Blue Prism yesterday announced the acquisition of Thoughtonomy, a SaaS-based integrated automation platform with Blue Prism RPA baked into its core. After six years and much flirting with potential suitors, Terry Walby’s Thoughtonomy successfully exits into the welcoming arms of Blue Prism. This was always the logical end-game for Terry’s business, which he bootstrapped from day 1 and tirelessly pushed at the automation world. HFS was particularly inspired with the firm’s work at the UK’s National Health Service (NHS) (which you can read here).
Essentially Thoughtonomy is RPA + cognitive capabilities + cloud. Net-net, Blue Prism is buying a cloud (SaaS) wrapper for its own product; arguably, it could have (and should have) built that itself, but decided instead to pay a tidy sum. However, this cloud wrapper puts Blue Prism in the ring with Automation Anywhere’s V12 cloud product, which is drawing a lot of plaudits from enterprise users (our forthcoming Robotic Transformation Software Top Ten will reveal its performance across several hundred enterprises). More importantly, it increases Blue Prism’s attractiveness as an acquisition target itself by upgrading its cloud-readiness from “available cloud reference architecture” to a legitimate SaaS-based offering. We touted Blue Prism as a potential target for IBM three years ago, and with a scalable cloud story and IBM/s major pivot around Cloud with its RedHat acquisition, surely this Cloud-ifying of Blue Prism makes the firm even more attractive to them.
Finding the synergies to justify the price tag – cloud with a potential side of cognitive capabilities, but the focus is too UK centric
Now, Blue Prism can contend with Automation Anywhere’s claim that “BotFarm is the first and only enterprise-grade platform for scaling bots on demand”. The midmarket can benefit from Blue Prism’s RPA technology, with very little setup cost or initial investment. Mid size companies that considered automation out of their reach can enjoy the democratizing effects of cloud, avoiding the hassle of on prem infrastructure.
The shopping basket also contains Thoughtonomy’s gross assets, reported at 31 May 2018 as £5.6m and established relationships with Thoughtonomy’s big-name clients including NHS, AEGON, and Sony. Partner implementation and reseller arrangements are in place across many of the usual suspects in SI and consultancy such as Computacenter (from where Terry Walby moved to IPsoft before setting up Thoughtonomy).
Like Blue Prism, Thoughtonomy is UK based so there’s not much by way of additional footprint synergies to be realized. Blue Prism, therefore, will only be adding a limited new channel and will have to rely on its existing sales and delivery channel to make this acquisition pay off. The US market is where the bulk of new demand for automation solutions is surfacing, and Thoughtonomy isn’t adding to Blue Prism’s US team, which is under huge pressure from US-centric competitors with much larger pools of funding.
In HFS’ 2018 study of customer satisfaction with RPA, client ratings of Blue Prism and Thoughtonomy reveal some additional areas of complement – notably Thoughtonomy’s embedded intelligence (see Below). Blue Prism used some of the $130M it raised in January of 2019 to establish an AI lab to further the addition of cognitive capabilities to its product stack. Thoughtonomy now helps shorten R&D cycle time.
However, Thoughtonomy is small and not (yet) profitable and has never benefited from funding. For the twelve months to 30 April 2019, it reported revenues of £9.8m and an adjusted operating loss of £3.6m. It has suffered from the difficultly of being ahead of its time, offering a general purpose integrated automation tool as a service when most enterprises are still experimenting with RPA and other piecemeal automation solutions. Enterprises that have made the leap to integrated automation tend to be those that have both a clear digital transformation execution strategy and an informed perspective on which tools they need in their toolkit to achieve their objectives. Thoughtonomy offers a great integrated bundle, but, unless enterprises know what to do with it and what it helps them solve, it’s value will not be recognized. But, as we recently articulated in “RPA is Dead. Long Live Integrated Automation Platforms”, this is where the market is headed, so the potential is there.
Businesses and organizations ought to look beyond desktop automation to deeper integrated automation
It’s time for businesses of all sizes to begin their automation journey and going deeper is possible. As it’s cloud-based there’s no infrastructure capex, just the ongoing cloud opex. Furthermore, Thoughtonomy has, since its inception in 2013, had a strong view and vision on scaling its virtual workforce. Never intended as an attended or desktop solution, the plan was always to effect automation using Blue Prism’s RPA platform at a deeper level. Single automations can replace up to thousands of workers as opposed to the desktop automation route where automation is applied at the individual worker level and usually to tasks rather than processes or workflows.
Off-prem accessibility unquestionably matters, especially to the smaller business, what’s odd is that it’s not that difficult, time-consuming or expensive to build. However, with this acquisition, Blue Prism can now strike that off the list of things to do. Thoughtonomy currently has 54 employees, of which half are “dedicated to product-related activities”. Assuming the bulk of those are product development and not other ancillary product management or product marketing functions there is a team that has worked with Blue Prism’s platform in two ways that are of value:
Putting a cloud wrapper together around the RPA platform
Integrating it with AI services: Computer Vision, Natural Language Processing and Machine Learning
This technical knowledge is an important part of the value here, and it’s really hard in an acquisition to guarantee that talent below the C-suite stays in place post-acquisition, many leave and there’s not very much the acquiring company can do about it. With UiPath, Automation Anywhere and other key service providers all hunting aggressively for automation talent across both sales and technical areas, the merging entity will be vulnerable as they integrate the teams.
Consideration for the acquisition is mainly in shares – is this a brave gamble on both sides?
The payment terms of this deal comprise cash and ordinary shares. The initial cash payment of £12.5m on completion of the deal will be followed by a payment of £4.5m 18 months after completion. The remaining £63m is scheduled to be paid out at regular intervals up to two years post deal completion. The payment schedule for the deferred consideration for the acquisition includes a condition that Terry Walby and “relevant recipients” remain with Blue Prism.
With this purchase, Blue Prism is opening itself up to the scrutiny that goes with the process of acquisition at a point in time when it too is still loss-making, and its losses are deepening, increasing from £5.5m to £37.6m (IAS) in HY2019, despite revenues rising by a staggering 82% yoy. Presumably, Blue Prism must be confident of one of two things:
Delighting the stock markets sufficiently to raise more capital – and hypergrowth is in its favor here or
Being snapped up by a larger player that will ultimately pick up the tab
It would be more reassuring if Blue Prism had a clearer message and roadmap plotting out how this acquisition will help them grow and move into profit. But the share price drop suggests that the stock market is not yet impressed by this news.
The Bottom Line: Blue Prism’s end game is that it’s priming itself as an acquisition target; its market capitalization, currently in excess of £1b, is prohibitive for many would-be acquirers
The RPA landscape is at a peculiar point right now with three dominant players – Blue Prism Automation Anywhere, and UiPath – each with skyrocketing valuations which presents a stark contrast to enterprise confusion and difficulties in scaling. More worryingly, interspersed among the success stories, many stories of abject disappointment are quietly told.
It sometimes looks as if the real product here is not necessarily RPA platforms, rather high growth companies striving to become unicorns, or to launch on the stock exchange or be bought for a tidy sum – and to be fair, if that’s what success looks like then Thoughtonomy has definitely made it. When the long tail of others outside the Big 3 in the RPA market is battling to get a strong foothold it’s difficult to compete for mindshare and revenues. Thoughtonomy was number four in HFS’s Top 10 RPA products 2018:
One strategy is worth pursuing; whether it was intentional from the outset or not, Thoughtonomy made use of Blue Prism’s platform in a way that is now so useful to Blue Prism, it’s finally making this purchase.
And as for Blue Prism in the longer term, some of its founders have already cashed in portions of their holdings, revenues are rising, it’s still in hypergrowth, but loss-making. But the stock market has high expectations and the requirements of publishing results mean the current deepening of losses is highly visible. The same could well be happening elsewhere, but we can’t see published numbers and the market is dominated more by private equity financing, as opposed to rocketing enterprise spending on the software and services. The current land-grab is taking place with an apparent absence of profit considerations – are we really just seeing growth at any cost?
HFS has previously speculated as far back as 2016 that IBM would or should buy Blue Prism. IBM is in the habit of buying competitors that appear to pose a threat and/or can significantly enhance its go-to-market strategy. While a price tag in the billions, as opposed to millions, would deter many, the $34b Red Hat acquisition last year demonstrates that IBM has no fear of big numbers. Right now, Watson isn’t being talked about as much as in the past and IBM uses Blue Prism extensively in intelligent automation solutions – is IBM happy to use, resell and create solutions from Blue Prism eggs or would it rather own the whole Blue Prism chicken?
We all remember when Jack Nicklaus played his last Masters, and when Sir Alex Ferguson managed his last game for Manchester United. These guys were godfathers of their trades, not unlike Azim Premji has been for IT services, the man who oversaw a firm which diversified from diapers and vegetable oil into one of the largest IT services firms in the world. However, when they retired, they left a legacy that enabled many to follow in their footsteps (albeit noone has come close yet). Premji’s legacy, which forever is written into the annals of IT services folklore, is still unfinished, which may be a good thing for his successors… there is still a lot of work to do to get Wipro to the place Premji always envisaged.
The current market situation facing Wipro’s leadership
To recap, Wipro’s Executive Chairman, Managing Director and philanthropic champion Azim Premji is retiring by end July. His son and Wipro’s Chief Strategy Officer, Rishad Premji will take over as the new executive chairman and its current CEO Abid Neemuchwala will become the new MD.
Azim Premji’s father founded Wipro in 1945, with Azim taking over in 1966 on his death. Azim led Wipro’s diversification into information technology in 1980. Today it has become one of the leading service providers in the industry and a big force within the India heritage IT service providers (lovingly called the TWITCH – TCS, Wipro, Infosys, Tech Mahindra, Cognizant, and HCL). However, Wipro has lost a bit of its cutting edge in the market. While its operating margins improved to 19.8% given the focus on the quality of revenues but overall revenue growth dropped to 2.8% YoY – the lowest growth rate of all the TWITCH service providers in 2018. It even lost its standing as the third biggest TWITCH supplier (albeit not permanently) last year to HCL.
We’ve assessed Wipro’s competitive positioning across execution, innovation, and customer experience across major markets (see summary below) and while it mostly performs commendably (ranked #5-#10 in most of our evaluations), it misses out on the Top 5 positioning in most areas of our assessment.
Only 3 of the large IT Services firms with revenues higher than US$5B grew at over 10% in calendar 2018: Accenture (14.8%), TCS (10.3%) and HCL (10.2%), this excludes Amazon Web Services. All of these have an excellent service delivery, but the stand out factor is the ability to differentiate and know themselves and their strengths – which means they market services effectively and to the right customers:
We believe that the increased authority to the young and dynamic duo of Rishad and Abid to shape the overall business will be a boon to Wipro. Rishad has shown tremendous energy and passion for the business, especially with his recent development of Wipro Ventures, which is the most strategic innovation initiative for the firm. And Abid is a proven and seasoned leader. HFS continues to be impressed by his astuteness since his TCS days where he built a stellar BPO capability for the firm till just last year, where Abid was instrumental in getting Wipro’s largest ever engagement $1.6 billion multi-year TCV from Alight.
The Bottom-Line: The “What” is clear, now Wipro need to focus on “why” and “how.” HFS recommends five focus areas for the newly appointed executive chairman Rishad and CEO and MD Abid
Rishad and Abid already have a strong base to drive an aggressive growth and differentiation strategy. Wipro is a respected brand, offers large scale services with 160,000 employees across the globe, and brings capabilities across emerging technologies to its clients. The “What” in terms of its 4 stated big bets (digital, cloud, cybersecurity, and engineering) makes sense but the “Why Wipro” and “How it will help clients” needs better articulation of value and Wipro’s unique point of view. Here are the five areas that Rishad and Abid should focus on:
Competitive differentiation. Wipro needs to stand for something. Its recent financial results say that customers don’t understand what makes it different from all the other IT services firms – this lack of differentiation is not unique to Wipro and applies to several of its Indian-heritage competitors. If it is to thrive rather than survive, this needs to change.
Digital capabilities. Wipro has seemed two-speed since the acquisition of DesignIT. It needs to integrate the whole firm around its digital message – this means building out its offer and making a splash with some strategic M&A and client acquisitions. Success in the digital long term means helping customers change their DNA – not just providing new IT. Wipro’s digital message needs to demonstrate it can help customers find new revenue streams, new business model and drive customer experience as well as harmonizing business silos (or the One Office).
Change management. Digital is about enabling change – so to differentiate itself in the noisy and overcrowded digital space Wipro needs to focus on change management. It needs to demonstrate that it can manage complex change process that penetrates its clients the businesses and drives value beyond just digital adoption. Wipro’s narrative around “zero touch change” and agile cell teams is a good starting point, but it needs to embed change management in all its engagements. Rishad and Abid also have to change the internal culture and bring together all the business units and service lines to reduce internal frictions and improve internal collaboration.
Fresh talent. Injecting fresh blood and energy into the firm’s leadership, under the guidance of Abid will be important. Wipro has a credible track record of retraining ground staff as well leveraging the gig economy (courtesy of Topcoder) but needs to aggressively look at revitalizing its talent base, especially near to its clients. Service providers need to be able to draw on a broader range of skills – which means a richer mix of partnerships, on and offshore talent.
Integrated go-to-market. Wipro has a broad suite of capabilities across emerging technologies (Wipro Holmes AI platform, Wipro cloud services, an end-to-end IoT portfolio, and robust blockchain offering) but to differentiate itself it needs to create an integrated go-to-market across all these capabilities that solve real business problems. The strategic focus has to be on what clients want to buy versus the capabilities that it is selling. Co-innovation with its strategic clients, partnership ecosystem, and aggressively leveraging start-ups (through Wipro Ventures) will need to be core components of how it approaches the market. As one of the best application service providers, it is in a good position to help modernize these clients application portfolio as part of an integrated suite of digital capabilities focused on delivering business value.
Rishad and Abid have very large shoes to fill in with Azim Premji’s retirement, but it also represents a golden opportunity for Wipro to scale new heights. Rishad and Abid together bring the energy and a pulse on the changing market dynamics to transform the IT-services behemoth. We wish them and Wipro all the very best!
When you have to listen to literally hundreds of people a day spouting advice about reskilling, unlearning, change management, relearning etc., I am going to respond with “great, so what are you doing yourself to stay ahead of today’s digital environment and increase your value as a superstar worker?” You may love to pontificate constantly weird definitions of digital transformation on twitter and harp on about today’s digital talent needs, but do you truly practice what you preach?
Is it just me, or have we entered an environment where everyone loves to talk about change, but most aren’t actually doing anything (themselves) about it?
I mean, if your accountant hadn’t bothered to brush up on the latest tax changes, or your personal trainer didn’t know how to use a Fitbit, you probably would seek to replace those relationships in your life. So what gives IT professionals the right not to learn Python, or learn how to deploy data management / automation tools? And what gives business executives the right not to learn how to use non-code analytics tools to help their decision-making, or social media products to help them communicate in the market? And operations executives the right not to learn low-code automation and AI apps that can help them free up people-hours on work that adds no strategic value to the business? And who told sales and marketing executives it was fine to ignore really learning the products / services they were selling because all they had to do was to follow a set of pre-defined processes to do their job effectively?
Why have so many of us become so complacent?
It just seems that the majority of workers today just think they need to learn to follow a few processes and that’s all they need to do to command a tasty salary and remain employed for years and years…. so few people actually realize that the whole nature of people value is changing for enterprises – they just love to do things the same old way they have always done them, and simply cannot be expected to learning anything new. “We just don’t have the talent in-house to do that” is the constant whine we hear from enterprises; and “our IT managers are project managers, not consultants” is what we hear from service providers. Then why don’t you train them? Is our agonized response. Why does everything have to stay paralyzed in this constant vacuum of sameness?
Much depends on the approach our enterprises take to driving change
The biggest problem with enterprise operations today is the simple fact that most firms still run most of their processes exactly the same way as they did decades years ago, with the only “innovation” being models like offshore outsourcing and shared service centers, cloud and digital technologies enabling those same processes to be conducted steadily faster and cheaper. However, fundamental changes have not been made to intrinsic business processes – most companies still operate with their major functions such as procurement, customer service, marketing, finance, HR and supply chain operating in individual silos, with IT operating as a non-strategic vehicle to maintain the status quo and keep the lights on.
As our Hyperconnected journey illustrates, many industries have now reached a place where they have maximized all their delivery methods for getting processes executed as efficiently and cheaply as possible. They have tackled the early phases of digital impact by embracing interactive technologies to help them respond to their customer needs as those needs occur, whether electronic or voice.
In short, most enterprises have been able to keep pace with each other without actually changing the underlying logic of processes. Simply doing things the same old way has been enough for many, until a competitor comes along with an entirely unique way of servicing your customers to shrink your market share or take you out of the game completely. We are already in the OneOffice phase where wrapping the needs of our customers around our front-to-back office business processes is critical. And you can’t do that simply by adding more software and bot lisences to stitch together wonky systems and processes – you actually have to redesign how processes work so you can outthink your competitors. Simply reacting to customer demand won’t work these days, you have to be able to anticipate and think ahead, try to predict how their needs will change even before they do. This means you need systems in place to mine information up and down your supply chains, B2B networks and understand today’s geo-political environments – and you need smart people who can think creatively to drive these systems for you.
So why can’t you get away with avoiding learning new ways of doing your job? Can’t you just find another legacy firm who’s desperate enough to hire you?
In many cases, the answer is still “yes”, especially while the economy is good. You can still serve up some BS in interview and convince another firm that you are still special, that a few utterances of “digital” and “AI” may be enough to convince them you are of the “new age”. Yes, you can spin your 2 hour online Blue Prism course learnings to convince them you can take your new firm on a special journey.
But if you are looking closely at your LI network these days, you will notice that many people who are taking on these “new” jobs aren’t lasting very long in them. We are living in an age where you can’t just get away with faking your skills and relying on a wafer-thin knowledge level… you need to really learn how to rewire business processes to compete with the best in your industry, and do that you have to drive change initiatives. This means you need to make yourself emotionally intelligent and understand how emerging low-code/no-code technology tools can help you make these underlying changes to age-old processes.
Time to influence strategy: A Lack of resources we can handle, but a lack of vision and being tied down with short-termist strategies are much harder to push passed
It’s not much of a consolation to know it’s not all your fault that your professional value is in decline. A recent study conducted by the World Economic Forum, presented an unconvincing picture of barriers to change. The research is sound – with over 100 major firms providing insights within each major industry sector – but the excuses provided by executives for hitting roadblocks comes across as a little suspect. In the first graph, we can see that old chestnut of resource constraints rears its head as usual. Let’s be honest, we can’t keep whimpering about funds and resources when it comes to change efforts – executives always manage to find money when something new and shiny crops up (lock at the clamour for blockchain POCs a few years ago, and the more recent rabid adoption of AI without really knowing what it is). And if executives honestly think their biggest barrier to change is that they can’t buy their way through it, that tells us everything about their relative maturity in a rapidly changing business environment.
In reality, it’s this lack of maturity and understanding in senior management teams that’s the real barrier – and it’s one highlighted by 51% of leaders. Leaders simply don’t know where the change is coming from, and what direction they need to shepherd their teams. Package that with the likelihood that at root of their enterprise’s strategy is sits cultural short-termism – driven by short-tenured C-level and increasingly active shareholders looking to force returns in a low-interest economy. In a business environment like this, you simply can’t reply on your leadership team to have the answers – and provide you with the direction you need to keep adding value and collecting that pay cheque. So, you must take on that responsibility yourself – the future of the digital employee is one of perpetual learning and evolution.
All we can tell you, is in certain professions and industries, you’ll need to rouse yourselves from your professional slumber much sooner than others. In the graph below, we can see major crunch points in ICT and Financial services, for example, where a combination of resource constraints and an all-round pitiful understanding of disruption from executives mean your only professional direction can come from within.
The Bottom-Line: We have to get out of these silos and learn how to drive change initiatives and develop cross-functional skills
Let’s face it, change is coming, and it will keep coming. And we can’t rely on anyone but ourselves to find the right balance of skills and experience to keep adding value. We are lucky to live at a time where we have a multitude of established and emerging change agents at our disposal: global sourcing, Design Thinking, Robotic Transformation Software, AI, Analytics, IoT, blockchain among others. But, unfortunately, most of the discussions in the market end up becoming a comparative discussion versus an integrative discussion – man versus machine, offshore versus automation, RPA versus AI, consulting versus execution, and so on. These change agents must work together rather than operate in silos to solve real business problems.
In Part II of this talent discussion, we will drill into the WEF skills data to align this with actionable steps we can all take to get us back on a cycle of ongoing learning and development:
What has happened to the Indian-heritage IT service provider that stoked fear into every Accenture client partner? “They think like we do” was the declaration one of Accenture’s leaders made at an analyst briefing in 2016. Well, the slide from grace has been alarming, leading to the appointment of a new leader to stem the bleeding.
However, when the problems cut this deep, you can’t just apply lipstick to the pig, you need to reconstruct the whole farm, or you can quickly find yourself in the zombie services category alongside the likes of Conduent and DXC, where finding any sort of direction and impetus would be a major accomplishment.
Yes, it could really get this bad, as Cognizant has posted its slowest revenue growth and worst dip in profit margins. Ever. A mere 5% annual revenue growth, when in its heyday it was posting well over 40% (and slipping below double digits was unthinkable until last year). Yes, declining revenue growth is one thing, but declining profit margins is when the panic button gets pressed.
Frank should have left when Elliott came along to poison the well
It’s clear to see why Francisco “Frank” De Souza, the poster boy CEO of the emerging power of the Indian IT Services industry, jumped ship (or more accurately was made to walk the plank a burnt out husk due to the unenviable pressure Elliott Management placed him under to keep the gravy train on the tracks and kick back billions to shareholders.) If anything, Frank should have considered making a move in 2017 as Elliott started squeezing Cognizant’s margins at a time is needed to keep pace with Accenture’s aggressive digital investments. He’d grown the firm to over $15bn by then and could have exited with a legacy no one could rival in the tech business.
And in his place comes IT Services newbie Brian Humphries – well we’re sorry to say this Brian, but the baby you just adopted has got a bit ugly, and is screaming for attention. Let’s just look at the numbers– now we’re going to be generous and forgive Cognizant’s dip in margin, a likely result of a reclassifying activity to meet fresh regulations. But the sinking revenue growth is much harder to look past:
In 2012, Cognizant invented the Digital concept before everyone else jumped on it. They were that cool…
In a punishingly competitive market, it looks like Cognizant has started to lose traction. Back in the good old days, the firm could do little wrong by challenging Accenture’s strategy – driving a hard-digital bargain and bringing in design consultancies along with their pony-tailed nose-ringed jean wearing creatives. In fact, Cognizant can genuinely lay claim to “inventing” digital with its 2012 “SMAC” stack philosophy, which was swiftly followed by Accenture’s 2013 re-branding the SMAC stack as “digital”.
But the market has moved on – away from automation point solutions and funky apps to fend off uberized rivals. It’s now about integrating capabilities and meeting clients with legitimate flexibility, a real willingness to find out what they want to buy, rather than keep pestering them with siloed offerings and poorly verticalized capabilities.
Somewhere in all this noise, India’s rising star lost its way. And, honestly, the hassle of a new leadership team is unlikely to make matters any easier to drag this tired giant back from the ropes to get them punching again.
Is now the right time for Brian to go on a cull? Crush a culture, or fix what isn’t that broken?
Changing a culture overnight is a gargantuan task in a firm that has been steeped in it for two decades – just look at Vishal Sikka’s attempts at Infosys, where the guy couldn’t charter a jet without all hell breaking loose. However, you can instill a new urgency (and a little healthy fear) which is more likely where Brian is heading with all this.
Realistically, we can’t be too tough on Cog’s new CEO – let’s face it the guy is barely in the door and the actions and initiatives behind these disappointing results were already in place before he took over the reins. But the stories we’re getting from insiders familiar with recent goings on paints a harrowing picture. We’re already seeing cuts being made and senior, albeit expensive, executives shown the door (and self-selected to take a package and quit), as the fresh CEO starts pushing for costs savings – but is this the right strategy? Maybe this is more about fixing a machine that just needs a significant tune-up – it’s working well with Salil Parekh at Infosys, where the firm needed renewed urgency, as opposed to open-heart surgery, to find a better direction for itself.
Anyone who plays in this space knows it’s not for the faint-hearted, but with major talent wars popping out across the industry, it doesn’t seem like axing staff and business units is the most prudent course of action – even with revenues in decline. And pushing for lower costs will do little to differentiate the firm from an already cluttered space packed with purveyors of low-cost offshoring.
The keys to victory are to be found moving up the value chain, not down it
Anyone who things they can “out-Walmart TCS” or “out-price HCL” needs a lobotomy. The reality is that Cognizant has little option but to loosen the purse strings – rather than tighten them – and bring in some real consulting and digital capability. It’s been a long time since the acquisition of cool kids Idea Couture, and even then this group was hardly big enough to make waves across the organization. To make a difference and reverse its decline, Cog needs to make some major investments – bringing in a BCG or Bain-sized consulting group wouldn’t see them too far wrong. They’ve actually shown more focus in digital than it’s India-heritage rivals, so it’s not too late to reboot this strategy, especially if it hands some war-chest to Malcolm Frank:
And perhaps that’s the plan all along, make savings now to open up opportunities for investments later. This may keep the accountants happy, but it does little to help the perception of a firm in decline – which in a market where the financial stability of partners is moving further up the priority list is a major concern.
What do we think of the new CEO?
But all of this isn’t to say we’ve taken an immediate disliking to poor Brian – far from it. He’s barely through the door, what we’re conscious of is there’s now a huge to-do list for an executive relatively new to the space to pull off.
When we’re asked what we think of the new CEO, our honest answer is we don’t know. He has, for all intents and purposes, kept a low profile externally, instead focusing his energies on extensive liposuction internally. But there are some concerns. First off, try to follow Brian on twitter – tried it? That’s right his account is locked down as “private”. Now this may seem innocuous enough but for the CEO of a major IT Services player it’s a big no-no.
We’ve been talking for a long time about the power of the CEO as a front-person for the firm. Take a look at Tiger at Genpact, CVK at HCL, Caldwell at Concentrix or even Ginni at IBM – they are their own firms’ evangelists – and in an over-hyped complex space, clients are desperate for that clarity.
If Brian’s not even confident that he can tweet without upsetting clients, employees and analysts to the extent he keeps his account locked down, there may be little hope of him taking to the stage to push the virtues of services. But we guess we’ll have to wait and see.
Bottom-line: Let’s give Brian a hand with a to-do list if he wants to right the direction of the Cognizant ship
Investments: Cognizant has been starved of major investments for years, ever since activist investor Elliot Management came in and held a gun to Frank’s head demanding billions in shareholder kickbacks. Elliot’s gone now and Brian should be using his fresh perspective and enthusiasm to home in on acquisition targets in the market to bring in the capabilities the firm really needs to differentiate itself. It’s 2014 $2.7bn splash on healthcare platform TriZetto is long in the distant past (and sadly healthcare probably wasn’t the best bet for the firm when we look at the sorry state of that industry today). Brian needs to look at key industries, such as banking, and key capability areas, such as further expansion of digital marketing, so get Cognizant back on track.
Talent: By the sounds of it Brian is moving through the organization with a scythe at the ready whenever a potential cut can be made. In some instances, this may be right, but we’re already hearing of talented professionals and executives getting ready to jump before the blade comes swinging round to them. We’re in a people business – and if all the best professionals jump ship, and they will, then Brian may find himself sitting alone in the boardroom desperately trying to figure out his AIs from his RPAs.
Perception: With the departure of Frank, and a crushing first quarter under Brian, there will be myriad perception battles to fight. Brian might want to start by stepping in to reassure the crew – and then it’s time to let current and future clients what the plan is – because right now, none of us have a clue.
Marketing: Finally, all the time Cognizant’s future is up in the air, its rivals are busily chomping into the limited mindshare bandwidth. Brian needs to push out a clear marketing message that lays out their differentiators and roadmap, if he’s to reverse the decline of one of the sectors most promising companies.
Mojo: Find it – and fast. Today’s market is harder than ever to build momentum, and bludgeoning people over the head with a blunt instrument is really the only way to get out in front. So find the right message, stick to it, and batter it home. There is no room for dithering anymore – and many may already think it is too late to rebound, but Cognizant’s position is way, way healthier than a Conduent or a DXC, and can quickly find its way back to the top if it stays laser-focused, makes some significant eye-opening investments and brings a fresh message to the market that defines what it stands for.
We’ve been pretty vocal regarding the unfocused direction the industry which has called itself “RPA” has taken, and the obsession some of the firms are having with their self-declared valuations. So let’s change the story from how much these firms actually believe they are worth to where they need to invest their funding to show they are serious about being part of a transformative industry.
Don’t get us wrong, in software world, it’s common practice to get attention that your company is valuable and investors are falling over themselves to hurl money at it – this is common practice in markets that are very focused on selling to IT executives. And we’ve seen far more ludicrous “valuations” than the 35x earnings ones the robotic software firms are claiming (just look at Blockchain and AI).
So why aren’t we seeing firms like UiPath shift the focus to the investments and changes they intend to make to propel a truly transformational value proposition with their products? Especially where the prime target for growth is the business executive who is far less accustomed to a world where his/her suppliers are obsessed with how much they’re worth, as opposed to how they can help you take your business through painful change.
It’s critical now to shift the vision to reality of making these bot dreams come true
UiPath, more than its competitors, has always pushed the vision of democratized IT. Literally, RPA or a “bot for every worker” and not just a sanctioned crew of IT professionals (or even a sanctioned crew of enterprises) is a brilliant marketing gimmick. However, with UiPath’s hypergrowth and rapid-fire funding, the time has come to connect the dots between a folksy vision and how UiPath can truly enable the transformation of work.
As HFS recently articulated in our blog “RPA is dead. Long live integrated automation platforms”, RPA is being used to automate tasks and prop up legacy processes. Broad business transformation is decidedly lacking and arguably cannot be achieved without supporting tools like artificial intelligence and analytics as well as digital change management to address how change is driven, managed and perpetuated. The one perhaps notable shift in the change winds is the on the democratization front – RPA is being bought and consumed primarily by business units not central IT. However, as enterprises push towards integrated automation, with a higher order of technical complexity of tools and data challenges, IT once again becomes essential. Integrated automation may drive the ultimate democratization – the balance between IT and business operations.
Despite its growth and funding, UiPath is a very long way from achieving this vision
Our recent survey work with “power-users” of robotic software products (what we were calling RPA and RDA) clearly highlights the top three strengths and challenges of the UiPath solution (with sampled comments):
The Bottom-line: To democratize technology and drive business transformation beyond task-oriented robotics activities, here are 15 key initiatives UiPath (or its competitors) must take on:
1. Must bring IT and business visions together as one integrated approach. Education must focus for technical and non-technical resources – into communities and educational institutions globally
2. Must shift focus to integrated automation – expansion of functionality beyond RPA/RDA to AI and smart analytics. Badging everything as RPA is definitionally incorrect and gives clients no roadmap to follow to advance beyond basic repetitive task, desktop and document automation
3. Must drive digital change management – help enterprises grapple with transformation with its services investments. Relying purely on Big 4 advisors and service providers for change management will cost clients a fortune and drive many away. This is a key area UiPath needs to take the lead on.
4. Must include unattended and attended processes (not just focus on attended)
5. The developer ecosystem must be expanded to extend functionality, libraries etc. Commit to specific goals for how much of the UiPath codebase will be available on Github to build an industry solution skewed against technology-vendor lock-in
6. Demonstrate commitment to building a stronger QA team, and fully transparent local customer support and customer success teams to drive customers (as per the number 1 challenge outlined above)
7. Commit specific sums to meaningful partner relationships with leading service providers and consultants, including opensource partner technical support systems, events, education resources and people to help the industry grow
8. Commit to funding UiPath local academies (building on their online academies) especially in blighted neighborhoods near its biggest offices to bring young coders and potential customers together with UiPath employees for on the job real-world training
9. Must get focused on core business processes by industry, such as supply chain in manufacturing, core banking in BFS, underwriting in insurance, billing in telecom etc
10. Revisit its client engagement model to ensure it is best serving its customer base – its rapid growth in salespeople may expand capacity, but if sales lacks vision, then clients may not be well served (as per comments in our recent survey above)
11. Commits to drawing down technical debt (Every SW company has it, some more than others. As illustrated above, our customer surveys point out which elements of the UiPath platform and solution are known to need immediate re-engineering and investment
12. Identify and subsidize hands-on automation industry experts and influencers whose independent thinking deserves funding and not just focus on checking boxes with legacy analysts. The automation industry is being impacted by many unique stakeholders.
13. Kick off an enduring and sustainable initiative modeled after Salesforce’s 1-1-1 program (of which the Notre Dame announcement by Daniel Dines was a great a start)
14. Invest in cross-technology customer events that will expand overall value creation, for example partnering more aggressively with the likes of Salesforce, Microsoft, Amazon, Google etc.
15. Spearhead an Automation Industry Manifesto that shows a clear path for enterprise clients to progress from basic robotic task automation through to integrated automation and then to achieving genuine AI value
At the HFS Summit this week, we asked 200 enterprises if they cared about automation software vendors bragging about self-inflated valuations. Not a single person did.
The robotic transformation software industry has three problems right now:
i) Defining itself;
ii) Scaling Bots and being Transformational;
iii) Obsessing with this “Funding Arms-Race”… so let’s dig in
1) Defining itself correctly… “RPA” is not correct. Most of “RPA” in its current form is incorrectly defined, and this market is dying if it doesn’t have a radical overhaul. Only a small portion of “RPA” it is actually “process automation” – most of it is desktop apps, screen scrapes and doc management. RPA in current form is incorrectly labeled and the way forward is to integrate these tools. When we introduced the term RPA in 2012 (with Blue Prism) the focus was on unassisted automation, it was self-triggered (bots pass tasks to humans) and centered on increased process efficiency. Only a small portion of “RPA” today is actually “process automation”. Most “RPA” engagements today are not for unattended processes – they are attended desktop automation deployments, a loop of human and bot interplay to complete tasks (not processes). These engagements are not the pure form of RPA that we envisioned back in 2012 – they are a motley crew of scripts and macros applying band-aids to messy desktop applications and processes to maintain the same old way of doing things. We need to refer to these “RPA” products as Robotic Transformation Software products which is a far more appropriate description. Now if these firms cannot partner with their clients and the services ecosystem to support transformative automation as part of an integrated automation platform, this market balloon will burst as dramatically as it got inflated…
2) Scaling bots and finding a transformation story versus a “fixing legacy” one. The more these robo tools can be used by clients – not only to do things better and more automatically – but also to help re-wire their operations, then we have lift-off to something fr more strategic than merely getting crappy tasks working better and moving data round the company better. If you just work on steady-state fixes without focusing on the real changes needed, we will see many firms stuck in legacy purgatory, unable to switch out bots in the future. Sure, there is usually a reduction in labor needs – but in fractional increments – which is rarely enough to justify entire headcount elimination. Crucially, the current plethora of “RPA” engagements has not resulted in any actual “transformation”.
As our global study of 590 leaders of Intelligent Automation initiatives, supported by KPMG reveals, barely more than one-in-ten enterprises has reached a place of industrialized scale with RPA – and the word from so many clients is loud and clear that they need help:
This struggle to get to a point beyond pilot exercises and project-based experimentation could prove to be a serious point of failure for the whole industry. There needs to be a much stronger melding of enterprises with implementation and consulting capability to fix these issues. Just like we realized that throwing bodies at a problem does not solve the problem, we need to recognize that merely hurling software at business process will not drive transformation. The real genius lies in understanding what to use when and how. The software also needs to come with support and services. Otherwise, we’re just selling more snake oil and magic.
3. End this “Funding Arms-Race” obsession nonsense. Now. While Automation Anywhere was busy with its Imagine conference in London, on 20th March, “news” about UiPath’s self-proclaimed valuation, based on its much-discussed future Series D funding round, was conveniently released the day before, claiming the $3 billion touted last year was now a whopping $7 billion. It was also widely rumored that UiPath was pushing to announce their Series D during Automation Anywhere’s New York event last week. Here are some snippets from the Business Insider news publication, which was also picked up by Tech Crunch:
So what, pray tell, is the point in all this?
UiPath is putting the whole automation industry under unnecessary pressure. If the UiPath Series D round has yet to be signed, these antics could be placing the negotiating power into the hands of the investors, who can clearly see UiPath’s management is obsessed with embarrassing its hated rivals as opposed to focusing on the first 2 items discussed above. Fortunately for UiPath, they have officially secured Series D this week, but these antics and obsession with fictitious valuations do the industry no favors and put incredible pressures on the automation software companies and enterprise to deliver genuine scale and results on months when the reality is this integrated automation journey will take years.
UiPath is creating the perception that this whole industry is after a short-term cash bonanza. Our automation industry cares about making these solutions work, and this ridiculous noise about inflated funding isn’t adding any value anywhere – this valuation noise only makes most people think these software firms are obsessed with a quick IPO or a quick sale, as opposed to a true long-term journey that will help enterprises enter the hyper-connected age. I can guarantee you all – right now – that none of today’s enterprise operations leaders are basing their robotic software selections off these crazy media-fuelled “valuations”. It is also an entirely separate debate about why robotic software firms with revenues under $200m can claim 35x valuations… stay tuned for that.
Well, you can’t beat a good headline, and you really can’t beat it when 50,000 people read the “RPA is dead. Long live Integrated Automation Platforms” blog article in just 48 hours, spending a whopping average of 6.5 minutes actually reading it. Yes, most of you made it further than the headline!
For those of you familiar with google analytics, I thought I would take the unique step of actually sharing some readership stats from our blog this week, just to show you how the extent of impact our plea to the industry is having to “wake up to enterprise integration and stop festering in obscure RPA”:
RPA as a term just doesn’t make sense anymore, but these terrific brands will thrive as Robotic Transformation Software. We re-badge RPA as Robotic Transformation Software (RTS) because that’s what it is (or what aspires to be). Only a small portion of “RPA” is actually “process automation”… most of it is desktop apps, screen scrapes and document management fixes. Most “RPA” engagements that have been signed are not for unattended processes, instead, most are attended robotic desktop automation (RDA) deployments. Attended RDA requires a loop of human and bot interplay to complete tasks. These engagements are not the pure form of RPA that we invented back in 2012 – they are a motley crew of scripts and macros applying band-aids to messy desktop applications and processes to maintain the same old way of doing things.
Integrated Automation Platforms are the Holy Automation Grail (HAG*) if we can make it there. Automation ultimately needs to support transformation, not legacy. The more these RTS tools can be leveraged by clients – not only to do things better and more automatically – but also to help them re-wire their operations to achieve their outcomes, then we have lift-off. These tools also need to make enterprises more agile – if you just work on steady-state fixes without focusing on how to make real changes down the road, we will see many enterprises stuck in legacy purgatory, unable to switch out bots in the future.
*HAG is not an official acronym, I just made it up. Peace out robo-warriors ✌
The biggest problem with enterprise operations today is the simple fact that most firms still run most of their processes exactly the same way as they did 20/30/40 years ago, with the only “innovation” being models like offshore outsourcing and shared service centers, cloud and digital technologies enabling those same processes to be conducted steadily faster and cheaper. However, fundamental changes have not been made to intrinsic business processes – most companies still operate with their major functions such as customer service, marketing, finance, HR and supply chain operating in individual silos, with IT operating as a non-strategic vehicle to maintain the status quo and keep the lights on.
Enter the concept of Robotic Process Automation (RPA), introduced to market in 2012 via a case study written by HFS and supported by Blue Prism, which promised to remove manual workarounds and headcount overload from inefficient business processes and BPO services. However, despite offering clear technical capability and the real advantage of breathing life into legacy systems and processes, RPA hasn’t inspired enterprises to rewire their business processes – it’s really just helped them move data around the company faster and require less manual intervention. In addition, most “RPA” engagements that have been signed are not for unattended processes, instead, most are attended robotic desktop automation (RDA) deployments. Attended RDA requires a loop of human and bot interplay to complete tasks. These engagements are not the pure form of RPA that we invented – they are a motley crew of scripts and macros applying add band-aids to messy desktop applications and processes to maintain the same old way of doing things. Sure, there is usually a reduction in labor needs – but in fractional increments – which is rarely enough to justify entire headcount elimination. Crucially, the current plethora of “RPA” engagements have not resulted in any actual “transformation”.
The major issue with RPA today is that it is automating piecemeal tasks. It needs to be part of an integrated strategy
Real research data of close to 600 major global enterprises show just how not-ready we are to declare any sort of robo-victory. In our recent survey of 590 G2000 leaders, only 13% of RPA adopters are currently scaled up and industrialized. Forget about leveraging RPA to curate end-to-end processes, most RPA adopters are still tinkering with small-scale projects and piecemeal tasks that comprise elements of broken processes. Most firms are not even close to finding any sort enterprise-scale automation adoption.
RPA provides a terrific band-aid to fix current solutions; it helps to extend the life of legacy. But does not provide long-term answers. The handful of enterprises that have successfully scaled RPA across their organizations have three things in common:
A unifying purpose for adopting automation,
A broad and ongoing change management program to enable the shift to a hybrid workforce, and
A Triple-A Trifecta toolkit that leverages RPA, various permutations of AI, and smart analytics in an integrated fashion.
So HFS is calling it as we see it. RPA is dead! Long live Integrated Automation. And by integrated we mean integrated technology, but also, and all importantly, we mean integration across people, process and technology supported by focused objectives and change management. Integrated Automation is how you transform your business and achieve an end-to-end Digital OneOffice.
Integrated Automation is not about RPA or AI or Analytics. It is RPA and AI and Analytics.
Business problems are not entirely solved by one stand-alone technology but by a combination of technologies. While only 11% of the enterprises are currently integrating solutions across the Triple-A Trifecta, there is emerging alignment. The supplier landscape is also starting to realize that clients will buy integrated solutions (see Exhibit 1) and examples below:
RPA products are seeking to underpin AI and data management capabilities. WorkFusion was arguably the first to combine RPA and AI with its “smart process automation” capability. Other subsequent examples include Automation Anywhere with its ML-infused IQBot, Blue Prism announced its AI Lab to develop proprietary RPA-ready AI elements, and AntWorks embeds computer vision and fractal science in its stack to enable the use of unstructured data. What these products having in common is their use of robotics to transform tasks, desktop apps and pieces of processes. Hence, we need to refer to these “RPA” products as Robotic Transformation Software products which is a far more appropriate description.
AI and analytics focused products are starting to embrace Robotic Transformation Software, instead of undermining it. IPsoft launched 1RPA with a cognitive user interface. Xceptor’s data-led business rules and AI-based approach to automation leverage RPA to help extend its functionality. Arago is starting to go to the market where it can help orchestrate RPA capabilities within its platform.
Enterprise software products are integrating the triple-A trifecta capabilities in their products. SAP Leonardo aspires to harness the emerging technologies across ML, analytics, Big Data, IoT, and blockchain in combination. It also acquired RPA software company Contextor (late 2018) similar to Pega when it acquired OpenSpan in 2016 adding RPA functionality to its customer engagement capabilities.
System Integrators are orchestrating the Triple-A Trifecta across multiple curated products. This typically combines some of their IP and service capabilities. Accenture launched SynOps in early 2019, offering a “human-machine operating engine.” Genpact’s Cora, a modular platform of digital technologies, similar to HFS’ Triple-A Trifecta, is designed to help enterprises scale digital transformation. IBM’s Automation Platform includes composable automation capabilities that orchestrate responses and alerts between Watson and Robotic Transformation Software solutions. KPMG’s IGNITE brings RPA, AI and analytics tools together with KPMG IP and services.
Integrated Automation is not just about Technology. It is Technology + People + Process.
The real point of Integrated Automation is actually to move beyond the tools. Yes, the Triple-A Trifecta offers more functionality, but it still does not work unless you change your business, your people, your processes. Integrated automation is the effective melding of technology, talent, organizational change, and leadership to get to the promise land. It requires the integration of the Triple-A Trifecta change agents in your toolbox and their application across the original trifecta of people, process, and technology. If you keep throwing technology at a business problem, you will have more technology rather than a solution.
Technology has overpowered the discussion today without adequate focus on people and process:
Source: HFS Research 2019
Integrated Automation is not a Product or a Service. It is a Product and a Service.
Just like we realized that throwing bodies at a problem does not solve the problem, we need to recognize that merely hurling software at business process will not drive transformation. The real genius lies in understanding what to use when and how. The software also needs to come with support and services. Otherwise, we’re just selling more snake oil and magic. Strategic and collaborative relationships of the future will be formed by providers that can consult as a trustworthy advisor and execute as an “extension” of clients’ operations. Enterprises need partners to drive innovation, contribute investment, apply automation and new ideas, and focus on delivering business outcomes – and that requires a combination of services and software. An ecosystem approach with symbiotic relationships between service and product companies is a must-have ingredient for automation to succeed and truly be transformative. It is imminently clear that no one can be everything to everyone.
Adoption is not the measure of success for Integrated Automation. It is about Change Management.
Fifty-one percent of the highest performing enterprises see their cultures as holding them back in the digital transformation journey, while only 36% of the lowest performing enterprises identify culture as a problem to progress. Providers need to offer change management approaches that are agile, measurable, and iterative to be impactful. Scaling up digital initiatives and enabling the right governance models are also critical points. The ability to codify “business outcomes” in contractual agreements, pricing structures, and performance measures is also a vital element to drive change. While there is no nirvana around pricing, it needs to be implemented based on every client’s unique requirements and context. The flexibility to put skin in the game with innovative and non-linear commercial models is essential to drive real change.
Integrated Automation will not be effective with a functional approach. It requires an end-to-end “OneOffice” strategy.
Less than 12% of the enterprises we surveyed have an enterprise-wide approach to automation. This strong focus on task-level and process-level automation remind us that automation often takes place in functional silos, with parallel but unconnected initiatives. The ability to balance task-specific and process-specific pilots and production instances with broader enterprise mission and vision is certainly daunting, but it is precisely what needs to occur to enable scaled and successful automation programs.
The collaboration between business and IT is another crucial issue. While automation initiatives require IT involvement, the programs are generally impacting and enhancing business processes—which requires participation from business constituents who understand the functions in question. The ideal leadership mix, then, is a combination of IT and business. However, our data shows that just one-fifth of respondents have created integrated IT and business leadership teams to grapple with automation strategy and deployment.
Bottom Line: Integrated Automation utilizes the power of AND, not OR!
We are lucky to live at a time where we have a multitude of established and emerging change agents at our disposal: global sourcing, design thinking, Robotic Transformation Software, AI, Analytics, IoT, and blockchain, among others. But, unfortunately, most of the discussions in the market end up becoming a comparative discussion versus integrative discussion – man versus machine, offshore versus automation, RPA versus AI, consulting versus execution, and so on. These change agents must work together rather than operate in silos to solve real business problems. The power of AND is much greater than OR and Integrated Automation is all about the power of AND. Thus, RPA is dead. Long live integrated automation!
Brian Whipple, CEO Accenture Interactive, describes the evolution of the world’s premier experience agency
The term “digital” has become overused, diluted and – in many ways – rendered useless. After all in 2019, what ISN’T digital, and what’s the point in distinguishing? We have instead moved to a world that’s comprised of integrated and immersive experiences – as consumers, or as patients, as employees, etc – experiences that shape our buying habits and our quality of life. The recent announcement of Accenture’s acquisition Droga5 has raised the stakes of creating immersive customer experiences to a whole new level (read our POV here).
Companies that are really seeking to align themselves to experiences need to break down their silos and better understand what their customers want… and really execute on that. We caught up with Brian Whipple, Accenture Interactive’s CEO (and recent winner of an HFS Disruptive Award), to learn how his firm’s massive acquisition appetite has helped build a company embracing an entirely new philosophy, helping its clients align to customer needs in the post-digital world. Accenture is integrating technology, design, commerce and content to help clients develop “living” experiences that meet customer needs today and are ready to evolve in the future – requiring a wide breadth of talent, expertise and even cultures within cultures to deliver on those experiences. The bits and pieces that have come together at Accenture Interactive over the last several years, most recently with Droga5, are all adding up to Accenture’s mission to “create the greatest customer experiences on the planet for our clients.”
Phil Fersht, CEO and Chief Analyst, HFS Research: Can you talk to us a little bit about how digital came to be, and how Accenture Interactive came in to the space? Because you were really the first of the service providers to coin the “Digital” phrase, and really put it together, industrialize it, etc. Could you give us a brief history about how it came to be, how it got started, and what the original philosophy was, and how that may have changed in the last five or six years?
Brian: Sure. There are three distinct phases to date, for Accenture Interactive. The original philosophy was that the world needed digital diagnostic tools that work in the arena of digital marketing; things like online campaign optimizers, A/B testing it, “I’m going to present offer A, with this creative treatment online, and I’ll test it against offer B,” or, “I’ll move it on a placement in a banner,” or, “I’ll have the banner come up in a different media vehicle,” and you learn from that, then redirect investment. Typical relationship marketing/direct marketing concept, but for digital, so you’re optimizing how you serve up creative advertising, digitally. And that was the one tool.
A second tool would be around things like digital diagnostics, like scanning through webpages, looking at traffic, looking at problems, and broken links, and where people get stuck on a page, and when people abandon a commerce transaction, and diagnostics around digital commerce. And those were looked at from a software tool perspective, and so at Accenture, we made a couple of small software acquisitions, and the genesis of Accenture Interactive was largely around these software licensing tools, around digital optimization and digital diagnostics.
When I came on board, we’d started that, but there was what we perceived to be a much greater opportunity– and that was a particularly crowded space, at the time – and the opportunity was really around doing what Accenture does best, which is stick to a services company, but apply that best-in-class services company mentality to the marketing space, instead of to the CIO space. So there was this notion of developing capabilities for the CMO, instead of the CIO, but keeping the concepts of being their business advisor, trusted relationship, multi-year contracts, and bigger, not smaller.
Phase two of Accenture Interactive was developing large capabilities, really in three or four areas, those areas being strategy and design, marketing, but commerce and content. So, you know, design, marketing, commerce and content, those four practice areas, and so we built up global large scale practices in those four areas, and that was the main, huge growth engine for Interactive that you saw, and you saw us go in to the billions in the Ad Age reporting, and things like that.
Then, about two years ago, we slightly pivoted again, through leveraging those capabilities much more into reinventing experiences for clients, and it’s really not about advertising per se, and not about augmented reality per se, or email marketing, or any particular capability. It’s about stitching them all together, to reinvent how people receive patient care, from a hospital group, or how people fill up their car with gas, or how people try and close at a department store, or any of these normal, like, consumer experiences you and I have, that need all of those things, and that is where we are now, as an experience agency. That’s the evolution. That’s phase three.
Phil: You very eloquently expressed a lot about bringing the technology to the user, in our personal lives, into our commerce lives. Some of these basic digital capabilities, how can companies respond to the needs of their clients as those needs arise, are working towards this emerging phase, getting more about how can companies anticipate their client needs better, before they even arise, and how intelligent can they become, as they start to evolve. Is that where you guys are going? Do you feel that’s what you’re already doing? Or do you think that’s the phase that we’re moving in to?
Brian: I think that’s, to some extent, table stakes now, but I don’t think it’s executed all that well. The notion of, essentially, in layman’s terms, giving people what they want, and in technical, or consulting jargon, it would be “personalization experiences”, and “expectation management”, and all those types of buzzwords. But what it really comes down to is, the technology is there to have micro personalized experiences today, but what people want may not be that, so it is about finding out the degree of personalization that individual consumers want, and then tailoring your experiences to those wants and needs. That orientation is what any consumer-facing experience should be aspiring to have today.
Now, the execution of that, how many companies do that particularly well, and are really reinventing things for efficiency and for human good, a la something like an Uber, or like Amazon, Spotify, etc., but there’s tremendous growth ahead of us, in the broader experience industry, to do that. The capability is there, it’s the execution of that, to give people exactly what they want, is spotty, in the industry. It’s hit and miss, today.
Phil: Right. And as things have evolved, a lot of CMOs have started calling themselves CDOs, and obviously, the use of the term “digital” has become a little bit too convoluted. Accenture’s the master of coming up with new terminologies and phrases. How do you see this happening? Are you going to stay true to this digital value proposition? Or do you think is actually now morphing into something different?
Brian: I would say, at this point, at 2019, what isn’t digital? And the notion of things being digital, that digital equals new, or digital equals better, I think is a notion that should probably be about to sunset. Because anything new is inherently digital, so it’s sort of redundant in its vocabulary, as a general descriptor. Now, I think leveraging the many technologies that are out there, that are all, scientifically, digital, to create, reinvent, establish, meaningful, efficient experiences for our clients, and our clients’ customers, we’re just only at the infancy of that. It’s just that I don’t think we need to refer to it as digital because everything’s going to be digital. It’s table stakes. So I doubt that five years from now, we’re going to see new firms sprout up that’s going to be, you know, “ABC Digital”, or something like that. I doubt that.
Phil: Right, remember “e-business” 20 years ago? As you look at the type of business Accenture’s becoming, in a digital, interactive scenario, you’ve acquired 30-odd of these design agencies around the world, so you have a lot of local talent, and we’re familiar with how you’ve bedded some of those in. And then you’ve obviously got a lot of competitors in the space, who may be much, much less focused on design, and they like to focus on the enablement of these digital capabilities. How important is it to have one company to do the design and the implementation, and the execution, and the management? Or do you think some clients have a good experience breaking it up. so, they may use Accenture for design, and go with a different business to maybe execute? What’s been your experience of that?
Brian: Yes. So, I definitely have a defined point of view on this, right or wrong, and that is that, as experiences are redesigned, all of them have built-in feedback loops and mechanisms, and are constantly… well, the word we would use to describe them is “living”. It’s not something you build it, implement it, and then go away for five years. They’re constantly evolving and changing, based upon new expectations and elements of the experience, and new technologies that come out available. So, within Accenture Interactive, and we are Accenture Interactive, these aren’t separate companies now, because we integrate them, as those companies come in, they’re not all design. Some are design, some are commerce, some are digital content, some are digital twin technology companies. They’re all pieces of a capability that are part of rendering compelling experiences.
So if you are a client who is reinventing how you try on clothes at a high-end department store in Japan, and rolling that out at your flagship stores in London, and New York City, and San Francisco, etc., then the design elements of that, along with the actual commerce technologies, and mobile technologies, connected device technologies on your app, as you walk in to the store, all with the customer service agents, and purchase histories, all of those things are all linked. So if your design of your experience is in a completely different partner than your technology experience, that becomes cumbersome, at best. So that is why we are not a design agency, and we are not a commerce agency, and we’re not a digital content agency, and we’re not an advertising firm. That is why we are an experience agency. Because you have to stitch all those things together, with people actually, physically, butts in seats, sitting together, so that all those things are naturally integrated.
There used to be this notion that a new process was designed, and then you’d hand that through to some “delivery organization.” And that delivery organization would then build it, and then it would go in to what’s called “production”, and it would run. That’s not the case anymore. All of these technologists, and the designers, and the creators, they all sit together. These are all integrated, very quick, agile technologies that people use, and, you know, artists and scientists are not all that different today.
It’s not so much that I think having them separate is a disaster, but I can tell you authoritatively that we see tremendous market value by integrating all those capabilities together, because it’s constantly evolving, and they’re not separate things anymore.
Phil: Interesting, I think that’s a very pertinent point. And as you’ve evolved the business and brought on lots of agencies, and these kids with nose rings, and all that type of stuff, how have you found integrating it into Accenture, over the last few years? What’s worked, what hasn’t, and where do you see this going next?
Brian: Yes, of the companies that we have folded into Accenture Interactive, there’s a couple of salient points there. One is that Accenture Interactive, and our leadership, Pierre Nanterme, and many other top executives, my colleagues in Accenture, have been very supportive of us having our own culture. So, Accenture Interactive is expected to push boundaries within Accenture, culturally, in terms of the types of studio office space we have, and things that are perhaps less strategic, like dress code, and things like you mentioned. So that’s point one.
Point two is that not all of the companies that are now part of Accenture Interactive are typical creative agency types. Some of them are technologists. We have some of the leading, for example, ecommerce technology, around Hybris or Websphere, or people that are deeply skilled in Adobe Engagement Manager, or other tools like that. These are technologists and integrators, and many of them have cultures that are similar to the recent cultures of Accenture around technology integration. It’s just that we’re doing it in a marketing space, instead of, say, in financial management, or business, or supply chain, something like that. And all the marketing stuff is in Accenture Interactive.
So, although we have what we call a culture of cultures, in Accenture Interactive, and we embrace that, as long as you are united, around the P&L incentives, and around the mission of being laser-focused on creating the greatest customer experiences on the planet for our clients. So I think, if you were to go in to our studio in Hong Kong, or in São Paulo, or in New York, you would find, you know, high-end, you know, virtual reality studios, next to designers, next to commerce architects, and the like, and many account service people, who are really the experience architects for clients, all working together. And yes, at Accenture, they have embraced that. But the key to it is, you have to have innovation, not far away from the core, but you have to have it at arm’s length from the core, or else the innovation will stifle, and our management has been great about giving us that arm’s length.
So, of them are called agencies, but they’re more like commerce integrators; some of them are true agencies, like Karmarama in London, or Rothco in Dublin, but culturally they have to buy in to the notion of being aligned around customer experience. So, for example, Karmarama in London; if they want to just be a really strong brand creative ad agency, then we’re not the right home for them. If they want to do that in the context of helping clients reinvent broader experiences and leveraging technology, and all that, and work on much larger transformational assignments, we are the right home for them.
So, there’s a certain weeding out of cultural affinity that happens naturally, in our process, when we look at possible acquisitions, and that is aided by the fact that we don’t ever, and I’m adamant about this, ever do a deal for the sake of just getting bigger, or growing revenue. Never, ever, ever. We would do a deal to add a new capability, which we feel is part of rendering future experiences, such as Mackevision, with its digital twin augmented reality technology, and such as Karmarama. Or we are trying to scale a new capability –scale this experience agency thing, in a geography where we are subscale, such as what we did in Tokyo, a few years ago, with IMJ. And that becomes the seed for Accenture Interactive in that space.
So, in summary, Accenture is very supportive of us having a different, but yet complementary culture, and it’s very much our role to help push the broader technology firm, and we’ve been given that leeway. But in terms of within Accenture Interactive itself, there are different cultures. A commerce architect is not the same thing as a service designer, and we don’t force them to be the same, but you have to be aligned around the desire to reinvent experiences, rather than working only in your silo. If they don’t, then they don’t become part of the Interactive family in the first place.
Phil: Right. That was very well put, and I think that’s given us some food for where this shifts. I’ve got one final question for you, Brian. If you were anointed the Emperor of Digital, which we kind of did, but if we did that for one week…
Brian:[Laughs].
Phil: What’s the one thing you would empower, to change the industry for the better? What would you enforce, on making digital better for everyone?
Brian: Without a doubt, I would take a couple of these experiences that have direct impact on human benefit, and change them. Not all, but many of them are in healthcare, and I would unite resources, really of the world, to kind of tackle them. I’ll give you two examples. If you have a loved one receiving chronic care for some kind of cancer … you know, every three weeks receiving a chemo infusion, and the like. The coordination of care between different hospitals, the flow of data between the anesthesiologist for procedures, and the oncologist, and the general practitioner, and the specialist, say it’s a throat cancer, so the ENT. All the different disciplines, the coordination between them is abysmal, and it’s abysmal globally, in the Tier 1 medical centers of the world. And that is an experience we can solve with data, with technology, and with user requirements, and changing that experience through a better design. We just have to align and do it, and create the economic incentive.
So I am very passionate about some of these experiences that have not changed in 20 years. Maybe you have a child that broke her ankle on the basketball court or the soccer field. That child goes in to the emergency room, or trauma centre of the hospital, where you don’t know how long it will be until he or she is seen, you don’t know what doctor’s on call, they don’t have any of your medical insurance information, it takes forever, you don’t know what the options are, you don’t know which hospital… but all the technology is there to solve all of that. Aligning some of these experiences to create human good is something that is an increasing priority for us in 2019.
The problem is not technology. The technology is there. The problem is – and this is sort of the headline of this answer – that we have to help clients break through what we call the “permission barrier”. The permission barrier is the census of consensus management, and risk aversion, and lack of innovation, because I don’t want to screw up, and I just want to do what my competition is doing. There’s some of that going on right now, and I actually think technology, right now, is being underutilized. And we’re seeing it in healthcare, being one of several places. I hope that helps.
Phil: I think your wish is something that is very commendable, and I’ve seen it, myself, with how much impact it can have on the healthcare systems, and interacting, giving people more information, and everything, so I think it is truly revolutionary, and it’s great to hear.
Brian: You know, so much money is put in to solving healthcare issues, and it should, I’m not trying to subtract any of that money, but if we could also pay attention to what the actual patient experience is, in terms of the quality of life, not the quantity of life, I think that would be a very good thing.
Phil: Yes. Good. Well, that was a great wish to have, and I look forward to sharing this discussion with our network.
Brian: Thanks for the reach out. I’d like that, and have a great weekend. I appreciate your time.
