Month: May 2018

Anatomy of Digital Transformation in BFS | Sherpas in Blue Shirts

Everest Group recently conducted a study with 55 banking and financial services firms to evaluate their digital capabilities in areas including strategy, organization and talent, process transformation, technology adoption, and innovation. Here are the primary insights we collected from that study.

Investments in Digital Technologies are Increasing

More than 60 percent of BFS firms have invested in exploring the various use cases in cognitive- and AI-driven technologies. Typical use cases include helpdesk automation using chatbots and other cognitive capabilities for functions such as sales & marketing, data entry, credit assessment, and information gathering.

The AI Transformation Wave is Hitting the Front-Office

BFS companies are increasingly leveraging AI-enabled transformation in areas where there is significant customer interaction. So personal finance virtual agents, voice assistants for account servicing, voice-based payments and account authentication, and intelligent message-based account servicing are gaining traction. Not surprisingly, Millennials and a new breed of mass affluent (per The Financial Brand, this segment generates up to 70 percent of banks’ and credit unions’ total retail profits, even though they only make up less than 30 percent of the customer base) are extensively using these solutions for advisory and servicing assistance.

BFS Firms are Increasingly Emphasizing Their “Change” Agenda

Our study indicates that BFS firms will increase their digital investments by 9 percent in 2018. This is particularly driven by the need to change in response to the evolving regulatory regime, and customer demand for responsive and agile applications. For example, in the U.S., deregulation could pave the way to a shift in the utility space. In the U.K., the Second Payment Services Directive (PSD 2) has heralded an open banking revolution that forces banks to release their data in a secure and standardized format.

The Talent Gap is a Key Challenge for Digital Adoption

BFS digital skill gaps

Although BFS firms are accelerating their adoption of AI-driven applications, they’re facing significant scaling challenges as digital talent is scarce and in high demand. The biggest talent shortage areas include cybersecurity experts to handle stringent regulatory pushes – such as GDPR in the EU – and those with deep knowledge of big data, without which enterprises can’t realize their full potential in enhancing the technical and functional capabilities of their internal teams on leading big data platforms.

Our Recommendations

To stay ahead of the competition and remain relevant in the market, BFS firms must invest in enhancing the five following capabilities in alignment with their digital journey:

  • Strategy – Outline a clear vision, metrics, and realistic goals for focused and scalable digital adoption
  • Organization and talent – Acquire digital talent through reskilling and retraining existing employees, as well as recruiting talent from outside
  • Technology adoption – Adopt niche digital technologies at speed and scale with higher focus on AI, analytics, security, and risk
  • Innovation – Continually source new ideas for innovation, and embed human-centric design in the organization’s DNA
  • Process reimagination – Transform and automate internal business processes to remove inefficiencies.

Related: Learn more about our digital transformation analyses

The above recommendations translate to a customer-focused triple mandate of Experience, Efficiency, and Ecosystems (E3) for banks. The  evolution from a product-centric to a customer-centric mindset requires an open banking ecosystem to orchestrate the lifestyle services that individuals or enterprises demand from their financial institutions at speed and scale

This metamorphosis will be challenging not only because of the complicated regulatory regimes and resilient legacy structures, but also the rise of non-traditional competitors.

Please feel free to reach out to [email protected] and [email protected] to diagnose your firm’s digital adoption maturity.

Activist investor Elliott exits CTS | In the News

Activist investor Elliott Management has sold its entire stake in tech major Cognizant. According to the latest holdings information filed by the fund with the US SEC (Securities and Exchange Commission) on May 15, Cognizant does not figure in the list. Elliott Management held 1.12 million shares at the end of Q4 (October-December).

Peter Bendor Samuel, CEO, Everest Research group, says an Elliott exit would be welcomed by Cognizant. “Elliott’s demands to raise (profit) margins have created an unhelpful constraint on Cognizant at a time where margin flexibility is necessary to invest in the new digital business models. However, the damage is already done and Cognizant has already committed to the street that it will raise margins and so must follow through on the promise,” he said.

Read more in The Times of India

Bored of Directors: No Technologists on Board = Impending Doom | Sherpas in Blue Shirts

The US Congress’ recent grilling of Facebook CEO Mark Zuckerberg led to a flurry of articles on how the “oldies” asking questions had no idea how Facebook worked or what meaningful questions to ask. Most people stated that the congressmen had zero background in technology, and were asking generic feel good questions that didn’t require incisive answers or meaningful preparation.

Juxtapose this to any large enterprise in the world. Market interactions suggest that less than 5 percent have a technologist on their board of directors. Their high echelon spots are filled with management, finance, or, at best, operational executives. So, how can the board members advise or question their companies around their technology advancement? Can they conceive of or initiate discussions around the enterprise becoming a platform business? (Would they even understand what that means?) How can they critique or support such technology-heavy discussions?

The obvious answer is, they can’t.

Although board members aren’t required to actively build strategy for the company – that is left for the CEO and the team – they are certainly required to intervene when they see the company is losing direction or possibly isn’t doing enough. Because they have no clue about what is happening in the technology world in the digital age, they can’t ask questions around digital strategy. In turn, they can’t be fully effective in their roles. And that can spell doom for the company.

Who’s to Blame?

While some of it falls to the board members, the technologists in the company – such as CIOs and CTOs – must share the blame for not being invited to the board, or at least regular boardroom discussions. They haven’t been able to succinctly explain digital disruption in a business sense that gets the board’s attention. Instead, they primarily focus on cost-centricity or supporting the business in newer initiatives. And they explain minute details around technologies and vendor management, which don’t give the board members the grounding they need (and honestly, aren’t interested in.)

What Should Technologists Do?

In order to provide boards with what they really need to know, technologists need to up their game and focus on the business impact of technologies, not just the business case.

First and foremost, they need to change their cost center mindset…something that’s been said, attempted, and failed in the past. However, in today’s environment, with digital technologies transforming, enhancing, and destroying businesses, IT has a real chance to become a force to reckon with. It needs to enhance its self-perception and treat itself as a business driver, not a support center. Though running the business activities may continue to take most of IT team members’ time, IT leaders must proactively suggest and address the change-and-transform activities.

Technologists will also be well-served by investing time in learning “story telling.” Board members don’t have the time, patience, or need to understand a long-winded argument. They are interested in learning the story behind the argument, and how it helps the business. Technologists who learn to use stories will be much more adept at driving their point home. This will ensure that the board has a relook at technologists’ role, and sooner than later invite them to join the board.

What Should Enterprises Do?

A board of directors’ role continues to be steering a company in the right direction. However, the days of developing a long-term strategy and intervening at exception are truly over. In the digital age, enterprises need iterative and evolutionary strategies that are dynamic and flexible enough to both respond to changing market dynamics and create newer dynamics.

For this to happen, company management needs to move beyond getting members of the “old boy’s school club” on their board. It must challenge the culture of celebrating technology ignorance. And it must vigorously look for gaps in current members’ understanding of technology disruption, and whether or not they are capable of deliberating technology disruption and how the company can harness it for competitive advantage.

Board members should be selected – indeed retained – only if they truly understand the business issues in today’s digital age. If they don’t, the enterprise they represent is doomed.

Genpact co may get Hexaware, Mphasis bids | In the News

Hexaware Technologies, Mphasis and L&T Infotech are among the potential suitors evaluating a bid to acquire IT services and consulting business Headstrong, put on the block by the NYSE-listed Genpact, people directly aware of the matter said.

US-based Everest Group’s CEO Peter Bendor-Samuel said the Headstrong acquisition has been problematic from the start as it did not have enough scale to succeed inside Genpact. It struggled with being a small IT fish in a large BPO pond. “It also had cultural differences and was focused in capital markets, which is not an area of strength for Genpact.”

Tomorrow’s Talent is Today’s Challenge! | Sherpas in Blue Shirts

Advances in new digital technologies, the emergence of new competitors, new sourcing models, and changing customer expectations are dramatically changing the type of IT skills enterprises across industry verticals require. And, with new service delivery paradigms such as automation, agile, and Artificial Intelligence (AI) becoming mainstream, the underlying service delivery models to support the new talent demand profile are also undergoing significant changes. We expect technology themes such as data management and analytics, omnichannel customer experience, and cloud adoption to dominate near-term demand, and cybersecurity, Service Oriented Architecture (SOA)-based application design, and agile delivery methodologies to become mainstream.

So, what does this mean from a talent perspective? Below are four takeaways from Everest Group’s recent research, much of which is detailed in a newly-released viewpoint titled Closing the Gap – The Future of IT Skills in the United States.

1. New Role Creation

To support their business initiatives in the changing technological landscape, enterprises will have to create new roles. Examples of these include:

  • Chief Digital Officers (CDOs) and digital strategists to drive the adoption of design methodologies
  • Chief Innovation Officers (CIOs) to source and evaluate disruptive ideas from innovation in technology and business models
  • Anthropologists and psychologists to help foster human-centered design thinking
  • Data architects and data scientists to build a holistic data strategy and generate insights to offer tailored experiences
  • Agile coaches and scrum masters to deliver using the agile methodology at scale
  • Enterprise security engineers to design and evaluate security measures across all phases of SDLC
  • Automation architects and Machine Learning (ML) experts to develop automated scripts.

2. New Architecture

The technology revolution is leading to an integrated “thin slice” architecture that is enabled to deliver end-to-end experience transformation. This full-stack structure is a sharp deviation from the legacy silo-based architecture that has fundamentally different attributes for delivery of technology services in enterprises. From a talent perspective, traditional siloed factory models are evolving into smaller teams/pods with capabilities cutting across areas such as application development, infrastructure support, and security. Demand for full-stack engineers will increase significantly as the demand for this future integrated stack becomes more prominent across enterprises. Enterprises will need to invest in upskilling and cross-skilling their existing talent at scale and speed to be able to pivot to this new model.

 

IT Skills blog - architecture

3. Demand Shift for Tech Skills

Emerging technology themes will increase demand for some tech skills, and reduce demand for others. For instance, we expect demand for emerging skills such as Go and R programming to increase considerably, as enterprises explore the adoption of big data and AI solutions. On the other hand, we expect demand for skills specific to middleware tools, such as TIBCO, to remain low-medium, driven by increased adoption of offshoring and automation. Enterprises must have a good understanding of hard-to-hire skills in order to effectively chart out their talent roadmap. Key decisions such as local hiring versus offshoring will also revolve around expected demand and supply for skills.

4. Non-Technology Industry Verticals Demand Increasing

Demand for tech talent from non-technology industry verticals is increasing. From banks to retail firms to healthcare providers, technology-led solutions such as robust mobile applications and chatbots are being leveraged to enhance the customer experience. With enterprises focusing on building in-house capabilities, competition for tech talent has increased significantly in the past two to three years. Everest Group’s recent analysis indicates a higher demand from non-technology industry verticals for emerging skills such as configuration management tools (e.g., Ansible, Chef), JavaScript libraries (ReactJS, AngularJS), datacenter solutions (e.g., skills in handling VMWare, AWS, Azure), and automation tools, as compared to demand for basic skills like programming languages such as C and SQL.

IT Skills blog - skill demand

To learn more about the emerging technology themes, their impact on talent requirements, the skills we expect to gain importance in the future, and their supply outlook, please read our viewpoint on skills of the future in the U.S.  And feel free to share your opinions and stories on how you are managing tech-talent directly with us at [email protected] or [email protected].

Blockchain based professional network SpringRole raises $1.3 Mn | In the News

Blockchain based professional network SpringRole has raised $1.3 Mn in funding from AlphaBlock Investments, DNA (Brock Pierce and Scott Walker’s blockchain investment and consulting firm), Isaac Lee’s BlockWater and Wavemaker Genesis.

As per the Everest Group, the total Indian IT-BPO industry is valued at approximately $154 Bn annually and is expected to grow by up to 9% by 2019.

Read more in people matters

Technology Advancements Force Reimagination of Capital Markets Industry— Everest Group | Press Release

Cloud, blockchain, AI, automation among technologies driving digital disruption of capital markets buy-side, sell-side and intermediaries.

Global capital markets firms are facing unprecedented challenges that collectively are forcing a digital technology-driven reimagination of the capital markets industry, according to Everest Group.

Key trends in the capital markets industry include:

  • Evolving customer demands. Customers expect more transparency, ease of access to data and services, and better multi-channel experiences.
  • The rise of non-traditional competitors. Non-traditional players, such as financial technology (FinTech) firms, are targeting the profitable segments of the capital markets business.
  • Regulatory and security complexities. With end-to-end trading activities becoming digitized, cybersecurity is at the top of the agenda for capital markets firms to ensure data security and integrity.
  • Technology disruption. Disruption is especially being driven by the scalable and affordable “ABCDE” technologies: Artificial intelligence, Blockchain, Cloud, (Big) Data Analytics, and Ecosystem Partnerships.

According to Everest Group, these challenges have forced capital markets enterprises to revisit their business models, launch innovative products, invest in emerging technology, and redefine the way they interact with customers and other ecosystem players, including service providers.

“A common impetus for digital disruption across the capital markets value chain—impacting buy-side, sell-side and intermediaries alike—is the shift to a customer-centric focus,” said Ronak Doshi, practice director at Everest Group. “Digital technologies ranging from machine learning to blockchain and from cloud to deep learning are being used to deliver an enhanced customer experience. This can take the form of data-driven insights that enable personalized offerings, the provision of seamless services across channels, and even ‘humanizing’ the design process so that product and service offerings are more empathetic to the unique needs of individual customers.”

Everest Group has released a set of research reports which address the unique challenges, priorities and trends in the digital adoption journey of each segment of the capital markets industry—buy-side, sell-side and market intermediaries. Each report also details the implications these findings have for enterprise buyers and IT service providers.

  • Capital Markets IT Annual Report Part 1 – Platformification Wave Disrupting Buy-side focuses on buy-side firms such as private equity, hedge funds, and asset management firms. These firms are serving a new breed of investors who find digital services essential. Buy-side firms are being challenged in the marketplace by alternative lending and automated trading platforms and face increased reporting and market surveillance requirements due to regulations such as EU Benchmarks Regulation and Market Abuse Regulation.

As a result, buy-side firms are making digital technology investments to target customers, meet compliance standards, and generate patterns from historical data to optimize the system. Artificial intelligence (AI) and automation of core functions is a key focus of investment, as it will enable firms to free up resources to work on core business activities. Buy-side firms are also investing in digital technology to provide the seamless digital experience that their customers demand.

***Download a complimentary abstract of Part 1.***

Partnerships within the ecosystem—with FinTechs, for example—are critical for the sell-side segment, because they are key to enabling new distribution channels, competitive product offerings and value-added non-traditional services.

Complexities in regulatory reporting are forcing sell-side firms to make digital investments in data management initiatives. Emerging technologies will require investments as well; these advancements are disrupting the sell-side of the value chain with new trading models, better cost structures and analytics-based advisory models, and keeping pace will be key to market survival.

***Download a complimentary abstract of Part 2.***

  • Capital Markets IT Annual Report Part 3 – Building Digital Market Infrastructures focuses on market intermediaries such as stock exchanges, custodians and clearing houses. To address changing investment behaviors and the demand for data visualization and insights platforms, market intermediaries are adopting next-generation digital technologies to facilitate real-time systems that process a very high volume of data with minimal delay.

Intermediaries also are looking to leverage analytics and automation to reduce the costs of regulatory reporting. Blockchain and AI likely will play a role in changing the way intermediaries operate, which may prove essential as the proliferation of blockchain-based startups diminish the role of traditional intermediaries as a trusted party.

***Download a complimentary abstract of Part 3.***

Simplifying skilling in Global in-house Centers (GICs) | Sherpas in Blue Shirts

With technological developments and digital disruption driving changes across most facets of global enterprises, it comes as no surprise that talent strategy has evolved from an HR topic to a board room agenda item. Because of their evolving role in how they can best support their parent companies, talent strategy is a top concern for global in-house centers (GIC) as well.

Through our extensive research in the GIC space, we’ve identified several trends among GICs that have experimented with upskilling and reskilling their team members to prepare and enable them to address today’s known and tomorrow’s as yet unknown challenges.

Trend 1: Investments in Skilling Mid-level Employees have been Underwhelming

Skilling Needs in GIC

Most GICs have dedicated skilling programs for senior management (Layer 3) and programmatic hiring and training programs for entry-level talent (Layer 1), including partnerships with universities/agencies. But, interestingly, there’s a big gap in GICs’ skilling practices for mid-level/Layer 2 employees.

Because Layer 2 employees form the backbone of a GIC by providing strong domain and process expertise, and typically have deep organizational knowledge, GICs need to escalate the skilling initiatives targeted to them. The right skilling practices for these individuals will be critical to GIC’s successful evolution and ability to sustainably deliver services in the future.

Trend 2: GICs are Experimenting – Starting Small across Multiple Areas, then Deciding Where to put Their Money

Because they’re lacking clarity on areas to prioritize, GICs are piloting upskilling and reskilling initiatives across multiple functions. These are typically small-scale pilots of less than 50 team members for less than three months. After evaluating the success of the pilots, GICs plan to scale-up the initiatives across their broader employee segments and organizations.

These pilots will help GICs decide where to invest. But they must also consider their peers’ best practices for upskilling/reskilling in the same or similar functions. This will help guide them in how to best avoid unproductive investments.

Trend 3: It’s Largely an In-House Game

GICs are primarily using in-house teams to develop and run their reskilling and upskilling initiatives. They believe they can reduce risk with internal teams that have a strong context and understanding of the business. This approach also allows them to experiment more, given lack of clarity on exact requirements and end results.

However, they may benefit by making selective use of external specialist providers in areas where they lack internal capabilities, such as use of gamification and simulation for training, role mapping and employee suitability assessment exercises, and change management training.

Trend 4: It’s Just a Part-Time, On-the-Job Affair

In most areas, GICs prefer part-time upskill/reskill training for their employees. Full-time training is limited to certain next gen skills, like digital, or across functions, e.g., of contact center employees in the use of analytics. When used, full-time training often occurs over just one to two weeks.

There’s no clear cut, overarching answer on whether the   part-time or the full-time model is a better choice. GICs need to consider factors such as complexity of the new skills, employee time off their current jobs, and the rate of previous training successes to choose the appropriate model in each given situation.

We recently surveyed senior leaders from 80+ GICs across India, the Philippines, and Poland to assess the changing nature of skills/competencies needed for the future, and the roles GICs can play in addressing the changing skill requirements. Contact us here to see the results, and to exchange perspectives on evolving skills needs and approaches to future proof your talent strategy.

And keep your eyes peeled for our next blog on this topic, where we’ll talk about best practices and how some GICs have upskilled and reskilled their team members.

 

GICs are Evolving from “Delivery Centers” to “Capability Centers” | Sherpas in Blue Shirts

Historically, companies have leveraged the GIC model to deliver business process (operations) and IT services. However, as the model is maturing and incremental demand for these services is declining, enterprises are increasingly looking to their GICs to build more strategic Research & Development (R&D) and digital capabilities, drive innovation, and focus more on value-added services. In other words, they want their GICs to be “capability centers,” not just “delivery centers.”

There’s clear evidence that this is happening. In 2017, there was a significant increase in set-up of such capability centers focused on R&D and digital skills, especially in areas such as design, innovation, automation, Artificial Intelligence (AI), Machine Learning (ML), and cybersecurity. Indeed, our recently released GIC Annual Report 2018 shows that the share of centers supporting R&D/engineering services – including digital services – increased by almost 150 percent during 2017, as compared to 2016. And these centers accounted for more than 50 percent of total GICs setup in 2017.

Breakdown of new GIC setups by services delivered

These capabilities are expected to be the key differentiators and success drivers for global enterprises going forward. In 2017, ~46 percent of all new centers were focused on developing or expanding digital capabilities for the enterprise. There are multiple examples where offshore/nearshore GICs have been given a global mandate to lead organizational initiatives in new and emerging areas such as automation and blockchain.

Related: Simplifying skilling in Global in-house Centers (GICs)

So, how exactly are GICs becoming the global capability centers? What are the key enablers? Another of our recent research studies shows that GICs need to take a FORCEful approach:

FORCEful approach to becoming the global capability centers

  • Foster innovation: GIC leadership needs to invest in developing a customer-centric culture, and test small-scale Proof-Of-Concepts (POCs) to demonstrate end-client value and build credibility
  • Orchestrate transformation: GICs should leverage their well-established foundation by identifying their core strengths and upshifting the value they deliver through improved operational excellence with productivity enhancements, optimized pyramids, and better managed external spend. Simultaneous focus on leveraging these new capabilities to drive both growth and efficiencies will be critical to deliver true value to the enterprise
  • Reskill and upskill workforce: GICs must radically change their reskilling/upskilling initiatives to ensure talent readiness for next-generation skills. They also need to adopt a bespoke approach for specific requirements, and undertake pilots in areas with the highest skills gaps to assess the effectiveness and relevance of the capability centers model
  • Collaborate with ecosystem: GICs should proactively leverage the external ecosystem – specialist providers, startups, educational institutions, etc. – to develop holistic solutions, increase agility, and reduce go-to-market time
  • Expand existing capabilities: GICs have a unique insider’s view that enables them to provide strategic insights to orchestrate enterprise-wide digital/technological transformation, facilitate integration between IT and operations, and break functional siloes to achieve truly breakthrough results

Related: How we support shared services centers (or GICs)

To learn more about the research behind our FORCEful approach, please click here. And if you’ve already established a capability center, or are in the process of doing so, write to us at [email protected] or [email protected]. We’d love to hear your thoughts and experiences!

Strengthen Your Leadership Skills In Implementing Robotic Process Automation | Sherpas in Blue Shirts

After five years of buzz, there is now a lot of momentum in companies adopting Robotic Process Automation (RPA) technology. At Everest Group, our Pinnacle Model™ research assessed the impact of more than 200 leading companies on digital journeys implementing RPA. Our assessment identified companies achieving superior business outcomes (Pinnacle Enterprises™), including 4X the ROI as other enterprises. We found these enterprises invested in key enablers for speed to impact in digital transformation and took a more holistic, participatory approach to implementation rather than a top-down approach. My conversation with Peter Quinn, who led RPA implementation at a large wealth management firm, reveals several characteristics about the successful approach enabling RPA success and higher ROI.

Read more in my blog on Forbes

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