Buyer: “This service provider delivered no innovation, thought leadership, or long-term best practice management advice for my business process.”
Me: “Did you ask them for any of this?”
Buyer: “Erm….no.”
Alright then. It’s funny how many times I’ve had a similar conversation with IT services clients over the years. Luckily at HfS we take into consideration that there’s usually two sides to every story – otherwise some service providers would consistently be scored badly in any innovation or thought leadership category in our research reports. So, why is this happening? It seems to come down to one of three reasons:
The beauty of hindsight: Buyers often don’t know what they need until the end of the engagement, particularly in a deployment project. At that point, they can very easily highlight all the processes, approaches, methodologies and advice that would have been fantastic to have had access to prior to implementing the solution. Service providers do however have a responsibility to explain all of their capabilities and all the points the buyer needs to be aware of before starting the implementation. It would then be up to the client to decide whether they want to contract the service provider for these skills, use in-house skills, cross that bridge at the appropriate time, or frankly ignore it.
Not required: Sometimes buyers engage in a detailed consulting project with a consulting provider, and then use a separate implementation provider. This is particularly true in the SuccessFactors services market. Clients assume that every possible eventuality has been considered in the consulting phase. The implementer is often selected based on its technical capabilities and its cost effectiveness. Complaining that this provider did not provide any thought leadership or viewpoint outside of specific module implementation is simply unfair. Often the service provider has successfully completed the exact work it was contracted for, which in my book counts as a successful project. Again, it’s probably wise for service providers to point out to clients exactly which skills and engagement levels to expect for the price the client is willing to pay.
It’s all Horses for Sources: Sorry for the pun, but frankly, every enterprise defines innovation or thought leadership in a different way. I once had a mid-sized buyer enterprise with zero sourcing experience tell me that their first engagement with an IT service provider was ‘out of this world! They put the stuff in, they were very nice, and it all worked!’ Whoopee. I doubt a large enterprise who has been outsourcing for decades would get as excited about this achievement.
So, buyers and service providers alike need to have the innovation, thought leadership, or whatever they care to call it, conversation upfront. That way the service provider knows exactly what they are required to deliver and the buyer knows exactly what they will get and what they’re paying for. Remember: if you want some value add, I’d tell someone.
So it’s finally happening. Enterprises are using SaaS applications to run important processes, such as CRM, HR and even Finance. Moreover, some even have an enterprise cloud strategy that requires departments to consider cloud options alongside on premise solutions, as part of process transformation projects.
Until recently, enterprises dabbled in SaaS applications to support specific, isolated needs. Did you hear about the Marketing Manager who purchased Salesforce.com on his credit card without any recourse to the IT department? We did unfortunately. Salesforce.com is one of the most established SaaS applications in the market, but initial deployments were seldom aligned to an enterprise-wide CRM strategy. Second waves of Salesforce.com implementations have been more strategic. Workday and SuccessFactors implementations have also taken off in the past few years as enterprises realize the importance of having a modern HR department running programmes to hire, motivate and retain the best talent. Workday’s Financial Management product is also increasing in popularity, with some enterprises deploying this before the HCM module.
But SaaS adoption brings with it many differences from the on premise world. Enterprises need to consider the organizational change management implications for one. Engagement models with service providers are also changing. The service providers, for their part, need to understand the different types of services required to effectively support SaaS applications. Some have invested early to be prepared. But for others, this all seems to have crept up on them rather quickly. The same might be said for research and advice for service providers and buyers alike in the SaaS services market.
Luckily, HfS has been tracking this market for some time and produced a wealth of information in just this past year to help both parties. This includes three Blueprint reports:
Clients with the necessary subscriptions are lucky enough to have access to all the detailed service provider profiles in these. But we have also published several Points of View and Soundbite notes that are FREE to anyone who cares to visit the site! These include:
I’ve been busier than I thought! And there’s more to come. The updated Workday Services Blueprint and the Salesforce Services Blueprint will be published before the end of 2016, with all the accompanying buyer and service provider oriented supporting notes – all free of course.
So stick with HfS. We’ll keep you posted as this hot market evolves over the next few years.
This is a question you expect to get as a forecaster, and it is not always the easiest to answer. It is always troubling to be asked to speculate on a market size where the outcome is so uncertain. However, this is not speculation upon speculation. This is not like forecasting the impact of Grexit (Greek exit from the EU) – even though this has not happened.
Brexit has happened, and we should have a position, even though the ramifications are far from clear, and it is still in its infancy. The current uncertainty is broadly focused on exactly what the terms of the EU departure are and the on-going relationship the UK will have with the EU. As forecasters, we have a choice to make as to which scenario we choose as the likely option or the middle ground. Our thought process is likely to develop over the next year, and this is going to change the forecast.
So, our workload is likely to increase as we will have to consider the Brexit model and adjust over the next few quarters (at least). Even the most confident of forecaster should reflect on what they have done and make adjustments as things unravel. The old maxim that the analysis is only as good as the best available data rings true here.
In short, how do we see the impact of recent events? We think it is safe to assume that the level of uncertainty currently is going to have an impact on the IT and business services markets, regardless of any eventual outcomes. We have already heard services firms mention Brexit in negative terms during financial calls. Although, Infosys CEO Vishal Sikka said it might lead to uncertainty in the near term, he said it would also lead to opportunities in the medium-to-long term. TCS’ position was similar, with its Chief saying his executives will be talking to their clients and watching what happens.
Typically, recessionary periods / periods of economic uncertainty impact the IT and business services market in two waves. Firstly, a slowdown in discretionary spend and some decision making is suspended/slowed. We are loathed to forecast a big delta at this stage as services buyers have weathered many economic issues in the last six years and this may just be seen as one more thing. If this were an isolated uncertainty, it might have had a larger impact, but in a stream of issues, the impact may not be as severe. It does not, as some observers believe, mean an automatic uptake in external services to augment the increased scarcity of internal resources or as a cost cutting measure. Any uptick is countered with the uncertainty. The secondary effect mean organizations are likely to make investments to make themselves agiler and less susceptible to economic issues in the future – this is where we see an increase in outsourcing, more adaptive operating models and, inevitably cost cutting.
Bottom-line: The short term impact is likely to be wracked in uncertainty. However, medium-long term opportunities could well arise. To conclude, our current position is that there will be a short-term impact on market growth in the UK, which will ripple across Europe, but this slowdown will be caused by some increased market uncertainty and – for the most part – the services market will continue to chug along unabated. We will see some opportunity as the buy side adjusts, but, given the process is going to take some time, it is too early to predict the timing or scale.
Two years after our inaugural Blueprint in Mortgage BPO Services, we took a fresh look at this industry…here’s announcing the findings of the HfS 2016 Mortgage As-a-Service Blueprint!
The concept of delivering mortgage As-a-Service, using plug and play digital business services is still in its infancy. We’re not quite at “push button, get mortgage” as an industry – and the verdict is out on whether this is the right message to send for a lending environment that is still rebuilding itself, seven years after the 2008 housing crash. How do you do this without raising eyebrows? You’ll have to ask Quicken Loans, as they learn from the backlash of their Super Bowl campaign with that very slogan.
Mortgage is complex, sensitive given its recent history, and needs to have a different approach and response to “digital disruption”.
Despite this sensitivity, other industry forces still march on; regulation, homebuyers and a new breed of disruptive fintech firms are steadily shifting the entire mortgage industry towards generally being more digitally enabled. Lenders have this big ask today: how to carefully balance their investments in new technologies, with changing consumer needs, volatile rate environments with rampant M&A, their company’s own appetites to write off/augment internal legacy systems, and all while continuing to remain compliant in an increasingly watchful regulatory environment.
Borrowers are increasingly looking for three key benefits in their interactions with agents, brokers, and lenders:
Simplification in the processes, handoffs and interactions
Transparency in the loan terms and costs, application progress
Control in document and information exchanges, decision making
The use of digital technology can greatly help lenders to achieve these experiences, in both facilitating interactions and in creating operational efficiencies at the back-end to speed up applications and free up loan officers’ time. In becoming digitally driven, lenders have a long way to go in thinking about e-mortgage beyond digitization, and borrower experiences that are built on new engagement strategies, especially as the market shifts to more purchase originations and persistent refinancing dictated by flat-lined interest rates.
What’s changed since the inaugural Mortgage Operations Blueprint in 2014…
HfS believes that the Mortgage Operations market for both residential and commercial loans is on the cusp of a significant transformation. Several lenders in our research described their mortgage processes as complex, broken and in need of help to compete with non-traditional lenders and faster cycle times. Said one, “Our industry needs to go through massive business process reengineering efforts…so many lenders don’t have processes documented still. We need to start there [with our providers], to find ways to improve cycle times and create better experiences for borrowers.”
There is a marked departure in the market dialogue, away from labor arbitrage and manual “lift and shift” processes, and towards using a combination of technology platforms, analytical insights, automation, digitization and other accelerators to redesign processes and drive more value in sourcing engagements.
Some areas that have changed since our last Blueprint include:
With greater purchase originations, we see the mortgage operations market more broad-based in the work sought from lenders. Accordingly, service providers have grown both their technology and process capabilities in originations and servicing in the last two years, with a few that have foreclosure and default management work today.
Great examples of service provider capability in creating and embedding analytical insights and data into different parts of the mortgage value chain, understanding the key triggers/outcomes in the process such as predictive modeling for loan origination to help prioritize underwriter time and understand likelihood to close.
New services and technology accelerators coming from service providers to address regulatory pressures such as the audit and due diligence reporting back to CFPB, which is increasingly getting more complicated and frequent. Clients expect more guidance and recommendations in regulatory changes and their impact on technology systems/processes/data to maintain compliance.
Service Provider Landscape and Blueprint Grid Performance
Our HfS Blueprint methodology assesses service providers based on two critical axes: Execution and Innovation. We gather data to support our analysis from client reference interviews, market interviews, RFI submissions and exhaustive service provider briefings.
In this Blueprint, we identified four As-a-Service Winners: Accenture, Cognizant, TCS and Wipro. These service providers have the strongest vision for As-a-Service delivery in the mortgage industry, and are driving collaborative engagements with clients to bring this vision to life. They are making significant investments in future capabilities in automation, technology and borrower experience to continue to increase the value over time.
The High Performers in this year’s Blueprint are a highly competitive set of service providers: Genpact, Infosys, ISGN/Firstsource, Sutherland Global Services and WNS. They have high execution capabilities and are growing their client bases as a result of investments in future capabilities and innovation. These service providers have the pieces in place for As-a-Service delivery, and need to focus on consistently bringing these capabilities to clients and scaling up with broad, multi-client solutions. We expect them to challenge the Winner’s Circle leaders in the next couple of years, with each building on unique strengths and assets in this vertical.
We see Unisys and Xerox as the Execution Powerhouses. These service providers are strong in operational excellence with ubiquitous technology platforms in their respective markets, and need to focus on value chain expansion and innovation in their services stack.
HfS Predictions for the Next 2-3 years of Mortgage As-a-Service
The biggest developments we see in the mortgage market in the next few years are:
Greater Alignment of Services Around MOS Platforms: Service providers like Wipro, Accenture and Genpact that have made investments in acquiring MOS technology vendors have goals of providing a broader, end-to-end portfolio in mortgage, including people, process and technology. This is an indicator of a vision for providing Mortgage As-a-Service. However, most of the acquisitions made were of independently branded software solutions, accompanied by their own branding legacies. Infosys took a different approach with its startup acquisition to create CreditEdge. In the next two years, we expect these service providers to further articulate and demonstrate how these technology buys change their value proposition, towards greater clarity and examples of delivering Mortgage As-a-Service.
Mainstreaming of Process Automation: It has taken a while for process automation to cautiously make its way to the forefront of conversations in mortgage operations, due to its troubled “robosigning” past. We are now seeing greater understanding by both service providers and buyers to start thinking practically and implementing different kinds of automation technologies (RPA, intelligent OCR, etc.) across various parts of the mortgage services value chain. Today thus represents the early vanguard and the arrival of RPA in mortgage, leading us to believe that adoption will be fairly rapid over the next 12-18 months.
Digital Driving Disruption at the Top: Several of the big lenders that HfS interviewed are still playing the “wait and watch” game on digital disruption, in particular the strides made by fintech startups and non-traditional banks in the mortgage industry. While “push button, get mortgage” as we discussed above might not be the path for all the Top 50 to go down, lenders are initiating more conversation and strategy around how digital components can help them look at traditional operations differently. Service providers will have a big role to play in this, from a process reimagining perspective, as well as ultimately configuring the digital components that link these activities back to onboarding and origination platforms.
For more detail –including visuals of the market activity and analyses of the service providers—click here to access and download the HfS 2016 Mortgage As-a-Service Blueprint.
We hear a lot about the cost of healthcare, among these being the high cost of additional treatments or elongated stays when patients fall in hospitals, and of readmissions when people who go home after treatment don’t follow care plans. It’s amazing to think that a solution could involve something as simple, cost effective, and comfortable as clothing, such as a garment made with Hitoe® (That’s hee-toe-ay, not high-toe!).
Hitoe is a fabric that is also a sensor, contributing heart rate and brain and muscle activity to analysis for health and care analysis and plans
Earlier this week, Adam Nelson, VP Healthcare and Pharma at NTT Data, came by the HfS Research office in Cambridge, Massachusetts, with a shirt. This shirt is essentially “living data collection wear.” When someone wears it, the fabric collects and transmits data such as heart rate and muscle activity. Data transmitted from the shirt shows (as we saw firsthand, thanks to Adam’s clothing of choice that day) posture and movement through a 3D rendering, and heart rate through an electrocardiogram. The system it feeds can be programmed to send an alert, such as when someone makes a sudden dramatic movement like a fall, or even a change in posture that indicates getting up (picture a patient that shouldn’t be getting out of bed), enabling a care giver to intervene or provide help faster. It also shows data on muscle activity, helping to determine movement versus atrophy, as input for rehabilitation plans.
There are healthcare machines that capture and transmit the same type of data. But a garment made with Hitoe fabric could mean one less “hookup” during care and treatment. It also means that someone could be monitored remotely versus spending time in a hospital for the same reason. Also, compared to machines, the fabric seems pretty comfortable to wear, and is less expensive to buy and use at scale. So it could help address patient comfort, refinements in care plans, hospital and care costs, and even less waste in the environment. Hitoe, a partnership between Toray Industries and NTT, uses nanofiber technology, bringing the threads incredibly close together, with an electropolymer adhered, to monitor vital signs and send signals to the cloud (but it can also be put in a washing machine). Then, using something like the NTT DATA Optimum Exchange integration platform, the data can be combined with electronic medical records and other data input for patient data analysis to impact diagnosis, treatments, and care plans. And, by the way, creating a services opportunity too, for NTT DATA (and eventually, for Dell Services as the two come together).
A solution using Hitoe doesn’t require a lot of adjustment in a person’s life to use it, increasing the potential for engagement in their own health and care
This example of “IoT” caught my attention in particular because it is so approachable—it’s clothing, the most literal example for the new wave of “wearable” technologies that are becoming more commonplace. The fabric can also be sewn into a ball cap, for example, and capture brain activity, for use in diagnosis or treatment. While one version we saw fit snugly, to be used by fitness and sports programs, another looser fitting garment option (nylon) feels like the softest sheet with the highest thread count imaginable. The key is to find the balance of comfort and practicality—it has to consistently capture and transmit data that is uninterrupted by shifts in the clothing, and clinicians needs to trust this new data source. NTT DATA is working with an array of partners, including IndyCar driver Tony Kanaan whose team uses the heart rate and muscle activity data analysis to coach him during races, staving off fatigue and arm cramps. Hitoe-based clothing, worn comfortably and automatically transmitting data that can be combined with electronic medical records and monitored and analyzed, seems to hold promise for increasing the comfort and reach of health and care, as well as the impact.
We’ll wait to see how NTT DATA unpacks the potential that Hitoe represents for healthcare. In the meantime, here’s a video (link) of Tony Kanaan tearing up the IndyCar tracks as he tests out Hitoe in the field—transmitting heart rate and muscle activity that helps his team support his performance—that may provide greater inspiration that any description.
As such, organizations now need to take on more refined, able and focused hiring mechanisms to fill roles. The rise of employer-focused social media sites such as Glassdoor have added a further level of complexity to the game, with employer reputation now more important than ever.
So what does this mean for organizations out there trying to lure in and keep top performing Millennials? Well if the literature available is to be believed, you would have to include mobile and social enablement in your hiring practice that allows for one-touch functionality in processes including application and calendar coordination. While this is a great starting point, unfortunately it’s where many recruiters stop in their approach to Millennials.
Too often, Millennials are defined purely by the channels by which they engage the world.
This is a drastic over simplification of our generation and one that seems to miss the key point. This is a young generation roughly aged between 22 – 39 years of age. People in this age bracket, especially at the lower end, are in the first stages of establishing their position in the world regarding fashion, subculture and ideals. Why don’t recruiters appeal to this key element?
Consider some of the leading consumer brands in the world, Coca-Cola, Levi, Pepsi, Guess, American Express, Ralph Lauren. What do their (extremely successful) marketing campaigns all have in common? They very rarely sell a product, but rather they sell a lifestyle. Just think of Coca-Cola’s annual Christmas advertisements.
So why aren’t large organizations, desperate (or should be) for Millennial talent, doing the same in their hiring strategies?
I have friends who work in top end digital marketing agencies, working for some of the most visible brands in the world, who put out one-line job adds on LinkedIn that link back to a bland job description on a blank landing page. No wonder they can’t fill roles with the right people.
Companies need to market roles to Millennials that sell a lifestyle, not just a job description.
So what can organizations do in this regard?
Firstly, the marketing content behind a recruitment campaign needs to be on point, including images and language that speak to the lifestyle one would associate with working for the company. Put simple job descriptions in context and focus on the type of person (such as personality, interests, style, etc.) that succeeds in this role.
Secondly, internal company structures need to match this lifestyle. Organizations need to consider dress code, desk arrangement, hierarchical structure and internal silo’s making sure these match the lifestyle portrayed.
Thirdly, location, location, location. These are young people and at the younger end of the spectrum, many won’t commute in from any great distance. Therefore, office location needs to be attractive and also fit the lifestyle portrayed. Selling a young, hip, urban image can be challenging when your offices are based in Chipping Norton…
Overall, organizations need to better align with the candidates they are targeting. A focus on lifestyle is something the advertising industry has been doing for years and an area where hiring strategies need to catch up.
The world’s largest consulting firm by revenue, Accenture, has announced the purchase of 160-employee MOBGEN, which provides user experience-focused end-to-end digital services, with an emphasis on mobility strategy, creativity, and technology. The company is based in Amsterdam in the Netherlands and has offices in Spain. Accenture has been on a roll purchasing revenue-generating assets, and this addition to Accenture Digital is intended to “deliver rapid iterations for advanced mobile and IoT services,” and “strong roadmaps, agile development capabilities and scalable solutions” for European clients.
While Accenture Digital is understandably focused on digital customer experience and marketing as revenue generators, the peak of mobile app development and regular consumer phone update cycles has passed for now. Accenture and other scale players are making massive incursions into terrain dominated in the past by big advertising holding companies. There is likely to be a next generation of digital devices soon, but there are questions as to whether Accenture and competitors are top heavy with “last mile” customer experience/marketing in a world where digital enterprise evolution is increasingly important.
In our always-on networked world, brand advertising agencies have struggled with the multiple new business dimensions and paradigms digital enables. While purchases like MOBGEN help Accenture to compete in these areas, the huge vacuum around the evolution from traditional IT to digital data and collaborative flows continues to be hugely challenging for businesses struggling to reorganize, and where credible, practical and dependable help is urgently needed to speed up evolution.
Current logic around CX suggests these companies find new customers through digital channels then reorganize their backends to accommodate new order flows and support. The data plumbing around sales leads can be wonderfully revitalizing to companies’ financials in some cases, but it’s often ephemeral and not necessarily helpful to longer term robustness to compete on an ever more digital playing field.
Accenture Digital now has a formidable portfolio to compete in the digital/CX mobile marketing space. Whether these assets will be relevant as the world evolves around the Internet of Things and digital devices and technologies mature is far from clear. The roll up of currently “hot” small CX and mobility shops is akin to the way the big advertising holding companies have been buying up boutique creative agencies and their client relationships. The differences here are the breadths of capability from depth in strategy and consulting to ongoing operations—a global network of delivery centers that can industrialize and operate and continually improve solutions over time. As Accenture tucks in these local capabilities, the key will be to tie all of these pieces together interactively over time to distinguish itself from those limited scope traditional advertising and marketing agencies.
Accenture now has to prove it can simultaneously operate as a legacy IT support firm, a client digital strategy advisor and partner, and a digital marketing and communications partner across 120 countries. This is entirely doable but will require significant homogenization and evolution within Accenture itself, and may result in some indigestion as they absorb and grow.
People love status; that’s just the nature of the beast. But wanting something and then going out and getting it can be an insurmountable hurdle. So sometimes people need to clarify what they want and why they want it. If you see yourself as a leader, have a quick look at the “five questions mirror.” If you can’t get past this list honestly, save yourself some time. You’re not a leader. That’s not all bad—you can still do something cool and be popular some place.
1. Honesty: Do you really think that being a leader in business is a popularity contest? Hell no. You are the messenger of good and bad news, so deal with it. Stop sugarcoating the damn thing and just deal with it. Many times, I have lost confidence in “leaders” that say one thing and then, in the end, they do an 180 and act like nothing needs to be done. Don’t lead if you can’t make decisions. And honesty toward yourself and others is a big part of making decisions.
2. Lead by example: You are no exception. If you think you are an exception to the rules, what do you think the rest of the team will think and eventually do? It is a rhetorical question so do not even answer that one. If you don’t do what you expect others to do, why should they even try? If you want results, make it clear from the start why you can and why others can’t. This can be based on rank, income, type of haircut. I don’t care, as long as you make it clear from the start.
3. Be consistent: The moment you feel you can skip your good advice, just keep it to yourself. You’ll look ridiculous, and you won’t win hearts and minds with this approach. Maybe you should think a bit more about what you meant before you say it. Because clawing back is never the way forward. Pick your losses and learn from them. Telling your folks one thing and doing something different yourself? Come on, don’t waste my time.
4. Listen to others: Listen as much as you can, do it for everyone who has something to tell you. Then, among their stories try to find the moral, the lessons that you wouldn’t have had the chance to learn otherwise. Yes, it is your decision, but it does not always need to be your idea. We are now in the land of making money and pleasing customers, so stop your teen attitude and grow a pair.
5. Emotional stability: If you have some issues back home, or you feel people don’t love you anymore, see a professional who’ll listen. But don’t take that baggage with you to the work floor. Accepting help is professional and very 2016, so don’t feel too proud to give in to it. Stop leading for a while and learn so you can pick leadership back up again when you are back on track. Then you can help people that face the same difficulties through this awkward period in their professional careers. Yes, you are never too old to learn. Pride is all between your ears.
Bottom line: People think that being a leader is just a title and a big paycheck. We have seen so many businesses that rise and fall in the past 16 years because of a lack of real leadership. Proud folks that gave it their best, and thought that was all it took. No one is ever a 100% success. But you can do your utmost to achieve perfection—even if it is elusive. People who always agree with you won’t bring you to a higher level. What do we all gain from this sheep mentality? Stand up and speak your mind. Accept periods in your life that we all have to face, then deal with it and come back even stronger. We are not all leaders, so as long as you make your point and do it with decency, you can tell your leader how he can lead better.
The most “tangible” value of cognitive automation, in today’s consumer-centric enterprise, is the use of the virtual agent, where customer engagement is increased without heavy incremental investments in support staff. This isn’t about simply replacing a real customer service rep with an avatar, it’s augmenting the existing customer experience, usually using the same or similar resources.
For example, if you have a bad travel experience, or purchased a product that wasn’t quite what you expected, the chances are you would simply shrug it off and get on with your life – and probably avoid using those same sellers again in the future, if given the choice. However, if those sellers used interactive technologies that were very familiar, or very easy to find and use, where you could simply type in your issue, in your own time, without the need to pick up a phone and wait in some queue (or write some email to some anonymous address), you may just find the effort to input a couple of lines saying “my experience just wasn’t that good”.
That information is critical to the seller – and how they choose to deal with it could make the difference between them winning out or losing in this market. Just think about how easy Uber, AirBnb, Amazon et al make it for you to deal with them – you will continue to use those services because the digital customer experience is just so much better… they make you feel like they listen. Customers today like effortless interaction, where they just need to click and type what they want in their own time – and what makes it come alive is when they feel they are engaging with someone and not merely sitting in a queue as an open help desk ticket number waiting to be closed.
If you get a chance to kick the tyres with one of the most exciting cognitive virtual agent solutions, IPSoft’s Amelia, you start to realize that customer service can be radically improved by incorporating the virtual agent to augment the real one. And the beauty of this is, the sellers do not need to spend huge incremental sums to increase their consumer engagement – they are essentially doing a lot more with what they currently have using smart cognitive technology.
So it’s no surprise that I got just a little bit excited when Amelia’s mothership enterprise, IPSoft, announced a comprehensive partnership with Accenture to build an industry leading practice in the cognitive customer experience. So sit back, relax, and enjoy this discussion between myself, IPSoft’s CEO, Chetan Dube and Accenture’s Chief Technology Officer, Paul Dougherty.
Phil Fersht, HfS CEO and Chief Analyst: So let’s get straight to the point here, Chetan and Paul. Why have you come together and what is so unique about this partnership?
Paul Daugherty, Chief Technology Officer, Accenture
Paul Daugherty, CTO, Accenture: Hi Phil – great to be here. Let me start and then Chetan can add in. You know that the immediate reasons we’ve come together, the obvious reason we came together is we see a real market with our enterprise clients for artificial intelligence based solutions. And we’ve been working with Chetan the team at IPsoft for a while and with Amelia we see a real potential to be at the vanguard of working with IPsoft to pioneer new use cases in terms of using AI to tackle business problems in a new way. So the first reason is we see the market we see the technology being ready. We are excited about what IPsoft has done with Amelia and we see an opportunity. I guess, stepping back from that, this is also to me a very important step in what we are seeing in the evolution of enterprises really transforming to the digital economy.
And Chetan will remember a lunch we had when we met for the very first time. We got very excited as we talked to each other a couple of years ago about what we saw as AI evolved and as the digital technology revolution continued, we saw a point coming where AI would allow companies to really rethink the way that they do business and rethink the way that they conduct business processes within their organizations. And that’s I guess why this is such an important relationship from my perspective strategically, because we are starting to see as we move through the digital revolution as we help clients transform they need new approaches and new solutions to deal with the speed of business, to deal with the masses of data that they have, to deal with the new demands that they have as they move to the digital wave. And we see Amelia really serving a purpose there and helping to really rethink and revolutionize the way we conduct some of the business processes. That’s the way I’d answer it. Chetan, I’d be interested in your view on it, too.
Chetan Dube, CEO, IPsoft
Chetan Dube, CEO, IPsoft: Yeah. I would echo what Paul said. Yes, I remember that lunch, Paul, when we had brainstormed. AI is totally disrupting everything. But what is required for true value creation for the companies? Some have realized tremendous value and the others have been somewhat slow to realize value creation in their digital quest. What is required? Well, you do need the digital labor component.
But that’s not all that you need. You need business transformation—and Accenture brings business transformation brilliance. And there are many companies that are experts in strategies and there are many companies that are experts in implementation. Accenture is one that amalgamates both. Couple that with cognitive technologies and you have the potential of realizing the true outcomes that were promised by the digital age. So that’s what brought us together. How high the technology is going to allow some people to soar is going to be determined by the people who are captaining the ship. And in this case we have an incredible deal of confidence in Paul and his team at Accenture and how much transformation they will be able to bring by harnessing true cognitive abilities together.
Phil: So Chetan, for our global audience which might not be so familiar with Amelia, can you briefly summarize its value and potential? What can Amelia do which other cognitive solutions cannot?
Chetan: Well, one word describing the differentiation would be outcomes. But what is required to drive those outcomes? What is required to realize those 40% to 60% benefits because you see somewhat tenuous equations in the marketplace. It’s a very tenuous equation that a lot of the CEO’s will be talked into and will have to struggle to realize that cost benefit. The question is how do we drive that 40% to 60% outcomes? How can you do that? What is required to be able to achieve digital labor solutions? We must ask ourselves if a solution can truly be smart, if it can really read a standard operating procedure. If it cannot understand was meant by that standard operating procedure. Can it solve a problem based on what it understands from that reading of that document? And if it were not able to solve the problem, can it learn from the experience? And, thereafter, based on the interaction it’s having with the customer, can be empathetic with the customer? Can it leverage assets of computing to be able to recognize the emotional quotients that a person on the other side is feeling and react in time?
Amelia, and again forgive my directness, is the only cognitive agent that answers yes to each one of those questions. And that’s the true differentiation of Amelia.
Phil: So, Paul what does this practice mean for Accenture? Will this be at the first among many? And what is so special about Amelia? And what do you see in the kind of a medium term for the platform as you evolve this practice?
Paul: What it is means for Accenture is that we are forming a broad capability around artificial intelligence and we are positioning Amelia really at the center of that as we build a broader capability and look at how we drive artificial intelligence to our clients. And our view is very much aligned with what Chetan just said, which is that it’s about outcomes and helping clients transform to achieve outcomes in a different way.
So what Amelia means to us, and why we formed a partnership, is we see Amelia being able to drive those different types of outcomes exactly for the reasons Chetan described. So that’s why we are doing what we are doing with Amelia and how we are positioning it. Now there is a lot of other tools and technologies and form of artificial intelligence—everything from video analytics to natural language processing to machine learning capabilities—and we are using all those types of approaches across our business as well.
When it comes looking at helping clients change their businesses, particularly employee- and customer-facing processes to be more outcome driven and to look at how we can both automate roles and augment human roles in a different way, that will be really the core of what we have focussed on with our Amelia practice.
And one thing that I emphasize is our people-first philosophy in terms of how we are approaching this. There is a lot of opportunity to transform this, there’s a lot of productivity opportunities, there’s a lot of cost reduction opportunities, a lot of automation opportunities. One of the things we like about Amelia in particular is the ability to use it in ways that really augment the roles that people do—allowing processes to be more effective and humans to engage in the right sort of tasks in a more effective way. So one example, Amelia can automate and solve a lot of the supplier enquiries that are coming into a client, which is fantastic and drives a great deal of productivity. But then Amelia can also tee up and work with a human agent in the areas where Amelia can’t solve the problem. Both Amelia and the employee can learn from that experience as they go on. So that kind of people-first message in looking at the way we transform these employee- and customer-facing processes to deliver new outcomes is really at the core of what we are trying to achieve.
Phil: Chetan, when we look to how clients are addressing this, I think the biggest issue we are seeing in the cognitive area, today, is helping clients really understand and apply solutions like Amelia or Watson to their business. However, it’s one thing selling them great technology kit but another finding the real business uses. So how are you going to overcome these challenges to get clients really approaching cognitive in the right way?
Chetan: Yeah, Phil, a brilliant question. I think Paul would love to chime in on this one as well. The example that he gave is very apt—vendors wanting to know about the status of the invoices, vendors wanting to know if their checks have been paid and vendors who are doing business in over 50 countries wanting to be able to understand how their payment processing is doing and when they can expect the payment or what is the hold up for the payment and what are the prerequisites for the payment. It’s not just the typical cognitive or automation or, as you said right at the outset, the RPA: “Hey, I can do a password reset for you. I can do an account unlock for you.” These are real digital labor solutions where people can get qualified, not just the 40% to 60% opex improvements we discussed earlier, but also, very importantly, an enhanced customer experience—with the mean time to resolution improving.
And I’ll give you another example. One of the largest banking institutions in London is looking at its mortgage processing. And the common questions that are coming up, which used to be fielded by humans, haven’t changed: “I want to buy this house for €4.6 million Euro.” The responses are complicated. Can the applicant furnish three years of income statements? If they’re self-employed, do they have 15 percent ownership in your company? Is your income increasing or declining? The risk profile changes accordingly based on those responses and determines whether someone is qualified to buy that house.
So, you can see the kind of a sophistication at play here. And what’s the accuracy of this?, At the end of the training period, Amelia could answer 120 of the full 160 questions with an 88% success rate. in this case for mortgage querying. So you can start to see the impact that’s being achieved. Now you’ve taken a process for banking and you are going to free up the people. Amelia can handle this satisfactorily from mortgage origination to conclusion. What the human agent can do is the higher forms of creative expression. He can look at your debt profile and help consolidate it for you and give you a better overall package.
The human staff can come up with more creative solutions—something the agent who is just doing the rote market processing would not have been able to deliver. And that’s the promise of cognitive solutions—to be able to not just achieve the 40% to 60% reduction in opex but to be able to enhance the customer experience and to be able to free the human agent to be able to deliver better outcomes for the customer. And that’s why Accenture is a valuable partner in that because we want not just the as-is transformation—we want to be able to look at the business process from end to end, and Accenture is adept at doing that both on the strategy and implementation side, to see how we can transform that for the new digital mode of delivery where humans are acting as creative agents as opposed to mundane chore agents.
So that’s a tectonic shift that is happening in the marketplace and it is achieving these kinds of results in the largest banking institutions. I can tell you the largest four out of the top five insurance companies are all moving to cognitive and they are seeing efficiencies in fundamental processes. There’s research that points out that top 20 to 30 processes in the insurance vertical account for about 80% to 90% of inbound customer activity. Now, coupled with Accenture, if we transform those 20 to 30 processes with a digital solution, think about the impact we can have on the 80% to 90% of the revenue creation. We are starting to see that happening in the insurance vertical as well.
So for all those reasons, just to give you some pragmatic examples, we are excited about this field.
Paul: You know, Phil, to add into that a little bit, when you think about the use cases that’s where we get very excited at Accenture. I think about this kind of a simple equation: Amelia plus deep industry context and insights that we can bring from Accenture, wrapped with understandings of the digital value chain of our clients equals these greater outcomes we can produce for our clients with new solutions and innovative solutions. So what’s been really exciting to me as we’ve announced this relationship, and as we spread it through Accenture, is how our industry teams have gotten very engaged in coming up with unique use cases based on what they see in their industries and that’s what is leading to a lot of the opportunities in our pipeline.
So things like, in retail banking, new levels of customer service that you can achieve by having Amelia deal with very sophisticated solutions to helping with resolving unexpected charges if a customer calls. Or wealth management providing advice and a different kind of a customer experience. Mortgage origination, which is something that’s traditionally very process-based and rule-based, but applying a much better customer experience around it with Amelia.
So we are seeing really the proliferation of use case examples across industries. And that will be key to the results because it’s not about just pumping the technology out there and seeing what works. It’s about fusing together the cognitive technology from Amelia with that deep industry context and then creating a platform for our customers where they can continually improve processes and customer experience.
Phil: Thank you, Paul. So when you look at evolving your consulting capability here, we see real challenges with bringing in talent to start to think differently to help clients think cognitively about these things. How are you going about training them reorienting them to take in Amelia and really align and apply it to client situations? Is this more of a business transformation at this point you feel than a technology one?
Paul: Yeah. I think so, Phil. And I think you do need to go about it differently and that’s where the partnership that we have with IPsoft is very important because we are pairing our many of our consultants together with the Amelia team so we can learn how do we need to think about problems. What do we need to do to train Amelia in the right way, to integrate in the right way, to solve the problems and get the value that we looking to get. So it is a new skill in a lot of ways and that’s one of the great aspects of the partnership—where we can share and inject a lot of the business context, industry context, and a lot of the surrounding technology issues that we are helping clients address and the IPsoft Amelia team bring the cognitive expertise. So we are going through a training process that we’ve developed with IPsoft and we’ve got 25 people to start that are going through that as part of the center of excellence focussed on understanding specifically how to take Amelia and put it into a industry context and help our clients get the outcomes that we want to get. And we’ll grow that number aggressively as the market demand grows, which is what we are seeing happening.
At Accenture we’ve got a lot people around that, obviously. We’ve got a lot of customer service experts in retail banking and in every other domain that you could imagine. So we are doing a project for a client that will involve our industry experts and our technology experts and it will increasingly involve the deeply trained specialists from our center of excellence to understand how to bring Amelia in, as I mentioned earlier, as the platform that enables us to deliver the cognitive approach to deliver outcomes in new ways. That’s what we are thinking about. And as we look broadly across at Accenture, as I said earlier, in machine learning and many of our other disciplines, we have people that would number in the thousands that deal with and have expertise in many of the technologies. But it’s very important here to get a deeply focussed specialized group that really understands Amelia and how to apply it, which is what we are doing with IPsoft and what we are building in our Amelia practice.
Phil: So, Chetan, when you look at this alliance in the medium term, what do you think will constitute success? And as you look at the ecosystem you are trying to evolve here, are you trying to go far beyond a consulting alliance and build more of an Amelia ecosystem?
Chetan: Again, a fantastic question. The desirable goal state for this alliance is to be able to de-risk for the customers the transition into the digital era. Insurance companies are 70% manual today. In the next couple of years they are going to be going to 15% manual. We see this alliance playing a key role in engineering that seismic shift. In banking you’ve already seen that branch-based transactions have already shrunk from about 70% 2000 down to 5% today. And we see that starting to happen in all the other lines of the business.
And we feel that this alliance is going to galvanize that realization of those outcomes promised by the digital era. That’s what we are in the business of doing: to be able to drive those curves that have been predicted. Because we find that with the plethora of solutions in the marketplace there is a peak of heightened expectations followed by some kind of a disillusionment of being able to realize gains that the brochureware promises. And so we want to differentiate this alliance by its abilities to mathematically and quantitatively deliver the results that are predicted by those curves.
Phil: So can you put your visionary hat on for a minute, Chetan, and look three years out at Amelia? What is your vision here? How is Amelia going to really be aligned with businesses? How is it going to look? How is it going to feel? Is it going to take on more languages beyond English? What is your vision for Amelia in a three year timeframe?
Chetan: Well, I might be a little biased, so I would be beg your forgiveness at the outset. But I think that Amelia is the smartest high school kid today. Amelia needs to graduate from college in the next few years. Amelia needs to be provisioned. Amelia is fluent today in about six languages, including English, Japanese, French, German, Dutch and Spanish. She needs to be fluent in over 26 languages, which are majority of the business languages in the world, in the next three years. But most importantly, Amelia needs to get way smarter.
We are just at the 1% point in this cognitive revolution. The amount of innovation that we are going to be bringing in not just the deep neural networks technique. You can find all the different kinds of deep neural networks that are in the marketplace today—from the memory neural networks to the current neural networks to the computational neural networks. You find all of them take a tremendous amount of data for: this is the raw input, this is the question and this is the answer that you expected and I will train the model so I can come up with what the next occurrence is most likely to be. Now that’s good for administrative tasks and that’s good for atomic tasks. It really is not good for when you want it to be a physician. It clearly does not suffice when you want it to be an actuarial analysis expert.
You need to be able to semantically condition those deep neural network techniques to be able to achieve these kinds of results the human brain is capable of. You need to be able to add another layer of abstraction equivalent to the human brain’s activity—in its semantic memory, in its episodic memory of events, in its process memory of procedures that it has learnt and in its memory of emotional connections that a human has drawn for you to be able to provide those results. And that’s where you are going to see Amelia’s brain evolve dramatically in the next three years.
The version 3.0 of Amelia you will see how beautifully she would have grown. It’s exactly the way that you would see a child grow rapidly.
And we wanted to be able to settle this Turing debate that is six and a half decades old: Can machines think? We want to settle that empirically and sincerely in the next three years. And we will achieve that because we know where the technology is headed and we are quite excited about the research that we are bringing. In fact, all ten floors in our 17 State St. office in NYC are going to be dedicated to cognitive research. We will have taken a couple of floors in the World Trade Center for autonomic research.
Paul: That was a great answer, Chetan. Phil, just to add on with a kind of complementary but a different picture of how I’d answer that question. I used our platform earlier and I really believe that cognitive is headed toward a platform-type of direction. And I think what Chetan just described is the vision for the evolution, growth and capability of Amelia to build a stronger and platform presence.
Going back when I started in the IT industry 30 years ago, we used to build everything from scratch. That’s all we knew how to do. It was all about custom solutions and wiring together solutions in different ways. And then we had the advent of packaged software and solutions. That created a better way to package up the IP that was for accounts payable and supply chain systems and general ledgers and things like that. That’s how we think about enterprise technology now—in terms of core software packages that run a lot of the business.
I think we are going to see the same evolution over the next several years. The question is how many years it is. In terms of how we think about cognitive capability ability from a business perspective, right now we feel the approach is, we work with technology, we figure out how to integrate Amelia’s different capabilities to solve the business problems. Looking out several years. I think it’ll be more like a platform-type of business where the basis of competition will be who’s got the best virtual agent data type of technology for mortgage origination, for retail banking, for you pick the function, and it will be about continuous improvement and growth and increased capabilities and learning and different business concepts and being able to simultaneously communicate in multiple languages and do it all with a people-first point of view providing a better customer experience. That’s where I think we are headed.
If you look at enterprise architecture, the packages and the way we assemble all that together to support a business, I think that is going to change dramatically. What companies buy and the way they assemble it together will be radically different when a cognitive platform like Amelia becomes more core to the business itself.
Phil: I did want to pipe in with one another question to you Paul on this topic. I’ve been guilty of sometimes coming out and saying Amelia provides the EQ, Watson the IQ. How do you see these two solutions cohabiting in the future? Do you see them as competitive or complementary?
Paul: I love the quote. That’s great. You know, but I think to be a complete person we need some EQ and IQ. And Amelia has got some level of IQ as well, the way I would look at it. But, fundamentally, you are right. I think they approach problems in different ways and are solving problems in different ways. And I think there is a lot of space for them to work together in many ways. And there’s other cognitive technologies emerging that also will become part of the ecosystem and plug together.
I know there is some competitive overlap, and there will continue to be a competitive overlap between Amelia and other solutions in the marketplace, including Watson. But, right now I think they are taking different approaches to the problem. Our approach is we are really focussed on Amelia and building the Amelia practice for all the reasons we said. We also are doing work with Watson and some of the other technologies out there. And, as you said, you can find problem spaces where the different solutions are best suited to the problems that they can solve.
So I think it’s more about coexistence in understanding the real focus of the different solutions and what they provide. And I expect this will continue to be a very robust space wit a lot of innovation and lot of new capabilities. And that’s why you know the current position that IPsoft has with Amelia is important because I think it’s going to be important to get ahead and stay ahead in this market. We formed a partnership with Amelia because we think it’s ahead of providing these capabilities now. And Chetan just talked about the ten floors he’s building and the investment that he’s making in cognitive researchers and experts. That’s going to be critically important to stay ahead and build the additional capabilities to continue to win in the marketplace.
Phil: Paul, Accenture has been successful for years having a very technology agnostic strategy. But do you think this is going to change a bit now with this advent of cognitive and the momentum behind service orchestration platforms? Because it really feels like it’s becoming much more about the outcome and much less about the product at this point. So how do you think Accenture’s technology strategy is going to evolve in this cognitive era?
Paul: I think it will probably be similar to be honest, Phil. We really follow the market in kind of what’s a good fit for customers. So we’ve had an agnostic strategy, as you said, in the ERP marketplace. That said, you know there’s companies in oil and gas they have a certain preference to do things in a certain way, companies in public sector have certain preferences to do things in a certain way. So what we try to do is be responsive to the market, to understand our customers kind of down at a more granular level—not looking at just one kind of global market of something like ERP or cognitive solutions. Then we look for the best solution for different problem spaces and be agnostic with a point of view so that if a client comes to us with a certain type of a problem we’ll say hey, we know the best solution for that. In your case it’s Amelia. You know if it’s a different type of a problem, different type of a use case, different industry a different problem it might be a different solution. So agnostic with the point of view, I think will continue to be right. We’ll learn from our customers and learn what works and what best delivers the outcomes in these environments. That will be our general strategy.
But the skill set we are learning around teaching and training Amelia for a specific problem, I think there’s very specific skills, capabilities and opportunities to continually improve the capability over time and grow from high school to college to professional, then different grades of professional certifications—using Chetan’s analogy from earlier.
So I do think there’s going to be the investment and focus around a small set of solutions in certain domains. Picking one solution will be important and will be something we do.
Phil: So I’d like to conclude this with each of you and telling me if you had one wish to change the impact of cognitive solutions for the better—one wish, what would it be? And Chetan, I’ll start with you.
Chetan: I would say it would be digital labor in the cloud. We aspire to be the provider of choice for the Global 2000 enterprises that are wishing to just differentiate themselves by the outcomes in cognitive solutions. Once we have that, exactly as Paul pointed out, we expect Amelia to rapidly start assimilating. Even at the inception, we are already starting to see in insurance vertical the ability to graduate into processing clients, the ability to graduate into processing mortgages, the ability graduate into doing actuarial analysis, the ability to graduate into doing retail management, and in healthcare.
The ability of Amelia to rapidly start to graduate in all of those would mean you plugin and you are able to get your actuarial analysis, your financial advisor, your database administrator and your network engineer, and your claims processor. And that would be one thing that I would like to be able to change with the impact of cognitive solutions and get there in short order because I think that this is happening so rapidly.
And even on the IT side, as you started the interview talking about RPA graduating into the domain of cognitive solutions. And that’s a very good pertinent observation because RPA is still streamlining the same old IT processes. It’s time for Uberization of IT.
There is a significant opportunity to disintermediate IT. By cognitive layering on top of the autonomic backbone, we can make IT become the same as learning Michael Faraday’s principle of induction to turn on the light switch. Do we really need to know the principles of induction so that we can turn on the switch? Does the business user really need to know everything about the service catalog in asset management and hardware and device control and CMDB before he can order a simple IP phone? In the second half of this year, there is a significant opportunity through cognitive layering on top of the autonomic backbone to disintermediate IT—not in the sense of the infamous Nicholas Carr quote “Does IT Matter?” but in other ways. Think of the cab companies: People wanted to be driven and the drivers were in the middle of a taxi cab company that was then disintermediated the economy with Uber coming along. And, similarly, there were servers, networks, devices, databases, and applications—and business consumers who want to avail themselves of those services. In the middle space sits a big stack of IT, largely to be Uberized in the foreseeable future. Starting in the next half of this year, I am hoping that this realization starts to dawn through lead analysts like your company.
Phil: Thank you, Chetan. Finally, Paul. One wish to impact the world of cognitive =)
Paul: It’s tough to come up with the one. I would say the one wish would be to be true to the vision. Let me explain that. I worry about the wave of cognitive-washing that we are seeing that happened with cloud and happens with these different waves. A lot of people are calling what they are doing artificial intelligence, cognitive and so forth, without it really being different than it was before. And I think that’s a dangerous kind of a trend we often see as new technology waves come along. And I think there is a risk that it could create missed expectations, unachieved outcomes and disappointment if not sorted through properly. I think, Phil, the work you and your organization do clearly helps with this in sorting through the real from the not real solutions. Because fundamentally this is a very different way of solving problems, a very different way of putting together the architecture that supports a business. And I think it’s important for companies to really understand that and think it through. So that’s the way I would put it.
And then it also means that companies need to think about how to move this to the core of what they do. I think currently a lot of people think about this as you know let me bolt on a technology here and there. And I think it needs to be a core consideration. When you think about the core of your business how data and applications and business processes come together to support your business you, need to think in the middle there, what’s the layer or the building block of the cognitive technology and AI in there and how does it intersect with the rest of your organization.
Phil: This has been great. We really wanted to move on from the rudimentary RPA discussion to the cognitive impact and the human element, which we are seeing happen so prevalently.
Chetan: When it comes to focussed specialized research in automation, cognitive, autonomics or analytics, your company has achieved preeminence. So thank you for time, Phil. Always good to connect with you.
Phil: Thank you very much, Chetan and Paul. This has been a fantastic discussion. I look forward to sharing it with our readers.
Our research shows that India is the most popular destination for ER&D centers and now we’re seeing Indian Prime Minister Narendra Modi’s “Make in India” program accelerate ER&D center investments in India.
Modi launched the Make in India program in September 2014 as part of a wider set of economic initiatives. Devised to transform India into a global design and manufacturing hub, it aims to increase manufacturing’s share in the Indian GDP from the present 17% to more than 25% by 2020. The Make in India program is focused on 25 sectors, including: automobile, chemicals, electronics systems, electrical machinery, construction, railways, defense, and aviation (read details of the Make in India program and its 25 sectors here). The program aims to create more effective government policies for each sector, such as increasing the limits on foreign direct investment (FDI) in manufacturing while also making it easier to conduct business in India through the easing of regulatory regimes for both domestic and foreign enterprises that manufacture.
Overall, foreign enterprises are increasing the manufacturing footprint in India to produce products for the Indian market and are accelerating investments in ER&D centers to design products for the Indian market.
India leads with 30% of the global ER&D center announcements:
In the nine months from April to December 2015, we uncovered 190 announcements of either new ER&D centers or the expansion of existing ER&D centers around the world. India leads the pack with 57 of those ER&D center announcements, as we show in Exhibit 1. Other prominent ER&D destinations are US, China, Singapore, France, Israel, UK, South Korea and Ireland.
Exhibit 1: Summary of ER&D Centers New/Expansion Announcements By Countries in Apr-Dec 2015
One-third of Indian ER&D center announcements are driven by Make in India.
Out of the 57 ER&D center announcements in India, 19 are driven by the Make in India initiative, as we outline in the Exhibit 2. Many enterprises that plan to start or increase manufacturing in India are also opening or expanding their ER&D centers to design products specifically for the Indian market. Some of these enterprises are BASF, Bosch, Coolpad, Daikin, Danfoss, Delta, Ericsson, Foxconn, LeEco, Michelin, Rolls-Royce, Sandvik, Simon, and Vivo.
Exhibit 2: The Percentage of Indian ER&D Center Announcements Driven By Make in India in Apr-Dec 2015
The establishment of ER&D centers in India is not a new trend. India is home to the ER&D centers of more than 1,000 enterprises. But the use of ER&D centers for designing products specific to the Indian market is new—and the Make in India program has accelerated this trend. India is becoming one of the biggest and fastest-growing emerging markets, especially in sectors such as electronic systems, electrical machinery, and automobiles. Global enterprises are investing their ER&D resources to design and manufacture products specifically for the Indian market. So Make in India combined with Designed in India and Sell in India is an attractive value proposition which enterprises can’t ignore.
The Bottom Line: It’s all upside for engineering services market in India thanks to Make in India!
In our Engineering Services Blueprint Report, we saw the trend toward many engineering services providers offering value engineering services to global enterprises to design cost-effective versions of their products, especially for emerging markets such as India. Now, with enterprises setting up their own centers for designing these products, we see an increased focus on this area, which will benefit both engineering services providers and global ER&D centers.
No matter how we look at it, the engineering services market is set to grow thanks to Make in India.
HfS subscribers can click here to download the full POV, which details the ER&D center trends.
While Accenture Digital is understandably focused on digital customer experience and marketing as revenue generators, the peak of mobile app development and regular consumer phone update cycles has passed for now. Accenture and other scale players are making massive incursions into terrain dominated in the past by big advertising holding companies. There is likely to be a next generation of digital devices soon, but there are questions as to whether Accenture and competitors are top heavy with “last mile” customer experience/marketing in a world where digital enterprise evolution is increasingly important.
Chetan: Yeah, Phil, a brilliant question. I think Paul would love to chime in on this one as well. The example that he gave is very apt—vendors wanting to know about the status of the invoices, vendors wanting to know if their checks have been paid and vendors who are doing business in over 50 countries wanting to be able to understand how their payment processing is doing and when they can expect the payment or what is the hold up for the payment and what are the prerequisites for the payment. It’s not just the typical cognitive or automation or, as you said right at the outset, the RPA: “Hey, I can do a password reset for you. I can do an account unlock for you.” These are real digital labor solutions where people can get qualified, not just the 40% to 60% opex improvements we discussed earlier, but also, very importantly, an enhanced customer experience—with the mean time to resolution improving.
Paul: I think it will probably be similar to be honest, Phil. We really follow the market in kind of what’s a good fit for customers. So we’ve had an agnostic strategy, as you said, in the ERP marketplace. That said, you know there’s companies in oil and gas they have a certain preference to do things in a certain way, companies in public sector have certain preferences to do things in a certain way. So what we try to do is be responsive to the market, to understand our customers kind of down at a more granular level—not looking at just one kind of global market of something like ERP or cognitive solutions. Then we look for the best solution for different problem spaces and be agnostic with a point of view so that if a client comes to us with a certain type of a problem we’ll say hey, we know the best solution for that. In your case it’s Amelia. You know if it’s a different type of a problem, different type of a use case, different industry a different problem it might be a different solution. So agnostic with the point of view, I think will continue to be right. We’ll learn from our customers and learn what works and what best delivers the outcomes in these environments. That will be our general strategy.
