In business operations, global shared services, and outsourcing, the mantra has been: centralize, standardize, industrialize, globalize. Traditional shared services and outsourcing contracts have been developed to focus on “lift and shift” and how to make processes increasingly more efficient and effective, measured by service level agreements. But what happens when the SLAs are green but customer or stakeholder satisfaction is level, stale, or down? When you feel that “innovation” is lacking? That the world is shifting to become faster, more flexible, and in-touch—but your business delivery isn’t and you just don’t have the time to think about it?

The answers to those questions are more and more often to use Design Thinking as a catalyst for innovation and continuous change. And it is the reason we explored the integration of Design Thinking into business operations and outsourcing design and delivery. Insights on how Design Thinking plays a role in creating a different experience—a different way of working and new insights for operational excellence and expansion—and 11 service providers are profiled in the recently published HfS Blueprint: Design Thinking in the As-a-Service Economy.

All of the service providers in the blueprint we’ve just published, Design Thinking in the As-a-Service Economy, are increasingly incorporating the principles of Design Thinking—human-centered, collaborative, action-oriented—into the way they work. Just like the increasing attention to robotic process automation and cognitive computing, experimentation has been going on for a while now… and so it is no longer “new” to many of them.

Design Thinking is a complement to, not a replacement for, operational excellence and solutioning for service design and delivery

You can use Design Thinking to understand what’s really causing problems or issues or expenses, by better understanding what people are actually doing –or not—and feeling. What is their experience? And then working through ideas that may revise, or replace, or eliminate process; that may change what people are doing and how; and could use current technology better, or new technology.  As one shared services executive told us, “we already know how to make something efficient [with Lean Six Sigma] and we required a new way of thinking in some specific areas.” Along these lines, we are not anticipating an end or replacement to Lean Six Sigma or “operational excellence” but adding a way of stepping outside the process to identify trouble spots and new solutions.

With Design Thinking you focus on understanding who is involved in whatever process or problem you are looking to address, and what are their expectations and needs (the “human” side)? And what is the industry and corporate context, the business outcomes to impact (the “business” side)? And what are the technology enablers? Then bringing it all together in a solution through a series of prototypes and tests. (See Exhibit 1: Incorporating Design Thinking Into Business Context for Shared Services and Outsourcing) Sometimes the solution is a quick fix, like changing the day of the week or where a request from a consumer is directed in a system; and sometimes it will help you identify a new way of working or a new service or solution.

Exhibit 1:

Bottom line: By using Design Thinking, we are moving a more human-centered, business-outcome oriented, and questioning approach to defining and delivering services in consulting and outsourcing, just the way the world is doing in general.

Using Design Thinking “was helpful because we make assumptions about people,” said an insurance executive interviewed in our study.  Taking the time to empathize with the end user through interviews and observations “helped us to make sure we understand not just what we do for the consumer but how it makes them feel.”  In other words, it’s not just about what you’re doing but the relevance of it to your end user. If you want your customers and your stakeholders to work with you to reach your business outcomes, then look for ways to make it easier for them to do it – and that means understanding them better, and that’s a role that Design Thinking can play.

Where is the outsourcing services industry on the path to integrate Design Thinking?

We want to help you, through our blueprints, to make the right match for a services engagement – short or long term. While that effort used to be about “we as a buyer post a list of requirements and look for cost reduction” and “we as a service provider will tap into our best practices, tell you about our features and functions, and hire or assign people who can process transactions” … times are changing.

Now, engaging a service provider or providing services to a business means understanding the context, the challenges, the outcomes desired, and how to broker and define a solution that can be flexible and change as the market changes.  We’ve been calling this movement the “As-a-Service Economy.” Design Thinking can play a role in this movement towards a new way of working as partners. But because it is a new way of working, it does take time – trial and error and willingness to work in a new way. It impacts roles, governance, budgets, and contracts. And equally important, you need to have alignment in the expectations and cultures of the partners involved in order to feel as though this way of working can work – to deliver results. 

In the Design Thinking in the As-a-Service Economy Blueprint, we look at the relevance, use and impact of Design Thinking in services engagements as it takes shape as an integral part of business operations and outsourcing solution and service design and delivery.  It includes coverage of the following service providers in terms of Design Thinking integration into the way service buyers and service providers are working together: Accenture, Capgemini, Cognizant, Concentrix, EXL, Genpact, Infosys, Sutherland, Tech Mahindra/BIO Agency, Wipro

Posted in : Business Process Outsourcing (BPO), Design Thinking

While most of the services and operations industry obsesses with Robotic Process Automation to streamline its rudimentary back office processes, one provider that’s never shied away from making bold moves to disrupt illustrious competitors is Genpact, with an imaginative move to integrate true artificial intelligence with its business process service offerings by acquiring the impressive Boston-based Rage Frameworks.

It’s almost history repeating itself from a decade ago, when the (then privately held) Genpact turned the BPO model on its head with its disruptive virtual captive proposition that significantly challenged the pricing models and ability to integrate offshore capabilities into the old BPO model. Now, the firm is breaking the mold, yet again, by making real inroads into infusing AI into business processes and introducing these concepts to its huge global community of finance leaders.  

Let’s get to the rub: RPA is all about digitizing the back office, but Artificial Intelligence is where we see the true marriage of business processes with clever technology and self-developing algorithms. We’ve danced for years trying to prophesize when BPO will truly integrate with IT, but we’ve now had reality unveiled: RPA platforms streamline the back office, while AI brings the middle and front together to create that true Digital OneOffice^™ experience. The Digital OneOffice is not about collecting and archiving historical data simply to discover what went wrong, it’s about being able to predict when things will go wrong and devising smart strategies to get ahead of them. The Digital OneOffice is about embedding smart cognitive applications into process chains and workflows, it’s about learning from mistakes and new experiences along the way. This is the emerging “organization neural system”, where the needs of the customer can be intelligently supported by real-time, self-learning intelligent operations:

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Why is this acquisition significant?

In a nascent market where stakeholders stumble through smoke and mirrors to make any sense of the many claims around Intelligent Automation, M&A is a clear indicator that the market is starting to mature. When in December 2016 ISG bought Alsbridge and CA acquired Automic, HfS suggested that Intelligent Automation was at an inflection point and that the focus on automation tools will shift toward the likes of Google, Amazon, and Facebook around deep learning and the integration of unstructured data. While we have not yet seen the Internet giants play their hand, Genpact’s acquisition of Rage Frameworks is underlining exactly these market dynamics. And this is the first time that a service provider is driving automation capabilities through M&A.

Rage Frameworks drives pre-built automation engines deep into unstructured territory

Whereas the broader market remains misguidedly focused on the intricacies of RPA, Rage’s focus is not on automating specific process steps, often on sub-process level, but on developing a broad ranging platform (RAGE Enterprise) for custom solutions with a deep vertical footprint. While RPA is largely focused on structured information, Rage will take Genpact deeper into integrating semi and unstructured data. Their development effort over the last two years to build enterprise applications for financial industry processes (wealth management, commercial loan processing and financial statement spreading) is shifting the focus from automation tools and capabilities to providing an end-to-end process leveraging a model driven business transformation platform.

In our view, the value proposition of Rage Frameworks is centred on leveraging Machine Learning and Natural Language Processing to build out highly vertical engines in Financial Services, Capital Markets, and Supply-Chain. The functionality of these engines ranges from managing business rules to real-time integrating content to data access and NLP all built around a process assembly engine. These engine building blocks can then be assembled for custom solutions that automate business processes or can be used as one of three pre-assembled financial services industry applications: LiveWealth, LiveCredit, and LiveSpread. In addition, broader capabilities including front desk automation, real-time intelligence, and pricing are transforming how commercial lending, policy underwriting, financial statement analysis, investment research, and multi-system reconciliation can be performed.

RAGE’s industry applications are a big part of the allure for Genpact, which has spent the last few years going deeper into its commercial banking and capital markets operations accounts with data and analytics solutions trying to solve the same client operational challenges as Rage. In our recent HfS Capital Markets Operations Blueprint, Genpact placed in the Winner’s Circle, with an HfS callout about its need to bring more technology enablement to capital markets. The service provider has examples of using emerging technologies such as machine learning, automation, dynamic data extraction, etc., in LOBs as retail banking. What Rage brings to the table for Genpact is a more strategic approach for impacting client operations through technology-led change.

Genpact continues to lead the automation discussion from the front

From Genpact’s perspective, the acquisition is reinforcing the perception of being a pioneer in Intelligent Automation. Having led the market with the first publicly announced partnerships with AutomationAnywhere, Exilant, and Automic around its Rapid Automation program, Rage Frameworks fits in well with Genpact’s holistic approach to automation. Within that context, Rage’ assets will further advance the integration of unstructured data: Genpact has invested heavily in analytics and big data with a dedicated research lab in Bangalore, India. They have developed a Data Engagement Platform using big data technologies, in order to be able to harness structured and unstructured data from multiple sources. Thus, its Lean Digital strategy is aligned with HfS OneOffice concept. But the company has to demonstrate that it is starting to link up back, middle and front-office.

The broader market will follow with accelerated M&A activity

Regulations and risk management requirements are forcing banks to rethink the way in which they capture, store, manage, and distribute the growing volumes of transactional and trade data. Structured data from multiple departments and asset classes are maintained in silos, and unstructured data present new challenges as well as opportunities for automation and analytics.

Despite the continuing noise around RPA, we believe the market will shift toward operational analytics and the broader notion of AI. Not only are the leading RPA tool providers expanding in that direction, but we expect the investment focus to progress toward Deep Learning, Neural Networks, and broad NLP capabilities. While it might sound trite, data really is becoming the new currency. But this currency needs to be integrated into delivery backbones on an industrial scale. Thus, service providers need to reinforce their efforts on service orchestration. We haven’t seen many proof points for a successful expansion into data-centric scenarios, but those deployments will be a clear demarcation between the leaders and the also-runs.

Central to this will be the articulation and delivery of business outcomes for specific industry functions through the use of operational analytics, RPA, BPO and AI. Can Genpact put together a financial spreading function by leveraging its operational expertise in BPO and RPA, the RAGE LiveSpread application and analytics interventions to deliver more efficient and effective credit risk management?

Bottom-line: Genpact is progressing toward True Digital OneOffice capabilities

Genpact’s announcement can be crystalized to its ambition of blending RPA in the back-office with AI in the middle-office, which is why the firm, still regarded by many as a “pureplay BPO” managed to break the top 10 in the recent Digital OneOffice Premier League, despite not dragging a multi-billion dollar IT services business around.

Thus, BPO is ever more changing to becoming technology-led. We expect that this strategy will be increasingly underpinned by neural networks and notions of self-remediation to enhance the Digital Underbelly and the Intelligent Digital Processes of the OneOffice concept. While Rage Frameworks is one of the superior suppliers across the Intelligent Automation Continuum, the more providers that are progressing toward the notion of AI, the more inflated the valuations for M&A will become. Against this background, valuations for RPA providers could look like peanuts very quickly. But then again, M&A is rarely rational in today’s foggy market.

Posted in : Business Process Outsourcing (BPO), Cognitive Computing, Finance and Accounting, intelligent-automation, Robotic Process Automation

At HfS Research, we’re growing fast in a very competitive and volatile market… and with growth comes change – but change is always good if you ask me! The most fun in jobs is when you have changes – you learn new things, get new ideas, and you meet new people to help accommodate the change.

HfS is always on the lookout for serious talent that can help our clients become even more successful. So happy days when I heard that some serious quality was on the lookout for some new chapter in her life. Sunayana Hazarika has joined per January, and today I wanted to give you a little more background about her.

Bram Weerts, Chief Operating Officer, HfS Research: Sunayana, can you share a little about your background and why you have chosen Marketing and Brand Reputation as your career path?

Sunayana Hazarika, Senior Brand Strategist at HfS Research: As the saying goes” Everything happens for a reason,” the economic recession in 2008 changed my career path. From an engineering graduate to a remote executive, my first job in TTK Services introduced me to the world of marketing. I was facing global clients- the who’s who of the business world from renowned bloggers to technology founders, and helping them in doing Digital marketing (web marketing is what it was called then). The varied requests from clients opened the door for understanding SEO, content marketing, social media promotions, brand messaging, to even executing fundraising events. This inspired me to pursue my MBA in marketing and soon after explored both services marketing and product marketing of software enterprise solutions. 

What draws me towards Marketing is the very nature of it – dynamic, fast paced and the fact that it is centered around the relationship between People’s awareness, product/service innovations and the value generation. I am intrigued by how brands impact the market. To me, Brand Management is like nurturing a sapling to grow and proliferate into a forest. The right and proper projection of the organization is the heart of Brand Reputation. A big and serious task, but with the passion and right intention, we can see the results. All this put together has compelled me to make marketing a career and more so in brand management.

Bram: Why did you choose to join HfS?

Sunayana: HfS Research is an industry leading research and data analytics firm, renowned as a trusted voice with edgy insights and disruptive viewpoints. They do not shy away from raising real issues even if it bruises some egos. I echo the same spirit. The organization has an impressive and matured outlook focusing on fostering an optimized business function, fully empowered team and delivers maximum value for the global community of clients. This provides me an opportunity to unearth optimum potentials to scale heights of success. Moreover, the fact that it analyzes cutting-edge technology and services like Digitization of business processes and Design Thinking, Intelligent Automation and Outsourcing makes it even more viable for a marketer to be on top of latest market trends. And to top it up is the pleasure of working with some of the most intelligent and good people on earth. Trust me; I have never been more content.     

Bram: What are the areas of focus for driving success in your current role?

Sunayana: The success of marketing in a Research, Data Analytics, and Strategy firm lies in enabling the “informed decision making” by providing the right information at the right time to the right set of people. For this, it is crucial for Marketing to merge into the organization’s core objective and culture. This enables outlining the appropriate value proposition to the audience. It is also equally important for marketing to connect with the audience to know their expectations and be abreast with the market. The focus on maintaining a symmetry between the two approach creates a two-way network for shared experiences and true value projection.

Bram: What trends and developments are capturing your attention today?

Sunayana: The world is moving towards digitalization and the marketing function of an organization, as a harbinger is expected to lead the way. Mobile, Social Media, Analytics, and cognitive automation are breaking the path for an individualistic approach towards interacting with the target audience. We as marketers should harness these technology enablers to increase market reach and have personalized engagement with the audience directly. These innovations can be used to evade distractions, garner relevance and bridge the gap between insights and actions.

Bram: And what would you like to see different in the research/services industries?

Sunayana: “Change is inevitable” and occurs sooner than ever. Information, opinions, trends, technology and processes have an expiry date, so it makes sense for the industry to keep ahead and have control of this transformation through continued innovation and research. Even if it requires challenging or superseding conventions, proven methodologies, tested services, recommended solutions, wealthy analysis or rich offerings.

Bram: And, what do you do with your spare time?

Sunayana: I love to explore nature and my husband partners with me, we go hiking in the forest and hills, trek to mountains, swim in natural water sources, to get out of comfort zone and appreciate the basics. I love to travel and go on backpacking trips to live life in a million different ways, with people from various regions and enjoy a variety of cuisines.

I also play racquet sports regularly and enjoy watching good movies and reading books.

Bram: If you could change one thing in Marketing what would that be?

Sunayana: Marketing has often been looked at as a function that projects the magnified and exaggerated image of the values provided by an organization. This need not be the truth anymore. Marketing is an integral part of an organization aligning to its goals and objective. Marketing enables organizations to stay in touch with their target audience, understand them and relate to their unique and different needs. Now in this new age with the availability of instant information in one’s fingertip, the audience is gravitating towards facts and authenticity of every promotion and do not get allured by the shine. Therefore, it is time marketing reflects the true image of the organization and value of the offerings to its clients.

Bram: Thank you for your time Sunayana, it’s a real delight to have you onboard and work with you in these fascinating times!

Posted in : About Us

This roughly $300M deal, expected to close end of June, doesn’t only have the potential to positively impact the HCM agendas of 4,000 combined customers worldwide between the two talent management players. It also has the potential to lift the HR Tech domain overall. How can this deal possibly achieve something that the much larger HR Tech deals done by SAP and Oracle didn’t?

For one thing, SAP buying SuccessFactors and Oracle acquiring Taleo were motivated in large part by accelerating a transition to the cloud, and secondarily, by the ability to leverage best-in-class Performance Management (SuccessFactors) and Recruiting Technology (Taleo) at the time. Elsewhere, IBM acquiring Kenexa gave it a nice beachhead from which to eventually launch other HR services and solutions. In short, these deals arguably benefited vendors more than they helped customers achieve better HCM-dependent business outcomes.

The Saba – Halogen Software deal opens new routes to HCM optimization

We suspect many forward-thinking HR technology customers will want to take advantage of the combination of a world-class LMS (Saba) and a top-tier Performance Management solution (Halogen) in ways that extend beyond performance review and coaching outputs feeding employee learning and development plans. These talent management “meat and potatoes” capabilities are there. The “kicker” is the combined ability to address today’s unprecedented rate of change, the explosion of corporate social tools, and just-in-time learning.

And this leads to the often-illusory goal of “organizational agility.”  

Saba + Halogen together could enable a bottom-up, employee-owned and initiated way of quickly addressing whatever performance, behavioral or skill gaps are most relevant at any point in time. Saba has robust capabilities around informal learning and social collaboration tools (even social network analysis functionality). Put it together with Halogen Software’s flexibility to support many different performance management models, and you go beyond that “meat and potatoes” passing of performance management process outputs to actionable learning plans. It’s a whole new level of execution that ties together professional development, employee engagement, individual / team performance and business results that include improved organizational agility.

Take the example of a mid-level professional being moved from an individual contributor role to one of managing a project team, add-in that the vacancy was unexpected, the project is behind schedule, and there aren’t many other resourcing options. The new project manager can immediately start marshaling peer and team member feedback, coaching and mentoring, broader community or social network support plus other internal and external resources to make this resourcing dilemma a much more manageable issue. Now multiply this unexpected, unplanned scenario by dozens company-wide.

When you can mitigate risk to sustain momentum on key initiatives this way, you have the essence of organizational agility.

Bottom Line: This new pairing of HR Tech players might be the answer for many organizations that are too often held back by their lack of organizational agility.

Posted in : HR Strategy

The traumatic Q4 results season has finally ended and our Chief Data Officer, Jamie Snowdon, is able to report on the final Q4 standings…

We’ve visualised the latest set of results for Q4 in the diagram, the top chart shows our usual margin v growth view (excluding AWS). With a chart showing the quarterly growth for Q4, an estimation of the annual (calendar) growth and the Q4 operating margin.

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For each of the providers the results look like this:

However, it is important to view Q4 in context, the following chart shows the average and weighted average revenue growth of these tracked providers, which represent 75 of the largest IT and business service companies.

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After a strong Q3, Q4 dropped back – making it the worst quarter for average growth since 2010. There are a number of factors that caused this drop – partly the on-going uncertainty in the market heightened by Brexit and Trump, but also the last few quarters were boosted by revenue from smaller acquisitions which no longer impact the growth.

The Bottom Line – The traditional outsourcing model has had its day, now we need to focus on the emerging client needs in this transitional market

For the market as a whole Q4 was a disaster – with the worst average growth rates seen since we started this tracking in 2011. This really shows how much the market is shifting toward new more technology driven solutions and how much of the traditional cost is being cannibalized by these new digital platforms and automation.

The onus is on us as analysts to start looking more deeply into the underlying trends in the market as the top-line data is increasingly swamped with hangovers from last decade. There is growth out there – but it is barely offsetting the declines in existing business. We have looked under the hood of the infrastructure management services market in one of our latest reports – IT Infrastructure Management Services in the Post Digital World – which is available on hfsresearch.com.

Posted in : IT Outsourcing / IT Services, trends-analysis

The time for smart partnerships to drive real innovation and new thinking in Artificial Intelligence (AI) and cognitive computing is now. This means we need to see the industry’s deep-pocketed innovators become increasingly open – and eager – to working together to help the services industry make the shift to true digital, intelligent, cognitive capabilities.

Recent HfS research shows adoption of Artificial Intelligence (AI) and cognitive computing to enhance operational analytics and Machine Learning is strongly accelerating, with 72% of senior operations executives citing cognitive as becoming a critical component of the future operations strategy:

Digital and Cognitive are Driving Enterprise Operations

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Source: “Intelligent Operations” Study, HfS Research 2016; Sample: Buyers = 371

While the market perception around these topics remains refreshingly blurred, AI is a critical building block as organizations increasingly look to progress from legacy labor-driven service delivery to progress toward notions the As-a-Service Economy and the Digital OneOffice (see link). While AI is capturing the imagination of many PE investors and VCs and is being used to hype up media reporting and conference circuits, the market dynamics are far from clear.

Against this background, the fundamental question being posed is “Who will be in the driving seat scaling out the deployments? Will it be the service providers, the leading industry platforms or will startups scale out?”

Salesforce Einstein and IBM Watson Partnership: A genuine step forward in AI, or another nice Press Release?

Salesforce and IBM have announced a global partnership to integrate their respective AI platforms to provide enhanced information and services to joint clients. Clients currently have access to Salesforce Einstein, which is built into the Salesforce Intelligent Customer Success platform. Einstein provides a broader set of capabilities around operational Analytics and Machine Learning. Salesforce’s ‘Spring 17 product announcement made Einstein available across Salesforce cloud products for customers.  The integration of Einstein with Watson, planned for the second half of 2017, would bring significantly deeper and broader analytics insight to customers. In addition, IBM Application Integration suite for Salesforce, which enables clients to integrate on premises and cloud data for Salesforce, will become available at the end of March 2017. IBM, for its part, will deploy Salesforce Service Cloud enterprise-wide.

So, what does this mean for the respective parties?

• Client and business growth: Both providers have broad opportunities to cross-sell into their respective customer bases through the partnership. The providers have an estimated joint client base of more than 5,000 enterprises.
• Salesforce strengthens growth area: As market awareness, if not real demand, for AI increases, Salesforce will be able to offer clients a broader orchestration of AI enabled services. The fact that it has already made Einstein available across Salesforce cloud products demonstrates the software provider’s commitment to and investment in this space.
• Potential to create leading AI offering: The partnership has the potential to drive broad AI capabilities into industry platforms. Thus, extending the reach and commoditizing of Watson capabilities. From a domain standpoint, while Einstein has focused on customer relationship management, Watson is going deeper into vertical scenarios, in particular financial services, healthcare and retail. Additionally, weather data from Weather.com will create new opportunities for both AI capabilities to test new use cases altogether. Salesforce brings its broad customer base and rich customer data to the table. IBM has had a head-start with building Watson APIs and products, which Einstein could benefit from. Clients will most likely select multiple cognitive engines in the next few years, as they embark on their journey towards increasingly intelligent operations that require less direct human interaction. These systems will need to interact with each other, built upon interoperable standards for data curation and access. A partnership like this could help that process, and possibly help clients with overall cognitive engine adoption in the long run.
• IBM wins in technology and services: As well as finding an additional, lucrative channel for its Watson technology, IBM also has an advantageous position to take the associated IT services work. IBM strengthened its Salesforce services capabilities by acquiring specialist Bluewolf in 2016 (see: IBM Culls The Pack Of Salesforce Partners By Buying Bluewolf). Salesforce has always had a close relationship with Bluewolf, and it’s no surprise that it has decided to strengthen this particular partnership now. Bluewolf, an IBM company, will establish a practice to deploy the combined functionalities for clients, called Bluewolf Dedicated Consulting Services and Expertise for Cognitive Solutions. IBM will therefore strengthen its position in this market, with potential increases in technology and services revenue.  Other partners in the ecosystem with the relevant capabilities have opportunities to build out similar services, but Bluewolf has a first mover advantage.

How can this partnership truly plug Salesforce’s gaps in Analytics?

While the stage could be set for AI in the long term, Salesforce needs to address the more basic analytics piece of the equation. While access to advanced AI insights delivered by a combined Watson and Einstein platform is useful, most Salesforce services clients are simply grappling with implementing basic analytics solutions.  Some Salesforce services clients who require analytics capabilities have selected alternative solutions to Salesforce because of the disappointment with the slow development of the Salesforce Wave Analytics product and the service providers’ slow ramping up of Wave capabilities. 

Our research from the HfS Blueprint Report: Salesforce Services 2017 highlights that most Salesforce services clients are just starting to consider analytics services, so Salesforce needs to speed up its development of the analytics module as well as market the developments made, so as to prevent any future clients looking elsewhere.  Analytics services, particularly consulting services are a massive growth opportunity for Salesforce services providers. Leading service partner, like Accenture, Deloitte, Cognizant and IBM, have invested in analytics solutions and services, anticipating the upcoming demand, but the specific solution selected by clients will not necessarily be Wave Analytics.

The bottom-line: This new partnership could genuinely accelerate the commoditization of AI capabilities

This partnership is a smart move by both Salesforce and IBM to use their strengths collaboratively – potentially winning IBM and Bluewolf more business, bringing Einstein up to speed on Watson’s expanding range of cognitive capabilities and industry depth and most importantly, unite the industry heavyweights that are most heavily marketing AI capabilities.  At HfS, we increasingly view smart partnerships with real teeth as the way forward for the software and services industry makers.

The ecosystem around Watson capabilities is slowly starting to emerge. IBM is working on a more structured approach to driving the broad capabilities toward partners that often are its competitors beyond the more narrow Watson context. As with all partnerships, most will come down to the investments into the collaboration and how transparent the account management will be. For IBM the partnership could accelerate the pervasiveness but also the commoditization of its Watson capabilities. The upside could lie in establishing Watson as de facto standard for broader industry platform and thus see Watson crystalizing its position in emerging ecosystems. Conversely, Salesforce could get access to much deeper analytics capabilities that would increase the stickiness of its products.

For the broader market, this could provide the blueprint for driving Watson capabilities into other industry platforms such as ServiceNow, Workday, and others. Fundamentally though this requires significant education of clients that the combined marketing power of IBM and Salesforce could provide. And these initiatives could prove tactically helpful to contain the impact of emerging competitors to Watson. If executed effectively, the Digital Underbelly of the OneOffice could mature significantly faster.

Posted in : Cognitive Computing, intelligent-automation, saas-2, smac-and-big-data

We’re witnessing the most far-reaching evolution in Procurement’s existence with ambitious procurement professionals desperate to elevate the profession to a much more strategic level aligned with the needs of the business or face irrelevance in the wake of emerging digital procurement solutions and rapid automation of transactional procurement processes. This means procurement leaders need to reposition procurement as a strategic ally that supports the business stakeholders it is designed to serve.

The evolution of Procurement As-a-Service solutions is making day-to-day procurement needs become increasingly easy at access in an affordable on-demand model. Our Procurement As-a-Service Blueprint shows the steps service providers have made in morphing their service offerings to combine people, technology, and processes into these on-demand, flexible services, with pay-as-you-go, As-a-Service pricing, and subscription based models.

Procurement As-a-Service delivery models are already having a significant impact on the market thus far; with the expectations of procurement services buyers rapidly changing. The average size and length of outsourcing engagements have plummeted from large ($50-100 million) and long (8-10 years) to small ($3-6 million) and short (1-3 years). This greatly impacts ambitious service providers’ revenue models once they have realized the ability to scale modular, agile services delivered via a utility model and increase their overall profitability. This is in addition to delivering high-value upstream procurement activities in strategic sourcing and category management to build out their end-to-end procurement capabilities.

Customer Demands and Technology Drivers will relentlessly continue to Disrupt Procurement

Let’s explores how the landscape will evolve and who we expect to rule the Procurement As-a-Service space.

The big survival challenge for procurement is threefold;

1. Redefining Talent: The old-school procurement professional has become legacy and needs to be completely reoriented or retired. Focusing on (transactional) procurement with the sole purpose of saving as many costs as possible is a dead end – it’s counter-productive in the new business world, especially when it’s increasingly easy to leverage digital procurement solutions to source purchases at the lowest prices and conduct most transactions digitally without the need for human interaction. The name of the survival game for procurement is relationship management; becoming the spider in the web that consists of internal business stakeholders, suppliers, service providers, partners. Next to relationship skills like empathy and business acumen, the new skills that need developing are critical thinking, creativity, and complex problem-solving. And being able to use technology to improve processes and ultimately experiences.
2. Embracing Technology is Critical: Standardized procurement platforms combined with cognitive automation is the only way forward. Procurement tech platforms like Ariba, SMART by GEP, Coupa, Tradeshift have demanded a lot of attention the past few years and have emerged at the core of procurement. Processes are clustered, integrated and delivered by platforms. Processes that are not suitable to be on these platforms are the focus of robotic process automation. The next wave of technology affecting procurement and sourcing is cognitive and artificial intelligence.
3. Delivering the customer experience must be embedded into all procurement activities. The pièce de resistance is creating better experiences for customers, being end-customers, buyers within the internal organization, suppliers, partners and your customers’ customers. It’s about creating buying experiences that meet the needs of more mature internal buyers, underpinned by seamless, straight through transactional processes. Effective procurement is all about enabling much more collaboration and innovation to take place with suppliers, providers, partners and customers and amongst them.

Posted in : Procurement and Supply Chain

This past Monday at the Boston FinTech Showcase over 300 people gathered to talk shop around emerging Financial Technology (fintech) and see demos from several hot startups in the space. There’s a lot of activity in fintech right now, demonstrated by the excitement around the event, which was at capacity with a waitlist.

There were startups for asset management, payments, analytics, and risk management, among others. And each startup had a point of view about how to transform fintech. There were also several incubators, investors, and corporate innovation groups. But what wasn’t? Blockchain. (Author Note: Check out my colleague Reetika Joshi’s blog for a broader perspective on the technologies and solutions that were highlighted at the Boston FinTech Showcase.)

Last Fall, we looked at what’s happening with blockchain services in BFSI and found that the market was mostly still in the proof-of-concept (POC) stage. At the showcase, we talked to several innovation teams at big financial services corporations about their progress on blockchain and found that they’ve gotten past the research stage and are in development in some specific areas like payments/settlements (something that was also big in our research) and derivatives. They all pointed out that they picked areas where they saw ROI. In other areas, they decided that blockchain was not better than current or alternative solutions.

Investors echoed this perspective. Network costs, interoperability and switching costs, and first-mover costs of picking a platform that might not wind up as the industry standard were among some of the reasons they felt that adoption hadn’t progressed faster and why the business cases were stronger in specific areas like cross-border payments.

Bottom Line: Blockchain and fintech tend to get used together a lot as if blockchain was the major trend in fintech, but in fact, the two markets aren’t as intertwined as we’d expected. Instead, fintech is developing quickly in areas unrelated to blockchain, like analytics and automation. Meanwhile, blockchain is finding a foothold in some specific areas but isn’t the driving force in fintech.

We also think that this shows some further evidence that other applications like provenance (proving the origin and chain of custody of materials through a supply chain,) anti-counterfeiting efforts and compliance reporting will overtake financial applications as the “killer apps” for blockchain, as HfS has written before. In fact, a recent study from Deloitte recently found this as well: it recently published results that showed 58% of consumer goods and manufacturing companies had already deployed or would deploy blockchain this year, compared to only 36% of financial services firms.provenance

We’re going to keep digging further, as my colleague Reetika Joshi and I research blockchain’s evolution in BFSI and I kick off reports in supply chain-related blockchain applications. Stay tuned.

Posted in : Blockchain

Last week, HfS had the opportunity to meet with the NTT DATA leadership team at the service provider’s first major analyst summit in Dallas Texas, since its acquisition of Dell Services last year.  So can the firm live up to its new billing as one of the major tier 1 global service providers?

Making sense of a complex fast growing entity

Analyzing NTT DATA is by no means an easy undertaking, given its complex organizational structure and lower visibility due to its reluctance to invest in marketing.

The CEO of NTT DATA Inc., John McCain, tackled those perceptions head on and vowed to change direction. Much of the purpose of this event was to present the “new” NTT DATA. Building on the acquisition of Dell Services, he pointed to branding campaigns that include TV and broadsheets. This is reflecting that the company has evolved, not least through acquisitions, into one of the largest global service providers. And with these significant investments come higher expectations. So, how should we look at NTT DATA and how does the company stack up in the competitive landscape?

The strategy framework that McCain outlined appeared sound and offers a platform for further expansion. In particular, (re-)packaging the portfolio and industrializing delivery. In the context of the portfolio pillar, McCain was pointing to the aim of deriving greater value from NTT DATA investments and of leveraging the “NTT Group power”. Yet, throughout the two days, we actually did hear very little about the Japanese capabilities and activities that the broader NTT Group brings to the table. When executives actually touched on those capabilities, the differentiation to the broader market appeared at least in contours. NTT DoCoMo, DiData, discussions on how Quantum Computing and Cognitive Computing could solve mankind’s more pressing issues, were providing a glimpse of highly differentiated capabilities. Invariably, the discussion of cognitive evoked strong memories of IBM. However, in contrast, NTT DATA is crucially not constrained by the many legacy deals with which IBM is still struggling. If anything, NTT DATA had hitherto focused on specific project-centric business but is now keen to trade up to larger and broader sourcing deals across multiple domains.

The challenge of bringing together the existing Japanese business units with the newly-acquired international businesses

The marginalization of NTT DATA’s Japanese business points to another crucial issue. The integration of the various business units, including the many acquisitions, is a work in progress. One can point positively to the long-term focus of the Japanese business culture that has seen acquisitions being very carefully integrated over a longer period of time. Yet, I couldn’t help feeling that the cultures of Keane and Dell Services appear to be the dominant reference points in many discussions. Thus, there appears to be a healthy tension between the Japanese core business and the “Global Business” i.e. the multiple acquisitions outside Japan. However, if HfS’ contention that organizations are moving toward to the Digital OneOffice™ (download our POV for a full definition of the Digital OneOffice), where connecting back, middle and front-office is corroborated, then NTT DATA has to eat its own dog food and move toward being a more connected global organization – you can’t deliver true Digital OneOffice capability if you haven’t become a true Digital organization yourself at your core.

NTT Data has real potential to align to the Digital OneOffice

From what we are learning, the seeds for that are already being sown. Around its Digital Services, NTT DATA is suggesting the first focus is through its customer’s eyes. And, similar to our suggestion of a Digital Underbelly, NTT DATA is pointing to the fundamental shift that automation is creating. However, the boldest initiative is to wrap the needs of the customer directly around its delivery priorities through its CUE², continuous customer experience engineering program.

Let’s start with NTT DATA stance on automation. The prominence in which executives were talking about automation was tangible. Yet, the specifics of the various initiatives might have been lost to many in the audience. Below the radar screen, NTT DATA is running the largest deployments of IPsoft’s IPcenter globally. Tellingly, the Global Management One platform is helping clients with onboarding to NTT DATA’s cloud platform. A task that has been challenged by the many acquisitions that we have called out. Furthermore, the company is helping to adapt IPsoft’s Amelia to the Japanese language and executives were suggesting strong traction. Around more mundane matters, the strategy around RPA was a trifle blurred. While NTT DATA’s BPO business is focused on its proprietary AFTE solution, as executives suggested the solution to be more efficient than any third-party tools, the consulting arm, largely representing the Carlisle & Gallagher acquisition, was pointing to third party tools as the preferred way of engagement. Beyond the nuances of the automation strategy, what really stood out for us at the event, was NTT DATA’s ambitious plan to integrate customers directly into their delivery strategy with the CUE², continuous customer experience engineering program. This program is not only adapting Agile and DevOps to the requirements of Managed Services but putting the user center stage. In all but name, here it is where the connection to the HfS Digital OneOffice concept is the strongest. Suffice it to say, NTT DATA is still very early in rolling this out across its engagements, but the strategic intent could evolve into one of its strongest differentiators.

Bottom-line: NTT DATA has to eat its own digital dog food to progress toward the OneOffice

As bold as the CUE² initiative is, in order to catch up with the leading global service providers and to demonstrate its Digital OneOffice credentials, NTT DATA has to advance significantly the integration of its various business units. Only by finding and leveraging commonality across its global delivery units, NTT DATA’s many innovative forays will lead to repeatability and thus margin improvement. In order to reach new clients, NTT DATA should make a virtue of the achievements of the broader NTT Group. While culturally not always accessible, NTT DATA’s strong innovation credentials, often emanating from the Japanese market, provide a platform for a clear differentiation in a market that has been notoriously difficult to achieve a meaningful differentiation. Deep networking and mobile capabilities that can be leveraged in IoT scenarios are jumping to mind. To succeed with the ambitions for the “new” NTT DATA, a broader mix of accents might go a long way, not least Japanese. Then we will start to look at NTT DATA as a truly global heavyweight.

Posted in : Digital Transformation, OneOffice

Finally! We’ve just saved you hours upon hours of mind-numbingly dull hangouts trying to figure out all your fancy new digital job titles and reporting lines… now time to get combatting all that disruption to make your firm a true transformative digital pioneer in this emerging quantum era, where you can be a digital Michael Phelps diving into your own datalake:

Posted in : Absolutely Meaningless Comedy, Digital Transformation, OneOffice