Nothing better to do next Thursday? Fancy spending an hour with the award-winning HfS analyst team, hearing about our research plans for 2017 – and why we are focusing so intensely on the reality of technology-inspired business operations versus the hype? Have nothing better to do than sip on a festive mimosa and hear our happy band of analysts get all excited about their research? Pray tell… what more could you want…
Digital disruption is no longer new – some industries have already been shaken up by evolving digital business models, while others are in the throes of being impacted. This is the new normal for enterprises, and we need to develop actionable strategies to survive and compete in this post-digital world. In 2017, it’s all about enterprises being digitally capable of engaging their customers in real time using immersive communication channels, supported by intelligent unified operations that can enable their business to pivot to remain competitive.
The HfS 2017 research theme is all about “making it real”. We will explore the experiences, dynamics, intentions, challenges and opportunities of thousands of enterprises in their quest to align their operations to meet the rapidly changing needs of their clients.
In this webinar, the HfS analyst team will share our 2017 vision for the industry and our plans for the 2017 HfS research agenda.
Hear about our plans for 2017 research across the following areas:
The Intelligent OneOffice: Taking an “outside-in” approach to Intelligent Operations, breaking down the barriers between the front and back offices.
The Post-Digital world for IT Services and Strategy, Business Operations and BPO and Cognitive Automation
Industry-specific dynamics for banking, insurance, energy, utilities, manufacturing, healthcare, life sciences, travel and retail industries
The market dynamics in the world of Intelligent Automation are hotting up. Two acquisitions within a single week and the market is awash with fresh rumors about more M&A. We already know about two other ones imminent – one a done deal and the other closing in.
First, ISG acquired Alsbridge, not just for their rapidly expanding RPA advisory and implementation capabilities, but RPA is likely to have been a key consideration as ISG was lagging both in terms of traction, as well as skill sets. Second, CA announced its intention to acquire Automic. This is a strong indication that the juggernauts appear to be not only willing to overcome innovator’s dilemma, but are expecting that offerings around Intelligent Automation will ringfence their leadership position rather than erode their bottom line. Moreover, the risk of not investing in Intelligent Automation is clearly outweighing doing nothing and hoping this feverish wave of interest dies down (which is not doing).
Sourcing advisors are currently not bringing automation deals to the supply side the way they used to with the people-scale centric legacy deals. As part of our research for the Intelligent Automation Blueprint, we tested this assumption with all the participants. Yet, at the same time, we are seeing the Big 4 play an increasingly important role in implementing transformational RPA deals. Thus, they have significantly moved on from largely doing top level advisory and tool selection. This is shifting the market from a narrow focus on task automation with short-term cost considerations. However, this shift and acceleration are being curtailed by an acute scarcity. In the broader market talent that understands the impact of innovations around the notions of Intelligent Automation on broader process efficiency remains a rare breed. Therefore, we expect more M&A predominantly by the Big 4 with pure plays like Symphony Ventures, VirtualOperations, GenFour and thoughtonomy likely to be high on their shopping list.
CA’s offer for Automic is strategically even more illuminating. First, the price of 600 million Euros is underlining that Intelligent Automation is becoming serious business. Given the slightly misguided focus on RPA by many stakeholders, Automic might not be a household name. But orchestration engines like Automic and Cortex become increasingly central tools for service delivery where organizations are starting to standardize on ServiceNow and integrating the plethora of Intelligent Automation tools with those orchestration engines. Second, we are nearing an inflection point where the innovations around the notion of Intelligent Automation are deemed critical for improving both top as well as bottom-line. Thus, we wouldn’t be surprised if the likes of BMC are casting a serious eye on the likes of Arago and Cortex. We have been gazing into the Automation Crystal Ball not too long ago and outlined 4 scenarios. Therefore, in this context, we will close by looking at how these acquisitions apply to those scenarios and how we are seeing the next 18 months panning out.
Bottom Line: Intelligent Automation is at an inflection point
The HfS Intelligent Automation Blueprint provided a broad set of reference points as to how the market is maturing and how the deployments are starting to scale. The discussed acquisitions are adding even more poignant points to a rapidly maturing market. Thus, we put out the following stalking horses for crucial dynamics over the next 18 months:
In 18 months, we won’t talk about RPA anymore. Most of the leading technology providers will have been acquired and RPA is a reality in the back-office.
The 4 leading pure plays (Symphony, VirtualOperations, GenFour, thoughtonomy) will have been absorbed by the leading managing consultancies.
ServiceNow is entering the Intelligent Automation fray either organically or through acquisitions. The likely focus could be on operational analytics and process execution.
The focus around automation tools will shift toward the likes of Google, Amazon, and Facebook around deep learning and the integration of unstructured data. As part of an eco-system approach, the leading service provider will increasingly integrate their OpenSource algorithms and libraries. Data literally will become the currency.
An organization will go into administration due to a badly implemented or governed automation project.
These are stalking horses. We love to hear your views, so if you are interested in discussing these issues, drop me a line at [email protected].
The Work At Home Agent (WAHA) model of contact center outsourcing is increasing in adoption. My colleague Melissa O’Brien is set to release some interesting findings of the growth of the WAHA model in the coming weeks. The growth that WAHA is set to enjoy, however, has been hard fought as there are key inhibitors (often perceived as opposed to actual) to the model. These include lack of control, service consistency, and most notably security.
For regulated industries, the idea of having a completely virtual workforce dealing with customer payment and other sensitive data fills them with dread. But what is the real story? Well, according to numerous service providers I’ve spoken to there is a lower average instance of security incidents from the WAHA environment as opposed to the traditional brick and mortar equivalent. We recently spoke to home based agent pure play BPO Granada’s new CEO Felix Serano and CTO AJ Flores. When asked about on the issue of security it turns out that Granada has not had a single security breach from its WAHA population over the last 12 months. Given the frequency of cyber threats we see in the news at present, this is encouraging.
So, what are service providers doing to address the security needs of clients in the WAHA environment?
Hiring the right people: Ultimately security needs to start with the right people. Due to the nature of the working model, at home programs are typically able to recruit a more seasoned and experienced type of candidate (the majority of WAHA hires are 35 years and up in age), enabling the potential for more sophisticated and more importantly trustworthy contact center support. Also, service providers generally tailor hiring approaches to target individuals with a university qualification.
Train: Next is to train agents on security protocols. Clean desk policies, not repeating information out loud when speaking to a customer– all these measures need to be reinforced to the agent, even in the work at home environment. Training is just as important in a brick and mortar facility, but from a cultural perspective is critical to ensure the concepts are digested with the absence of physical “team huddles” and the like.
Physical security measures: There are two overarching categories to look at from a WAHA physical security perspective. One is the Bring Your Own Device (BYOD) model and the other is using a service provider supplied thin client device. For the sake of this discussion we will look at the BYOD model as this has been gaining traction in recent years and is, by and large, the most cost effective WAHA model. In 2013 I did a report on the WAHA market, at that time we were seeing some extreme physical security measures rolled out by service providers. These included keyboards with integrated keyboard entry analysis, multi-layer biometric analysis, etc. These measures were all extremely costly and often not that effective due to limitations in the technology. Now what we are more commonly seeing is simple fish-eye cameras, installed at an agent’s home workstation, through which service providers can perform randomized audits. Another interesting side note is that brick and mortar service providers are seeing cyber thieves targeting call center agents outside of physical centers and extorting them to steal credit card information; in this sense, the physical security risk is heightened in a home agent model.
Software: This is where we have seen the biggest advances in security measures and hence why many of the more extreme physical security measures are no longer needed. A desktop layer, such as Citrix ZenDesktop, is used to replicate in-center desktops. This is then locked down to prevent cut and paste, print screen, etc. Payments and sensitive information are handled by an IVR system to exclude the agent. VOIP is often embedded into the desktop to provide continuity when transferring to IVR systems. Interestingly, Granada tracks the internet latency of agents and can automatically remove them from the workflow if internet speed drops below predefined parameters.
As I’ve mentioned, many of the security measures used in WAHA today seem much less extreme compared to what we saw a few years ago, however they are considerably more effective. With WAHA expected to grow rapidly over the next five years, it seems service providers have finally cracked the code for security and can now provide extended track records of fraudulent free delivery from this model. Service providers offering the WAHA delivery model seem to get it now that the key to security is as much about intelligent and foolproof software as it is finding and developing the right people.
Remember eMarketplaces (also called Supplier Networks)? They were networks of suppliers and buyers where the goal was to make information sharing easier by standardizing and consolidating platforms, products, prices and policies. In many cases, clients got in “free,” but they still had to pay for some integration cost. Suppliers had to pay to be part of each network, and most clients each used different ones, making it expensive and complicated to decide which networks to join.
As a buyer, you could try to insist suppliers join your preferred network, as long as you were a big enough client, or if you were willing to pay the supplier’s connection costs. As a supplier, you had to decide which networks were important to belong to, either because a lot of clients used them, they catered to specific industries, or offered some other unique benefit.
These supplier networks were a great idea, but the practicalities of connecting everyone was a big headache, and very few of these eMarketplaces survived. Many of those that did survive were bolted on to procurement apps. Without a way to make the networks talk to each other and give trading partners, on different networks, a way to work together, eMarketplaces achieved some limited value for customers, but ultimately failed to deliver the game-changing impact they envisioned with these “super networks” that never quite materialized.
In the example above, go back and replace the word “eMarketplace” with “blockchain.” Minus some of details, it’s pretty much the same problem we’re all about to face today, as companies struggle to understand where, why, and how they can get the most value from blockchain implementations.
When we researched blockchain this past summer, we found that almost all POCs and client examples were focused on internal operations – transferring funds across business units in a bank, for example. Yet, the foundation of blockchain is creating exponential value from a collaborative and engaged peer-to-peer network.
Everyone’s experimenting, and there are a lot of technologies and validation/authentication options being used and explored. There are also no standards at the moment, so everything’s getting siloed into one-off projects. Are you starting to see where the eMarketplace experience gets echoed?
Let’s say you’ve chosen the blockchain technology, as well as an authentication approach with which you are happy, that work for your needs. Now you want to expand your execution of blockchain to connect with partners.
Your partners likely made different choices They may have stricter authentication approaches than you use. And each trading partner’s blockchain implementation is different than everyone else’s, so you need to connect to each one using a separate connector, or you choose to get onto their blockchain. And then you have the initial cost of integration, plus compute costs. And blockchain often isn’t efficient with compute power, so connecting to multiple systems is more expensive that way than you might initially think.
And, of course, the market’s so new that we also don’t know how much cement we’re pouring when we build blockchains. We do know, for example, that no transaction or other data in the blockchain can get erased. Once it’s there, it’s there forever. But, what if we decide to switch to another network or technology? We don’t know the costs of switching from one network to another if we have a lot of data sitting in the blockchain.
In our blockchain guide for BFSI, we recommended that you start talking to trading partners, because the real value comes from using blockchains outside the walls of your company. And this issue of linking networks makes that recommendation all the more important.
Bottom-line: Make sure you fully understand the broader network of partners impacted by your blockchain options
Here are some questions to start asking trading partners (and yourself, if you haven’t already):
What validation/authentication approaches are you considering?
Which blockchain technologies do you like and why?
What criteria do you want to use to approve new members to join a network?
Who pays, if someone wants to join the network? What if we want them to join? Will we pay only for integration costs or other longer-term costs like the compute power needed to process blocks?
If you have thoughts on this, or know of companies who are already working on the interoperability problem, tell us. We’re always looking to talk to more people about what’s going on in the space.
It’s no secret that the traditional infrastructure outsourcing market has taken a beating over the last few years, with our predictions of growth for the overall IT infrastructure management market hovering around 2% the last couple of years. We are forecasting a calculated annual growth rate of 2.2% from 2015 to 2020 for this market globally.
The chart below shows our estimation of the size and forecast for the IT infrastructure management market – a market set to reach $129 billion in 2016. The chart illustrates this showing the split between the traditional IT infrastructure management market and the new “As-a-Service” model for IT infrastructure.
In our view, As-a-Service IT Services includes infrastructure managed services delivered in either a pay-per-use or a managed cloud platform. When we include the whole IT services market, it includes professional services revenues related to transformation to cloud/SaaS, digital engagements and the move to IT-as-Service delivery models.
The disruption we expect in the market over the next few years is dramatic, with almost half (44%) of spending from infrastructure management anticipated to come from As-a-Service models by 2020. We believe that this forecast is a touch conservative and there is a possibility that the As-a-Service component could even grow more aggressively. This won’t necessarily reduce the traditional infra spend, as the biggest uncertainty in our market model surrounds companies that don’t currently use any traditional IT service management, particularly small and medium enterprises and companies in Asia. If growth in that sector shifts more toward the top end of our scenario, we could see the As-a-Service component even reach as high as $70billion in this timeframe.
One of the big impacts to the competitive landscape will be Amazon Web Services (AWS). The company recorded revenues of $7.9b in 2015, with estimates of $12b in revenues in 2016, meaning if it tracks with the market at the current rate it will reach around $25+b in revenue by 2020. Please note not all of AWS would be counted in this category and given their propensity for disruption it’s unlikely its revenue profile will be the same in 2020. To put this in perspective, these estimates mean it would be competing with Accenture for the number 2 position in the IT services market by 2020.
Bottom Line: The infra market has already made the shift, now we need a plan to take advantage of the benefits of AaS
It’s worth pointing out that the reduction in spending isn’t all about a transition to the As-a-Service model – but the increasing efficiency of traditional IT infrastructure management. Causing deal values to plummet over the past five years as the offshore firms aggressively target this space and buyers opt for asset light solutions with more automation and remote managed “traditional” options.
Increasingly, it will become hard to differentiate between the two models, particularly as they meet in the middle, with large enterprise customers wanting cloud and As-a-Service packaged in a managed service-like wrapper, with professional services bundled into the mix.
For buyers this broadly means more choice, increasing flexibility and scope while making informed choices about risk. Public cloud will be an increasingly viable option for more types of workload – which means more organizations will need to consider it as an option for both new and existing compute. The rise of richer public cloud options and managed hybrid cloud platforms to help manage more complex infrastructures should help this transition process. Cloud was seen as a limiting choice for infrastructure in terms of workloads – now there are very few cases where security and compliance requirements cannot be met.
For the traditional IT infrastructure providers it is increasingly about partnering and making your hybrid offerings as rich as possible. On the SaaS side, it is about partnerships with the likes of Salesforce, Infor, Pega, and Workday – as well as Microsoft, Oracle and SAP. On the infrastructure and hybrid cloud side it is about having a managed service layer that helps shield clients from the complexities of cloud. One that allows them to bridge legacy applications and legacy infrastructure pools, bringing cloud flex to existing environments – and helping clients build devops platform for future development work that encompasses great architecture and great creativity. This means partnering with AWS, Google as well as Microsoft – helping increase clients choice without reducing scope and risk.
Can these two newly-weds weather the storm of a stagnant outsourcing industry?
Yes – that happened. We just had the biggest shakeup in the outsourcing advisory market since KPMG’s acquisition of EquaTerra in 2011.
The last two large independent outsourcing advisors (outside of the management consulting firms) realized they needed to stop killing each other and would be far better off becoming one. So now we’re left with an even bigger ISG and a few really small shops, like Avasant, Aecus and Everest, to scrap around for the remnants of demand for former EDS executives to negotiate a nice contract for them.
This is a really smart deal for both ISG and Alsbridge. ISG takes out its prime competitor to monopolize its space, while Alsbridge’s prime investor, LLR, makes out nicely on its 2013 investment within the typical 5-year window private equity firms give themselves.
This is a great deal for most the Alsbridge consultants. Many are welcomed back into the loving arms of their former employer and they have a bigger brand, global scale and presence to hone their craft.
This is a great deal for most the ISG partners. Now many of them will not have to suffer their fees eroded by a very aggressive competitor (or losing deals to it). They can still easily undercut the Management Consultants’ fees, and have access to more talent to win deals, especially in areas like telecom and Robotic Process Automation (RPA), where ISG was previously struggling.
This is not a great deal for all the employees. Large mergers of like companies always present rationalization opportunities. The new ISG will surely look to retain the cream of the Alsbridge talent and hive off its lower performers. The outsourcing market is flat and advisory firms are struggling to make the numbers of past years, with the $500m ITO mega deals becoming confined to history.
This is not a great deal for the management consultants. ISG’s principle competitors, KPMG, Deloitte, EY and PwC, now have a bigger badder ISG to contend with, that can no longer only undercut them on fees, but also can boast competencies in the emerging area of RPA, where the Big 4 are currently winning out. While the market is one player lighter, it is also one player stronger.
This will have mixed results for clients of advisory services. For those ITO buyers who loved to trade off ISG and Alsbridge to get their fees lowered, they will have to resort to really small firms like Avasant and Aecus as alternatives, who are good at some things, but will often struggle to scale up to meet client needs. For loyal clients of both ISG and Alsbridge, most will have a larger pool of talent to help them.
This might be good for the emerging RPA boutiques. While Alsbridge has been developing quite impressive capabilities in RPA, we’ve also seen a rapid emergence of RPA boutique advisors, such as Symphony, GenFour, Virtual Operations. They could be able to take advantage of the merger to scale up further and may be able to pick off some talent that comes available. On the flip side, I wouldn’t be surprised if ISG starts to look at swallowing up a couple of these shops as the RPA demand continues apace.
My personal view: This won’t be “Veritage 2.0”
I know both companies well, their leadership teams, and have many good friends in both. I was expecting one of the management consulting firms to buy up Alsbridge (especially EY, where the original Alsbridge founder, Ben Trowbridge, is a partner). So it’s always a surprise when two very fierce competitors bury the hatchet and see the business sense in becoming one. We’ve been so used to seeing both firms trying to take each other out on deals, it’s going to take a little while to get used to seeing them whispering sweet nothings to each other.
But cutting to the chase, these firms have some seriously experienced fellows who know this business inside and out. They know what they are doing and I would be highly surprised if we see a repeat of the now infamous “Veritage”, when EquaTerra and TPI failed to tie the knot after some very expensive offsites (and had chosen the lovely name “Veritage”).
Alsbridge CEO Chip Wagner (pictured left) thinking about his impending windfall…
I know it’s pathetic, but one of my wishes during Thanksgiving dinner … other than to avoid major indigestion, plus of course good health to all those I care about … was to learn what great things the HR Tech market’s largest players were doing in the predictive HCM arena. This would clearly make my recently launched research effort pretty darn interesting.
As this is clearly one of the more nascent HR Tech areas, I really don’t expect to hear about an abundance of mature, robust predictive capabilities just yet. I do expect, however, that many of the large HCM / HRMS solution providers we invited to participate in the research will have a reasonably clear and compelling product strategy and execution plans around their product’s predictive capabilities. Also, in my effort to take a read on this emerging capability area (the research’s main objective), I’m hoping to hear about HR Tech customer experiences related to leveraging these powerful capabilities.
When I dabbled on the HR Tech practitioner side (around 20 years of dabbling), my corporate HR colleagues and I sometimes sat around brainstorming about how to possibly predict such things as:
Which on-boarding aspects, if changed, could contribute to accelerating time-to-productivity
What are reliable indicators of “very high upside” in a candidate or employee’s profile
Will a job candidate, employee (considered for a new team or department) or a corporate acquisition target be a good fit from a culture perspective
Will changing an employee’s job, manager or team have a positive or negative impact on performance, retention, engagement, etc.
Will changing comp and/or benefits plans to reduce costs adversely impact the company in other ways
These “skull sessions” often ended with the same seemingly rhetorical question (at the time): “Can we ever expect HR Tech capabilities to help us out here?”
Bottom Line Regarding the Research Just Launched
Whether I’m getting ahead of myself by hoping the above questions will ultimately be supported by HCM systems remains to be seen. But I remain hopeful that I will be hearing from some HR Tech vendors that such predictive opportunities are not only on their radar, but they’re close to rolling these and other impressive capabilities out over the next 12-18 months.
We have recently published Blueprint Report on Product Lifecycle Management (PLM) Services. This is our third engineering services Blueprint in which we analyzed and positioned thirteen PLM Service providers according to their execution and innovation capabilities. In the first one, we focused on the mechanical engineering services. In the second engineering Blueprint, we looked at Software Product Engineering (SPE) services in detail.
What does PLM Services Blueprint cover?
This blueprint includes the PLM offerings of different service providers across verticals. This includes their capabilities across the HfS PLM Services Value Chain of: Plan, Implement, Manage, and Optimize for leading PLM applications such as Dassault, Siemens, PTC, Autodesk, SAP, and Oracle. This report also provides insights into the capability, vision and investment priorities of the service providers included in the Blueprint report. We also outline the strengths and challenges to take into consideration for these service providers. The report also mentions market analysis of the PLM Services industry, the current focus area and the future growth areas over the next few years. The service providers included in this report are Accenture, Atos, Cognizant, Capgemini, HCL, Infosys, KPIT, L&T Technology Services, Syntel, TCS, Tech Mahindra, Tata Technologies and Wipro.
What is unique in this Blueprint?
Our focus is not solely on size, revenue and global scale of the PLM service providers but our emphasis is also on the way service delivery is organized, the availability of industry domain expertise, the availability of PLM software expertise, applicability to different customer segments, investments in industry talent, acquisitions of companies with industry specific capabilities, etc. Also, the blueprint includes recommendation sections for buyer enterprises as well as the service providers. Another point of emphasis in our research is the effect of digital and emerging technologies in PLM and how service providers are enabling new ways of working with these new technologies to address industry-specific challenges and the level of innovation brought to clients. For example we covered how service providers are leveraging social, mobility, cloud, and analytics in PLM.
This Blueprint also includes PLM market analysis and benchmarking. This is first of its kind of PLM Services study where we tried to collect important operating data from PLM service providers and arrived at the aggregate or the average PLM Services industry metrics. This should help each PLM service provider, PLM software provider, and enterprise to benchmark their PLM operations and identify their strengths as well as areas or levers of improvement.
The intent of this report is to provide valuable intelligence and a reality check on what is going on in the PLM services world.
What is the current state of PLM Services market?
There is a renewed interest in the PLM market. PLM traditionally was an enterprise application solution for addressing product development challenges, which was a nice-to-have solution. But now with the advent of IoT, smart products, and digital manufacturing, it is becoming central to any manufacturing firm’s technology landscape. Though PLM has been implemented in large organizations for quite some time, the user adoption is very low among organizations. But now companies are realizing the value of PLM implementation and are increasingly looking for PLM services for consulting, implementation, managing, and optimization. Service providers are also developing industry-specific PLM systems and plug-and-play solutions in partnering with PLM software vendors to address specific client challenges. With the advent of digital technologies, digital PLM is helping to build the next generation PLM products and ensuring a rapid, intelligent and connected system. Also, PLM solutions are increasingly being used for compliance management, after market services solutions, etc.
What are we expecting in the coming years?
The next few years will observe more PLM adoption, application of digital PLM and more integration of PLM with enterprise applications. Also, the PLM usage will expand beyond traditional large manufacturing companies to other verticals and also customers for different sizes including SMBs. As the PLM market has been growing rapidly, a number of new service providers have emerged in this space in the last few years. So we expect to see an acceleration of this trend in the near future. Also, the market will see M&As as the global and Indian service providers will look for specialized service providers and boutique consulting in PLM space to get rapid access to the industry and technical capabilities.
We think there’s a high chance the grid could be very different again next time round! Stick with HfS to monitor the important changes in this rapidly evolving market!
One of the astutest CEO appointments in recent times was Abid Ali Neemuchwala (or simply “Abid” as most of us call him) being elevated to the hotseat at Wipro. I, personally, have known Abid since his TCS days, when the firm acquired Citigroup’s Indian banking operations in 2008, where Abid was instrumental in building a stellar BPO capability for the firm… and first interviewed him right here in 2010.
Cutting to the chase, Abid was the perfect hire at the perfect time for Wipro. With the Indian-heritage service providers scratching their heads trying to figure out how to keep growing, as those legacy $500m IT infrastructure deals and $200m SAP roll-outs dry up, the only true way forward is to build out an As-a-Service delivery model that caters for the modern enterprise needing to access talent, technology, analytics and automation capability as part of an integrated solution, tied much more to outcomes and efforts, than headcount numbers. Being able to manage the traditional enterprise’s needs, while investing in the emerging enterprise of the future, is the Holy Grail for the Indian-heritage majors seeking to get ahead of a market in transition.
In my view, today’s services providers need to be led by process people that understand technology and how to bring the two together effectively. If you’re just selling tech, you’ll end up with a commodity service, and if you’re just selling process, you’ll end up with something completely unscalable and unprofitable. So you need a CEO who gets right into the weeds of the operations and figures out how to technology-enable business services. You need someone who built a billion-dollar BPO business out of a tech-dominated service provider (TCS), where you had to train IT people to manage processes, and process people to understand how to enable them effectively with technology underpinnings. You need someone who’s going to mastermind one of the potentially shrewdest acquisitions yet by an India-heritage major in Appirio.
You need someone who prefers to play chess than golf… you need Abid.
Phil Fersht, Chief Analyst and CEO, HfS Research: Good afternoon Abid… it’s been quite a journey for you to make it to the CEO role at Wipro. Maybe you can share a little bit about your background and career path just for our readers, so that they can learn a bit more about you…
Abid Ali Neemuchwala, CEO and Member of the Board, Wipro: Certainly. Phil. So I’ve been part of this industry since I came out of university at IIT, Mumbai, in 1992, and now, my goodness, that makes me feel old! I’ve spent 24 years in this industry, the last two at Wipro—as Chief Operating Officer, at first, and then as the CEO since the beginning of this year. The fun part of being in this industry was to be able to wear many different hats. I started as a developer, quickly moved into project management and then I got an opportunity to do some very strategic projects, especially as part of the financial services industry in India as it was just growing.
I also had the opportunity to live in multiple places around the world and experience various cultures. I went to work in South Africa immediately after Nelson Mandela was sworn in. At the time, the South Africa market was just beginning to emerge for Indian IT, and I was lucky to be one of the first IT people there.
I lived in Japan as well which taught me a lot about program management and sales as we expanded our business. The Japanese market teaches you a lot. It is, in a way, the perfect training ground for sales guys because it not just teaches you perseverance, but also helps you learn the value of relationships and cultural diversities. Thereafter, I moved to the US and as a general manager in the US Midwest Operations I ran some key large accounts, before I moved back to India in a general management role. In my last stint at my previous employer, I was running the BPS business. There, I got a great opportunity to integrate a large acquisition, which exposed me to the need for being bold about acquisitions, all of which worked out well. And then, surprisingly, I got an opportunity to move to Wipro, which brought me in as the Chief Operating Officer.
So, all along it has been a great ride and a journey of many opportunities. And throughout, I continued my passion and hobby for traveling to places. The industry helped me do that. I love walking on the streets of new cities that I visit because I think conference rooms, all around the world, are exactly the same. I ask my teams to do that as well. You’ve got to experience the culture, the people and the places. I have always been like that, meeting people, absorbing cultures and the world around us.
My love for travel has taken me to cover about 100-plus executives amongst our top 100 customers, which helps me talk about Wipro’s strategy and understand what is most relevant to them. This also helps me get their feedback on the organization as I steer Wipro through this wonderful transformation.
Phil: So you acquired Appirio. That’s a company we know very well and what a very quick transaction that was! Can you talk about the core factors in this decision?
Abid: As I said, we’re going to take bold strides as we rev up the engines for digital transformation. The future, which is going to be quite different, is already here in terms of Cloud, As-a-Service business models, Automation and Artificial Intelligence— not only Robotic Automation but also Cognitive, Machine Learning and Analytics. These, and also design thinking, of course, and user experience.
We, at Wipro, believe in acquiring the right capabilities at the right time and, as part of that move, had been looking at assets that would be a strategic fit. Appirio is one such capability we’ve been very fortunate to get. The capability is essentially, as you know, around Cloud ERP and integrating the As-a-Service model into the IT landscape of enterprises.
It was a quick move but hardly a surprise. Appirio really is the thought leader in creating the next generation of customer and worker experiences. And, if you see it from the perspective of our enterprise customers, it makes perfect sense. As our customers step up to the digital challenge, it’s important for us to be able to create a seamless offering so they can react with agility to the market opportunities.
If you look at all the pieces in our digital offering including Designit, Consulting and Technology, Appirio fits in beautifully. They have deep partnerships with Salesforce, Workday and Ecosystem partners (such as ServiceMax, Google, Medallia, Cornerstone On-Demand) which can rapidly translate strategy into execution. It accelerates our maturity as a full-service provider and it dramatically reduces time to market for our customer’s digital strategies.
Add to this TopCoder and it really is a no-brainer. Being the leading crowdsourcing marketplace, which connects over a million designers, developers and data scientists around the world with customers through challenges hosted on its platform, it gives a great edge to Wipro’s future delivery model. It puts us miles ahead in adapting to what is the virtual workforce of the future.
About a year back, we were fortunate to find Designit, which brought design capability to us. To be honest, about a year-and-half back we tried to train engineers in design and, I think, that was a great learning experience because though you can expose engineers and programmers to design and creativity, you can’t convert them into designers. Then we tried hiring designers and we realized that our brand, perceived essentially as a heavy engineering and technology one, doesn’t lend itself to creative people.
Then we started looking and we found Designit. We have maintained Designit as a separate brand. When we acquired it, it was about 300 creative designers and in about 15 months, it has gone up to about 450, reflecting a 50% growth. And it is still growing. We could have never done it in-house and I see Appirio doing the same for us in Cloud ERP practice.
We’ve reverse integrated with Appirio a nearly $40 million practice that we had organically built. Today, we are poised to take a leadership position at least among the Indian players, once we close the deal. So, I think, the idea behind acquiring Appirio is to get a digital offering that comes in with speed and which we can synergize very well with what exists in Wipro, bringing immediate value to our customers.
Digital is a different game from traditional sourcing. If you want to deliver experiences to customers and employees at velocity and scale, the strategy, design and execution need to come together and align to a single axis. We can bring it all together and make digital happen for our customers in an agile mode. Being able to offer that comprehensive solution makes us a partner of choice.
The opportunities are right now, and we need to be bold about acquiring the right capabilities.
Phil: Looking back at the experience you went through with the Designit integration, what have you learned from that is going to help you get this one really right?
Abid: I think one of the things is the culture. It’s my aspiration to make Wipro a company of the future by creating a startup culture for it. Being a 45-year-old organization, we’ve built a lot of good processes and with time have created related complexities as well that a lot of the new age companies don’t have. They thrive in a culture where it’s more like a scrum team and there are more unicorns. I think maintaining and preserving that would be extremely important.
That’s what we learned at Designit and I think that is what we’re going to implement at Appirio. From Designit our 2 key learnings have been: provide a high level of independence on the back-end and enable integration on the front-end with the business teams. We plan to imbibe that for Appirio.
It is not only about providing the level of independence on the back-end and the processes they have but also about adopting some of those best practices at Wipro, by bringing home more agility.
Customers want to see a very tight front-end integration. They, and especially enterprise clients, see how a trusted strategic partner like Wipro, that has a very good understanding of their current technology and operations landscape, can not only bring newer offerings but can also deploy those capabilities in the context of their environment and culture.
Phil: There has been a lot of excitement about the TopCoder product, which Appirio re-launched back in 2013. I know you guys are excited about that crowdsourcing capability. How much of an impact did that have when you were looking at the acquisition?
Abid: That’s a great question. I believe that the future of work is going to be very different from the way we do it now. I think for any task we need to do for our clients we’ll look at eliminating the process or the task altogether. What we can’t eliminate, we’ll look at hyper automating using robotics and AI. And what we can’t hyper automate, we’ll then crowdsource.
Only stuff that can be crowdsourced will then be done in what was the model of the past and present — which is using dedicated teams working for customers in the global delivery center model. Hence, like AI and the process for digitization or elimination, crowdsourcing will play an equally important role in the future of work.
About six months back we internally initiated a project, which we incidentally named Top Gear. This has been a very successful crowdsourcing platform within Wipro. This is a Wipro IP, on a platform that has been available to Wiproites. In a matter of about six months, we have about 23,000 Wiproites who have delivered some kind of code or IP, across about 31 different technology platforms on Top Gear. Then, when we started looking at Appirio, we knew that it also had TopCoder, which fits very well with our strategy on the future of work.
So, that’s a great asset to have, and we continue to invest in it and grow it. It brings us about a million members in the public cloud, which is smart people all across the globe registering on TopCoder to develop software and deliver what our customers could benefit from. So we’re very excited about that. I think it’s still early for enterprise use because there are still the same questions about the cloud that we had about three or four years back on security, on background checks, data privacy, intellectual property protection and stuff like that. That needs to be ironed out.
But I do believe in three or four years, this will become mainstream and it just gives us a head start in experiencing and experimenting with crowdsourcing. So I’m very excited about the TopCoder platform and the opportunities that it provides to us as well as the value we can deliver to some of our strategic customers, where we will be able to pilot crowdsourcing.
Phil: What do you expect from your competitors here? Surely they’re running out of Appirio-type acquisitions to make it worth their while.
Abid: I believe we will continue to see increased competition. The industry is going to belong to the people who are bold and can take risks. That is why I am trying to leverage Wipro’s strength because we have been very pioneering and have a good balance sheet, which gives us the latitude to make certain bold moves.
And I am also fortunate that I have one large shareholder who owns about 75% of the company, which makes it easier for a CEO to make those bold moves as it helps us act quickly. For example, the Appirio decision was a very quick decision. We could sign within a matter of a few days. That’s the difference that a majority shareholder brings.
So, you couldn’t ask for more. I think it’s going to be an interesting play. There will be consolidation in the industry and those who make bold moves early and take risks early, will benefit in my opinion.
We’ve made investments, we’ve executed on our strategy around digital, around innovation, around domain, consulting, around integrated services, the As-a-Service business model. All of those investments have cursed us a little bit on a bottom line, and that is again another bold move that we took when we, for a short time, moved a little lower than the margin levels we had been comfortable playing in. Those are some of the risks one needs to take and investments one needs to make to be able to lead in the future. And I believe we will lead from the front.
Phil: I’m going to ask you one more question, Abid. We’re going to make you the Emperor of the Services Industry for one week, and you can do one thing to change the industry that you think will make it a better place. What would that one thing be?
Abid: It’s a great industry of which I love being a member of and I will continue to do so. In the future, there are many things we would like to see evolve here. But there’s one thing that right now is on top of my mind as we look at Cloud, As-a-Service models and at some of the risks and gainshare models that are evolving.
I think there is a need for all the ecosystems within the industry to be able to work in tandem in being able to embrace this concept because interoperability will be key. This is going to be more and more an ecosystem-driven world where partnerships, amongst even perceived competitors, are going to be a new way of life. Openness to being able to do that and have an entire value chain that works in a rhythm so that customers don’t see the incompatibilities within the ecosystem—that is what I would like to enable in our industry.
Phil: That’s excellent and I’ll ask you one more since I’ve got you here. I think we last had an interview together about six years ago. If we have another one in six years’ time, what do you think will we be talking about?
Abid: So, the last time, our time horizon was five years, but this time I would put it at about two-and-half years, Phil. Because the rate of change has been exponential. So, maybe in five years we will have the equivalent of two changes like we had in the last five years.
But I’m sure one of the things we’ll be talking about is the whole idea of the future of work that I alluded to. How does work get done in this industry? It will be very, very different. The entire concept of non-linearity., of how we look at hiring people, how we look at training them, how we look at delivering a service—all of it will all be very different in about two to three years than what has been. That will be a huge change.
Phil: That’s a great answer. It’s been really great to hear your thoughts on the industry. I know our readers here will appreciate your time out to talk to us.
Abid Ali Neemuchwala (picture up top) is CEO and Member of the Board, Wipro Technologies. You can read his bio here.
The prevalence of high-profile cyber-attacks is on the increase. In the last two weeks alone we have witnessed the exposure of 412 million accounts from the FriendFinder network, 20,000 Tesco bank customers lost money in the UK and Three Mobile lost personal data from 133,000 customers. Not only are these attacks becoming more frequent, they are also increasing in severity with the Tesco incident seen as the worst banking security failure to date by some commentators.
The trouble is the talent pool is empty. Security staff have always been always been hard to find, and currently there is a drastic shortage of cyber security professionals across the globe. As I discussed in my recent PoV Is HR the Missing Link in Your Cyber Security Strategy?. In the U.S alone there are 209,000 unfilled cyber security jobs.
So, with all this in mind, why are cyber security professionals so hard to find? What skills, qualifications or characteristics distinguish them?
Well, according to IT compliance provider IT Governance and the U.S. News and World Report, individuals looking to establish a career in cyber security should begin with a degree in computer science, programming or engineering. This should then be followed this up with industry standard security qualifications offered by Microsoft, CISCO, and HP. For those wishing to become true specialists, an industry recognized qualification specifically within security should be sought. Examples include Certified Ethical Hacker (CEH) or GIAC Certified Penetration Tester (GPEN) certificates. So a lengthy and hard path to follow giving rise to the reality that candidates with these qualifications are scarce.
So, we have started to see organizations looking to tap into new sources for security talent. The UK public sector is leading this charge by instead of looking for qualified individuals rather focusing on recruiting candidates with the correct behavioral and cognitive capabilities who can then be trained on the job.
The UK’s National Cyber Security Program is looking to hire 50 candidates who have the ability to excel in cyber security. The program, whilst been open to all individuals, will primarily target soldiers, doctors and nurses whose attention to detail and pressured thinking ability would allow them to excel in cyber security.
Apart from being a healthcare professional or one of Her Majesty’s finest, what specific traits do cyber security hopefuls need? Well according to recruiting specialist DHi Group, individuals need the following characteristics:
Ability to work methodically and is very detail oriented
Eagerness to dig into technical questions and examine them from all sides
Enthusiastic and highly adaptable
Strong analytical and diagnostic skills
Demonstrated skills in innovation and collaboration
Keep a current understanding of vulnerabilities from the Internet
Maintaining awareness and knowledge of contemporary standards, practices, procedures and methods
Ability to get the job done.
The Bottom Line
The solution to the cyber security shortage is not rocket science. Companies must start thinking ahead and training the future professionals. Pump the money you spend on sky high salaries of the seasoned professionals with a mix of junior staff and a decent training program. The scarcity is fueled by the lack of junior and mid-level positions. Get the characteristics, not the qualification, and train on the job! Is this groundbreaking? Absolutely not, but what this approach does do, is help to redress the supply/demand crisis for this critical business issue.
Digital disruption is no longer new – some industries have already been shaken up by evolving digital business models, while others are in the throes of being impacted. This is the new normal for enterprises, and we need to develop actionable strategies to survive and compete in this post-digital world. In 2017, it’s all about enterprises being digitally capable of engaging their customers in real time using immersive communication channels, supported by intelligent unified operations that can enable their business to pivot to remain competitive. 
The trouble is the talent pool is empty. Security staff have always been always been hard to find, and currently there is a drastic shortage of cyber security professionals across the globe. As I discussed in my recent PoV 