Infosys has just announced a joint venture with ABN Amro for mortgage administration services, where it will acquire a 75% stake in Stater N.V., a wholly owned subsidiary of ABN AMRO Bank N.V., that offers mortgage services across the value chain including origination, servicing and collections. The transaction is valued at $143.53 million and is Salil Parekh’s second acquisitive move in Europe since his appointment as CEO a year ago. Clearly, bolstering its European presence is a big deal for INFY in 2019, gaining more “zero distance” impact with European clients, adding more innovation centers, and strengthening its local footprint and brand across Europe.
Has Infosys finally gone all “sensible” on us?
Mortgage processing is one of the most commodotized 3rd party banking offerings, where services are heavily outsourced to offshore locations, the technology platforms are mature and robust, with a lot of focus on eliminating manual processes over the last 5-10 years. In addition, all the major banks have been signed up. So is this the new Infosys? Making moves into dependable industries in areas it knows it excels, such as BPM services. Has the firm become (dare we say it) a bit boring after several years of perpetuating an Indian soap-opera of jet-setting CEOs, highly-public power struggles and grand-standing new strategies?
As with most services that are reaching maturity, incremental productivity improvements can be achieved with investments in automation, analytics and AI – and training staff to manage these enhancements. However, mortgage processing to-date has proven little more than a linear, lengthy, margin-thin business, where the winners will be those who can shuffle the market shares into their bailiwicks. So while it clearly makes sense for ABN Amro to divest of a commodity asset, what’s really in it for Infosys?
The Stater acquisition expands Infosys’ European market share and provides an opportunity to transform a commoditized process
Infosys has traditionally performed well in banking and financial services in the US, but has tended to lag behind the likes of Cognizant and TCS in recent years, hence this deal really helps level the global playing field among the leading India-heritage providers focus on the space. In addition, Infosys leveraged its long-standing existing footprints in ABN to beat Cognizant to a marquee European client. With CEO Salil Parekh personally involved – especially with his personal history in the banking sector – this is a particularly satisfying deal for the firm, and marks a much more ideal addition than the recent problem technology assets Pannaya and Skava, which have proven a real bane to the firm.
Stater provides services to an array of mortgage lenders in the Benelux region, with its greatest depth of customers and capability in the Netherlands. Stater also brings intellectual property into the mix with its digital Stater Mortgage Platform. This deal brings a notable European expansion of Infosys’ mortgage administration services capabilities. The existing bulk of its mortgage capabilities are decidedly North America-focused. Stater’s leadership role in The Netherlands, its solid client base, and its existing digital platform are all strong assets for INFY to build on.
Stater celebrated its 20th anniversary in 2017 and begun focusing on the development of its digital platform. So there is a digital baseline, but clearly the INFY play here is to drive substantial digital optimization using levers such as dynamic workflow, API layers, RPA and analytics to reinvent manual processes, improve the borrower experience and, overall, create digital operations. As INFY acquired the majority stake in the asset, it can quickly make these changes happen. ABN prefers to be the lender not the mortgage servicer, so it offloaded this non-core business to INFY.
Although note ABN’s bet hedge of retaining a 25% stake in case this all goes swimmingly – and also increases the desire to co-innovate with the new partnership. There is no doubt that INFY can drive some “standard” efficiencies in this business, such as some improvements to the offshore people management, platform development and further process improvements, but mortgage servicing is a commoditized, low margin business that has been incrementally optimized, but lacks true change and innovation. It is still fundamentally laborious and slow. Hence, if INFY truly wants to meet impressive KPIs with this deal it really needs to invest in improved automation, especially with its learnings and experiences from its US clients.
Large banks consider offshoring as hygiene and no longer seek control of non-core assets
The latest mega deals in the IT and business process services market are all about buying a big book of business and using an arsenal of digital tricks to run it leaner and more efficiently. Recent business services examples include HCL’s $1.3 billion shared “services deal” with Xerox and Wipro’s $1.5 billion deal with Alight for health, wealth, HR and finance solutions. While INFY’s ABN deal looks more like a traditional acquisition than an outsourcing mega-deal, it is still premised on the unifying theme that human-only labor arbitrage-based business models are now hygiene. The new gig is driving enhanced value through better process automation, analytics, better staff development and hybrid workforces.
Driving growth is the leading transformation objective for large banks (see Exhibit 1). They are shedding non-core assets to enable pivot to digital growth. More than a decade after the global financial crisis, profit and revenue performance of global banks is anemic. Firms are divesting-non-core assets to better enable focus and generate funds to support investments in digital business transformation – often using divestments to streamline operating models so they can pivot more quickly toward growth opportunities. Recent examples include Thomson Reuters sale of a 55% interest in its Financial and Risk company to Blackstone for $17B, now rebranded the unit as Refinitiv, Barclay’s disposal of certain AP-based wealth management businesses, and UBS’ sales of its Dutch wealth management business.
Bottom line: Infosys gets scale and market share but needs to re-invent the tired mortgage servicing market to make the Stater acquisition truly notable.
If Infosys really wants to make this mortgage play differentiating, it will need to refocus seriously its efforts around borrower experiences across the lifecycle of originations, servicing, and collections. In a commoditized mortgage market, change has been slow to come in the form of “e-mortgage”. Infosys must use this opportunity to go beyond driving cost efficiencies across Stater’s operations and platform with its automation toolbox.
It must use its design capabilities to rethink engagement strategies for borrowers, and ultimately configuring the digital components that link these activities back to its platform and clients’ core systems. The more Infosys can simplify the complex and often harrowing mortgage process for borrowers, the better its chances for seeing ROI on this deal.
Ever since IBM sold off its Daksh business to Concentrix in 2013, “call center” has been something of a dirty word to traditional service providers and software aficionados alike.
Since then, traditional IT services have flatlined as the focus has shifted to digital solutions, where the customer is front and center to emerging interactive (“digital”) technologies. Having that ability to lead the customer front line and support those customer needs with real-time speed and intelligence is core to business operations…. and service partners which can deliver this has never been so crucial. So are call center providers back in vogue, or is this merely a blip as we transition to a world where we don’t need many human beings anymore?
The contact center operations (BPO) services industry is growing at 4% globally, despite razor-thin margins and intense competition. So, why do pundits declare the call center on the brink of implosion into a piece of software, while the stagnant IT services market escapes criticism for perpetuating a “people-centric” model? While contact center BPO growth is hardly setting the world on fire, it’s been steady over the last several years, even though the majority of contact centers worldwide are still in-house. The fact that there’s still a $65 billion market for outsourcing this work begs the question why these investments are simply going away. Contact center leaders like Teleperformance and Concentrix have recently made sizeable investments in bolstering service delivery (acquiring Intelenet and Convergys, respectively), reflecting the relative importance of this market segment. The recent development in which SYKES acquired Symphony demonstrates the optimism that automation can grow, not cannibalize, the contact center business. The latter, in particular, signals a promise that contact centers can use RPA expertise to scale and complement traditional contact center services business as they pivot to become more strategic providers.
Other large business services firms are gravitating into the customer engagement market, sensing an opportunity to disrupt deals with a hybrid intelligent automation/global talent approach. Most of the Indian-heritage IT services firms with strong BPO delivery arms are gravitating back to contact centers, as they see the potential for aligning intelligent automation and cognitive assistant solutions with their global base of talent for supporting their enterprise customers. Some examples of this are with the likes of Tech Mahindra in telecoms and Infosys with order management. Cognizant, Wipro, and HCL – for example – are also competing for call center work. BPO firms that have been more focused on non-customer centric areas are gravitating aggressively back into the market, such as WNS, EXL, Hexaware, and Genpact. Even IBM has recently flirted with a few opportunities, despite selling its call center business, and we even cam close to featuring Accenture in our new Top Ten, but the firm was very adamant that is did everything but the contact center piece.
Contact centers are ripe for a renaissance, and automation is a big piece of this transformation. The common retort that a contact center with automation is an oxymoron is false. Perhaps it’s our legacy view of contact centers and automation that is oxymoronic—and it’s time to let go of that legacy. When “digital” is ultimately about new ways of doing things, the contact center is in a more precarious and important position than ever. The contact center for companies that want to stay competitive in a hyper-connected economy must learn how to embrace intelligent engagement, using the key change agent of automation to become a strategic hub that empowers both customer service professionals and the customers they support.
Enterprises must navigate the changing of the guard for intelligent customer experience services
As the dust settles on our latest Top Ten, an assessment of the Customer Engagement Operations market, we’ve been fielding lots of questions about what this ranking means from a competitive standpoint. Our final top ten chart was chock full of what you might consider to be the usual contact center suspects, but also sprinkled with some interesting up-and-comers, as well as familiar names that aren’t necessarily known for competing in this space — the intelligent customer engagement services that are evolving out of the contact center. The promise of digital customer engagement and the vast amount of data in contact centers has brought back a resurgence of excitement for services that have evolved out of the legacy call center, and traditional labor focused legacy services are slowly but surely shifting to embrace automation, analytics, and digital interactions to provide a balanced, more intelligent customer experience.
It’s clear that this isn’t your dad’s customer care BPO market. While suddenly every service provider we talk to wants to carve out a name in this space, there are different roles each will play and fit into within the ecosystem. This report focused on the interactions management and operations piece of the puzzle, but actually, the three pillars of the value chain are intrinsically linked, with front office convergence creating demand for operations to leverage strategy, and vice versa.
Pivoting to the digitally enabled front office means that customers are demanding more strategic input from partners at all points of the customer lifecycle. The recent investments we’ve seen from service providers for digital and design assets are complementary or integrated services to customer engagement operations. Thus, the services market is looking a lot less like a linear value chain and more like a cyclical system (ee below), where the contact center feeds strategy and design with customer data and analysis, where marketing, sales and support blur as one “experience,” and RPA, smart analytics and AI fuel the whole digital front office with greater efficiency, intelligence, and intuitiveness to customer needs. Our next HFS Top Ten reports will take a deeper look into the market for CX strategy and design, and marketing and sales services.
It’s a seismic shift particularly for organizations that are aligning to OneOffice and thus why we see such a different competitive set than we have in the past. Fundamentally different capabilities are coming into play in the realm of intelligent customer engagement, with bold moves like SYKES acquisition of Symphony Ventures shaking up the space with some real RPA capabilities. Firms like Infosys, Tech Mahindra, HCL, Wipro and CSS Corp are actually embedding automation into engagements, often in the form of cognitive assistants. We even see some action in this space from the likes of Accenture, which have come in with a CX consulting slant and then operationalize to support the design, or have an industry-specific capability that they’re supporting with customer interaction operations.
It’s worth noting that while the traditional contact center players tended to score well in the execution categories, there was a difference in the ranking for the innovation investment and capabilities, which was largely led by more IT focused firms. Thus, while now we still see the traditional service providers winning overall and in the voice of the customer in this market, in the future it may not be the usual suspects, but the providers that leverage niche and complementary capabilities, digital marketing, and CX design assets for their operations to be winning in the future. The demand from customers has fundamentally changed to shift away from low-cost, low-value services to seeking a partner that can help to deliver on a holistic digital customer engagement strategy, and many service providers are stepping up to the challenge.
The Bottom Line: In order to develop a truly customer-centric digital organization, you need the right partners in the right places of the digital front office
We expect the waters to muddy further as the impact of digital self-service, RPA and intelligent automation and AI accelerate. While on the one hand an existential threat, it is also the opportunity to breathe new life into a services market that for too long had been a race to the bottom for FTE based pricing. The convergence of services in the front office space means that enterprises need to choose their partners wisely. As an enterprise buyer, you will need to evaluate your partners and decide whether the partners you have today are the ones to help on your journey to deliver on intelligence customer experience. You will also need to open up to emerging business models and shed legacy contracts in order to really embrace an outcomes-focused front office that caters to its customers.
RPA has passed its peaky hype and we’re now staring into reality for the first time in 6 years. And it’s a messy picture…. the market has largely bought into three software tools and tens of thousands of people have invested a significant amount of their time training themselves on them.
However, beyond scripts and bots and dreams of digital workers scaling up rapidly to provide reams of value, most enterprises are fast coming to the realization that they need an actual process automation platform capability that ingests their data, visualizes it, machine learns it, contextualizes it and finally automates it. Essentially, the whole lifecycle of data components needs to be integrated into a single platform in order to take maximum advantage out of automating processes through scripts, bots and APIs.
AntWorks comes out of the closet to make its integrated automation play, taking the fight to the Big 3
Fresh off a series A round of funding with SBI Investment Co in July 2018, AntWorks has come out of the 2019 gate ready to up their profile and expand their enterprise footprint for their brand of intelligent automation. And why not choose the lovely island of the Maldives to press home its vision for its Process Automation Platform that integrates data ingestion, visualization, machine vision and RPA…
Having tracked the product for several years, and also researching the lions share of early adopters of automation products, AntWorks’ machine vision is an outstanding product, and Fractal math has significant advantages over Bayesian. Visiting with the core team just last week, having them show how it can extract text from images within images is something that can provide a huge edge in the market as users wise up to what they really need to integrate data. One of their use cases involves taking a picture of a coupon flyer to find out intel on what products are being promoted, special packaging, size, flavors, dates of promo etc.. They can tell you, for example, how many ounces are on a Pringles can in an image on an image on an image (label on a can in coupon on a page of coupons).
Yes, this really is slick stuff, and last year 350 users of automation products show how AntWorks is stacking up when it comes to embedded intelligence:
Five things enterprises evaluating intelligent integrated automation platforms should know about AntWorks
While HFS has been tracking AntWorks since early 2017, this was its first “official” analyst briefing. We took away a variety of facts as well as future direction and strategy points. Here are the five things we learned that we consider relevant to enterprises evaluating intelligent automation tech and partners:
1) Its platform offers up integrated intelligent automation – AntWork’s ANTstein platform consists of modular components including “cognitive machine reading (CMR)” sort of a computer vision meets machine learning-based smart OCR, RPA , and a smart analytics components. While these are available piecemeal, they are designed to work together. The primary client entry point today is with its CMR module. So rather than adding AI to RPA, AntWorks adds RPA to AI. HFS created our Triple-A Trifecta framework (eg: RPA, AI, and smart analytics) to make the point that you can start anywhere with intelligent automation, but our research shows most firms start with RPA and then can struggle with scale. Clients that start with CMR are tackling unstructured data which can then help unlock greater functionality with RPA downstream. ANTstein offers a path to integration which can enable end-to-end work flows and the potential for the coveted scaling of IA. AntWorks is launching its new version of ANTstein, Square, imminently.
2) Its machine learning engine leverages fractal data science rather than neural – While the sciences are different, why it matters to enterprises is that you can train some business process algorithms faster as there are finite sets of patterns and outcomes in many business processes. Fractal science tends to work best with a finite set of outcomes, rather than infinite, where neural would be more appropriate.
3) Innate process and verticalization depth – AntWorks’ leadership team came from the BPO industry (eg: Infosys BPO, WNS, Capita, Mphasis BPO), where deep understanding of business processes is essential. This deep process knowledge in the areas being automated by enterprises today is largely lacking from most AI and RPA software companies. AntWorks is applying this process focus to develop domain-specific use cases for horizontals like finance and accounting and HR and more notably industry-specific use cases like title search in mortgage or claims processing in insurance. The service provider community has really been bridging the gap between intelligent automation software and domain knowledge to create end-to-end workflows. AntWorks’ domain use cases bridge its full stack and demonstrate the potential of integrated IA.
4) RPA innovation – While AntWorks missed the first wave of RPA, it is working to offer RPA product improvements in areas clients are grappling with such as bot productivity to ensure its relevancy. Its forthcoming Square release of ANTstein is purported to enable dynamic reallocation of idle bots and multi-tenancy of multiple bots on one machine. One of their clients in attendance at the event indicated this would be a major resource saver.
5) Bot cloning – As many enterprises have already invested in one or more of the leading RPA software players, AntWorks needs a value proposition beyond follow the leader RPA. An interesting concept they are working on is “bot cloning” – essentially replicating existing bots and porting them over to their platform. Given its current focus on unlocking unstructured data for enterprises as their lead selling point, this may create a logical bridge to RPA as long as it works. As enterprises increasingly focus on outcomes rather than the enabling technology, this may create some conversion opportunities as enterprises look for ease of integration to enable end-to-end workflows.
Bottom line: AntWorks offers a path to integrated intelligent automation, provided enterprises embrace its full stack. One more large round of funding and it will be a real force
Go global with its platform play. AntWorks, fuelled by funding and early client success, is making a major push to take its product to market globally. While its full stack platform offers enterprises a tangible path to integrated intelligent automation, the reality is that today they are best known for their cognitive machine reading capabilities. AntWorks needs to continue to focus on its domain expertise which has the greatest potential to showcase end-to-end workflows that work across its stack – essentially showing intelligent automation in action (the Triple-A Trifecta). Currently, there are a lot of piecemeal IA tools in the market that requires custom integration to tie them together to enable straight-through processing of automated workflows. As enterprises grow weary of having to continually piece together the components that enable intelligent automation, the focus on tools will become more about what delivers the best results and can scale. AntWorks’ investment in people and expanded geographic footprint will help take the message to a broader range of prospects outside its core client case in Asia Pacific. Additionally, the firm needs work on its global channel strategy. A solid network of partners, particularly strong service partners who understand the tech and value proposition, can help AntWorks reach a broader range of prospects.
Secure more investment funds to fight for a limited supply of talent. What’s needed next is a significant second round of funding, not dissimilar to those being ingested by UiPath, Automation Anywhere and more recently Blue Prism. The sales team, under the experienced leadership of Bill Schrank, need added firepower, and AntWorks needs to prove its RPA story aggressively… how can they truly bring it all together and negate the need for enterprises to purchase expensive RPA licenses when ANTstein provides it all for them in a one-stop solution? And finding the talent is tough as the Big 3 currently soak up any semi-decent professional with a pulse capable of understanding and communicating the value of integrated automation.
Combat “RPA fatigue” to re-energize a weary and frustrated market. Too many enterprises have been oversold the same old story of no-code and the fact this is supposed to be “easy”. So Ash and his crew need to make the case that clients of AA, BP and Ui can jump ship without losing face. In addition, weary service providers and advisors need to be convinced to put similar resources into AntWorks that they already have into the others.
I just couldn’t resist the annual pilgrimage to Mumbai to experience the Indian IT elite’s gathering, in the case my concerns that the offshore-centric IT service delivery industry was getting complacent were misplaced. Sadly, they were not.
It has been two years since the NASSCOM leadership forum of sell-side IT execs was held in Mumbai (after a pretty disastrous diversion in Hyderabad last year), so it was pretty obvious that attendance was clearly down, compared to two years’ ago. Am sure numbers will be reported otherwise, but it was pretty easy to navigate the entire venue without having to resort to the traditional scrimmage position to hack through the usual sea of people.
My takeaways:
The atmosphere was “relaxed”.Seriously. The traditional urgency has somehow dissipated to this bizarre – almost chilled-out – mindset from most of the people there. “Aren’t you guys worried about Brexit or this Chinese/US trade war escalating. Surely that could really hurt Indian service delivery?”. Most people just shrugged. No-one seems to care that much anymore… everything is just fine, and, I hate to say it…. BORING.
Digital as a term is done. Yes, even in India. After the last few years of digital overdosing, the only time the word is now uttered is when an Indian provider exec explains that “half their revenues are now digital”.
“AI” is the new Digital. And absolutely no one can define it. Great. Hurry up Quantum…
Service providers fell into two camps: inspiring and downright awful. Yes, we literally hammered our way through 30 meetings and I can honestly report that about a third were truly inspired conversations… the other two-thirds were dull as dishwater. Some came to us with a precise vision and focus, others literally had nothing to say beyond “we’re doing OK”. There was nothing in between.
There is a depressing lack of service delivery disruption. All the execs wanted to pitch was their amazing new pricing models that incorporated some RPA and some type of “outcome” pricing. Few were pushing their ability to disrupt actual service delivery with a next-generation talent development strategy. Few were talking about how they were helping clients with innovative role development, with change management programs, with co-investment plans, with the re-platforming of IT for their clients. And no-one was talking about investments in cognitive assistants and blockchain… it was all about dumb RPA bots and new-fangled pricing models that helped them win deals. Who is advising these people? Don’t they – at least – talk to decent analysts anymore to tune up their messages?
Where were the CEOs? We got visits from Salil Parekh (Infosys), C.P. Gurnani (Tech Mahindra) and mid-cap CEOs Keshav Murugesh (WNS) and Nitin Rakesh (Mphasis). In addition, we were treated to Accenture’s CTO Paul Daugherty, which was welcome… and Capgemini’s Thierry Delaporte, co-COO (and potentially the next CEO) did manage to make the trip. However… Cognizant, HCL, Genpact and TCS all failed to serve up any C-Suite royalty.
Isn’t this supposed to be India’s premier IT event? And what about IBM and DXC, two of the largest IT employers in the country? I don’t think a single leadership soul from those giants made the effort. Not to mention Deloitte, EY, PwC… all huge beneficiaries of Indian IT talent. Where were they?
Where were the RPA dignitaries? Considering RPA was pretty much the most discussed topic this week, apart from AntWorks co-founder Govind Sandhu and a rumored sighting of Automation Anywhere’s Mihir Shukla, they all gave this conference a wide berth. Considering the Indian IT service provider channel probably represents the largest growth opportunity for the RPAs, this was a huge miss from them. And from NASSCOM for not inviting them along.
What happened to the analysts? Aside from single individuals from Gartner and Forrester, only a handful of lower tiers analysts were seen parked in the meeting lounge desperately trying to pitch their wares to Indian marketing folks (pretending to be excited by them). Even the HFS trends session was thrust into an obscure breakout room that ended up with wall-to-wall standing and disappointed people being turned away. When I mentioned to some NASSCOM folks that it “may have been wiser to stick us on the main stage”, the response was “We’re truly sorry, but we have to be careful not to upset the other analysts”. As if anyone would have cared… there were hardly any there in any case… and when did the feisty Indian IT monster of yesterday worry about upsetting a few people?
Thank god for Rishad! The one truly bright shining light was the effervescent Rishad Premji gracing the halls, bouncing around on stage, talking to everyone he could, even having beers with his buddies in the hotel bar. Someone with a vision, oodles of passion… saving the day for a tired old show that badly needs a facelift. I must apologize to my friends at Wipro, but can you just let this guy run for PM?
The Bottom-line: It’s time to change the Indian IT record… or this industry will be disrupted by… something else
I can recall all the way back to my first NASSCOM invitation in 2002… this was THE event of the year, back then. Anyone in IT services who meant anything just had to be there. This thing literally used to be Davos for global IT. Now it appears to be descending into a microcosm of an Indian IT industry bordered on complacency… content to make quarterly numbers and little else.
Having spent time, in recent months, at industry events in the US and emerging European locations, something is going wrong in India. Is Indian IT losing its luster? Has it settled for what is has… losing its ambition to keep disrupting the world of technology, like it did so magnificently between 1995 and 2015? Will we see IT services firms headquartered outside of India creating the next big shift, leveraging more talent from emerging locations such as Ukraine, Poland, Russia, South America and China… and lessening their reliance on India?
Bathgate. Alastair Bathgate… Unshaken and stirring the pot, but doing it his way
Anyone who’s known Blue Prism CEO and Co-Founder Alastair Bathgate over the years has seen a marked change in his executive presence, especially since the IPO two years ago. While he still insists on driving his Volvo SUV, while his buddies are prancing around in fancy Aston Martins and Bentleys, he is a more assured and confident individual than the chap I first met seven years ago, when we first alerted the world to RPA. Yes, he still has the same honest style and just tells you what he thinks, but there’s a certaswagger about him now – he sees the future of his firm and is hell-bent on taking it there. And yes, if only he could use his wine pricing app for RPA, all his problems would be solved =)
In short, it’s been a mildly frustrating couple of years for RPA’s early mover and market maker, Blue Prism… the firm was the first (and still only the first) pureplay RPA firm to go public, with every dollar spent being visible, all staff moves closely scrutinized, and a CEO who’s had to divide his time between board meetings and investor days instead of harassing the conference circuit as aggressively as his rivals.
Meanwhile, while some of his competitors have been in stealth mode, raising all sorts of private investment and offering licensing models that appear (on the surface) a lot cheaper, while selling the “This is easy, this is no/low code, we can train you in weeks and get you a nice certificate to share with your friends on LinkedIn”. This is what I personally detest about the software business… anyone can sell dreams, confuse executives too scared to ask critical questions like “how exactly does this work again?” especially when you have the lovely term “robotics” to excite greedy CFOs and CEOs eager to find new ways to increase margins.
‘Refusing to get carried away’ may have hurt Blue Prism in the short-term
Cutting to the chase, the Blue Prism team has stuck together for almost a couple of decades and has stayed true to its very British style of keeping the discussion realistic, refusing to get too carried away with the hype and the fantastical stories gripping many starry-eyed executives eager to slap RPA success on their CVs… not unlike the SAP and Oracle roll-outs of the 90s and Workday and Salesforce escapades of the last decade.
Now it’s all about stitching the wonderful skills of building scripts, macros, document processing and screen scrapes with the emerging excitement of Machine Learning, Natural Language Processing, Augmented Reality and Computer Vision. Yes, folks, you thought the hype-train of the past 30 years was bad, the one we’re venturing into is going to drive many of us completely nuts.
It’s been pretty hard for Alastair Bathgate not to get irritated by the challenge of his highly-visible firm taking pot-shots from other firms, playing on the excitement this market is generating, promising enterprise clients dreams that will likely turn into nightmares when they set their expectations to achieve outcomes their staff simply do not have the skills to achieve – with a hodge-podge of processes far too messed up to fix, simply by slapping new software components over the top.
However, Blue Prism’s low-hype, pragmatic approach could pay attractive dividends as the hype-phase dissipates and fresh investments are made in re-thinking the whole RPA/AI model
While his firm may not have been quite as successful as UiPath in forging lucrative partnerships with professional services firms and lacks some of the terrific messaging and vision of Automation Anywhere… while having to tackle a publicly-listed firm persona and widespread (unjustified) confusion over its pricing model, you have to credit Alastair, Dave Moss, Pat Geary and Martin Flood for sticking to their knitting and focusing on what they know best – keeping the conversational balanced and realistic and investing in the sales and technical talent they believe they need to keep developing their product.
It went unnoticed to many that Blue Prism recently landed a $130m investment round. What excites me about this investment is the firm will actually get the money over the next two years and we can see exactly where it is going… on its product-specific developers in Manchester and an exciting new group of research in London, where 25 crack AI thinkers will be working hard to take Blue Prism’s solution into the place it needs to go. The firm already has a diverse group of 250 salespeople… now it can focus on the development areas that hold the key to who will ultimately will this automation arms race.
Upping its RDA game and expanding its presence in Japan are immediate needs that it needs to deliver
In addition, the firm is working hard to fill the gaps in its current solutions… while it prides itself of the back office unattended automation, if has suffered at the hands of AA and UiPath when it comes to very RDA-centric (Robotic Desktop Automation) engagements (what we call “unattended watched RPA”).
Plans to release (in version 6.5) document processing capabilities to support end-to-end processing of document workflows which also acts as an OCR system to classify documents, extract key-value pairs and encode verification steps into the digitization process, could well propel the firms back to the front of the market as the reality of delivery exceed these dreams of great visions. In addition, Blue Prism plans to deliver full Japanese and simplified Chinese language capabilities with this new version release… essential add-ons as it plays catch-up to UiPath in this region.
The Bottom-Line: The real work starts now as RPA evolves to become a key component of the AI tool kit
The stark reality we’re currently facing is getting ahead of market confusion to forge genuine learning journeys for ourselves, our careers and our companies. At our AI-enabling Operations roundtable last week in New York, we all agreed that AI is Nascent, New, Hard … but it is, most certainly, Inevitable.
The most important clarity that most organizations have gained over the last several months is that AI is not some monolithic thing or a singular technology. Instead, we’ve come to understand AI as a toolkit, or “a bucket of stuff” that enterprises can use to make their operations more intelligent; building blocks that include various elements of foundational AI moving across a spectrum toward more packaged solutions.
The one common denominator among the executives was that they were all determinedly seeking to evolve their experiences from RPA to join the dots to the next steps of achieving enterprise-wide automation and AI capability… essentially integrating the tools and hatching a real plan to get it done. This is where the likes of Blue Prism, Automation Anywhere, UiPath, Pega, Kofax, and AntWorks need to head next; building on the RPA digitization to create real solutions that go far beyond scripts and bots… solutions that can help re-invent the underlying institutional processes that have held back firms for years.
Let’s get to the point: most of the past five years have borne witness to our industry postulate on the why and what of digital (and many still do). It’s time to focus on the how.
Unlike the wild grandiose claims from most services and tech providers that everything they do, these days, is “Digital”… it is far, far more than simply investing in new technologies. Digital is about embracing interactive technologies, mobile, social and analytics to drive new revenue and customer experiences, as well as harmonizing business silos to support these digital outcomes.
However, success in digital initiatives is much less about technology adoption… and much more about people and culture, and the ability to manage that change. Code errors can always be fixed, workflows stitched together, apps integrated… but taking enterprise teams through the whole volatile experience, helping their staff learn new techniques, creating an environment where an enterprise can keep evolving on its own accord, and not rely on armies of consultants until perpetuity, is how we evaluate the performance of today’s ambitious service providers.
With this evaluation objective in mind, HFS shortlisted and assessed 10 leading providers: Accenture, Capgemini, Cognizant, EY, Genpact, IBM, Infosys, KPMG, TCS, and Wipro across the following five dimensions of digital-change prowess:
There aren’t too many people who can boast to be one of the true pioneers of the emerging robotic process industry, or whatever we end up calling it, but one man who didn’t need to recreate his resume in 2017 is Francis Carden, one of the original brains behind recreating desktop automation to become Robotic Desktop Automation (RDA) which is such a key component of the broader RPA offerings attracting so much noise and attention today. And he now leads the whole robotics strategy for customer engagement and data orchestration giant Pega.
Francis – a British Floridian these days – is never one to hold back, and when one cynic mercilessly described some of today’s RPA rollouts as “lipstick on a pig” at our recent New York FORA event, he just had to take it one stage further to declare them as “lipstick on a pig’s arse”. So without further ado, let’s hear from the granddaddy of RDA himself…
Phil Fersht (CEO, HFS Research): Francis – firstly, tell us about the OpenSpan business you co-founded and how this evolved to the acquisition by Pega?
Francis Carden (VP, Digital Automation and Robotics at Pegasystems): In 2004, a group of “tech head” advanced windows operating system engineers approached me about forming a company using an automation technology vastly different from anything proceeding it. It let companies rapidly automate, through the Graphical User Interfaces (GUI) of windows applications, any task or process that a normally would be done by a human on their desktop.
On first hearing of it, I had to laugh and said to myself, “It sounds like screen scraping.” I didn’t believe what they were proposing was even possible. But I did a deeper investigation into the background of these engineers and the technology and found it both unique and incredible. So I bought in – and even invested a significant amount myself. Today, we label our RPA technology “Deep Robotics” given it is so different.
In 2005 we started OpenSpan and over the next three years, as CEO, we convinced a consortium of Atlanta technology angels and then attracted four Tier 1 VC firms that what we had was something different. The customer base grew rapidly. Our patented technology started life as being called “Surface Integration” because it was so different from screen scrapers of the past (and current RPA). But we quickly settled on “Desktop Automation” (known today as RDA), and “Automation Broker” (known singularly today as RPA). We ended up implementing most of the world’s largest RPA projects over the next 10 years.
Then Pega acquired OpenSpan in 2016. Pega recognized our RPA approach was markedly different from any other RPA vendor. After we got talking, I realized our unique technology would be even stronger if it were part of something “bigger.”
What I mean by that is organizations on the digital transformation journey shouldn’t aspire to RPA as the end game. You really need to look at RPA as a short-term plug to fill the gaps on the road to get there. When you deploy RPA, you’re just masking the poor processes behind it. And when application UI changes, the bots are prone to break. It might be weird to hear me – an RPA vendor – say that. But it’s the truth.
And that’s where Pega’s digital process automation (DPA) software comes into play. Pega enables you to digitally architect those processes the right way, from the ground up. No more organizational silos, no more inefficiencies, no more needlessly manual processes … and really, no need for RPA to always be the first option. RPA gives you a digital automation jump start, and when it’s time to deploy DPA, those bots can be put out to pasture.
And the good news, at least for us, is that everyone is on a digital transformation (One office as HFS call it Phil) journey, and it really never ends. RPA and DPA are the perfect one-two punch. So the tie up and combined value prop with Pega was, and has been, an ideal match.
You’ve been the undeclared granddaddy of RDA, so what is the key “difference” between RDA and RPA… unattended and attended… etc?
Imagine if every compiled windows application ever built allowed itself to be automated from within its own code, robustly and in real-time. You wouldn’t need any RPA, right? However, very few apps running on windows are easily automatable at the UI layer – at least, without resorting to screen scraping techniques like MSAA, UI automation and OCR.
In 2005, we patented a more sophisticated approach to UI automations – a “plug-in” like architecture that enabled any compiled windows application and all its objects to be non-invasively automatable in a single architecture. This “deep robotics” automation occurs inside the windows layer, inside the memory of the machine, and runs as if the original developer of that application had natively built it. This plug-in like approach automates at the application’s original speed (10x to 100x faster than scraping), highly robustly, and far less susceptible to application UI changes. More importantly, and hence the dual name “attended RPA,” it even allows the desktop worker to use their machine, keyboard, and mouse while the automations are running. This is something unheard for old school scrapers and other RPA products. It is this pure form of RPA that also enables it to be used as RDA, giving every worker their own personal robot or “co-bot” to automate from one percent to 90 percent of their work. Agile RPA. And only then, after you’ve rolled out RDA, should you look at those same processes ready for full automation with RPA (unattended as opposed to attended) operations.
Before the Pega acquisition and continuing since, we have 100s of 1000s of bots deployed across some of the world’s largest enterprises in all industries. By the way Phil, being a Grand-daddy makes me feel old, but I did calculate that I’ve been doing automation of the UI for 20 million minutes of my life!
So what happens next as RPA (assume RPA includes RDA here) moves from “tinkering” to broader enterprise adoption – where do you see clients finding the most value, and how can they scale their people and tech platforms to accommodate?
Good question, Phil, and the key word to the question is “tinkering’ – which is how most RPA vendors excuse themselves, after 10 years of trying, for not getting many customers to really scale or still stuck in pilot stages.
It is hard to believe, looking at the crazy RPA vendor valuations today, but yes, most RPA projects are tiny compared to scope of the company’s using them. RPA is not new, so the real question enterprises need to ask is, “What’s stopping this large-scale adoption across the globe, and why do RPA vendors keep insisting it’s because it’s new”
Attended RPA (RDA) scales — that’s a fact. It automates all the easy stuff in an agile way. But RPA unattended constantly struggles with trying to automate everything, both the easy and the hard stuff. Putting RPA band-aids on top of old and tired processes is just wrong for the long term. As Gartner says, “RPA is a tax on legacy,” but businesses are often so enamored by the hype.
But the thing is, RPA will indeed scale if it’s part of something bigger. RPA is tactical to the extreme. Digital transformation is strategic. What happens though if you combine the two? This is where software robotics shines. Using RPA and RDA to plug gaps that currently prevent digital transformation allows business and IT to align to solve the real problems. This gets you real and rapid ROI from RPA out of the gate, but equally, it encourages planning to then “fire” the robots as fast as you deploy them. Not something you’ll hear other RPA vendors promote Phil. With robotic automation capabilities embedded and fully integrated into the heart of Pega’s DPA, we are seeing enterprises really changing the way they compete in a race to become them most digital company in their market(s). Analog companies, using tactical RPA only as the glue, or those not buying into your one-office analogy, will simply not survive.
Francis, we’re seeing some tentative moves from “big iron” ERP vendors such as SAP into the process automation space, but do they really want to delve into this world, or are they merely ticking the “we have an RPA module” box?
Like I said, if all new applications were built to be truly digital and open, then there is no need for RPA at all. But we’re living in the real world here. While we wait for that to happen, the real “transformation” vendors selling the digital dream need to be able to use tactical technologies like RPA to help their customers plug the (hopefully) short term gaps. This gives customers quick relief where they are strangled by their legacy systems with no other integration capability. If a vendor doesn’t have this kind of automation, this sets the customers up for failure – they need to automate now to compete, not six or 12 months from now when your big overhaul project is finally done.
There are now 30+ RPA vendors, but I think the bubble will burst on these companies riding the hype wave. Most of them use many of the same old scraping technologies, and none of them have a unified DPA play to help companies for the long term. I’m not sure how long these RPA companies will be able stand on their own. Consider that Pega now includes bots as a standard capability of our DPA platform. We’ll give you all the bundled bots you need as part of your DPA strategy. So yes, we’ll likely see more consolidation in this market.
And how do you see the “blending” if classical RPA with some of these newer AI products on the market? It feels to me that RPA has really evolved from the process/operations side of the business, while AI is some magical vision being pushed hard by IT, but lacks in real business applications? What is real versus fantasy in your view?
This is the biggest myth of RPA. The idea that AI will help accelerate getting RPA to scale. It’s a red-herring perpetuated only by those in the RPA industry. No bias there then!! I concur with you Phil that AI is central to becoming a truly digital company. However, the idea of using AI with RPAdoesn’t fly – at least not right now. AI must live central to anything an enterprise does, everywhere. AI needs data, and LOTS of it. But very little of that will come because of RPA.
In order for AI to be really valuable, it needs data from as many systems as possible as well as data feeds from interactions with as many customers as possible, in real-time or extremely fast. Only then can you use AI start to predict what customers are going to do and/or create models that make the best decision for each individual customer. RPA would likely touch less than 1 percent of 1 percent of that data, so if anything, the RPA world is embarrassing themselves by trying to join these two tactical vs. highly strategic dots.
Don’t get me wrong, AI can create work for RPA bots, and maybe some RPA feeds some data into AI, but that doesn’t make RPA Intelligent. At the heart of AI is a digital company with data feeds from every source feeding into it. The DPA (one-office) movement is joining real transformation technologies together, acting as one, with AI at the center. The vendors that have DPA are the ones delivering IT and business on the promises of the past – a real digital company – and envy of their peers!
Thanks for the insights, Francis… we’ll be watching Pega closely in this space this year as the market finds its sea-legs… and some more attractive lipstick!
There’s nothing more jarring than an ex-Gartner analyst desperate to continue dining off a legacy analyst industry that is actually trying to change. And lo and behold, Just before the Christmas break, a blog emerged on LinkedIn with an enviably click-baity title ‘Is Gartner research quality under threat?’.
Simon Levin, a Gartner Alum and owner of a boutique business “The Skills Connection” that helps tech vendors lobby their way through the Gartner and Forrester MQ and Wave processes, plies his trade on the fact he “knows” how to work his friends at Gartner, to help his vendor clients get their dots edged in a more positive direction for the firm. And why not? If I was a CMO, and lobbing Simon some moolah can help get some sort of leg-up in the process, I’d probably give him a shot. And however you performed, there is no doubt Simon will claim it would have been worse without him. It’s like that hair product “Rogain” that claims to slow down hair-loss… you’d never really know if it actually helped unless you went completely bald…
Simon makes the case that now most his former Gartner buddies he worked with in the 90’s are being quietly “retired” and replaced with a new breed of youthful analysts, and their research maybe less predictable:
“Quality control is hard to enforce. When a client of ours became involved in escalating a dispute over an MQ assessment recently, we saw some signs that Gartner’s controls may occasionally creak at the seams.
Our vendor noted factual errors in both the wording and the scoring of the draft assessment. We protested and took the client through the escalation process, and the company’s dot was rightly promoted from midway down Niche to the top quartile of Visionary, while the words were rewritten and became significantly more positive.”
So Simon literally cannot lose here: “In the old days I could leverage my influence with my former colleagues, now they’re going, I can help even more with the new kids they’re throwing into the mix who might make a few errors”
Predictably, the conclusion from Simon Levin was “as long as you hire my firm early enough in the MQ process to make sure their analysts don’t misrepresent you, you’ll have nothing to worry about”.
Why the content of Simon Levin’s blog should also be of real concern to the industry
In many ways, the stance taken in this blog is representative of how tech marketeers AR professionals view analysts – after all Simon’s revenues come from advising vendors on how to put pressure on analysts in the right places. But let’s break down in stages what’s wrong with this argument:
Misguided principle 1: Wining and dining analysts mean they’re in your pocket and should stay there!
The piece starts off innocently enough by confirming what we already knew and discussed in our blog covering nodding dogs – vendor marketeers and their analyst relations professionals should expect analysts to do their bidding all the time they’re being wined and dined. We know this because Levin discusses at length how irritating it is for vendors when they have invested so much time “cultivating” an analyst, to find out that said analyst isn’t handling that big competitive analysis this year. The misguided presumption here, of course, is that wining and dining analysts is just as important for getting a decent score as, say, providing relevant and timely information.
While this isn’t true for many analysts – we can infer, given the provenance of Levin and his compatriots, that Gartner analysts are perhaps more willing to boost scores if they have a good relationship with the vendor. Isn’t this knocking the value of objective assessment somewhat? I’m sorry Simon, but most analysts do this job because they actually value their ability to be objective. While one analyst firm obsesses with incentivizing its analysts with P&L responsibilities, most separate their analysts from the direct revenue impact of license reprints. Having a good relationship never hurt anyone with any business engagement, but a decent ethical analyst is never dissuaded by a decent steak (or vegan) dinner. Which moves us neatly on to our next puddle of misguidedness…
Misguided principle 2: Fresh perspectives are bad – the game is about controlling stale opinions, not embracing new insight
This is a big one, and it slithers through Simon’s blog as a core theme – the only stakeholder worth thinking about is the vendor. What’s misguided here, though, is the prospect that a fresh analyst jumping on a piece of research is always a bad thing. Sure, vendor marketeers and their analyst relations professionals may be rightly upset the steak dinner they bought has gone to waste as a new analyst’s in town, but for the enterprise executive who relies on balanced research to make decisions, a fresh perspective is almost always welcome.
The same staid analysis from a crusty ol’ analyst recycling the same themes may well be predictable and easy to influence. We all know the types who have those decade-long loyalties to the likes of SAP, Workday. Oracle, IBM et al. It’s very hard to convince a 30 year long analyst that the world is changing and and the vendor that have been lauding for their entire career may be losing its edge. Changing things up a bit is important to keep the research fresh, and analysts on their toes.
However, change is nearly always inconvenient for vendor marketeers and their analyst relations professionals – the clientele that keep Simon Levin’s coffers swelling. What’s soul-destroying here is that the quality of the research (despite being the core focus of the misleading title) is pushed to the fringes of the discussion. Simon’s blog isn’t about getting the best research and coverage into the market. It’s commiseration on the annoyance that is losing a tame analyst for a new one that may not be as willing to down the Kool Aid.
Nevertheless, quality is mentioned – but it masquerades in the narrative as a single metric – the average tenure of an analyst. Because, of course, the longer an analyst is in a firm, and covering an area, the better they get. I mean that’s just math’s…sort of. But unfortunately, even that old-world idea is being consigned to the history books. And – just like the rise of avocado ownership, and the crippling private rental market, we may as well blame the millennials for our next part.
This is the bit that really goads us. Why are we perpetually locked in this bizarre world in which we believe the best perspectives come from those that have been doing it the longest? Why do we shrug off the new and refreshing insights because their origin hasn’t been dipped in decades of painful CIO workshops? We endlessly hear the need to develop new skills, to re-imagine our processes and redesign our business models, so why do the analysts get a free pass when it comes to keep up with the times? Why shouldn’t analyst firms practice what they preach?
The main assumption in Levin’s blog is that age begets wisdom. That there may be a quality issue at Gartner because the average tenure of analysts has dipped. But could it be possible, just possible, that the average tenure dropping is a good thing? Already we’re seeing hordes of younger executives and professionals flood into enterprises, no longer restrained by mandatory experience quota’s or ridiculous policies from HR insisting that employees stay put in a junior role until they’ve paid their dues. This coupled with the army of young entrepreneurs driving growth in tech start-ups and disruptors, is starkly altering the demographics of the average analyst firm’s client. So, is it reasonable to infer that the demographics of the analyst catering to this market also evolve?
Comments and blogs that imply quality research is inextricably linked to the quality and value of research are not only wildly out of touch with the changing market. But they’re just obscenely ill-informed. In a room full of 20-year-old tech innovators, does the experience of an analyst with decades of early 90s CIO experience more valuable than a young analyst who can live and breathe the unique challenges of the market?
Bottom Line: It’s not about tenure, it’s not about gaming the system, it’s not about wining and dining analysts. If this analyst is to survive to see 2020, it needs to focus on the quality, relevant research that a diverse market needs
The reality is that diversity is always beneficial and throwing in the perspectives of both analysts will undoubtedly be of benefit. But what doesn’t help is commentators like Levin churning out the same vapid and misguided tripe, in a bid to form a reactionary guard against the changing tides of the market. If anything, they’re proving themselves to be irrelevant and damaging to an industry that, much to our lament, is crashing around us.
