We’ve pooled all the big discussion topics from our recent service buyers summit in Harvard and let our analysts loose to demand 10 big things the industry needs to address if we are going to drag ourselves away from legacy land and avoid becoming massage therapists… and venture into the promised land of the As-a-Service Economy:
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1. Outsourcing is now part of a broader management capability; it is not a standalone profession. Outsourcing is a competency that is learned on the job and through real experience as opposed to a qualification or certification. It is an ongoing, amorphous capability that has no end-state or stamp of perfection, it is the ability to partner to improve constantly processes, outcomes and performance. Outsourcing is a means to improvement, access to resources and better capability, usually not the means to a specific end.
2. Intelligent Automation has emerged as a core competency for operations staff. Like outsourcing,Robotic Process Automation (RPA) is a means to improve processes and applications, but rarely the ideal end-state – it typically is retrofitted to make legacy applications and processes function more automatically and efficiently. Legacy operations delivery and BPO can only achieve a certain level of efficiency, without a well-planned Intelligent Automation roadmap. RPA is one of the leading technologies to provide efficiency improvement in rules based tasks and processes, but Intelligent Automation (see link) is also now including the adoption of real time self-learning techniques, predictive analytics and cognitive computing.
3. Ambitious providers will cannibalize their revenues when their buyers give them more to work with. Moving forward, buyers will need to make some new investments in Intelligent Automation (especially RPA) technology and expertise, while the service providers will ultimately have to concede they may need to reduce the FTE provision on their side, as automation takes effect. A service provider must prove it can redeploy “freed-up FTEs” on their clients’ higher value processes. So these two motivations should go hand-in-hand: decreasing labor effort on automatable tasks and increasing it on the higher value work the clients would like to outsource in the future. So, if buyers and their providers can get this right, automation will be a long term play for both parties, where higher value work gets done and delivery staff are kept busy because of the closer collaborative relationship and greater volume of work being parsed out.
4. The race to the bottom is killing innovation. This is tied in part to Insight #3, large outsourcing deals have been driven by desire to drive out costs continuously and make the processes increasingly more efficient. This constant race to the bottom is not sustainable and is impacting service provider’s ability to add value to deals in a tangible way. Although, service providers need to take notice of Insight #3 and work with buyers on automation to help plug this innovation spending gap.
5. Design Thinking is a real, tangible practice that can bring together common outcomes and support co-innovation activities across buyers and providers: The core issue holding back the services industry are relationships being too “Directional” and there needs to be a pre-agreed willingness and desire on both sides to get to the table, on an ongoing basis, preferably in close physical proximity, but also using visual media collaboration tools:
Effective Design Thinking can work, provided both buyer and provider can use the method to agree, prioritize and ultimately execute on common outcomes that constitute success for both parties. One buyer said we must learn to “think big, start small, and adapt fast”, which is the heart of the design thinking ethos. With many making the point that design thinking is not about turning all your staff into product designers, it’s a technique to empower staff to become change agents. Used in conjunction with rapid development techniques like DevOps, it allows staff to make changes with a great deal less investment and resultant risk. One buyer at Harvard put it like this “empowering process owners and overcoming fears of accountability is a crucial step moving toward the as a service economy.” Although there was a note of caution, the edge given by design thinking may be short lived as its second nature to Millennials, they don’t need design thinking, they just call this thinking!
6. The critical skills to be effective with As-a-Service are adaptability, creativity, and interpersonal communication. Service buyers and service providers need to provide an environment for “fast fail,” and allow for risk in order to more decisively shift sourcing engagements from “directive” to a “vital partner”:
We are in a world of constant change and fast moving developments. To capture the value, we need to have effective ecosystems brokered by Global Process Owners. These people can define business problems, identify opportunities and broker relationships to bring the best solutions together across internal and external resources. These skills are developed through experience, not by training, and challenges HR to rethink its approach to hiring. Creating a more “fluid workforce” by shifting selection from an inventory of skills to a candidates “coach-ability.” HR needs to be more effective in defining and building these ecosystems in order to effectively recruit and manage the people who will make it happen. The generations entering the workforce and growing up in it today, may not have a career “path” so much as a career “journey”—a general direction that is taken in steps that follow their interests and capabilities matched to opportunities.
7. The strategy behind the deployment of Digital Plug & Play Services remains bifurcated. Enterprises are rapidly increasing their investments in digital platform based services that deliver processes around a system of engagement (e.g. CRM, Marketing, HCM, Procurement) but remain as reluctant as ever to take on re-platforming core systems of record (e.g. Finance, Accounting and Claims Systems). As a result, Intelligent Automation will be focused around systems of record, to prolong the life and extract greater value for enterprises out of these legacy platforms for the next several years.
8. Automation is impacting entry-level roles—and the industry is not prepared. The roles that used to drive entry into business process and IT careers (e.g. data entry, level 1 help desk, systems admin, exception processing) are changing as many of the core tasks for these roles are being addressed by deployments of Intelligent Automation. As an industry, there is a need to recognize this change and determine what will constitute new entry-level roles and career paths for the future. This means changing many elements including: educational programs, models for recruiting and training new employees, promotion and evaluation criteria, supervisory role definitions and more. It also means that middle management baby boomers and Gen Xer’s will have to accept that their reports will build their careers on criteria that are new and sometimes hard for the older employees to recognize and accept.
9. Organizational design will become a key differentiator. Workforce demographics, rapidly changing employment contracts, business process automation, and cognitive computing will collectively stretch traditional employment and organizational models to the breaking point. Enterprises that are able creatively to leverage these disruptions will not merely succeed, but will replace once-respected slow-to-move competitors.
10. True shared risk/reward contract structures that buyers and service providers actually buy into will emerge. New shared-risk, shared-investment deal structures at the transaction level, and relationships akin to alliances will be the models that produce the most rapid and satisfactory results in the maturing as-a-service economy. The rapid wins made possible by large-scale adoption of robotics, cognitive computing, and the altered workforce relationship will create an imbalance in contracts that are not structured with those successes in mind. While the high end has the volume and the opportunity, look for upstart providers with novel deal structures to take share early in the next wave of innovation. One of the delegates put it “to advance towards the As-a-Service Economy we have to move beyond case studies and facilitate connections of stakeholders.”
The Bottom-line: 2016 will be the year where the fog lifts and we figure out how to adapt
When we look back at 2015, I think we’ll reflect on a year of confusion and too much over-thinking of what’s happening down the road. What we learned at Harvard is that many enterprise buyers are much more aware of what is possible, but struggle to engage effectively with their provider to risk more and share more to find new thresholds of value.
However, there is a strong realization that if you fail to tie your career to Intelligent Automation, understanding how to leverage digital technology more effectively, noone’s going to wait for you to catch up. None of this stuff is rocket science, it’s simply resetting the goals and revisiting stagnant relationships to figure out a realistic way forward. Sadly, I do think money and cost is the ultimate arbiter of change, and it’s not until the providers really start to feel the squeeze on their profit margins, and the clients get tempted by disruptive rebids, will we really see much of the change described above become reality. Those service providers and buyers which have not yet begun to address (with genuine investment) the reorientation of capabilities and enablement of technologies to support business model disruption, are already circling the drain of yesterday’s legacy.
To Apply for a Seat / lead a session (buyers only): Email us here
This promises to be another UK style “throw the kitchen sink at everything crappy about our service industry”
We’re back at Gonville & Caius College, Cambridge this Spring (Click to learn more)
Join these core discussions where we’ll finally address these issues:
The Race to Irrelevance: Are we on a race to the bottom, or are we genuinely in the midst of change: Are service providers really selling what service buyers actually need? Europeans v Americans: Who’s outsourcing smarter and where can we improve to get to the As-a-Service Enterprise?
Demystifying all that Robo Hype: What is the realistic place for a Robotic Process Automation strategy inside the enterprise – and what should Service providers be doing to support it? Digital Transformation: It’s really all about the business, stupid! Beyond the Transition: How can service buyers and providers really share their risks to achieve longer-term gains? Ending the Master/Slave Model: Can service buyers and providers leverage “Design Thinking” to fashion a collaborative relationship with a common purpose, common values and jointly desired outcomes? Getting beyond the Paperwork: What does it really take, in today’s environment, to execute and manage a meaningful, effective and lasting contract? Getting past that “outsourcing career track” discussion: Is the outsourcing “profession” now part of a broader management capability? The Message we have to Send Back to the Industry: How can we fix this industry to deliver the As-a-Service Enterprise?
Service buyers email us here to apply for your seat…
While the benefits of the cloud and the pervasiveness of new digital technology impact our professional and personal lives – more than at any point in history – the need for the tech skills to make this all work has never been under so much intense pressure.
Not every firm can drop $200K a year on whizkid programmers who can actually handle this stuff, so the focus moves to those firms which can do this effectively and affordably. The industry’s only dedicated engineering services analyst, Pareekh Jain, has been micro-focused on the emerging engineering service industry over the past couple of years and today unveils the industry’s first unvarnished view of software product engineering capability of the leading service providers.
This is our second engineering services Blueprint. In the first one, we focused on the provision of engineering services for physical products. In this Blueprint, we look at Software Product Engineering (SPE) services in detail. So let’s turn to Pareekh to learn more about his Blueprint experience in this emerging space:
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Pareekh, how do you see this market evolving and what are the key drivers for software product engineering services?
This market is very dynamic today. A few years ago there were only a few specialized and small service providers who strategically focused on this market. Large service providers generally treated this market and clients more opportunistically. Their product engineering service capability was relatively small and often sat inside a larger ADM practice. Overall the attractiveness of ISV market was not high enough for large service providers to make investments to serve this market in detail. Now the market attractiveness has increased because of two reasons. First, as ISVs (Independent Software Vendor) are moving to As-a-Service, they need help. Second, as more and more products are software driven in IoT world, enterprises need help too. Traditional software product engineering outsourcers were ISVs. Later internet companies who faced similar challenges of scalability, reliability as ISVs also became a major customer segment. What we are now witnessing is an emerging trend with the rise of IoT that all products and industries are becoming smart and will need software solutions for scalability, reliability and connectivity. The traditional ISV market had limited potential and was driven by the R&D spend of ISVs but this much greater market for software products beyond ISVs has huge potential. Consequently, service providers both large and specialized are increasing their attention on and capabilities to serve this market. We have observed new specialized service providers have also emerged in this space in the last few years.
And how did the Blueprint analysis turn out?
Pareekh Jain is Research Director, HfS (Click for Bio)
This Blueprint analysis was interesting. First we researched how service providers are making investments in helping ISVs transition to As-a-Service economy and used these criteria also in evaluating service provider capabilities.
The scope of this Blueprint was software product engineering services for ISVs and internet companies. We excluded software product engineering work for enterprises because it is still an emerging area and there is a lack of a common understanding among service providers of what enterprise work will qualify as ADM versus SPE.
We evaluated 13 service providers for this study. These service providers include providers which are China centric, Eastern Europe centric, Latin America centric, and 100% domestic US sourcing centric in addition to India centric service providers. This is much geographically dispersed than most other outsourcing markets we research.
There are five service providers in our Winner’s Circle – Cognizant, HARMAN, HCL, EPAM, and TCS (in alphabetical order). They all have the scale and are making investments in technologies, design and IP capabilities to push this market forward.
High Performers and other service providers are also capable of delivering high-quality services.
I was also impressed by three small service providers Belatrix, Happiest Minds and Nexient which are new age software product engineering service providers without any legacy hangover. Their scale is very small, and practice areas are still evolving, but their direction is good. They all have a promising future if they are able to scale up with systems and process and able to maintain their focus.
In this Blueprint, we also focused on benchmarking and operations improvement. This is first of its kind of software product engineering services study where we tried to collect important operating data from software product engineering service providers and arrived at the aggregate or the average software product engineering services industry metrics. This should help each software product engineering service provider and captive to benchmark their operations and identify their strengths as well as areas or levers of improvement.
Pareekh, what regions are excelling at providing affordable software engineering services? Is this still all about India, or are we seeing new regions emerge, such as Romania, Russia and China. And is onshore in the picture?
The majority of software product engineering work is still being done out of India, but we have found of pockets of excellence in Central and Eastern Europe (mainly Ukraine, Romania, and Russia) and China. The buy-side customers have highlighted that the cost of doing work from Eastern Europe is slightly higher than that of India. In addition, we are seeing some increased delivery investments in Israel and Silicon Valley becoming increasingly important for several customers, as it helps to leverage synergies with their innovation ecosystems, especially with several of the leading service providers making augmenting their delivery center capabilities in these locations.
So what are your key takeaways from this study and what should we be watching for in the next few years?
There are five key takeaways. First, there is renewed interest in this market and technology developments are creating interesting market opportunities. Second, for buy-side access to skills and time-to-market are most important drivers for software product outsourcing. Earlier it was cost and time-to-market. Now new technology developments have increased the importance of access to skills relative to the cost. Third, ISVs are facing disruption and need the help of software product engineering service providers in their “As-a-Service” journey. Fourth, scale is becoming important for service providers to make investments. Fifth, New service providers are entering this market and some service providers which were ignoring this market are making investments.
We will be watching four key trends. First, how will the software product engineering services revenue grow for service providers? Does it grow faster than overall IT services revenue? Will new service providers enter this market? Second, how will service providers build their scale organically and through mergers and acquisitions? Third, how will service providers augment their capabilities and service offerings? How some of the critical areas identified by us such as DevOps, product management, automation, design thinking become prevalent? Finally, will we hear examples of successful software product outsourcing case studies from new disruptors and Unicorn companies which are important and growing segments but still under-penetrated for software product outsourcing.
Anyone who’s been in and around the tech industry for the last couple of decades, will have come across the legend that is Bruce Richardson. The first of the true blogging analysts with his famous “First Thing Monday” newsletter, having had the misfortune of bringing me back to the analyst industry with AMR (Gartner) and being my (last) boss, has today survived that experience to lead strategy for Salesforce.
We were priveleged to dust off Bruce’s old analyst hat and bring him along to our recent Buyers Working Summit at Harvard Square where he immediatetly declared, “If anyone here doesn’t have a Cloud-first strategy, I am walking out of hrre right now”… He did also start to worry he was starting to sound like the Donald Trump of cloud computing… So over to you Brucey!
Our theme for 2016 is all about us “getting back to basics” as a services industry, and nothing exemplifies this more than what the buyers and providers privately said about each other at the recent HfS Working Summit in Harvard Square. Once we get past all the talk of disruption and change, the real issue holding back progress is the simple fact that too many of today’s services relationships are just not set up to be collaborative ventures.
What’s more, in spite of all the chest-pumping from providers on their revolutionary capabilities to turn their clients’ business models on their heads, over half their clients still perceive them as brokers of cost-efficiency… not capability:
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I am sure many of you are muttering to yourself, “This is very consistent with previous studies HfS has run” – and you are correct. Little is changing. However, it’s worse than just the buyers’ having negative perceptions of service providers… 80% of buyers simply aren’t engaging with their providers in a collaborative way:
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Until we can break this legacy master/slave culture, this industry will continue to stagnate
Here are three measure that could break the cycle:
1) Buyers need to entrust more higher-value work to their providers, with their leadership incentivizing their middle-managers to “let go”. Many buyers consistently admit they need to entrust their provider with higher value work to improve the quality of their engagement. But this isn’t really about trust, it’s more about the buyer letting go and having the confidence to give their service provider more responsibility, which would make them more effective at their own jobs. Sadly, most middle-managers have absolutely no motivation to entrust more to their service provider -and, frankly, why should they? What motivation would you have to make yourself less dispensable to your firm? So it’s up to their leadership to force the issue, either by demanding more work is outsourced, or by incentivizing their managers by giving them more motivating work to do… with real financial and career benefits to do so.
2) Automation is the “new offshoring”, so leverage RPA to create renewed opportunities to collaborate. The next wave of value is blending global sourcing with the mimicking of manual processes in RPA software that are predominantly high throughout, high intensity tasks. All enterprises have varying potentials for real automation value to be created by robotizing rote manual tasks. And most of the respectable service providers have invested in capabilities to develop an RPA strategy for their clients. Buyers must learn from mistakes of the past to look beyond short term cost savings and create a broader intelligent automation strategy, which also creates significant opportunities to establish more collaborative, value-added relationships with their service partners. Moreover, it is in the interests of buyside managers to put automation capabilities on their resumés as CEOs increasingly demand a cohesive plan to create a more automated operating platform to support non-linear future growth for their firms.
3) Weave Design Thinking into engagements to shift the impetus towards mutually beneficial outcomes. The less hyped, but nevertheless creeping uptake of Design Thinking is helping several relationships inject lateral thinking and renewed motivation to work together, not only in the customer-facing front office, but also in the back office operational functions. Design Thinking in services is based, primarily, on both service buyer and provider coming together to create business outcomes that are mutually beneficial – and motivational – for both parties. However, this must be established as ongoing collaboration across all key relationship stakeholders, and not simply two days of senior management putting sticky notes on each others’ foreheads. There must be senior pressure and buy in to adopt Design Thinking as a means to move away from Six Sigma-obsessed old world models, and really change the way the service buyer and provider teams work together. We’re seeing encouraging signs from several providers aggressively promoting Design Thinking techniques, such as Infosys, IBM and Cognizant, into their engagements, but this is still restricted to far too few a number of buyers at this stage. But Design Thinking, and new creations of Design Thinking-eque collaborative methods are increasingly important ways to bring together new concepts and ideas, better teamwork, and ways to design outcomes jointly that can incporporate investments from both sides.
Forget the Trump, 2015 has been one helluva year for pontification on big disruptive, and occasionally ridiculous topics.
Anything robotics, artificial intelligence, the end of work, the end of sanity… the end of pretty much anything has been bandied around. Hence, it was refreshing to bring together a host of service buyers and providers in Harvard last week, to dial back into planet earth and really get to the point of where we need to take things.
Glaring into a future, where there is no written rule book, no set curriculum to follow, can be a little daunting. So it can’t hurt to take a look at some of the mistakes of our past to create a more long-term, focused strategy to set us in better stead as we embark on this new wave of change and disruption to our cosy little world: the Continuum that begins with establishing a rudimentary, trigger-based Robotic Process Automation underbelly, that forms the building blocks for incremental investments in more predictive autonomics and – ultimately – cognitive self-learning capabilities, before reaching a haven of true artificial intelligence (which doesn’t actually exist yet, but we can all dream, right?):
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I’ve been reading some interesting arguments that discuss separating RPA out from the more intelligent developments further along the Continuum. And they’re half right, but I also argue they’re half short-sighted too. The best comparable is BPO, where we are going to see most RPA deployments, as many service buyers seek to eke out more productivity from their messy processes, which they didn’t quite get right the first time around.
And why – pray tell – did so many BPO buyers not do enough that first time around? Why is our industry literally littered with hundreds pf underperforming BPO contracts that are caught in a purgatory of status quo, where the provider has no desire to change anything and simply keep pumping home their predictable profit margins from a pre-set provision of offshore FTEs, while their buyers have long-lost the attention of their CFOs to get renewed investments to make their processes run better.
Why is it that so many BPO buyers only enjoyed some “transformation” during their brief 18-24 month transition towards a BPO steady-state, before their service provider packed up the Visio charts and redeployed their process wonks to work on that next deal coming down the pipe?
The Bottom-line: Only focusing on RPA is a fast-track to short-term disappointment. A broader Continuum focus is where the smart buyers are headed
The answer is simple – most BPO buyers only focused on getting that initial 30-40% of cost out the door. They were not thinking beyond that. They did not budget or create a real plan for achieving ongoing process improvements and innovations, once they reached that steady state of lower cost. And it’s the same with RPA and cognitive – focusing only on the short-term cost is only going to get you so far.
Do you think your CFO is really going to release significant funds to embark on a cognitive strategy once you have reached a happy state of RPA, where you have a few bots cranking through processes more effectively and more headcount freed up to do other things? Did that same CFO open up the coffers to invest in significant process transformation once BPO steady state was reached? Of course he/she didn’t…
So learn from that experience to make a broader business case for an intelligent automation journey right from the onset. RPA is only the first step on a journey of self-learning, self-healing, dynamic process creation and really smart decision making support for your business. Don’t ring-fence it… embed it in a broader program of Intelligent Automation.
After the brilliant “back to reality” conversations at our Harvard Summit last week, where we crammed 53 senior enterprise buyers into a fantastic room with the HfS team and some very “game” sponsors, we are thrilled to unveil our 2016 Summit Agenda, starting with a return to Cambridge University in March, a debut Summit in San Francisco in the Spring, and a major industry gathering in September. We’ll be rolling out themes, speakers, crazy new ideas and lots of associated buzz in the coming days and weeks… click here to learn more and apply for your places.
Next stop in the HfS quest for operational perfection… Gonville and Caius College, Cambridge
Click here to learn more and apply for your places.
And finally… the eagerly-awaited industry bellwether 2016 HfS Autonomics Premier League table is unveiled…
Tom, firstly, what is autonomics and why is it different from RPA?
Thanks Phil, before we dive into the details, let’s level set where we believe the industry is at. We have seen the market and the discussion on Intelligent Automation change significantly, both in terms of maturity as well as in terms of scale especially in 2015. The large service providers are accelerating investments in and build out broad capabilities around the comprehensive notion of Intelligent Automation. Yet the mainstream narrative on Intelligent Automation remains largely focused on the narrow notion of RPA rather than depicting the interdependencies and implications of a diverse set of tools and approaches. In our view, the journey toward Intelligent Automation is aligned around three dimensions:
Unstructured data
Less well defined processes
Broad notions of cognitive computing and artificial intelligence
Therefore, HfS is aiming to stimulate a much broader discussion on Intelligent Automation by launching the Autonomics Premier League Table. On purpose, we have opted to use the term “Autonomics” as a broad reference term for process automation approaches beyond RPA. Thus, for the purpose of this study we refer to Autonomics as self-learning and self-remediating systems. Just to be clear, HfS is not aiming to redefine the term for RPA or even Intelligent Automation, we are aiming to stimulate a more holistic discussion!
To your question on the main differences, in short these are around the use cases and around the capabilities. RPA is largely focused on business process services with capabilities around extracting data from heterogeneous systems and around capturing, scheduling and executing process steps. Conversely, Autonomics evolved out of IT centric scenarios where comprehensive cognitive engines are not only self-learning but more importantly self-remediating. Though as suggested for this study we chose a broader definition on Autonomics to include a plethora of approaches including Machine Learning and Crowdsourcing that span across the spectrum of IT and business process services.
Tom Reuner, HfS Research (click for bio)
“Automation” has been the watchword of 2015 – has it lived up to the hype? Can we expect the noise to continue next year, or will it calm down?
If I am honest I am shying away from calling it hype. Normally in our industry no topic is small enough or largely aspirational to be hyped. But typically it is the IT juggernauts that are at the forefront (or being culpable) for hype. Within the context of Intelligent Automation the large service providers and BPOs are unusually coy on the topic, presumably because they haven’t yet fully understood the impact on revenue models as well as being anxious about the levels of transparency resulting from automation. This manifests itself in many NDAs curtailing our ability to discuss many of the issues in public. Thus, it is the comparatively small technology providers who are educating the market. Put in other words, the market is still nascent but maturity is noticeably setting in.
Having said all that, both the level of interest as well as of deployments has increased significantly. For many organizations having an automation strategy has become a strategic priority. It is about de-coupling routine service delivery from labor arbitrage. At the same time Intelligent Automation is a key building block for moving toward the As-a-Service Economy. And lastly, the large service provider are starting to educate the stakeholders around automation. All this will lead to Intelligent Automaton moving center stage in 2016. However, as I have indicated, RPA is not only dominating the discussion, but is also more mature than Autonomics, not least at is much smaller in scale and aimed at low hanging fruit. But my hunch is, that in two years’ time we won’t talk about RPA anymore as it will be a reality in the back-office. The differentiation will be around cognitive computing and artificial intelligence.
So what was your methodology behind putting together the Autonomics Premier League?
The process started by sending out a RFI to the leading service and BPO provider. This led to deep dive interviews with the participants. These insights were enhanced by HfS research stream on Intelligent Automation. At the same time input by technology providers balanced and corroborated the feedback by service providers. All this information was analyzed and we ranked the service provider by the following criteria:
Vision and credibility of Autonomics strategy
Breadth and maturity of internal tools and external partnerships for Autonomics
Scale of deployments
Institutionalization
Commercial traction
Effectiveness of marketing effort behind Autonomics strategy
However, the Premier League Table is just a catalyst for a broader discussion. Stay tuned for the Intelligent Automation Blueprint in Q3/16!!
So what did you learn throughout the research process? Why are some providers outperforming and other less so?
Beyond the issues I have called out already, two points are jumping out. First, the process has reiterated our belief that Intelligent Automation is about cost and value. Thus, the direction of travel should be around human augmentation. We have to move beyond narrow notions of cost take out. Second, higher levels of automation are the prerequisite for getting closer to the endgame which is in our view vertically infused insights and analytics.
The provider standing out are either the pioneers who took on risk and scale out deployments such as IBM and NTT Communications or organizations demonstrating strong thought-leadership including Accenture, Cognizant or Capgemini. Crucially these leaders embraced the Continuum of Intelligent Automation and don’t look at individual tools as the panacea but are building out a portfolio approach to Intelligent Automation. However, the dividing line between the leaders and laggards is drawn around two issues: The willingness to take on the risk of revenue cannibalization as well as overcoming the fear around transparency that automation invariably will create.
When you look at how this will shape up for next year, are they some providers you expect to surge up the table?
2016 will be the year when the IT juggernauts are finally taking the plunge and will start to educate the market. This will lead invariably to a significant acceleration of maturity. At the same time organizations are increasingly demanding from their service partner to help them moving to a more holistic automation strategy. As a result all the provider in the table are likely to move closer together. The India heritage provider will ramp up their comprehensive proprietary engines. Providers like Dell and Atos who have demonstrated sound visions, will aggressively ramp up deployments. And even organizations like Swiss Post Solutions who can hardly be described as the usual suspects will built on their strong understanding on Autonomics and scale out.
Crucially, the discussion on Intelligent Automation will move beyond RPA toward broad notions of cognitive computing and artificial intelligence. The HfS Continuum of Intelligent Automation will get ever more crowded as new technology players will enter the fray and will find their place in automation portfolios. Thus, the ability to manage and integrate this plethora of automation approaches will become the reference point for providers’ maturity and ultimate success. As we have stated at the outset, HfS is aiming to broaden the discussion and extend our collaboration with stakeholders. We would love to hear your views!
Great work Tom – it’s been a pleasure having you help drive our autonomics coverage this year and am excited to see how rapidly this space continues to evolve in 2016.
HfS premium subscribers can download their copy of the Autonomic Premier League table and analysis here.
The reality of Robotic Process Automation is hitting us at the HfS Summit for services buyers at Harvard Square this week. We anonymously polled 53 senior outsourcing relationship leads with the question “what measures would improve the outcomes and quality of their outsourcing relationship”:
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Last year’s buyer’s summit saw 48% polling they needed to let go and entrust their service provider in higher value processes… now that number is dropping to 28%, with the preferred partnering focus shifting to working jointly on an automation strategy. Nearly half of today’s buyers (45%) now see that as the main area to get renewed value.
What does this tell us?
As mature outsourcing deals get stuck in holding patterns, automation is providing the new flavor to find that next increment of value. The industry hype and marketing is clearly reaching the buyer – and many want their service providers to work with them to help figure out an automation strategy.
So the real conversation now shifts to how buyers and providers can find common commercial models to make automation work for both parties. However which way we look at this, buyers will need to make some new investments in Robotic Process Automation technology and expertise, while the service providers will ultimately have to concede they may need to reduce the FTE provision on their side, as automation takes effect.
Now, the real challenge here is for the service provider to redeploy the freed-up FTEs on their clients’ higher value processes. So these two motivations should go hand-in-hand: decreasing labor effort on automatable tasks and increasing it on the higher value work the clients would like to outsource in the future. So if buyers and their providers can get this right, automation will be a long term play for both parties, where higher value work gets done and delivery staff are kept busy because of the closer collaborative relationship and greater volume of work being parsed out.
