Monthly Archives: Jan 2021

The proposed Atos-DXC takeover is papering over some very deep cracks from a bygone era

January 10, 2021 | Phil FershtTom Reuner

The IT services market has arrived at its most critical infection point in 20 years, where the role of service providers that survive the Covid era will be those that have made the shift from support firm (Phase 1) to a business partner (Phase 2).  We've talked about this services shift ever since Tom Reuner and I were young analysts.  And we're not very young anymore.  Especially Dr. Reuner.  

So why on earth is Atos bidding to make some wild takeover of DXC?  Let's understand the burning platform driving this

When the first major tranche of IT support deals evolved to a heavy dependence on India as a delivery location to exploit lower-cost labor at scale, made possible by the original Internet revolution. In the early days of the offshore era, the more ambitious traditional IT services firms, at the time, developed their own global delivery models with the goal of staying relevant, in the face of emerging competition from the "Indian Pure Plays" (as they were known in those days).  This included the likes of Accenture, Capgemini, HP, and IBM - all of whom invested in India to attempt their own flavor of global service delivery with "added value" that the IPPs - at the time - could not (yet) deliver.  The traditional IT service firms which failed to invest effectively in the global delivery model, once-great brands such as ACS, CSC and EDS, all got acquired by traditional western outfits.  And the IPPs which failed to break into the Indian Top Tier eventually got rolled up into the second tier of traditional IT services shops, desperate to keep competitive, such as Patni, IGATE, and Syntel.  

Covid has forced the services industry to make the rapid pivot from bread-and-butter to business-transformation services

Getting to the point of this little history lesson, we need to understand the motivations behind these acquisitive moves.  Phase 1 was all about cost, scale, growth, and profitability as IT services firms could save the Global 2000 billions of dollars by exploiting cheaper talent at scale.  If you weren't in the game of pulling the cost lever - and adding above-average value somewhere to justify yourself to your clients - you either made a graceful exit to a willing suitor adding you to their own scale game - or chose to tread water and watch yourself get progressively smaller and desperate, until you got to a point where nones wanted to buy you anymore.  I'll share these firms' identities over a drink if you can't guess who there are already.

This new era of services (Phase 2) is seeing a clear bifurcation between the bread-and-butter services of the years pre-Covid - namely standard IT infra, app development and support, and BPO - and the present-day transformative services that run your borderless, work-from-anywhere business operations in the cloud, dependent on deep skills in data science, process design, automation, and most importantly, business logic and training people to become digitally-fluent. You can read our HFS 2025 Services Vision here.

The drawn-out Pandemic Era has forced the route into the cloud; it has forced processes to be re-designed and automated (or re-automated); it has forced enterprises to embrace rapid change, and it has forced the leading service providers to put their money where their mouths are or face a painful drain-circling experience as the bottom falls out of the traditional services model.

The new leaders in Phase 2 of IT services are rapidly emerging – and these do not include Atos and DXC.  

IBM is spinning out its legacy infrastructure business while Hyperscalers like Google are starting to win comprehensive cloud deals as in the case of Deutsche Bank. Furthermore, accelerated by the pandemic service providers are reorganizing their business around the cloud. In addition, we are seeing a spate of mega-outsourcing deals in the billions as the word’s fourth-largest economy, Germany, finally warms up to outsourcing by doing “big-bang” deals to the likes of Infosys, TCS, and Wipro, keen to exploit this market and strengthen for the expected recovery later this year, where we forecast growth of 5%+ across services markets.  Atos also got its piece of the action successfully extending its partnership with Siemens for another five years (see below), so this does beg the question why it needs DXC, as it clearly need to focus on making that shift from Phase 1 to Phase 2, and its very difficult to understand how a gargantuan merger is what it needs right now.  Simply put, this is probably the most complex services merger ever contemplated by two firms which do not have a great track record of large, complex mergers:

Against this background, the announcements that Atos and DXC are publicly reporting a potential takeover of DXC by Atos - in the region of $10 billion - are very surprising, as both firms have been struggling to keep pace with the market leaders for years, and Covid has not provided any respite for either, although DXC has shown some signs of arresting its decline under the leadership of Mike Salvino now in his second year at the helm. Having providers officially confirming takeover discussions is highly unusual, which indicates a merger could well be inevitable if the numbers add up to the stakeholders that matter. Yet, the central strategic question is whether there is an opportunity to consolidate and scale lower margin legacy businesses rather than focusing on investing in innovation.

Rather than getting bigger, these services firms need to spin off their legacy businesses.  This proposed merger is illogical.

Currently, HFS sees little value in merging these two firms together, as the only potential value is more in scale and geography, as opposed to deep areas of innovation where both firms are struggling in this tough market.  The muted reactions from Wall St tell enough of a story already – this whole merger proposal smells like a consolidation exercise that could be even less effective than the carnage caused when HP and CSC merged to form DXC in 2016.  What’s more, Atos has struggled to derive much value from its major offshore-centric investment Syntel, so the chances of an Atos-led juggernaut of mainly legacy services business-lines being effective are highly questionable. 

While we laud the value of OneOffice at HFS, this could be the antithesis version, with a hundred-plus 'offices' all grimly clinging to survival.  We believe the IBM model of spinning out legacy business lines from growth business lines is the smart way forward.  That is not to say a merged DXC and Atos could not pursue a smart strategy, but the simple fact that neither has done this to date gives us little confidence that they will.

So let’s take a look under the covers...

Atos and DXC are caught between a rock and a hard place: Losing out on recent large deals while having limited levers for margin improvement

The recent major contract wins of TCS at Walgreens, Infosys’ double swoop at Vanguard and Daimler, and Wipro at Metro paints a bleak picture. It is too simplistic to point out that some of these were asset-heavy deals as an explanation for the lack of success. In particular, in the context of Daimler, there is a strong cloud element and the synergies across the automotive ecosystem are immense in areas like supply chain, cloud agility and creating of data value. While in the Walgreens extension contract, a strong emphasis was placed on digital innovation. The key question for both providers is where revenue growth should come from as the anemic growth as Exhibit 1 highlights: 

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If topline growth is not the priority then margins have to be improved by either extreme efficiency of operations and/or deep investments in innovation. As our Triple Trifecta Services Top 10 has demonstrated, neither organization made it to the overall Top 10. Atos has strong investments in innovation and a solid vision but struggles around execution. DXC has not even made the Top 10 in any of the various categories. As such deeper investments in innovation but more importantly, the execution of it should be top of mind to Atos.

The deal logic appears to hinge on three pillars:

  • Finally, Giving Atos scale in the US market
  • Cross-selling between accounts
  • Aggressive cost take-out

Atos has a solid track record in M&A. While Syntel might have been fluffed, it managed to extract value out of stagnated businesses like Siemens, Xerox, and Bull. But we see the deal at best as a defensive move that would be buying Atos management time for other strategic moves. While Mike Salvino has stabilized DXC, he has taken over an organization that was demoralized and exhausted after continuous excessive cost-cutting and management change. . His task ahead is perhaps best illustrated by a comparison of operating margins. In Q3 2020, DXC was at 6.2% while Infosys achieved top-in-class with 25.4% and bellwether Accenture came in at 14.3%. Thus, the reported price of $10billion would represent a significant premium on a market capitalization of ca. $7.4bn that is likely to tempt shareholders to accept the offer. 

Atos needs to reinvigorate around innovation – not legacy

M&A is in Atos’ DNA. The company is built on perpetual acquisition activity. The extension of the Siemens outsourcing contract in September 2020 is testimony that it can extract value even from highly challenging acquisition targets. Yet, DXC both in terms of scale as well as the culture would be its biggest challenge to date. The acquisition would also come at a time where the company is going through an organizational restructuring dubbed SPRING. With that  Atos is moving from a largely horizontal go-to-market to one that is focused on verticals. OneCloud will be the first practice for this new organizational setup. Atos is late with a move toward verticalization and DXC is more advanced. But the key strategic issue goes beyond culture and integration. With the deal, Atos would become a consolidator of legacy businesses. Yet as Accenture and the Indian heritage provider demonstrate, value stems from moving aggressively toward innovation.

DXC is still suffering from its own ill-timed M&A

With a certain irony, DXC is still suffering from its ill-timed acquisition of EDS in 2008 at a time when the outsourcing market was shifting toward more discrete deals with a strong digital flavor. The margin erosion in ITO and infrastructure projects is still haunting DXC. However, in sharp contrast for instance to IBM, there is no RedHat in sight which could act as a catalyst for change. Rather Mike Salvino has evaluated “Strategic Alternatives” for three business units: the U.S., state, and local health and human services business; its horizontal BPS business; and its workplace and mobility business. The public sector business has meanwhile being sold while the other two units will be retained. But this process makes clear that the whole business model is under constant review. Despite more targeted moves like for Luxoft, it appears unlikely that DXC could turn into a consolidator. Therefore, its strategic options are limited.

Bottom-line: The consolidation of legacy businesses will make bankers and executive management happy, but it won’t transform Atos

While Atos might finally get to get to scale in the US, the proposed deal lacks imagination as neither firm adds much of the new world to the traditional world. The offshore component of both firms is not compelling when compared to any of the leaders.  For example, their capabilities across the emerging market areas of the OneOffice platform, such as ServiceNow, Salesforce, Pega, SAP S4 Hana and Workday are not leading edge, and business process services investments across both firms have long been neglected. Yes, Atos management might be buying time for a more incisive transformation, but the strategic headwinds are already immense. Clients are looking for trusted partners to accelerate the Phase 2 services journey toward the OneOffice. Doubling-down on legacy-at-scale is hardly a compelling pitch to move up the value chain.

Posted in: Business Process Outsourcing (BPO)Cloud ComputingIT Outsourcing / IT Services

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OneOffice is all about anticipating customer needs before they even know what they are...

January 09, 2021 | Phil Fersht

OneOffice is all about putting the customer front and center by having end-to-end processes automated in the cloud enabling great AI to help you make winning decisions...

Posted in: Absolutely Meaningless ComedyDigital OneOffice

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Introducing the Tech Stack to power Native Automation, Data and Process Design: The OneOffice Platform

December 30, 2020 | Phil FershtElena ChristopherTom Reuner

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesDigital OneOffice

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He's got the Cloud in his soul... his name is Joel

December 28, 2020 | Phil Fersht

Joel Martin heads for the Cloud with HFS to lead the Cloud strategies practice

It's funny when you meet these people across all corners of the globe during your career and you get that feeling that you'll cross paths again in the future.

I first met Joel in 2002 when I was a Bio-IT analyst (yeah, I actually did that) in Australia working for IDC and Joel was running the PC tracker for the ANZ region.

Fast forward 19 years and Joel, and after his 10-year IDC stint, a couple of cyber-security and research startups; and a product marketing stint at Microsoft, got in touch about something that had nothing to do with the role for leading our new Cloud Practice was being advertised...   I even asked him if he knew anyone when I thought "Hang on Joel, what are you doing these says...".

To cut a long story short, Joel is now our first permanent Canadian employee, based in tropical Ottowa, with 2 daughters, (tries to) play guitar, and has mastered Bar B Qing at -20C. He has lived and worked all over the world and somehow still ended up in Ottowa.  But that's OK because we now officially have HFS Canada!  He is also leading HFS' new Cloud Practice to help the big pivot into the virtual work-anywhere world.
 

Phil Fersht, HFS: Before we get to all the work stuff, Joel, can you share a little bit about yourself….your background, what gets you up in the morning?

Joel Martin, Vice President Cloud Strategies, HFS:  Great question Phil, thanks for asking. 

About me, well, I like to think that I am a classic overachiever. I have built a career from a humble beginning to one that has allowed me to live, work, and experience cultures and peers in Europe, Asia, Australia, and North America. I love immersing myself in a new culture, have been fortunate to lead operations, sales, and research teams across the world, and thoroughly enjoy the customers I have engaged in finding new revenue opportunities. 

I grew up in a small town in the United States, proud son of a Red Cross executive. As such, I got involved in community service from an early age, which continues to be important to me. Travel is something that I also grew up with, as early in my life, we lived in Germany and then across the U.S. 

While at university, I built a partnership between the University in Leipzig and Houston, leading to my joining an international student-led program based out of New York City. This allowed me to travel extensively in Eastern Europe in the early and mid-90s, and honestly, I haven't looked back. I started my technology career in Prague, Czech Republic, with IDC in 1997 and moved to Australia in 1999 and Toronto in 2004. Building a career in research, consulting, and practice leadership. Then I moved to Microsoft, where I was product marketing lead for the ERP business for Canada. In fact, I was part of the initial plans to move that product to the Cloud. After that, I was recruited by TechInsights, an Ottawa based Intellectual Property firm, to lead global marketing and product management. During this stint, I was part of the executive team that sold the business to a Private Equity firm and was retained to build exit strategies for different business lines. 

During this time, both the company and the business I led went through significant digital transformation, taking our products and systems to the Cloud. This was a major undertaking as we fundamentally changed our financial, operations, HR, and customer-facing tools and experiences. That was 2015-2016, hard to believe nearly 5 years have passed. 

Over the most recent 3 years, I ran workshops, managed client engagements, and wrote blueprints on building better supply chain relationships. I also supported a new program that focused on the impact of emotional connections between users that the software tools they use. Our hypothesis was that it is essential to look beyond the capabilities and features and understand what emotions drive satisfaction—a crucial component for marketing, sales, and buyer synergies. 

Now I am excited to join HfS! As you and I worked together in the early 2000s in Sydney, while our paths diverged, we've found ourselves working together again. 

As for what gets me up in the morning, I am an early riser, so after that first coffee cup, I like to explore problems with a fresh perspective. You know, before the in-box and to-do list from your boss dulls your creativity.  

You've had a very global analyst career spanning several countries and continents... can you share some of your experiences over the years... what would you do all over again, and what would you definitely avoid?

When I look back at the crazy times of hitchhiking between meetings in Eastern Europe in the 90s to negotiating with a crooked cabbie in the middle of the night on a highway in China about the fare, there are undoubtedly many memories. And many things I would AND WOULD NOT do again! 

The most important thing I always found while working abroad was being willing to listen. Not just to the customer or executive in the meeting, but to the colleagues, cabbies, and folks you meet while spending time in their country. Understanding another's views based on their experiences, society, and culture has allowed me to apply my experiences in ways that have built more successful outcomes. In my experience, we often rush into conversations with our opinions and should take more time to listen. 

So I do my best to avoid talking until asked. Instead, encourage the sharing of experiences, challenges, and opportunities. By making this investment, together, we can then build a prosperous relationship. Without doing so, it can be hard to establish the trust needed to collaborate equally and fruitfully. 

How did you end up back in research after spending time with Microsoft?  

My career's second decade was on the supply side of the market. At Microsoft and TechInsights, I succeeded in developing products, managed partner programs, and delivering on go-to-market strategies. Something I'd advised on in my first decade at IDC, but with little

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Posted in: Cloud ComputingIT Outsourcing / IT ServicesOutsourcing Heros

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HFS Vision 2025 is here: The New Dawn to become a OneOffice Organization

December 07, 2020 | Phil FershtReetika FlemingMelissa O'BrienTom ReunerSaurabh GuptaElena ChristopherSarah Little

Posted in: Digital OneOffice

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And here's an hour of my life I thoroughly enjoyed. I hope you to do... with Cognizant CEO Brian Humphries.

December 01, 2020 | Phil FershtSteve DunkerleySarah Little

Posted in: IT Outsourcing / IT ServicesDigital OneOfficeCloud and Business Platforms

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Infosys can save the UK from Economic Fossilization. Here's how

November 30, 2020 | Phil Fersht

In today's world of constant fake news it was refreshing to get some real news that literally made me choke on my 57th microwaved frozen chicken jalfrezi of the year.  The fact that this real news emanated from the Daily Mail (the UK equivalent of the New York Post or Air India's in-flight magazine) was an indicator of how bad today's media has become.  Also, the fact that my head of marketing actually reads the Daily Mail gives me serious concerns for our 2021 marketing strategy... 

Anyway, let's get to the point.  Our Chancellor of the Exchequer (CFO for you corporate types), "Dishy" Rishi Sunak is married to the daughter one of India's IT industry's founding godfathers, none other than Akshata Murthy, daughter of Narayana Murthy, the man who created Infosys.  Like that happened and no one's noticed until someone at the Daily Mail discovered this... and they wed in 2009.

The UK is in a mess so bloody big we need to redefine "mess"

If a depression-driven Covid catastrophe wasn't bad enough, the mother country is going into a catatonic depression so bad, it may lead to an economic fossilization (that is my term for something worse than a depression) when we throw a no-deal Brexit into the mix... due end of 2020.

Anyone observing the thrilling performance of the Indian-heritage service providers this year will observe how the leaders have somehow kept the IT outsourcing industry actually growing a little bit, despite a predicted 8-10% nosedive that analysts many predicted.  And this owes a huge amount to its standout performer of 2020, Infosys, which has chugged along signing megadeals and reinforcing its commitment to the cloud at a time when enterprises are desperate for a partner to help them pivot at breakneck speed into the cloud model.

Anyway, as a disillusioned British born analyst (and global citizen) I suddenly see hope...

I have a lot more faith in these entrepreneurs from Bangalore than the current old-boys network running Her Majesty's economy into the ground.  I always knew Rishi was the only smart one in there, and now we have the evidence.

So... now good old Infosys has no choice butto bail us out as they married into... the UK!  

I am sure they will appreciate some free advice on the governance team that can drag us quickly out of our current predicament, so here's an initial strawman architecture:

UK Prime Minister:  Ravi Kumar S.  No one spins it better than old Ravi... all he has to do is bulldoze our media with pics of his new baby girl all over twitter and have us guessing forever on the mysterious "S"...

Chancellor:  Pravin "UB" Rao... this man can keep a ship sailing through any storm.  This current crisis stuff is child's play compared to rogue CEO's in private jets and dodgy Israeli automation purchases..

Head of the UK Coronavirus Task Force:  Vishal Sikka... time to dust off the former CEO to convince the UK public that we needn't worry about Covid as "AI will provide the answer" (after showing up 30 minutes late to every briefing).

Brexit Secretary:  Salil Parekh... who better to carve us out of the EU than the king of the carve-out deal himself?  He'll even do the deal on the golfcourse showing the rest of Europe how it's done.

Head of Cybercrime:  Mohit Joshi... who better to arm our cyber-defenses than the man who can iron-wall any bank still running on Cobol mainframes?  Easy, just move all our sensitive data onto Finacle and the Russians and Chinese will go crazy trying to figure out what the hell we just did...

Vaccine Distribution Czar:  Radhakrishnan "Radha" Anantha... who better to command the British vaccination process than InfosysBPM kingpin Radha himself, who will ensure everyone needs to "calm down and just focus on the outcomes".  If things get a bit dicey, he will take questions from his kitchen where we'll be far more interested in what on earth his kids are sneaking out of the fridge while he's too busy talking to us...

But what about Rishi himself?

Oh, he's far too smart for us.  Can't you get him to take over from that Modi guy?  Rishi makes money appear from magic, you know?

Posted in: Outsourcing HerosPolicy and Regulations

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The Agile Gabriel calls the leaders who'll take you into the Cloud faster

November 17, 2020 | Phil FershtMartin Gabriel

Today's environment is based on rapid decisions to move processes and apps into the cloud as fast as possible to keep companies functioning in a remote-working economy.  That means it's all-hands-on-deck to use all available resources to make this happen as cost-effectively as possible.  The principles of agile development have never been as important.

Cloud computing is basically the Internet being used as the system for delivering processes, software, data, and other services.  Being ‘agile’ means being able to use all resources as and when required. It also means not having to use them when not being used, and not pay for them. So how can we expect today's service providers adopt agile development to help our enterprises make the leap to the cloud as effectively and rapidly as they can? Let's ask HFS analyst Martin Gabriel who led the recent Top 10 report in Agile Development Services:

(Click to Enlarge)

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Martin - why has agile become so talked about in the recent past?  Hasn’t this been around for ages?

Yes, that is very much true. In a nutshell, due to the following reasons, it took center stage – a) Because of the agile success rate in software development space, and b) the traction in organizational agility. It has proved that agile methodology enhances productivity and alpha,

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Posted in: Cloud ComputingIT Outsourcing / IT ServicesDigital OneOffice

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So what's coming coming next folks? Stay tuned right here as the fogs clears for the New Dawn...

November 14, 2020 | Phil Fersht

Posted in: Digital OneOffice

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Chatting to Vinnie Mirchandani on how the IT and business services industry has coped with a pandemic

November 09, 2020 | Phil Fersht

One of my oldest blogging sparring partners is the gnostic Vinnie Mirchandani of Deal Architect fame.  We caught up a few days ago to talk about the impact of Covid on the services and outsourcing industry, how to lead through these challenging times, and how to embrace the faster, cheaper, more competitive tenets of digital to exploit these market conditions:

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT Services

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Meet Sudhir Singh... the Coforge King

October 19, 2020 | Phil FershtSarah LittleSia Ravari

Watching the rise of the mid-tier services providers - especially in the midst of a pandemic - has been nothing short of impressive.  Firms that got written off a few years ago because "only the top tier only got to the table"... are now at that table.  In fact, I could name several who broke protocol to become sought after partners with reputations for going way above the standard service and regular win engagements against the juggernauts.  Just read our post about the surge in growth for mid-tier IT service providers.

With 50% growth in the last three years, Coforge – formerly known as NIIT Technologies – is no exception here. In the midst of a $600M platform and (in spite of) a global pandemic, they hit the refresh button with a new name that aligned with their identity.  Changing one's name is a brave move, but when your British clients have called you "Nit" for a couple of decades and you have a supercool CEO who plays field hockey and racketball, you just gotta do it...

Within 3 years, CEO Sudhir Singh has led Coforge has taken this firm well past the $500m barrier, so let's get the story behind the strategy, the rebrand, and how the Coforge King sees the industry unraveling...

Phil Fersht, CEO and Chief Analyst, HFS Research: Thank you Sudhir for taking the time today to speak with us. You have recently gone through a rebranding and I would like to find out why Coforge and you decided on a name change, particularly in these economically uncertain times. And a little bit about how you have fared since you have taken over the role... 

Sudhir Singh, CEO and Executive Director, Coforge: Very good to be speaking with you Phil. We spoke about the name change around February when we met in Mumbai. This was an exercise that we were very excited about because all of us had this gut feeling that we are not going to be getting too many opportunities in our careers to rename a $600 million platform. This was a

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Posted in: IT Outsourcing / IT ServicesOutsourcing Heros

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After Groundhog Day... what happens next?

October 18, 2020 | Phil Fersht
When the fog clears in the coming weeks, we're faced with rebuilding workforces, rethinking failed political ideals,  revamping education and healthcare systems,  re-energizing ourselves, our families, our attitudes towards diversity, our own health, how we work… and so much more.  While we are all weary of living a real-life Groundhog Day, we have to stay focused, motivated, healthy and prepared to be ready for a new era that is approaching.   Surely this will represent the biggest reset in modern history.
 
There is no place to hide anymore. We are the dawn of a Hyperconnected Economy with the advent of connected global talent and the infinite possibilities of processes and data running in the cloud. The HFS 2025 Vision represents the north star for bold enterprises who want to design their organizations to thrive in this new era and not meet a painful, boring, and irrelevant death.

Watch the replay of this HFS Live purely unfiltered, unsponsored real talk with real industry leaders to help us unravel the emerging landscape:
 
Host:
 
Phil Fersht, CEO and Chief Analyst, HFS
 
Guests:
 
Traci Gusher, Leader AI and Enterprise Innovation KPMG
Chirag Mehta, Product Leader Google Cloud
Jesus Mantas, Chief Strategy Officer GBS, IBM
Malcolm Frank, President of Digital Business, Cognizant
Mike Small, CEO Americas,Sitel
 
 
 

Posted in: Cloud ComputingDigital OneOffice

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There is nowhere to hide in the Pandemic Economy

September 20, 2020 | Phil Fersht

Posted in: None

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As the industry churns Tom Reuner returns

September 13, 2020 | Phil Fersht

There aren't many more exciting professions to be in these days than the analyst industry... you're right at the heart of all the key industry stakeholders absorbing a level of disruption, volatility and confusion we'll likely never experience again (we hope).  When everyone is stuck at home fretting about their futures, what better to do than talk to analysts plying their trade unraveling the current scenarios?

As an analyst firm, we need analysts who thrive in this scenario, with the experience and foresight to help us define our Vision2025, who understand this technology convergence of the hybrid cloud and containerization with data and digital technologies, all made possible by automation, AI, digital workers and - most importantly - people.  So when my old friend, colleague, and fellow Tottenham sufferer Dr Thomas Reuner agreed to return to the HFS family after a two-year sojourn in the AI software world, we knew we had the right person to lead our tech services vision...

Tom - so why did you choose to come back to the analyst community?  What really makes you get up in the morning?

Funny that you ask that, Phil. I am definitely not a morning person. If anything, I am intolerable in the morning, just ask my long-suffering lovely wife. On a more serious note, what drives me (professionally) is to understand technology evolution and how it helps organizations to advance their delivery of services. I get a real kick when I see in meetings and projects that I can help clients to better understand the dynamics of the market and achieve their strategic objectives. Working with the brilliant folks at arago has helped me to gain a more nuanced understanding of all the issues around AI, but also to appreciate more the many challenges and opportunities that innovative startups face. As such, I hope I have gleaned a much more rounded view of the industry. But deep down I always had an inkling that I would return to the analyst fold at some point. When you guys came knocking at my door that point came perhaps earlier than I expected, but being an analyst has always been my passion, so I didn’t have to think too long to make up my mind.

It must have been quite the experience working for an AI software provider during the hype-overload phase and then to experience the sobering reality of COVID where the rules of the game went out of the window.  Can you share what you learned from it all?

arago is a unique organization, both in terms of a highly differentiated technology but equally culturally. Working with one of the best development teams in AI has given me a much better comprehension of where the development of AI is really at. Not surprisingly, there is a fascinating life beyond just Machine Learning and Chatbots. However, on the negative flipside, being at the cusp of innovation that can’t be squeezed into pigeonholes provides significant challenges in engaging with the broader market. All too often we were asked “how are you different from RPA?”, “how are you different from Machine Learning?” And even where we made progress in discussions, we often got “show us the magic” as if the automation platform was a smartphone that can transform processes in a similar way to manipulating pictures.

The sobering reality of COVID was intriguing in many respects. On the one hand, the notion of a Digital Workforce took on a completely new quality as companies never really envisaged that employees literally couldn’t get to work. Thus, arago’s end-to-end automation became a have-to-have as you tend to call it. On the other hand, arago was at the forefront of providing a technology solution to trace COVID that would be interoperable between many countries. It was a rollercoaster ride starting with a groundswell of positivity as everybody wanted to engage with us but culminating in informal pressures and fickle politicians derailing much of the brilliant work my colleagues had done. I suppose much had to do with the various COVID apps being seen as a key to getting access to healthcare systems and consequently contracts. What saddened me about this journey is that the arago team worked pro bono on all of this and our CEO Chris Boos worked tirelessly day and night trying to get the project off the ground while engaging with the public about the implications and merits of the approach. To witness the headwinds and some of the public discussions on all of this makes one only more cynical. If anything, the experience has reinforced for me the importance of not losing sight of informal dynamics when analyzing the industry.

So where next for intelligent automation?  Will we see the phoenix rising from the ashes?  We talk a lot about the "have-to-have" economy at HFS... how much of this is really a have-to-have? 

I have fond memories of the early days of Intelligent Automation. It was a small community and we all had no clear idea of where the development would be heading. At least for me, the context was always about how do we progress to end-to-end automation and how can we decouple routine services delivery from labor arbitrage. To help clients on their digital journey, collapsing the many siloes was top of the agenda. Yet, the current hype around RPA appears to be confining the goals more and more to task automation and employee productivity. And in my view, the discussions on “Hyperautomation” are not helping either because they are re-enforcing an RPA-centric view of the world.

Therefore, we should re-focus the discussions back to the outcomes we had in mind at the outset, take a more holistic view and focus on how we finally can scale deployments. If we succeed with that you could argue we would see a phoenix rising from the ashes, but I am not holding my breath. The breath-taking valuations for some of the RPA providers are masking many of those discussions. At the same time, the blurriness as to what constitutes AI is adding to the confusion.

As with the discussion on COVID, Intelligent Automation and a Digital Workforce should be have-to-haves to guarantee business continuity in these pandemic times where organizations have to plan for the unknown. But talking to clients they increasingly realize the limitations of RPA and that we need new approaches to really succeed with a Digital Workforce. It is here where I see HFS continuing to be the leading authority of guiding the market.

And how much will enterprises depend on services to make their have-to-haves happen for them?  As you scope your research agenda across the tech services domain what areas are you going to cover that will help HFS clients and readers?

You always give me the easy tasks (laughs). Services remain, or more precisely, build the cornerstone in most organizations as they are accelerating the journey towards the OneOffice (or call it truly digital organizations) and are trying to find ways to survive these pandemics times. But crucially, success is about the outcome, not the technology itself. As such, the research agenda will be aligned with the various HFS frameworks, the OneOffice being the most relevant one. With that in mind, it is about how best to orchestrate and configure cloud offerings as the market is shifting from multi-cloud to hybrid-cloud. Crucially, this includes change agents such as RPA and AI as legacy environments have to work together with all those innovations. As we are touching on the change agents, of course, Intelligent Automation and AI will remain close to my heart, but I hope I will bring new insights to the discussions having benefitted from working with the brilliant folks at arago. In the context of applications, we are likely to expand our coverage on distributed agile. What are the best practices to make it work in complex engagements, including outsourced engagements? Similarly, looking at our coverage on testing, I could imagine focussing more on the testing of innovation, especially around the big change agents. I hope you can see, Phil, that this is more about aligning our research to our sweet spots rather than reinventing the wheel. But as I have the privilege of working with a hugely talented team, I am sure we will be able to move the goalposts at least a bit.

Now you're officially an analyst veteran (hehe), what do you see next for the analyst industry?  Are we still going to get the same old vendor grids and turgid vendor-driven messaging, or will we finally see a change in how the industry consumes research and engages with analysts? 

Thanks for reminding me that time is flying, Phil. If I am honest, I am seeing at best a marginal change in how the industry deals with the wondrous world of analysts. Too many AR folks spend the majority of their time dealing with Magic Quadrants, notwithstanding any other grids or activities. We have seen more consolidation of analyst firms, yet we haven’t really seen new firms with new ideas breaking through. There are many wonderful analysts out there, but if you look at the industry, I would argue it has gone a tad stale. Smart AR folks reacting to that by working more with individual analysts. Take some stalwarts like Gurvinder Sahni at Wipro, he is building deep relationships but then orchestrates those relationships according to his requirements. And if I take my experience on the vendor side, which represented more innovative startups, I was struggling to get relevant advice. The guidance was often templated and you were encouraged to engage with ten other analysts to glean relevant insights. My “favorite” piece of advice, was: “Tom, you have to reinvent RPA for your space”. But I would love to see new firms emerging as this is the most challenging but also the most intriguing time to be an analyst.

And finally, Tom, what will you do to set your own research apart as we venture into this murky future ahead?

To be honest, the quality of my research will always be in the eye of the beholder. But I would hope by leveraging HFS’s vast network of buy-side organizations and by continuing to build deep relationships with stakeholders, I can provide value to my clients. It was always the collaboration with some of those outstanding industry veterans that has helped to shape frameworks like the Intelligent Automation Continuum. Folks like Boris Krumrey at UiPath and Wayne McQuoid at Credit Suisse are top of the tree. By exchanging ideas, challenges, and working together on projects, the most relevant research pieces have come up. You keep challenging me to revamp the Continuum and revamp our IT Services research. To do that I really look forward to engaging with many of the brilliant folks in our network!!

Well it's terrific to have you back in the HFS family Tom and looking forward to hearing your new ideas

Posted in: IT Outsourcing / IT ServicesDigital OneOfficeIT Infrastructure

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My five learnings leading a company through a pandemic: Just be human, be smart and you’ll find your way

September 06, 2020 | Phil Fersht

Having founded a successful analyst firm 10 years ago, nothing seemed to derail us from continuous growth… every obstacle could seemingly be overcome by throwing smart people at it or investing time with your clients.  Net net – if you were good at what you did and had some smart people who believed in what you were doing and saw your value, you would always find a way.  You were always a safe bet, a sure thing, something to invest in for the future. 

You could ride out prosperous times and tough times because you influenced sales cycles and validated multi-million (even billion) dollar decisions. Whatever was going on in the world, you thrived off the one thing that kept the wheels on everything:  certainty.  Enterprise leaders, investors, politicians alike all banked on one thing – they had a reassuring view of the future, of where things were heading.  They could always make decisions to keep pushing in the right direction.

We’ve been given the worst corporate disease possible:  Uncertainty

Then along came something no one accounted for which caused the one thing that can destroy the status quo:  uncertainty.  Suddenly everyone is unfamiliar and uncomfortable with their environment – their certainty has dissipated and the rules for conducting business have gone out of the window.  Unless your business is something they have-to-have you may find yourself out in the cold so quickly by the time you realized your perilous position, it may already be too late.

And the scariest part of all this is the immediacy of your potential demise.  If you’re not Zoom, Microsoft, Amazon, Nintendo, Instacart or Occado - who have immediate opportunity to exploit the situation – your whole business model is immediately wracked in uncertainty.  Whoever you may be.  How do you sell the same stuff when you can’t meet your clients, when many your key staff are surely too busy home-schooling their kids to commit to extra work, when your clients’ bosses are suddenly demanding things form your clients that don’t include your products or services?  What do you do if you are suddenly deemed irrelevant?  

As much as pandemics suck (yes, they really bloody do!) they give you a once-in-an-era chance to make changes you never thought possible, or never even realized you needed to make.

Five things I have learned about leading in these times:

  1. Moving everything to digital is not some crazy expensive investment – it’s the best thing you’ll ever do to your business. Seriously, can we please stop this bullshit that “digital transformation” is some insanely expensive cost that is just too much for your firm to handle. Shifting your core products and services to digital results in them being cheaper to deliver, cheaper for your clients, more efficient, faster and give you much, much better data to make better decisions.  If you can’t move some of your services to digital, then they were probably ready for the analog scrap-heap in any case.
  2. Choose your team you need to take with you on this journey – and do it fast.  This is where it gets hard, but deep down you know what you have to do.  This is probably the only rare time you can make painful – and sometimes unpopular - decisions to shape your business around your digital present and future.  Now you can make decisions and take actions that could have resulted in a rebellion pre-March 2020.  Just make the changes and move on fast, you just gotta do it - and be honest about them.  Sure, they’ll probably paint you as one huge asshole and write something about your “toxicity” on Glassdoor, but you know you made a painful - but professional - decision – and so did they deep down. 
  3. Invest in trust with your chosen team. The old rules about managing people are all over the place.  Once you have decided who you need and who you want, this is the motley crew that is going to get you through this.  So don’t just select the people you know you have-to-have, select those who will be up at 3.00 am with you thrashing out proposals and executing for your clients, listening to your quasi-insanity as your turn over every damned stone to keep the wheels on into 2021… Just make sure you have people who know what they have to do, who you trust, who trust you, who are on this road to somewhere with you.  This means you will need to share a level of transparency with them which made you uncomfortable in the past.  This means the old metrics need to be sacrificed for a simple “we just need to get this shit done”.  That’s what real trust is all about.
  4. Family comes first, business second. Then business wins.  These times will define you forever as a leader. This isn’t about being nice, or kind, or even generous – this is about being human.  If anything good came out of 2020, it’s the value of our families around us as stabilizing forces and responsibilities. We may be breadwinners, but we are also mothers, fathers, daughters, sons, sisters, and brothers.  We have to make every possible accommodation for our fellow workers to look after aging parents, home-school their kids, support their spouses, etc.  Clients can wait an extra day or two if they need to – they have similar pressures and will understand.  The old 9.00-5.00 is pretty much gone for now… so trust your team to prioritize family needs and find the time later to finalize their critical work.  We all find the time when we are committed, when we feel trusted, when we feel good our family is finding their way through this with us.
  5. Manage extreme emotions with humility and forgiveness. If you are not flying off the handle in this environment on the odd bad day, you are definitely not human.  We are all mentally drained, we are all operating at the edges of our tolerance, and emotions are frequently being stoked.  But that’s not all bad – we get to see the human side of each other a lot more than we ever expected. And arguments are not always bad if we resolve them – that what families do, and that’s what colleagues can do too… just be cognizant that people are human and we’re just seeing everyone function with less of the emotional filters on. I guarantee when this is all over you will have better and closer working relationships than you ever thought possible.

Bottom line:  Staying relevant means staying energized, staying committed, and being damned smart.  And being very human.

Roll on 2021 when we slowly pick up the pieces of 2019 and before, coupled with the experiences of 2020 which changed the world ever (and are still not over).  There are new rules for almost everything: how we treat our clients, our staff… and most importantly our families. And there are other changes emerging we have to figure out, such as how we shape our approach to politics, to endemic racism, to inclusion and diversity, to climate change.  My main hope is we are just more human, more pragmatic, more tolerant, and more transparent as our future unravels around us… there is already enough for our aching brains to handle. 

Peace out =)

Posted in: HR Strategy

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Without a Virtual OneOffice Organization, you won’t survive this Pandemic Economy

August 30, 2020 | Phil FershtMelissa O'BrienSarah Little

OneOffice is no longer a pipedream – almost overnight it has become a “have-to-have” business environment to operate and compete effectively in this virtual Pandemic Economy.  There is no waiting around for things to revert to the analogous way we used to run things in 2019.  Especially when new HFS data shows only 37% of the Global 2000 intends to revert back to the same office-based environment in the future.  If you can survive on a third of your client base in the future then good luck to you!

Creating a true OneOffice experience is the very foundation of operating as a digital or virtual organization, where there are no stovepipes, no silos, no breakpoints that prevent processes functioning end-to-end, and data to flow freely across the organization.  A virtual OneOffice experience will give you a huge chance of thriving in this new reality, provided you have figured out how you are pivoting your business.

Digital is the only language operations now understand

OneOffice is where automation becomes a native competency, where human performance is augmented by unleashing creativity and personal interaction, where the immediacy of data creates insights to support decision-making that can make or break the firm. In fact, if you can’t operate your organization as one integrated unit where data flows freely back and forth across your process chains from your customers to your employees, from your front office to what you used to call your back office, then you probably won’t survive much longer in today’s brutal Pandemic Economy, where digital is the only language operations now understand.

 

Click to Enlarge

The Virtual OneOffice Organization is the foundation of the virtual workforce that encompasses both physical and digital entities

Our Virtual OneOffice Experience is the foundation of the ‘virtual workforce,’ where automation tools augment the employee’s digital capabilities and the workplace becomes a “plug-and-play,” work-from-anywhere scenario . It is all about creating touchless, frictionless digital experiences and connecting the front and back offices to facilitate them within a virtual setting.

Increasingly important to HFS’s OneOffice Experience is that any business strategy must align and equally consider both employee experience (EX) and customer experience (CX). Even more so in this virtual environment, the lines blur between who the customer is and who is servicing the customer. Leaders need to focus on the positives they will glean from this Paradigm Economy by putting customers’ needs at the core of their strategy.

Focus on human experiences to unleash people and drive business results

There is an evolution of thinking about experiences underway, from the traditional thinking in siloes --- customer, partner, and employee --- to a more holistic human experience-focused strategy. Based on the premise that human connections generate satisfaction and loyalty, aligning the goals and experiences across all of your company’s stakeholders will serve to create an impact on business growth and success.

OneOffice Experiences require EX and CX alignment to elevate the human experience

While the concept of ‘CX’ has had most of the fanfare in recent years, your employee experience is just as important and inherently tied to CX (whether or not you’ve made efforts to align them.)  The HFS Virtual OneOffice Experience is all about how customer, partner and employee experiences are coming together to drive a unified mindset, goals and business outcomes.  Organizations need to ensure they find the right balance of optimizing the use of emerging technology with a robust business case to improve CX to the long-term benefit of the business.  This means getting the right information flows in place, eliciting strategic advantage and ensuring exceptional CX to drive loyalty and growth.  The OneOffice approach centers on the optimization of the all human experiences involved in an enterprise ecosystem and in improving the use of technology in support of these experiences.

The more connected workers are to their organization and its values, the more empowered they are to support customer and partner experience

The OneOffice approach has become even more important as companies navigate these new virtual workplace experiences with blended physical and virtual environments. Technology change agents that augment and support people can be the glue that connects employee and customer experience, by making data and insights easier to access and decisions easier to make.   When so many decisions are made based on emotion, it's critical to ensure that people have the best data and information aligned to the shared values to support decision making.   The more connected workers are to their organization and its values, the more empowered they are to support customer and partner experience. 

The Bottom Line:  OneOffice is first about your talent and your business model.   Then it's about how successfully you deploy digital technologies to make it all happen

OneOffice illustrates what true digital transformation is all about – pivoting your business model around your customer’s needs (and anticipated needs) and ensuring your whole organization designs its processes right across the operations to achieve these goals with your staff motivated by the common outcomes. This means making similar investments and priorities to ensure your employees are as engaged digitally with your organization and your customers.  You can't get away just focusing on an exemplary customer digital experiences if your employees are not embedded into the same experience.

OneOffice is not just about improving engagement and productivity, but fundamentally about ‘unleashing people,’ and enabling passion and creativity for a new world of work where different skills are required.  At HFS we have categorized these skills into the following:

Being a Virtual OneOffice Organizaton will give you a huge chance of thriving in this new reality.  It's about pivoting your desired business model around your people an bringing them all together with your customers and partners in one virtual environment.  

Posted in: Digital TransformationDigital OneOfficeIntelligent Automation

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Surviving to win in this “Have-to-Have” Economy

August 27, 2020 | Phil Fersht

Gone are the bells and the whistles.  Gone is the sugar-frosting… even that lovely cherry on the top.  Those are the things that only appeal when your organization’s core is not under threat… because addressing that critical core of the business is boring, it’s stressful, and it was not great for your career to expose what was truly dysfunctional in your organization.  Now all the frilly paraphernalia has been cast aside, and we have no choice but to focus 100% on that core.

Why we didn’t address the core and focused on nice-to-haves

Having to deal with critical issues like security, making processes flow and work better, helping train staff to stop doing things the same way they have for 30 years, addressing why your service providers never deliver any of the stuff they claim they do on their PPT slides, asking difficult questions why your firm spent millions on software they simply failed to deploy… those were the things we knew deep down we needed to do, but most the folks around us just didn’t care, and would have thrown us under the bus if we'd agitated for real change.  So we did the safe thing… pushed initiatives that promised some incredible future value as long as we threw around some cash and made everyone look good.  Plus, the steak dinners with decanted wine always helped… After a while, we just convinced ourselves what we were doing was critical even if our firm didn’t really have to have any of it.

Addressing the core of your business is the only thing to save yourself... and your business

We have absolutely zero choice but to address these two actions to survive and win our in today's environment:

  • Finding our “bottom” and devising a financial plan to survive the cross-winds of recession. As much as we can play with sexy terms like resilience, we cannot avoid the one reality of surviving what were are currently experiencing – having a decisive financial plan to survive.  Without it, we’ll continually panic and flounder and never be able to attack our markets with a game-plan to come out of this on top.
  • Finding that chink of light to guide our organization to the market leadership position we crave. Once we've achieved a financial plan to survive, we are now in a position to get focused on the services and products customers simply have to buy, because they have no choice, as their cores are under threat without them. That means focusing all our investments on making damned sure that happens.

The Bottom-line:  Identifying your customers’ have-to-haves is the only path to follow in this market, but only once they know what they are!

It’s one thing to identify what our current customers (or prospective customers) have to buy from us, but it’s another to make sure we are not wasting our valuable time and resources on those who haven’t yet worked out their plan to survive this market.  There are still many organizations out there who are still scrambling to fathom what is going on, holding out some hope for a magical imminent V-shaped bounce-back.  As lovely as that prospect is, holding out for that miracle will likely end in tears.  What’s more, you are also a terrible customer, as your firm is too nervous to invest in anything serious. 

So find your bottom, find your chink of light, then identify your customers who simply know they have to buy what you are selling.  It really is that simple.

In Part II we’ll get into what customers have-to-have.  You know you have to read it =)

Posted in: Cloud ComputingDigital OneOfficeIntelligent Automation

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Time to get taught... by Delaporte

August 10, 2020 | Phil FershtSarah Little

Thierry Delaporte, the new CEO of Wipro Limited – accompanied by colleagues Milan Rao, Gurvinder Singh Sahni, and Laura Langdon – gives HFS the story behind the story as he sets sail with Wipro.

 

Strong operator... tough decisions... aggressive changes. That's a triptych summary from my recent post which drives into Wipro's bold appointment of industry titan Thierry Delaporte as CEO. The course now turns from firm to fluid with the story behind the story from Thierry himself – who guides us on his journey of navigating north stars, surprises, principles, and people. And breaking walls...

I once called for a ruthless CEO with teeth at the helm here, and while I stand by that reckoning, I do believe we've met the human in the middle of the sea change... 

Phil Fersht, CEO and Chief Analyst, HFS Research: Thanks very much, Thierry, for getting some time with us today; I know you’ve only been in the job, what is it, like, two or three weeks?

Thierry Delaporte, CEO, Wipro: Three weeks.

Phil: Three weeks! So, it would be great to hear a bit more… I learned a lot more about you, when you took the job, and the one thing I learned a lot was that you’re a very international person, you’ve lived in a lot of different countries and experienced a lot of different cultures – it would be great to hear a bit more about yourself, and where you came from, background, and then your career. Did you always intend to do a job like this? And was this your expectation, in recent years?

Thierry: Okay, sure. So, you’re right, … although my accent keeps reminding everyone I’m French, I’m probably one of the least French people you can find in France. I spent most of my life abroad. If you look at my career, 25 years, I’ve spent 21 years of those 25 years abroad. I lived in the UK; I lived in Switzerland, in Zurich, in Spain. I lived in Singapore and in Sydney, Australia. I lived in the US for 15 years, and, every time, my wife and my kids were with me, so four kids, a wife – incredibly resilient, as you can imagine, following every new adventure, with a lot of energy and passion.

And, frankly, you know, I was known at Capgemini as being one who’s really tried, pretty much, everything. I’ve been a finance person… Actually, I started as a member of the Internal Audit team for two years, and then moved as a CFO of subsidiaries in different continents, and then [moved on] to cover sales. I was the Head of Sales, at some point in time, for about a third of the group of Capgemini, which I’ve never seen a finance person becoming a salesperson [smiles], and then managing operations, in different places, or different businesses across the organization. So, I’ve been in consulting, I’ve been in outsourcing, and I’ve been in the apps world of Capgemini. And then, from that experience in operations, spent time in running a business in BFSI, before coming back to Paris to be Chief Operating Officer of the group.  This year, I completed 25 years with Cap Gemini. It was an amazing ride, but it also got me thinking that it was time to pursue new adventures outside the organization.

 

“One of the lessons I’ve learned in life, Phil, is that you must let life surprise you. The only thing you have to do is don’t miss opportunities.”

 

I don’t think you can ever say that you were born to be a CEO. One of the lessons I’ve learned in life, Phil, is that you must let life surprise you. The only thing you have to do is don’t miss opportunities. So opportunities will come, and many will surprise you, but just not saying no is a good enough decision to make, in order to not miss these opportunities that come. And so I try to apply this in my life.

Phil: Excellent. So, as you looked at opportunities, and you obviously saw what was happening with the economy and the pandemic, etc., and then the Wipro thing came up, did you immediately think, “Yes, that’s the one for me”? Or was it kind of a long, drawn-out thought process, on [moving] from Cap to Wipro. You were at one company for a very long time, and the cultural shift…. Was it an immediate decision, that you thought, “This is what I want?” Or did it take some time to cultivate with you?

 

 “So, I’m going to tell you in full transparency what happened.”

 

Thierry: So, I’m going to tell you in full transparency what happened, Phil. I made up my mind mid-Feb and informed the CEO and the Chairman of Capgemini.

 

“I had the plan to sail transatlantic, from Newport to Brittany, in May. So that was my plan. I had the boat, I was going to do it with a friend of mine…”


My immediate plan was to take a six-month sabbatical – I haven’t had a single day sabbatical since my career started, so this was going to be my “me time.” And I’m a sailor ­– I had the plan to sail transatlantic, from Newport to Brittany, in May. So that was my plan. I had the boat, I was going to do it with a friend of mine, and that was the plan that I had sold to my wife.

 

“But then, literally, days after I went on sabbatical, my phone started to ring.”

 

But then, literally, days after I went on sabbatical, my phone started to ring. And it’s very interesting, and more of a surprise, because there was no announcement of me leaving. It was just being on sabbatical, that, actually, the industry knew it rapidly. I was starting to get calls on opportunities. And I knew that if I was going, it was for something I wanted to do. And I was not in a hurry. I really wanted to make the right choice.

 

“And I knew that if I was going, it was for something I wanted to do. And I was not in a hurry. I really wanted to make the right choice.”

 

I’ve known Wipro for twenty plus years. As I said to the team several times, I’ve been competing with Wipro many times. I won often – I lost often, as well. And so, I’ve really learned to respect tremendously this brand, the people, and the success of this company. I still remember the time when Wipro was still a rather small company, but growing every year at an exceptional pace.

 

“I don’t know any other company that has such a sense of purpose, where it’s not only about delivering the numbers… The fact that this is a company where 67% of its profit is going to philanthropic activities is very much talking to my view of what capitalism should be.”

 

Then I had conversations with Founder Chairman Mr. Azim Premji and Chairman Rishad Premji. This is when I felt this is a unique company, because I don’t know any other company that has such a sense of purpose, where it’s not only about delivering the numbers – it has a much broader ambition. The fact that this is a company where 67% of its profit is going to philanthropic activities is very much talking to my view of what capitalism should be.

 

“And then I felt, ‘Okay, this is an incredible company.’”

 

So I went and met both of them… actually, I started with three hours with Rishad, and it was really an outstanding, natural, easy connection between us, and then I met Azim Premji, and then several members of the board. And then I felt, “Okay, this is an incredible company.”

 

“And so, with humility, I would say I’m convinced – I’m seriously convinced – that there is a good match, and that we have a wonderful page to write. And so then, the decision was made – everything based on principles.”

 

I feel that the challenges that this company has, I can really have an impact. And so, with humility, I would say I’m convinced – I’m seriously convinced – that there is a good match, and that we have a wonderful page to write. And so then, the decision was made ­– everything based on principles. It’s people, of principles agreeing on things, and I think we were very aligned, culturally very aligned, on many, many different fronts.

Then I started to engage with the team before July 6, which is the official day one. I met all the members of the Executive Committee, I spent hours with Rishad, and engaging with Saurabh (President and CHRO) connecting on many different fronts, so that, you know, when I actually started, on day one, I was immediately hitting the ground. The Executive Committee has 17 people. By the time I officially joined, I knew all of them and what they did. So, it was a really great start.

Phil: And obviously at an interesting time, Thierry. I’m getting tired, talking about the shock and the change. I think what’s happened has happened – now we’re in a new world, and we just have to play by different rules and expectations. Obviously, digital has gone from being aspirational to something that is suddenly forced upon us. And we have a very different economy; one that’s not going to change any time soon. So, does this level the playing field? And is this an opportunity for Wipro to get ahead of the market? Do you feel that everybody has kind of a clean slate? Or do you think this is just going to be a very challenging time, and we just need to hunker down and see through the next year or two?

Thierry: So, there’s no doubt that we are at a moment of our history where you cannot imagine that what we’ve been through, over the last five months, will have no implications. I believe that what we’ve learned over the last five months is that, in a context where you are suddenly not able to connect physically with people every day, that there is a need to connect always more; connect more with your clients, connect more with your employees. In the context where, basically, it’s no longer about going and visiting, but connecting.

 

“The dimension of trust is more important than ever, and I am convinced that one of the implications of this crisis, going forward, is that the length of relationship will matter more than ever.”

 

The dimension of trust is more important than ever, and I am convinced that one of the implications of this crisis, going forward, is that the length of relationship will matter more than ever. So I think, more than jumping from one partner to another for 3% of savings, I think our clients will value more than ever the value of commitment and long-term partnership. I think it’s true for our employees, as well.

I think that we’ve also seen that companies that have not moved fast enough in their digital agenda have been struggling, and I think they didn’t expect to have such a brutal event confronting their own strategy. I think the reality is that there will be an acceleration of the rotation of the offerings, of the rotation to digitally transform organisations across industries.

So, yes, it’s going to change things for us, because what it means is that your legacy offerings, I would say, the more traditional offerings of the past, are going to shrink even faster. You need to accelerate your rotation to the new, because this is where the investments are going to happen. So, I absolutely agree that, yes, I feel that in arriving at this point in time, I have an incredible opportunity to reset the stage, somehow, for our business, and make some bets.

 

“I am a great believer in strong partnership. I have built my success, over the last years, in focusing on a few strong partnerships, and it has paid off multiple times. And so, I’m convinced that it will be even more important in this new world.”

 

We are going to make some bets, I cannot tell you which ones, you know, this is what I’m working on right now, to define where I want to make the bets. I believe we will see efforts, or focus, on simplifications.

We will see focus on rationalisation, on consolidation, to build bigger partnerships. I am a great believer in strong partnership. I have built my success, over the last years, in focusing on a few strong partnerships, and it has paid off multiple times. And so, I’m convinced that it will be even more important in this new world.

Last, you know, looking at the market, but also looking at our employees… when I look at our employees, this is our asset. Right? This is what makes us different. It’s very weird, to start with, because I have no clue how long I will have to wait before I can actually physically meet people from Wipro. You know? They might wonder if I’m a real person, or if I’m just a hologram [laughs].

 

“I think connecting with our people will be my obsession for the next weeks. One of the beauties with Teams or these tools, is that you can actually break a lot of the hierarchy. Everyone on the screen is equal sized, and there’s no one ahead with people standing in the back. It also breaks a lot of the walls; walls between one office and another, or a business unit and another, or a language and another. And so, it’s wonderful, because you really can now drive a lot more alignment. So, I will use this new world to the benefit.”

 

I think connecting with our people will be my obsession for the next weeks. One of the beauties, with Teams or these tools, is that you can actually break a lot of the hierarchy. Everyone on the screen is equal sized, and there’s no one ahead with people standing in the back. It also breaks a lot of the walls; walls between one office and another, or a business unit and another, or a language and another. And so it’s wonderful, because you really can now drive a lot more alignment. So, I will use this new world to the benefit. It will never be the same, I think.

You will never be able to ask your employees to be at the office five days a week, if this is not what they want. But I think, equally, it will not be a time where, everyone is working from home every day, because you will miss a lot, in terms of connection, in terms of engagement. But I think it’s going to be a world that requires fluidity and agility; which is fine, I’m very comfortable in this environment.

Phil: Yes. And, to me, a new CEO within three weeks? This wouldn’t have happened, if we were back in the analogue days, right? It would’ve taken probably six months or something. [Laughs].

Thierry: [Laughs].

Phil: So...

Thierry: Phil, today… Today, I have spoken to six clients.

Phil: Wow =)

Thierry: And since day one, I have spoken to 35 clients already. 35 clients. When I say spoken, it’s basically I have met 35 clients. And, you know, I’m just increasing the speed. I’m engaging more than ever. If I had to jump on a plane for the meetings I have had today, it would have taken me more than a week because of the different locations.

Phil: And if I could tell you how our business as a research company has changed, it’s beyond belief, in terms of the speed we can get things done, the extra time our analysts have, because they’re not traveling all the time to deliver work. And the closeness we’re getting with our clients. This was terrifying for a couple of months, Thierry, and then we realized we have to move everything we have onto a digital setting. But once you get ahead of this, and embrace it, and realize this is how we do business, the benefits are just astounding and surprising. And I’ve been reading and hearing about entire transitions now being done on Teams. I mean, you can do a hell of a lot now that you didn’t realize you were capable of, without physically being with people.

Thierry: I absolutely agree.

Phil: …this is a huge, huge gamechanger in how we operate.

Thierry: Agreed, Phil.

Phil: Right. So I’ve got one last question, then. If you could have one wish for the industry, in the next couple of years, what would that be? 

 

“…the beauty of our industry is that our assets are our people – our enabler is technology.”

 

Thierry: One wish for the industry. Continue to maintain the balance between technology and people. So I think, you know, the beauty of our industry is that our assets are our people – our enabler is technology. And my wish is that we continue along this line, and we don’t take it for granted, or we don’t go in a world where technology replaces talent and people, because I think we would take the wrong direction.

Phil: Very good. That was excellent, Thierry, I really appreciated the time… and I know our audience will when they read this.

Posted in: Business Process Outsourcing (BPO)IT Outsourcing / IT ServicesDigital OneOffice

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You’ve got to start with the customer experience and work backwards to the technology

August 08, 2020 | Phil Fersht

I don't think any singular statement better described the world of technology in the last three decades:

"You’ve got to start with the customer experience and work backward to the technology. You can’t start with the technology then try to figure out where to sell it." 

-- Steve Jobs 1997

Posted in: Customer Experience ManagementCustomer-Engagement

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The Umph behind Humph: after 15 months in the Cognizant hotseat, Brian Humphries dives deep on the pace of change, the lessons learned... and much more

July 23, 2020 | Phil FershtSarah Little

Brian Humphries, CEO of Cognizant since April 1, 2019. In an interview with HFS CEO Phil Fersht, Brian moves beyond the business talk and straight to the deep end – the personal, the humble, the lessons learned – and the stakes set firmly in the ground.

 

I wrote a detailed business piece on Cognizant’s 2019 leadership change after losing its edge in the market: The Life of Brian: Prettying up a baby that’s got a bit ugly. One of our readers, Mike N, commented, “Don’t weep for Brian. I for one believe his hiring reflects the vision of a Cognizant and that he has the perfect timing and opportunity to shake up the old guard and culture. New day dawning!”

True indeed, but to now quote myself from the same piece, “When we’re asked what we think of the new CEO, our honest answer is we don’t know. He has, for all intents and purposes, kept a low profile externally, instead focusing his energies on extensive liposuction internally.”

I’ve managed to breach Brian’s low-pro firewall, finding a leader willing to engage beyond the business talk and go straight to the deep end – the personal, the humble, the lessons learned – as well as the stakes set firmly in the ground…  So, without further ado, let’s meet Brian:

Phil Fersht, CEO and Chief Analyst, HFS Research: Good afternoon, Brian. It’s great to get some time with you again today. I want to keep this conversation a bit more informal, and a little bit about you; not just about Cognizant; Did you ever expect to be doing this job today, when you set out, many years ago?

Brian Humphries, CEO, Cognizant: No, I did not. I’m from a relatively humble background, I would say, growing up in Ireland. I can’t say I started off wanting to be a CEO, Phil, because I probably didn’t have exposure to large MNCs until my early 20s. But I started working at a company called Digital Equipment Corporation, or DEC, which was acquired by Compaq and later acquired by HP.

So, for the first 18 years, I was there, and, subsequently, moved to Dell, became the President of the Enterprise Solutions Group there. I was most recently in Vodafone as the CEO of Vodafone Business, prior to joining Cognizant. So, I can’t say I’ve had a fully orchestrated career.

 

“I certainly made commitments along the way, in terms of moving internationally and throwing myself into the deep end of the swimming pool, more than once…”

 

I think, as the years went by, I had figured out paths of success. I certainly worked and invested in my career. I certainly made commitments along the way, in terms of moving internationally

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Posted in: IT Outsourcing / IT ServicesOutsourcing Heros

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