it’s easy to overlook our digital underbelly during these times of AI hype and “let’s make a few billion based purely on investor hype” fantasies. But who’s providing the tools and grunt to make all this possible? HFS analyst Ollie O’Donoghue has pooled our study data from the Global 2000, conducted countless enterprise interviews and driven the providers potty to deliver the perfect poignant viewpoint of this industry:
Ollie, what are the major trends in the infrastructure market?
Over the last few years, the infrastructure market has taken a bit of a battering with the kings of hyperscale eroding market share, and enterprises looking for more exciting things to spend their money on than traditional “lift and shift” engagements. However, that’s all changing, and the market is evolving. The big providers are partnering up with the hyperscale cloud players and making them a valuable tool in their toolbox. Moreover, “digital” has fueled enterprises’ appetite for technology. Which means getting their infrastructure and digital foundations in order. After all, these overhyped technologies like AI and blockchain have to run off something!
The challenge for us as analysts covering the space is rethinking how we assess and evaluate providers. In essence, partnerships have become a much more critical part of this market – if a firm isn’t befriending the big cloud leviathans, then they’re likely to struggle to build offerings that resonate with evolving enterprise appetite. The challenge is that as all providers follow this path, there’s a degree of equilibrium, so the assessment needs to evolve further and evaluate how these providers are leveraging partnerships, and building value-add offerings. We also need to scrutinize how providers are developing automation capabilities to design and build more resilient, scalable and cost-effective infrastructure solutions for clients. So while this is a mature market, it’s one that’s changing all the time – and one that certainly keeps us, analysts, busy.
So who’s winning this infrastructure and cloud war?
IBM’s still the undisputed champion of the infrastructure and cloud market – Big Blue brings with it unrivalled enterprise trust, and is the only IT Services major that truly has the cloud capability and resources to fight alongside the hyperscale leviathans AWS, Google, and Microsoft. It also has true scale and ability to manage the largest most complex engagements in this space. That being said, Accenture has an uncompromised reputation for delivering quality and bringing best in class capabilities to engagements. From an enterprise perspective, the fact that this comes at a premium count against the firm to some extent. And while Accenture executives assure us they’re building commercial models to make pricing more attractive, the reputation for being expensive is relatively well set in, and any changes might be like trying to get toothpaste back into the tube. Although let’s be honest, there are worse problems to have than being known for delivering quality at a price.
And the main movers and shakers in the Top 5?
A couple of firms are worth mentioning – Atos performed well because of a concerted effort from the firm to broaden and deepen partnerships with major cloud players. It’s now shaken hands with all of the big hyperscale players and is doing some exciting work around analytics with Google. Atos has also pulled some fresh thinking out of the bag and built a compelling vision for hybrid cloud. HCL has excelled at large scale transformation, is also doing interesting work in the space and comes with strong client references – the consensus is, HCL will keep working to get the job done, bringing in automation capabilities to get the most out of assets. And then we have Cognizant, another firm that is striving to deliver innovation through all its infrastructure services is producing offerings that focus on specific client’s needs. Ensuring business value is delivered, whilst pushing hard down the hybrid cloud path – in recognition that the future of cloud will be leveraging multiple providers to deliver the best results.
So what about the Top 10 overall, any surprises there, Ollie?
The big heavy lifters hold a competitive position, TCS brings a lot to the party and has an enviable track-record of delivery in some industries and loyal clients that leverage the firms considerable global delivery network. Similarly, Infosys is positioned competitively, reflecting the investment the firm is making in building out nearshore delivery centers and redeveloping talent into higher value areas of work. However, the firm does struggle to get its message out there which is holding it back a tad. And then we have DXC – the leviathan firm can bring considerable brains and brawn to engagements, but its path is still unclear to some clients and all eyes are on its financial reports looking for stability at a time when providers sinking can drag clients down with it. Unisys relies on its strong legacy in the Infrastructure space – and innate trust from some industries, particularly financial services. Supplemented by respectable security credentials and offerings. Finally, Wipro is driving a competitive approach to writing off legacy through a cloud-only approach, a strategy which could see the firm drive further up the top 10 list in the future.
So what does the future look like for the market?
We’ve been charting the major trends impacting the infrastructure space for some time now and it’s a quickly moving market. Partnerships are no longer a nice-to-have, they are mandatory if providers are going to have a chance of survival. Finally, the big providers are warming to the potential value they can leverage from the cloud giants, rather than shaking hands through gritted teeth as their revenues eroded. This is an important step as the market matures. But the biggest shift is the rosier tint the market now has after years of revenue freefall. Shifts to cloud and as-a-service hammered traditional revenues – which often made up a sizeable chunk of vendor revenues. But with some compute-heavy applications and technologies on the cards, spending on infrastructure is very much back in vogue. The smart enterprises are investing in their digital underbelly now, in preparation for their future digital needs.
Bottom line: Our partners who got us here may not be the ones to take us where we’re going – the future’s all about smart partnering as the need for savvy IT talent reaches critical levels
If we take a look at revenue projections for the market, it’s not the good news providers are looking for. With As-a-Service and cloud continuing to batter traditional revenues, the market is unlikely to grow from a revenue perspective. But it’s not going to shrink either – we see this market is bouncing back in other ways as enterprises urgently seek help digitizing their operations and scaling their digital businesses: technology is at the heard of C-Suite strategy these days, and partnerships which provide scarce talent to keep these increasingly data-driven environments agile, scalable and secure are critical for enterprises.
Reputationally, IT infrastructure has always had a hard time – security breaches, server crashes, and integration challenges. But all of that’s changing now as automation drives service quality up, and costs down. And partnerships are supporting providers in offering clients best-in-class cloud capabilities at a time when the contents of their digital shopping list needs to be running on the best.
There is a massive opportunity to lead in the world of IT services, provided you can plug these skills gaps. The challenge is breaking out of the traditional sourcing model to access niche talent across the globe in areas such as crypto-technology, Python development, Lisp, Prolog, Go and C++. While most traditional firms still rely heavily on bread and butter IT services delivered at scale from regions such as India, the emergence of talent in Central and Eastern Europe, China and parts of South America also need to be brought into play. The IT services world will be a very different place in a couple of years as boutique firms offering niche skills come into the fore. Not to mention the emergence of crowdsourcing for IT talent. Having really savvy IT leaders who can cobble together crack teams on-tap to solve their IT headaches is already becoming a huge differentiator for many firms. The will also be a role for the super services integrator, who can pull together teams for clients to work with them on complex projects.
To this end, we recently presented the Digital OneOffice Concept to 100 C-Suite executives to understand what is holding back both business and IT leaders from reaching the promised land of perfect real-time symmetry of their business operations staying ahead of their customers’ needs. While the business leaders grapple with changing their mindsets, the IT leaders were quick to call out their skills deficiencies to enable their businesses to achieve a digital OneOffice.
Hence, those providers which can pull together the resources and talent can still profit from this disruptive market – the digital engine can only purr when it’s aligned with all the core components of the business, right from the front to back office. Today’s market is all about taking bigger bets on bigger risks… and only the smartest and boldest will make it.
The rise of RPA is nothing short of spectacular as the market closes in on $2bn this year. It has captivated the attention of the digital operations executives with the promise of cost-savings beyond labor arbitrage, cost avoidance by extending the life of legacy IT, quicker implementation than traditional IT projects, business-user friendliness, auditability and compliance, straight through processing, and let’s be honest – terrific marketing!
However, confusion around RPA deployments is also rife. There are growing questions whether RPA can deliver on the promised ROI and outcomes. Most RPA initiatives continue to be small and piecemeal. Truly scaled RPA deployments are rare. The industry is still struggling to solve challenges around the process, change, talent, training, infrastructure, security, and governance.
With the mission to demystify this confusion and uncover the truth to successful RPA deployment, we conducted a first of its kind RPA CX research to develop the list of “HFS Top 10 RPA Products” (See Exhibit 1). The research is based on interviews over 350 clients and product partners across the ten leading RPA products across:
Ability to execute based on product functionality (Ease of integration with legacy IT, Unassisted automation functionality, OCR functionality, Scheduling functionality, Development tools, Exception handling, Required set-up coding, Ease of product configuration); integration and support (Service extensions and connectors, Documentation, Certification program, Training and customer support, Experience in serving multiple geographies, Adoption across multiple industries, Required IT skill-sets), and security and governance (Uptime and SLA commitments, Version control and upgrade management, Centralized controls, Regulatory compliance, Enterprise security, Disaster Recovery (DR) and Business Continuity Planning (BCP))
Innovation capability based on flexibility and scalability (Accommodating process / environment changes, Licensing model flexibility, Ability to handle multiple processes, Workflow templates and library of processes, Handling multiple inputs) and embedding intelligence (Processing structured, semi-structured, and unstructured data, Operational Analytics, Dashboards, and Artificial Intelligence (AI) capabilities)
Voice of the customer based on the RPA products ability to drive business outcomes (Realizing cost savings, Speed-to-market, Overall satisfaction, and Client reference ability)
Key highlights from the HFS Top 10 RPA Provider assessment
Overall RPA Client Experience has been ‘Good.’ The aggregated average CX scores across all assessment dimensions is three on a scale of 4 implying a good overall experience. For most clients, RPA has created value in addition to reducing costs (just not as much and as fast as they heard in the first sales pitch!). For almost all the RPA products assessed, security, controls, accuracy, integration, and out-of-the-box functionality performs as promised. Basically, RPA works!
Getting RPA “production ready” is not as easy as promised. The client experience with the amount of coding/configuration required is rated amongst the lowest. Management of version control and upgrades as well the training and support offered by RPA providers was also sub-par. The primary reason behind this is a classic expectation mismatch – the RPA providers oversold and overpromised, raising the client expectations beyond normal, that then resulted in less than required client investments towards process and change management. The disappointment associated with RPA is not about the technology itself.
RPA is not very smart (at least as of today). The dimension around embedding intelligence in RPA was rated amongst the lowest by clients. There is considerable confidence in RPA’s ability to process structured data but drops down significantly when asked about unstructured or even semi-structured data. Clients are not convinced about the Artificial Intelligence (AI) capabilities of their RPA products. The good news is that most RPA providers recognize this and are investing in building out capabilities especially around Machine Learning (ML). At HfS, we believe that the holy grail of service delivery will be at the intersection of the Triple-A Trifecta – Automation, AI, and Analytics
Bottomline. RPA works but is not a magic wand. Best practices are emerging
Based on our in-depth conversations with the RPA clients, we developed a set of best practices that you need to keep in mind when implementing any of the RPA products:
RPA is not a silver bullet. Keep expectations realistic
RPA cannot automate everything. Choose the use-case wisely
RPA success is not about technology. Treat it as a change agent
Automated processes are still processes. Invest in documentation, especially as for complex automations
RPA vendors are product companies. Do not expect them to behave like service providers
Do not side-step your IT folks. RPA success requires IT-business collaboration
RPA products are still nascent. Do not short-change security and testing
RPA is not a one-time exercise. Change management and ongoing governance and the keys to continued success
RPA is not the holy grail. Business outcomes driven by integrated solutions are
RPA does not solve your data issues. Data-centric mindset is the key
RPA offers more than cost savings. Think beyond cost-reduction and figure out how to measure success
We’ve been talking about the legacy model of butts-on-seats “mess for less” outsourcing fizzling out for years, but somehow the same old candidates have clung on grimly to the same old model, relying on clients that still find a modicum of comfort negotiating rate cards down to the lowest common denominator, content to hobble along with average service delivery that just about keeps everyone paid… and somehow relevant.
As we’ve bemoaned the decreasing growth rates across almost all traditional areas of business and IT services, no one’s pressed the panic button to do anything wildly different. In fact, many have used the recent stagnant times to merge with each other to eke out a bit more revenue growth and rationalize costs wherever possible.
Meanwhile, all the providers have slapped the lovely “digital” tag on pretty much ever new client dollar that wasn’t obviously a help desk deal or some server consolidation. Yes, people, even good old app testing today has managed to be magically reformulated as a “digital” service by some.
The balance of power sits firmly with the enterprise clients, and many have no choice but to jump ship from the old model
Being realistic, the IT and business services business is no different than it was five years ago, except there is a lot more cloud… and a lot more window dressing. But that is all changing, and our new research reveals a new services economy is upon us.
But, finally, many enterprise clients are wising up to the reality they now wield a lot more power over service providers as the market flattens to a state of hyper-commoditization and negligible-to-pathetic growth. Many are, finally, awakening to a new dawn that service providers can (and most are) able to takeout delivery cost through better deployment of cloud, less costly SaaS apps, and applying robotic process automation to reduce manual workarounds and augment people delivery.
Simply put, if your long-time service provider is failing to deliver you any of these benefits to your business, or at least is making some strides to incorporate pricing that is tied to successful service execution and not only people effort, then it’s time to cut bait before you get fired yourself for perpetuating a legacy model that is depriving your firm from finding new thresholds of value your smarter competitors are already enjoying.
As this year’s State of Operations and Outsourcing study of 381 enterprise operations leaders across the Global 2000 reveals, only 30% of these relationships will continue to operate in the old model, while a similar number will stick with their service provider if they can have a shift towards business outcome pricing and a degree of automation applied. 27% have already given up on shifting the model with their current provider and have declared their attention to switch, while 17% want to end the misery and focus on bringing the work back inhouse, and look to simply automate it:
The Bottom-line: Outsourcing is finally entering the uncomfortable phase of change that’s threatened for several years, and it’s going to get ugly.
Judgement day is now upon the industry once known as outsourcing and this one will get pretty ugly before it eventually finds a new groove, where enterprises and service providers find real value in each other again.
History has told us time and time again that nothing in this business changes until deals are lost and the C-Suite is forced to address why this is really happening… and actually act on it. This is the fine balance in which we find ourselves today, where actions will change dramatically when 2% growth spirals into a 5-10% decline because that is what will happen to many service providers if they truly cannot pivot to deliver value beyond cheap labor.
Those providers which have the capability to make the necessary investments and adjustments will take a few hits, but rebuild for a new phase… those which think they can keep papering over the cracks, repeating to same old spin, but never fundamentally changing how they invest in solutions, talent and their clients, will quickly start moving backward (and fast) in the new services market that’s emerging.
The word “Chatbot” is officially banned: they treat conversations like they’re a game of tennis: talk, reply, talk, reply. There is little to no context and zero intelligence, just pre-programmed responses only set up to deal with a pre-set finite number of frequently asked questions. It’s a legacy customer experience that most of us go out of our way to avoid. To be blunt, it’s easier to be redirected to an FAQ page, or even some online Q&A forum than try and engage in a dumb one-dimensional conversation. I’ve had more intelligent conversations down my local pub after a 3.00am “lock-in”… So let’s shift the entire conversation towards chatbots with some form of intelligence…cognitive assistants.
HFS Research sees cognitive assistants as the combination of conversational interaction and process execution capabilities; they combine characteristics of smart analytics and artificial intelligence. These services can include front-office facing elements (e.g., conversations with end customers) and internal employee use cases (e.g., help desk, HR onboarding, assisting contact center agents).These cognitive assistants can self-learn, self-remediate, and execute business processes. They can also often understand structured and unstructured data and then use natural language processing to learn, comprehend, and recommend next steps. Advanced cognitive assistants can also enable predictive decision making using real-time analytics. This distinction is significant as many people use the terms “cognitive agents” and “chatbots” synonymously. While cognitive agents are a less mature capability, interest and adoption are growing rapidly—and their impacts are far greater than traditional automated tools.
So who’s delivering these services most effectively today? Well, who better to consult that HFS customer experience connoisseur Melissa O’Brien, who’s just launched the industry’s first deep-dive report on the services market for these cognitive assistants:
We based this research on interviews with 300 enterprise clients of IT and business services from the Global 2000 in which we asked specific questions about innovation and execution performance of service providers assessed. We augmented the research with information collected in Q1 and Q2 2018 through provider RFIs, structured briefings, client reference interviews, and from publicly available information sources.
Melissa: Which service providers are the early front-runners?
The most notable players in this study demonstrated the most sophisticated and well-developed cognitive assistants. These providers’ services had solid examples of use cases with capabilities above and beyond the traditional rules-based chatbots and IVR style communications. These intelligent bots have the capability to learn, handle unstructured data, solve business problems and use natural language processing to analyze sentiment and understand context, and are deployed across the enterprise in a variety of ways.
IBM, which topped the list of providers demonstrated the greatest volume and depth of cognitive assistant use cases across industry verticals and enterprise processes, and has the power of Watson as a brand and a tool to leverage for these services. Cognizant, the runner up, also has a wide variety of deployments and some unique examples outside of traditional channels, like its cognitive assistant in a kiosk of a quick serve restaurant. Accenture had some very strong virtualized deployments and the most sophisticated consulting and design capabilities for cognitive assistants.
Which other providers are also showing potential?
One service provider with a unique focus is CSS Corp, which has doubled down on its “Yodaa” cognitive assistant capability. While it risks getting pigeonholed by going to market with the one persona, its actual use cases are broad and the sales and marketing outcomes achieved in particular have been significant. TCS demonstrated broad applicability for its cognitive assistants services, with significant depth and scale of deployments and compelling and differentiated use cases in particular for travel and the NYC Marathon (check out “Pacey Miles”. Many of the service providers, including TCS, Accenture, Infosys, Tech Mahindra, Concentrix, Sutherland, and Convergys, have developed cognitive assistants for their internal processes—using them within their own HR and IT processes or to assist their customer service agents — which is demonstrative of their faith in the solutions they’ve developed. Wipro, DXC and HCL have each demonstrated strength in deploying cognitive assistants within clients’ IT service desk environments— automating ticketing and issue resolution in a more intelligent way.
Is the focus of cognitive assistants is more about augmentation of employee work rather than replacing them?
Automation tools can often replace a human interaction—we see this a lot in self-service, especially in the case of straightforward, focused inquiries. Tools can typically free the employee to do something less transactional, more valuable to the customer, and more “human.” However, with cognitive assistants, the capabilities are more powerful and therefore more nuanced. Generally, the use cases we’ve seen are about making employees, whether contact center representatives, IT service desk staff, or human resources officers more efficient and effective; often that means that the bot is working side-by-side with the employee as an assistant, synthesizing and presenting data, aimed at making their lives easier and processes more intelligent and agile.
Which processes are more commonly being used for cognitive assistant deployment?
Front-office deployments are common, but their AI implementations are not as mature as examples often found in HR, finance and accounting, and help desks. The majority of case studies we saw in this research involved the front office, particularly in sales and customer service. These are often the starting points or the low hanging fruits where enterprises will decide to test the use of cognitive assistants. But the capabilities for cognitive assistants go well beyond the front office, assisting in various elements of the enterprise such as HR, finance and accounting, and the help desk. While the front-office examples are ubiquitous, more mature use cases are often found in other areas where cognitive assistants can execute on processes such as ordering equipment for an employee during onboarding or creating and resolving a help desk ticket autonomously.
Will this all boil down to smart partnering, or a best-of-breed approach?
Partnerships are essential building blocks for cognitive assistants. Many of the service providers in this study cited a “unique” approach with “best-in-breed” technology providers. The reality is that the technology is advancing so rapidly that there’s really no such thing as best-in-breed, and having a partner ecosystem is hardly unique. Those leading in this market will develop strong relationships with well-known players (e.g., IBM Watson, IPsoft’s Amelia, Nuance for NLP), which is essential to have a flexible client-friendly environment—but will keep a keen eye on up-and-comers. Integration with other systems (e.g., ServiceNow for ticketing, HCM platforms for recruitment and onboarding, or CRM systems for customer data) is also important. Almost all of the service providers we spoke to have a technology-agnostic platform (perhaps with the exception of IBM, which partners but leverages the Watson platform heavily), which enables them to leverage their clients’ existing investments and be flexible to clients’ needs and modular with building the tools.
If this market is so focused on the front office, Melissa, why aren’t the contact center providers leading the pack?
Pure-play contact center BPO companies are less mature but have tremendous potential to move up the value chain. The contact center BPO companies (Convergys, Sitel, and Teleperformance) we profiled had less mature capabilities and fewer actual client case studies; two reasons are that contact center BPO companies are finding that it is difficult to fit cognitive assistants into their bread-and-butter business and that automating customer interactions brings with it revenue cannibalization. However, for front office use cases there is a tremendous opportunity for these players to take the lead given their wealth of customer data and customer experience expertise. By embracing cognitive assistants, these service providers have the opportunity to carve out a differentiated capability for a blended bot and human model, providing seamless transitions to human agents and harnessing the power of their core capability—while potentially breaking out of the legacy FTE models that have dampened innovation and profitability for years. Two ripe areas for further developing cognitive assistants for contact center companies are in use cases that employ bots internally for recruiting and hiring and those that augment agents. Companies that use these tools internally to their best advantage will create differentiation in their service delivery.
The Bottom-Line: The disruptive potential of cognitive assistants is only just unravelling for service providers and enterprises
Today, the cognitive discussion is about augmenting peoples’ performances. Being able to engage in a semi-intelligent manner with a bot has huge ramifications for everyone in the business environment: for consumers who want to engage digitally, for employees who can spend less time having routine interactions, for supply chain staff who can move products and services around at digital speed, and so on. The common nuance here is that all these entities are being assisted – they aren’t being replaced.
Tomorrow’s discussion is about scaling businesses with less reliance on people addition, and these cognitive assistants will be a significant factor. However, the evolution of technology isn’t finite, and while these social tech tools today add value and efficiency and add to the customer engagement experience, the more these tools can be refined to self-learn and self-remediate, the more judgement-based human tasks they will be able to support. Ultimately, this means both service providers and enterprises will not need to keep adding so many new staff in the future to deal with larger business volumes. Cognitive technologies, when smartly managed, will allow business to scale without the linear addition of staff to deliver scale. This creates a huge opportunity for service providers to compete, as those which can provide volume services and lower rates, based on their acumen to deploy cognitive assistants to support their clients. Of course, enterprises will have the choice of deploying cognitive assistance themselves inhouse, or whether to engage with external service partners which can deliver high volume/ low-cost cognitive services for them. Much depends on the skills needed to develop ongoing algorithms based on an intimate understanding of the business and its institutional processes. This has much more far-reaching potential than merely deploying an RPA bot to crank some basic process loops… This means having unattended and attended interactions with people, processes and data sources both inside and outside of the enterprise, such as macroeconomic data, compliance issues, competitive intel, geopolitcal issues, supply chain issues etc.
Net-net, the more intelligent we become at deploying these cognitive assistant tools, the more we will focus on technology-driven solutions that reduce the numbers of butts-on-seats needed to support the business. Those service providers which fail to deploy cognitive assistants to scale their services competitively will fall away, and for those which have not yet developed this emerging capability, it may already be too late. I doubt we’ll even call these solutions “cognitive assistants” in a couple more years… they’ll simply become part of the fabric of operations, and how we engage and interact digitally to get things done. Rather like offshoring became so normalized we stopped defining and noticing it, the same will happen with many of these emerging technology solutions as they become part of how we conduct business.
When you do something to change the status quo, you usually expect those who love the status quo to resist. So why on earth would Accenture’s global leader for analyst relations, Allen Valahu, laud the emergence of the HFS TOP 10, when his firm is already hitting top right corners of all the analyst quadrants on a (seemingly) daily basis? Well, Allen publicly submitted to us his viewpoint:
“Good news. I believe the TOP 10 will allow us to have more regular and meaningful interactions with your team throughout the year. It will put less pressure on our clients as they will have more lead time to talk to the analysts. Finally, the ability to update HFS through timely structured briefings, demos, and reference customers as the opportunities arise throughout the year, is a much more targeted and strategic approach. Look forward to interacting with HFS in a more strategic way going forward.”
In short, Allen is seeing the HFS TOP 10 as not only presenting the voice of the customer in a more meaningful way to customers, but it also enables analysts and vendor executives to engage in a less stressful – and political – manner. Where quadrants force a “lobbying” situation, where the outcomes of the matrix dots are entirely dependent on the analyst getting served up their vendor references within tight deadlines, dictated by the analyst firm, the TOP TEN frees up all parties from these stressful processes and interactions, as the analyst firm isn’t 100% reliant on those vendor reference calls. This also refocuses the analyst/vendor relationship more around valuable conversation and strategy, and less around the “he said, she said” tactical bake-off, which the legacy quadrant model forces.
Bottom-line: Goodbye quadrants… it was nice while it lasted, but the industry has moved on
I have been overwhelmed with messages of relief and encouragement from many people right across the industry who are delighted to see a change to a practice that is tainted, tired and viewed negative by all and sundry. Only one vendor executive voiced objections, based more on the fact that their job is tied to quadrant management, and the HFS TOP 10 threatens to impact their cosy existence.
Full credit to Allen, who runs a tight ship of analyst relations executives to communicate their performance effectively. While the current system works for Accenture, it clearly impacts the quality of relationships with analysts, their own clients and their under-pressure executives. It’s too stressful, drives far too many negative, defensive conversations, and, quite frankly, degenerates the whole balance and value of analyst/vendor relationships. While am sure it will take time for many people to fully get used to the more strategic methodology the TOP 10 brings to the table, having the market leaders immediately voice their support (and relief) is heartening.
Yes, folks – the rumors are true. HFS is officially out of the quadrant business.
We’re done, the whole quadrant craze is starting to smell pretty bad and we know the industry is fed up with it. Increasingly, many of these 2×2 matrices are missing several of the market leaders (who refuse to participate) and having them all stacked in the top right just smacks of pay-for-play (even if the analyst has fair intentions). Let’s be honest, noone trusts these matrices and they are harming the entire credibility of the analyst industry. Sure, there are many honest, quality analysts with integrity, but their craft is being soiled by several quacks who are basing their vendor placements purely on vendor briefings, whether they like a particular vendor, and whether some vendors pony up for their research services. There are many “analysts” out there who do not bother to do sufficient customer research and we all suspect who these characters (and their employers) are…
If we don’t change, we all – as analysts – might as well admit we’re no longer in the research business: we’re in the vendor PR business. Yes, it’s that bad… and let’s stop sugar coating it.
Enterprise executives tell us all the time they get zero value from these grids – they are purely for vendor marketing sales decks (and I talk to a helluva lot of these enterprise folks). However, enterprises desperately need to be informed on vendor performance – they just need a direct ranking that’s relevant for their needs, where a credible analyst puts a stake in the ground. That’s what everyone has told me, so that is what we are delivering: The HFS TOP 10.
Quadrants, Peaks, NEATS and Waves – and sadly Blueprints – are all sales tools for vendors as opposed to decision support tools for enterprise customers. At HFS, we are not in that business – we are in the research business to support informed enterprise decisions. At HFS, we are not ending our involvement in covering the hottest markets in the industry and producing the best competitive analyses, we are merely making our research more relevant, more timely and more impactful with the HFS TOP 10 and much more simplified to support the enterprise customer. What’s more, when some firms take six to nine months to get a quadrant to market, that market has often already moved on, and the data, despite its credibility, may already be stale. We are in a world that doesn’t stand still, where enterprise customers are thirsty for timely, credible data that clearly shows the winners, contenders and laggards in a given market.
Customers want rankings where the analyst took a stand, not merely a fuzzy matrix where everyone looks like a winner. Here is an example of how the HFS TOP 10 ranking looks (the RPA Products in 2018), and here you can download a full report example to see for yourself how we get to the point, how we inform decisions and we clearly profile where vendors are strong – and where they face challenges.
HFS TOP 10 reports remove the unhealthy involvement of vendors from the analyst evaluation process and are much more timely, relevant and less cumbersome to produce
The main difference with the HFS TOP 10 is the fact we’re running them purely on desk research, support from our research academy and from our vast repository of current user data. We are eliminating the whole laborious vendor lobbying and briefing processes so we can get these reports out the door faster than ever before, without being tied to vendors schedules and relying on references they provide. This does not mean analysts cannot do vendor briefings to support their research (if the analyst deems it necessary, or if the vendor requests a timely briefing), it just means we do the research in a timeframe that can’t be moved. It means vendors cannot complain that we “did not do reference calls with their customers” or give them a chance to be adequately represented in the market. Because HFS already has the data! We have reams of data on service vendor performances, or vertical markets, on RPA products, on blockchain platforms, on analytics firms, on FinTechs etc. And where we may occasionally not have sufficient customer data in a niche market, we will invest in gathering it using the HFS network. Yes, we actually set aside funds for user surveys where most of our competitors only perform custom research when their customers are funding it.
Here are some FAQs you probably want answering:
1. How is the methodology of the HFS Top 10 different from the Blueprint? There are several key differences in methodology:
a. We are Ranking vendors, not Gridding them. The HFS Top 10 is presented as a simple and clear ranking of assessed products / service vendors versus the 2X2 Blueprint grid
b. Voice of the Customer, execution success, and innovation capability. The HFS TOP 10 methodology is driven by customer experience with products / services (voice of the customer) in addition to vendor’s ability to execute and innovate.
c. Powered by HFS G2000 network. The primary source of data for the HFS TOP 10 reports is HFS’ extensive network of G2000 enterprise customers. HFS will gather information via surveys, analyst interviews, and ongoing dialog with customers versus relying on data inputs from service vendors. HFS conducts over 5,000 interviews a year with enterprise customers right across the six change agent areas of our research coverage: RPA, AI, Smart Analytics, Global Sourcing, Blockchain and Digital Business Models.
d. Not reliant on vendor RFI responses. The Top HFS TOP 10 report methodology does not rely on the use of old-school traditional approaches of collecting data through vendor RFIs. We welcome vendors to augment our analysts’ knowledge base through structured briefings, demos, and reference customers, but this not a necessary component in the process. We will not allow vendors to slow-down our research processes.
e. No opt-out. There is no opt-out for leading vendors given HFS is relying 100% on its own network and data sets. We never produce vendor landscapes where half the leading players are absent.
2. Will there still be fact checks with the vendors?
Yes, vendor profiles, including strengths and development opportunities will be sent for fact-checks. However, rankings will not be shared in these fact-checks. An embargoed HFS TOP 10 will be released one-day prior to the actual release of the report, intended to be an FYI versus any negotiation on ranking etc. We are not in the lobbying business, we are in the research business.
3. What data will populate the HFS TOP 10 reports?
The data will be populated from multiple sources of information:
– The primary source of data for the HFS TOP 10 reports is HFS’ extensive network of G2000 enterprise customers. HFS gathers this information via surveys, analyst interviews, HFS roundtables and summits, and ongoing dialog with enterprise customers, versus relying on data inputs purely from service vendors.
– Providers can augment our analysts’ knowledge base through structured briefings, demos, and reference customers.
– Note that we will minimize the use of old-school traditional approaches of collecting data through vendor RFIs (unless covering a nascent / emerging market where most of the solutions are still in beta mode).
4. What is the minimum customer data-set needed to be able to guarantee a voice of the customer? What happens, if for whatever reason, there is not enough customer data?
A statistically significant sample set is 30 datapoints for a report across reference checks, our existing data sources, and our own customer conversations. While most of our current research has a significantly higher sample set than 30 there is rarely a lack of available data to use to source the rankings. Where a lack of customer data does occur, it may result in delays of the research publication as we make extra efforts to source customer data.
5. What can vendors do to maximize customer data access?
Real value usually comes through engaging with HFS analysts throughout the year by providing HFS analysts the opportunity to speak with more of their customers, sharing and collaborating on customer stories. As mentioned, we make it our business to do our own customer research – that is our purpose in the industry, but those vendors who can persuade many of their customers to showcase their experiences will benefit.
Yesterday, you may recall we discussed the comments made by Nigel Barron, who spend 13+ years at CSC before the merger with HP (when DXC was formed). After nine months at DXC, Nigel was sacked. I was sad to see him go because he was one of the few folks in CSC who pushed hard to persuade its executives to spend time with HFS analysts (as opposed to Gartner, IDC etc). I remember Nigel would frequently share our work with his team and would put out some pretty cool insights.
Firstly, I would like to thank Nigel for excusing the behaviour of many people for acting like “nodding dogs” to keep their jobs. Secondly, I would personally like to apologize to Nigel for inadvertently portraying him as one of the nodding canine family, when, in fact, he is anything but. Nigel asked me to publish his explanation that he was actually sacked by DXC because he was fired for refusing to conform to the nodding brigade, daring to challenge a firm that (let’s face it) is in danger of drifting into insignificance.
“Hi Phil, thanks for the mention. I was the antithesis of the nodding dog at CSC/DXC, so much so that it probably contributed to my being laid off last December. I was a top five company internal blogger on the company’s collaboration platform writing blogs such as ‘The end of management’ and ‘Nowhere to hide’. My bosses kept the faith until the second round of layoffs occurred after the merger. My then boss had an easy choice to make when told to find someone to cut, although there were other circumstances that I won’t go into here (Mike Lawrie refers to ‘Pyramid corrections’ in earnings calls). I do sympathise with analysts who have become nodding dogs for the reasons I mentioned in my comment, but that doesn’t mean its the right thing to do. I’ll be 54 in a couple of weeks, I’ll never, ever be a nodding dog but I’ll always be a supporter of HfS, you and your team. Nigel”
If anyone from DXC is reading this, you need a few characters like Nigel who can shed some light on what your firm is trying to accomplish, as we – at HFS – are flummoxed with the whole premise behind this merger. Why remove the only people who can challenge you, just because you can? Good luck Nigel – feel free to share any of your views with us in the future, you are developing quite a sympathetic following. DXC is poorer for your absence and you deserve better, my friend. PF
After yesterday’s slightly risqué rant, I received an interesting comment from Nigel Barron (pictured) this morning, an avid follower of HFS over the years, who spent much of his career with CSC and subsequently DXC before recently going independent (and clearly off the leash and wagging his tail!):
“Since 2008 every job has become a hustle and analysts are no different. Authenticity is not a winning attribute. To survive, being the nodding dog is the difference between having a paycheck and not having a paycheck and when they’ve got mortgages to pay and kids to put through college truthful, honest and clear research might not be the best bet. That’s not to say its the right thing to do, just an observation. I speak from experience also.”
I refused to become a nodding dog. It’s simple if you keep at it…
Nigel Barron: Nodding Dog Sympathizer
Well, Nigel, I also speak from experience here. I used to work for Deloitte Consulting back in the day, and my lead Partner demanded I take my blog offline (having initially been fine with me continuing with it, during the interview process). The firm literally could not tolerate one of its consultants having freedom of thought and bypassing its painful thought police (aka “risk”) process. I eventually left the firm after that… I just couldn’t stomach an employer putting the muzzle on thought leadership. Especially mine!
A couple of years later, I was working for AMR Research (now part of Gartner) and a huge debate ensued among management whether “Phil should keep his blog up”. Many of the clients insisted one of the reasons they stuck with the firm was because of my blog, so money eventually spoke – they felt they got some real views of the industry and wanted to call me to discuss as part of their research contract. In fact, our Chief Research Officer, Bruce Richardson, at the time candidly said, “Let’s just let all the analysts blog, I can guarantee only 2 or 3 will bother”. Bruce was right. In fact, I think it only me who actually bothered. And then another boss decided to try and ban analysts using LinkedIn. My god… where do they find these people?
Amusingly, around that time, I went for a job interview with SAP (yeah OK, I wanted a Merc)… and the first thing the hiring SVP asked me was “Phil, you will keep your blog going, won’t you?”. I nearly fell off my chair – you’d have thought the Germans would be the first to censor free thought =)
Find an employer who lets you express your ideas and views. Otherwise just work for yourself. Or just be a nodding dog…
If you are a nodding dog who’s happy nodding away and taking home your paycheck each month, then I am very happy for you. Life is good. However, if you are bored out of your mind and are desperate to craft a living that utilizes your creativity, please get out of your predicament… for your own sake. The digital world is all about people with creative relationship skills and entrepreneurial capabilities. Nodding dogs can (and will) be replaced by automated ones… please don’t nod your way into unemployment.
Let’s face facts, the world is a digitally-scary place, and the only way to deal with it is to keep trying to learn more and keep talking to colleagues and peers in other firms about how to get ahead of this. Suddenly, we have become disposable assets and we need to keep reinventing ourselves to keep sounding like we’re up on all the new stuff. Suddenly, we live in a world where everything is about to be transported to the scrapheap of legacy professionals who can’t be retrained to do anything meaningful anymore. So keep nodding at your peril…
However which way we look at this, the real answer is that we simply don’t actually know what the future has in store for our careers, our companies, our economies, politics and our children, but what we can do is keep understanding the facts and keep sharing knowledge with other like-minded people… and the future will unravel before our eyes as we keep trying to make sense of it all.
Our recent study on Intelligent Operations, conducted with the support of Accenture, which covers the views and dynamics of 460 global 2000 operations leaders, gives us some real insight into this shift towards the creative, curious types, with a thirst to learn and an obsession with networking and partnering:
The focus is heavily shifting to dynamic, entrepreneurial individuals who understand how to define outcomes
So if we’re one of these obsessively socially curious animals with a penchant for constantly knowledging-up on all the cool new stuff – and we love to talk partnerships with other companies in our network, the near future is actually pretty encouraging for us: our skillset now tops the list for what global 2000 leaders are looking. Leadership is under intense pressure to change the norm, to align their operations with the direction their customers are taking them. The wonks who spend all day staring at spreadsheets, focused on execution “left-brained” activities are less in demand – they need to learn how to wrap the needs of the business into broader processes that can cater to customers and support management decisions in real-time. Essentially, if your operations are not in sync with the customer-driven front office, you will likely fail. Yes, you need opinions, you need to speak up, yes you need to stop the nodding and find your inner digital mojo.
The Bottom-line: This is the new normal – leaving our comfort zones and getting out there to make stuff happen. End the nodding now!
It really is as simple as that – we’re all leaving that big comfortable world where all you had to do was turn up for work, do the same routine activities each day, go to the same mundane meetings and keep the lights on. We all know those days are leaving us behind, and if you’re under the age of 55, it’s unlikely you can plot that sneaky escape to early retirement… we’re living in a world where we need to learn about new technologies (you don’t need to code anymore), we need to share experiences and use cases with peers across the industry, and we need to reach outside of our cosy internal networks to talk through smart partnerships with tech firms, supply chain partners, customers etc.
You only have to look at the reason 200 executives showed up at the HfS FORA Summit in New York to understand motivations have changed in an anonymous poll: they are going out to get educated and share experiences with peers. The days where conferences were all about job hopping are over – it’s more about how to stay relevant and ahead of the game.:
In essence, there is no written rulebook where this all leads – the world has become an uncertain place politically and we have yet to experience an economic downturn for many years. However, what is clear is sitting in a quiet office all day staring at your emails and nodding in a canine-like fashion is unlikely going to get you where you need to go next in your career. This is the age of getting networked, getting smart and learning from collective experiences. The only comfort zone is the one you make for yourself – being comfortable with the impact of change agent technologies and the experiences you can have working with them.
So let’s wage a war on the turgid dog nodding motherhood and apple pie, people… Ugh, it makes me want to curl up into the foetal position and reemerge in the 1960s… when thought was valued, and democracy was everything.
As an analyst, you spend your time with a lot of other analysts – for better or for worse. And, recently, worse is taking up more than its fair share. It just seems like, as an industry, we’ve lost our collective teeth, our ability to question, challenge and find out the truth. We’d even go as far as questioning whether we’ve lost out soul.
When HFS launched ourselves onto the market over eight years ago, the cornerstone of the firm was a blog that was revered as one place you could get the real truth about the industry, where people were safe to make a (gasp) controversial comment where we could all call a “spade a spade”. One industry leader (from IBM of all places) even went as far as describing this blog as the “Wall St Journal editorial section of the industry”. More recently, we’ve been called “Blue Collar” research, which I guess we’ll take as a compliment. Anything is better than being seen as fully paid and played by the dirty vendor dollar… which is sadly how so many recent pieces of “research” have been described.
Today, most analysts and advisors use hype as their comfort blanket – even if they don’t understand it, they just circulate it because it makes them feel relevant
Sadly, at HFS, we doubt we’d have succeeded with our honesty and bluntness if we launched today. The industry is too controlled by vendor marketeers who shower their lovely budgets at analysts and advisors alike to keep them all in line… where most just regurgitate the same hype as each other because they just don’t care anymore. Most barely understand the hype, but regurgitate it because it gives them a sense of security, a sense of belonging. It really is fucking sad, isn’t it?
Today, when you go into a vendor briefing packed with analysts, you’ll be confronted with row after row of nodding dogs, passively absorbing the hype, marketing drivel, and outlandish ‘thought leadership’ that has no bearing on reality today, let alone the future.
Yes folks, let’s face reality: vendor executives deliver lovely fluffy cotton candy the analysts and advisors gratefully inhale. No one seems to want to give anyone a hard time these days… it’s all PowerPoint bullshit being delivered to plastic smiles and nods of universal agreement, even though no one really has a fucking clue what reality is versus bullshit anymore. In fact, no one seems to care… they just keep nodding… like dogs. I mean how can you really be an expert in RPA when you’re spinning your wheels at conferences 13 months a year? When are you actually talking to real clients about real issues? Does it matter in this age of #fakenews?
Vendors just insist on nurturing the nodding dogs
Let’s give you an example. At a recent event on the “future of work” (yep… that old chestnut), a room jam-packed with senior analysts listened and nodded intently to a vendor expert proselytizing on the business benefits of pushing 70% of enterprise employees onto the modern equivalent of zero hour contracts. It’s scalable; enterprises can tap into talent whenever they want, reduce costs, all of the good stuff businesses have been desperate to do. Eventually, a couple of HFS analysts broke ranks and said ‘what on earth makes you think the labor market will accept that deal?’
I mean, honestly, it’s weighted so heavily in favor of the enterprise that if government regulators and unions don’t kick it in to touch, a massive disenfranchised labor force almost certainly will. But the simple act of challenging this line of thought was almost enough to cause the immediate ejection of the analysts. The look on the faces of the professionals from the vendor told the whole story – they hadn’t been challenged in such a long time they didn’t know what to do with it. The other analysts in the room stopped their nodding briefly with dazed confusion across their faces. I can imagine it was the same reaction a courtier would get if in the middle of a banquet they told Henry the Eighth he should stop eating so much and think about his cholesterol… or his gout For once, the nodding dogs stopped nodding and looked up in amazement…
We’re in a world where rocking the boat gets you quickly hurled overboard
There have been other occasions when plucky analysts have challenged the core narrative – at its worst, they’re ejected from the room. At its best, they have been picked on as a ‘negative person’ or someone who ‘hasn’t read around the topic enough’. The world we are building for ourselves is one in which analysts are just a collection of dullards with a single purpose – to toe the party line of whatever a vendor is telling them. Either that or be ostracised and ridiculed. You can see why keeping in the pack is a much more attractive prospect to some. Why rock the boat when you can nod like a dog and everyone leaves you alone?
In many ways, vendors are as much to blame as the analyst firms. A short while ago it became vogue to cram analysts into large lecture theatres and run presentation after presentation – “Thanks for listening to two hours of us running through our financial performance, now you’re suitably sedated we’ll tell you about cloud, automation, blockchain, AI, GDPR, et al. quick succession over the next five hours. Unfortunately, there will be no time for questions. Try and ask a question and you won’t be invited back. Thanks, have a great day and remember your earplugs and eye masks are stored under your chairs.”
This bred a particular type of analyst – the nodding dog – that silently sits at the back of the room, nodding reassuringly when anyone makes eye contact, and briefly types out a mirror image of what the vendor has splurged out on their slide deck. “Doing lots more digital huh? great, I’ll write that down and get it off to editing.”
Just take your money and nod like a dog, please
Now, this may seem like a vitriolic attack on the analyst industry as a whole – which is partially correct – but this is really a look at the series of factors that have slowly eroded the value that analysts can provide to clients. The days of clear, impartial insight that fuel business decision making on their way out unless we start fixing this industry now.
The biggest issue is that the analyst firms swimming against the current are the first to be snubbed by vendors looking for the immediate gratification the industry now offers them. Publishing something even lukewarm will see your inbox filled with demands for ‘rebuttal’. You can’t imagine the response to something which is openly critical. Ultimately vendors know this works, they hire pushy and aggressive AR people to drive their narratives into the skulls of analysts. The big firms, chasing the money, know not to fight back – drilling their analysts to nod politely and, crucially, not to write or say anything that could lose them the account. Take your money and nod like a dog.. and we’re all cool, right?
This short-termism is pillaging the credibility of our industry.
‘Pay to play’ has become an insult so frequently used that’s it’s lost all meaning. Like that family member we all have whose frequent profanity was shocking at first, but eventually became an endearing characteristic. Corruption, subjectivity and personal agendas have become the knowns that clients expect and budget for. Frankly, it’s a constant surprise that 2×2 grid hasn’t disappeared as quickly as positive interest rates did after the financial crisis. There’s no value in them anymore – and if enterprise decision makers know that, by and large, they’re sketchy and not worth consulting, why do them at all?
Our worst fears were confirmed in a recent dispute on LinkedIn, in which industry grandee’s defended research that contained none of the major players in a market as a better way of supporting buying decisions (although they went on to argue that these reports, paradoxically, have no role to play in informing sourcing professionals!). As a sign that the industry is doomed – as with a failing company where all assets are for sale in a desperate bid to eek out a few more months – professional credibility and the reputation of a firm are up for sale for a relatively small price tag
What business are most ”analysts” in these days? Not “research”, that’s for sure…
This is the question at the center of an existential crisis for the analyst industry. In recent years, business models have eroded from research and analysis to vendor PR and marketing. The proliferation of nodding dog analysts which serve only as a mouthpiece for vendor marketeers, and the production of research which only has market value as far as vendors are willing to sponsor it has pushed analyst firms further and further away from the core mission of the industry – to inform clients. For some, the journey back is too long and arduous – they may as well throw in the towel now, or just honestly label their output as marketing fluff. At least they’ll be able to claw back some credibility for owning up to the true nature of the business.
For others that have drifted less, they must ask themselves ‘what business am I in’. If the answer is anything other than to provide clients with truth and clarity, sorry – you may as well phone it in as well.
The tragedy is that the current analyst market incentivizes the nonsense. For guaranteed business revenue and analyst bonuses, it adds up to pump out the same hype that we are supposed to be cutting through. Blockchain and AI hype trains are mandatory for most analysts if they want to get paid. And the easiest way to join in the conversation without needing to do any actual research is to circulate what vendors are saying. Even I’ll admit that it’s easier to find free time as a researcher if you don’t need to do any research.
But this dynamic simply can’t continue. The type of people that consume analyst research are, save some exceptions, exceptionally intelligent people. As soon as they start seeing the same crap from analysts as they get from vendors – the type of drivel that doesn’t tie up with how their business works – then they’ll stop reading and listening. It’s a simple as that. Even the most remote watering hole in the desert will stop being visited by local wildlife if it gets filled up with sewage and shit.
Bottom Line: If things don’t change soon we may as well close up shop and join a circus. Assuming we’re not in one already.
So as an industry we need to keep asking us what business we’re in, who we’re serving, and why we’re doing the things we do. Luckily, at HFS we’ve built a community of candid, and often ruthlessly honest analyst, buyers, enterprise leaders, and advisors. While other vendors and analyst firms are stifling the voice of dissension, we’re giving it a loudspeaker. Because if we’re not producing truthfully honest and clear research – then we may as well jack it in as well and join a circus (or move to the part of the industry that’s already become one.)
