Month: January 2018

Is Your GIC the Secret Weapon for Digital Enablement? | Sherpas in Blue Shirts

You might recall, back in December we identified digital agility as a key 2018 initiative. In that blog, we discussed how you can create business value by making things easy, reliable, and fast for your customers. The question I would ask GIC organizations for 2018: In realizing that goal, are you part of the problem? Or are you part of the solution?

Our research, Digital Maturity in GICs | Pinnacle Model™ Assessment 2018, seeks to answer those questions.

Most GICs started small and expanded over time as they proved their value. Now that most GICs have realized the fundamental benefits of labor savings, quality and process improvement, and – in some cases – business outcome improvement, it’s time for them to look to their next act.

Our central thesis is that a GIC can be a critical driver in building and running new digital competencies. But we want to hear from you about the functions and processes that are getting the most attention and investment. Which digital technologies are you focusing their efforts on? And what capabilities did you deploy to build out these capabilities?

There are plenty of digital surveys that you can participate in, so – why Everest Group’s? Because we take a different approach that results in more meaningful, useful outputs. Our Pinnacle Model™ approach asks questions about what the very best GICs are doing in terms of real impact and then correlate the capabilities required to achieve those results. And we go beyond the online survey, talking with some respondents to understand their journeys – what worked and what didn’t.

With that information in hand, we identify a set of Pinnacle Practices™ that you can consider deploying in your GIC.

Yes, there is a ton of hype around digital; let’s get beyond the headlines and talk outcomes and practices in your GIC.

Take the survey

‘Unprecedented’ Hiring Could Make The Amazon HQ2 Shortlist Much Shorter | In the News

Amazon’s HQ2 bidding process has advanced to a shortlist of 20 locations.

That narrowing field has some questioning how feasible creating a 50,000-person office from scratch will be for smaller contenders not known for their tech base.

“When this first came out, our reaction was: ‘Holy cow. That’s big, and it’s quick. Can they do it?’” Everest Group Managing Partner Eric Simonson said.

Amazon’s aggressive HQ2 building plans, coupled with its desire to hire 50,000 employees, would be a difficult task for any city to fulfill, Simonson said — but particularly those smaller markets like Columbus, Ohio; Raleigh, North Carolina; Nashville, Tennessee; and Indianapolis. An Everest Group report on HQ2 bidders said Amazon is going to struggle with filling seats if it considers regions with populations of less than 4 million people.

Read more in Bisnow

Service Providers Basing Margin Expectations on Flawed Math Assumptions | Sherpas in Blue Shirts

As legacy service providers excelling in the labor arbitrage-factory model look to participate in the digital world of cloud, automation, agile, DevOps and AI technologies, they are basing their prices on flawed mathematics assumptions. They expect that they not only will be able keep the same margin structure they now have but also that those margins will increase. Their thesis is that digital work is more valuable and worth more to clients; therefore, they should make more money for doing the work.

Inconveniently, this assumption is flawed. Margins have very little to do with the value a company creates; they have everything to do with the underlying market structure.

New Digital Work Will not be at a Higher Margin

I think it’s fundamentally unrealistic that the new digital work will be at a higher margin. It may be at a higher price person, but not a higher margin. There are many reasons for this including:

  • The providers’ inability to utilize offshore factory, as digital environments demand close collaboration of business and IT teams that are located onshore close to a client’s business
  • The talent required to deliver these digital services is much more expensive than the talent base in the old factory model
  • The more automation a company introduces, the more the client captures the financial benefit, not the service provider.

New Margins at a Lower Rate

All these and other reasons suggest that the new natural margins for digital services will be at a lower rate than the margins of the offshore factory model that currently dominates the marketplace.

I also want to point out offshore margins are structurally higher for services than we’ve seen in previous generations. So, it shouldn’t be surprising that the new model would be lower because this is an aberrant model to begin with.

So, why should service providers’ clients care about this issue? I believe service providers are likely to exaggerate their DevOps, agile and other digital capabilities yet not make the system changes necessary for delivering these services. They won’t make the changes because they’ll make less money. Delivering digital services requires a fundamentally different business model. If they do not make the necessary structural changes and business model changes, they will under-deliver services in the new digital models.

 

Everest Group IDs 11 North American Retail Banks That Are Delivering Superior Customer Experiences via Digital Technologies | Press Release

These ‘retail banks of the future’ will rely on an ‘ambient fabric’ that connects people and businesses to holistically impact the consumer lifecycle

 Everest Group has studied 30 leading North American retail banks and identified 11 Pinnacle Enterprises™ that are leading the way with new “experience first” business models, delivering business results through the effective use of digital technologies.

In its recently published report—“Digital Effectiveness in Retail Banking | Pinnacle ModelTM Assessment 2018: Journey of North American Banks to Build SUPER Experiences”— Everest Group examines how these banks employ digital technologies to provide superior customer experiences, establish stronger customer engagement and produce higher business growth. The assessment focuses on multi-channel digital technologies that are used in consumer interactions – both online and offline.

Digital Banking Pinnacle Enterprises™ have a major competitive edge across a breadth of digital functionalities offered and adoption of channels. The following Digital Banking Pinnacle Enterprises stand out for making a strategic impact through their digital transformation efforts: Ally Bank, Bank of America, Capital One, Chase, Citi, PNC,Suntrust, Wells Fargo and USAA from the United States, and CIBC and RBC from Canada.

Collectively, the Digital Banking Pinnacle Enterprises outperform their peers, delivering:

  • 22 percent higher adoption of online banking platforms
  • 13 percent higher adoption of mobile banking platforms
  • 20 percent higher mobile banking application rankings
  • 3 percent higher growth in deposits
  • 9 percent lower efficiency ratio

“Over the last three years that we have conducted this assessment, we’ve documented an increasing correlation between banks’ digital capability maturity and business outcomes,” said Jimit Arora, partner at Everest Group. “For example, banks with more mature digital capabilities have superior brand standings; their customers express high degrees of trust and strong perceptions of transparency and accountability. Also, banks with more mature digital capabilities have better efficiency ratios, higher staff productivity and larger deposit growth.”

“Everest Group is establishing indisputable evidence that effective investment in digital technologies and strategies contributes significantly to business success,” adds Michel Janssen, chief research guru at Everest Group. “Our Pinnacle Model assessments show organizations exactly who is succeeding and how. Armed with this clear point of comparison, organizations are better equipped to prioritize where to invest their time and resources and plan their own path to the top.”

Everest Group predicts the retail banking industry soon will witness a sea change as banks move to a co-creation model—joining with allied businesses to combine, package and offer products and services to orchestrate consumers’ full financial lifecycles. Consequently, banks will move away from being perceived as just a physical structure that offers financial services and products to being an “ambient fabric” connecting people and businesses.

Consumer preferences are the impetus for this sea change; banks are compelled to shift to an “experience first” business model to respond to customer demands for a “SUPER” banking experience:

  • Secure: consumers demand transparency in fees, products and personal financials and expect high levels of security without significant friction in the customer experience.
  • Ubiquitous: consumers demand access to banking services anytime, anywhere and from any device. They expect high digital channel availability from their banks.
  • Personal: consumers demand that their banks not only understand their current needs but also detect potential needs and offer relevant, customized solutions
  • Easy: consumers demand a seamless user experience across channels and types of transactions. They expect integrated financial solutions (e.g., payment processing) with their activities.
  • Responsive: consumers expect quick responses to their queries across the channels of their choosing. They expect context-aware responses in real time.

“Traditional banks are being forced to reinvent themselves to compete with FinTechs and other non-traditional providers and to deliver what customers demand,” said Arora. “Digital technologies are at the heart of this transformation. By weaving together digital technologies, experience-first strategies and new alliances across industries, banks ultimately will become the underlying, connective fabric that unites the global ecosystem.”

 About the Pinnacle Model

Everest Group’s proprietary Pinnacle Model™ assessments, which include input from executives from leading Fortune 1000 companies, compare internal capabilities to desired business outcomes, such as disrupting the industry, improving customer experiences, increasing market share, and launching innovative products and services. By highlighting what the best—Pinnacle Enterprises™—are doing, these performance studies help organizations plot a journey from their current position to where they want to go, prioritize investments of time and resources for maximum impact, and accelerate change.

Driving RPA from GICs? Learn from the Best-in-class | Sherpas in Blue Shirts

The shift towards a “digital-first model,” in the wake of technology-led disruption, has given GICs an opportunity to become strategic entities that can drive innovation across the enterprise, instead of an arbitrage-first-oriented low-cost set-up delivering back- / middle- office services at scale. A very positive move for GICs and the enterprises they support.

Robotic Process Automation (RPA), among other digital technologies, is gaining popularity across enterprises and GICs thanks to its many business benefits. And enterprises are increasingly leveraging their GICs to drive RPA usage. This is largely driven by factors such as GICs’ tighter integration with the core business, increased endorsement from the enterprise, shift toward insourcing, higher visibility to enterprise leadership, lower costs, and availability of talent.

So what factors enable best-in-class GICs to drive RPA programs successfully? We’ve identified eight:

How GICs drive RPA

Successful GICs, through dedicated RPA CoEs, have gone beyond exploring RPA technology for in-house consumption. From educating various stakeholders across the enterprise on capabilities and benefits of the technology, to executing RPA solutions across functions and locations, these CoEs are playing a key role in transforming processes across the enterprise. CoEs in best-in-class GICs have gone a notch higher, and are focusing on creating an ecosystem that enables businesses to independently explore RPA opportunities.

While GICs are well positioned to drive RPA across the enterprise, successful implementation requires dedicated focus on factors including governance and business continuity. They must also be on the lookout for advanced technologies, such as AI and cognitive, that can augment existing RPA technology and enhance overall automation business benefits.

To learn more about the best practices employed by best-in-class GIC adopters of RPA, please read our recently published report, “RPA Implementation in GICs – Learnings and Best Practices.” We developed it based on interactions with 100+ global enterprises’ GICs and a range of automation technology vendors.

If you are driving RPA from your GIC, I’d love to hear your story. Feel free to share your opinions and stories on how your GIC is evolving in its RPA journey directly with me at [email protected].

And/or, join in on our research on how enterprises design their GIC journeys to drive their enterprises’ digital agendas. Click here to take the survey; responses will, of course, remain anonymous.

Digital IT contracts now come with tough liability clauses | In the News

The newer IT contracts involving higher levels of automation and New-Age digital components like cloud, analytics, and artificial intelligence, often get service providers better prices, but they also come with more stringent liability clauses.

This is because the work either impacts the front-end operations of clients, and hence the overall business — or they are aligned to delivering specific outcomes. Traditional IT contracts were based on the time-&-material model, under which clients simply paid for the number of hours spent on delivering a project.

Rahul Barwe, a senior analyst with IT research firm Everest Group, says a global consumer goods company’s outsourced robotic process automation (RPA) solution malfunctioned. “It took six months for the base product to be updated and fixed. The company could not recoup the lost opportunity costs from the service provider because such a scenario was not adequately incorporated into the contract terms and conditions,” he says.

Read more in ETCIO.com

Robotic Process Automation to create 2 lakh jobs by 2021: Dines | In the News

India is in prime position to become a Robotic Process Automation (RPA) powerhouse because of its growing talent pool and cost advantage and an estimated 2 lakh jobs can be created by it in the country by 2021. Daniel Dines, CEO and Co-Founder of UiPath, the leading enterprise Robotic Process Automation (RPA) software company said RPA had been gaining traction as a way of automating repetitive, tedious tasks to handle higher-value analysis and decision-making.

Sarah Burnett, Vice President, Global Research Company Everest Group, said that automation was the way to go. ”It will create incredible opportunities in the IT sector. In a recent study by Everest Group, 80 per cent of companies that we surveyed rated RPA to meet expectations and even exceed them. RPA addresses many areas including regulatory compliance, process automation and more. Also it is secure and most importantly, it is scalable.”

Read more in webindia123

 

Small service providers becoming heavyweights and outcompeting system integrators | Sherpas in Blue Shirts

Why would a large retail bank with access to the largest, most sophisticated systems integrators and fintech firms in the world opt, instead, for a relatively small boutique service provider to build one of its most important systems? This “David vs. Goliath” story caught my attention as it illustrates one of the most exciting trends of 2017 in the digital services world. I think the outcome of this story is rather amazing, given that winning in the payment space is among the highest priorities for a retail bank, and this project was highly visible to customers.

The project was to build the back-end payment system supporting digital wallet transactions. The bank initially made several attempts at building the digital payments system internally and released a digital payment system to a couple of retailers, but the system was not powerful enough. Then it tried working with systems integrators (SIs) in several attempts. But a legacy SI approach didn’t deliver the necessary innovation and best thinking. So, Quisitive, a small, boutique firm stepped in to compete for the work.

 

Technology Influence Pendulum Swinging Back to CIOs | Sherpas in Blue Shirts

For the past few years, the pendulum for control over technology decisions moved into the business, and the stakeholders other than the CIO gained increasing flexibility to deploy technology. Now we’re seeing a bit of a pendulum swing back towards the CIO’s influence. It isn’t that we’re going back to the days in which all technology decision making happened in IT. What’s happening now is a move towards a more integrated approach.

Why is this happening?

As digital transformation projects become larger, their implications cut across business units and across functions. These projects are not small pilots. The transformation is an end-to-end experience that requires substantial change from integrating legacy systems through new digital systems.

As these end-to-end journeys become larger and more complicated, the business is less able to drive them. The CIOs’ existing responsibilities naturally drive them to play a larger role. Also, the project management and change management skills within an organization are often vested in IT or closely aligned with IT. So, IT is in the best position in terms of its skills to manage end-to-end journeys.

Digital transformation involves more than collapsing a business process into a set of data

As companies drive deeper and further into the journey of digital transformation, many aspects of the business model must change, as processes and data are interrelated throughout the organization. As digital transformation starts taking hold and these projects begin making substantive business impacts, the CIO or CTO needs to be responsible for integrating existing enterprise apps and digital technologies to make the digital promise effective.

An interesting phenomenon is happening as the business unit leaders start relying more and more on IT. As the business gives more influence back to the CIO, it results in an imperative for CIOs to become more flexible, more business oriented and sensitive to business needs. It’s also causing CIOs to recognize the need to modernize the IT environment so that the business can operate in a more integrated, end-to-end manner.

The bottom line is IT is increasingly in a better position to deal with large digital projects and end-to-end transformation journeys; so, CIOs and CTOs are gaining a little more influence in technology decisions. Note that I said, “a little more influence.” Currently, CIOs and the business are sharing decision making and influence. But at least for the time being, the pendulum seems to be moving slowly back to the CIO. However, I don’t believe it will swing back to the old command-and-control world of IT.

 

TCS wins $6 billion in contracts under a month | In the News

For several years under its previous CEO N Chandrasekaran, TCS achieved growth rates of 15 per cent-16 per cent even when it had hit $10 billion in revenues, way more than the No. 2 player in the Indian IT industry. Then, in the past couple of years, the company slowed down dramatically as customers looked at newer digital technologies that TCS and others were not fully prepared for.  Now, Chandrasekaran’s successor, Rajesh Gopinathan, looks to be bringing the company back to its winning ways.

In less than a month, TCS has announced deal wins of nearly $6 billion, including a $690-million contract with Europe’s M&G Prudential that it announced on Tuesday. It’s a stellar feat that has left many in the Indian IT sector in awe of the company’s deep client connects and robust execution engine.

Peter Bendor-Samuel, CEO of outsourcing consulting firm Everest Group, said TCS is taking on the market with new vigour. “Last year, TCS rolled out a comprehensive strategy to address the markets’ move into a digital-first orientation. This involved increased investments in digital, reorganization of its operations to address the new realities of a digital marketplace, and new messaging for its marketing and sales teams,” he said.

Read more in The Times of India

How can we engage?

Please let us know how we can help you on your journey.

Contact Us

"*" indicates required fields

Please review our Privacy Notice and check the box below to consent to the use of Personal Data that you provide.