May 2018 - Everest Group

May 31

Real IoT Value Requires a System of Technologies | Sherpas in Blue Shirts

Our latest enterprise survey revealed that more than 40 percent of large enterprises have already implemented IoT and another 25 percent have piloted IoT use cases and will likely make meaningful investments in the technology in near future. All these enterprises have invariably invested in building an ecosystem of partners, made technological and business process changes, and trained their talent to sustain the investment.

However, 75 percent of these enterprises are realizing benefits limited to cost reduction, better visibility at the operational level, and access to more data for better decision making. This, unfortunately, is a massive underestimation and under-utilization of the potential of connected ecosystems.

IoT Innovators

On the other hand, the other 25 percent of the enterprises, we call them “Innovators,” are realizing IoT-driven outcomes with substantially greater business impact, such as identifying alternate revenue sources, offering new products and services, and increasing customer intimacy. These enterprises have undertaken a holistic approach to technology adoption, and have designed connected systems with in-built cognitive capabilities and next generation technologies such as machine learning, augmented reality, virtual reality, natural language processing, and blockchain.

The convergence of these technologies with IoT has created a multiplier effect by building further strength and adding new capabilities in the connected ecosystem, thereby, enabling these enterprises to re-visualize their businesses.

Achieving transformational impact with IoT

IoT benefits

Leveraging next generation capabilities with IoT

A noteworthy 45% of these Innovators are exploring these next generation capabilities to derive higher value from their IoT investments. Some model transformational use cases by leading industries have paved the way for others to make higher bets in IoT. For example:

Blockchain, in combination with IoT, is being used extensively by the logistics industry to achieve a low power secure network for transaction recording and timestamping. The insurance industry is set to be disrupted once the supply chain network reaches its desired level of transparency with accountability with this application.

Augmented reality, in combination with IoT, is recognized as the crucial technology to attain the “factories of the future” objective. Remotely accessing a visual overlay of the connected asset enables real time issue identification, remote service provisioning, and an exponential increase in operational efficiency.

Machine learning has enormous applications, many of them yet to be identified by enterprises. Enabling continuous process improvement, customization of services or messages, and helping experts take the most suitable action are the known use cases being implemented today. ML with IoT can be the defining moment for personalized service provisioning for every enterprise in the services industry.

Natural language processing can help enterprises deliver on customers’ expectations for connected devices to be interactive and intuitive. The world would be a different place if this technology were used in parallel with connected devices for meaningful value delivery.

With macro-economic changes and massive financial pressure to ensure sustainability, the travel & transportation and manufacturing sectors have been at the forefront of conceiving new revenue streams and launching products in as-a-service mode with IoT adoption. Changing customer preferences and competition from players across industries have pushed retail enterprises to adopt IoT with AR/VR technology to enable delivery of interactive and personalized experiences to customers. Infusing data security with blockchain adoption has enabled healthcare & insurance and energy & utilities enterprises to bring about continuous process improvement and ensure business sustainability.

To sustainably implement these systems of technologies, leading IoT adopters are building technology adoption roadmaps with an enterprise-wide view aligned to a unified vision. Their clarity in their business objective/s has helped them extract more from their IoT investments. These innovators have also laid considerable focus on transforming their people in tandem with the technology transformation, and have placed organizational change management at the core of IoT adoption.

For more insights on the possibilities and value potential offered by IoT, read our latest report “IoT Services PEAK Matrix™ Assessment and Market Trends 2017: Have You Taken the Plunge in IoT Yet?”

May 31

Improved Business Sentiment Drives 11% Jump in US Outsourcing Deals in Q1, According to Everest Group Findings | Press Release

By Staff Writer | Press Releases

Cloud, automation and analytics lead in digital-focused outsourcing deals, which dominate outsourcing activity with a 65 percent share.

North America witnessed a significant increase in outsourcing transaction activity in Q1 2018 as compared to 4Q 2017, with 115 deals recorded as compared to 103, respectively, according to Everest Group. This increase can be attributed to an improved business sentiment in the U.S. as well as an increase in outsourcing demand across healthcare and manufacturing verticals.

For the first time, the number of new centers supporting digital skills surpassed new centers supporting only traditional services. Among global services transactions overall, digital services continued to dominate the outsourcing activity in Q1, similar to the previous quarter. The share of digital-focused transactions increased from 61 percent in Q4 2017 to 65 percent in Q1 2018 vis-à-vis the pure traditional services, which showed a decline in adoption over the past quarter.

Among all outsourcing transactions, 50 percent included cloud, 21 percent included automation, 14 percent included analytics, 13 percent included mobility, 7 percent included cyber-security and 30 percent included some other form of digital service, such as social media, Internet of Things (IoT) or blockchain.

Other key global services market trends noted for the quarter include the following:

Global in-house center (GIC) expansions are at a seven-year high, as mature GICs added next-generation technologies (especially big data analytics, cloud and IoT capabilities) in their service delivery.
The industry saw a secular increase in the number of new centers supporting R&D/engineering services, driven by the need for innovation and customer-centricity.
Service providers are actively looking for partnerships with startups (as opposed to acquisitions) to leverage them for niche capabilities.

These findings and more are discussed in Everest Group’s recently released report, released Market Vista™: Q2 2018. The report discusses outsourcing transaction trends, GIC-related developments, global offshoring dynamics, location risks and opportunities, and key service provider developments.

“Outsourcing activity remained steady in Q1 as compared to the previous quarter, with a growth in information technology outsourcing as well as increases in several verticals, including retail and consumer product goods, technology and communication, and healthcare,” said H. Karthik, partner at Everest Group. “New GIC setups, which reached an all-time high in Q4 2017, declined slightly, but GIC expansions are at a seven-year high. All-in-all, Q1 was a good quarter for service providers—both global as well as offshore-heritage service providers—with most reporting sequential growth in revenue and an increase in operating margins.”

Complimentary Webinar Offers Q1 Review Plus Bonus Topic—“War for Talent: Impact on Talent Acquisition Strategies”

Everest Group hosted a webinar on May 22—Webinar Deck: Q2 2018 Market Vista™ Update and Implications on Talent Acquisition with Intensifying War on Talent—in which the findings of the “Market Vista: Q2 2018” report were reviewed. During this 45-minute webinar, Everest Group experts discussed the most impactful events in the global services industry thus far in 2018 and looked ahead to how these events likely will shape the rest of the year.

The webinar also addressed talent acquisition strategies, including the factors impacting talent models and the resulting implications and imperatives for employers. The impact of automation on transactional jobs and the redesign of the employee value proposition to reach a predominantly millennial workforce are two of the key topics covered in the discussion.

*** Watch the Webinar Replay *** (The webinar slide deck also is available for complimentary download with registration.)

May 30

Two Key Enablers for ROI in Robotic Process Automation | Sherpas in Blue Shirts

By Peter Bendor-Samuel | Blog

I spoke with Peter Quinn, who orchestrated the highly successful Robotic Process Automation (RPA) implementation at a large wealth management firm, about some of his insights and lessons learned. In that discussion, two of his methodologies stood out to me. That’s because they’re great examples of key enablers for achieving superior business outcomes through RPA. His methodologies for funding the implementation and for change management led to capturing greater ROI from RPA.

In our Pinnacle Model™ research at Everest Group, we investigated more than 200 leading companies undertaking RPA adoption. While the cost savings from RPA were similar across all the enterprises we studied, we found that Pinnacle Enterprises™ – those that achieved superior business outcomes – achieved a significantly higher (4X) return on investment.

Enterprises Leverage Global In-House Centers (GICs) to Create Centers of Excellence to Drive Innovation, Digital Transformation | Press Release

By Staff Writer | Press Releases

Growing GIC Center Segment Now Accounts for One-Fourth of $185 Billion Global Services Market—Everest Group

Enterprises are increasingly leveraging global in-house centers (GICs) as strategic partners; GICs are playing a significant role in enterprises’ digital transformation journeys as they move from a “arbitrage-first model” toward a “digital-first model.” According to Everest Group, GICs are perfectly suited to serve as Centers of Excellence, driving innovation for their parent companies. One key way that GICs are accomplishing this is by collaborating with the external ecosystem, such as nimble tech startups.

Three models typically adopted by GICs to engage with external innovation ecosystems comprise:

Startup evaluation: The GIC identifies and shortlists startups for the parent organization. No infrastructure or financial support is offered to the startups, but the GIC typically helps the startups in building domain knowledge.
Project-based engagement: The GIC evaluates startups, which are then hired as technology vendors on commercial terms to implement turnkey solutions. This model offers higher predictability in deriving tangible benefits from the engagement.
Incubation and acceleration: The GIC acts as an incubator and runs the accelerator program: Typically, the GIC engages with three to five startups for a dedicated period, offering infrastructure, technology, financial support and mentorship. This model allows experimenting with future technologies and the bringing in of disruptive innovations.

“GICs typically have an enterprise-wide perspective, deep domain and process experience, and access to niche skills at a favorable cost, and so, for these reasons, GICs are often in a unique position to foster innovation and serve as Centers of Excellence for their parent companies,” said Sakshi Garg, practice director at Everest Group. “Leading GICs are adopting several best practices for fostering innovation, such as dedicated investments for innovation, special recognition for thought leadership, and driving customer centricity to grow beyond the service delivery mindset.”

The global sourcing market continued to evolve and grow rapidly in 2017 to cross US$185 billion, and the global in-house center (GIC) model remains an integral component of this evolution, accounting for one-fourth of the market, according to Everest Group.

The GIC market saw a 10 percent increase in 2017 over 2016 in the number of new GIC setups by companies from technology and communications, manufacturing, healthcare, and energy and utility verticals. The market has grown consistently with more than 2,800 centers set up across leading offshore and nearshore locations, compared to approximately 2,100 about five years ago.

The research supporting these findings is summarized in “Global In-house Center (GIC) Landscape Annual Report 2018 – GICs Emerging as Innovation CoEs for Global Enterprises,” a report recently published by Everest Group. This report provides a deep dive into the GIC landscape and a year-on-year analysis of GIC trends. The research brings out key insights into the GIC market across locations, verticals and functions, and concludes with an assessment of the role played by GICs to drive innovation for the enterprises.

***Download a complimentary abstract of the report here.***

May 29

Redwood Software Revamps Pricing Model for Robotic Process Automation | In the News

By Staff Writer | In The News

Robotic process automation (RPA) provider Redwood Software recently began offering a new licensing model that allows customers to only pay for the specific services they use at their organization.

Branded as a “robotic service charge,” the company is marketing this as distinct from other licensing models that “leave customers with the responsibility of having to guess how many bots they need at the beginning of a project and what that return can give them,” said Redwood Software in a statement.

The Houten, Netherlands-based company, which recently unveiled its enhanced Redwood Robotics solution and was also named among the top 13 RPA vendors by the Everest Group, added that this will allow clients to only pay for service when it is “equivalent to a unit of work that can done by a person,” including tasks such as sending an email or downloading a report.

Best of the Best: Everest Group Picks Top 5 Leading Vendors in the RPA Market | In the News

By Staff Writer | In The News

In a report identifying the top 18 top robotic process automation (RPA) vendors, Everest Group has named Automation Anywhere, Blue Prism, NICE, Thoughtonomy, and UiPath as the five market leaders.

The a Dallas-based consulting and research group’s highly respected “Product PEAK Matrix Assessment” for the industry noted that the standouts outperformed their peers in several key areas.

Time for a Locations Strategy Rethink | In the News

By Staff Writer | In The News

Multiple forces are driving unprecedented disruption in service delivery ecosystems, most notably market pressure, cost and margin tensions, and environment constraints. In the face of this upheaval, enterprises are increasingly leveraging their locations strategies to drive transformation and create differentiation. Everest Group digs deep into the research to offer five predictions on what all this means for locations strategy over the next few years.

Everest Group Unveils Fourth Annual Business Process Services Top 50 | Press Release

By Staff Writer | Press Releases

ADP remains No. 1, Teleperformance leaps two spots to No. 2 and Accenture retains No. 3 ranking among world’s largest third-party BPS providers

Everest Group, a consulting and research firm focused on strategic IT, business services, and sourcing, today released the fourth annual edition of “The Everest Group BPS Top 50™,” a ranking of the world’s largest third-party providers of business process services (BPS). The list was launched in 2015 as the first of its kind for the global industry, which today is valued at more than US$175 billion.

This year’s ranking is based on both revenues (75 percent of the composite score used for ranking) and year-on-year growth, whereas the previous years’ rankings were based solely on revenues. Growth has two sub-parameters: absolute growth (measured as change in BPS revenue in US$ million, and accounting for 12.5 percent of the composite score) and percentage growth (measured as percentage change in BPS revenue, and accounting for the final 12.5 percent of the composite score).

Everest Group estimates there are more than 200 service providers with more than US$50 million in revenues offering BPS services around the globe. What started as a cost optimization concept focusing on “non-core” and “back-office” business processes today permeates the entire business process value chain, addressing a wide variety of business objectives.

“The industry has attracted many service providers from a broad range of backgrounds and heritages,” said Rajesh Ranjan, partner at Everest Group. “As digital forces create a new paradigm of value creation and service delivery, we are seeing a widening gap among providers in their capabilities and market success. By incorporating growth as an additional factor, we are making sure that the ranking reflects this. We also expect both the list and the rankings within to see greater volatility in coming years as this industry experiences accelerated change.”

This list helps enterprises to identify the scaled-up providers and their functional coverage. It helps BPS service providers to compare themselves against others in the industry.

***Download a complimentary copy of the 2018 Everest Group BPS Top 50 list and analysis.***

Topping the 2018 list of BPS providers are these 10 leaders:

ADP
Teleperformance
Accenture
Conduent
Paychex
Concentrix
DXC Technology
Xerox
Arvato Bertelsmann
Genpact

Other highlights:

The cumulative revenue of the providers in the BPS Top 50 list grew by 7 percent year-on-year.
The highest growth rate for the past two years was logged by Alorica at 95 to 105 percent and was achieved largely through acquisitions in 2015 and 2016. Cognizant logged the second fastest growth rate at 22 to 25 percent and achieved this largely through organic growth.
North America-based service providers continue to dominate the list; however, the region’s overall share has declined versus 2016 (54 percent share versus 56 percent), while the Rest of Europe’s share has grown (up from 14 percent in 2016 to 22 percent in 2017).

Top 3 North American Providers:

ADP
Conduent
Xerox

Top 3 “Rest of Europe” Providers (excludes UK providers):

Accenture
Teleperformance
Arvato Bertelsmann

Top 3 APAC Providers:

TCS
Transcosmos
Relia

For the first time in three years, the number of specialist service providers increased their share of market as compared to broad-based service providers, driven by increases in the Contact Center Outsourcing (CCO) submarket. Broad-based providers now represent 56 percent of the market whereas specialists represent 44 percent. The top 5 broad-based providers are:
- Conduent
- Accenture
- DXC Technology
- Arvato Bertelsmann
- Capita
Among the specialist providers, the following ranked highest in their respective specialty area:

Human Resource Outsourcing:

ADP
Paychex
Fidelity

Contact Center Outsourcing:

Teleperformance
Convergys
Alorica

Document Management:

Xerox
Williams Lea Tag
Iron Mountain

***Video: Watch “The Everest Group BPS Top 50 2018.***

May 25

Musings from AWS Summit: Make Infrastructure Irrelevant Again | Sherpas in Blue Shirts

By Yugal Joshi | Blog

I attended the Amazon Web Services (AWS) Summit in Mumbai earlier this month, and two things about the event itself really stood out. First, regardless of the fact that the Summit was held in India, it was organized on a global scale with global flavor, which ensured that attendees heard about AWS’ global aspirations and strategy. Second, although the company’s leadership rightly spoke about their great services portfolio and how and why it is the best, they never ridiculed or demeaned any competitor. This is a mark of a great company that’s in it for the very long haul.

Not surprisingly, the key message I could sense was that enterprises should not own their infrastructure, but instead leave it to cloud vendors – read, AWS – that will make sure it runs smoothly without the need for any second thoughts. In short, make infrastructure irrelevant.

Here are my three key take-aways from the content at the Summit.

I Learned: Partners Used to Sort of Matter…Now, They Really Matter

AWS has always positioned itself as a partner-friendly cloud vendor. At the Summit, its focus on succeeding with partners was very evident through the services it demonstrated and the messages it delivered. However, AWS’ current mindset is about building great services that enterprises would want to consume through pull demand, rather than through extensive leverage of channel partners. Thus, while partners today may not be as important as AWS may want them to think, they will be increasingly vital as AWS further expands to enterprise-class customers. This means it will be in AWS’ best interest to nurture its relationships with its partners.

I Re-learned: On-premise is Here to Stay…Cloud or No Cloud

AWS is a smart company that realizes there will always be a case for certain enterprise workloads to remain on-premise. The Summit sponsor was VMware, the king of on-premise. With its “VMware on AWS” offering becoming available globally, VMWare and AWS need each other. Though AWS largely stayed away from embracing “hybrid is the model of future,” it did reluctantly admit that all enterprise data centers aren’t going anywhere. However, AWS plans to make enterprises’ journey to the cloud simple and seamless. Its strong partnership with VMware is a testimony to that.

I Un-learned: New Services Have Miles to Go…Which They Will

From DynamoDB to serverless to AI/ML services, AWS shined a spotlight on everything new. While most of its new services are witnessing massive double – even up to 5X – growth, they aren’t yet meaningfully contributing to AWS’ US$18 billion top line. Most of its business continues to be the traditional EC2, S3, and similar services. Talking to AWS clients and partners made me believe that most of them have grand plans for adopting these new services. And almost all of them appreciate the hand holding AWS has provided to make their journey less painful.

Though AWS never admitted it, it was apparent that it realizes the vast potential in this market. Out of its 125+ services, very few are consumed at a massive scale. This implies there is a lot of headroom for AWS, despite that it’s already clocking a run rate of US$20 billion. This is very similar to its online business which, despite its size, is only ~4 percent of U.S. retail. Given such potential, it is no surprise that Amazon is investing heavily in AWS. Indeed, most of Amazon’s operating profits in recent quarters have been from AWS.

The cloud market is in flux, and with the first and second generations of DR/back/email migrations now over, the next battlefield is the business process and AI/ML workloads. AWS has strong plans to lead this market as well. It will be interesting to observe how it shapes the cloud world. Can it influence it the way it did online retail? AWS certainly has the vision, capability, and aspirations. Only time will tell.