Tag: digital

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

Digital Transformation: Five Steps to Better Metrics | Sherpas in Blue Shirts

Everest Group’s recent Enterprise Digital Adoption | Pinnacle Model™ Assessment suggests that the organizations that are having the greatest success in achieving outcomes from their initiatives have a focus on a set of success metrics the extend well beyond cost savings. They include a focus on things that are relatively easy to quantify such as reduction in process cycle times. However, they also include an emphasis of more nebulous goals such as improving customer experience, introducing innovative offering, and engaging in disruptive behavior in the market.

Measuring this latter set of goals is a far departure from the familiar service level agreements (SLAs) and key performance indicators (KPIs) that IT organizations and their internal business customers are accustomed to using to determine success. Not only are SLAs and KPIs insufficient to measure the strategic impact of digital efforts, they also fail to capture the real essence of what business customers desire. While every SLA and KPI can be met, enterprises on digital transformation journeys tend to find those metrics unsatisfactory.

Five steps enterprises need to take to establish a meaningful set of digital performance metrics

1. Ensure a clear set of business objectives have been established – an objective to improve customer experience is not a clear enough metric to guide a focused set of activities and investments in a digital effort.

Within the customer experience realm, an enterprise could focus on increasing the level of consistency of the experience. In this case, the digital effort may be around automating a set of processes to reduce the variability in results and decrease the dependence upon the knowledge and experience of individuals.

If the desired improvement is to create a personalized experience, the enterprise may be more focused on ways to leverage analytics to consolidate the customer’s activity with the enterprise, make recommendations based upon the behaviors of similar customers, and predict the likelihood of purchasing.

In addition to defining the objectives, a business value should be attached to each. What is the anticipated benefit to the business, in terms of dollars and cents, were the objectives to be met.

Related: See our latest research on digital transformation readiness

2. Develop a quantifiable baseline for the business objective – even with a goal as vague as improving an experience, enterprises who want to ensure their activities are leading to results will find a way to quantify them. For example, if you are trying to improve customer experience through consistency, you may want to measure and set improvement targets for the level of variability in the time to serve a customer or whether the customer experience is similar regardless of the channel through which the customer engages.

3. Track the progress of adoption – while getting a technology solution implemented or a new process defined is clearly the first step, enterprises that get results from their efforts also focus on the level of adoption. These enterprises understand that without behavioral changes to use the technology and follow the new procedures the value potential of the digital efforts cannot be realized.

4. Track the achievement of the quantifiable results – once it is clear that there is a high level of adoption of the technology and redefined business processes, enterprises can begin to track the achievement of the quantifiable objectives identified in step two. Until adoption is achieved, tracking these results is futile.

5. Determine whether the desired business impact is being achieved – a critical and oft overlooked step is to ensure the achievement of the quantifiable results is delivering the desired business impact. In the age of digital transformation, the level of certainty  in effectively achieving outcomes is much lower than in times past. Additionally, the pace of change is greater, meaning that an approach that worked last month might begin to lose its effectiveness this month. Enterprises that want to achieve business results are wise to continuously monitor the impact of their efforts on their desired business results and make the necessary adjustments to both technology and business process to sustain the desired business impact.

Even in the digital era, the adage that what gets measured gets done remains solid advice for enterprises interested in not merely engaging in digital transformation activities but in achieving business results.

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.

 

With All The Talk of Transformation, Are RPA Projects Bad? | Sherpas in Blue Shirts

This past week, I had the opportunity to deliver a keynote speech at the Dallas RPA and Cognitive Summit that focused on the difference between digital projects (in this case, RPA projects) and transformations. In a nutshell, here are the key takeaways:

  • Your Why Matters: RPA implementation by itself is not a strategy but an enable of a specific objective(s) the organization is trying to accomplish
  • What you want to accomplish can be far reaching: The outcomes of your RPA effort have the potential to range from IT operations improvements, business efficiency, or improvements in the customer experience. The closer to the customer, the more transformative the effort is likely to be
  • How you choose to execute determines your impact: Since technology is rarely a barrier to success, the alignment of the business stakeholders, the cultural adjustments, and the approach to risk management will be the determining factors in the ability to scale and to capture the intended value

While my talk was purposefully focused on pushing the group’s thinking around transformation, the world in which most of the attendees current live is all about projects. The dichotomy between my focus and their reality led one of the attendees to ask whether projects were a bad thing and what they as mid-level manager could do to encourage transformation.

RPA projects are not bad

RPA projects are by no means bad or inferior to transformation efforts. In fact, most transformation efforts are implemented through a series of projects. However, it is important to know that projects implemented outside of the context of a transformation effort will have limited impact. It is perfectly acceptable to do standalone projects – just do not expect them to deliver results that will be significant enough for customers or the marketplace to notice.

On the other hand, understand that you cannot run a transformation as though it were a project and expect good results. Given the level of complexity and need for executive sponsorship, transformation run as projects usually do not scale well beyond the initial pilot, take excessively long to implement, and rarely achieve business impact. If it is a transformation, run it as such.

Use RPA projects to ready your organization for true transformation

Realistically, if your title is Director of RPA, Business Process Improvement, Operations Excellence, etc., the chances of you being able to initiate a digital transformation in your organization are slim. That is not to say, however, that you cannot have some influence on the organization through you work you do with your RPA projects.

RPA adoption is still relatively new and most business stakeholders are not familiar with the potential impact it can have, comfortable with the different type of risk it brings, nor aware of the level of effort required to use it for transformation. An approach that starts with a project focus that creates a pull in demand from the business side of the organization could be just the early experience an organization needs to begin to consider RPA and other automation technologies as a part of its digital transformation efforts company-wide.

View the full presentation.

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

2018: The Year When Faking Digital Won’t Work Anymore | Sherpas in Blue Shirts

Since the global financial crisis nearly 10 years ago, many enterprises have been riding high on the “free money” made available to them through endless central bank bond buying and low or even negative interest rates.

But there’s zero doubt that this capital bubble will burst. And as the flood of money recedes, some organizations that have been “faking” their digital transformations, i.e., taking a non-strategic approach to digital, will falter. Others will likely fail.

Does lack of a digital strategy really equate to such doom and gloom? You bet it does. Because digital isn’t just about technology. In fact, Everest Group’s definition of digital specifically looks beyond technology and focuses on how digital dramatically enhances the experience of users – customers, employees, and partners alike.

Need to be convinced of the importance of a superior digitally-based experience? Look no further than the alarming number of retail stores that have closed and gone bankrupt because they haven’t been able to provide an Amazon-like experience. Of course, it’s just not the retail industry facing challenges. True digital transformation is and will cause future disruptions in the healthcare, financial, pharma, and other industries.

Against that back-drop, here are my top five predictions for 2018, and what you should do to address them.

Top five digital predictions for 2018

  1. Digital agility will be the basis for competitive advantage: Your business value will increasingly come from making things easy, reliable, and fast for your customers. To win in 2018 and beyond, your focus must not be on the functional attributes of your product or service, but instead on the context for how customers purchases and use them, and how you manage their relationship and interactions with your company. These will be the critical proof points for building and sustaining customer loyalty.
  2. Delivering the right experience will become your organizing principle: The structural limitations of legacy organizational models – where functions and insights into customer needs and behaviors are fragmented and siloed – severely impact delivery of an enhanced customer experience. In order to effectively compete, you need to adjust structures, internal processes, incentives, reporting, and other levers to directly align to the customer experience. Imagine the impact if you took 20 percent of the team members in each of your functional departments and had them report to a newly-established customer experience department?
  3. Success won’t be about the information you have, but what you do with the insights: Your organization has most likely built and analyzed large sets of data about your customers, products, operations, etc. But data is only valuable if you take action on the insights you gain from the information. In the words of Jack Welch, former chairman and CEO of GE: “An organization’s ability to learn, and translate that learning into action rapidly, is the ultimate competitive advantage.” And, borrowing Nike’s trademark: “Just do it.”
  4. This won’t be your grandfather’s job: The increasing impact of technology and the acceleration of change will have dramatic impact on how humans are utilized and managed by companies. Success will mean increasingly virtualizing your employee and career models. These could take various shapes, including using talent free-agency models to staff initiatives, and replacing the concept of a career path with skill dashboards whereby individuals accumulate related sets of experiences and expand those experiences into new areas.
  5. There will be seamless interaction between humans and automation: Don’t fret about the FUD around automation replacing human workers. RPA, analytics, and other new technologies are accelerating the need for humans to evolve their roles and skills, which means less effort on collecting and manipulating information and more focus on identifying insights, understanding needs, developing new ideas, and applying judgment to make decisions. Empowering your employees with knowledge on how to use these new technologies for higher value activities will provide you with a distinct advantage over your competitors.

Three no-regret actions to ensure you aren’t left entirely behind

  • Understand beyond your immediate competitive landscape. You can gain all kinds of gems and jewels on how to leapfrog the competition from businesses in sectors other than your own. Make the ask of enterprises you respect: most are generally willing to share, as long as you are too.
  • Get your digital technology degree. Educate yourself on how available technologies can be applied to competencies, processes, and activities that are relevant to you. What types of problems do they help solve? What are the new tools in the tool box, and how can they build upon each other?
  • Don’t go it alone; invite your friends. Every one of my above predictions have big implications that go well beyond one function or process. They’re enterprise-level initiatives that need the collective to succeed in a meaningful way. Silos need to develop a shared need and vision, which is generally the biggest barrier to fundamental digital change.

2018 may not be the year the money bubble bursts. But it is the year that you must make highly strategic digital investments. So, the question your enterprise should be asking itself is, “am I ready for it, or am I faking it?”

New Infosys CEO Salil Parekh Brings Commitment to Digital Transformation | Sherpas Blue Shirts

Recently, Infosys appointed Salil S. Parekh, formerly a Group Executive Board member at Capgemini, as CEO and MD of Infosys. His selection was a surprising choice. He lacks the industry profile of Infosys’ prior CEOs and has no prior experience as a CEO. But I believe he is a talented executive who is well positioned to continue the existing Infosys strategy and is committed to building the next generation of Indian services. He understands all that an Indian talent base can offer while also understanding the need to broaden the global talent base and lead Infosys into a becoming a digital transformation leader. I believe the following perspectives are critical when evaluating the impact of this new leader at Infosys.

The Advantages He Brings to Infosys

As I blogged in August 2017 when Vishal Sikka resigned as CEO, the new Infosys CEO will need to make bold, decisive moves to position the company for the future. Specifically, I think he brings the following advantages to Infosys:

  • Strong credentials and deep practical knowledge in using a consulting-led approach to build a global transformation services business. Under his leadership, I expect Infosys to strengthen its consulting capabilities and use them to position the firm as a first-choice digital transformation company. Prior to joining Capgemini, he was senior partner at E&Y and used that financial services consulting team experience to help Capgemini into one of the fastest-growing financial services practices in the services industry. He understands how to blend consulting and delivery in a fast-changing industry will be powerful for Infosys, which must master a more consultative transformation approach if the firm is to emerge as a leader in digital services. Sikka had deemphasized the consulting practice at Infosys.
  • Successful track record in business turnarounds and managing acquisitions (including Capgemini’s acquisition of iGate). In October 2017, I blogged about Infy needing to aggressively acquire digital companies is a key component of its digital transformation strategy. His influence in leading Capgemini’s charge to acquire iGate indicates he understands the necessity of a strong Indian delivery component in the future mix of services.
  • Deep experience in the financial services market, which is Infosys’ largest and most lucrative market segment.
  • Notable experience in working in a global context outside of an Indian firm. Salil’s outstanding leadership capabilities were notable at Capgemini.
  • Deep understanding of the Indian/Bangalore culture along with demonstrated outsourcing industry experience. He will fit well into the Infosys culture and, thus, is a safe choice as CEO.

I think Infosys chose an external candidate to lead the firm to avoid some of the friction and issues lingering from the friction among the board, management and founders. Infosys now needs a steady hand, a more low-profile approach to building its future. Although Sikka raised the firm’s profile in the digital transformation space, he didn’t manage to bring the founders and the rank-and-file employees along. Parekh has the skills to focus on executing on the digital strategy. He will bring a fresh perspective on how to continue Infosys’ drive to remake the firm into the next-generation of services companies based on digital technologies and business models. I also expect he will be instrumental in changing the board composition over the next 18 months to ensure he has a unified board and can heal any ongoing rifts with the firm’s founders.

The fact that Parekh will be based in Bangalore is significant, as it will better position him for deeper understanding of the Infosys culture and enable him to build internal support for the difficult journey ahead in a challenging and changing marketplace.

In Salil, Infosys has found a capable executive that fits the Indian culture, yet brings the consulting and global perspective the firm needs. Thus, he should be able to build alliances in and outside the firm without creating the pushback that Sikka experienced.

What about Other Changes in Senior Leadership at Infosys?

The industry and media are abuzz with speculation on the amount of executive turnover as a result of Parekh’s selection. Every new CEO brings in new executives, and he won’t be an exception to this rule. It’s important to realize that Infosys has plenty of room to remove executives without removing existing talent. Some in the senior ranks had stayed to create stability after Sikka’s departure, but they will now be free to move on. Other senior talent had stepped up on a temporary basis and can now move back to a more sustainable role. That said, I don’t expect a wholesale removal of the firm’s senior leadership. It will be a case of streamlining the leadership team and restructuring some layers.

Should the Infosys Strategy Change?

Together, Parekh’s experience and the Infosys board’s forward-looking statements indicate that the existing digital direction and strategy that Sikka was driving will continue. I believe the firm is well positioned to participate in the consolidation of the legacy, high-margin labor arbitrage-based business. This is already taking place in the services industry, and I expect Infosys will capture a significant share of this work. However, I believe the primary goal is still to continue the digital transformation journey.

In the effort rebuild Infosys to lead in the digital marketplace, I suggest Infosys take the following five steps:

  • Build strong support from the board/founders and internal organization, A house divided will fall, and we have already seen what this will do to the organization. As I mentioned above, this will probably require changes to the board and some changes in senior leaders as well as taking a more low-key approach (at least at the outset).
  • Reset investor expectation on margins. The previous strategy’s fatal flaw was maintaining the expectation of industry-leading margins. To become the leader in the digital space, Infosys needs margin flexibility to experiment with new models and capture growth at the all-important start of the cycle.
  • Focus on understanding and building a new digital delivery model that is different from the factory arbitrage model. It’s important to recognize that this new model has yet to fully emerge in the services industry; therefore, if Infosys can be the first major firm to build such a model, it will become the industry leader.
  • Keep the commitment to aggressive pricing established under Sikka. The market will not tolerate a premium pricing position at this time.
  • Focus on its clients instead of the firm. Infosys has traditionally been introspective. Parekh looks to be capable of changing this characteristic and influencing the firm to look outside to its customers and their needs. Now, much of Infosys’ messaging is on how Infosys is changing. This needs to change to focus on how its clients are changing.

For all the above reasons, I believe Parekh is notably able to grow Infosys’ business. I don’t think he will bring clients with him, but I don’t think this is necessary. Infosys has all the clients it needs. The challenge for Infosys today is to become the digital transformation partner of choice for the clients it already has. If he can help achieve this objective, I believe Infosys will become a clear leader in the new emerging services market.

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