as to whether clients want/will develop and keep intelligent automation capability in-house or partner with service providers. We heard examples of both decisions. 

Collaborative engagement is an increasing factor in whether or not service providers have “stickiness” with clients

There is a current trend in “considering options” as contracts come up for renewal. A number of service buyers shared their stories of re-bidding parts or all of their finance BPO contracts to (a) create balance in a service portfolio to have strategic partners where there is stronger alignment on strategy and culture as well as thought leadership for finance and tactical partners to address the transaction and increased use of RPA; (b) shake up service providers that clients believe are complacent, e.g., not consistently raising the bar or challenging the status quo.

Clients are (a) kicking it up a notch in partnering for the long –term with strategic roadmaps, (b) getting impatient with service providers that seem to be “resting on their laurels,” complacent, or just not aligned or insightful about the client culture or work/objectives, and (c) more willing to look beyond the traditional market leaders to “up and comers” who can prove trustworthiness, credibility and cultural alignment. This was reflected in scores for “value of engagement over time.” With the increasing mix of technology – platforms for procure-to-pay, record-to-report, and order-to-cash, as well as robotic and cognitive computing – in the business process services market, clients need to be looking at where and how service providers are investing in their own and third-party software, technical and business/consulting talent, and change management.

F&A As-a-Service Winners are service providers with clear vision and momentum towards transformational finance… but face the challenge of making an appropriate match with clients culturally and having the talent to deliver on these promises consistently

Our study included over 60 client interviews as well as surveys, service provider briefings, and additional research and analysis covering the vision and operationalization of F&A As-a-Service. All of the participating service providers are making investments and progress in some way towards a more insight-driven, digital-enabled finance function. The ones that have the clearest and compelling vision and scale as well as roadmap and evidence of investment and progress toward landed in the Winner’s Circle. However, there are also some unique value propositions by players on the whole map. 

As always, we recommend that when you as a service buyer – finance, procurement, or operations executive – are evaluating a service provider for a new or existing business process services engagement, that you consider that best fit for your organization. Criteria, as reflected in our methodology for the blueprint, should cover culture, strategic, technical, and corporate alignment. 

Click graphic to Enlarge

F&A As-a-Service Winner Review

Accenture: One of the few service providers that consistently through the years touts talent development as a differentiator and is working to create a more flexible workforce management approach (Accenture Agile Workforce). It’s also invested in building out and

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Posted in: Business Process Outsourcing (BPO)Finance & Accounting BPORobotic Process Automation



Got anything better to do Thursday? Come along to the #Nasscom summit in Bangalore

October 09, 2017 | Phil Fersht

Amigos - I'll be waxing on about my favorite new topic "The Future of Operation in the Robotic Age" this Thursday morning at the Nasscom Summit in Bangalore - reserve your spot here!  I hope to see you at my favorite hotel in the world... the lovely Leela in Bangalore...

Posted in: None



Have we finally become an industry? Have we become the Digital Operations Industry?

October 05, 2017 | Phil Fersht

The worlds of software, business operations and services have always been chasms apart – different mindsets, vernaculars, conversations, ideas of what constitutes value – and vastly different cultures.  Software people never understood the operations folks and vice versa – each thought they were top of the corporate food chain.

However, the past couple of years have seen the coming together of these diverse groups of people to rethink completely how we run global operations in this robotically digital era (or whatever we want to call this curious period of time in which we exist). 

One thing is abundantly clear: the outsourcing phenomenon which has gripped the Global 2000 over the past decade is making way for a genuine industry in which we all play a part – an industry where we have no choice but to develop learning programs, sustainable business strategies and make real, actual investments in order to survive.  And what’s most fascinating

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Posted in: Business Process Outsourcing (BPO)Design ThinkingDigital Transformation



Meet Elena the analyst

October 02, 2017 | Phil Fersht


In case anyone thought we were going soft, we're proud to announce another feisty outspoken analyst to the HfS family to help drive our coverage of industries - most notably the hi-tech and banking sectors - Elena Christopher

Elena - it's just terrific to be working with you at HfS!  Can you share a little about your background and why you have chosen research and strategy as your career path?

It's wonderful to join the HfS family. Research and IT and business process services have been the prevailing themes of my professional life. I realized while in university studying social science that research and its various methods provide valuable insights into whatever topics you apply it to. In my second job out of school, I was fortunate to be hired by Dataquest (Gartner), which afforded me the opportunity to learn the IT and business process services industries from the ground up. I never looked back. Since 1994, I have served as either an advisor or supplier partner to clients in most commercial industries, working to make sense of the various waves of seminal change in how businesses operate. 

So why did you choose to join HfS... and why now?  And didn't you want to go back to one of the traditional analyst houses?  

I started my career as an analyst with Dataquest/Gartner. After nine years, I went into industry to build practical experience to complement my theoretical knowledge. I've been in the supplier world for the past ~15 years building and running services businesses. I was resolute in wanting to come full circle and connect my practical experience with my analyst skills. However, I only wanted to go with a firm that was doing things differently and one with which I personally had derived value. I was very attracted to HfS' approach of tackling and breaking down the major trends and issues in an incredibly timely fashion with much of the research accessible open source. I also appreciated the independent perspective and use of enterprise data rather than substantial reliance on supplier research. And as a services research company it is perfectly aligned with my experience base.

So where is the services industry right now, Elena?  Do you see us in a transition state, or is something else bubbling to wake us all up?

We are most certainly in a transition state - with most industries in the process of being remade as disruption and enabling technologies change the fundamental concepts of business as usual. The services industry is enabling much of this transformation but it is also in throes of change with increased impetus placed on platform-based models and business outcomes. 

So what can we expect to see from you at HfS... can you give us a little snippet of what you're going to be working on?

l'll be driving the industry-specific research agenda for HfS - digging into the major trends impacting each in-scope industry and the implications for business process and IT services. I'll collaborate with my fellow analysts to cultivate the industry angle on major trends such as automation, artificial intelligence, blockchain, digital business models and smart analytics. My primary coverage areas are High-Tech and Banking. In addition, I'll drive the industry point of view across HfS research. 

And finally, is the analyst industry going as exciting as it was 10 years' ago? 

Probably more so - there is so much change and transition afoot that creates a great need to research near-term and future horizons

Welcome back to the analyst community, Elena - am sure you'll find HfS a fascinating laboratory for observing the next phase of this industry!

Posted in: None



Azeem Azhar will deliver an exponential keynote at the London FORA Council this December!

September 29, 2017 | Phil Fersht

After the unprecedented success of our inaugural Future of Operations in the Robotic Age (FORA) Council in Chicago last week, we're thrilled to announce esteemed strategist, product entrepreneur and analyst Azeem Azhar will keynote our next FORA council session in London 7th December at the Andaz Hotel. 

Azeem has spoken for TV and radio on BBC, CNN, Sky, among others, lectured at Harvard and London Business School, and writes a column for the Financial Times. Azeem has taken the stage at major tech conferences, including TechCrunch, The Europas, DLD Conference, WHU Founders Conference, At the HfS FORA Council, he'll deliver his Exponential View on the impact of artificial intelligence on global business and how our near future is shaping up as we ride this disruptive wave.  He'll also stick around to engage with the council members and co-lead our AI breakout session,

I cannot wait to unveil the full FORA agenda that spans the leading minds and stakeholders across the worlds of RPA, AI, operations services very soon... stay tuned folks, but this will be our most explosive summit yet.

Don't forget to apply for your seat, as this will fill up very fast... be there or be eliminated!


Posted in: Robotic Process AutomationCognitive



IBM, Accenture, KPMG, TCS, Deloitte, Wipro and Atos lead the 2017 Digital Tech Consulting blueprint

September 25, 2017 | Phil Fersht

We interviewed 300 digital technology decision makers across the Global 2000 to get up close and realistic about their experiences working with all the main IT consultants and services providers, when it comes to their consulting and strategy abilities (report can be accessed here).  

What's unique about the HfS approach is we don't allow any of these firms to opt-out of our report, and we also do not need to rely on the wined-and-dined reference clients for their rose-tinted views. So how did this all shake out?

Click here to Enlarge

For us, the standout performers are TCS, KPMG and Wipro, after the obvious "big two".  And this is so much more about pragmatism and focus, than big marketing and glitz.  

Let's take a closer look out the digital tech services firms which make up the 2017 HfS Winner's Circle:

IBM: IBM is all about technical skills and the ability to bring a wealth of enterprise IT experience to fix a problem - the company has thrived on huge transformations, which has proven both a bane and a boon for the firm, as the whole IT industry shifts to smaller-scale deals, more one-off projects and the demise of the multi-year billion dollar managed services contract.  Big Blue has invested in strong business consulting skills across offerings including customer experience/design thinking to help clients understand digital and drive value out of tech projects.  In addition, the arrival of former Accenture consulting head Mark Foster is having a significant impact on IBM's approach to services as the firm seeks to embrace the value of Watson and break out of legacy FTE engagements which are weighing down so many service providers. While it's been a tough couple of years dealing with these winds of change in the traditional global services sector, the firm's focus on designing and operating complex solutions is starting to bear fruit and it's recent top spot in the Digital OneOffice Premier League emphasizes its broad capabilities across the front, middle and back offices. It's big challenge now is to become the ultimate "whole is greater than the sum of the parts" partner for clients.

Accenture: Accenture scored highest in the ability to execute criteria, supported by a plethora of recent acquisitions that shore up its digital business. With digital talent and resources in abundance - the challenge now is to integrate of the likes of Karmarama, Chaotic Moon and Kuntsmaan and align these front office design areas with the firm's digital technology execution.  The landmark acquisition of Fjord has paved the way for the firm to allow its digital assets to maintain their own creative cultures and leverage the Accenture execution and consulting machine.  However, the massive new abundance of digital acquisitions (19 so far this year) could prove challenging, simply because of the sheer size and scale of the new investments.  Whichever way we look at it, Accenture is now firmly competing with advertising agencies for digital accounts, and is redefining the whole digital market place with its aggressive approach. Accenture's challenge now is to capitalize on its terrific momentum in the digital space and really bridge its newly-acquired design capabilities with its execution machine.  With projects increasing in business focus and the need for data-driven consulting, this should be Accenture's market for the taking, but ultimately the firm will need to venture beyond its comfort zone inside the Global 2000.

KPMG: KPMG’s capabilities in the traditional consulting space haven’t held it back from pushing a compelling digital narrative. The firm's digital clients are benefiting from the cross-pollination of design talent and operational prowess to address business challenges. The firm's operational prowess to integrate the back office with the customer experience has been noticeable with several major clients, and its ability to partner effectively with the likes of Microsoft and IBM are putting the firm in a surprisingly strong position as one of the most nimble of the "Big 4" to work on spot projects and larger more complex transformations - a critical component of making these digital initiatives successful. KMPG does need to work on its brand positioning in the digital market as it continues its impressive trajectory - both in terms of thought leadership and perception from CIOs.

Wipro: Investments in Designit and Appirio have created a defining set of digital capabilities for the firm - giving the firm the necessary structure and focal point to repackage the firm’s strong operational IT skills to match a client's digital transformation agenda.  While its current digital footprint is still emerging, its ability to partner with digital native pureplays and fintechs is impressive, and its digital design labs in the US and UK great hubs for driving new client work.  We view Wipro as a well-resourced, disciplined outfit which could emerge as a genuine contender in the digital race, as clients needs become more demanding and providers have to be more flexible and aggressive to take advantage. Its challenges moving forward are scaling its consultative talent and finding smart ways to bring its Holmes AI platform into meaningful client conversation.  Wipro is frequently viewed as a "safe pair of hands" for IT projects and it need to work hard to evolve this perception.

TCS: TCS has the scale and capacity to handle heavy IT and digital engagements, which makes the firm perfect for organisations with a lot on their digital to-do list. They’ve also got a great reputation for packaging their deep domain experience into usable solutions for clients. TCS simply has that ability to win any deal in the world if it really wants - its industrial and relentless approach to execution always stands the firm in good stead, and its aggressive more to analytics and automation will be crucial for digital exercises with clients mired in obsolete processes and creaking infrastructures.  Its challenges are managing its next phase of growth, with the firm famous for avoiding acquisitions in favor of organic development.  With this convergence of digital business design capabilities with IT execution, organic growth may no longer be an option as the market consolidates at unprecendeted speed and the emergence of digital pureplays threaten the traditional IT service model.

Deloitte: Deloitte has solidified its position in the digital space, driving innovative thought leadership and research into the market and using it to develop offerings. Similarly to KPMG, the firm can also bring that same “outside-in” broader market perspective to help firms contextualize new technologies and solutions within the broader market and industry trends.  It's no surprise Accenture has recruited Deloitte's head brand honcho, Amy Fuller, to take on the Accenture CMO role next year (see link) - clearly the brilliance of Deloitte's branding and thinking has impacted the industry at the highest levels. However, while Deloitte is clearly an early leader in the space, we are seeing several key competitors closing the gap, both from the traditional consulting space, as well as the outsourcing industry.  We need to see the "what's next" from the firm as competition intensifies.

Atos: Atos’ broad digital offerings include structured transformation projects – such as the Atos Digital Transformation Factory – which offers clients an accelerated journey to embracing digital.  The firm offers significant experience in some industries (mainly public sector, manufacturing and retail) and especially in Europe with a long list of successful engagements.  On the IT enablement side of digital, Atos is clearly doing well, however, adding capabilities at the design front-end would add significant capabilities if the firms wants to compete more aggressively with the market leaders.  However, outperforming the likes of Capgemini and DXC is a significant achievement for the French-led firm. Atos really need a flagship digital acquisition to take its strategy to the next level and keep it ahead of its traditional competitors.

Premium HfS Subscribers can download their copy of the  Blueprint Report,  "Digital Technology Strategy and Consultancy Services 2017" authored by Phil Fersht, OIlie O'Donohue and Jamie Snowdon, by clicking here.

Posted in: Digital Transformation