It’s not everyday you can find a prolific industry expert, living and breathing AI and IT services, who wants to return to the analyst industry to make her mark. So when a former Gartner legend – and one of the brains behind the market development of Wipro Holmes – was eyeing a return to the analyst fold, we didn’t need too much encouragement when Tapati Bandopadhyay came calling…
Phil Fersht (CEO, HFS Research): Welcome Tapati! Can you share a little about your background and why you have chosen research and strategy as your career path?
Tapati Bandopadhyay (VP Research, HFS Research): First of all, thanks for giving me this opportunity Phil, to get back to my favorite world of analysts and research, in a firm that can make any enthusiastic 40+ feel like a 20 something again!
I have been a nerd all my life, and very proudly so. I wrote my first year PhD exams when my girls were 2 and 1-year old and I used to study for the exams from 12 to 4 at night and loved every moment of it. Even now, I cannot get sleep if I don’t read at least 20 pages of something completely new, something to anticipate and to be excited about when I wake up the next morning!
In last ten years I have probably taken the Strength-Finder 2.0 test at least three times, and each time my top two strengths remained exactly the same: Futuristic and Analytical. I think I am destined to be a research analyst and strategist! The upside of it has two key aspects: 1- analysts are future-makers, if we don’t push the real to the imaginary and back, the art of the possible is not likely to transform into the science of the real anytime soon; and 2- in addition to being future-proof and creatively bot-proof, analysts’ jobs are also recession-proof, as we can apply our analytical skills to find cheaper ways to do things with same or even better quality.
What are the areas and topics that you’re focusing on in your analyst role with us?
AI is my area of strength and there’s so much going on currently that I think we in the research and analyst world have a great responsibility right now, to clear up the clutter and let people focus on what’s real vs. what’s plain hype. Never losing sight of the Big Picture is becoming increasingly difficult in this technology-blurred world of “AI-defined everything”. While I love all the math models and algorithms and routinely devour new research papers in areas like deep belief nets, XAI, NLG, or imagination augmented AI, ultimately we have to keep it simple and human-centric. Only then all this technology hullabaloo will start making real business sense.
AI and IoT are highly connected, especially with 5G becoming mainstream in 2020 and even 6G at the works to come in by 2025-2028. Therefore I will be quite actively tracking the IoT space, chasing Nicola Tesla’s 1926 dream of creating a world-wide human-machine combined brain, which will become real when we achieve the next level of HFS OneOffice- the hyperconnected intelligent enterprise.
Talking about Things, I will cover the manufacturing and industry 4.0 research agenda too. I have always loved machines- be it those mammoth hydraulic presses at the Tata Motors truck factory, or the precision drilling machines at GEC Marine Glasgow. Manufacturing is truly the parent industry where tangible economic value gets generated with the land-labour-capital inputs. Only, the labour is now the ‘phygital’ workforce- with smart machines augmenting our quality of work and productivity, while freeing us up from loads of hazardous or boring tasks. That’s where AI, IoT and industry 4.0 connect beautifully in my mind-map, creating a simulated digital twin of the physical machine-world.
What trends and developments are capturing your attention today in technology and business operations?
I take what Andrew Ng said about data being the new oil, to data becoming the new glue, the invisible ‘ether’, the collective grey matter of the world. In sync with what you envision about the next OneOffice becoming ubiquitous in a hyperconnected world, the data oligopolies that we all know to exist today will come crashing down. We have already seen this happening just as the entry barriers to AI algorithms went down with the cloud-based pay-as-you-go models, and the entry barriers to top talent got broken in an open world of millennials comfortable in crowdsourcing. Now, with machine learning itself becoming partially autonomous, with unsupervised learning in a limited way and then with AutoML, human learning will also have to undergo transformation, where enterprises will learn from each other’s data, intelligence, experiments, experience, and thrive in a fairly co-opetitive world of frenemies where ultimately mankind and the unsuspecting individual, wins.
Is the analyst industry much different now than when you were at Gartner a few years ago? What is changing in your opinion, Tapati?
I think the analysts in this agile, new-age, ‘open research’ side of the world, are far more than mere subject matter experts. We are bolder, actionable and direct, hands-on folks, been-there-done-that type, and I love it. We are also listening better, to build our perspectives from a 360 standpoint. Not just technology, not just business, but the ability to cover all aspects, keeping the end-customers at the centre. Because, whatever be the industry or technology, if the end-customer is not impacted, nothing else matters.
So I see three key changes: 1- the idea of open research and collective intelligence, given that even IBM and Microsoft have now become proponents of open models; 2- the cognitive agility- to think fast and slow as the situation demands, and 3- to be direct, actionable and relevant with a holistic perspective – keeping the end-customers at the centre of any value universe.
So, Tapati, what are you working on first for our clients?
I am planning to cover the practical aspects of applied enterprise AI, as I have experienced this freshly and first-hand and have learned a lot. I have some very strong views and counter-views, on how these AI algorithms and their applications will pan out in the immediate and intermediate future, and the subsequent to-do’s. We will have to stay ahead of the curve. Hence I plan to share these as predictions and actions kind of PoV’s. I will also be covering the IoT and industry 4.0 with our India team along with the global team.
And given I have the locational advantage of being based out of India- the services factory of the world, and especially in Bangalore- world’s no. 2 silicon valley, I will work with a lot of tech start-up’s and service providers on their AI and automation initiatives, and IoT and manufacturing vertical practices.
And, what do you do with your spare time (if you have any…)?
Oh, I have to try very hard to play the cognitive catch-up game with my three children – my teenage girls and our 3-year old German Shepherd – named after our most fav physicist Dr. Feynman, we most humbly accept the fact that he is the smartest in the family.
I love to read physics books and fictions by the likes of Archer and Grisham, but I get constantly rebuked by my girls on not reading enough. Therefore I always try the easier way of asking them questions and then listening to every word of wisdom that they have internalized, post reading the tough non-fictions.
I also love to paint and play Indian music on the piano. And I love to cook for our friends and family. So next time any of you are in Bangalore, you have to come prepared. It’s a statutory warning- there’s no getting away from my unique cuisine while you’re here!
Welcome to HfS, Tapati. Delighted you have chosen us as your analytical home and can’t wait to see those first pieces of insight to hit the press =)
Tapati Bandopadhyay (pictured above) joins HFS research to lead our India research operations and expand coverage of AI and IT services. You can read her bio here.
In 2008 Lehman Brothers nearly took down the global banking system… in 2017 Greece’s debts were poised to destroy the European economy… today, we are staring at a stock market that gyrates up and down double-digit percentages in a single day, based on one awkward tariff tweet-up between Xi and Donald…
We’re talking about the world’s 5th largest economy going into immediate meltdown. This is more than a UK-only debacle
So… who cares about the world’s 5th largest economy potentially plummeting into a complete meltdown? Let’s just have a good giggle at those idiotic British politicians hell-bent on destroying the country over a referendum staged 2.5 years ago on a topic no-one actually understands. Yeah, let’s not worry as they’ll be screwed, and we can all make Brit-jokes at parties as those idiots run out of medical supplies and are forced to import frozen butterball turkeys pumped full of Ractopramine and several other GMOs… yum.
Here’s the bad news – Lehman and Greece are small-time when you consider the potential damage a complete Brexit failure will cause, if – as it possible – the UK government paralyzes itself and lets its economy degenerate into a warzone of regulation chaos, complete data disaster, supply chain meltdown and political purgatory. While we have boldly – and positively – predicted (see earlier post) that Brexit won’t actually happen, there is also the distinct possibility that Brexit and no-Brexit blindly meander into the nothingness of a “No-Deal” scenario.
We have predicted that – at the end of the day – politicians are surely not that selfish, and voters really aren’t that stupid to allow their country to descend into complete economic and social chaos… and madness. But that’s because we, at HFS, have assumed a modicum of intelligence does exist in the world. But, we could be sadly naïve. However, there is some hope – and that hope is the simple fact that if we Brits commit the ultimate harakiri of a No-Deal Brexit, we take the rest of the global economy down with us. You thought Lehman Bros was bad? You’ve seen nothing yet folks.
Why this could be a $15 trillion global decimation
If we look at similar shocks to the stock market over the last century, it takes relatively little to create a major downturn in global asset values. We don’t need to look too far back this decade to see how even a moderate dip on global stock markets cans seriously impact the health of the economy.
If we look at the Asian financial crisis in 1997, for example, we can see just how quickly the collapse of even a relatively small economy can wipe off a huge percentage of global stock values. If we look at the potential consequences of not only one of the world’s largest economies, but one tightly integrated with the global economy, it’s not hard to see how much of an impact this could have on the major stock exchanges. That’s not to mention the major role the UK currently plays in global finance – with some estimates advising that the City of London manages over $9 trillion in assets, three times the size of UK GDP.
In a no-deal scenario, almost overnight the UK will no longer be compliant with EU rules and regulations – of which the previously discussed GDPR is just one of. There are countless other regulations that have formed part of the business environment of the United Kingdom, Europe, and by extension, the rest of the global economy, that are likely to emerge during the real-time stress testing that a no-deal crash out will lead to.
We can simulate (with the same degree of absolutely no certainty characteristic of the Brexit process) a major tumble in global stock prices by examining how previous shocks to the market have impacted in the past. And it’s worth noting, that our estimates are generally very conservative compared to other financial crises over the past century.
In the following illustration, we can see how some significant impacts to the value of stock markets can play out – particularly in areas most likely to be impacted by Brexit. In this simulation, we can expect the value of the twenty largest stock markets to drop by $14.9 trillion as a result of the major market shock of no-deal Brexit.
Bottom Line: A no-deal Brexit has far-reaching consequences, and could knock chunks of value from global stock markets to send us crashing into a serious economic depression
The warnings about the implications of no longer being compliant with GDPR are chicken-feed compared to the true global impact of allowing Britain to hive itself off from the EU with no insulation from the multiple disastrous consequences. In the past, major financial crises have been caused simply from a much smaller and less integrated economy defaulting on debts, now we’re facing the very real prospect that one of the world’s largest economies will wake up one morning with a completely different rule book, and much more red-tape and bureaucracy between it and the rest of the world. It’s not hyperbolic to say, the consequences to the global economy could be huge.
In a sick way, maybe this No-Deal scenario is what we all deserve to open the eyes of the politicians and gullible voters of the world for losing their grip on reality. Maybe a period of poverty and hardship will knock us into shape to prepare for the next chapter of economic and political life.
Ugh – we seriously hope it doesn’t take a crisis of these immense proportions for everyone to wake up to the world we are shaping, where facts are merely tools to shape opinions and this sense of entitlement that so many people possess is threatening to destroy everything we’ve worked so hard to create.
There never was a “Brexit deal”. Brexit was all about pissed off working class people (mainly older folks) sticking it to the rich and to “foreign” people they saw ‘stealing’ jobs (they were never going to do themselves in any case). So the only “Brexit” these people wanted was to ruin the economy for the wealthy British middle class and to stop immigrants coming into the country (and kicking out the existing ones too). This is why the situation is such as mess. The real motives behind Brexit are not the ones being discussed in Parliament or in Brussels. It’s a mess and needs to be somehow reset so the real debate can take place. Otherwise this never ends.
We all agree at HFS that change can be good, and we must embrace change… but changing to what? That is the issue right now – what is wrong with the current system and what is the ideal system we need to move to… and its not only the UK grappling with this problem…
So it’s now 2019, and HFS’ Ollie O’Donoghue and Jamie Snowdon waste no time in the world of the new feisty Top 10 methodology, where they take no prisoners in ranking how the leading application development and management service providers performed…
The market continues to test and experiment with new frameworks and methodologies. The most notable are DevOps and agile, which are now widely adopted by many of the major IT service providers. Providers are implementing sweeping training and culture redevelopment programs to adopt best practices to support innovation and delivery in the application services space.
Now more than ever, enterprises are looking for providers to help them rationalize and optimize their technology stack, of which business applications is a significant component. In their drive toward the Digital OneOffice, forward-thinking enterprises are engaging with providers that can build innovative solutions that can integrate and unite business applications and in the process break down business siloes.
Given the importance of technology and business applications, enterprises are looking for collaborative partners that are invested in their success. As a result, we’re seeing an increasing reliance on existing relationships to deliver on fresh engagements.
Service providers are also working tirelessly to ensure they are making the most of their talent—driving training and retraining programs to help keep employees’ skillsets up to speed in a changing market.
So let’s see how the leading ten service provider shake out, based on interviews with 300 enterprise clients of IT services from the Global 2000 in which we asked specific questions pertaining to innovation and execution performance of service providers assessed. The research is augmented with information collected in Q1 and Q2 2018 through provider RFIs, structured briefings, client reference interviews, and from publicly available information sources:
Developing talent. Providers are working hard to develop talent internally through retraining programs and bring in the right people by building out innovative talent attraction processes.
Building out partnerships. Providers are developing broader and deeper partnerships to support the increased demand from enterprises for a diverse and complex ecosystem.
Blurring service lines. Traditional service lines, particularly infrastructure and applications, are coming under more pressure as enterprises show less willingness to differentiate between siloes when designing an engagement.
Investment in capability. Many providers are building out their capability through acquisition of innovative start-ups and boutiques, as well as some major investments in the acquisition or merging of major providers and ISVs already operating in the space.
Q&A with Report Author, Ollie O’Donoghue
“Are the partners who got us here the ones to take us to the next place?”
This is always a tough question to answer, particularly in the application services space where the scope of projects is getting larger and encompassing far more technologies. To thrive in this market there is no perfect route – we see firms like IBM bolster capabilities through acquisition (RedHat being the largest), while firms such as DXC and Accenture pull in capability through partnerships, and the major IT outsourcers try to build up skills and talent organically. At its core, this is to meet the needs of an evolving buyer community that expects the best solutions from a complex array of technologies and practices.
So, what we’re seeing is a large section of the provider community fight to stay relevant in a rapidly changing market. Honestly, we can expect to see some casualties, there’s just too much to specialise in for some providers to keep pace with, and many are spread too thin to become real specialists. The future in this space belongs to those who can keep layering valuable interfaces between a growing technology stack that includes advanced automation capabilities. For some, this will be through becoming a jack-of-all-trades, and for others, it will be through unique specialisms – all who are in between are vulnerable.
Which of this bunch are going to break out of the pack, based on your recent conversations?
As we’ve mentioned, there’s a lot of movement across the leading service providers – but there are four or five that have a lot more going on than many of the others. Let’s start with IBM, which already has scale and differentiation in the space, but has jumped ahead of the pack in open source through the mammoth acquisition of RedHat. We also have Accenture which continues to be synonymous with innovation and bringing high-quality solutions to clients. The firm has also plugged in more digital design and apps agencies into its service lines in recent years, adding more brains and brawn to the rapidly growing market.
It’s also worth highlighting Wipro, which has a strengthening reputation in the application services market – strengthened by the firm’s big bets in digital. This part of the IT services market has always been the core of Wipro’s business, so the firm is able to pull in experience and skills that other firms still need time to develop. We also have Infosys which, with fresh leadership, has started to take the services game seriously again. The firm has done a lot of work to retrain talent and redevelop its strategy. Jumping on the developing push for onshore and nearshore, Infosys is also building out delivery centres, particularly in the US with plans for more work in Europe. Finally, Capgemini and TCS are gaining ground. The former through capturing more mindshare in Europe for its IT Services heft and expertise – a potential gold mine as businesses grapple with geopolitical pressures and look to local technology experts to help them. And the Latter for pushing a fresh narrative on the need for technology in the modern enterprise through its Business 4.0 thought leadership.
As a last note, HCL presents somewhat of a quandary to us since its purchase of IBM assets. It’s difficult to see the acquisition of somewhat legacy assets as a route to breaking out of the pack, but the reality is this could be a platform on to a broader customer base for HCL. All in all, though, we’re holding judgement until the firm has a clearer strategy for the assets.
Are there any niche firms popping up who can disrupt this space?
It’s a tough market for smaller firms to play in, but for specialists who can corner the market or disrupt business models, there’s plenty of room for manoeuvre. This is the first major IT Services analysis where we’ve included some of the mid-tier players where a lot of the innovation is taking place – simply because these firms have to try much harder to fend off the majors whether that’s the flexibility and agility of Mphasis or the vertical specialism of LTI.
There are even smaller players starting to challenge in the space – nClouds, an HFS Hot Vendor is an excellent example of a small firm with a compelling track-record in the market, particularly when helping enterprises shift applications and services to the cloud. There’s a vast amount of space opening up for players in the ‘small and cool’ category – the acquisition of RedHat leaves behind a massive gap in independent open source and there is a large portion of the community disillusioned by the acquisition that could be a huge boon to the right company. And with several mid-tier players hoovered up by the majors – notably Syntel and Luxoft – there are gaps in the market waiting to be filled by agile firms.
So, Ollie, which emerging apps services firms are worth keeping an eye out for?
nClouds – In many ways, nClouds is the definition of a company thriving from the increasing blend of application and infrastructure. The firm leverages practices and technologies such as DevOps, Containerization, and public cloud to help clients evolve their technology stack. We were so impressed by client feedback from this firm that they made their way into the first HFS Hot Vendors at the start of 2018.
Trianz – While not necessarily a niche player, Trianz has proven itself more than capable of taking on much larger firms to win deals. The firm has a broad range of services, but its edge seems to be the agility and flexibility it can bring to engagements. The firm has won multiple awards and seems to be benefiting from increased enterprise appetite to diversify engagements amongst many small players, rather than one giant one.
Linium – (acquired by Ness Digital Engineering) – For specialisation, we need to look no further than Linium which has worked tirelessly to carve out chunks of the enterprise service management space. The firm has dedicated practices for core business platforms such as ServiceNow, as well as capabilities in custom application development. The firm was acquired by Ness Digital Engineering in 2018 – bringing with it broader capabilities and access to talent, as well as access to a broader pool of clients.
GAVS Tech– When we covered Gavs Tech in our Q3 Hot Vendors, we concentrated on their zero-incident framework, an approach to reduce the impact of IT issues on end-users. But the firm has used the mantra across other service lines in the space, including a pay as you go DevOps models that focus on deploying reliable application code and resources. The DevOps platform provides an integrated solution for application development, testing, deployment, scaling and monitoring – not only offering improved speed and quality, but also a degree of simplicity in a complex technology environment.
Bottom-Line: Increasingly scarce talent, combined with a never-ending demand, places real pressure on service providers to keep innovating their delivery models
Simply put, the modern application services market is now so complex it’s not possible to be an expert in everything. Providers are beginning to recognize this and continue to bring in partners to support their delivery capabilities while retraining staff to move them into higher value work.
At the center of this changing market lies a huge question mark around talent. Enterprises are telling us that there are major talent crunches in key areas of the market and for some applications, which is forcing them to push more work over to providers. The challenge is that many of these providers are facing similar challenges. All of the IT services providers assessed in this research have extensive retaining and retraining programs in place to ensure they get the most out of their teams. They’re also partnering up with major sources of talent, particularly higher education institutions.
Nevertheless, the market is showing no signs of slowing down to allow providers any breathing space. Enterprise applications are now a major focus area for CIOs and technology leaders to get right. They need help writing off legacy, making sense of extensive technology estates, and finding areas of opportunity for new services and solutions.
What better than to hand out some awards to people who have absolutely no clue they are going to win one… and for actually doing something in 2018 to impact the world of IT and business services that actually shook up the rules of the game? And what better to offer up zero prizes beyond a fleeting recognition that they actually did something impactful?
No, they did not pay me $10K to sponsor a table at a penguin-suited gala dinner, and no, they did not coerce a bunch of analysts to sift through hours of painful “innovation submissions”. These are purely based on my personal experiences of 2018 and my judgment on ten folks who deserve some recognition for shaking things up in 2018!
The “They just didn’t see us coming Award”, Daniel Dines, CEO UiPath
When HFS introduced Robotic Automation to the world in 2012, the industry was transfixed around Blue Prism – the firm which pioneered unattended back office RPA – and Automation Anywhere, which shot on the scene in 2014 with the industry’s first RPA Maturity Model. RDA (robotic desktop automation) suppliers such as OpenSpan (acquired by Pega in 2016) were also present in the automation narrative as the worlds of traditional outsourcing, shared services and operations executives got shaken to their very core by the fact that people conducting repetitive work could be replaced/augmented by macros and bots. However, while these firms stole the headlines, one dude in Romania quietly went about building an RPA product that would leap from $10m-$150m in just the last couple of years, while its competitors could only watch on in awe. This founding CEO, Daniel Dines, engendered trust with executives and demonstrated an uncanny skill of being a technologist who quickly grasped how to communicate effectively with business line leaders. He also hired some excellent sales people, including the much-liked Guy Kirkwood, who’s social media skills should not be understated as a key reason for growing a firm so quickly. 2018 was definitely Daniel’s disruptor year. Now the firm is heavily backed and poised to battle it out for supremacy in 2019.
The “Resurrection award”, Nitin Rakesh, CEO Mphasis
It’s not often you see a company that had almost disappeared from the world, make such a credible and impactful return to the corporate spotlight. But this is exactly what happened in 2018 as Nitin Rakesh drove his new firm past $1bn in revenues and is likely to post double-digit growth. How can a company that was acquired by EDS in 2006 (at the time being touted as “EDS’ Bangalore Call center”), then being merged into the HP entity in 2008, before selling off its BPO assets to HGS in 2015, manage to retain its core IT talent and identity to find itself back in play as a standalone IT services business – in its own right – in 2018, as Blackstone bought out the HP shares? Not only that, the firm has positioned itself excellently as a core transformational IT services firm, with deep expertise in financial services, with many loyal clients always willing to share their experiences. While great Indian-heritage IT services firms, such as Patni and Syntel, have been subsumed into larger Western entities, Mphasis is back swinging punches and poised to give some of the leading IT services firms a run for their money in 2019.
The “Making Cyber actually cool Award”, Nicole Eagen, CEO Darktrace
While the whole industry seemingly got lost in a stupor of automation and AI, the one core area that will increasingly dominate the narrative in 2019 – and beyond – is cyber security. And not too many cyber firms have effectively brought together genuine ML and AI algorithms to create an “enterprise immune system for cyber defense”. Draktrace’s focal point is that enterprises should not require a previous experience (“pre-defined”) of a threat or pattern of activity, in order to understand what it is potentially threatening. It works automatically, without prior knowledge or signatures, “detecting and fighting back against subtle, stealthy attacks inside the network — in real time”. It sounds great, but this solution actually works, the firm is now valued at close to $2bn with $400m in revenue. My favorite line from Nicole: “Cyber security was all about keeping the bad guys out. But a lot of time the threat is from an insider, such as an employee, or someone who had managed to get inside the system.” Hiring founding partners from GCHQ and MI5 certainly helps bring the cyber conversation to the boardroom.
The “Approaching Digital the way it was supposed to be, and not confusing everyone Award”, Brian Whipple, CEO Accenture Interactive
The lovely term “Digital” has been distorted by so many people, 2019 will render the term practically meaningless. The firm which originally oriented the term for the IT and business services industry was Accenture, launching Accenture Digital back in December 2013, where the focus was firmly on helping enterprises “create new sources of value from marketing, mobility and analytics”. Since that time, the firm has amassed 36 digital agency acquisitions across the world to essentially become the market leader for digital advertising. While every other IT and BPO services firm under the sun boasts “digital” prowess, only Cognizant has reached double figures with 10 acquisitions and the rest are barely at a handful. So everyone is really helping companies enable the digital strategies they have already designed. When you look at the evolution of Digital, the core area has been leveraging interactive and social tech to drive new revenue channels and customer experiences, which has been the sole focus of Brian Whipple and his Accenture Interactive group, which has tucked in these numerous digital agency acquisitions over the years, pushed hard to retain their identities and cultures (something Accenture learned the hard way where most of its competitors are still failing). Brian’s declaration that Accenture is not “looking for Don Drapers” and, rather, is focusing on acquiring talent that focuses much more deeply on the entire customer sphere (than merely crafting ad campaigns) just edges himself into a well-deserved mention for banging the digital drum the loudest for 5 years, while his IT services competitors have failed to get even close.
The “Doing RPA differently Award”, Asheesh Mehra, CEO AntWorks
While we’ve been deluged with (pretty much) the same “bots are everything” monolog from the RPA industry for several years now, it’s been refreshing to see a firm get fully-focused on driving the data ingestion piece that RPA and intelligent automation can support. And today’s emerging auto/AI firms are becoming styled very much on their founder personalities… so you just can’t avoid the effervescent and colorful AntWorks honcho Asheesh Mehra, who has managed to pop up in every corner of the operations/services/AI space in 2018. With some funding in the bag, and some really excellent hires joining, expect AntWorks to make one helluva lot of noise in 2019 as they round out their platform and become an increasingly important part of the industry’s intelligent automation conversation. We need more AntWorks to keep shaking it up…
The ‘Doing services with a product mindset Award’ – CVK, CEO, HCL
While most of the IT services industry has resorted to following each others’ strategies of being technology agnostic, having poorly-defined digital strategies and a bunch of platform-things that noone really understands, HCL has quietly forged its own path and focused heavily on embracing its engineering and product development DNA. Several interesting engineering acquisitions, such as Geometric, Butler Aerospace and H&A set the firm’s stall out as a company which really likes to make and develop things. It’s eye-opening $1.8bn pick-up of all the IBM workplace software products, including, IBM (Lotus) Notes, Domino and Appscan, while not appealing to the media as relatively “sexy”, will end up creating a masterstoke $10bn new business for the firm, provided it can develop the customer base and improve on products that need a bit of work. The man with the plan is the humble, softly spoken and incredibly smart “CVK” (C Vijayakumar) who has persistently resisted the marketing glitz and the drum-beating to focus his firm on where he sees its differentiation. I anticipate more to come from HCL in 2019 as it rounds out its ability to build products that enterprises are actually using.
The ‘Hail Mary Award’, Ginni Rometty, CEO, IBM
While poor old Ginni has had to hold the fort as IBM went through 23 consecutive quarters of revenue decline, tried persistently to keep the dialog flowing around cognitive and Watson, you have to give her some serious credit for betting the entire bank on the RedHat acquisition this year, setting the firm back a cool $34bn, despite revenues of barely $3bn. The stark reality is that IBM really wants to out-opensource Microsoft, add some cloud mojo – and also add some serious RedHat management talent to its ranks. If you forced me to give you my opinion, I’d say that IBM has taken a decided pivot away from poster-boy IA giant Watson, to go back to its enterprise IT core and solve real challenges for real people. And you can’t beat a $34bn Hail Mary… so Ginni makes the 2018 cut..
The “Superhero CEO who can close a humungous deal Award”, Abid Neemuchwala, CEO, Wipro
Abid took on Wipro at a difficult time, when the company needed to raise its value proposition with enterprise clients, had not been performing particularly well in the market and – to cap it off – have one of its biggest clients, Carillion, go belly-up. It had many of us wondering why Abid would leave his BPO leadership role at TCS, where he had pretty much created a billion-dollar business, to take up a Wipro hotseat that could drive him even more crazy. But anyone who knows Abid, knows he’s a workaholic who loves a challenge, and – to cap it off – is one of the most gentle, sincere and nice guys you will ever meet. Which may explain how he convinced Alight Solutions to drop $1.6bn on a 10 year mammoth IT/BPO engagement that is one of the largest ever known to mankind. And right at a time when his company needed it. A terrific win to steer a company in a new direction. 2019 will not be without its challenges for Wipro and its close competitors, but having someone like Abid at the helm is a much-needed advantage.
The “Multi-billion dollar startup Award”, Chris Caldwell, President, Concentrix
Before its merger with IBM’s call center business in 2013, Concentrix was a little-known contact center tech business, which its parent firm, Synnex, put under Chris Caldwell’s charge to grow. Hence Chris had to take his experience managing a much, much smaller firm and figure out how to play in a fast-commoditizing and consolidating market. And grow it he has achieved, adding the likes of Minacs and Tiger Spike before surprising the whole industry with the bargain uptake of the Rolls Royce call center business itself, Convergys, pitting the firm just behind Teleperformance at the head of the market. While his competitors have been scrambling, looking at curious pickups like Intelenet for a billion, snapping up a heritage global call center firm with flagship enterprise clients, some great technology and people delivery culture for just $2.8 billion, places the firm in a very aggressive position to kick on in 2019 and push hard for overall market leadership. Chris will need to figure out how to adopt automation at scale, really embrace emerging cognitive solutions, but with the last few years’ track record to bet on, who will bet against Concentrix now?
The “Veni, Vidi, Vici Award”, David Poole, CEO/Co-Founder, Symphony
It’s not often you get to tip your hat to someone you’ve known for a long time and witness them achieve, literally, exactly what they set out to… but David Poole did exactly that. Not many people can boast to launch a consulting firm exactly four years ago and achieve a $69m acquisition to a global provider such as SYKES. When you compare this with the $74m ISG paid for Alsbridge and the (rumored) $85m KPMG paid for Equaterra, you have to hand it to David and his founding friends David Brain, Ian Barkin and Pascal Baker for catching a wave and finding their desired exit in less than half the time – and a lot more value placed on future potential earnings than merely existing revenues. When David came to visit me to tell me he was “going full on into RPA” in the summer of 2014, I have to confess I was skeptical as I knew the area needed a massive personal commitment, and people prepared to work unpaid for a very long time to get it off the ground. But that is exactly what he and his founders achieved. You may enjoy this blog with David in 2015… where everything he said pretty much came true. Now am sure Chuck Sykes is hoping for David’s vision to stay as consistent in 2019!
Remember when Amazon, Apple and Microsoft were racing to become the first $1 trillion valued firms? In just a few weeks they all languish in the $600m-$700 range. That’s a market decompression from a high never quite seen before, and it seems that the floodgates are now fully open, as political uncertainty (driven by colossal political egos and selfish self-interest in both US and UK), combined with a sentiment of “surely it’s time for a long overdue recession”. In short, the markets are having a correction and our economic outlook is being clouded by political uncertainty. Noone is better than talking themselves into a recession than the human race.
We should have just let the robots take over and go with the flow
In the past, when we arrived at a market correction, we’ve quickly shrugged off the over-exuberance that engulfed our lives and focused ourselves quickly on the realities of keeping our jobs and conserving our cash. This time I am not so confident society is ready for a cold turkey experience of, heaven help up, reality.
This time, all those lovely pictures of robots and repetitive marketing messages that all seemed to have emanated from one festering camembert-infused Shutterstock site, have combined to send too many of us in a fantasy maze of artificial nonsense, from where many of us will fail to find a way out.
So why couldn’t we have all just stayed there, inhaling this pungent odor of future fantasy, until our tech stocks exploded in that sea of $millions, where we could just retire and let that next generation worry about fixing the stagnant world we left behind? Why have we become the ones who have to learn from our own mistakes and try and fix them?
Why does anyone have to be held accountable for anything anymore? Isn’t that the new mantra of the workplace? I thought the future of work was “no work”?
Don’t worry – you can (somehow) bring yourself back from your digitally-transformed, robotically-automated and ML-infused unreality – all made possible by that blockchain fantasy, where, if all else fails, magic will, ultimately, provide the answer. You can do it, it’s hard, but you can lock yourself in a padded cell and let the digital delirium slowly subside into a silly dream. “Remember that time we all thought robots were taking over” will be a good old topic down at the bingo hall as you reflectively look back at the AI careers that never quite materialized with your old cohorts who also dragged themselves back from digi-blivion.
The Bottom-line: Accept it was fun while it lasted, but it’s time to peel back the layers of bullshit and find those core attributes that used to make you successful.
It’s time to be honest with yourself – you never even bothered to actually define what digital transformation really was, beyond positioning yourself as someone with disruptive DNA. And you never really knew more about RPA beyond the endless posts and blogs about those stages of “maturity” you need to go through (even though you’ve never actually met anyone who knows much about RPA than those really smart software salesmen). Did you even bother to put yourself through the basic training of writing a script – or was that all a bit beneath someone of your undoubted prowess?
And you’ve probably started to bleat on about Machine Learning and AI as if this was somehow your true calling in life, ever since daddy bought you your first train-set and you demanded he return it to fund your python course instead.
Yes, folks, those heady days where you had already made it without barely even bothering to fake it are over.
So dig deep and remember what made you great in the first place… and sure you can identify with at least one of these five attributes:
You may have been an amazing communicator… so learn how to articulate your firm’s true differentiation in plain English. What is it you bring to the table that your competitors cannot? How can you siphon through the buzz-talk to articulate real value, not fake value, because in the new reality, the focus will be on the real, not the fantasy.
You may have been awesome at numbers… then learn to create metrics that matter to your business to prove the value of doing things. Demonstrate how man-hours saved equates to impact on top/bottom line. Quantify the impact on customers when you fix a process chain that includes fulfilling a customer need. Quantify the impact on growing a business by speeding up the cash flow cycle, such as people and tech investments to get ahead of customers.
You may have been awesome at selling… the get back to selling solutions people will actually buy, as opposed to solutions you want your next prospective employer thinks you can sell. Being great at sales will be even more in demand as the need to actually close business quickly supplants the need to promise future deals that most people realize are unlikely ever to happen.
You may have been terrific at relationships… so get back to getting to know your clients better, as opposed to trying to impress them with fancy stuff they don’t really understand (and neither do you, but you know some bigger words to use). However smart and amazing we all may have become, it’s the trusting, deep relationships with your peers, colleagues, and customers which will make you successful.
You may have been a terrific bullshitter… so find those remaining viable AI and blockchain firms still functioning and blowing their seed capital, and get a sales or marketing job fast!
Each year we promise no more predictions but it’s a habit we just can’t kick. So have 19 of them from the HFS research team…
“OneOffice” becomes reality. Organizational silos around front, middle and back-office will continue to erode in 2019 to create a boundary-less organization where there is only one office that matters – and that is the office that caters to the customer. The triple-A trifecta of automation, artificial intelligence, and smart analytics is helping ambitious organizations reach their OneOffice goals at a much faster pace.
The Hyperconnected enterprise beyond OneOffice will emerge. As organizational silos converge, ecosystems will start to develop and a “Hyper-Connected Enterprise” will emerge. These B2B networks will be driven by collaboration across multiple organizations with common objectives around driving completely new source(s) of value. The emergence of blockchain and Internet of Things (IoT) is starting to make this vision of a shared economy with distributed and trustworthy information a reality.
The term “Digital” becomes so diluted, it is rendered meaningless as “Integrated Automation” drives the narrative. In the race to call everything “digital”, digital will start to mean nothing. Integrated automation across the HFS Triple-A Trifecta of Automation, AI, and Smart Analytics will drive the industry conversation in 2019.
The misplaced faith in “retraining” will fade. We will continue to see uncertainty and confusion on changing job roles due to the impact of automation and AI. This is clearly a much longer conversation than just 2019. But as more enterprises get their hands dirty with various technologies, reality will set in and we will at least retire the misplaced faith in “retraining” as the panacea to all talent management challenges. We will also see an increased focus from ambitious talent putting themselves through nanodegrees (such as Udacity) and other discrete training opportunities as the pressure builds to stay relevant in the face of emerging tech.
2019 will be the year of ‘how’. The why (customer experience, revenue impact, internal alignment) and what (emerging technologies) for transformation are now fairly clear after intense debate for the last couple of years. But “how” to go about executing on the aspirations is still a black hole. There will be many disappointments as exponential expectations are met with linear execution. Execution requires integration in every sense of the word – technology, talent, organizational change and leadership to achieve scale and deliver exponential benefits.
Success will be defined by effective digital change management versus digital adoption. There is an increased realization that simply throwing money at a new technology will not yield the desired results, but spending time in developing a method to the madness will drive success.
Emerging technologies
“Big iron” software firms will enter the RPA market. They have ignored RPA far too long and we saw SAP starting to make a move in 2018 acquiring a little-known RPA product Contextor. In 2019, mega ISVs such as Microsoft and/or leading systems of records like Oracle will acquire some RPA product challengers such as Kofax, Softomotive, Redwood, or Workfusion. The big three (Automation Anywhere, Blueprism, and UiPath) will likely remain untouchable.
RPA-as-a-service will get traction in 2019. RPA solutions will become increasingly function or process-specific to help enterprises scale. Today they are far too task specific. The push towards greater process and function focus will enable broader solutions and necessitate complementary technology integration like ML and NLP. RPA will certainly start to be smarter and the solutions will look more like the custom solutions coming from the service providers.
AI as a term will get tiresome and we will revert to something more meaningful. This is heading towards more combined applications of foundational AI building blocks to solve specific business problems. One of the “big four” mega-ISV firms (Amazon, Google, Microsoft, IBM) will pull ahead (likely Microsoft) in the AI arms race because of their deep investments and partnerships to offer the most comprehensive marketplace for enterprise AI deeply tied to cloud migration.
AutoML and XAI will gather momentum. If AI is to have true business-ready capabilities, it will only succeed if we can design the business logic behind it – and hence the need to design “explainable AI,” or XAI. The AutoML movement will also see traction as technology continues to become more accessible, resulting in a host of new companies getting started with AI despite limited resources.
Blockchain will come out of the closet as ecosystems across organizations that service the specific needs of a customer start to emerge. No single organization owns the entire customer experience and competitors and peers will have to start to figure out how to collaborate. Blockchain will provide the way to make it happen.
Cybersecurity will become a C-level priority versus the current mid-level management headache. Most enterprises understand the importance of securing their data but lack of C-level management commitment to effective investment is a key inhibitor of an enterprise’ security readiness. This will (hopefully) change in 2019.
Most enterprises and providers will realize that they will never be ‘cloud-only’ due to legacy workflows dependent on traditional on-premise kit. Cloud providers opening up the technical debt further by running towards newer more efficient platforms – migrating from one to the other is a pipe dream. Assuming the pipe is loaded with crack!
The smart providers will invest more in hybrid cloud platforms to help clients simplify the growing (expensive) chaos of multi-cloud environments. More so now due to the increased differentiation of hyperscale players forcing clients to build relationships with all of them for best in breed cloud.
Open-source technologies embed further into enterprise becoming a pillar of the modern technology stack. As CIOs are pushed to avoid lock-in to expensive and rigid proprietary tech.
Emerging players to watch in 2019
HFS Hot Vendors. Niche players with differentiated value propositions for the OneOffice will continue to proliferate. We will be keenly watching how the 17 HFS Hot Vendors profiled in Q1-Q3 2018 perform in 2019 (also watch out for the Q4 edition of HFS Hot Vendors in the new year)
Service Provider Landscape
Several traditional service providers will merge as market for services becomes unsustainable for so many commodity firms – right across business process and IT lines. Expect M&A activity involving the likes of Conduent, DXC, and NTT Data which all currently suffer from lack of market differentiation.
Large commodity call centers lose to smaller more nimble contact center players. Large commodity players have done precious little to add value beyond the FTE model will lose to smaller contact center vendors that have invested in premium tech services (such as RPA and chatbots) and nearshore delivery in their portfolio.
The boundaries between service offerings will blend into each other. Consulting and managed services will get diffused. The big 4 will start to offer more managed services and the leading SIs will continue to invest and expand their advisory services. “Fr-enemy relationships” will start to get established!
I was reminiscing about the first ever report we wrote to industry on the emergence of “robotic automation” and was amused at how little has changed in six years. So I popped it onto LinkedIn earlier this week and 160,000 people clicked on it. Wow.
What I love about RPA is it most often has the highest impact where there is a serious amount of IT failure, disorganization and overworked staff. Yes, that’s a lot of organizations to consider, and it’s one of the reasons why its hard to find this technology sexy – it’s built to fix the murky, dysfunctional stuff that has been squirreled away for decades, buried deep beneath failing ERP projects and conveniently ignored by senior executives who have few political points to score by acknowledging they should actually focus on fixing their broken underbellies.
This has been the failure of operations leaders for decades – simply focusing on layering more garbage over the top, when the real way to fix their inherent problems of dysfunction is to dig deep beneath their navels and address their broken process chains, and – heaven forbid – actually start to do something differently.
And there is no ground more fertile than the hallowed turf of the British National Health Service (NHS), the world’s sixth-largest employer with 1.7m staff, where decades of hollow political rhetoric, obscene wastage on ‘big-bang IT transformations” and big-ticket consultants on the gravy train, bravely held together by a woefully understaffed administration that end up spending on contract agencies just to keep the wheels turning. Let’s face facts: the UK National Health Service makes the basket-case that is Obama Care resemble a slick, well-oiled machine.
Enter RPA: a tool that is reducing GP referral processing time by 75%
But there is renewed hope – and this hope can quite easily become reality if you entertain the idea of using RPA to unify document submissions, scrape data from legacy desktops to speed up GP referral times. And the real value to be gained here is if the NHS can adopt a common enterprise-wide strategy to deploy a common RPA as-a-service toolset and methodology across its 207 individual trusts. It’s so simple, I describe in on the back of an envelope:
Even in these tough times for the institution, many of its leaders are looking optimistically at the opportunities new technologies that can be customized provide, which can solve business inefficiencies and don’t involve the massive complexities of entire system upheavals. One particular example provides insights into how one NHS trust is actively addressing some of these issues, both in terms of saving the NHS money directly, easing pressure on administrative staff and providing a better more consistent service for patients being referred to hospitals. All of these endeavors are in line with the broader objective of ensuring that the NHS meets some overriding objectives to digitize services.
The starting point for this work began at the East Suffolk and North Essex Foundation Trust (ESNEFT). The organization faced many of the same pressures discussed above and like all healthcare services within the UK, they were directed to enable all GP referrals to be processed via the Electronic Referral Service (eRS) by October 2018. However, the existing system for processing electronic referrals was based on manual processes and was slow—a common challenge.
Essentially, once the GP had made a referral to the Trust, the support staff have to find information such as scans, blood tests, and other results which need to be manually downloaded and appended to the file. In a process which may seem bizarre to many enterprises, this often meant admin staff were required to print off material and then scan it back into the same computer (using the same printer and scanner) to create a PDF file to navigate bottlenecks between unintegrated systems. The PDF document is then uploaded to the administration system. Approximately, this process took around 20 minutes for each referral and created, what the trust described as an avalanche of admin, distracting medical secretaries from their primary task of supporting patients and consultants.
ESNEFT had already started a pilot scheme looking to automate some accounts payable processes with the RPA provider Thoughtonomy, which was showing a great deal of promise. So, the Trust decided to use the system to automate the referral process across five clinical specialties, using “Virtual Workers” (BluePrism bots), which actively monitor incoming referrals from GP patient appointments in real-time, 24 hours a day. Once triggered, the Virtual Worker extracts the reason for referral, referral data, and supporting clinical information and merges the information into a single PDF document. This combined document is then uploaded into the Trust’s administrative systems. The RPA system uses virtual smart card technology for authentication providing the same level of data security assurance as the old manual process. Overall, the complete task now takes less than five minutes. The Virtual Workforce is able to update all systems, instantaneously and extract critical information, which it passes on to the lead consultant for review and grading.
One of the most important aspects of this technology is its ability to work within the current system, regardless of how chaotic and unstructured that may be. It is technology that adapts to the real world and the way people actually behave and work rather than expecting people to miraculously change current tropes and behaviours. This is perhaps the single most important reason RPA works: it provides whatever shaped peg is required, no matter the hole.
RPA negates the need to spend vast amounts on many complex technology integration projects
This first stage has significant cost savings—estimated to be $275,000 in the first year—without removing staff. Crucially, the $275K saving achieved is made up of agency staff and sundry costs such as printing. ESNEFT believe that 500 hours of time was saved thanks to the solution. Plus it increased the job satisfaction of the admin staff, who could concentrate on more important aspects of their role.
For us, although the top line cost saving number is important, it’s the fact that a technology solution proof of concept has been deployed successfully (and relatively painlessly) within the NHS. To deliver the outcome required, there was no need to drive an enormous transformation project to align and integrate systems. Which, given the lack of appetite for big bang projects in the NHS is an achievement in itself. Simply put, the way the technology is used can be fitted into the existing chaos—it’s technology for the real world. It can provide a bottom-up solution to productivity improvements, which is a project that replaces part of existing work flows and automates manual and repetitive tasks. It accomplishes these things with the double whammy of removing tasks which is disliked, genuinely improving outcomes to patients, whilst helping to drive efficiency.
Bottom line: The NHS is not alone in facing an unforgivingly complex estate, but with technologies that fit into the chaos of the modern organization, this is only the start
If we look more broadly at the impact RPA technology could have on the NHS, we can use a simple calculation to estimate the ramifications this technology can have. We know that savings of $275K have been made on 2,000 GP referrals per week. But the figure for NHS England as a whole, puts GP referrals at 3.5m from April 2018 to June 2018. So, if this were scaled up, we could see savings across NHS England purely for GP referrals at a staggering $38m, this included all hospital referrals the figure rises to almost $63m, or around $1.3m per week. To put this in context, this would equate to almost 850 nurses for the GP referrals or almost 1,400 for all referrals in England (using the average cost of $45,000 per annum for a mid-tier nurse, source: Nuffield trust).
This is the tip of the iceberg, considering that more than 520M working hours are currently spent on admin and approximately $3.3 billion is spent on agency staff across the NHS as a whole during 2016. There is a great deal of savings to be had. Even if only a quarter of the agency spend is non-medical, that could be $820M per year that could be freed up with only positive impacts on patient outcomes.
I am not normally one for big grandiose predictions – I’m actually pretty dull when it comes to big hyperbole (I hope).
Honestly, I’d love to declare that AI will destroy a third of the workforce, and then magically perform a 360-degree flip and start creating jobs. I’d also love to declare that RPA vendors will magically infuse Machine Learning into their apps to produce AI magic. Because AI is magic, didn’t you know? I’d love to declare that software is eating the world… and then declare that it actually won’t, because a lot of it is actually pretty crap. I’d also love to declare that Blockchain will radically impact the entire business ecosystem to such an extent I can prognosticate all these business cases with so many holes in them, I might as well start lauding the transformational capabilities of emmental.
However, there is one big bold prediction I am prepared to make: Brexit will be dead in the water in a few weeks.
I am an analyst, I explore every permutation of almost anything that impacts economies, business, societies until I drive myself mad. I also work with other half-crazy analysts who do the same. Just take a gander at our recent analysis of the hazardous implications of Brexit on the UK economy.
So why is Brexit headed for the scrap heap?
It was always an “all in” or “all out”. We did neither. Seriously, we should have just drawn the guillotine on the EU right after the 2016 referendum, arranged a sensible withdrawal that could be governed effectively and transparently. We should have taken the pain then, and we’d probably be OK right now. Hell, we’d probably be part of NAFTA introducing delicious microwaved fish and chip pub luncheons to the Mexis and some actual real beer to the Canadians. And we may even finally get decent burritos introduced to the streets of London and poutine finally replacing soggy chips n’ curry sauce. Instead, we dithered, argued, bored ourselves silly arguing until no-one could quite remember what we were doing in the first place. Instead, we got to see close hand how indecisive, and stupid so many politicians are, how most of these people only care about their self-interests than any actual deep-driven mission or purpose. We also had many chances to think “Why are we doing this again? None of our businesses are happy, the Irish are freaking out, the Scots are ready to bolt, so we’ll only be left with, er, Wales (and even they are making noises)”. And Mr Trump even thinks it was a bad deal… and he was great in the apprentice, so it must really suck.
Brexit is a massive Catch-22. You can’t just compromise on an issue like this, even though 48% rejected it. There just isn’t any point in doing half-measures with Brexit – both scenarios suck. The diluted mess Theresa May has served up basically ensures we only get half-screwed by the experience. We are still tied to the EU, the Irish are still freaking out, we will close our borders in any case, but noone will want to come here anyway, because our economy will stink. In fact, most of the EU immigrant workers will probably flock to Dublin to work in the call centers after the banks have shifted over there… There really isn’t a compromise when the issues are this black and white.
The only current scenario is ‘no-deal disaster’ or ‘go back to the people to make a decision’. Let’s get to the point – the “deal” on the table is a plethora of half-measures with little upside for anyone. So that leaves only one Brexit option: no-deal and an economic calamity. There is no way 52% of the British folks care that much about putting a middle finger up at Brussels to destroy their livelihoods. When May’s deal fails next week, she will really only have one choice – to go back to the people to decide. And we only need a 3% swing from that heady warm June 2016 evening to fix this calamity. I occasionally like a bet, and this is one I’d throw a few pounds at…
The Bottom-Line: Parliament will throw this out and the British public will reject a no-deal Brexit… So Auf Wiedersehen Brexit
Firstly, there is no way MPs will vote for the current “soft-Brexit” deal on the table next week. May must know this too – and will simply go straight to the people to finalize this issue once and for all. There is no renegotiation with Brussels – that is clear, and there isn’t enough time, in any case, with the deadline being 29th March 2019. Secondly, Calling a general election with Brexit looming so close would be madness. There are now only two real options:
1) A “Hard no-deal Brexit”
2) No Brexit
So there will be a second referendum and it will swing for option 2. That won’t be the end of the matter, as a groveling “take us back” negotiation will take place, but the EU leaders all know they need Britain back to keep the EU strong – and this will drive Putin mad (who would love nothing more than a weakened EU). Trump liked Brexit for similar economic reasons of weakening Brussels’ power, but the US relies on a strong Britain as its gateway to Europe, and may now prefer an EU including the UK than one without.
There will also be considerable public fall-out as half the country did vote “leave” and they will feel betrayed by shambolic politicians. However, a “deal” was never going to be done and a transition organized in two short years – May was always on a hiding-to-nothing, and the only real takeaway is that referendums on complex issues never work. You know who loved referendums? One A Hitler… when information was easily controlled and the public easily brainwashed. In today’s age of hyper-connected everything, you simply can’t control anything!
