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disruption

Why Aren’t We Seeing New Technologies Deliver Business Performance Breakthroughs? | Sherpas in Blue Shirts

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There’s an important dynamic happening with new technologies. Cloud, analytics, cognitive computing, and robotic process automation (RPA) are available to businesses today, but they’re only creating modest, incremental gains. Why aren’t these technologies creating a bigger difference in businesses?

Take cloud for example. We’re way past the point of discussing whether or not to move to cloud computing. We understand the power of cloud and know it can really help transform the relationship of IT to the business. It’s quicker. It’s more agile. It helps better align IT with the business. Cloud is consumption based, so the total cost is cheaper. It comes prepackaged with PaaS, middleware, and databases, so it’s easier. Given all these advantages, why aren’t we seeing a fundamental change in performance in the relationship between IT and the business?

It’s not just cloud; there are other examples. Given the power of Amelia (IPsoft’s cognitive agent) and RPA, why aren’t we seeing a fundamental change in the call center businesses with customer service? Given the capability of cognitive computing evident in IBM’s Watson, why aren’t we seeing dramatic change in the field of medicine? And with the insights available through analytics, why does it still take a month to get approved for a mortgage? Analytics are incredibly powerful in helping businesses understand customers, so why isn’t it showing up in the bottom line in a big way?

These disruptive technologies have been tested and vetted; we know they work and are incredibly powerful. So why aren’t they creating the impact that they promise? When implemented, they do make contributions, but for the most part they’re margininal and achieve only incremental benefits. Case in point: cloud technologies. Yes, cloud technologies have dropped the cost of IT infrastructure, and we can get new apps up faster. But IT departments remain, and business users are still frustrated with them. The basic relationship between enterprise IT and the business is unchanged.

All of these technologies are ripe for a performance breakthrough, a step change. By this I don’t mean a 10 or 20 percent reduction in cost; I mean a fundamental change in performance. A change in the cycle time it takes to find a candidate and get a new recruit in. A change from a month to just a day, or even an hour, for mortgage approval. We should be seeing dramatic fundamental change in the customer experience, cycle time, supply chain –- in fact, at every level.

Why are we stuck in this world of hype instead of reality? Where the promise of a technology clearly can be delivered, why aren’t businesses getting the powerful benefits? That’s the question that we at Everest Group are dedicating ourselves to solve.

Clayton Christensen, HBS Professor & Disruptive Innovation Expert, essentially says it’s because all these disruptive technologies and capabilities cannot be integrated. They are too disruptive for large organizations to use to create a difference, and the only way to use them is to start a new company.

But we disagree. We know from experience that large companies can create performance breakthroughs. At Everest Group we’re dedicating ourselves to helping organizations engage these technologies to deliver these benefits at every level.

Not only do these technologies and capabilities exist, but they have been tested and implemented, and ought to be driving a significant change in performance. For the most part, however, they’re failing to deliver on that promise. We think this is the issue of our time, and I’ll be blogging about this over the coming months.

Thinking about Robotic Process Automation (RPA) – What Can You Learn from Your Cloud Journey? | Sherpas in Blue Shirts

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Everyone is talking about the emerging disruptive technology that is the next transformational solution…

Tales of massive cost reductions and time-to-market improvements that will leave your competitors in the dust abound…

You are getting pressure from the C-Suite about what you’re doing about it…

The vendors have lots of slideware, but precious few production examples at scale…

Everyone is launching pilots or proofs of concept…

Hmmm…is this recounting the cloud services situation of 5 to 7 years ago, or today’s RPA situation?  Well, I think it is both. Our discussions in the market – encompassing both enterprises that are commencing their RPA journey and services and technology providers jockeying to deliver solution to those enterprises – suggest a picture that is eerily similar to a number of patterns we saw as the “last” disruptive trend was gaining its footing a few years ago. It got us thinking about what those wishing to capitalize on the emergence of RPA might learn from the trials and tribulations many firms went through as cloud services emerged.

  RPA
today
Cloud Services during emerging phase Fast forward: what happens next for RPA
Market maturity
  • Every conversation begins with “here is what we mean by RPA…”
  • Every conversation began with “here is how we define cloud…”
  • As enterprise-wide usage patterns emerge, nomenclature will converge to drive clarity on the value levers
Adoption patterns
  • Lots of pilots; slow to scale across processes/ enterprise
  • Focus on “no brainer” use cases
  • Lots of pilots; slow to scale to enterprise workloads
  • Early focus on “spiky” workloads where cloud yielded extraordinary benefit
  • Many “red herring” barriers (“cloud can’t be secure”)
  • Business users will continue to drive siloed initiatives until market reconciles buyer needs with provider business models (see below)
Solutions
  • Targeted at specific use cases with value enabling providers to extract maximum profit surplus
  • Not oriented toward enterprise value
  • Targeted at “low hanging fruit” use cases where benefits were unassailable
  • Broad enterprise-wide solutions limited to niche players (private cloud-led for most larger enterprises)
  • Solutions evolve from “bolt-on’s” to serving as a foundation/primary dimension of the environment
  • ROI driven by impact across processes and internal organizational boundaries
  • Enterprise software vendors build automation capabilities into their products
Market leading solution providers
  • Bifurcated market structure with leading software providers and business process services providers
  • Software firms struggling to align a software business model with market needs
  • BPO players conflicted with cannibalizing installed base
  • Tradeoffs embedded in software and BPO business models hinder adoption
  • “New entrants” exploited unique cloud business model
  • “Incumbents” that attempted to leverage their historical business model made compromises and fell behind
  • New RPA business model must emerge to fully align with market needs and drive enterprise-wide value
  • Solution providers will emerge with approaches that align interests (rather than create conflicts)
Value levers
  • Cost reduction with the ability to replace human capital with robots

 

  • Cost control by tying  cost structure to usage patterns
  • Value levers emerge that supplant cost reduction such as accuracy, flexibility, agility and compliance 

That’s not to say there aren’t some key differences in how these two disruptive trends are playing out. For example, while both sets of key early players created their business models from a blank sheet of paper, the cloud leaders (Amazon Web Services, Google, Microsoft Azure, etc.) clearly had deeper pockets than emerging RPA leaders and they leveraged that ability to invest ahead of demand to drive a market share-driven pricing strategy that secured and continues to protect distinct advantages.

Notwithstanding the differences, it sure feels like many enterprises (and service providers) have been down this path of pursuing the next disruptive technology before.

As you contemplate your RPA strategy, it probably makes sense to step back and gauge how your organization responded to the emergence of cloud services. The steps you took that worked for your cloud initiatives – and those that didn’t work so well – will provide a good path forward.


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DevOps: Disruptive and Changing the Purchase of IT Services | Sherpas in Blue Shirts

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Businesses now demand that IT departments dramatically change the velocity of the cycle time it takes to take ideas from concept to production – often from as long as 12-18 months to only four to six weeks. Organizations can’t achieve a change of this magnitude with just a change in methodology. To do this, they must move to DevOps – a disruptive phenomenon with immense implications for the enterprise IT ecosystem and the service providers that support it.

Put another way, many IT firms batch or create software releases once or twice a year in which they bring out updates to their enterprise platforms. Businesses now demand a cycle time of one to two times a month for updates. What they want and need is a continuous-release construct.

Methodology alone cannot create the conditions in which organizations can form ideas, build requirements, develop code, change a system and do integration testing in the new timeframes. Hence the DevOps revolution.

DevOps is the completion of the Agile methodology. It builds the enabling development tools, integrates test conditions, and integrates the IT stack so that when developers make code changes, they also configure the hardware environment and network environment at the same time.

To do this, an organization must have software-defined data centers and software-defined networks, and all of this must be available to be tested with automated test capabilities. By defining coding changes with network and system changes all at the same time and then testing them in one integrated environment, organizations can understand the implications and allocate work as desired. The net result is the ability to make the kind of cycle time shifts that businesses now demand.

DevOps implications

DevOps enables IT departments to meet the cycle time requirements. But the implications for how organizations buy services and how providers sell services are profound. Basically the old ways don’t work as well because of the new mandate for velocity and time. This causes organizations to rethink the technology, test beds, and service providers; and then manage the environment on a more vertical basis that cuts across development, maintenance, and testing, and allows the full benefit of a software-defined environment.

Let’s examine pricing, for example. Historically, coding and testing are provided on a time-and-materials basis. The productivity unleashed in a DevOps environment enables achieving approximately a 50 percent improvement in efficiency or productivity. Therefore, it is as cannibalistic or as disruptive to the development and maintenance space as cloud is to the infrastructure environment.

Furthermore, organizations can only operate a DevOps environment if they have a software-defined hardware environment – aka a private or cloud environment. This forces production into ensuring they perform all future development in elastic cloud frames.

Enterprises today are reevaluating where they locate their talent. Having technical talent in a remote location with difficult time zone challenges complicates and slows down the process, working against the need for speed.

So DevOps is a truly disruptive phenomenon that will disrupt both the existing vendor ecosystem and also the software coding and tool frames. Testing, for example, has been a growth area for the services industry, but DevOps environment largely automate testing services.

Another disruption is that DevOps takes a vertical view of the IT life cycle. It starts to integrate the different functional layers, creating further disruption in how organizations purchase IT services.

DevOps offerings are a new development among service providers, but the services industry to date has been slow to adopt the movement. DevOps is an internal threat to their existing business and requires providers to rethink how they go to market.