Ned, let\u2019s start with what you mean by Digital Transformation. Can you elaborate?<\/strong><\/span><\/em><\/span><\/p>\nThanks, Phil. As you are aware, it can mean many things but in its purest sense we see Digital Transformation as the changes that must occur when a business moves away from a physical task. For example, the shifts that occur in underlying processes and infrastructure when one sells goods online rather than in physical store. As such, you could argue that Digital Transformation is as old as information technology itself.<\/p>\n
So… why, suddenly, is “Digital” as a moniker beginning to stick again? <\/strong><\/span><\/em><\/span><\/p>\nAh, good point and to quote Yogi Berra, its Deja\u00a0 vu all over again. But there\u2019s good reason. We are entering another period of accelerated development and economic advancement that is being driven by technology. The last wave was also fueled by Digital technology, but driven by\u00a0 the web and the broader internet the gains this created were primarily centered on improving existing operations. Information became cheaper, moved faster and became available to nearly everyone – whether an employee, customer or partner. That transparency drove out waste. Today, we are seeing another wave of Digital, however this time it is different. It is fueled by a cross pollinating collision of three things: the proliferation of mobile devices, the development of sophisticated analytics, and the emergence and maturing of cloud delivery. In short, computing is now spreading out to the edges of every activity we undertake and in conjunction we are now able to glean meaningful and actionable insight from this activities at reasonable cost. None of this is new. It\u2019s been the subject of visionaries for years. What is transformative today is that it is increasingly economically feasible. As such, leading enterprises are adopting these technologies to drive business gains, and laggards are realizing they must either keep up or they may be forever left behind.<\/p>\n
You mention in your research that Digital Transformation is already here today. Where do you see this activity?<\/strong><\/span><\/em><\/span><\/p>\nYes, and I can not say it enough. The future is not waiting for tomorrow. It is here today and we have been documenting it over the past year in our research and for those hoping to reference some definitive turning point, you are waiting in vain.<\/p>\n
So… what then does Digital Transformation actually look like? <\/strong><\/span><\/em><\/span><\/p>\nDigital Transformation is as much about the impact on providers themselves as it is about the needs of the markets they serve. Specifically, it brings five key changes to the provider market \u2013 changes we highlight in our ongoing research. The five traits are:<\/p>\n
\n- New business models emerge.\u00a0 <\/em><\/strong>As IT service providers look to push a message of transformation, they are being asked (or afforded) the opportunity to embrace this themselves. As a result, we are seeing a rise in revenue gainsharing models where a provider delivers a set of underlying services in exchange for a share of profits pegged to a specific business outcome.<\/li>\n<\/ol>\n
Bottom line: Digital Transformation will rewrite the underlying economics for services firms<\/em><\/strong>.<\/em><\/p>\n\n- Sacred operating models get shattered.<\/em><\/strong> When a new market emerges it does so via a set of new definitions that establishes its uniqueness and allows it to take shape. These \u201crules\u201d often take on significance of their own but as the market evolves into a mainstream opportunity, these rigid definitional distinctions ultimately become obstacles not advantages. Such is the case today with Cloud, Analytics, and Mobility. The core concepts matter but greater value is obtained by taking a broad and open approach to the enabling technologies and what they can bring.<\/li>\n<\/ol>\n
Bottom line: Digital Transformation will become embedded in every conversation<\/em><\/strong><\/p>\n\n- A focus on infrastructure readiness prevails. <\/em><\/strong>As providers push their messaging around the positive outcomes that digital transformation can bring, they are being asked to rationalize disparate legacy apps to enable this change. This raises the focus on solving the challenge of infrastructure readiness and who can best weave it all together.<\/li>\n<\/ol>\n
Bottom line: Digital Transformation requires us to fix many of our old problems before we can realize its promise.<\/em><\/strong><\/p>\n\n- Old technologies become new friends. <\/em><\/strong>As new markets emerge, they often revolve around shiny new features that ultimately cloud our ability to extrapolate where they are truly headed overall. True progress comes when we move beyond this feature focus to embrace the whole. Take for instance the mobile market where early on we saw smartphone Apps become the end rather than the means. Today leading services providers are thinking well beyond this and presenting Digital Transformation offerings that leverage the full capabilities of these phones and integrate them\u00a0 into how a business is run not just how some information is accessed or displayed.<\/li>\n<\/ol>\n
Bottom line: Digital Transformation requires us to look beyond the obvious in what new technologies offer.<\/em><\/strong><\/p>\n\n- Old friends become new technologies.<\/em><\/strong> In a similar fashion, Digital Transformation creates opportunities for new forms of information and insight to be gleaned from the traditional ways we already conduct business today. For example, email trails are being mined via sophisticated analytics to determine patterns of communication that may indicate future problems among partners. Sensors are now being deployed on physical objects to allow them to become part of information context that was impossible before.<\/li>\n<\/ol>\n
Bottom line: Digital transformation requires us to look for new insight among existing processes and tools. <\/em><\/strong><\/p>\nDespite the current activity being well underway, it is important to point out we remain in the earliest of stages for this market and the battle for dominance continues to play out \u2013 both across the underlying enabling technologies as well as the providers themselves.<\/p>\n
After all, the iPhone – arguably one of the single greatest drivers of this opportunity \u2013 is only seven years old. These markets are moving fast and there is a tremendous amount at stake for every participant \u2013 be they hardware, software, services or some combination of all three. Expect the activity to intensify.<\/p>\n
So with that, how do the providers stack up?<\/strong><\/span><\/em><\/span><\/p>\nDigital Transformation represents a diverse set of activities \u2013 everything from modernizing a back office legacy application to designing a new customer engagement model to be delivered via a mobile app with many disparate services in between. As such, conducting an apples-to-apples comparison across providers requires a high level view that compares outcomes rather than individual underlying technologies.<\/p>\n
In the realm of Digital Transformation, HfS groups IT Services providers in one of three circles as determined by the maturity of their offerings and capabilities within this emerging market.<\/p>\n
Front Runners.<\/strong> Accenture, IBM, TCS, Cognizant and Infosys occupy the select group of \u201cFront Runners\u201d as each has demonstrated having the industry expertise and technological innovation to craft leading edge solutions across a variety of clients. These providers make a great fit for those looking to aggressively embrace change \u2013 understanding the level of challenges and opportunities that breaking this new ground will entail.<\/p>\nChallengers.<\/strong> Wipro, HP, Capgemini, and Unisys are this year\u2019s \u201cChallengers\u201d with each in the hunt for the top positions though they could all benefit from greater coordination and centralization around their entire portfolio of Digital skills. These providers make a great fit for an enterprise that brings a clear but more measured vision of adoption.<\/p>\nRising Stars.\u00a0<\/strong>IGATE and CSC round out this year\u2019s \u201cRising Stars\u201d with each providing strong examples of Digital Transformation though now needing to do so on much broader scale. Providers in this wave make an excellent choice for those looking to experiment and want a strong partner to co-develop a solution.<\/p>\nIn your view, how should a business or technology executive should approach Digital today? <\/strong><\/span><\/em><\/span><\/p>\nFirst and foremost, there is the need to assess your organizational appetite for change. As the most significant new selling opportunity of a decade if not more, Digital Transformation is generating tremendous buzz across the IT Services landscape. Nearly every major provider is aggressively marketing themselves as a leader in the field today.<\/p>\n
So what is a buyer to do? Enterprises are advised to assess their internal appetite for change. If you are still at the experimental phase and only looking to test the waters of Digital, a skilled partner from the lower left might be willing to invest more energy getting you where you want to go in return for becoming a reference account. However, if you are in a market or industry that needs to quickly go all in, you may be better off with a front runner today.<\/p>\n
Also understand that some firms excel at execution while others excel at innovation and these relative strengths can differ within an individual provider\u2019s own big MAC. We include a diagram highlighting these distinctions for every provider in the report. For example, one portrays a firm that is strongest in mobile innovation and brings balanced strengths in Analytics but lags a bit around innovation in Cloud. Enterprise buyers should use these diagrams to match a provider\u2019s strengths with the skills they need.<\/p>\n
And finally, where do you see Digital Transformation headed in the second half of 2014 and beyond?<\/strong><\/span><\/em><\/span><\/p>\n