Ian Maher… Sourcing Star

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As the fog slowly lifts from our beleaguered world of operations, we can start to put the pieces together regarding where we truly are, when it comes to building the backbone for successful businesses of the present and the future:

No – not all our firms have been wiped out overnight by disruptive digital competitors (sorry all you hypesters who’ve been beating that drum, but most our ‘legacy’ firms are doing just fine).  

No – not all of us have been replaced by robotic software that can mimic our rote behavior and render us useless (if only more customers will actually admit they are finding RPA a lot more challenging than they thought).

No – outsourcing isn’t dead, it’s just under pressure from commoditizing services, too many competitive service providers, greater global location choice and the emergence of specialist niche firms, which can do complex work at a much smaller scale than our juggernaut firms can afford to deliver. 

In short, our enterprises are caught between innovation and renovation, where they need to make the most out of what they have, while making the shrewd investments in the innovation the need to stay relevant in their markets. So with whom better to chew the fat than a very old friend and great supporter of HfS over the years, Ian Maher, who’s been the dynamic busybody behind Hanover Insurance’s sourcing and operations activies over the last decade. You won’t meet many customer executives who deal with technology firms, automation vendors, outsourcing providers, procurement executives, HR, IT – you name it – and still always has a smile on his face. Maybe it’s his stubborn devotion to his under-achieving soccer team, Everton, which keeps the chap so positive and focused….

Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Ian. It’s great to catch up with you again. Could you tell HfS readers a little more about you and your background in the industry, where you’ve come from, and what you’re doing today?

Ian Maher, VP, Head of Sourcing, The Hanover Insurance Group: Phil, good morning, it’s great to catch up again. As you know, my background is on both sides of this interesting equation, from both a sales  and a buy-side perspective. When I was originally in the UK, I spent the first decade of my career working for what is now Fujitsu. As the development of consulting services, on the back of technology solutions, I was fascinated by how firms created new revenue streams on the back of product sales. In the late ‘90s, I moved over to the States and joined Gartner. With roles, in account management support and financial services in the North East of the US, I then started to work more closely with the research leaders in Sourcing and especially BPO, spending a lot of time working with CIOs and similar leaders, helping them understand what was going on from the BPO point of view as it started to seep away from a technology space, into the realm of mainstream business decision makers.

One of my previous clients is the company I’m with today. I’ve been at Hanover for nearly 10 years. We are a growing P&C business, largely in the US but with a UK operation via our Lloyds of London syndicate. In this role, I look after a variety of functions, including, traditional procurement, contract risk and governance. But more interestingly, perhaps to me at least, is the role of trying to fix together how the ideas from the outside world can be brought to benefit, what is pretty much, a traditional insurance business. I’ve led a couple of major initiatives working with leadership about benefit realization from BPOs and in the last two years, really started to help familiarise and educate the organization as to the potential and perils of what we call Services Automation. In short, our venture into RPA, Cognitive and the step change function that Automation may offer operational excellence.

Today, I’m keeping the organization moving at a steady pace.

That’s the potted history and I’m speaking to you today from a very sunny Boston. So I’m happy about that.

Phil: Good for you. I think we’ve worked together as colleagues and friends for probably close to a decade, since you started at Hanover. You’ve been through a long process of educating your colleagues and stakeholders on the merits of BPO and I’ve observed you’ve become quite a mature adopter at Hanover over the years. Where is it all going now? Is it still the same type of value proposition that we were talking about three, four years ago? Or do you feel it’s really changing now, beyond recognition?

Ian: It’s interesting Phil. I sometimes think we jump to the next fad or area of excitement, and forget that at its very basic level a successful BPO program is, and should continue, to deliver massive benefits as long as it’s managed in the right way. It isn’t something that gets stale. We continue to reap major benefits economically, from a quality of service, which is really the primary driver and continues to be a point of differential with our agents and with our insureds. Caution should be taken not to throw away something, that while it’s sell-by-date might be fast approaching, it’s something that can still, year-on-year, give a consistency of service at a scalability of cost, and should be maintained.

We’re approaching 12 years in our relationship with our primary BPO provider, to support maybe 80 to 85 different functional areas across Hanover, and continue to deliver extremely well in a very, mature set of processes. Where is that relationship going? We’ve discussed how the BPO providers are moving towards the next evolution of service delivery and incorporating the digital aspect. I’m sure a part of me is a little bit frustrated, I would like to see the traditional pure-play BPO’s a little bit further along the path. But at the same time, I need to be confident that if they change their delivery model, I can still hold them accountable for both the people and the digital aspects of the solutions. I’m comfortable in biding my time a little bit as long as I get a 95% confidence level of the evolution of the BPO into this hybrid BPO, and its success. That’s probably where I am and what I’m saying to my senior leaders, don’t rush into something at a 40-50% confidence level.

Let’s make sure we get it right jointly. Let’s make sure that the vendor succeeds. Because if we fail, we fail jointly and there may not be a second chance in terms of going in the direction that we’re looking to go given the magnitude of impact of introducing automation into the delivery model.    

Phil: It’s good to hear you talk about incremental change, at a pace that you’re comfortable with. We hear a lot of clients today and customers talk about, “Oh, my CFO just came back from another conference and apparently we have to find 40% cost saving through RPA, and we got to do it next week and we need a digital strategy.” Does your firm suffer from a lot of the startling new stats and new technology trends? Or do you feel you’re a bit more sceptical, at Hanover, as to the pace and the velocity with which things are moving?

Ian: No. You hit on the most common conversation I have, from a global business services or a shared services leadership point of view, there is no more important task than being a voice of reason, and often responding to CFOs latest airport lounge magazine article, in terms of what’s the marketing hype from the sell-side.

It is always possible to hit some unrealistic number in the short-term. But you’ll probably pay the cost through disruption or through a failure to really plan systematically for the next three to five years. Across the industry, and not just at Hanover, experiences of going through different delivery model changes can bring that realism to keep you ahead of the discussion. One of the things that I’m starting to take a lot of interest in, and I’m looking forward to discussing further at the HfS Summit in Chicago, is, are leaders ahead of the discussion or is the discussion ahead of them and they’re simply reacting to other senior leaders?

I think this is a great chance for the BPO leaders, the CPO’s, the SSO leaders to again reinforce value within their organization and to be ahead of these major changes. I’m interested in the views of the folks that are going to be in Chicago – where do they see themselves on the proactive vs reactive scale.

Phil: Yes, there was a lot of tension at a recent event we held in New York City, the stress levels between providers and their customers, have reached an all-time high. I think there is a lot of expectation on both sides and a lot of pressure on operations to really shift things along in many organizations. It’s interesting to hear what’s happening with Hanover. When we talk about a burning platform, you know insurance is an interesting industry. We’re looking very closely because there are a lot of disruptive competitors coming along, a lot of digitally driven insurance products and firms leaping into the space. Do you feel being in a more traditional firm like Hanover, there is more threat from digital disruption? Is this something you’re closely monitoring in terms of how you need to make a pivot? How are you viewing disruption in your space? Is it something that is changing your behavior when it comes to sourcing and operational relationships?    

Ian: It really is and obviously my major area is the P&C side. I am vaguely aware of the Life and Health side as well. We are traditional, in so much as we still largely operate through a distribution channel of Insurance agents, because at the end of the day we’ve got a firm belief and understanding of the needs of the insured and this is best handled through a skilled individual – that’s our Agency channel. Clearly, we’ve got challenges within the industry. As companies can move into the insurance space with a fraction of the start-up or operational cost that we have, there is clearly a need to pay attention to those who are bringing in digital end-to-end solutions. We’re looking to build on the foundation of our value proposition, which includes intimacy of conversation and an understanding of  “location”, and bringing in the smartest and most effective delivery model.

We typically see a progression through a legacy system being matured, and in some cases being replaced by package solutions. However, at the front end, what we’re starting to see is the widespread adoption of the digital based input processes, the submittal, the early inquiries and so on that come to us. They now typically come in with an expectation that a quote or description of the coverage areas, can be provided through any device, can be provided at any time of the day, can be provided without necessarily having to talk to somebody. So my focus is sourcing the enhancement of our sales activities as well as the delivery of operational services.

The other area that we’re seeing Phil, is clearly the development of certain products to actually take account of some of the emerging threats in the world of business. Most insurance companies, are looking at the development of cyber-related insurance products.

As we start to build those new products, we’re largely building them from a framework of digital first components. In the past, we have gone through a traditional underwriting compliance product development area. Most of us are more likely to look at a solution that’s a one-stop shop for underwriting in some of these interesting and extremely opportunistic areas for us to develop new products. I go back to my earlier question – is the sourcing leader involved in working with these types of solutions and integrating them into the portfolio of traditional BPO services?  I think that typically sourcing leaders can bring in a rational and an understanding of how new vendors, new third-parties can be integrated into the bigger service offerings of the organizations that we represent. So definitely a change in mentality from back office through to front office differentiation, something akin to the HfS OneOffice vision.

Phil: It’s good to hear the evolution of your approach in this type of market as you look at your enabling support strategy, to be more flexible, nimble, scalable, cost effective with your delivery. One of the other analyst firms recently declared that 96% of clients trying RPA aren’t very happy. What’s been your experience? Are you one of the 4% or one of the 96%?     

Ian: So we will refer to that “other firm” as, just as one of the others… I don’t think we’ve had enough time for anyone to judge happiness or success. I think we’re in the twilight of the first day of understanding just what the benefits or otherwise from the early ventures might be. Insurance is slightly a laggard as we don’t work in a real-time environment Phil, the wealth management and retail banking firms together with the micropayment functions are ahead of us in terms of benefits realization but we are starting to see how to deploy successfully, and how not to.

Our success, as opposed to happiness, has been in actually seeing from start to finish, the life cycle of Service Automation, including almost 10 to12 months of actual production environment. We’ve measurable results of a very, very key insurance process which has a minimum life cycle of a year because it’s involved with the market acquisition. I think the first sign of success is present but we won’t know for some time. I’m not in the camp of happiness, I’m in the camp of ‘enthusiastic observer’.

More than anything our success is about getting our organization ready for the next major initiative, as it is with the result of the first one. If your organization is primed and operating in an environment where the support services understand, articulate and are making the right commitments to plan for 2018/2019, I think that is success. But I don’t put that down to RPA. I put that down to good planning and leadership that we’re trying to bring to the organization.

Phil: We talk a lot about unlearning. You’ve been in a quite unique role as a sourcing lead, a governator type, for quite some time. Do you feel that you are learning new skills, new capabilities on the job and broadening your horizons? Or do you feel there is more of a defined curriculum here with everything that’s going on?

Ian: Well it’s a good question. I think in some ways the scope of what we try to do really hasn’t changed, but the pieces that we’re talking about clearly have.

From a sales background and now leading the buy-side, in many ways I’m part evangelist on behalf of the industry and some of the sales organizations, part pragmatist. I think that really hasn’t changed. The role that we play organizationally is about risk management, finance management and governance. But individually, I think you play a different role in terms of bringing the knowledge to the C-level that they require in order, to make decent decisions.

So from my own development, my ability to understand the ways of a changing C-suite is something that you’re never going to feel that you can take for granted. You go through the activity to establish and maintain relationships. You understand how the outside world forces changes in business direction for the senior leaders and you have to connect Sourcing to these changing needs. We’ve had the retirement of our CEO and the arrival of a new CEO with a very different outlook on the world. You need to be ahead of that individual thinking and bringing ideas as opposed to problems. Otherwise, you and your function that you look after might be relegated to a secondary position. In summary, while nothing has dramatically changed, you have to be consciously looking out and understanding and translating the marketing and the realities of the sale side. That is something we’re never going to be comfortable in saying that we’ve achieved, simply because the sell-side bring ideas at an ever faster rate.

Phil: We talk about the velocity of change and where things are shifting, when you look at your partnerships, with the other service partners in particular, would you say those are changing dramatically? Do you feel your current partners can innovate with you at the pace that you want to go with? Do you feel you constantly need to look out for new expertise and skills? How do you feel the service community is helping you get to where you need to get to?     

Ian: I think I’m going to give a more general answer as opposed to a specific comment on my primary partner Phil. Knowing many of the folks in North America and a number in Europe as well, Many service providers have struggled somewhat with this reality of, “How do I protect my revenue but also generate future margin.” For some time I have been somewhat frustrated but also somewhat sympathetic to the business challenge that they’ve got. I’m not sure that I need to hold my primary BPO vendor to something that would cause them to act unnaturally or even put their capabilities in threat. I want to get a better deal clearly. I may want to get better quality but you have to figure out the solution together. I say that because I’m still going to hold my BPO partner accountable for both the digital and the non-digital delivery component. I’m not looking to change or reduce service levels. They’re only going to go up.

There is a degree of complexity, that you really have to think through on behalf of your vendor rather than just take a “two by four” and challenge them to take 60% of cost out. Because you’ll end up with an unbalanced and a somewhat immature solution. My wish though, and again I’m looking forward to speaking to some of the BPO vendors as well as the Automation vendors, is how well are they really teaming together not just to shift license, not just to get me to commit upfront, but to think through the reality of a deployment model including the HR aspects of workforce changes.

Providers need to think through a reality of a well built, highly efficient use of technology rather than just have a deploy bots that may just about meet a basic level of performance but fail to when integrated to the much bigger ecosystem of operations. The BPO providers need to take look at derivative rights solutions that combine technology and process knowledge into a reusable industry focused set of solutions. I’m surprised that this isn’t more widely talked about because your asset at the end of the day is your execution of your process. Whoever carves that out first and can create some competitive edge, maybe even protect that particular new product, I think has got a great opportunity to be competitive and more aggressive and go after other organizations traditional business areas. So a long answer but I think on the whole I’m  a little bit more sympathetic in figuring the future out than I was.

Phil: That’s nice to hear. So you’ll go easy on everybody when you’re in Chicago in September I’m assuming, right?        

Ian: I’m looking forward to the one-on-ones Phil, let me put it that way!!

Phil: And finally… what do you think about Wayne Rooney coming home to Everton?   

Ian: Happy!  A different player at 31 but will help galvanize the team. some very good signings so far, I’ll be doing nearly as many air miles as you this year, Phil

Phil: Excellent. I’m really looking forward to seeing you again. You’ve been a very good friend and supporter of HfS over the years and hopefully, you’ll get to meet many new folks in Chicago in a few weeks. Thank you very much for your time today Ian. 

Posted in : Business Process Outsourcing (BPO), Outsourcing Heros, Robotic Process Automation, Sourcing Best Practises

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Can virtual assistants help to heighten the value of customer interactions? CSS Corp looks to Yodaa for wisdom.

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In a world of inflated hype around chatbots and where customer service interactions solutions claiming to be AI or cognitive are popping up at a feverish pace, it’s up to service providers to take a stance and articulate a strong value proposition. Most pure play contact center service providers don’t have much of a strategy for Intelligent Automation in general and in AI in particular. Many are exploring partnership options or allocating tiny budgets to develop their own chatbots and lower level machine learning tools. CSS Corp has decided to flex some muscle and use its own IP to develop a virtual assistant, “Yodaa,” claiming to be an AI tool capable of “human-like” interaction. Combining NLP and machine learning, the SaaS-based solution can be used as a standalone support interface across contact center channels or as a platform integrated with Amazon Echo, Apple Siri, Microsoft Cortana and Google Now. It also has the ability to understand customer intent and learn from its interactions. CSS Corp is piloting Yodaa across 3 clients and 1 client has already gone live with the virtual assistant. 

While the broader market gets excited about chatbots, the best way to discuss Yodaa’s capabilities is to look at the evolving landscape of service agents across a continuum (see graphic below) from more basic back office automation of processes all the way through to process execution on interactive channels. Without seeing specific use cases just yet, our best guess is that Yodaa falls somewhere on the spectrum between chatbots and virtual agents. It’s self-learning capabilities take it beyond the traditional bot to integrate with enterprise systems and learn from conversations, as well as combine both human and machine learning in what CSS Corp calls a “cotelligent” platform. Its multi-channel capabilities plus ability to integrate with existing consumer virtual assistants is another important feature. What remains to be seen is whether Yodaa’s capability extends to process execution the way that IBM’s Watson and IPSoft’s Amelia have demonstrated: to help front office professionals make better decisions with insightful, predictive data and analysis or routing customer requests to execution, or interact (in the case of Amelia) with some level of “emotional” intelligence. 

 

Augmenting the agent experience: adding value to customer engagement

At the far right of the continuum, virtual agents are not only automating tasks to support the digitally-driven front office behind the scenes but also using cognitive intelligence to have meaningful, secure, and efficient interactions with customers. But, cutting through the hype, we’ve yet to see a virtual agent that really can replicate a true human interaction or execute processes the way a human can. IPSoft’s Amelia is the closest we’ve seen to be able to execute at a close to human capability.They’re getting more sophisticated, and ultimately these tools may replace some customer interactions, but not all. Ideally, virtual assistants and agents can help human agents do their jobs better to support the customer experience– by providing context and recommendations to agents, promoting more valuable interactions.This opens up the door for cross-selling and upsell opportunities, as well as promotes loyalty and satisfaction with customers, whereas lower level chatbots and automation simply replace repetitive tasks and automate basic functions without adding much value. 

The Bottom Line:  Virtual assistants have the potential to help transform the contact center if used correctly.   

As Yodaa’s namesake famously said, “you must unlearn what you have learned.” Cognitive agents are not going to work well if they’re slapped on top of or inserted into broken and bad customer support processes. Customer service executives need to re-think and re-design the processes that contribute to customer experience across the board, which means “unlearning” bad habits, throwing away legacy thinking about “this is how we’ve always done it” to embrace making the contact center a much greater strategic entity within the enterprise– one which doesn’t continuously solve simple, repetitive issues (at great cost) but finds ways to build value. We explored this concept with CSS Corp in a POV last year, where we discussed the ways in which contact centers can transform from a cost center to a profit center—most notably, we looked at how enterprises can drive more revenue by analyzing their real-time customer interaction data and support contact flows. Virtual assistants like Yodaa contribute to this strategy by making data and context easily available and automated, becoming a valuable tool for marketing and sales as well, by learning from customer conversations to better understand their needs and expectations.

The lynchpin of success in the contact center for virtual assistants like Yodaa is the capability to fulfill a very important customer need for simplicity. It all boils down to making things easy for the customer while looking for opportunities to add value when appropriate.The Yodaa tool claims to understand customer intent and be able to learn from its conversations, which can provide a huge benefit to making customer service easier. CSS Corp’s Yodaa is onto something with its learning and integration capabilities, and looking forward we will see if customer stories pan out to show this is a capability which stands out amid the din that is the topic of service agents today. 

In Q4 we will be exploring the world of service agents in more depth as we launch our first Cognitive Agents Emerging Market Guide. 

Posted in : customer-experience-management, intelligent-automation

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Time to get worried about being automated… very worried

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With Natural Language Processing, Interactive Voice Response, cognitive virtual agents, Robotic Process Automation, the very essence of our corporate existence, the conference call itself, is in grave danger of going robo.  I think we’re done folks… 

Posted in : Absolutely Meaningless Comedy, Cognitive Computing, customer-experience-management, Robotic Process Automation

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Technology: Terminator or Salvation?

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Recently I attended the GSA Symposium to get to grips with what’s going on in the global sourcing industry. In a debate, the topic of robotics and automation and its economic impact was tackled head-on by a panel that included union leaders and automation luminaries including HfS’ founder Phil Fersht.

The core focus of the debate was the impact of these technologies on employment, and what could be done to mitigate them. The discussion was broad and covered a full spectrum of topics including universal basic wage and the plight of low-skilled labor. It is the latter that caught my attention.

The bulk of the argument was how organizations should protect low-skilled positions to avoid such sweeping economic change. One union leader argued that if low-skilled jobs were to leave his region, it could never possibly recover as the range of employment options simply weren’t available.

The trouble is, I disagree and do so with relatively little knowledge of the region in question. Simply put, I think the future looks bright for all workers, regardless of skill, for two key reasons. Paradoxically, technology is at the center of both – except where others believe they’ll make people redundant, I think they’ll empower them to do greater things.

Technology up-skills and empowers

In previous blogs, I’ve argued that technologies like automation free people to do amazing things by doing the tedious and low-value work that nobody wants to do anyway. This time, however, I want to look at things from the other side of the coin.

I believe technology empowers people to do high-skilled work, regardless of their experience and education. Historically, individuals found themselves pigeon-holed to specific forms of work because of their academic background or employment history. It may be that they didn’t study the course they needed to get the dream job, or hadn’t ticked all the experience boxes needed to get where they wanted to be. Now, technology can balance the field.

Take a car mechanic as an example. An enormous amount of training and experience is required to be successful in the role. Fixing a Ford Mondeo with a dodgy head gasket isn’t something you can just walk into after all. However, with new analytics technologies and the increased computerization of vehicles, it may be something that can be diagnosed by a relative novice. With the right integrated knowledge management system, it might be something they can fix while reading a walkthrough or watching a video.

What’s key here is that the technology available to us now provides us with opportunities that were historically never available. So, the fear of low-skilled labor taking the brunt of the automation fallout is unlikely to be as simple as people make it sound. The parameters of what is considered low-skill and high-skill are blurring significantly.

Technology makes us more mobile

Access to these opportunities makes the average employee more mobile, as long as they have the right tools and access to knowledge most doors can be flung open. But technology makes us more mobile in another way. I’m writing this piece from home, approximately 50 miles from my nearest colleague, Jamie. Nevertheless, I’m happy talking to Jamie right now using technology that’s available to pretty much anyone. I’m accessing documents and collaborating on a report with colleagues in three continents. Of course, some jobs and professions require a physical presence (even I’m struggling with the concept of a surgeon operating from home) but more and more will utilize new mobility and communication technologies to allow employees to work from anywhere in the world.

The future of work is a complex beast, but if one thing’s clear it’s that technology will play an enormous part.

So, will technology be a terminator or our salvation?

Both. Technology will make some jobs redundant, improve some and create others – as it has always done. When I discussed this blog with our Head of Research, Saurabh, he mentioned the example of candlemaking’s decline at the advent of electricity and the light bulb. Sure this was undoubtedly upsetting for those who had dedicated their lives to candle making and had little other skills to transfer into another role. But these days, when we’re surrounded by knowledge, tools and technologies, we have a much broader range of transferable skills.

Crucially, as Phil Fersht has pointed out in his popular blog, the digital worker has a broader range of considerations rather than a particular strength in a craft – the key considerations are captured neatly in the image below which I’ve ruthlessly plagiarized from Phil’s original blog.

When did we start missing the point?

What I want to know is when did we start being so miserable? Everywhere I turn people are sharpening pitchforks for the imminent robot invasion. I answered a survey recently that asked if I was preparing for a world domination bid from an AI overlord. Amongst the hype and hysteria, we’ve lost sight of what’s really going on. By and large, technologies have been invented to improve on what we currently have. Sure, dependent on your perspective you can reel off a list of offenders that have been damaging, but for the most part, they improve how we live, work and play. And increasingly seek to secure the future of our planet.

Frankly, and if the hype is to be believed I may be in the minority, I’m looking forward to the future and what new and innovative technologies will bring.

Bottom Line: The truth is that technology may have a negative impact in some areas of the economy, but it will also have a positive impact on many more.

Posted in : intelligent-automation, IT Outsourcing / IT Services

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IBM partners with Automation Anywhere: Great for AA, but IBM’s cognitive automation strategy just got more confusing

If you’ve been covering the legacy world of Business Process Management (BPM) software and the emergence of Robotic Process Automation (RPA) software for the past two decades, it’s fascinating to see the two solutions to mesh together, as customers need the full gamut of automation help:  the digitization of manual work, the scripting, and integration of static data that provide the foundation for the automation of the digital processes.

Then you can get to the really exciting stuff of recognizing data patterns, taking advantage of machine learning to make systems self-remediating, and, ultimately, the injection of intelligence to make them absorb everything around them to become predictive and human-like in the way they operate. This is why we’re seeing the likes of Pega peering into the RPA space, Blue Prism partnering with Appian and AutomationAnywhere now partnering with IBM’s BPM software solution.  We’re also seeing some novel approaches, such as intelligent automation provider WorkFusion donate free RPA software to the world to bridge the divide between the manual and the digital quandary.

Yes, people, there appears to be a fair bit of life left in the HfS Intelligent Automation Continuum. Despite some critics who believe RPA is a very separate solution than digital autonomics, machine learning, cognitive and AI, the fundamental thought-process behind the HfS Continuum model still rings true: all the approaches illustrated are both overlapping and interdependent:

Notwithstanding all the feverish excitement on RPA and Cognitive, we still need to include all the less exciting – but critical – activities, like runbooks and scripting, and how these approaches must be integrated into broader digital process workflows. True Digital OneOffice only works when all breakpoints and silos are effectively automated.  If you truly want all touchpoints and processes across your organization focused on executing your vision of customer experiences and building foundational capabilities that support this entire philosophy, you have to address the entire Intelligent Automation Continuum if you want a data backbone that operates in synch across your customers, partners, and employees.

This is the context in which the announcement of IBM’s partnership with AutomationAnywhere comes in.

As part of the agreement, the two companies plan to integrate Automation Anywhere’s RPA platform with IBM’s portfolio of digital process automation software. The main focus will be on integrating Automation Anywhere with IBM’s Business Process Manager and Operational Decision Manager. Crucially, integration is meant to be on code level and therefore goes beyond more loosely integrated partnerships between BPM and RPA players. These enhanced products will be part of IBM’s software catalog. And lastly, both companies plan to build out a Center of Excellence around Automation Anywhere’s RPA capabilities. Condensed and in plain English, this means that IBM is planning to expand its BPM offering through RPA capabilities. Thus, it is a defensive move against Pega’s acquisition of OpenSpan that has seen the integration of BPM, RDA (Robotic Desktop Automation) and RPA. At the same time, we’re seeing the rise of more loosely integrated partnerships such as Blue Prism and Appian.

IBM needs to develop a holistic corporate strategy for RPA

While the partnership makes a lot of sense for IBM’s BPM division, from a narrow BPM angle, from a corporate and market facing point of view this announcement raises many questions. As part of its Cognitive Process Automation strategy, the GBS side of IBM has a focused and strong relationship with Blue Prism. It is unlikely that executives at Blue Prism (or GBS) are overly-pleased with these developments as it could curtail their mindshare among stakeholders. If anything, in contrast to most of its peers, GBS had chosen a single partner in order to scale its RPA deployments. Almost all of IBM’s peers have moved to a portfolio approach on RPA by offering and integrating a broad set of tool providers. In our discussions with IBM executives there appeared to be a lack of understanding as to the different RPA strategies of the various business units, let alone a nuanced understanding as to how RPA is being discussed in the broader market. In a nascent market with blurred market communications and relentless marketing rhetoric, this could add to the reluctance of customers to engage on a larger scale and a more holistic approach around RPA.

For those already engaged in RPA activities, questions begin to crop up about the firm’s current RPA engagements. Can clients expect to continue on their journey with BluePrism or should they anticipate a migration over to Automation Anywhere solution in the long-term? Of course, this is dependent on the level of exclusivity surrounding the partnership alongside other factors. In recent engagements with HfS analysts, the firm has championed its vendor and IP agnosticism, offering customers the opportunity to broker a broad range of solutions and services through them to find the best fit for the client business. We will continue to monitor this space to see if this partnership also signals a move away from this philosophy. If there’s one thing for certain, the deal may make commercial sense to IBM, but it opens them up to a lot of questions about current and future engagements for RPA, alongside broader IBM services.

And where does this really leave Watson?  While the rest of IBM grapples with the digital underbelly of pulling the pieces together in a way that makes sense for the process wonks, the engine that is Watson, with all its cognitive analytics grunt, is nowhere to be seen in this story.  Surely IBM needs to pull together all these internal factions (and from within the Watson group itself) to develop an integrated data orchestration story that the industry can actually understand.  Talk to anyone about Watson and noone is particularly clear where this is all headed, even from within Blg Blue. 

For Automation Anywhere it is all about scale

The RPA market is still lacking scale. Most deployments are client specific and on sub-process level. In a nascent market that might not be surprising, but more fundamentally there is a lack of education as to how to get to scale with deployments. Against this background Automation Anywhere could leverage IBM’s know-how and IP to understand better how data is being transported and what the critical bottlenecks are. This could provide a critical differentiation in a nascent market that lacks an understanding how those innovative toolsets are impacting process chains and workflows. The talent with such an understanding is extremely scarce and is difficult to keep in an organization. However, for Automation Anywhere scale is also important from another angle. The main strategic objective is still moving toward an IPO. Therefore, the leverage of IBM’s sales channel could conceivably reach many new customers which in turn would enhance Automation Anywhere’s valuation by financial stakeholders. To achieve that goal, Automation Anywhere needs to mitigate any potential negative reaction by its other main partners. Suffice it to say one could argue, that Blue Prism’s close relationship with IBM has not harmed its potential, yet with more scale and consequently value, the balancing of partner interests could become more intricate. Having said all that, should the partnership prove successful, M&A rather than an IPO might be on the cards.

The broader market is likely to get more confused in the short term

In a market blighted by smoke and mirrors as well as the mis-selling of RPA, without a focused and clearly articulated marketing push, this announcement is in danger of confusing the market at least in the short term. Many stakeholders don’t understand the differences between RPA and RDA, how cognitive is coming into play or even how RPA could be integrated into BPM toolsets. By adding BPM as another starting point to the RPA discussions on top of the front-office centric RDA approaches and the more back-office focused RPA engagements, further confusion is likely. Suffice it to say IBM has the marketing muscle to act as (a long overdue) educator. IBM’s BPM team should urgently leverage the robust insights and capabilities from its peers in GBS.

Bottom-line: The proof will be in the pudding, but the move could give Automation Anywhere real industrial scale

IBM urgently needs to develop buyer stories that demonstrate to the broader market the success of its strategy. A critical component in those narratives needs to be the depiction of how BPM and RPA work together. As it is sold as a product rather than a service, it could follow the many failed RPA projects that neglected a more consultative approach leveraging the specialist capabilities of organizations like the RPA pure plays such as Symphony Ventures, VirtualOperations or Mindfields. Automation Anywhere has less to lose yet more to gain. The understanding of how to scale deployments while simultaneously broadening its client reach is as tantalizing as it could be value enhancing. As the proof will be in the pudding, HfS will follow those developments with great interest.

The big questions marks with the likes of AA and other RPA solutions are whether these products will hold up in situations of industrial stress where they have to cope with very high throughput, high-intensive processing. If AA can prove it can delivery both the RDA and RPA grunt to power the broader IBM BPM solutions, then the firm will be in a strong position to increase its valuation as a bonafide enterprise class solution.  Perhaps even IBM itself wants to have an up-close and personal experience of the AA software in these intensive client environments, before making its own acquisitive move… the future is unraveling, and this is just another piece of a much larger automation jigsaw that is quickly coming together…

Posted in : Cognitive Computing, Robotic Process Automation

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Getting into the Top 50!

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Another year another top 50 list of service providers can be found on HfSresearch.com. We have included some new providers – including a couple of interesting BPO firms in Japan and adjusted for the recent wave of consolidation in the market.

I just wanted to repeat the advice I gave out last year about the report and the list – this report is all about the money. Being on the list or not, doesn’t make a service provider good or bad – hopefully market forces mean that better/cheaper providers rise through the ranks, but it isn’t necessarily so. 

The Top BPO FAQ:

You’ve made a mistake can you correct it?

We are human and from time to time this happens – just send me an email and with your thoughts and we’ll correct. By all means, call me names on Twitter – but I may shout back…

We can miss companies from time to time and define where revenues go incorrectly. And, occasionally, spell your name incorrectly 😉 Also we may define things differently from you – we are trying to compare like with like as close as possible. Remember this is an estimate – so if you have further guidance, I’d be happy to have a conversation to let you know how we came up with any of the numbers.

I should be on the list / What do you have to do to get on the list?

Sending us evidence (a financial report or two, would help) that shows latest annual revenues. We use calendar years for our lists usually, so something that shows the relevant quarters would work. But happy to have a discussion with any private firms – just so we can properly establish position. I am not a miracle worker so private companies that don’t publish results and don’t provide guidance may not make the list.

How much do I need to bribe you to change my position?

It (still) pains me to say it but no – we just can’t. The pesky tax man (and our boring accountant) frown on it 😉

That said it is also free to be on the list – you just need to demonstrate that you have the revenues to make it. But I will check against public sources and validate.

I really want to be part of this but I just don’t have the revenues yet – is there anything I can do?

We are happy to engage regardless of the absolute market share if a vendor has an interesting service – we are interested in up and coming providers. And we may profile interesting firms.

Posted in : Business Process Outsourcing (BPO)

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Blockchain still not enterprise ready, but the Hyperledger Fabric 1.0 release can show the way

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Tired of the Blockchain hype? You should be, but the emergence of Hyperledger Fabric 1.0 gives us a sense of the reality to come and where this is all heading.  Let’s dive in…

Hyperledger announced the release of Hyperledger Fabric 1.0 yesterday (see press release). Hyperledger Fabric is an open-source platform, hosted by the Linux Foundation that allows organizations to develop Blockchain applications. Version 1.0 marks the release of a production-ready platform that goes beyond pilots and proof of concepts. 159 engineers from 28 organizations collaborated over a 16-month period to make this happen.

There are multiple Blockchain platforms that exist today. Ethereum is the most mature public platform (besides Bitcoin) with tremendous potential and over 500 use-cases in various stages of development. There are multiple other private or semi-private platforms such as Ripple and Chain. Hyperledger Fabric is younger than many others, but there are three characteristics that make it important for enterprises that want to solve business pain points, leveraging Blockchain:

  1. Flexible. The architecture of Hyperledger Fabric can run like a private or hybrid or public platform, making it potentially more secure from a data-privacy standpoint thus rendering itself enterprise ready
  2. Open-Source. Hyperledger is an open source collaborative effort created to advance cross-industry blockchain technologies. It is a global collaboration, hosted by The Linux Foundation, including leaders in finance, banking, Internet of Things, supply chains, manufacturing, and Technology. This structure gives it the potential to become the de-facto standard which will become an important adoption criterion going forward
  3. Not crypto-currency based. Hyperledger does not have a crypto-currency (such as Bitcoin or Ether) which potentially renders it more usable for business applications as not every potential use case needs a currency

The announcement marks a significant move forward to leverage Blockchain for business use cases. The Hyperledger Fabric project started in March 2016 based on merged codebases from IBM and Digital Assets Holding. It moved out of incubation 12 months later and was ready for pilots and POCs. Now four months later, they have released Hyperledger Fabric 1.0 – a production ready version.

Does this mean that Blockchain can now become mainstream for enterprise adoption? No.

These are the three challenges the Blockchain pioneers must address to make the technology truly enterprise ready:

1) Technical challenges. Blockchains by design will never be able to complete thousands of transactions in a second, but the technologies do need to be able to scale up for enterprise-grade performance, efficiency, and costs. Hyperledger Fabric promises to solve this by not using consensus-driven Proof of Work (PoW) that most other Blockchains are built upon and requires major computing power

2) Policy challenges. There are no Blockchain standards, there exist multiple platforms with no interoperability, and there are no regulations in this space. And these are not easy questions to solve. For example, given that all Blockchains are Distributed Ledgers, which geographical jurisdiction will be applicable?

3) Nascency challenges. Several challenges stem from its nascency and novelty. Lack of proven use cases, limited understanding of technology and its potential, limited talent and skill-sets shortage across IT and business, etc. The inherent power and potential of the concept with the help of some pioneering risk-takers will help pull it through such nascency challenges, but it will take time

Bottom-line: There is still a long road ahead for Blockchain, but real progress is being made.

Notwithstanding these challenges, the advancements in Blockchain technology are happening at a frenetic pace. Market developments such as this Hyperledger Fabric 1.0 release are important milestones in the development of this space. It’s important for enterprises to take notice and start investigating. 

Posted in : Blockchain

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HCL’s CEO CVK talks three lane growth strategy: Mode 1-2-3

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One of the leading service providers is also one of the most understated:  Hindustan Computers Limited, or its better-known abbreviation, HCL. This company has grown its revenues by more than 75% in the last 5 years and maintained its profitability to surpass $7 billion this year, while running Wipro close to being the 4th largest Indian heritage IT services firm. Its reputation is one of having a very strong engineering pedigree, a “roll the sleeves up” attitude and a no-nonsense approach to business. The fact it has never bothered to spend millions on a fancy new logo, or glitzy marketing posturing, speaks volumes for this determined, humble and very focused firm, quietly – but aggressively – going about its business as becoming one of the heavyweights of the IT services industry, and one of the best positioned to weather the current malaise caused by flagging demand, too many competitors, and creeping automation. 

So when I got a chance to spend some time with its new, young dynamic CEO, C Vijayakumar, or “CVK” as everyone calls him, I just had to share some of our conversation with the HfS community…

Phil Fersht, CEO and Chief Analyst, HfS Research: CVK, tell us about your journey to becoming the CEO of HCL Technologies? What is your secret sauce?

C Vijayakumar (CVK), President and Chief Executive Officer, HCL: More than the secret sauce that I bring to the table, the question is, what is really special about HCL, and what is that secret sauce that has developed a range of leaders within the company. They may seem different and diverse on the surface, but all our leaders embody a core culture within, and that’s fairly constant. I have had the good fortune to be part of some great milestones and worked with some excellent teams at HCL. I have also worked across multiple business functions – strategy, practice, product management, sales, business development and delivery. This has helped me to get a well-rounded view and brought me to this position today.

Phil: So what is the number one issue with HCL and the business… what is keeping you up at night?

CVK: The number one issue is the speed at which we can evolve our next generation of services. I believe if 40% of your revenues are from next generation services, then we have crossed a threshold to be relevant and do well. 20% of our current revenues are coming from next generation services. How can we get this up to 40% in the next 2-3 years? Or how fast we can get there? That’s what we are working on and that’s what keeps us up at night. We have a strategy, our “Mode 1-2-3 strategy” we are driving on a three-lane highway where we need to maintain a steady pace in the lane we are driving on, Mode 1 – our core services. Moving to the adjacent lane, Mode 2, we have an opportunity to overtake and finally working our way to the high-speed lane which is Mode 3. That’s how we and a lot of global leaders look at it, especially in the IT industry. Technologies themselves may not be the big things you are worried about, I think every business is trying to reinvent themselves, reimagining and rewiring their business using new technologies. Every aspect of the IT industry, infrastructure, application, business services, even the talent, and skill is undergoing significant change or disruption. My focus is to evolve the business in line with the changing dynamics and rapidly changing customer dynamics. That’s where the focus of the company and the leadership team lies. Our Mode 1-2-3 strategy has been built to address theses issues:

Mode 1 – is our core services: infrastructure, applications, BPO and engineering services. They contribute 82% of our revenue as measured in the last quarter. The differentiator is the industry leading autonomics platform called DRYiCE. We are still the most significant player in these services offering practical benefits for our clients.

Mode 2 – our experience-centric digital services or outcome orientated IoT services enabled by a foundation of cloud and security, leveraging what we call DRYiCE orchestration. This is where cloud and security are already enabling digital which offers a great growth opportunity for us. 

Mode 3 – this is unique to us and is about using the ecosystem to future-proof our business. Building a products and platform business, by creating innovations enabled by creative partnerships. The products are stable, long-standing products and we make them relevant for the new world. This is different from creating products from scratch. You buy the IP and see how you can modernize and make them relevant. A good example would be our work with Workload Automation, we bought the source code license from IBM and created a cloud Workload Automation solution which is very relevant in data centers, which are becoming hybrid cloud solutions. This strategy is working very well. We have numerous products in the pipeline, they are all traditional products but they are being reinvented to be relevant in the modern world. That’s the Mode 3 strategy, we not only have this on the technology side, we are doing this on the business functionality as well. We have a few things in the pipeline that we will announce shortly. We are building a strong products and platform business. This is an in-depth answer, but technically this is what is keeping us up at night.

Phil: Very well-articulated! What do you think, CVK, is going to have the biggest impact in the next 3-5 years? Is it blockchain, automation, cognitive or something else?

CVK: I think it’s a confluence of all these things, not just one thing. These and some more things will all have an impact. We have now identified 5 distinct areas that will have a huge impact on the services industry and they are: Digital, IoT, Automation, Cloud and CyberSecurity. There could be many sub-themes in and around these areas, but broadly these are the 5 key themes. We recognize that clients’ ability to adopt these will vary based on the maturity of their existing environments, hence we have created separate focus groups with a leeway to invest adequate management support to the three Modes that we are operating in. I believe having the right investment and right management across all the various aspects of operation is critical to our Mode 1-2-3 strategy.

Phil: A lot of this is going to require ‘unlearning’, changing the way things have been done in the past. When you look at your company and where you are going, how can you unlearn the last couple of decades to make yourselves truly relevant for the next decade?

CVK: I open a lot of presentations with a quote from Alvin Toffler – “The illiterate of the 21st century will not be those who cannot read and write, but those who cannot learn, unlearn, and relearn” – I keep emphasizing this to our business leaders and the technical talent – learn, unlearn and relearn – is a very important aspect. The outsourcing business is definitely changing. Even if for a moment we believe it’s not changing dramatically, it’s always good to believe it’s changing dramatically, which will propel us to do the right things and be ready when these changes have to be implemented for a client, or to change your business model. I believe the industry is changing significantly and we have to change ourselves. Traditionally there were many subject matter experts with in-depth knowledge in technologies, but today the silos have broken down and IT is a vast horizontal plain, cutting across technology, businesses and different functions. The challenge is to create a breed of inter-connected specialists who can traverse different domains. This is where we need to focus our talent – continually building capabilities that will make them a full stack engineer or a converged engineer who can look at not just running infrastructure but who can program application API’s and micro-services etc. Creating talent that has a broader view than the siloed view of the last few years.

From an industry and services perspective, it’s no longer a labor and a cost arbitrage game, it’s about how you can deliver a business outcome and encourage your teams to have skin in the game, by committing to a solution, committing to an outcome, that will deliver through that phase and ensure the outcomes happen. Customers today are looking for a partner who will have skin in the game and ensure business outcomes. We are therefore encouraging our teams to take some risks, learn something on the way and deliver outcomes.

Phil: That’s great to hear, and it’s difficult to have a conversation like this without talking about the impact of politics. For the first time politics and technology are becoming entwined in a business model. In terms of HCL business have you seen a major impact on your own financial performance, as a result of some of the political changes and noise that we have had in the last few months?

CVK: Yes, due to the political changes, I think some decisions have been delayed, people are reviewing their decisions a lot more carefully and thoughtfully. Everyone is worried about being visible. It has definitely slowed down the flow of some new deals. But most customers strongly believe in the business model, the outcomes that they expect in the services outsource space. There is some delay but I don’t think that people are fundamentally rethinking this. They are being a little bit more cautious, so it has an impact to that extent but I do not believe it will fundamentally change the way customers are thinking about a business case.

Phil: So, my final question, if you were to be anointed the ‘Emperor of the Service Industry’ for a whole week and you can make one change, what would that be?

CVK: We have an internal communication platform called MEME where I communicate directly with all HCL’ites every day and I actually posted this question there. There were lots of very interesting responses, some of them very closely aligned to my own thoughts on this subject. I believe the IT industry is an open source world and cannot have one Emperor, but to answer your question I would probably aggregate the forces of IT to really use them for the less advantaged and unleash its benefits to the common man – in today’s world that is not the central piece which drives investment. We could really leverage IT in unimaginable ways – help the disadvantaged, help to fight crime in a very meaningful manner. The other decision would be around AI. Currently, there is a lot of nervousness about automation and AI. I am a strong believer that if you use Automation and AI in a thoughtful manner, it will give more benefits to humanity. But how do you get that done in a very thoughtful and disciplined manner? There’s a very good analogy that we can draw from the ‘Nuclear non-proliferation treaty’, signed across many countries in the world. Something like that should be done for AI, an AI treaty that mandates the use of AI in a meaningful manner to augment what humans can do and improve lives. I hope that makes sense.

Phil: This is the most thoughtful answer I have had from this question and it makes a lot of sense. It’s been a great interview and good to hear what HCL is doing to continue to be successful… excited to share with our audience, CVK!

Posted in : Outsourcing Heros

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136 enterprise RPA users have spoken and 58% are positive about the business value

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When we revealed Gartner’s bullish 96% of clients are getting real value from RPA bombshell (see post) six weeks ago, everyone close to the action was incredulous:

 

Now we have the real data to prove where satisfaction levels currently sit, where we interviewed 136 major enterprises currently experiencing RPA installs:

 

My personal experience has tended to be about half of enterprise RPA clients today are experiencing positive progress, while the other half are struggling or aborting RPA projects altogether, so this data is pretty positive, especially when you consider that the same number are positive about both the cost and business impact of RPA.  

The Bottom-line: RPA is making sense in this era of renovation and the current satisfaction results reflect this

What I love about RPA is the fact it’s making us fix a lot of the systems we’re currently stuck with, using sensible, affordable technology. We spent years bemoaning the fact that enterprises couldn’t just “saw off” their broken processes and replace with costly new systems and services, but the reality is that most enterprises are not ready to write off their technical debt and invest in change, especially when the outcome is not particularly clear. What is clear is that most enterprises prefer to invest in making their broken processes function better, operating in a digital fashion where they can manage the change themselves and the cost isn’t abhorrent. Taking it one broken process at a time, fixing it, proving the ROI then onto the next one is the step change strategy that is working for the majority. 

Yes, RPA is predominantly operating as a retro-fit solution for most enterprise clients, getting rudimentary processes functional by eliminating high-throughput, high-intensive manual interventions and helping applications and systems manage digital workflows effectively. Yes, RPA keeps legacy alive for many organizations, but in a way that you can build digital overlays over these systems, once the manual elements are eliminated and workflows are joined up effectively.  Our emerging conversation, beyond RPA, is all about automating the automation and deriving the right data patterns to promote more intelligent machine learning and cognitive capabilities.

The good news is the general adoption of RPA is on the right path and the next challenge for enterprises is to figure out the next wave of digital building blocks to drive more intelligent and predictive capabilities into their data backbone. Software firms, advisors and service providers alike all have to create much more dynamic partnerships to help enterprise their clients get to this stage – this is much more about how to start innovating together and understanding each others’ capabilities. Just talk to any services provider, such as an Accenture, Genpact, IBM, TCS or Wipro etc., and they will tell you a whole new plethora of smart digital competitors are emerging and you just can’t afford to acquire them all – you need to learn how to work with them and give them some skin in the game. 

We’re in an era when technological needs are complex, and there is no defined rulebook explaining how to develop a holistic data strategy. We’re in an era of discovery and making the most of what we currently have, before we can truly understand what we will need to be successful at some far-flung point in the future. In my view, being “disrupted” is when you don’t collaborate and explore… being a disruptor is being forever bold and unafraid, in order to define your own curriculum as this digital future unravels. Stay tuned for a lot more analysis from this study…

Posted in : Cognitive Computing, Robotic Process Automation, the-industry-speaks

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Accenture Expands its Digital Frontier with Intrepid – Another Pearl in the String of Acquisitions

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Last week, Accenture announced the latest in its 2017 $1.8 B shopping spree with Boston-based mobile design and development company Intrepid. This is a part of Accenture’s strategy to dominate the Digitally-driven Front Office with the vision to offer its clients a model with no business silos where the barriers between the front and back office are removed forever; as described in HfS’ Digital OneOfficeTM. Accenture’s strategy goes beyond the ambitions of growing and maintaining the largest digital agency in the world. It’s about building capabilities to impact its clients’ transformation, finding unique capabilities in opportunistic Geos, opportunities for pull-through with its other services, and a keen focus on impacting the customer experience. 

Intrepid’s 150 employees will join Accenture Digital, the division where many of Accenture’s customer experience focused services reside.  Intrepid’s engineering talent and capabilities, such as it’s work with Saucony Stride lab — an app that helps runners analyze their stride for better performance–  falls right in line with the kind of digitally-driven customer experiences Accenture is looking to help its clients achieve.  There are also great client synergies between Accenture and Intrepid, in particular around P&G, Accenture’s marquee client for front office services and an organization which is at the forefront of value creation from front office services. 

Accenture was recently placed in the Winner’s Circle of our Digital Marketing Operations Blueprint. This acquisition will further solidify its position, in a space where Accenture’s ability to replicate its Digital Front Office services across industries is also emerging as a competitive differentiator. The ‘string of pearls’ M&A strategy across the core pieces of digital transformation is illustrative of the service provider’s forward thinking vision for the evolution of this market. These acquisitions span across various core pieces of digital transformation, such as include aVVenta for content, Cimation for IoT consulting and Chaotic Moon for digital technology design and prototyping, complementing customer experience services and helping the service provider double its digital marketing operations business over the last two years.

Accenture is putting together a differentiated and bold story for the digitally-driven front office. In fact, Accenture accounts for approximately 50% of the M&A activity since January 2017. Let’s look at some of the more recent Accenture recent acquisitions in 2017:

  • MediaHive, May: Digital commerce strategy and design to platform delivery and managed services
  • Monkeys and Maud, May: Creative ad agency, Australia and New Zealand
  • Kuntsmaan, April: Belgian communication agency focused on customer experience
  • SinnerSchrader, February: German digital agency

What is the common theme in each of these selections?  A clear focus on digital customer experience and design. Accenture also stands apart from the competition in the sense that it seems to avoid falling to the temptation of talking immediately about technology and software (in spite of the strength of its technology assets and partnerships), and instead focuses on the business value.  This management consulting legacy and mindset is part of the company’s DNA and a big part of how it builds trust with its clients. 

This flurry of M&A activity is bold, but not without risks and potential problems.  One of the greatest potential issues is addressing the clashes of so many disparate and vastly varying organizations both operationally and from a cultural perspective.  Accenture’s culture is built on thought leadership, delivering operational excellence, and not necessarily in sync with more “creative type” cultures that will inevitably come with the acquisitions, it’s been targeting.  For now, the strategy seems to be running these entities independently, almost using them as R&D centers wherein their original cultures remain intact.  But inevitably over time, some cultural transformation will occur, morphing the digital giant and its entities into something new-the question is whether legacy Accenture becomes a more creative, innovative organization-or it’s subsidiaries turn more corporate, potentially snuffing out some of the creative fire and losing key talent in the process.  It also risks its size becoming a deterrent for buyers who prefer the niche specialized agencies and the attention, flexibility, and experience they receive from a smaller player.

Another potential threat is that Accenture might become complacent in delivery and execution given its dominance from a capability perspective in this space. This acquisition moves it up on our innovation versus execution grid, but will Accenture also move toward the right? We will be watching that as Accenture continues to enhance its capabilities with these innovative firms.

 

As Anatoly Roytman, head of Accenture Interactive for Europe, Africa, Middle East and Latin America said (of the Kuntsmaan acquisition): “Together, we’re bringing our unique model to the market: part creative agency, part business consultancy and part technology powerhouse – all laser-focused on creating the best customer experiences on the planet.”  The refrain we hear constantly from service buyers — Accenture’s included—is “more innovation!”  Accenture has certainly amassed an array of building blocks to address this demand globally; now the hard work begins to pull these pieces together – a ~$10B digital agency with many moving pieces, specialized skills and domain capabilities – to execute on transforming the digital customer experience for its clients. 

Posted in : customer-experience-management, Digital Transformation, ma

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