As we work with service providers developing new offers, we see a very common issue. A provider develops an innovative offering for one of its customers. Often that customer will have led the provider into it and then they evolve it over time. An executive shows up from the provider company and says, “Wow, that’s really powerful and an incredible story. Let’s package that and sell it to the rest of the market.” Almost like a basketball slam-dunk maneuver, they believe the new offering will be a crowd-pleaser, a “sure thing.” That’s a mistake.
We see providers spending a substantial amount of money, time and effort into building offerings around these one-off experiences. Here’s the problem: Just because an offering delights one client doesn’t mean it will delight the rest of the market. It’s not a slam dunk. Typically these one-off experiences are with large clients with unique requirements. The larger and more sophisticated the client, the less likely the offering can be transported to other clients.
The industry has had poor success in scaling offers built around just one client; they seldom scale quickly or profitably. It’s great to get an idea from a client. But the provider needs to then do industry-wide market research to understand what really resonates. Where Everest Group has conducted this research for our clients, it always surprises both us and the clients how different an offer is when built for the industry compared to one built for a specific client.
To recap: Providers shouldn’t build an offering around just one client’s experience and shouldn’t risk cutting out the step of doing industry-wide research before building an industry-wide offering.
Technology vendors and enterprises continuously experiment with new ways of software delivery to ensure the software is bug free, meets the timeline and cost objectives, and can be updated going forward. For this to happen, multiple teams within the software development ecosystem need to collaborate and talk the same language. Enter DevOps.
While the Agile methodology was a meaningful initiative to address the time-to-market aspect of software, it didn’t serve the entire purpose, and release management and operations continued at a sluggish pace. Developers were developing code, but it was rarely delivered into production at the same pace despite “continuous integration” being around for ages. DevOps tries to address this disconnect ensuring tasks such as provisioning, configuration, and security are automated and simple. It attempts to bring different moving parts and teams in an application lifecycle onto the same page, working toward the same target, using the same terminology, and – possibly the most important – working with the same underlying infrastructure.
Opponents think DevOps is a bad idea and much more applicable in startups than enterprises. Not surprisingly, proponents believe this to be a loser’s argument from large organizations and one more excuse not to evolve their archaic systems.
From a software developers’ perspective, DevOps is met with a mixed bag of reactions. Very few developers truly understand it (they are busy coding, their work), some believe in its promises, and some are skeptical. The skepticism comes from the perception that DevOps is trying to shift the onus of managing databases, application servers, and systems to the developers. It is trying to make them what is popularly known as “full stack” developers, superhuman developers who are a data base administrator, a system administrator, a security administrator, and other things all in one.
Many software developers believe that DevOps will add to their already burgeoning overhead, rather than helping them write code that can create great software (I discussed some of this in an earlier blog where I made a case for allowing developers to be more crafty, rather than tied to rote coding). While some senior developers believe it will ensure better time-to-market, reduced cost of quality, and collaboration between teams, they are apprehensive about the role they have to play in this entire game. Though developers do not like raising tickets for everything, and prefer quicker access to infrastructure – which is a key driver for the adoption of cloud services – most developers believe DevOps may be taking things too far for their liking. They also believe that the onus to improve the entire application delivery process is being put on their shoulders (and they’re not at all pleased with that and believe that they are being asked to address IT operations’ laggardness.) Moreover, a lot of them just do not want to work “with” IT operations.
Adding to all this is the typical noise around “culture change.” Of course, anything meaningful requires a culture change. However, viewing DevOps only from a culture perspective is like the proverbial can’t see the wood for the trees. It requires as much investment in tools, collaboration platforms, cloud services, release management solutions, and development platforms.
So how can organizations make the developers see the value of DevOps? Cut through the theoretical knowledge and the puritanical message on culture change. Or, call it something other than DevOps. Make the developers see beyond the confines of their code to how it fits into the broader scheme of things. Help them understand the challenges of IT operations, and how those challenges are impacting the software delivery and hurting the business (of course, IT operations also needs to understand the same about developers). Make developers link DevOps adoption back to business benefits and the importance of them adopting such principles. And, finally, have them have some hard metrics and data to track and analyze the adoption. Do not make it a benign exercise in vanity, but rather something more meaningful and tangible.
The industry should keep experimenting with newer ways of application delivery, and throwing the DevOps baby out with the bathwater may not fit into that mix.
Healthcare providers will drive growth, make up for historical lag in IT adoption in effort to trim expenses and enable innovation.
Facing tapering margins, regulatory reforms and evolving customer-centricity, the global healthcare industry will step up its investments in technology in an effort to trim expenses and enable innovation. Consequently, the global healthcare ITO market is expected to grow at 12 percent compound annual growth rate between 2014 and 2020, reaching US$68.3 billion in 2020, according to a new research published by Everest Group.
“The healthcare provider segment is expected to witness the highest percentage growth in ITO activity during 2014-2020, as compared to the life sciences and payer segments,” said Abhishek Singh, practice director at Everest Group. “Through new IT investments, healthcare providers will be making up for their historical lag in technology adoption and gearing up for various mandates such as payer-provider convergence, patient-centric care, evolving reimbursement models, and value-chain digitization.”
These results and other findings are explored in a recently published Everest Group report: “IT Outsourcing (ITO) in the Healthcare Provider Industry – Annual Report 2015: Building a Coherent Value Proposition.”
The full report provides an overview of the IT market for the healthcare provider industry, which includes large health systems, stand-alone hospitals and clinics, pharmacists, physician practices and diagnostic laboratories. Everest Group’s analysis includes trends in the healthcare industry, market trends and activity related to large contract relationships, the service provider landscape, the significance of technology opportunities and the outlook for 2016-2017.
***Download Complimentary 12-page Preview Report Here*** (Click on report title and click “login to view preview.” Registration is required to receive the free download.) This preview summarizes the report methodology, contents and key findings and offers additional resources for further study.
Other key findings:
- The global healthcare ITO market reached $34.5 billion in 2014; this healthy 9 percent year-on-year growth was led by strong growth in the healthcare provider and life sciences segments of the market and was partially offset by a decline in the payer segment.
- Regulatory requirements, payer-provider convergence, customer-centric care and M&As/restructuring will fuel growth in global healthcare ITO market.
- North America continues to remain the principal region for large-sized provider ITO transaction activity.
- Within the healthcare provider ITO segment, over US$9 billion worth of contracts are due for renewal between 2016 and 2020.
- Patient engagement and population health management (PHM) have become the predominant mandates being actualized by healthcare providers through technology.
- Service provider organizations looking at succeeding in this market need to focus on building expertise in key service lines, developing/acquiring talent and skills demanded by providers, and aligning themselves with the evolving vendor engagement models.
Healthcare providers’ short-term technology imperatives, including low-hanging fruit, long-term best, opportunistic bets, and slow-burning opportunities
Something big is stirring throughout the global in-house center (GIC) landscape. Across all industry verticals, GIC tech executives are rolling out a broad array of initiatives that place bold bets on new digital technologies, which they expect will fundamentally change how their business operates.
While the current digital market is unarguably dominated by service providers, the share of GICs is increasing slowly and steadily. GICs are well poised to support the enterprise in its digital transformation journey given that:
- They have an established foundation with a significant talent pool and an insider’s view that is vitally necessary to support digital-related transformation
- They play a strategic role in building internal innovation capabilities for the parent, which is imperative to survive in the dynamic digital space
- They are closely intertwined with the core business functions and can comfortably leverage their unique position to integrate digital delivery capabilities and yield synergies for the parent.
While most GICs have forayed into this digital journey by supporting the parent in its broader digital agenda, some have clearly outshone to display tremendous potential not only to just effectively support, but also to lead the way for digital transformation of the enterprise. There are examples at both ends of the spectrum – some GICs continue to deliver back-end support for digital operations (e.g., social media monitoring, core analytics, and mobility testing), and some enjoy ownership of key end-to-end processes (even Robotics Process Automation!). While some operate with a push-based approach to demand creation for even evolved digitals segments (e.g., analytics,) some relish a pull-based approach for burgeoning digital segments (e.g., RPA,) and meaningfully influence the nature and quantum of digital work being delivered from the GIC.
Analytics is the most evolved segment, with ~40 percent market share. Most of the other digital segments are in the initial to mid stages of evolution. Cloud and mobility represent significant shares, with most of the GICs currently delivering transactional services within these segments, such as application testing within mobility, infrastructure management and orchestration within cloud. Social & interactive and RPA are relatively nascent segments, with only a few GICs showing capabilities to harness them and deliver effective solutions.
The extent of digital adoption across industry verticals, and the maturity of digital segments within these verticals, varies significantly. BFSI is the leading adopter of digital services, with strong capabilities in analytics, mobile, and RPA. The product and technology vertical follows next, with about one-quarter of the market share. GICs in this vertical typically develop sweet spots across the digital stack (e.g., cloud,) with significant scale and depth, thereby achieving a higher level of sophistication in select areas. The third largest adopter is the retail segment, where digital is being leveraged to understand consumer buying behavior and drive a seamless cross-channel customer experience.
While digital presents a path-breaking opportunity for GICs to upshift the value being delivered to the enterprise, it doesn’t come without its set of challenges. Almost all GICs unanimously report that their key challenge to going digital is talent – both finding and retaining it. The highly competitive landscape, with the unprecedented shortage of “ready-to-consume” talent, is creating a situation in which entities are feeling the heat of competition not only from their traditional rivals, but also from emerging disruptive rivals. For example, retail banks are facing stiff competition from mobile payment tech providers such as Google Wallet, PayPal, and others. To overcome this challenge, best-in-class GICs have adopted innovative approaches to talent management such as hiring from creative/media agencies for specialized skills, such as social media.
To revel in this digital chaos, GICs are also driving ecosystem partnership with start-ups to drive their innovation agenda, especially automation, workflow management, and analytics. This allows them to derive complementary benefits such as acceleration of own technology, higher speed of innovation, better understanding of customer needs and new business models, branding as an innovation-driven organization, and improved internal employee motivation.
Quite distinctly, digital presents a lucrative opportunity for GICs to upshift their role from a cost arbitrage-focused provider to a strategic partner driving innovation for the parent.
Rise up and take your place in the digital sun, GICs! Your journey has just begun!
For more insights on the GIC digital landscape, please refer to our recently released report, “GICs Leading the way for Digital Transformation of the Enterprise.” The report provides an overview of the current state of digital adoption in GICs, assesses digital maturity of GICs based on a framework, evaluates functional maturity of the top three industry verticals, and highlights best practices, key implications, and calls-to-action for GICs. The report will help senior GIC stakeholders understand the opportunities and challenges offered by this disruptive wave of digital services.
So often, clients tell their providers, “If you help us save money, we will spend that money on your services in other areas.” But what often happens when the service provider saves the money is that no funding for new initiatives is forthcoming. Instead, they are asked to do more initiatives to achieve more savings, and the savings is spent with other service providers’ initiatives in other areas. Occasionally providers are awarded funding for new initiatives from some of the savings, but over time that money is taken back to the business. So service providers face a dilemma: how to fund new initiatives.
Cutting costs to have more money for new initiatives happens in some companies, but it really only works in a world in which a CIO has a zero-sum game. I think this is a Hobson’s choice – one in which really only one option is offered.
I’m not saying providers shouldn’t reduce the run cost as much as possible. But I’m not sure that there is a direct correlation between how much they reduce run costs over the long run and how much capital is available for new initiatives.
New initiatives get funded by the business, not the CIO’s budget. I blogged before about the reality of today’s Golden Rule in business – they who make the gold make the rules. The provider might get a one-year reprieve on that cost savings but won’t get a permanent allocation of that money.
Here’s what drives funding for new interesting, impactful initiatives more than anything else: If the client can see clear, unambiguous value generation for the business from the initiative, it will get funded. The more the value, the more money is available to fund the initiative. Providers need to build a strong business case with an unambiguous and high confidence that the proposed initiative will drive value.
I don’t want to discourage service providers from cutting costs or finding saved money. But if you want to be brought into the conversations around new initiatives, you must make the case and explain that the initiatives that you’re suggesting will drive clear and quick returns. This is what allows you to capture the development budget much more than your ability or your willingness to squeeze out more savings in the existing issue.
The innovation dollars that help clients generate new value clearly and unambiguously are much more likely to yield a higher return for the service provider than initiatives to cut costs. But the provider still may need to cut costs to keep the client. Reducing the run rate might mean keeping the client, but it doesn’t necessarily mean the provider will get new opportunities to serve the client in other ways. Service providers must be able to link new initiatives to business value to assure a consistent buy of new developments.
Accenture, Cognizant, IBM, TCS and Wipro top the list of IT service providers who consistently rank among top performers in Everest Group’s PEAK Matrix™ reports.
Everest Group—a consulting and research firm focused on strategic IT, business services and sourcing—today announced the winners of the inaugural PEAK Matrix Service Provider of the Year™ awards for IT services. The awards recognize IT service providers who have demonstrated consistent leadership in the PEAK Matrix reports issued by Everest Group in the previous year.
In 2015, Everest Group issued 26 PEAK Matrix reports, evaluating a total of 59 service providers in various segments of the IT services market. Twenty of the 59 providers are recognized in the 2016 PEAK Matrix Service Provider of the Year Awards.
The 2016 PEAK Matrix Service Provider of the Year Awards for IT Services comprise:
- The ITS Top 20 list—recognizing the top 20 providers of IT services (ITS) based on a consolidated scoring of rankings within the 2015 PEAK Matrix reports.
Cognizant, Accenture, IBM, TCS and Wipro won the top five spots (in that order).
- Top Leaders and Star Performers—Awarded to IT service providers who appeared in “Leader” or “Star Performers” positions most prevalently within five industry segments: IT Services (overall), Healthcare and Life Sciences (HLS); Banking, Financial Services and Insurance (BFSI); Cloud and Infrastructure Services (CIS); and Application and Digital Services (ADS).
Accenture, Cognizant, HCL, HPE, IBM, Infosys and Tata Consultancy Services were recognized either as Leaders of the Year, Star Performers of the Year, or both.
Cognizant had a dominant presence in the 2016 honors, claiming the No.1 spot in the ITS Top 20 list as well as being named “Star Performer” in the HLS segment, sharing “Leader of the Year” honors in the HLS with Accenture, and sharing “Leader of the Year” honors in the BFSI segments with Accenture and Tata Consultancy Services. Accenture also made a particularly strong showing, earning the No. 2 spot in the ITS Top 20 list as well as being named in the “Leader of the Year” in overall IT services and ADS categories and sharing “Leader of the Year” honors in the HLS and BFSI categories.
***All winners are listed in the report, “2016 PEAK Matrix Service Provider of the Year Awards” available for complimentary download here.***
“For today’s enterprises, designing and operating an IT infrastructure that supports business objectives is a daunting task. Enterprises must navigate not only the complex landscape of next-generation and legacy technology but also a complex provider portfolio,” said Jimit Arora, vice president at Everest Group. “The PEAK Matrix Service Provider of the Year Awards are here to help enterprise buyers identify the best of the best – the IT service providers with strong, broad-based capabilities and successful service strategies that align well with the evolving enterprise IT demand.”
About the PEAK Matrix™
The Everest Group PEAK Matrix is a proprietary framework for assessing the relative market success and overall capability of service providers based on Performance, Experiences, Ability and Knowledge. Each service provider is comparatively assessed on two dimensions: market success and delivery capabilities. Market success is measured by revenue, number of clients and year-over-year growth. Delivery capability is measured by scale of operations, scope, technology and innovation, delivery footprint and buyer satisfaction. The resulting matrix categorizes service providers as Leaders, Major Contenders, and Aspirants. Companies that demonstrate strong upward movement in successive reports are recognized as Star Performers. Everest Group recently announced a recalibrated methodology, in which innovation, intellectual property and technology take center stage.
Everest Group is proud to release the first edition of its annual PEAK Matrix Service Provider of the Year™ awards for IT Services 2016.
Before you turn a blind eye to another set of service provider awards in a market already flooded with matrices, quadrants, and other such convoluted shapes…these are special recognitions of a small handful of providers that are unique stand-outs.
2015 was a seminal year for our IT services PEAK Matrix™ evaluation program. Under the aegis of four key ITS practices – Banking, Financial Services & Insurance (BFSI), Healthcare & Life Sciences (HLS), Application & Digital Services (ADS), and Cloud & Infrastructure Services (CIS) – we published a whopping 26 PEAK Matrix evaluations, featuring double click views on capabilities and market success across practice sub-segments.
While we appropriately recognized performance in individual segments, what started to unravel was a picture of consistency by a few service providers that was hard for us to ignore. Hence, while there indeed are Leaders and Star Performers for each of the segments we evaluated, the composite picture clearly shows that some deliver consistent leadership and top performance across many different categories.
As today’s enterprises navigate the complex landscape of next-generation and legacy technology, a global business footprint, and a complex vendor portfolio, the PEAK Matrix Service Provider of the Year awards will help them to identify the best of the best – service providers with strong broad-based capabilities and successful service strategies that align well with the evolving enterprise IT demand.
The award categories are:
- ITS Top 20: We arrived at this list using a consolidated score reflecting points received on individual evaluations based on tiered scores for Star Performer, Leader, Major Contender, and Aspirant positions.
- Individual awards categories: These awards are based on the count of Leader or Star Performer positions across the category evaluated
- Leader Of The Year
- IT Services (Overall)
- Star Performer Of The Year
- IT Services (Overall)
- Leader Of The Year
Here’s a PEAK peek at the top five on the ITS Top 20 leader board.
Have you had experience with one or more of these providers? Our readers would love to hear your views about them!