Experts in the global services terrain
As part of our efforts to profile the rapidly evolving service delivery automation (SDA) landscape, I am speaking with the leaders of many of the technology players who are helping stimulate innovation in this space. This second of a series of blogs on SDA technologies, is based on observations and learnings from a recent briefing with Hans Christian (Chris) Boos, CEO of Arago.
Arago and its Proposition
The company was founded in 1995 but its intelligent automation software for enterprise IT, in its current form, became generally available only 2-3 years ago. Arago has since experienced rapid growth, more than trebling revenue since 2011.
Arago’s flagship product is AutoPilot. This uses an inference engine with, what essentially sounds like, a neural network to speed up processing, although the term was not used by Boos during the briefing. Instead, he refers to human brain like activity to learn and apply learning (knowledge items) to new or changing environments to infer how to process requirements automatically. The machine gets more useful the more knowledge it gains but it also has to manage the knowledge, for example, deal with rules that contradict each other. It does this in a mathematical way and uses analytics. According to Boos, it can apply this approach to different areas such as database management, incident management and also to more architectural processes and business logic.
Arago figures show that AutoPilot processed nearly 2 million tickets (as produced by infrastructure management tools such as BMC) for clients in 2013. Circa 87% of these were fully automated. Processes automated at the middleware layer, AutoPilot’s sweet spot, had the highest level of automation at 98%.
Clients are typically large organizations or IT service providers. These include two major global IT service providers.
The software is available as a service, as well as on premise but interestingly the majority of clients want it on premise.
Two licensing models are available from Arago:
- Outcome-based pricing: Based on the number of tickets that are automated
- The second model is the traditional software licensing model.
AutoPilot comes with built connectivity to infrastructure management tools such as BMC and IBM Tivoli and with APIs for integration with other packages.
Arago’s proposition comes with an estimated cost saving of between 30% and 50%.
The Inference Way
If AutoPilot can successfully tap into its acquired knowledge to handle non-standard environments or changing conditions, then it could minimize the need for predefined scripts, to automate parts of IT that are more challenging to automate. I believe this can complement other automation tools that are highly scripted and which are used in other parts of IT infrastructure. The potential benefits in large and highly heterogeneous IT environments, could soon accumulate.
This is advanced technology and could also increase complexity, potentially leading to tickets itself, at least initially while the knowledge-base is being developed.
In terms of Arago’s target market, the company is selling to a converted crowd – IT service providers and IT departments of large organizations that have automated parts of their IT infrastructure already. Its challenge is its size which is not big enough for the demand that it is seeing. Arago is enhancing its partnership network. It is also expanding geographically. At the moment Arago operates out of Germany with all its 92 staff currently based there. It is looking to open an office in the United States soon but it has no physical presence in other countries such as India.
Other measures include creating a community where clients can share automations/knowledge items for free or buy or sell them.
These plans will start to pay off but for now demand is likely to remain choked by lack of scale, I believe, particularly, in initial consultancy and client training services.
AutoPilot is still a relatively new product and I expect some functionality enhancements to be on the cards. More work on the UI is already underway.
Growth opportunities include selling to smaller companies. Arago has released a community edition that can give smaller organizations a fully functioning AutoPilot that is only limited in the size of the IT that it can automate. This is a clever bit of marketing that prepares the ground for attracting large companies of the future.
Arago’s core technology is application agnostic. The company chose to apply it to IT first but the core product can also learn to handle business logic, potentially leaving Arago with opportunities to expand into business process automation in the future.
On 15 July, 2014, IBM and Apple announced a sweeping enterprise mobility-focused partnership to create business apps and sell iPhones and iPads to Big Blue’s corporate customers, thereby bringing IBM’s big data and analytics capabilities to the iOS ecosystem. The venture includes more than 100 industry-specific enterprise solutions, including native apps developed for the iPhone and iPad, targeted at the retail, healthcare, banking, travel, telecommunications, and insurance verticals. IBM will leverage its 3,000 mobile experts and industry/domain consultants, to provide cloud services and onsite support for enterprises. The two companies will collaborate on IBM’s MobileFirst for iOS solutions, combining their distinctive strengths – IBM’s big data and analytics capabilities and Apple’s consumer experience and developer platform.
The Rationales Behind the Partnership
The intention of the deal for Apple is to enable its products to become go-to-offers for large enterprises. It also principally underlines the company’s immediate need to expand its presence in the enterprise world, as consumer sales peak and competitive intensity in its core market heightens. Meanwhile, IBM hopes Apple’s mojo can help revitalize its fortunes after nine consecutive quarters of year-on-year revenue decline, as it places its bets on mobility in the workplace. It will also help IBM solve its big data and analytics growth issues (i.e., providing Watson with much needed impetus through enhanced mobile users’ data), forming a pivotal part of a new growth story. (To this point…think back three decades to Apple’s iconic television commercial titled “1984,” when it attacked IBM as an evil Big Brother figure. Talk about a 180-degree turnaround!) iPhones and iPads are already owned by employees in large enterprises but are hard to manage and govern. IBM can leverage its enterprise-wide system management expertise to make a compelling value proposition, complementing its Fiberlink acquisition (a provider of cloud-based enterprise mobile management solutions). Additionally, it will help IBM cement its reputation as a leader in the “mobile first” movement in enterprise solutions.
Implications for Rivals
Microsoft will feel most uneasy about this alliance, as while its products are ubiquitous in corporate PCs, it has been a laggard in serving the mobile workforce. This is a critical whitespace its new chief, Satya Nadella, is determined to fix. Google, Samsung, and the Android bandwagon will also feel threatened, given their recent push in the enterprise market. To allay fears about Android’s security for enterprise use, Samsung has built a system called Knox into its devices. Last month at its developer conference, Google announced that it would embed software elements of Knox in the next version of Android. They will also have to look at alliances with other enterprise-focused vendors to shore up their business case. Also, if IBM becomes the de facto champion for iOS, it will have potential ramifications for other service providers such as Dell, HP, and CompuCom.
Apple has not targeted enterprises with any zeal in the past. Steve Jobs was infamous for his contempt for selling to enterprises, even referring to CIOs as chief information “orifices.” While the Tim Cook era has seen Apple making small but significant progress in courting corporate stakeholders, IBM’s significant experience in the space makes Apple/IBM a very unlikely pairing. Apple and IBM have drastically different people cultures. Any effective partnership will need to account for these differences. They also have very different go-to-market and channel strategies, which will result in friction over the direction the alliance takes. Their sales motions tend to be at odds, with IBM solutioning for a client, while Apple caters to essentially product categories. IBM has defocused severely from the end-user computing space. Does this alliance signal a revival in this regard? The companies’ divergent investment attitudes will make joint investments problematic. To complicate matters further, both have stark but strongly held philosophies about design, customer support, and sales, making collaboration painful.
The Road Ahead
Partnerships and alliances such as this are notoriously difficult to manage. Both organizations will find it challenging to bring two entirely different culture sets to work cohesively as one. The alliance will need sustained resources, time, and senior leadership investments, along with a steadfast commitment to change management. Given the complicated dynamics sweeping the enterprise market, IBM and Apple have certainly stolen a march over rivals. We will need to keep an eye on the investments both are making into the alliance, the steps they are taking to mitigate the challenges, and the success stories that emerge as a result.
One thing is certain. The enterprise IT market is in for some interesting times. For further insight into the enterprise mobility space, check out our recently published viewpoint.
Earlier this month EXL acquired Blue Slate Solutions and positioned itself for growth through transformation services. But the move also reflects a broader industry move.
Blue Slate is a consulting firm that drives operational transformation. The acquisition looks to be a move to buttress and increase EXL’s ability to add value to clients through driving large-scale transformational projects. It also improves EXL’s industry expertise in critical areas such as healthcare.
And it will better position EXL to compete. The Blue Slate acquisition matches Genpact’s investments to add similar capabilities and also allows EXL to compete more effectively with Accenture and IBM on large-scale transformational opportunities.
So it’s a nice acquisition. But it also has broader significance. As we think holistically about this, EXL is joining a broader industry move of players positioning themselves to transcend or add value beyond operational excellence.
If you said Asia Pac, great … but do you know what APAC is particularly good at? And do you know about available alternatives beyond APAC?
We all know location is half the battle (possibly the entire battle). But location selection is difficult – it’s not just about cost arbitrage, talent scalability, and sustainability, but also linguistic and cultural affinity.
The most mature location may not be the best fit for your company or your industry, and you definitely can’t toss a dart and hope to find the right location.
Here’s the battle plan – a map of GIC “hot spots.” Need multi-lingual support? Check out Central & Eastern Europe; Poland alone delivers services in more than 34 foreign languages. Need support in the Technology and Telecom industry? You might want to take a look at MEA (Middle East & Africa). While you’re there, check out Latin America, India, and the rest of Asia, too.
Click on the map to expand the image
Looking for more information on GICs? Check out these three resources: