Accenture’s strategy has always been pretty straight-forward: focusing on its major clients and making sure it stays ahead of the pack, where the marketing is moving. This was pretty much the story when we spoke with Accenture Digital’s Group Chief Executive, Mike Sutcliff, two and a half years ago (view blog)… and today all these intentions have been backed up by billions of dollars of bold digital investments, vastly outplaying the competition:
So we hunted Mike down for an update to talk about these massive recent investments and how this Accenture Digital business is shaping up…
Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Mike – it’s been a couple of years since we first discussed the big digital push your firm is making. Can you share an overview of how the market has evolved since then?
Mike Sutcliffe, Group Chief Executive, Accenture Digital:Sure Phil. Thank you for having me. I guess the first thing I would note is that companies started thinking about digital as a channel or a technology, and then they started to understand that they had to design omnichannel customer experiences. They really started to think about how the digital channels and physical channels blended together.
But what’s happened in the past two years is they’ve started to understand that this is about the entire business model, the operating practices, the business processes, the organization and skills. Not just in the front office but the mid and back office. They are re-architecting their businesses to create fundamentally better experiences that scale across front, mid and back-office operations.
Phil: Do you feel the confusion has lifted around digital? Are clients more certain, now, of where they are going, when it comes to digital strategy?
Mike: I think most clients have really started to understand what the predictable disruption would look like in their industry. They have made choices on whether they want to become the disruptor or be a fast follower. They have started to think about what their roadmap is going to be as they chart out the course of creating, or depending on, new revenue streams in their businesses. The question though is no longer just “what should I do” but “how do I get it done”.
Phil: We’ve talked a lot in general about digital disruption and how traditional businesses are going to get wiped off the face of the planet if they don’t wake up and smell the roses. However, our recent research clearly shows a lot more organizational leadership today is far more bullish about opportunities than threats when it comes to digital impact on their business environments. Do you think traditional firms have figured this out? And who do you see as leading, and lagging, in your experience, when you look at different industries?
Mike: Well I do believe that most of the players in each of the different industry segments we participate in have understood what the disruptors might be. They have looked at what the start-ups are doing and what they are doing and then started to think about what assets and capabilities they have got, in order to give them an ability to win.
Now when they look at their financial flexibility and strength, their customer relationships, their brands, their knowledge, the constraints they are up against in the industry, they have decided that they have every right to innovate and create the next generation of the industry as well. We started with the consumer-facing industries like retail and consumer products, retail financial services, communications and hi-tech. But now we’ve seen that expand across all the industry groups, even the asset-intensive industries that are dealing with comprehensive disruption, where their ongoing business models are slowly degrading, they have started to really engage in what the right digital strategy is going to look like for their industry as it continues to rotate.
I would summarise by saying most of our clients understand what’s happening. They understand what they intend to do about it and now they are thinking about how quickly they move and how they pay for all this.
Phil: So tell us about this aggressive Accenture strategy, Mike. I think you’ve bought at least 20 digital agencies in the last 2-3 years and several other related firms that drive the digital paradigm. What is the grand plan here? Is it to integrate them all together under one common strategy, or are you trying to keep their cultures distinct, and perhaps take more time to see how this industry plays out? What’s the thinking here?
Mike: Well the first thing is that we are not trying to replicate the model of the agencies that do advertising and marketing work. In fact, we are not even really trying to go after the advertising and marketing market itself.
What we are trying to do is to create a single integrated capability, ‘Accenture Interactive’ that operates as an experienced agency. Their job is to design and create the best experiences in the world not just for consumers but for employees, for physicians, for participants in sporting events. What we really want to do is find a way to create better experiences at scale. In order to do that we need many of the skills in e-commerce and contact management and experience design in executing digital marketing campaigns that the agencies would have had traditionally. So what we have been doing is creating a combination of capability from creatives to content to commerce, experience design etc., bringing them into an integrated team at Accenture Interactive, but at the same time respecting the fact that their cultures might differ in terms of the tools, the techniques, the approaches they used to get the work done.
And what we really focused on is making sure that the cultures are all aligned to a core set of values that we’ve got about creating values for our clients as our primary objective and then doing whatever it takes internally to get the team together to make that happen.
Phil: As you look at the experience you’ve had in the last 2-3 years, meshing traditional consulting with these creative types, do you think you have found the secret sauce, or has this been more challenging than even you had envisioned?
Mike: We’ve discovered that the participants in the existing advertising and marketing world were watching the customer expectations evolve and they knew the model that they were working with was not going to be capable of satisfying the demands of their customers.
What we came to the industry with was just a different point of view on how to string together different types of skills and capabilities to serve those customer’s needs. We found that we are in the creative space because we have to be to serve the customer’s needs. The same thing with content, commerce and experience design. As we think about building Accenture Interactive, what we are really doing is appealing to the same objectives that those people have when they started their careers. They want to do great work for clients. We just take maybe a broader view of what it is going to take to do that work.
Phil: I think you already said you are not, but can you ever see Accenture becoming an advertising firm? I know folks in media who are already looking for jobs in Accenture. Clearly, digital media and advertising are merging. I mean do you think it is a possibility in the future?
Mike: No, I don’t. I think it’s absolutely the case that we will be creating products for clients that the advertising industry would call creative work. We are already doing that. It will absolutely be true that we will be either teaching our clients how to buy media and execute their own campaigns. We are doing some of that work on their behalf as part of a broader assignment. So I am not saying that we won’t be doing the work, but what we won’t be doing is trying to replicate the business model of the current advertising industry.
Phil: A very good answer, Mike… so disrupting the model in a different way =) What do you think we will be talking about in another two years? What do you think is going to become the dominant discussion in this digital sphere as we look at the development, the pace and the velocity of what’s been going on?
Mike: Well, Phil, we believe that all of this work in digital is about extending the capability of humans to do what humans are uniquely capable of doing. So I think we are going to be talking about how artificial technologies and immersive virtual and mix reality technologies can come together to enable humans to do the things that they do uniquely well.
We want to make sure that everything that we are working on is either creating a better experience for somebody or enabling somebody to do their job in a much richer way. I think that’s where the industry is headed, but there is lots of work to do to get there.
Phil:I think you once famously said to me “the future of work is going to be no work.” Do you still believe that’s the case?
Mike:Well I believe we will automate away a lot of the what I would call low-value work that humans are required to do today. But I think we will shift that energy to doing things that we don’t do today. I believe that humans will always be engaged in work but I think we will eliminate a lot of the non-value added things that we do today because we can let the technology handle that for us.
Phil: Thanks for your time today Mike – will be good so air your experiences again with our readers!
We seem to have suddenly shifted from the doom and gloom of robots taking our jobs to people proclaiming that AI is going to create millions of new jobs. And if you haven’t endured this latest round of hype, I envy your unique skill in removing fake news from your life.
Suddenly AI is the antidote to automation! Really?
Don’t we have a responsibility to inject some reality into this conversation? Today’s business world is about removing physical touchpoints, about fixing our data, about running processes faster, smarter, more autonomously, and cheaper… So where are the real links between the universities, the politicians, and the businesses? Why aren’t we really debating this stuff in the senates and parliaments if today’s organizations are on an inexorable drive to sub people for better data? Instead, we have academics and “analysts”, desperate for attention, making unsubstantiated predictions that are only fuelling the tech firms, desperate to sell their wares without this negative connotation that the real ROI of selling their products is tied to labor elimination.
Let’s just make the call – AI is indirectly and inextricably tied to the elimination of “unnecessary” labor, by nurturing systems that get smarter with each incident and transaction. The smarter and more autonomous your operations become, the more agile and efficient your business becomes. That’s not a terrible thing – in fact, you are doing your valued staff a huge favor by keeping them employed and keeping them relevant to your business. But you are not creating a net influx of jobs into your organization, you are becoming more fluid and competitive. Sure, you’ll probably look to add some Python and R developers, Machine Learning experts, serious data geeks and design thinkers – or you may just pay consultants to do it all for you – but the bottom-line, here, is that you’re going to be shedding a lot of your left-brained staff performing jobs that can be artificially automated, at a much faster rate than you’ll be adding the data-oriented people you need to digitize your business. AI is about doing more with less, not more with even more – let’s get real.
Don’t get me wrong, the possibilities of faster, smarter, touchless data flows between the customer and the operations of the business, are critical to promote competitiveness and survival, but let’s stop sugar-coating the true purpose of data driven intelligence – the less businesses need to rely on people and the more autonomously they can run processes, the more nimble and profitable they will become. Now if these businesses then choose to reinvest their new-found wealth hiring loads more people, I will tip my hat to these purveyors of job hope, but let’s fact facts, the companies of the future will be running a lot of smart technology with a smaller group of savvy people to manage it all.
Let’s take our much-loved services industry, which is pretty high up the tech-savvy ladder and comprises firms where efficiency and competitiveness are its very DNA
The global IT and BPO services industry employs 16 million workers today. By 2022, our industry will employ 14.8 million – a likely decrease of 7.5% in total workers (see our research methodology and full blog here). This isn’t devastating news – we’ll always lose this many people through natural attrition, but what this data signifies is this industry is now delivering more for less because of advances in automation and artificial intelligence technologies. The new data also shows how job roles are evolving from low skilled workers conducting simple entry level, process driven tasks that require little abstract thinking or autonomy, to medium and high skilled workers undertaking more complicated tasks that require experience, expertise, abstract thinking, ability to manage machine-learning tools and autonomy.
All major service delivery locations are expected to be impacted at the low-end, but the higher the wage costs, the higher the expected role elimination (750,000 roles in India and a similar number in the US)
Medium-skilled roles are picking up across the board, especially in roles that are customer/employee facing with the need for more customized support, the ability to handle basic customer and data queries, and more customized service work with virtual agent models in 2nd / 3rd tier escalations:
As this data illustrates, the more we automate, and digitize, and the more we adopt human + machine technologies, such as machine learning and cognitive solutions, the more we need people to develop skills in managing automated workflows, Machine Learning mechanisms, being able to interpret data, and service increasingly complex customer and employee needs. So when we take into account the total impact of automation and AI on services jobs, the impact is not nearly as severe as so many of the hypesters and fear-mongerers are prophesizing, but the reality is we’re definitely not creating jobs faster than we are digitizing them out of existence:
Philippines should actually increase its service delivery population due to its dominance in voice and capabilities to support increasingly complex and personalized customer models, the UK should be flat, especially with the challenges of Brexit and the slowdown in low cost worker immigration, while both India and the US will see a total worker reduction estimated at the 10% level between by 2022. You can view the total impact on the global services industry – a worker population decline of 7.5% here:
The Bottom-line: Many jobs that can be digitized are going to disappear, but there is time on our side to develop the new skills we need
The big narrative here isn’t about what’s going away, but more about what is emerging in its place. The next fives years we can manage, it’s the five after that when the impact on labor becomes much more challenging. Transaction roles at the bottom of the value chain have been under threat for many years now – with the impact of low cost location delivery and better technology. Now the emergence of RPA is eventually going to sound the death knell for most high-throughput, high-intensity jobs, as both service providers and enterprises master the ability to apply these technologies effectively. The good news is this takes time and there is no huge burning platform to do this overnight from most enterprises.
So our message to all stakeholders of operations and services is simply to get out of your comfort zones, accept that new skills are replacing old ones, and it’s critical we have a plan to train, develop and invest in changing what we have. I will leave you with six things to think about as you ponder your own value to this industry and your firm:
Which customers have you delighted recently?
What new relationships have you made that add value to our business?
What work have you done that excited people inside and outside of the business?
How are you helping energize your colleagues and exciting them with new ideas?
How have you helped add value to new business wins?
How have you contributed to new initiatives that improve productivity and effectiveness?
Well someone actually said it – and it may not come as a complete shock that it’s come from everyone’s favorite RPA evangelist Guy Kirkwood, of UIPath fame. Even more impressive is guy’s beautiful command of the English language to describe the latest hyped term “AI”, now that most the hypesters have got bored touting the massively disruptive impacts of IoT and digital – and the automation conversations have just got a bit rinse and repeat. Guy is saying that true AI is when we arrive at the “singularity” (which Ray Kurzweil predicts will happen in 2029), when machines will become smarter than humans, abruptly triggering runaway technological growth, resulting in unfathomable changes to human civilization.
Guy basically claims it’s incorrect that we are dubbing the conglomeration of tools, such as NLP, Machine Learning etc as “AI”. While I agree with Guy that the inane use of the term AI is driving me (and many of my colleagues) to scream “Please just stop the bollocks!”, my point to him is: what else do we call tools which are all about “the simulation of human thought processes across enterprise operations, where the system makes autonomous decisions, using high-level policies, constantly monitoring and optimizing its performance and automatically adapting itself to changing conditions and evolving business rules and dynamics.” So if this isn’t Artificial Intelligence, what is it?
And my further point, here, is that these tools are already here and being heavily piloted and evaluated, according to 400 major enterprises in our recent State of Automation and AI Study:
Sorry, Guy, but while we all want to scream “bollocks!” at all the bollocks, I think we’re stuck with AI until the next buzz term comes along =)
HfS recently hosted the debut session of the newly-formed Future of Operations in the Robotic Age Leadership Council (FORA) in Chicago. The purpose was to bring together stakeholders across all corners of enterprise operations, services and intelligent automation software arenas to lock heads and map the course of this emerging industry: business operations being fundamentally redesigned by the impact of intelligent automation and digital technologies. We believe this is becoming known more broadly as the “digital operations industry”. So let’s hear the consolidated feedback from the industry’s key stakeholders:
The FORA Mandates, Q4 2017
1) Automation technologies can collapse the barriers between front and back offices
While there’s a lot of noise and scaremongering in the public sphere around job losses, the real story is that automation technologies of various flavors and deployments — RPA, RDA, AI, etc. – are quietly creating a new execution layer on top of the IT “stack,” one that offers a flexible, reconfigurable operations platform for the business. Freed from the costs and rigidity of legacy systems, savvy enterprise architects see automation technologies, together with the data they capture and generate, as a way to digitally connect their back-, middle-, and front-offices for greater throughput, quality, and responsiveness.
2) Commercials of engagements must be reconstructed around the economic value of robots
Automation is destroying the traditional FTE-based cost/value equation for service delivery, and we need a new “post-FTE” commercial model, one based on partnership, business outcomes and joint value creation for buyers, advisors, and provides. The economic value of a robot is vastly different in kind, cost and scale from that of a human being, and is forcing us to rethink the value of different kinds of work – separating rote transaction work from judgment-based work. Ultimately, this will require all parties to re-think their offerings and value propositions and to demonstrate imagination, creativity and flexibility, while educating their respective stakeholder communities and managing the financial and human impacts.
3) From the C-Suite to the manager, enterprises need people who appreciate and understand the value of data
Success in achieving the OneOffice future requires a blend of strategy, business design, and technology skills to re-think and re-configure core processes with a singular focus on improving the customer experience v. just cutting costs. Automation per se looks deceptively simple (and is often sold with that promise) but can fail to deliver true value if simply retrofitted on existing processes; coupled with artificial intelligence and cognitive, automation can support new services and capabilities at speed and scale. But thoughtful tool selection and disciplined deployment is crucial. And as data grows exponentially, it becomes the essential raw material for every enterprise in every industry. At every level of the organization – from the C-Suite to manager – enterprises need people who appreciate and understand the value of data and who can identify/extract the most important customer-relevant insights.
4) Businesses must be redesigned from a logical rather than physical perspective
Native digital businesses have demonstrated the value and power of a digital operations approach by thinking about their business from a logical rather than physical perspective – focusing on customer outcomes rather than internal inputs. They begin with an intense focus on identifying their customers’ most important ‘priorities’ (as distinct from ‘needs’) to design a differentiated and dynamic customer experience. They then build and optimize a collaborative partner ecosystem to deliver that experience, leveraging specialist capabilities and resources. The result is a more disaggregated but fiercely cooperative business model. The challenge for non-digital natives is to re-imagine their businesses from this logical perspective and to demonstrate what one executive called the “willingness to let go.” That implies – and requires – a fundamental re-thinking around control and governance as well as motivation and reward, supported by deep and enduring commitment to change management.
I hope to see many of you in London on 7th December for our next round of pivotal discussions. A big thanks to all of you for your terrific support with the FORA Leadership Council initiative,
As we brace ourselves for yet another deluge of dodgy automation and AI predictions for 2018, where people just make stuff up and hope we don’t remember them in a few months, we thought we’d break the mold and actually release some real numbers based on real adoption trends and real expenditure date on software and services. We also had the audacity to define the market so this might actually make some sense:
As we revealed earlier this year, despite all the ridiculous hype, the global market for RPA Software and Services will pass $400 million in 2017 and is expected to grow to $1.2 billion by 2021 at a compound annual growth rate of 36%. The direct services market includes implementation and consulting services focused on building RPA capabilities within an organization. It does not include wider operational services like BPO, which may include RPA becoming increasingly embedded in its delivery.
RPA Definition: RPA describes a software development toolkit that allows non-engineers to quickly create software robots (known commonly as “bots”) to automate rules-driven business processes. At the core, an RPA system imitates human interventions that interact with internal IT systems. It is a non-invasive application that requires minimum integration with the existing IT setup; delivering productivity by replacing human effort to complete the task. Any company which has labor-intensive processes, where people are performing high-volume, highly transactional process functions, will boost their capabilities and save money and time with robotic process automation. Similarly, RPA offers enough advantage to companies which operate with very few people or shortage of labor. Both situations offer a welcome opportunity to save on cost as well as streamline the resource allocation by deploying automation.
Intelligent Process Automation
RPA is only 10% of the true picture when it comes to total spending by enterprises on automating their processes. The internal training and development, pilot projects and trial implementations, is so much larger than simply software licences and third-party professional services to work the software effectively. We term this broader automation market, beyond RPA as “Intelligent Process Automation”. This market will surpass $6bn this year and more than double over the next four years.
Intelligent Process Automation Definition: Intelligent Process Automation (IPA) is the use of technology to allow a business function or part of the operation of a process workflow work automatically. It includes the use of RPA, BPM suites, Remote Desktop Automation, screen scraping and custom scripting and related technologies. IPA comprises of two core elements:
External professional services: Relates to all external spending focused on developing business process automation strategies / roadmaps and the use/ implementation of automation with business functions.
Internal operational spend: Includes internal and external spending on automation – change management, IT and operational teams focused on process automation and automation use as part of existing business process management initiatives.
Artificial Intelligence
And the most talked about area is Artificial Intelligence (AI), which is already emerging as a billion dollar market for enterprise operations, and could almost treble in spend in four years.
AI Definition: AI refers to the simulation of human thought processes across enterprise operations, where the system makes autonomous decisions, using high-level policies, constantly monitoring and optimizing its performance and automatically adapting itself to changing conditions and evolving business rules and dynamics. It involves self-learning systems that use data mining, pattern recognition, machine learning. virtual agents, computer vision and natural language processing to mimic the way the human brain works, without continuous manual intervention.
The Bottom-Line: Automation and AI have a significant part to play in engineering a touchless and intelligent OneOffice
However which way we spin “digital”, the name of the game is about enterprises responding to customer needs as and when they occur, and these customers are increasingly wanting to interact with companies without physical interaction. This means manual interventions must be eliminated, data sets converged and process chains broadened and digitized to cater for the customer. This means entire supply chains need to be designed to meet these outcomes and engage with all the stakeholders to service customers seamlessly and effectively. There is no silver bullet to achieve this, but there is emerging technology available to design processes faster, cheaper and smarter with desired outcomes in mind. The concept was pretty much the same with business process reengineering two+ decades ago, but the difference today is we have the tech available to do the real data engineering that is necessary:
In short, every siloed dataset restricts the analytical insight that makes process owners strategic contributors to the business. You can’t create value – or transform a business operation – without converged, real-time data. Digitally-driven organizations must create a Digital Underbelly to support the front office by automating manual processes, digitizing manual documents to create converged datasets, and embracing the cloud in a way that enables genuine scalability and security for a digital organization. Organizations simply cannot be effective with a digital strategy without automating processes intelligently – forget all the hype around robotics and jobs going away, this is about making processes run digitally so smart organizations can grow their digital businesses and create new work and opportunities. This is where RPA adds most value today… however, as more processes become digitized, the more value we can glean from cognitive applications that feed off data patterns to help orchestrate more intelligent, broader process chains that link the front to the back office. In our view, as these solutions mature, we’ll see a real convergence of analytics, RPA and cognitive solutions as intelligent data orchestration becomes the true lifeblood – and currency – for organizations.
Do take some time to read the HfS Trifecta to understand the real enmeshing of automation, analytics and AI.
Over the last 15 years, we’ve witnessed the rise and fall of the sourcing consultancy. Clients needed help finding the right services partners – at the right price points – and the likes of EquaTerra, TPI (now ISG), Everest, Alsbridge were there happily to oblige. Today, only ISG survives as a credible boutique sourcing advisor, while the Big 4 have moved into developing sourcing practices of their own. However, new data from our soon-to-be-unveiled, Journey to the Digital OneOffice study, conducted with the support of Cognizant, shows that decision makers for business operations are looking largely to other places to stay ahead of all this change:
However which way we look at this, not even a third of decision-makers are relying on consultants in this ever-confusing market, when you would have thought consultants would be licking their lips at the opportunity. Don’t these guys feed off confusion, hype and nervousness from the well-resourced enterprise leaders, only too keen to pay their rates to get a steer on what to do next? What’s going wrong here?
Consultants just don’t do research. For example, I have yet to see a single set of publications from any of the sourcing advisors examining the performance of the RPA solution vendors. There are a million best practice pieces, but nothing of actionable substance. Clients want substance, not just the fluff. Clients are shifting to soliciting help from firms which can do the work and have the proven knowledge to support it, which is why so many are resorting to analyst reports to figure stuff out.
The MBA bus can’t find its usual parking spot in the visitor’s parking lot. As the demand for expertise in areas such as complex operating models, understanding murky automation challenges and being able to design outcomes-focused models is reaching unprecedented proportions, it’s just not possible for the traditional gaggle of consultants to serve up the inexperienced kids with their Visio charts and park them in the basement for six months to come up with a plan. While most of these people are brilliant, many don’t really know what they are doing. For them, doing RPA and automation tool selection is just plain scary.
Enterprises need consultants with deep, relevant and up-to-date experience. This market calls for hands-on experienced practitioners, skilled in understanding modern solutions and real change issues, who are prepared to roll up their sleeves and live their clients’ pain to find the answers. Simply rebadging outsourcing deal negotiators as robotic or digital experts does not work – these guys need serious retraining if they are to stay relevant in the current market – it’s not like the old days where you could hide behind some fancy new acronyms, utter the phrase “digital disruption” in every sentence, and promise “innovation”. Noone wants promises – they want real business cases, with genuine milestones and measurable, proven impact. They also want people who have got their hands dirty with these emerging solutions and can articulate how they can align to their processes and business models. In short, you can’t get away with half the bullsh*t these days…
Service Providers are in direct competition these days when it comes to transformation support with automation, digital and AI. In the heyday of sourcing advisory, advisors and service providers fed off each other as advisors cultivated clients and brought business to service providers, and service providers returned the compliment when they had clients in need of independent advice. It was a perfect symbiotic relationship. Now that model is rapidly atrophying as these two entities increasingly find themselves now competing for the same dollar. Let’s makes no bones about it, advisors and service providers are now in direct competition for supporting clients with their transformation journeys. Most the service providers are now offering intermediary services to provide automation strategy, implementation and delivery to enterprises, catering to whatever technology tools and platforms the clients require. As you can plainly see above, many operations leaders are now getting more value from them than they are from their advisor relationships. Clients can call on Genpact, TCS and Wipro these days, as much as they can KPMG, EY and Deloitte when it comes to the new stuff.
While service providers are integrating upwards into advisory services, advisors are integrating down into annuity services. Most the advisors are now evolving themselves as service providers and annuity-based revenue models in areas such as cyber-security services, blockchain services, managed RPA services – and even payroll services in certain countries. KPMG even declared it was in the Workday managed services market.
However, we might be on the cusp of a whole new era of new digital operations advisory boutiques, equipped to help clients make sense of it all
What gives me hope that we haven’t just witnessed the demise of the sourcing consultant, is the emergence of several small, but highly practical, boutiques of mid-career process guys who are in serious demand – and some of them are scaling up at a breathtaking pace – and we’re seeing some serious hitters make the jump from established consultancies to lead these boutiques, such as David Poole and his excellent team at Symphony, Paul Donaldson who has just moved from leading ISG’s RPA practice to being the new CEO at Robiquity with a very compelling automation bootcamp, Mohit Sharma and his determined drive from Down Under with Mindfields, the brand new “Agilify” (not quite launched) that Lee Coulter will head up as a new initiative from healthcare giant Ascension Health, Jan Rapala’s NEEOPS, driving RPA advisory from central and eastern Europe, Christian Voigt’s compelling Roboyo business emanating from Germany, and Richard Jeffrey’s ActiveOps firm, which is driving Workware, a back office optimization solution with a strong alignment to RPA effectiveness and now expanding aggressively from the UK to the US market. I’ll stop there for now, but there is a significant influx of very smart, experienced operations experts branching out and taking advantage of a market where clients need hands-on real help – and need it fast.
The emerging advisory market is about hiring people with the capabilities to understand client outcomes and implement solutions using the right mix of new tech on the market. What’s more, most of these consultants are relishing working in a boutique environment – it just feels like the age of the boutique is coming back, and we will see several more of these spring us with the barriers to entry still pretty low. Only GenFour has got absorbed (by Accenture earlier this year), as a first-mover in RPA implementation, but I’d be surprised if many of these other boutiques really want to get swallowed by the mega-firms… most seem to be hell-bent on building up organically in this market.
And there’s another reason why these emerging boutiques are so compelling… many have the emerging skills to support enterprises with their number one talent requirement – the ability to partner across these increasingly complex ecosystems of RPA, AI, and digital firms to help them:
While the traditional consulting firms have continued to bury themselves in supporting the “left-brained” areas of process delivery, digital tech etc., where clients really need help right now is understanding how to cement the right partnerships across the digital operations ecosystem to truly understand these change agents and devise the right plan to achieve their outcomes. Net-net, it’s not just about left-brain support these days, it’s about entrepreneurial, savvy, “right-brained” capabilities and nimble boutiques are able to mix up their teams with the talent clients really need to address the complexity.
The Bottom-Line: The digital operations train has already left the station and not all the consultants are on it
It’s not all doom-and-gloom in the management consulting firms, as KPMG’s Cliff Justice leads the firm’s AI strategy, with some promising key industry partnerships, most notably with IBM Watson, and Dave Brown’s SSO advisory is leading the industry with RPA transformation revenue; EY has jumped in aggressively with strong RPA deployments; ISG has held onto Chip Wagner, one of the first advisors to “get” RPA during his time running Alsbridge; Deloitte has developed its own brand of “process robotics” with some eye-opening projects, such as their work with NASA, and PwC is boasting some impressive work with the likes of Tesla, as it seeks to make up ground on the rest. The challenge is how to support clients with the experienced talent which actually understands how to implement this stuff in a way that is affordable.
However, the change upon us is seismic and we need advisors which can surf the wave of change agents forming the new Digital Operations industry:
In short, the worlds of software, business operations and services have always been chasms apart – different mindsets, vernaculars, conversations, ideas of what constitutes value – and vastly different cultures. Software people never understood the operations folks and vice versa – each thought they were top of the corporate food chain.
However, the past couple of years have seen the coming together of these diverse groups of people to rethink completely how we run global operations in this robotically digital era (or whatever we want to call this curious period of time in which we exist). What’s uniting this array of industry players is the fact that we’re all now in the business of addressing clients’ desired business outcomes, as opposed to simply selling them some product or service with some vague ROI attached to it. And those desired outcomes are unifying around the fact that nearly all clients are under immense pressure to become digital businesses with touchless customer interactions, supported by digital operations to make it all possible.
One thing is abundantly clear: the outsourcing phenomenon which has gripped the Global 2000 over the past decade is making way for a genuine industry in which we all play a part – an industry where we have no choice but to develop learning programs, sustainable business strategies and make real, actual investments in order to survive. And what’s most fascinating are the new conversations that have rapidly emerged to bridge this divide between the technologists and the business operators.
Suddenly, we’re talking about business logic, about datasets, about redesigning processes with genuine business outcomes in mind. We’re talking about deep learning AI systems that store what has been learned in the past, take notes of how variables and results have changed under different scenarios and then make decisions based on that.
The narrative has radically changed and the focus is now firmly on bringing together all the components that can escort us to this promised land of Digital Operations. And the firms to take us there might just not be the ones who got us here in the first place…
We got so sick of this nonsense, we just went out and surveyed 400 enterprise automation and AI decision makers across the Global 2000, split across IT and business operations functions, and hit them with some very straight poignant questions about their attitudes, satisfaction levels and genuine plans for both AI and Automation across their business operations.
But let’s start with the hype: AI and Machine Learning is now one of the most critical strategic directives being dictated from the C-Suite onto the operations function
81% of operations leaders are feeling the pressure from their bosses to reduce the reliance on mid/higher skilled labor, viewing AI and Machine Learning as increasingly important or even mission-critical directives to drive this. Only cost reduction beats this out as a priority, but as we all know, we can’t reduce costs much further without investing in our digital underbellies:
What’s clear is that enterprises are frantically evaluating their talent (81%) and looking to collapse these silos in the middle/back offices to improve their customer experiences. And they see AI, Machine Learning, and process automation as the levers to achieve this.
So let’s summarize the key findings from the study, and you can download your copy here :
Automation is the number one strategic priority four-fifths of enterprise C-Suites are placing on their operations. Enterprises see AI and machine learning (81%) and process automation and robotics (82%) as important C-suite directives toward operations strategy – higher than any priority other than cost reduction.
98% of enterprises have an automation agenda, but a third already have embedded it into their service delivery. Every organization today needs to have an automation strategy and that is reflected in the responses in our survey; only 2% suggest not having a strategy as of now, while 20% are in the process of formulating their strategy. Already, 31% of enterprises are integrating automation into the fabric of their service operations. Others are setting up dedicated CoEs (18%) and working with service providers (13%).
Corporate leadership and IT are most active driving the automation agenda. Decision making is increasingly being led by the CEO (54%), CIO/IT Director (57%), and CFO/Finance Director (35%). Additionally, a diverse group of automation influencers and stakeholders emerge, notably the finance department (49% consider as influencers), procurement (47%), data center managers (51%) and purchasing managers (48%).
Deployments of RPA as well as AI starting to scale out with varying degrees of maturity. RPA is seeing rapid adoption and AI will become mainstream in two years. More than 70% of customers are planning to deploy RPA over the next two years and more than 50% believe that AI will be applicable for a broad set of processes within the same timeframe. Therefore, investments, planning, and training of talent around the notion of Intelligent Automation is pivotal for staying competitive.
Many customers are in an automation dichotomy: they want automation to drive long-term quality and agility, but need rapid cost takeout to sell the ROI. For a significant number of enterprises, their automation strategies are expected to deliver, primarily, better quality of operations (52%), more workforce agility and scalability (49%), and superior data accuracy (48%). Only a minority of respondents are seeking short-term cost savings (21%) or a way to displace employees (12%). However, when you ask what is inhibiting automation adoption, the top criterion is that the “Immediate cost savings are not high enough” (35%), indicating a disconnect in expected benefits and business case.
Satisfaction with initial automation deployments is mixed as customers struggle to define success and execute against it. Only a little over half the enterprises (58%) that have gone down the RPA path are satisfied with the level of business value and cost savings from their implementations thus far. Enterprises that have yet to explore technologies like RPA point to struggles with establishing business cases (41%), while 30% expect that automation capabilities will be absorbed by enterprise applications in the next five years. In addition, many enterprises struggle with developing an effective centralized governance structure for automation initiatives, citing that projects are too siloed, don’t have success milestones established, and lack organized training to use the tools effectively.
Despite the growing pains, RPA is starting to be used effectively in this era of innovation and the current satisfaction results reflect this. IT operations have the most satisfied clients for both cost savings (70% satisfied) and business value (72% satisfied), followed by marketing (70% satisfied with cost) and procurement (63% satisfied with business value). Regardless of the level of satisfaction on cost and business value as of today, operations leaders are making incremental progress, one process at a time. In the interim time between sawing off broken processes and legacy systems and replacing them with costly new systems and services, RPA seems to be helping enterprises get some level of access to new business value from their current processes.
Automation Centers of Excellence (CoE) proving a major success. Of organizations with the CoE approach, 88% believe that the automation CoE has been effective in delivering business value (scores of 4 or 5 on a 5-point scale). HfS has been hearing advisors in the RPA arena claim many clients are failing miserably with their CoEs, but this data proves, beyond doubt, these are scare tactics and those customers who are centralizing automation projects into one governance team are already reaping significant benefits.
If there one service provider who’s really got focused over the last couple of years, it’s Wipro – not only expanding all its main business lines and making some exciting acquisitions, but also revamping its brand and showing a very focused approach to its marketing and positioning. While several of its Indian-heritage competitors have struggled to differentiate themselves, or just failed to develop a coherent strategy, Wipro has stayed focused on pushing its automation platform, Holmes, and making determined efforts with its digital proposition. One man who is tirelessly pushing its digitization efforts to a new level is Rajan Kohli – a really nice guy who doesn’t mince his words….
Phil Fersht, CEO and Chief Analyst, HfS Research: Good afternoon Rajan – thank you for your time today. We would love to hear more about Wipro’s digital strategy. We have been hearing a lot about the opening of your new centers and the recent acquisitions of Designit and Appirio. There really seems to be a lot of energy around the strategy here. Maybe we could start with a bit about you, Rajan… could you tell us a bit about yourself, your background and how you came to be leading Wipro Digital?
Rajan Kohli, Senior Vice President and Global Head, Wipro Digital: It’s a great honour to be speaking to you, Phil. I have spoken to you many times before, but this is the first interview with you specific to Wipro Digital. So thank you.
A brief history about me. I have been with Wipro for 22 years now. I have been through various roles within Wipro in both Sales and Leadership. I was also the Chief Marketing Officer and more recently running the banking business for Wipro globally before I was moved into our digital business three years ago.
When we were going to start this new digital business we wanted to do something differentiated in the market and we had to decide what that differentiation would be about. We identified four pillars:
Design. Design will be the starting point of differentiation for our clients. Design talent would be the starting point of differentiation for us. That’s why we acquired Designit – because we really wanted a proven platform, that we can really build on for design.
Talent. We had to think about the quality and the type of engineering talent that we wanted to bring in. A lot of the system integrators really have grown up where technical talent is grown in ‘I’ shape. You go deep in a particular technology and you earn your stripes off that particular technology. In the digital world, we need a fuller understanding, we need T shaped, Pi shaped and what we call X shaped.
Velocity. Velocity for our clients because that was going to be a big differentiator for us. How we can service our clients. How we can come together in autonomous small teams quite quickly, behave and operate in autonomous agile teams to deliver larger projects in smaller pipes for our clients and how we can localize our workforce. This enables us to work in a ‘No-Shore model’. We call it a ‘No-Shore model’ not an offshore model, because talent is more important than the location.
Combining our skills. There are a lot of agencies that can do small digital projects and there are system integrators, but we didn’t really see a company that could combine the best of what a digital agency can do with the best a systems integrator can bring to the table. We really wanted to be that company.
That was the intention behind how we started with Wipro digital and our digital foray for Wipro.
Phil: So when you talk to clients today, Rajan, how would you define the digital opportunity to them? What is different about “digital” than the next generation IT conversations we were having three or four years ago?
Rajan: That is a hard question to answer in a short interview, Phil, because it is actually very difficult to box what digital is. So we unbox it, and we tell our clients that actually it is not about digital transformation, it is about transformation. That transformation could be in what is traditionally known as the back office. It could be operations, operational transformation. It could be a transformation of your channel, transformation of the enterprise, of how enterprise works between business and IT, or in more realistic terms, a transformation of a new product or new business model.
That, to us, is the holy grail. But really we don’t call anything digital or un-digital, as long it is a transformation in its true sense then it is digital for us. That’s what we attack with our strategy – design and technology teams coming together and working in very un-siloed ways to solve company problems.
Phil: When we look at the value that Wipro brings to the table, Rajan, we like to talk about the whole being greater than the sum of the parts. So when you look at the design piece of digital, the execution piece, the enablement piece, where do you think that the true value and strengths are, that can help you win out against other illustrious competitors?
Rajan: The best value for us is that all the pieces are utilized together. As I said, if a client just wants to use strategic design, there may be another five to ten firms which would be equally good in a particular region, as you know design is quite regional and localized. If a client just wants digital engineering, then there may be a handful of firms who can deliver that. But when a client wants both, strategic design and what we call strategic tech, along with solving large problems in their enterprise, that means you need real system integration capability and world-class technology competence, being able to look under the hood in client enterprise systems. That to us is our sweet spot. Those three pieces together. There are very few people who could address this with the quality and the quantity that we at Wipro could.
Of course, we are happy to do some strategic design standalone projects as long as they are strategic and designing a new market entrance strategy or a new product. Because they reposition us. But our real intention, and where our clients see true value from us, is when all three come together. That’s where our positioning is to become a transformational partner.
Phil: In terms of your broader market capabilities, we’ve spoken about partnering in the past, but as you look at the emerging digital pure plays and Fintech firms etc., we are talking about a very different marketplace than we have been operating in. I’m even seeing advertising executives joining IT firms now, because of this. So as you look at this shifting landscape, and you look at the role of Wipro in this industry, do you feel it is more important than ever to develop much tighter partnerships with emerging digital players, so you can have that broader offering?
Rajan: Absolutely, Phil. It is critical and it is a part of the objective that I carry. Wipro clearly believes that there will be tremendous innovation outside the enterprise and we cannot be restricting our client’s access to innovation through this channel. In fact we need to use this channel of Wipro to expand our client’s access to innovation, and we have used that quite effectively.
We have broadly three sources of partnership. One is a broader 360 degree partnership where start-ups come to us and we evaluate these. They want to work with us because we understand our enterprise clients. We want to work with them because they are at the forefront of innovation and will help set new standards of experience for end customers. Second is the higher level partnerships for us when we make investments in these firms. At the last count, we made 13 investments through our Wipro venture fund and they have been very successful. Our interest is to take these products and services to our clients because our clients see tremendous value in working with a known trusted player like Wipro while working with the start-ups.
The third way for us, when it truly makes sense, is to do mergers and acquisitions. We would not want to acquire a company that really doesn’t fit in when we can use the other two channels, the partnership and investment channel to really maximize the returns for both the partners, the company as well as for our clients.
We have been on this journey for the last two years and it has been quite successful.
In addition, there are obviously our traditional large partners. There are a number of smaller services areas today where innovation can lead to potentially becoming very big projects. For example, thinking about how AWS or Azure would have been four years back. We are also working very closely with our large partners to identify these innovative opportunities and focus areas so we are part of them from the start.
Phil: Thinking about two or three years ahead, and with everything happening in the industry, what do you think this digital landscape will look like? Do you think it’s going to be vastly different as more cognitive engines come into play, as human interactions get replaced by more machine interactions? What do you think this landscape is going to look like?
Rajan: A very important and an interesting question. I hope I have the answer to this. In my broad thinking, number one, we should see more differentiation between the players in the market. It is already beginning to happen through the acquisitions or investments that have been made. They are beginning to create a differentiator between each other. That is a path we are all on, and I think that will continue to move forward quite briskly.
Second to your point about automation. I think automation is really key, both for running operations or running infrastructure and applications services. How automation happens will look different but automation is here to stay. Again there will be investments that we do directly, for example we have invested in Wipro HOLMES. At the same time we have key investments in the partner ecosystems. We work with almost all the top cognitive players in the industry to actually implement those products for our clients. In many cases we have clients who have already invested in those products. We leverage HOLMES and our Capabilities to help clients maximize their value in those investments.
So I definitely see automation being central.
Number three is where certain players will become the best providers in a certain space. There could be certain areas where, for example, Wipro would have the advantage with acquisitions. For example, we acquired HPS. Similarly, we may make more bets on BPaaS. So where there is standardization of process and clients we believe would want As-a-Service model, you would also see that sort of differentiation coming into the picture.
There are several elements of differentiation. Different companies will place bets in different places. At Wipro we have clearly identified design, cloud, BPS, security and data space as areas for investment and to drive our experience.
Phil: Right. If you were made the emperor of the digital industry for a whole week and you had one wish to change the industry for the better. What would that wish be?
Rajan: Thank you for making it one week and not one day. I think first of all I would go and find the answer to your previous question because that would really help us invest better and make better decisions today. I would try to build myself a crystal ball in the seven days because it’s not just those seven days, the industry is changing almost every day. I would want to be the emperor almost every day.
I think the biggest struggle our clients are facing today is they are getting disrupted both on the consumer side whose expectations are changing and on the provider’s side they are not getting what they need. They want the same partner to be able to do strategy, design and technology implementation. The technology itself is changing so fast.
I would like to find out which are those technologies, which are those use cases that enable our clients to get value three years from now and start investing in them today. That is how we will be more successful in the future and that’s how our clients will be more successful.
Phil: Very good answer and the perfect end to this conversation! So thank you very much for your time, Rajan. I look forward to sharing this with our readers very shortly.
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Rohit Kapoor (right), Chair of the NASSCOMBPM Council, hosts his first summit in Bangalore
It was good times revisited in Bangalore last week, where the Indian-heritage BPM (BPO) services firms gathered for their annual reality check, courtesy of NASSCOM, India’s leading IT and BPM services body. We were pleased to get the chance to meet with many of the industry’s finest and have some frank exchanges on what this industry must do to stay relevant and keep eking out a growth curve.
And, similar to the recent HfS summit in Chicago, the conversation has moved rapidly along in recent months with a genuine buzz of excitement about the future. In short, most folks are stepping out of the comfort zone and attempting to embrace the emergence of technology-driven value levers as part of the very fabric of the future of business process services. However we look at this, we’re becoming a data services industry that supports the inexorable enterprise drive towards Digital Operations.
The NASSCOM folks fondly remember how we once described the Indian-heritage BPM (BPO) industry rather like a “biryani” – (a mixed rice dish comprised of many different ingredients that also has many different regional variants across India). At that time, three years ago, we called out all the ingredients the industry needed to embrace to reach that next level, namely partnerships, platform plays and RPA. Fast-forwarding to last week’s BPM bonanza in Bangalore, we can proclaim that a pretty tasty biryani is being regularly served up, and now we are enjoying one of my favorite dishes, the “bhuna”. Bhuna is a cooking process where spices are gently fried in plenty of oil to bring out their flavor. The Indian curry dish “bhuna” is an extension of that process where meat is added to the spices and then cooked in its own juices which results in deep strong flavours but very little sauce.
Much the same can be said of the current state of the Indian-flavored BPM industry, where the baseline delivery of process services have been nicely spiced with disciplined execution, competitive pricing, RPA capabilities and process standardization, and the added meat is providing new levers of value with emerging intelligent automation and analytics capabilities. The missing potatoes are the added element of risk that BPM services providers need to take to fix the data underbellies of their clients so they can truly start to benefit from the fruits of having digital operations to support their clients. We’ve reached the era where real data transformation is the missing ingredient that can really take this industry to the next level.
Having met with most of the key BPM service providers with key Indian delivery ties at the annual NASSCOMBPM summit in Bangalore, these were my takeaways:
The mood is upbeat as the Indian BPM leaders are (largely) facing up to reality and embrace the opportunity. Over the last couple of years at the annual NASSCOM reality check, we witnessed heated arguments regarding the viability of the long-term viability of BPM. Several service provider leaders have defended the value of the traditional labor arbitrage model, while others have called for a reality check that the old model is dead and we need to conform to a very different world of outcome-driven, automation-centric models that aggressively cannibalize obsolete engagements. In short, the underlying feeling has been one of doom and gloom, and we’re simply waiting for this impending nose-dive for the industry. This year, most people seem to have taken a crash-course in reality and have realized the answer lies somewhere in-between – the old model provided a valuable lever to drive out costs and tee up the next phase of engagements – and the current crop of service providers should be smart enough to invest with clients to derive value out of several additional value levers, in addition to providing affordable, global talent. Yes, it is possible to advance the traditional labor-driven model into the digital age without making too much of a sacrifice on the profit margins.
The mid-tier service providers are showing the way. As the large FTE monster deals dry up and we’re left with smaller engagements that require less staff, more automation and better analytics-driven outcomes – and most of the mega providers simply cannot afford to scale-down to be competitive. The likes of EXL, WNS, CSS Corp, Sutherland, Concentrix, Hexaware et al are all competing for the smaller, tastier deals on the table that require real attention and focus. Plus most clients are now eager to explore relationships with smaller competitors who roll out of the red carpet for them… the crux of the issue here is that the mega-deals of the past are not coming back, and if the large providers cannot accept this, they are going to be left defending that they have for the next decade, as opposed to growing their businesses and investing in their capabilities along the way. This is going to get worse before it gets better – and everyone knows it.
Most of the BPM providers are still confusing everyone with their “strategies”. I challenged nearly every service provider to articulate their value proposition in three bullet points. They all failed miserably. Being all things to all people is the recipe for bland failure in this attention-deprived world, and spinning the same marketing mush as everyone else has become the disease of our industry for the past couple of decades. It’s time to crush the vernacular and talk openly about what we all stand for. Sadly, I do not expect anything to change soon…
This industry desperately needs new blood. As per the last 10+ years I have been coming to this event, we are subjected to many of the same folks spinning the same old stories and viewpoints. We need to meet more of the emerging talent and hear from some of the newer thinkers. They do exist and need to be blooded… otherwise, we come across like an industry without a succession plan.
There is a chasm between BPM and IT services, which is a real missed opportunity for India. The divide between the process people and the tech people in India seems to be greater than ever, at a time when automation and digitalization are closing that gap. India needs to embrace hybrid delivery and present a united front between BPM and IT at its flagship events. The RPA and AI discussion at the BPM level is so much more real and actionable than when the techies discuss it… As we discussed here, the worlds of software, business operations and services have always been chasms apart – different mindsets, vernaculars, conversations, ideas of what constitutes value – and vastly different cultures. NASSCOM needs to help bring together these mindsets and drive the conversation forward as a unified industry, not several soloed sub-industries.
There is a lack of exciting up-and-coming digitally-centric BPM firms appearing in an industry in real need of some disruption. While the mid-tier BPM firms are clearly enjoying something of a modest renaissance period, there really isn’t much coming up behind them – at least they are not on display ay India’s flagship BPM summit. Where are the Indian digital pureplays and fintechs? Sure, we met some exciting Indian RPA software firms, such as Intellibot and Option 3, but there seems to be precious few emerging human-plus-tech process delivery firms emerging to get us excited. We need these firms to be wheeled out, wrapped in cotton wool and showcased as the future of Indian services.
Bottom-line: NASSCOM needs to deliver a stronger message of reality and guidance to support its industry
While NASSCOM has performed an amazing job over the years putting India on the IT and BPM services map and providing a vehicle for networking and information sharing, the message today is largely avoiding the harsh realities the industry is facing. The industry is going to suffer some labor shrinkage over the next few years (we predict a 450,000 decline by 2022 in India’s IT/BPM service industry alone by 2022). NASSCOM needs to be at the forefront of recreating the next phase of India’s services capability and confronting the legacy model, not celebrating what’s left of its glorious past but embracing its less certain, but high-potential future.
