Monthly Archives

June 2018

Digital transformation: How to beat the funding challenges | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

Executives continue to struggle with how to fund digital transformation projects. Let’s examine three funding pitfalls and approaches that avoid them

In working with CIOs and other senior executives leading digital transformation efforts, the most frequent comment we at Everest Group hear is, “I don’t know how to get this funded.”

IT modernization and digital transformation are multiyear journeys that require enormous change to reinvent the business and create new value for customers, employees, and shareholders. Typical transformation initiatives aim to help an organization stay within the budget and complete projects on time. Although these goals help when you’re trying to achieve a return on investment (ROI) by performing a process better, these are not relevant goals when you’re aiming to do something different.

Digital Transformation Readiness

Everest Group’s study on digital transformation readiness reveals dramatic differences in value created by the most successful organizations, which we call Pinnacle Enterprises. (These 21 companies in our study achieved superior transformation results, by investing in resources  including adequate funding for digital transformation.) Consider these outcomes, for instance:

  • In 86 percent of the Pinnacle Enterprises, the IT organization enabled the enterprise to serve a new market or customer segment (versus 43 percent of the other enterprises we studied).
  • In 85 percent of the Pinnacle Enterprises, the IT organization supported significant growth of current products/services (versus 33 percent of the others).
  • The Pinnacle Enterprises invested in innovation labs (81 versus 36 percent), digital studios for new product development (71 percent versus 27 percent) and innovation funds to support start-up activities (76 percent versus 35 percent).

Read more in my blog at The Enterprisers Project

Use the right pricing model for third-party services | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

Which pricing mechanism should your company choose when buying third-party services? What is the optimal contract length? And what is the best way to manage switching costs? These questions are even more important today than in the past because the services industry is switching to new pricing mechanisms for digital services. Understandably, these changes create consternation and confusion for buyers of services.  What comprises service prices? In this post, I’ll explain how pricing works and, hopefully, clear up confusion and help your company make optimal decision.

Read more in my blog on CIO

Redesigning Your Outsourcing Portfolio for a Digital World | Virtual Roundtable

By | Webinars

Thursday, June 28, 2018 | 11:00 a.m.  – 12:30 p.m. ET

Request to attend the Virtual Roundtable

As digital services cause yet another inflection in the outsourcing market, the service provider landscape is undergoing significant changes. Against this backdrop, enterprises need to recalibrate and reimagine their outsourcing portfolios to capture transformational value and manage risks.

To help organizations future-proof their outsourcing service provider portfolios, this session will provide an alternative view to segment the landscape. Participants will exchange perspectives on how they are shaping their outsourcing supply strategies to align with new demand strategies.

Who should attend

Strategic sourcing and vendor management executives who currently manage their enterprise’s portfolio of IT Services providers.

What you will learn

The session will help participants understand contemporary practices for structuring outsourcing portfolios and share best practices for future-proofing outsourcing relationships.

Presenters

Jimit Arora, Partner, Everest Group
Eric Simonson, Research Managing Partner, Everest Group

Request to attend the Virtual Roundtable

Symphony Robotic Operations Centre Launch — June 27-28 | Event

By | Events

Research VP and RPA expert Sarah Burnett will be a key speaker at Symphony’s Robotic Operations Centre Launch in Krakow, Poland held on June 27-28.

Sarah’s presentation, Are “Colleagues” Electric?, will distill volumes of unique and detailed, industry-leading research on the rise of robots in enterprises. She will discuss the state of the automation market and its phenomenal growth, technology trends, how leading enterprises are taking advantage of the technology to get ahead of competition, and what the future holds for the industry.

Join Everest Group at this event for a round of discussions and presentations on the state of the automation market.

When

June 27-28, 2018

Where

Krakow, Poland

Speaker

Sarah Burnett, Research VP, Everest Group

Learn more about the event

Digital Insurer of the Future — June 27 | Webinar

By | Webinars

Wednesday, June 27, 2018

Register to attend

Research Practice Director Manu Aggarwal and research analyst Saurabh Verma will be guest speakers during Capgemini’s June 27 webinar: Digital Insurer of the Future.

The webinar will start with a 20-minute introduction by Everest Group on industry trends, the need for digitization of insurance operations, and the role third parties can play in fast-tracking the Digital journey for insurance companies

About the webinar

This webinar will help orgs understand “how to” digitize their front and back-office operations to deliver increased efficiency, faster turnaround time, and enhanced member experience.

Although traditional third-party administrator (TPA) services have been around for quite some time, insurance companies are under increasing pressure to deliver breakthrough innovation in customer experience and a significant reduction in administrative spend through leveraging Digital across their policy administration.

Capgemini has been listening to the market and together with leading analyst firm Everest Group brings you an exciting opportunity to learn how to digitize your insurance operations across your entire core policy administration.

Speakers

Manu Aggarwal, Research Practice Director, Everest Group
Saurabh Verma, Research Senior Analyst, Everest Group

Register to attend

Keeping the Love Alive: Five Steps to a Long-Lasting Buyer-Supplier Relationship | In the News

By | In The News

The buyer-supplier relationship can be very much like a human relationship: the heady days of new love, the bliss of engagement…followed by the crush of everyday life with conflicting jobs, screaming kids, and constant haggling over who does the dishes. But there are steps you can take to keep the love alive, or in the case of the buyer-supplier relationship at least build a mutually beneficial long-term affiliation. Everest Group offers 5 steps to an effective supplier management strategy.

Read more in Intelligent Sourcing

Are Colleagues Electric? | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

“Max, please send our new terms and conditions’ letter to all our Prime current account holders,” said Louise, a customer contact manager in a retail bank.

“I will ask Alf to do it. Is there anything else I can do for you today Louise?” Asked Max, the personal virtual helper on Louise’s desktop computer.

“Yes, please tell Alf to update Elsa.”

You may have guessed that Alf and Elsa are robots too – one processes letters for mailshots, the other makes records for regulatory compliance.

Is this scenario hype or reality?

Are colleagues going to be electric?  Everest Group data indicates that by 2021 there will be as many Robotic Desktop Automation (RDA), attended robots running on users’ desktops, assisting agents, and employees, as there are people currently delivering contact center outsourcing services globally; that means about three million attended robots by 2021.

There will also be a huge rise in the number of virtual workers or unattended Robotic Process Automation (RPA) robots, running on servers in data centers and delivering end-to-end process automation without the need for employees to activate them. Exhibits 1 and 2 highlight the projected rise of both attended and unattended robots through to 2021. These estimates are for robots purchased on license from independent third-party RPA software vendors. They exclude robots provided by vendors at no charge for proof of concepts, and training, etc.

Exhibit 1 – Attended robots

 

Exhibit 1 - Attended robots blog

Exhibit 2 – Unattended robots

Exhibit 2 – Unattended robots blog

Methodology

Our calculations are based on data from multiple Everest Group databases including but not limited to:

  • Revenue, average license costs, and growth of 18 RPA vendors projected out to the larger market
  • Numbers of people currently working in contact center outsourcing services, in Global in-house Centers (GICs), also known as shared services centers, in both front- and back-office functions globally

Everest Group analysis indicates that many colleagues will indeed be electric by 2021, a shift that will impact enterprises, not only in operations but also in terms of HR policies, recruitment, succession planning, process knowledge and other skills development, process and program document management, IT investment, management and maintenance, and business and IT continuity.

Sarah Burnett will be discussing this topic and other RPA trends during her talk at Symphony Venture’s Robotic Operations Centre Launch in Krakow, Poland on June 27.

The Characteristics of Europe’s Digital Banking Leaders | Sherpas in Blue Shirts

By | Sherpas in Blue Shirts

Disruptive forces – open banking regulations, growing FinTech ecosystems, and increasing demand for a seamless customer experience – are forcing banks to make significant investments in digital technologies.

The UK and European banking market is characterized by heightened activity on account of multiple converging factors

To effectively compete, banks must move away from being perceived as physical structures that offer financial services/products to an ambient fabric that connects people and businesses. They must transition from a transactional, product-centric approach to an intelligence-oriented customer-centric model centered around customers’ journeys. Artificial Intelligence (AI), API-enabled open banking architecture, and cloud are fast-becoming the foundations of banks’ IT architecture.

In order to evaluate and measure how organizations are faring in their leverage of digital technologies, Everest Group several years ago developed the Digital Effectiveness Assessment model.

Everest Group Digital Effectiveness Assessment model

On the Capability maturity axis, we measure organizations’ presence on all digital platforms, the quality of their mobile apps and online banking capabilities, their activity on various social media channels, their self-service innovations, and their open banking capabilities. On the Business outcomes axis, we measure their digital prowess using parameters including customers’ digital channel adoption, the customer experience (based on mobile app ratings, website optimization, and engagement), brand perception, and financial performance.

Earlier this year, we used the model to determine the European digital banking leaders. And from a field of the top 20 banks in Europe, we identified seven: Barclays, BBVA, BNP Paribas, HSBC, KBC Group, Lloyds, and Société Générale. These financial institutions have achieved:

  1. Superior financial performance: 17 percent higher growth in deposits, and 3 percent advantage in efficiency ratio in 2017
  2. Superior customer experience: Higher penetration of digital and social channels (e.g., up to 75 percent of BNP Paribas’ retail customers are using mobile app and online banking channels), mobile-based advisory capabilities, and personalized products and services. These leaders’ mobile application ratings are 7 percent higher than the other banks we evaluated.
  3. Stronger customer engagement: A superior user interface (UI), feature-packed mobile apps (e.g., BBVA offers 80 percent of the mobile features evaluated) and online banking platforms, self-service technologies across branch/ATM network (e.g., Barclays offers card-less cash withdrawal, bill payments, and check deposits through ATMs), and meaningful social media content.
  4. Higher business growth: Wider adoption of digital banking channels, superior efficiency ratios, adoption of an open banking ecosystem, and innovative product offerings, particularly through the wider set of APIs they offer.

European Banking Leaders

These leaders have re-designed their customer journey to adapt to external disruptions by:

  1. Calibrating current customer satisfaction: Formulating a unique customer engagement model based on insights gained on each customer’s digital readiness and adoption.
  2. Benchmarking current digital maturity with best-in-class enterprises: Evaluating their digital channel maturity and customer satisfaction scores against best-in-class peers, and then tailoring their digital strategy to bridge the gap in their organization’s vision of the customer experience.
  3. Redesigning the customer experience: Incorporating human-centric design principles to address customers’ stated and unstated requirements and desires.
  4. Optimizing their channel strategy: Developing a comprehensive channel strategy to drive customer adoption and acquisition, and changing the business model to deliver digital experiences.
  5. Innovative product offerings: Offering personal finance management features through digital channels that are intuitive and simple for users. Other services include payments through multiple messaging and social media channels, and intelligent voice-based payment solutions.

To learn more about the characteristics of Europe’s digital banking leaders, and what sets them apart from the others, see our report: Digital Effectiveness in Retail Banking | Focus on Banks in the UK and Europe: Identifying Digital Banking Leaders in the Open Banking Era.

Legacy IT Systems Weigh Down ‘Digital First’ Efforts of More Than Half of Enterprises—Everest Group | Press Release

By | Press Releases

80% of enterprises’ application modernization efforts are limited to ‘lift-and-shift’ rather than meaningful changes to the underlying architecture; enterprises need to invest in intelligent sentient architecture if they are serious about digital transformation

More than 54 percent of enterprises aspiring to digitally transform blame their slow-moving efforts on the constraints of legacy systems. A key, but too often disregarded, component of those legacy systems is the architecture of enterprise software, according to Everest Group, which reports that 80 percent of enterprise efforts to modernize their applications is limited to a “lift-and-shift” approach as opposed to the adoption of modern software architecture practices which would considerably accelerate digital journeys.

“With a traditional software architecture approach, the enterprise focus is on ‘how’—basing their software architecture on the technologies they want to adopt,” said Yugal Joshi, vice president at Everest Group. “Instead, enterprises should focus on the ‘what’—user expectations and business outcomes—as they design and modernize their software architectures. Unfortunately, enterprises aren’t hiring the right talent to accomplish this.”

Joshi explains that a wide chasm exists between the next-generation architecture aspirations of enterprises and the skills of their enterprise architects. Unfortunately enterprises are not moving fast enough to fill this gap. For example even for hiring next-generation architects, 5 percent of enterprise architects are expected to have expertise in containers, 10 percent in microservices, 15 percent in DevOps, and only 1 percent in serverless technologies.

These next-generation technologies and development approaches are key foundational elements for creating sentient architectures, software architectures that are agile and responsive to business needs. Sentient architecture systems are driven by the 3Ds of design centricity, dynamic adaptability and discrete structures:

  • Design centricity: Systems need to be intuitive and should be designed collaboratively rather than being the responsibility of the enterprise architect alone.
  • Dynamic adaptability: The architecture should be adaptable so that it can be easily refactored or re-architected, without requiring a massive time-consuming investment to deliver value to customers.
  • Discrete structures: Software should be composed of discrete components that are granular in nature and can be integrated with other components when required. This will require architects to break down application components into software-enabled services that are independent, distributed and loosely coupled.

These results and other findings are explored in a recently published Everest Group report: “Application Services—Annual Report 2018: The Future of Architecture is Intelligent.” This research provides fact-based analysis of buyer trends by geography, industry and revenue size. It analyzes major trends impacting the application services market and provides an outlook for the year ahead.

 Key Findings About the Applications Services Market

  • Stand-alone application deals continued their upward trend, constituting two out of every three deals signed (67 percent). Bundled deals that combined application services and infrastructure services also witnessed a slight uptick (11 percent from 9 percent), suggesting that enterprises are beginning to find more value in the convergence of these layers than in the silos.
  • The declining deal size trend saw reversal, and the deal sizes for application services grew by over 25 percent this year, compared to the previous year. This is indicative of a vendor consolidation exercise where a lesser number of service providers are getting the larger share of client’s spend.
  • Application services deal duration continued to be dominated by deals with durations of less than three years (40 percent); deals with a duration over five years constituted only 16 percent of the deal volume.
  • New contracts took up a slight majority (52 percent) in contract type, suggesting that the trend of anti-incumbency and customer dissatisfaction prevails.
  • Surprisingly, deals with consulting in scope dropped sharply to 43 percent of the deal volume. However, 55 percent of deals included system integration in scope, suggesting that the precipitous drop in consulting deal volume might be an anomaly.

***Download the Complimentary 11-page Abstract*** (Registration required.)

HCL ups the ante to dislodge Wipro from number 3 position | In the News

By | In The News

Anil Chanana let the cat out of the bag at an analyst call earlier this year. The chief financial officer of HCL Technologies said he expects half the growth for the current fiscal to come organically. “If I take 10.5% as being the middle of the range, I am cutting it exactly in half — 5.25% is organic and 5.25% is inorganic.”

Industry experts believe successful enterprises of the future will need to develop symbiotic relationships across the ecosystem to exploit market opportunities and accomplish goals.

But unlike most peers, HCL has used its balance sheet to win new business by buying assets, argues Peter Bender-Samuel, chief executive of consultancy firm Everest. In transactions with both CSC (now DXC) and IBM, HCL acquired the rights to support legacy software assets by offering CSC and IBM with large upfront payments. In exchange, it received a large ongoing contract to maintain the software. In some cases, HCL will provide upgrades, jointly market the software and receive a part of sales.

Read more in The Economic Times