HfS Network

Monthly Archives: Apr 2017

By golly, HfS hires Ollie...

April 22, 2017 | Phil FershtOllie O’Donoghue

From staring at his fish tank to working on an IT service desk... to becoming an analyst, then ending up at HfS.  Now that is unlearning personified for Ollie O'Donoghue (see bio), our latest recruit covering the IT services landscape from the UK.... so let's learn a bit more about this curious fellow...

Welcome Ollie!  Can you share a little about your background and why you have chosen research and strategy as your career path? 

Hi Phil! My career started in IT Services after I graduated from University with a History degree. Luckily for me, by the time I graduated, IT organisations had become more focused on service as opposed to technical ability – of which I have none.

I joined a large public sector organisation and moved around to a few different positions in the three years I was with them. I thoroughly enjoyed my time there, but my real passion lies in research, so I jumped at the opportunity to join an organisation as an Industry Analyst covering IT services. After a year or so, I made the jump to Head of Research and Insight which allowed me to develop and drive the research agenda. 

It was around this period I started on the IT Service speaker circuit. At the time, the industry was particularly concerned about the impact of automation, so I tailored my presentations to bring data and research to the party which, at the time, was being overrun with sensationalism from the mainstream media. Finding good data and sources for my sessions brought me into contact with HfS who, unlike some of the other analyst firms, were mirroring what I saw taking place in the industry. 

Why did you choose to join HfS... and why now?

As they say, all good things come to an end. Covering the service and support industry was great fun, and I made some amazing friends and contacts. But after a few years, I felt the need to expand my coverage to encapsulate a lot of the other key areas and trends at play in the wider business landscape.

When it came down to it, moving to HfS was an easy decision, I just asked the question: Do I want to join the Blockbuster of the analyst industry, or the Netflix?

HfS have been busily disrupting the industry for years with their freemium model and high

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Posted in: IT Outsourcing / IT Services



Revisiting the Intelligent Automation Continuum

April 21, 2017 | Tom Reuner

Being a trained historian, I was delighted when on a recent HfS webinar on “Beyond RPA”, I got dissed by participants for a slide that I had drawn up four years back for a similar webinar, albeit for a different organization. When I say being drawn up for a webinar I really mean it, as I would never have expected that this slide would still be in use today albeit in expanded versions and some refer to it as an industry model. And to make my smile even bigger, I revisited those old slides and the title at the time was:” Beyond the Hype: Assessing the Evolution of (Robotic) Process Automation”. You can see the original slide above. As HfS is all about facilitating discussions among the industry’s stakeholders, I am truthfully delighted for all those questions and challenges. That being said, it is time to take stock where the industry is actually at!

Why are we still talking about RPA?

On the danger of sounding like a broken record, we have to stop confining discussions on service delivery to the topic of RPA. Last year I wrote a blog that summarized many of those arguments. Yet, despite a lot of noise in the industry we are getting pulled back and end up discussing RPA time and again. Granted, as nothing is defined, for many RPA is just a placeholder for what HfS would term Intelligent Automation. But beyond semantics, why are we paying lip service to broader notions of automation such as cognitive computing, AI, and self-learning as well as self-remediating engines? Service delivery is not just about business processes. If HfS’s contention about the journey toward the As-a-Service Economy and the OneOffice has any merit, we have to overcome those organizational silos and mental stovepipes. But we also urgently need to expand the set of stakeholders educating and talking about automation. While we have to give a lot kudos to the RPA providers and consultancies who singlehandedly educated the market, the reluctance of the IT juggernauts to enter those discussions is leading to distortions of the direction and dynamics in service delivery.

Revisiting the “Continuum” – and a plea for service orchestration

To go back to my academic roots I am tempted to quote the Cambridge English Dictionary which describes a continuum as “something that changes in character gradually or in very slight stages without any clear dividing points”. If truth being told, I didn’t consult the dictionary before drawing up this slide four years back. But from the beginning, the thought-process was the following.

To help overcome the blurred perception and often confusion that I have tried to call out, HfS did introduce the Continuum of Intelligent Automation to start discussions on the evolution and innovation in service delivery. It is not meant to be an answer to the ever-increasing questions. This model is by no means perfect and we have developed additional slideware that is trying to capture the evolution toward more data-centric models. In this context, I would like to call out just a couple of the points that we are trying to get across with this model:

  • First and foremost, the term Intelligent Automation is a placeholder for a set is disparate innovations in process automation encompassing the concepts that you can see on the slide. Intelligent Automation is a critical building block for the As-a-Service Economy as it decouples routine service delivery from labor arbitrage thus supporting the ideals behind the As-a-Service Economy.
  • Second, the main idea behind the notion of the Continuum is that all the approaches you see here listed are both overlapping and interdependent. Despite all the focus on RPA and Cognitive, we still need all the less exciting stuff like runbook and scripting, mostly in the data center. From an operations point of view of particular importance is the integration of data into process chains and workflows.
  • And the third point I would like to call out is the evolution or direction travel for the broad notion of Intelligent Automation. You can see 3 dimensions here on the slide. First, probably less surprising toward unstructured data. Second, probably less obvious toward less well-defined processes. And thirdly, toward the broad notion of cognitive and artificial intelligence as they are meant to overcome the limitations of the first two dimensions. Especially from a business process perspective, AI is meant to integrate semi and unstructured data as well as allowing this data to be routed through less well-defined process chains. But it really is a broad bucket because the boundaries between cognitive, autonomics and AI are not well defined. Having said all that, we shouldn’t look at these segments as binary choices. AI is being integrated into or bundled with RPA tools and all these tools should be discussed within the notion of service orchestration. An attendee at recent conference condensed this to following pearl of wisdom: “Make sure crap doesn’t get into your production and then throw Machine Learning at it.” Although he used a slightly more lyrical language.

Having said all that, the questions and at times challenges boil down to largely three issues. First, the suggestion that there is a linear development from RPA toward notions of AI? Second, the temptation of trying to pigeonhole tool sets into any of chevrons on the Continuum. Third, having the wrong starting point for discussing service delivery. To start to answer those from the end: service delivery is about service orchestration. All the leading service providers and the mature buyers have moved in that direction. It is all about having the right tool sets for the required use cases. Whether this based on microservices, on leveraging orchestration engines or other means: RPA is just a footnote in those discussions. And just to shout from the rooftops, orchestration implies that there is no linear development. In parts, this answers also the issue on pigeonholing. On the recent webinar, Guy Kirkwood from UiPath used the analogy of a golf course with RPA tools being the putter, while AI is more a drone that drops the golf ball into a hole. While thought provoking and entertaining, this analogy implies the old pigeonholing. Moreover, automation is in the eye of the beholder and RPA is no exception. While nothing is defined, all RPA tool sets evolve toward operational analytics and the broad bucket of cognitive. And lastly, the starting point is not how do we sell RPA but how do we innovate service delivery. It all comes down to use cases and requirements. For many of those requirements, RPA is the wrong approach.

Bottom-line: RPA is dead! Long live Intelligent Automation!

Having uttered this plea many times before, I am not overly confidence that I will get more listeners this time. But we urgently need to broaden the discussions from a narrow(minded) RPA mindset. We need the service providers come to the fore and educate the broader market. We need the buyers tell the stories from the trenches. We need new models and ideas to advance the learnings from the deployment and the best practices. Perhaps we should invite stakeholders of the automation community and undergo a Design Thinking process. The goal should be to reimagine service delivery to support the journey toward the OneOffice. The secondary goal should be to get rid of the Continuum. We would love to hear from volunteers and curious minds!!

Posted in: Robotic Process AutomationIntelligent Automation



Simplify Blockchain by Refusing to Let Interoperability Issues Bog You Down

April 18, 2017 | Christine Ferrusi Ross

We’ve previously written how interoperability will hold back blockchain adoption, at least until we can find ways around the problem. The cost and friction of joining multiple blockchains may hinder widespread adoption until we can figure out how to get them to talk to each other and reduce the cost of joining a blockchain implementation. However, recent thinking suggests there are some shortcuts we can take to make better use of blockchains in the short term, as their development and adoption matures.


For example, recently I met with the Deloitte blockchain team, and Principal Eric Piscini disagreed with my premise. He believes that interoperability really isn’t that big of an issue. First, he points out that, today, we have multiple environments that don’t connect to each other and the work still happens effectively. For example, different credit card payment vendors each have unique systems but everyone can still use any of them without an issue.

He also notes that interoperability seems like a bigger issue if you look at the blockchain implementation as needing to do every part of a transaction. However, he thinks of blockchain as having three layers:

  • Recording (actual transcribing of data into a block)
  • Transacting (an activity or transfer, such as moving money from one participant to another)
  • Business logic (the rules and controls of a process coded into the system)

You don’t have to do all three things in blockchain. You can use it for any of the three, or some combination. And as a result, you start to see how it’s possible to use blockchain technology and not necessarily have to worry about interoperability.  It’s not dissimilar to evaluating automation technology, where you will, simply, fail if you try to automate everywhere possible – you’d run out of time, money and patience trying!  Most experts will tell you to first focus on what not to automate, which is similar with blockchain:  first figure out where you can carry on just fine without all the expense and disruption of a blockchain implementation. 

Piscini also believes, in some instances, that firms do not need interoperability, but more a single blockchain per asset class, as it will be near impossible to transfer the same value across multiple blockchains. 

So, where does this leave us with our interoperability decisions?

1) Blockchain interoperability needs both a technology choice and business reason to exist. We need to separate the technology of blockchain from the business application of blockchain and from the business model of blockchain-based systems. From a technology perspective, for example, multiple blockchain implementations can exist and drive value even if not connected to other blockchains.

2) Network ownership may be more important than technical interoperability. For networks that are, essentially, owned and controlled by one party (the credit card examples above) and other parties just access those networks but don’t need to integrate per se, then Piscini’s view makes total sense. It also works in situations like Ariba’s, which we’ve written about before, where participants on don’t need blockchain implementations themselves to use Ariba’s blockchain. (Ariba also notes that clients can choose to do just recording on the blockchain, further supporting Piscini’s point of separating blockchain into layers.) However, in networks where the peer-to-peer aspect is more important, and no one participant has strong power, we believe interoperability will continue to be a barrier to widespread adoption.

Bottom Line: Clarity around when/if/how interoperability is really needed for the blockchain market to mature.

We expect that, by the end of this year, as companies continue to tackle implementation challenges like interoperability and the development of common industry standards continues[1], will the market will begin to pick winning platforms and technologies.


[1] Many consortia are dealing with this issue as we speak, and government agencies are beginning to weigh in. Expect a lot of activity in standards development this year.

Posted in: Blockchain



Digital, Cloud, SaaS and Automation Becoming Table Stakes When Choosing an IT Service Provider

April 18, 2017 | Jamie Snowdon

We just wanted share another finding from our “State of IT Services Survey 2017” – this survey has been conducted largely to support our IT Services blueprint process. We have interviewed 302 IT service decision makers to find out what they think of the IT services providers infrastructure management services, digital-focused consulting and their application management services.

We asked IT decision makers to pick their most important selection criteria for choosing an external service provider for IT Services generally, and specifically when choosing an infrastructure management, application management and consulting/IT strategy provider. The chart shows the difference between these main groups - displaying the proportion of buyers selecting each option for each type of provider.


Bottom Line – results count more than the method

Overall buyers are looking for Innovation, financial stability, quality of service. Consulting buyers care more about quality and skills (as well as innovation) - prior engagements are much less important. Buyers are starting to care less about the technology that drives the innovation - at least as dominant factors driving selection. Digital/SaaS/Cloud and automation are increasingly table stakes.

Posted in: Digital TransformationSaaS, PaaS, IaaS and BPaaS



The SaaS Buyers’ Guides: The Business Case for SaaS is no different from On-Premise

April 17, 2017 | Khalda De Souza

SaaS applications are on the rise. Everyone’s moving to the cloud. But, pray tell, why?

What are the real reasons enterprises are selecting SaaS applications? We have had analyst interviews directly with 200 SaaS buyers in the past couple of years, and their motivations for buying SaaS are not as strategic as we would have expected.

Generally, most buyers have succumbed to marketing that promotes SaaS as faster to deploy, cheaper to run and generally has better functionality than its on-premise counterparts. All of which sounds terribly attractive when faced with a costly legacy on-premise upgrade that could take you up to 18 months to implement. Some enterprises even told us that they had a corporate-wide ‘cloud first policy’ that encourages all departments to consider seriously cloud options for all IT projects.
There is no doubt that SaaS applications can be deployed a lot faster than on-premises solutions, and yes, some have some fantastic user interfaces as well. Two of the biggest benefits of SaaS are predictable costs and the ability to stay current on vendor releases. However, the biggest operations business objective of recent times – cost reduction - isn’t automatically achieved by moving to the cloud. The reason for this is three-fold.

Firstly, buyers are investing in functionality they do not need. Most software providers bundle in as many modules as they can muster into a sale, regardless of which specific functionalities the buyer actually wants and needs to use immediately. It’s nice to have these extras in the bank for when you may want to unlock their magic but, in the meantime, do you really want to pay an astronomical monthly rate simply for having them?

Secondly, deployments are not the end, but the beginning of the SaaS journey. As SaaS applications have continual updates, new functionalities, and even new modules several times a year, SaaS services support becomes an ongoing cycle of consulting and implementation work. This, of course, costs money and effort, which needs to be taken into consideration. And, don’t forget one of the biggest drawbacks of SaaS, potentially you have less control over your data.

Thirdly, cloud policy must be aligned with defined business outcomes. It makes sense for this to be a strategy for IT departments, which are charged with providing cost-effective technology to the business. It should not, however, be a specific focus for any other department in the enterprise. As highlighted in The SaaS Buyers’ Guides: Five crucial steps to ensure you get it right, business line leaders should have defined business outcomes and objectives, and approach technology as an enabler for these. The actual technology used should be irrelevant.

Bottom Line: Deciding to switch to a SaaS model doesn’t mean you can abandon good business practice – you still need to weigh up the options and make the case.

SaaS buyers need to employ the same selection rigor to SaaS selection as they did when they evaluated procuring on-premise applications. This includes an in-depth cost analysis of the implications of deploying and managing SaaS on an ongoing basis, and the ability to read between the lines of the vendor marketing hype that does such a great job of selling the products. And most importantly, do these SaaS solutions help them achieve their defined business goals and outcomes? Buying technology for technology’s sake has never been the answer, and nothing has changed!

Posted in: SaaS, PaaS, IaaS and BPaaSSaaS



Automation will destroy, then save outsourcing: The industry has spoken

April 15, 2017 | Phil Fersht

For those of you who made our New York Digital OneOffice Summit a couple of weeks ago, we had a rumbustious mix of seasoned outsourcing buyers, service provider leaders, advisors and robo vendors under one roof to cogitate, discuss and argue where the hell the industry known as outsourcing and operations is truly heading. Let's just lay down what the hell is really happening in the only unvarnished way we know how...

There is a fast realization that the outsourcing industry has reached a phase of almost insufferable tension.  Why?

Several of the RPA (Robotic Process Automation) solutions vendors are painting an over-glamorous picture of dramatic cost savings and ROI. RPA software firms are claiming - and demonstrating - some client cases where ~40% of cost (or more, in some cases) is being taken off the bottom line. While some of these cases are genuine, there are many RPA pilots and early-phase implementations in the industry that have been left stranded because clients just couldn't figure out the ROI and how to implement this stuff. This isn't simply a case of buying software and looping broken processes together to remove manual efforts... this requires real buy-in from IT and operations leaders to invest in the technical, organizational change management, and process transformation skills.

Buyers are backed into a corner with broken delusions of automation grandeur as their CoEs fail. Buyer leaderships are being fed all this rosy information and are under incredible pressure to devise and execute an RPA strategy, with some sort of set of metrics, that they can demonstrate to their operations leadership.  Many are quickly discovering they simply do not have the skills inhouse to set up automation centers of excellence and are frantically turning to third parties to help get them on the right track.

Outsourcing consultants are selling RPA before they can really deliver it. Sourcing advisors are claiming they are now "RPA experts" who can make this happen, while struggling to scale up talent bases that can understand the technology and deal with the considerable change management tensions within their clients.  RPA is murky and complex, and not something you can train 28-year-old MBAs to master overnight.  Meanwhile, we are seeing some advisors simply do some brokering of RPA software deals for small fees, only to make a hasty exit from the client as they do not have the expertise to roll-out effective implementation and change management programs. 

RPA specialist consultants few and far between. Pure-play RPA advisors are explaining this is not quite so easy and requires a lot more of a centralized, concise strategy.  There are simply not enough of these firms in the market, especially with Genfour having been snapped up recently by Accenture. With only a small handful of boutique specialists to go around, these firms can pick and choose their clients and command high rates.

Service providers will set the pace, but many will destroy each other in the process. Service providers are claiming they can implement whatever RPA clients need, but are not willing to do it at the expense of reducing their current revenues. Meanwhile, smart service providers are aggressively implementing RPA into their own operations to drive down their delivery costs and reduce their own headcount.  So we can expect to see providers aggressively attacking competitive clients with automation-led solutions that should create unbearable pricing pressures for service providers looking to retain the talent they need to implement this stuff. Hence, services providers will be hell bent on destroying each other and the winners will be those who eventually succeed in winning more work than they lose amidst all the destruction. This is a war of many battles being fought - and the winners will be those who are in this for the long haul, who can absorb some short-term losses to pick up the larger spoils further down the road when they have a fully equipped intelligent automation delivery capability that can deliver highly-competitive and profitable As-a-Service offerings.

The good news is that half of today's buyers want to turn to service providers to make this work

When we privately polled 60 senior outsourcing buyers, at the recent HfS New York Summit, on what would improve the quality and outcomes of their current services relationships, the answer was pretty conclusive - half want to work with their providers to rollout their automation and cognitive roadmaps, while only a third think they should pull back work in-house to figure this stuff out for themselves:

The Bottom-line: The automation gauntlet is now in full effect and the casualties will mount up as the outsourcing industry plays out its most perilous battle for survival yet.  But all is not lost if we eye a longer-term prize...

So we've reached crunch time. Whichever way we look at it, RPA has created a lethal environment, which was only just coming to terms with providers and buyers working together to get the basics of delivery right. Most outsourcing buyers have to look to automation to save their jobs and please their ambitious leaders, no longer content with the ~30% they saved on offshore-centric outsourcing just a few short years ago (see our recent State of Outsourcing and Operations data on 454 major buyers). 

So, in the meantime, for all the reasons outlined above, this industry will literally go into a destructive war over automation. The skills to make automation a massively profitable reality are few and far between, while greedy corporate leaders demand cost savings that simply are not achievable if their organizations fail to make the necessary investments and partnerships to make this achievable. Did companies become world class at HR overnight because they bought an expensive Workday subscription?  Or stellar at sales and marketing because they slammed in a Salesforce suite?  So why should they become amazing at cost-driven automation simply because they went and bought some licenses from an RPA vendor promising bot farms and virtual labor forces?  

RPA and Intelligent Automation have sparked a major war in the worlds of outsourcing and operations, where many battles are being fought - and the winners will be those who are in this for the long haul, who can absorb some short-term pain in order to benefit from the larger spoils further down the road. While automation is killing outsourcing today - costing many people their jobs, their reputations and destroying the profitability of legacy engagements, those who can hunker down, focus on self-contained projects where they can fix one broken process at a time, can get stakeholders onside by demonstrating meaningful, impactful outcomes without major resource investments, will be the winners.  Start with one process at a time, prove how to fix in, then onto the next, then the next... that is the only true way to be successful in this destructive automation-infested world. 

Posted in: Cognitive ComputingRobotic Process Automation



Familiarity breeds respect – for IT services firms…

April 14, 2017 | Jamie Snowdon

We are just analysing our “State of IT Services Survey 2017” at the moment – this survey is being conducted largely to support our IT Services blueprint process. We have interviewed 302 IT service decision makers to find out what they think of the IT services providers infrastructure management services, digital-focused consulting and their application management services.

We are hoping this will add an additional buyer perspective when we rate and review the global IT services companies – getting away from the usual marketing blurb and focus on what is important for the organizations buying external services.

As part of this work, we asked these business leaders to rate their familiarity with infrastructure management service providers and then rate them on, amongst other things, service quality. This gave us the opportunity to see whether familiarity with the providers has an impact on the ratings -the infographic chart shows the findings.

The Bottom Line – buyer respect is earned through good service delivery

The good news for the industry is that, except for a couple of notable exceptions, as buyers start to use a providers infrastructure services the rating for quality of service delivery increases. With a big leap from merely heard of a provider to extensive knowledge.

We are analysing and publishing more of this survey over the next few weeks.

Posted in: IT Infrastructure



With reckless abandon, here's Manish Tandon

April 14, 2017 | Phil Fersht

In today's perilously paranoid services industry, many ambitious executives are resurfacing in smaller sized service providers, which can compete on smaller scale contracts that are arising with mid-market firms, in addition to being nimble enough to compete for business at the high end. What's more, many savvy buyers are feeling more secure investing in emerging providers that are not weighed down by the legacy contracts of older times and greedy investors eager to jump ship once they sense the gravy train has stalled.

One such character is the affable Manish Tandon, who made his name at Infosys, where he led some major divisions, before recently popping up at customer experience and IT provider CSS Corp.  So let's hear what life is like moving from the very large to the medium-sized provider... 

Phil Fersht, Chief Anaylst and CEO, HfS Research: Good morning Manish. It’s great to have you on HfS today. You've had a very illustrious career in the services industry, spending a long time at Infosys where you climbed the ladder, and you recently took the CEO job at CSS Corp. Did you expect such an illustrious career in services - and what's exciting about this move for you?

Manish Tandon, CEO, CSS Corp: Thank you, Phil for having me, and great talking to you, as always. I would say I have always liked the services business tremendously. As a graduate from one of the top management institutes, I had the pick of jobs in most of the top financial institutions and so on, but I always liked technology and particularly technology services. Primarily, because this is one area you get to work on something new, something different, something challenging every one or two years, every assignment is different, so I have always

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Posted in: Outsourcing Heros



Once Upon A Time…To Hold Management Attention, Security Execs Became Storytellers

April 14, 2017 | Christine Ferrusi Ross

Security is a complex space – changing and emerging threats, multiple interconnected technologies that each do one small piece of the security landscape, and an ever-changing regulatory and legal environment. And frankly, most senior executives don’t have the patience to really understand the threats to their business in great depth.

So what can a smart security executive do to capture and hold management attention on security issues? Become a great storyteller. There are lots of reasons storytelling helps in the security space:

  • People remember stories much more than they remember a bunch of data points or random facts
  • Stories connect emotionally as well as intellectually, making them more impactful, and increasing stakeholders’ investment in the topic
  • Having people re-tell stories is both a great validation of your original point but also a powerful way to make sure that your point is shared throughout the organization so that everyone understands security better

Start by studying storytelling. There are some basic plots for stories, such as boy meets girl, hero vanquishes evil, etc. There’s also a basic narrative structure you can use (see Exhibit 1):


So with this structure, you can explain security threats to your executives.

  • Exposition – threat the business faces, including what part(s) of the business, are affected (sales, brand reputation, data, etc.)
  • Rising action – how that threat is evolving
  • Climax – impact on the business if that threat occurs
  • Falling action – steps being taken to address the risk and protect the business
  • Denouement – any residual implications, requests for support or budget, etc.

You leave out the details that will take the focus off the overall story but leave the ones that add color and help people connect with the story. So, examples of how other companies are handling the threats can stay, but likely the reporting spreadsheets of the quarantined threats should go. This balance of the details is key to effective storytelling. Your team may find deep data invaluable, but it may cause your audience to give up trying to follow your story.

You’ll also save a lot of time. How? Typically, when something happens, you give the details and then try to explain those details in context. If you’ve told a story people understood, then when you have a conversation about details, you can refer back to the story and have the person “get it” faster. You can tell this works when stakeholders start asking more, and more relevant, questions. People who don’t understand a topic don’t ask as many questions.

How will you know the storytelling approach is working? When more people in your organization start to change their behaviors to support your security goals. And when senior executives begin to get more invested in your work.

Bottom line: To really improve security, get outside of security data and details and become a great storyteller.

Posted in: Security and Risk



How Infosys Seizes the Momentum for Change in Oil & Gas

April 13, 2017 | Derk Erbé

Oil & Gas has gone through a crippling crisis in the last three years. What are service providers doing to help Oil & Gas recover? This question plays a central role in our 2016 Energy Operations Blueprint, HfS’ inaugural report on the services provided to the oil and gas industry. Infosys is an As-a-Service Winner’s Circle provider with strong roots in the oil and gas industry and a clear vision for the services needed to pull the industry out of the slump it has been in since the oil price collapsed in 2014. Since the 2016 Blueprint, the oil price has rebounded and is stabilizing between $50 and $55 per barrel, giving the industry some more breathing room and a momentum for change.
Time to have a conversation with Robin Goswami and John Ruddy. Robin heads Infosys’ Energy practice in the Americas. John in the president of Noah Consulting, Infosys’ 2015 acquisition that bolsters its capabilities in Oil & Gas.

Robin Goswami

John Ruddy

Derk Erbé, Research Vice President, Supply Chain, Procurement, and Energy: Robin and John, thanks for sharing your vision for the Oil & Gas industry with our audience at Horses for Sources and candidly discussing the challenges of operating in a struggling industry. Infosys impressed us in the Energy Operations Blueprint, with its vision for the evolution of services that this industry needs to pull itself out of the downward spiral since 2014. Even though this is a very volatile environment with challenging economic circumstances, Infosys has continued to invest. How do you see the current situation in Oil & Gas?

Robin Goswami, Vice President and Head of Energy Practice Americas, Infosys: We are starting to see some recovery but there is a growing realization that this is not going to be a quick recovery, but more of a gradual one, like what we saw in the '80s downturn.

In 2014, everybody thought this would be a six-month downturn, by early 2015 it looked like a one-year downturn. Only in late 2015, was there a realization that this could last a lot longer and would be much harder to predict. The last ten years now seem more like a spike, with the market having settled to a new normal of $50 a barrel of oil.

Due to the downturn of the last couple of years, companies have stopped most capital projects, whether in IT or the field. They are trying to optimize what they have. At some point, they must start looking at different ways of doing things including radically different ways of leveraging technology. This is where offerings like Infosys Mana – the knowledge based artificial intelligence will play a significant role in driving automation and innovation.  So far, this has happened in spurts and pockets. We've seen a couple of companies try to do it, but most of these have been the smaller to medium sized ones in a desperate situation. We have not seen the bigger companies do this just yet, but lately, are starting to see a changed mindset and some positive signs as a result.

We'll see a lot more interest in the things that we've been trying to talk about for the last year, year and a half or so. Automation, how can that help to significantly reduce operational expenditures? Analytics, how can you leverage analytics to get a lot more efficient and predictive analytics around equipment failure.  

John Ruddy, President, Noah Consulting: The industry is learning how to be profitable in a $40 per barrel world, and that the days of anything more than $60 are over. They are learning that they need to be profitable at this price point, and that's driving much leaner, much more efficient operations and much more reliance on automation, machine learning, and analytics. We're starting to see modest growth because our clients recognize that this is their direction. They've stabilized following the workforce reduction, which was very significant. I believe they're now starting to become leaner, more agile organization that they need to be to survive in today's market.

Derk: Do you feel they are making the shift in mindset from cutting down costs in existing processes and with workforce reduction towards how to create value in a different way and create new value?

John: Now that the price is somewhat stabilized, we see the emergence of a focus on how they become a lean, responsive organization. We see a big focus on operational technologies around real-time data, and that the digital oil field wave that happened 10 -15 years ago is now re-emerging with IoT being the main catalysts, with even more sensors, and even more data and even more automation are happening.

We see a big push into more Cloud based As-a-Service models out there. In fact, the operators are forcing the software providers to move there more quickly than the software providers had anticipated. There is a very strong desire on the demand side for an As-a-Service ecosystem and the operators at one point were reluctant and are now pushing very hard for that type of a model to be offered by the vendors.

Derk: We're on the verge of a very interesting period in oil and gas. Would innovation go slower or faster if the oil price were slightly higher?

Robin: Innovation would go faster if the oil price were slightly higher. Our clients have been focusing on primary goals, ensuring that they stay just cash flow positive. They don't have the cushion to invest in innovation. If the oil price was slightly higher, I think that the money would be there. I also feel that if the price were to push 80 or 90 a barrel all of this would be forgotten, and we would be back to doing business the way we were before. But if the price consistently stays in the 50s, it will drive some efforts and activity to bring up the level of investment in innovation.

Derk: There is this fine line for innovation, investments and having the ability and willingness to innovate. Where do you think we’ll find the sweet spot?

John: I think $50 to $60 per barrel might be the sweet spot for a lot of innovation, a lot of demand to be addressed, especially with the smaller workforces that are out there and to a certain degree, a refreshment of the workforce regarding the average age coming down. I think you're going to find more millennials driving automation as well. The voice for innovation will be a little bit louder perhaps than it was pre-downturn. I do think that the $50 to $60 sweet spot would have allowed more innovation to be applied to the clients. There are modest pockets of it happening with prices in the $40 range. $50 to $60 will open the floodgates for people to be innovative. Anything more than that ($60) and people don't care about innovation anymore.

Derk: The industry has adapted to this ‘new normal’ of $60 per barrel as the peak price. What does that mean for the focus of your oil and gas practice and your competitors?

Robin: Oil and gas is a cyclical industry, and we're in a down cycle, but we've got to continue to invest. I strongly believe that when it does come back, the folks who have invested will reap the rewards of their investments. We continue to focus on oil and gas and are seeing some positive movement. The tough part is the fact that our work is split between OpEx and CapEx and the CapEx side of the work really came to a halt. We've got clients who are doing work on analytics, data lake projects, or initiatives to get more efficient, but it's small compared to the amount of work pre-downturn. You can count the number of ERP implementations currently happening in the industry on the one hand. That was completely different four years ago. At any given point in time, four or five projects were kicked off. That has not happened recently at all. In terms of competition, we used to have eight or nine competitors bid for the same projects. That has drastically changed, a lot of competition has re-focused or exited this space.

We have seen a lot of companies that in the past never looked at outsourcing who have now started to approach the market and say, "Let us explore working with outsourcing companies that can do IT a lot more efficiently than we can do it ourselves." It has opened some opportunities. But the opportunities are still few and small. We are doing well from a perspective of winning them, but the squeeze in capital expenditure has hurt all the service providers.

We acquired Noah Consulting in late 2015. We continue to invest in oil and gas. We see a modest growth of some CapEx-projects, though not in a big way. The significant change that happened over the last year was people trying to find more efficient ways of doing their expansion. Whether it is the large or the small players, everybody is trying to use this down phase to optimize how their operating expenditure is leveraged.

We are focusing on delivering value by proposing automation (Infosys Mana) and leveraging digital to optimize the operational costs and are starting to see success.

Derk: What is the key to creating more of an innovation-minded culture and boost As-a-Service adoption in this hundred-year industry that doesn’t like to change and frankly lacked the incentive to change most of the time?

John: The key is education. A lot of it is repetition. A lot of it is helping to stimulate some of that demand and get our industry comfortable with new ideas. I'll give an example. There is a lot of innovation happening in Infosys, for instance in our Palo Alto offices. We were out there a couple of months ago. The first thing you notice when you walk into the lobby is a science lab type experiment set up with plants. There are different basil plants. Each plant has sensors measuring the nutrients in the soil and the amount of light and the amount of water that they're getting. Each plant is generating a growth curve, and they're learning from each other. They're looking at each other's growth curves and adopting best practices and dropping bad practices, and are using our AI platform Mana.

That's being used in the other industries, but not yet adopted by oil and gas in a large manner, but it's applied to this little science experiment. That was an inspiration for us. We looked at that and take that same exact concept and took it out to an oilfield and have pumpers learn from each other. Have the pumpers look at the Geoscience strata for that field. They're from the same field, comparing that pad to the one a quarter mile away and the pumpers look at the data and learn from each other and look at economic conditions.

We're test driving those innovative concepts. It's an industry that avoids disruptions. We're working towards it, but it's an educational process. We show them the possibilities and help them get more and more comfortable with innovation. Some clients are first movers, prove the benefits and the rest of the industry will follow. The onus is on us to find that first mover, and that's what we're out there doing.

Derk: If you were given the keys to the oil and gas services kingdom and you can rule the services world for a week, what's the one thing that you would do to change the industry for the better?

Robin: That's a tough one. John, I'll let you go first.

John: Having the keys to the kingdom, one very broad-based public relations thing that I would do is I would promote natural gas as a clean fuel alternative. Why aren't there more compressed natural gas vehicles? Why aren't there more natural gas power plants? I know there is an uptake in those, but not to the degree it could be. There is a huge environmental and climate change concern, and our industry has the answer to that, and that's natural gas. As king, I'd be out there to get the public comfortable that natural gas as a clean fuel alternative that should be embraced and not pushed away.

Robin: I would like the companies to look at the industry and say "Look, we all know, oil and gas will be there in our lifetimes. We will come out of the downturn at some point. Lets leverage this downturn and look to use technology to change our model. This is an opportunity for us to reset our entire cost model, our entire way of operating with technology for the next decade.”

Right from the beginning of the downturn, we've had a view from the outside. We are very much part of the oil and gas industry, but we have the luxury of having the bulk of our business focus on IT services, so any impact from oil and gas is well cushioned by the rest of the Infosys business. That gives us the cushion to make acquisitions, invest and enables us to continue what we are doing. That is not an advantage, unfortunately, that most oil and gas companies have. They are unfortunately dealing with the day to day of trying to keep positive cash flows and are forced to react to weekly, monthly, quarterly pressures and none of them have been able to step back and say, "Let's assume this is a three year or a five-year downturn and let’s try to do things differently". Definitely not when it hit in 2014.

I saw this as an opportunity in late 2014, for companies to completely change their model, move to other service models, look at analytics, automation, Internet of Things, to radically work differently with technology, not only IT, technology overall. Most of them were unable to take that opportunity. The longer the downturn continues, the more you are, in a sense, in a hole where you are trying to just survive. The amount of cash that companies had in 2014 and 2015 was just not there in 2016. Those initiatives could have been taken on in 2014 and 2015. It has become way more difficult, a lot more challenging, now. And this is the one thing I would like us to do differently.

If I had the keys to the kingdom, that is what I would do. Try to move away from the quarterly, the monthly survival and look at leveraging technology to change the model.

Derk: The saying is “never waste a good crisis” and they're wasting a good crisis to change. Would you recommend having a different dialogue with the financial markets, because that's part of the issue for oil and gas companies? They want to do the same for the shareholders as they did when the oil price was $100. Does that need to change or they're addicted to doing the same as ever before?

Robin: I don't think we have a choice, Derk. I think we have reached a stage where $80 barrel of oil is not coming back shortly. The boom won’t be back for a while and we must reset expectations and look to do things differently and leverage technology a lot more.


Posted in: Energy



Don’t Look Now but Payroll Services Providers are Embracing Digital -- and their Sexiness

April 13, 2017 | Steve Goldberg


A product strategy executive at ADP recently told me ”employees generally spend more time picking out a color TV than they do selecting their Benefit plans.” At that moment I knew the conversation would be different than any of my previous chats about payroll services. After all, I’ve never known an organization that cited a well-run Payroll operation as a major source of competitive advantage. In contrast, achieving only modest (e.g. 4%) upticks in employee productivity, perhaps from focusing more on improving employee engagement, can be a pretty big deal. The math: A 2,000-employee company that goes from $150,000 revenue per employee to $156,000 (or a 4% improvement) generates $12 million in new value ($6,000 x 2,000 employees).

Payroll Services in the digital age is where “intelligent automation” and the constancy of innovation empowers and enables all participants and customers – ergo, makes them more engaged and productive. And for newer readers of HfS fare, we basically define intelligent automation as moving from legacy technologies to a more on-demand environment that enables (as warranted) plug and play solutions/services, cognitive/AI elements, impactful analytics, highly engaging user experiences, mobile taps over mouse clicks, etc., often based on design thinking and always involving genuine customer advocacy.

To cut to the chase, my new Blueprint Report “Payroll-as-a-Service: 2017”, being published this July, will delve deeply into how Payroll Services are being transformed based on the best that intelligent automation has to offer. The Report will examine where this market is today and where it’s going, include actionable guidance for services buyers and providers, showcase innovations that are driving real business value, incorporate customer perspectives from around the globe, and of course, utilize our “As-a-Service Winners’ Circle” evaluation framework to separate market leaders from high performers and high potentials – replete with service provider analyses.

Readers wanting to see who offers great pricing for tax filing and reporting services should look elsewhere, but for those interested in digital capabilities in the form of impressive chatbots (for maximum responsiveness), benefit plan cost/benefit optimization and financial wellness support at the individual level, other types of “personalized value adds,” predictive and prescriptive guidance for managers, and other capabilities which take routine tasks out of the daily life of Payroll staff and its internal customers, we will have you covered.

Bottom Line: Payroll Services providers are jumping on the digital bandwagon with gusto, and the results belie that long-time characterization of Payroll not being sexy.

Posted in: HR OutsourcingHR Strategy



Customize Or Die - Industry 4.0 Blueprint

April 12, 2017 | Pareekh Jain

We have recently published our Blueprint Report on Industry 4.0 Services. This is our fourth engineering services Blueprint in which we analyzed and positioned twelve Industry 4.0 Service providers according to their execution and innovation capabilities.  In the first one, we focused on the mechanical engineering services. In the ”second engineering Blueprint, we looked at Software Product Engineering (SPE) services in detail. The third Blueprint was about Product Lifecycle Management (PLM) services.

What does Industry 4.0 Services Blueprint cover?

This Blueprint includes the Industry 4.0 offerings of different service providers across verticals for shop floor manufacturing. This includes their capabilities across the HfS Industry 4.0 Services Value Chain of R&D, Plan, Implement, and Operate for thirteen technologies that are relevant to Industry 4.0. These technologies are Manufacturing Data Analytics, Robots, Manufacturing Automation, Digital Clone or Simulation, 3D Printing, Manufacturing IoT, Plant Cybersecurity, Manufacturing on Cloud, Augmented Reality in Manufacturing, Virtual Reality in Manufacturing, Artificial Intelligence in Manufacturing, Visual Analytics in Manufacturing, and Small Batch Manufacturing. This report also provides insights into the internal R&D, capability, vision, investment, and partnership priorities of the service providers. We also outlined the strengths and challenges to take into consideration for these service providers. The report also mentions market analysis of the Industry 4.0 Services industry, the current focus area, and the future growth areas over the next few years. The service providers included in this report are Accenture, Altran, Atos, Cognizant, Genpact, HCL, IBM, Infosys, L&T Technology Services, TCS, Tech Mahindra, and Wipro.

What is unique in this Blueprint?

Our focus is not solely on size, revenue and global scale of the Industry 4.0 service providers but our emphasis is also on the Industry 4.0 use cases, customer case studies, service provider strategy,  way service delivery is organized, the availability of industry domain expertise, investments in industry talent, academic partnerships, industry body associations, acquisitions of companies to augment industry 4.0 capabilities, etc. Also, the Blueprint includes recommendation sections for buyer enterprises as well as the service providers. Another point of emphasis in our research is the effect of digital and emerging technologies in Industry 4.0 and how service providers are enabling new ways of working with these new technologies to address industry-specific challenges and the level of innovation brought to clients. For example, we covered how service providers are leveraging existing digital capabilities (analytics, cloud, automation, IoT, AI, cybersecurity etc.), and emerging areas (robotics, augmented reality, virtual reality, 3D printing etc.) in Industry 4.0.

This Blueprint also includes Industry 4.0 market analysis. This is first of its kind of Industry 4.0 Services study where we tried to collect details of Industry 4.0 engagements and arrived at the overall current adoption level of Industry 4.0 across verticals, technologies, service lines, and geographies. This should help each Industry 4.0 service provider, Industry 4.0 software provider (technology providers related to the mentioned thirteen technologies), and enterprise to benchmark their Industry 4.0 footprints and identify their strengths as well as areas or levels of improvement. The intent of this report is to provide valuable intelligence and a reality check on what is going on in the Industry 4.0 services world.

As part of this work, we are launching Digital OneManufacturing framework (refer Exhibit 1) that provides our view of the Industry 4.0 operating model. The framework represents an integrated manufacturing operation center that has digital prowess for a manufacturer to meet future manufacturing complexities.

In brief, Digital OneManufacturing is the platform on which digital technologies meet manufacturing engineering technologies and controls a manufacturing landscape in real time to serve clients. It’s where all the process elements are combined: Connectivity, the processes, and the intelligence come together as one integrated unit, with one set of unified business outcomes tied to manufacturing organizations.

Exhibit 1: Digital OneManufacturing Framework- Click to Enlarge


Digital OneManufacturing is the ability to do mass customization at scale so that manufacturing enterprises manufacture for one customer economically and efficiently. Please refer our PoV on Digital OneManufacturing to get more details about the framework.

What is the current state of Industry 4.0 Services market?

Since Industry 4.0 is a relatively new concept, manufacturing organizations are conservative to implement Industry 4.0 across the enterprise. Big enterprises are committing modest investment, and resources in digital manufacturing for specific manufacturing functionalities and once they realize the benefits enterprises will go for digital factory and then connected factories. Geography wise, North American manufacturing organizations are at the forefront of Industry 4.0 adoption followed by European and APAC enterprises. The automotive, aerospace and industrial equipment verticals are the leading verticals for Industry 4.0 services. Service providers are also developing industry-specific Industry 4.0 platforms, and plug-and-play solutions in partnering with Industry 4.0 related technology providers (Siemens, GE, Dassault etc.) to address specific client challenges. The biggest challenge manufacturing organizations are facing in Industry 4.0 implementation is the lack of digital maturity and enterprise readiness.  Once the Industry 4.0 technologies mature, and the adoption increases, the expectation about Industry 4.0 benefit realization will be realistic.

What are we expecting in the coming years?

As discussed, Industry 4.0 is gaining traction in the manufacturing industry, and in the next few years, we will see more Industry 4.0 adoption, and increasing integration of Industry 4.0 with ERP, PLM, and other enterprise applications. It will take decades for manufacturers to implement Digital OneManufacturing at scale but surely manufacturers will  make progress with the help of progressive service providers in this area in the next couple of years  

Consulting is often starting point for the large Industry 4.0 programs, so service providers are augmenting their consulting capabilities. We expect to see an acceleration of this trend in the near future. Also, the market will see M&As as the global and Indian service providers will look for specific capability augmentation in Industry 4.0 space. Industry 4.0 will generate a huge amount of data in real time from every connected digital asset, so actionable intelligence from the data is of paramount importance. Thus data analytics is a differentiating factor for successful Industry 4.0 implementation. Security is also one of the most important features of Industry 4.0 as critical manufacturing, and customer data is generated and stored as a part of Industry 4.0 services.

We think there’s a high chance the grid could be very different again next time round! Stick with HfS to monitor the important changes in this rapidly evolving market!

HfS subscribers click here to access the new HfS Blueprint Report, “HfS Blueprint Guide: Industry 4.0 Services 2017“

Posted in: Digital Transformation



The SaaS Buyers’ Guide: Five crucial steps to ensure you get it right

April 12, 2017 | Khalda De Souza

As enterprises embark on their SaaS journeys, we’ve compiled a quick no-fuss list of tips for buyers to keep in mind. With all the marketing hype created by tech firms, certain analysts, journalists and pundits, enterprise SaaS buyers, more than ever, need to stay focused on their strategic missions and desired business outcomes. Here are five top tips to consider:

  1. Focus on your business strategy, not a technology strategy: Business leaders, such as HCM and CRM business managers, constantly grapple with outlining a technology strategy to support their business requirements. Why? Business leaders are just that – they have a mission to improve their business performance, aligned to specific business outcomes. For example, an HCM manager may need to create a particular culture to engage and motivate employees, or a CRM manager may be charged to increase customer satisfaction. Either way, these missions should not be to use a particular type of technology or procurement method.
  2. Don’t select SaaS because it’s cool and looks good on your CV: Too many buyers today are selecting SaaS solutions without tight alignment to the overall business strategy. Too many marketing executives’ eyes light up when you mention “Salesforce” or HR executives “Workday”.Without this, these deployments will ultimately fail. Buyers may achieve automation of mundane tasks but they will fall short of engineering any real business transformation.
  3. Don’t care as much about which technology you use: IT is and always will be an enabler to the business objectives and requirements. It’s no more than that. One of the most important advantages of SaaS applications is that buyers are not tied to them for years, or even months. If the solution no longer works, you can drop it and find something else. Yes, there are some cost implications, but technically, it is not nearly as painful and cumbersome as trying to swap out an on-premises application.
  4. Be careful of believing the hype – whatever the source: The ISVs are, of course, aware that you can switch a SaaS solution relatively easily. They are, therefore, laser-focused on making you stick with their solution. Antics include bundling in solutions and modules you don’t need (but will pay for) and stressing the importance of using one complete solution for integration simplicity.
  5. Only buy what you need: The ability to integrate easily between cloud and on-premise applications is obviously very important, but SaaS buyers need to focus on exactly which modules they need to fulfill their business mission and only use and pay for those. If an alternative solution or application meets a specific business need, then don’t be afraid to use it. Let system integrators pick up the headache of integrating it all – that’s what they are paid to do.

Bottom Line: You achieve business transformation through organizational and cultural change – not with a software tool or a procurement method.

And yes, we’re looking at you, SERVICE PROVIDERS, to help buyers understand this and keep them focused on their business mission and requirements. Judging by a recent survey at our HfS User Conference (see: The spreading outsourcing disease: barely a third of buyers see real value in their current provider relationships), there is still some way to go before service providers actually act as true partners to clients.  

Posted in: SaaS



DXC’s challenges represent a microcosm of a services industry in perilous transition

April 09, 2017 | Phil FershtJamie SnowdonTom Reuner

April 3rd saw the long-anticipated creation of a new IT and BPO powerhouse service provider – DXC.technology. However, DXC’s challenges represent a microcosm of a services industry in perilous transition.

This is a crucial event in the services industry, not only because it isn’t often a “new” $25 Billion services firm is created, but because of what it signifies about the uncertain state of the current market and the huge challenges facing service providers in the near future.

Read our complimentary analysis of the merger on the HfS Research website by clicking here.

Posted in: IT Outsourcing / IT Services



An idiot’s guide to buying and selling services in APAC

April 07, 2017 | Phil FershtAndrew Milroy

We're delighted to unveil Andrew Milroy (see announcement and bio) to head up the new HfS Singapore Office, driving the firm's APAC operations.

I worked with Andrew in IDC UK in the late 90s, and in IDC Asia/Pac in the early 2000s when I was based in Singapore and Andrew was in IDC Australia - and we've kept in touch for most of the past two decades. Andrew is a big deal in the region, having led Frost and Sullivan's APAC IT and comms practice from Singapore for the last 9 years. He also single-handedly established NelsonHall's US research business, prior to that.

Extending our coverage of global markets is critical to our future direction at HfS, so I wanted to have Andrew introduce himself to our readers with a simple guide of the region and give you a snippet of his insight as we firmly get to grips with services and operations dynamics in Asia/Pac.  Over to you, Andrew...

An idiot’s guide to buying and selling services in Asia: Some Key Considerations

After a break of nearly 7 years, it is great to start blogging again with the analyst industry’s most successful socially-driven analyst firm: HfS Research. I have had the privilege to spend most of the last 7 years, living and working in Asia. I say ‘privilege’ because the experience has been truly enriching professionally, intellectually and personally.

My learning curve steepened the day I started to work in the world’s largest, most populous, and richest continent. Much of the understanding of Asia that I developed, while working in the

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



Worried you're failing at your job? Here are six simple questions to ask yourself...

April 06, 2017 | Phil Fersht

Posted in: Global Workforce and Talent



Accenture adds European Automation Brains and Brawn with Genfour Acquisition

April 03, 2017 | Phil FershtTom Reuner

As an addendum, many of you have reached out to us since publishing this blog, regarding whether this was the right time for an emerging star in automation, like Genfour, to sell. There is a lot of runway in Intelligent Automation and there is no doubt in my mind that Genfour's architect, James Hall, could have held out for longer and continued along his growth path as one of the few attractive pureplays in the space worth acquiring.

As our recent analysis of them revealed, the current bunch are not very well established, hence some want a quick cash-out and exit, while others are hunkering down to play the longer game.  It is our view that Intelligent Automation and AI will evolve like the digital market, with service providers crying out for "press release buys" that give them credibility.  Hence, this is as good a time as any to establish your own pureplay Intelligent Automation shop and throw yourself into the mix.  But good luck finding the talent... there's a real shortage of it out there!  

So why did Accenture acquire Genfour and does this make market sense?

In times of disconcerting political and macro-economic events, where #fakenews and a traditional outsourcing model officially running out of value, getting predictions right is becoming increasingly difficult for an analyst.  Hence, the more pleasing it is when you can gloat about predicting an acquisition.

Case in point, Accenture’s acquisition of UK-based Genfour, a pure-play automation services provider that will become the cornerstone of a newly formed Center of Excellence (CoE) for Intelligent Automation, located in Wales. Back in December 2016 we did gaze deeply into the automation crystal ball and suggested that similar to the acquisition of Alsbridge by ISG, the

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Posted in: Cognitive ComputingRobotic Process AutomationIntelligent Automation



Yamazaki, Macallan and Redbreast lead the inaugural HfS Premium Whisky Blueprint

April 01, 2017 | Phil FershtBram Weerts

We've talked long and hard about the extent of digital disruption of traditional business models, so we decided to extend our research coverage into growth markets where the impact of digital is always positive.  When you look at the premium whisky, for example, our research shows its impact promotes new ideas, helps foster greater team collaboration and can even provoke new Design Thinking principles. Let's have a look at how the leaders in this space are positioned, based on our Blueprint Research Methodology:

At HfS we are expert analysts at peering into markets and evaluating the performances of the major players, so we thought "why not extend our coverage into adjacent markets where some of our analysts have years of practical, hands on experience?".  Personally, I have had more innovative client discussions comparing the various merits of single malt whiskies than which automation tools vendors have better control features.  

So let's talk to a few of our contributing analysts to understand how this market played out:

Bram Weerts, COO, HfS Research:

"I've tried each and every one of these buggers and you can't beat the old Yama 18.  I do love the Mac, but Yama hits the spot everytime"

Tom Reuner, SVP Intelligent Automation Research:

"I believe I've sampled all of these whiskies, especially when I am out at analyst conferences. I haven't a clue which is the best, but wanted my name on the report, so I endorse whatever Bram and Phil came up with."

Derk Erbé, VP Research:

"I believe the whisky market is ripe for digital transformation.  Emerging brands like the Walmart Fireball are poised to rip the bottom out of the market"

Jamie Snowdon, Chief Data Officer:

"There's no way I could get through our quarterly forecasts without sampling a few of these first.  And the way the industry's going, the old Walmart Fireball will only increase in popularity"

Phil Fersht, CEO:

"We may worry about robots stealing our jobs, but those bastards will never be able to drink our Scotch."

Bottom-Line:  This is only the beginning, HfS is going to extend into new markets everywhere as digital disruption takes hold

We believe we are qualified to become experts on any market where money changes hands and greats ideas emerge. Stay tuned for our forthcoming blueprints:

"Tequila Transformation - it can really change things"

"The least disgusting low-carb beers of 2017" and

"Organic wines that you really want to avoid As-a-Service" 

And of course... this was an:

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Posted in: Absolutely Meaningless ComedyDigital TransformationHfS Blueprint Results



The spreading outsourcing disease: barely a third of buyers see real value in their current provider relationships

March 30, 2017 | Phil Fersht

Oh dear - here are the private views of about 60 outsourcing clients we polled today at the HfS Summit in New York.  Close to half the room are either feeling let down by their provider over-promising, or merely feel they are only really getting cheap labor from their relationship. Moreover, barely a third of them actually believe their provider can come up with the goods, provided they pay for them via the legacy FTE pricing model. Now, these buyers are highly experienced and sophisticated, so this data is particularly hard for the outsourcing industry to digest.

So a few simple takeaways from this:

Service providers have to stop the over-promising and start over-delivering.  Over-promising may result in some short-term wins, but the implications of long-term damage caused by missing client expectations are much more hazardous. Sadly, investor pressures to sustain unrealistic growth is forcing several service providers to over-sell without the talent resources to deliver anything beyond low grade offshore delivery.

Many providers are proving their competency, but failing as proactive co-innovators.  As we recently revealed, a third of senior management does see real potential in their service providers to become genuine co-innovation partners, but there is a stark difference between fantasy and reality.  Providers need to prove they are willing to share risks, really roll up their sleeves with their clients - and clients need to work harder to create an environment of trust that they'll stick with their providers, provided they are willing to co-invest with them. Design Thinking anyone?  Maybe it's time to get in a room together and figure this whole thing out.  

Bottom-line: We're going to see a lot of chopping and changing of service providers in this volatile environment.  

Several buyers cited they felt their providers were too comfortable with them and were not worried they would get ejected from long-term outsourcing relationships.  However, with advisors, competitive providers and RPA vendors all touting the magic 40% of cost savings through automation, the leadership layers are exerting unprecedented pressures on outsourcing governance leads to demand change. In many cases, buyers are simply bringing in advisors and RPA tools vendors themselves and running their own pilots, but eventually, they are likely to put their existing deals out for rebid to find providers willing to guarantee the RPA savings.  And that is where the market is going - lots of cut-throat rebids, higher degrees of risk-taking to win business and more clients being over-promised.  We're in a vicious cycle where desperation is trumping good, pragmatic partnerships where both buyers and providers can figure out how to work together in trusted, risk/reward sharing environments.  

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



RPA is finally growing up, though custody is not settled yet

March 29, 2017 | Tom Reuner

Having opened a fair few presentations and blogs with the dramatic proclamation “RPA is dead”, this title of “RPA is growing up” might sound a tad contradictory to some.  Forgive me, I’m analyst and some days my glass is half full, others it’s half empty.

I am consistently trying to hammer home my plea that we approach RPA in the context of quality service delivery in all its naked complexity – not simply this obsession with individual tools, not looking for some sort of silver bullet, not looking for simple answers.

That is what our research and this blog itself are all about. Yet, for many, RPA is code for short term, guaranteed cost take out of headcount. For others, RPA is a broader placeholder, more similar to what I would term Intelligent Automation. Despite a lot of noise in the industry, RPA and Intelligent Automation are still a very nascent market. Thus, we continue to have a blurred perception around RPA that gets aggravated by the amount of smoke and mirrors spawned out by some tool providers and well as service providers.

Against this background of #RPAfakenews, I had the pleasure of sitting down with the management team of RPA solution provider upstart UiPath in Bucharest to discuss all those implications as well as getting a sneak preview of their development roadmap.

Culture, both internally and externally, underpins UiPath’ growth trajectory

Before I dive into the details, what struck me in Bucharest was the energy and togetherness of the UiPath team. Romania might not be the obvious location for an innovative start-up, but the country has been seeing a rise shared service centers, BPO delivery centers, and their entrepreneurs are part of the global village over the last few years. UiPath’ founder and CEO Daniel Dines, one of the smartest, humblest and nicest guys in the automation community, spent years coding for Microsoft in Seattle before embarking on building his own company. And this varied experience is showing, with UiPath being one of the fast-growing RPA providers and perceived by most buyers as a mandatory inclusion in RFPs next to the likes of AutomationAnywhere and Blue Prism. Clients reference the company culture, sincerity, lack of arrogance and the flexibility in commercial terms as a key reason for partnering with UiPath. From a capability side, the stability operating in Citrix environments and the expansiveness of it recorder function – features so critical to the effectiveness of RPA - is often added to those reasons. But the growth is also underpinned and enabled by smart hires. The most recent example is Boris Krumrey, UiPath’ new Chief Robotics Officer, who was won over from Atos where he had built out compelling automation capabilities around the notion of service orchestration.

Service orchestration is underpinned by operational analytics and cognitive computing

Service orchestration is the segway to understanding UiPath’s strategy. Aligned with the notion of service orchestration, UiPath is driving towards an integrated platform approach with end-to-end business process automation in mind. To achieve this, the company aspires to be an RPA eco-system player that integrates capabilities, in particular around operational analytics and the broader notion of cognitive computing. Examples include the integration of Google and Microsoft libraries, and also partnerships with providers, such as AABBYY and Elastic Search and Kibana for OCR integration and Data Analytics.

The capabilities of Elastic Search and Kibana will also underpin UiPath’s effort to advance to robot orchestration. However, the journey toward service orchestration goes beyond just tools and technologies. UiPath is trying to change the mindset in many RPA discussions and the notion of knowledge transfer is central in that regard. Consequently, UiPath is working on enhancements and tools to overcome the knowledge transfer challenges to create RPAs on robots quicker, but also in technical complex settings. At the same time, the company is beefing up partner support, training and certifications to put the evolving partner ecosystem on a much more solid platform. In a nutshell, UiPath’s platform strategy mirrors the orchestration efforts of the leading service providers that we have covered at great length at HfS. (link to the RPL)

UiPath’ platform strategy embraces the principles of the Digital OneOffice

Boris’ experiences at Atos can clearly be seen in other elements of UiPath’ roadmap and are aligned with HfS’ Intelligent Automation Continuum. Two examples for that: On the one hand, the integration of broad cognitive capabilities into the platform not least to lower maintenance costs. On the other hand, the extension of integrating automation capabilities to notions of a Virtual Agents akin to Atos AVA which Boris introduced there during his tenure. This extension to digital channels and intelligent sensor aligns UiPath strongly with our Digital OneOffice framework that suggests provider must enable customers to connect their back, middle and front offices. Thus, it is not about individual tools but about enabling a Digital Underbelly. As my esteemed colleague, Phil Fersht puts it, “Digitally-driven enterprises must create a Digital Underbelly to support the front office by automating manual processes, digitizing manual documents and leveraging smart devices and IoT where they are present in the value chain.  Enterprises simply cannot be effective with a digital strategy without automating processes intelligently.”

Bottom-line: Service providers must educate, not obfuscate the market

The discussions with UiPath reference the increasing maturity in the market with a shift away from rudimentary process automation towards enabling higher value transformation projects. Yet, for those discussions to become the benchmark for the broader industry, the stakeholders and in particular the service providers, have to start properly educating the market, rather than continue to obfuscate it with smoke and mirrors. RPA clearly is growing up and maturing. But the marketing and broader discussions are not yet reflecting this reality. We urgently need a new set of custodians to translate these insights into publicly available best practices. To support exactly that, we would love to extend these discussions with other RPA providers about their roadmaps and insights.

Posted in: Robotic Process Automation