Tag: innovation

Digital Transformation – Will IBM Attain its Aspirational Leadership Position? | Sherpas in Blue Shirts

Everest Group had the opportunity to attend IBM’s APAC analyst day in India on 11-12 June 2015. Business and technology leaders from IBM presented their offering portfolio, demos, and real life transformative case studies with active participation from their clients. One thing that stood out was how Big Blue is communicating not only its technology vision, offerings, and organizational commitment toward open technologies, but also its internal transformation to serve clients and reclaim its technology leadership position. It realizes that the “old IBM” ways will no longer work, and it needs to become more nimble and innovative, and play an important part in shaping the technology disruption the digital age has brought onto us.

What’s happening?

Earlier this year, IBM aligned its go-to-market strategy around key industry verticals. It also created internal structures to make myriad of its offerings, technology groups, services business, sales and marketing, and its research lab work in sync. It believes this will help create solutions that are required to leverage digital technologies, and thereby not only redefine itself, but also create a new ecosystem of product and service providers around it.

Going back in the history, IBM truly transformed the technology industry when it invented the Mainframe. And while today’s technology becomes tomorrow’s legacy, no one can deny that the Mainframe was a historical system that shaped and created the technology industry as we know it today.

However, since then, IBM became a nuts and bolts company providing middleware, desktops, and back-end efficiency solutions focused on enterprise computing. While it did introduce incremental innovation and acquire many technology companies, it did not play a meaningful role in shaping the industry vision. It continued to invest in its research labs, and its products were always considered leaders in enterprise computing. But it hasn’t been a leader in true enterprise technology transformations such as the rise of ERP, virtualization, SaaS, or IaaS.

This has changed. The analyst meeting demonstrated that digital has become the new pivot around which IBM will take back its earlier pedestal position of being the company that forms, shapes, and guides the technology industry. This story was ably supported by multiple client interactions during the event. Clients say that this is not the IBM they had earlier worked with, or had expected to work with.

IBM’s much publicized partnerships with digital native firms like Facebook and Twitter, and leading user experience and design companies such as Apple, are an important but small part of its digital journey. The bigger part is moving away from its traditional way of working, and realizing that it must play a key role in the digital everywhere environment. Its increased focus and core commitment toward open technologies is highly apparent. And it has always had the technology, scale, and reach to transform businesses. Now, the muscle it’s putting behind Softlayer and BlueMix, its mobility play, and its investments in analytics, the Internet of Things (IoT), and Watson have the potential to transform not only its clients but itself as well.

Is there any challenge?

With its go-to-market alignment with industry verticals, IBM can bring effective solutions to clients looking to transform their businesses. However, disruption in most industries is happening from the outside, (e.g., Uber to the taxi industry, Airbnb to hospitality, Apple Pay to banks, and Google cars to automotive), rather than within. Therefore, a rigid structure around industries may not work well. IBM will need to ensure that its technology, industry verticals, and innovation groups talk to each other, an area where it has historically struggled.

Moreover, monetization of some of these innovations will be a long, drawn out process. IBM has had significant growth challenges, and has shed many of its businesses. For its growth and profitability to return –which should be the big drivers along with reclaiming its innovator status – IBM has to do a lot more. It has historically been viewed as a company that helps clients’ operations run more efficiently; it now needs to carefully position and communicate its willingness and ability to partner in clients’ growth.

Where does IBM go from here?

In addition to the digital technologies IBM possesses, other of its strong strategic initiatives include: internal transformation around reskilling the workforce toward innovation and design thinking; commitment to open technologies; collaborative alignment between its services business and its technology groups; renewed commitment toward client centricity; improved sales effectiveness; and focus on solving core industry problems.

IBM’s changes have been pushed right from the CEO’s office, and IBM executives believe results will be visible in the next 6 to 12 months. IBM needs to play a dual role in which it helps some clients disrupt their industries and business models, and assists others sail through the digital disruption. It again needs to become a technology innovator. While it’s a difficult task, we believe it has the needed technology, vision, and now internal alignment to achieve these objectives.

Selling New Services Concepts | Sherpas in Blue Shirts

Why are many service providers struggling to sell new technology in volume through traditional channels? If the provider’s sales team challenges the buyer with a new concept such as the Internet of Things and the buyer understands how it will change their business, why don’t they take action and buy it?

The answer is they can’t.

For new concepts and technologies, the only source of funding is at the C-suite level. Everyone else in the organization runs from a budget. The C-suite are the only parties that are able to generate a budget.

It’s not that you can’t sell to the other stakeholders, but you have to sell what they’re buying — what they’re asking for and what they have a budget for. That’s fine if you’re selling application maintenance or finance and accounting services — a function they already know they need and you’re selling it in the way they need to purchase it. But they’re not empowered to take action on new concepts.

Often in new areas such as the Internet of Things, the actions require cutting across traditional organization structures, and the business stakeholder you try to sell to doesn’t have the ability to do that. Therefore, if you sell it, you’ll be faced with only experiments and incremental activity; although they move in the direction of the new technology or new capability, the result is small and frustrating in that it rarely lives up to the potential of the new technology.

We see this in analytics where the potential for the digital revolution and analytics to transform supply chains and business models is huge. But each party in an organization only acts within its own domain and within its own budget.  So buyers are forced to look for opportunities to create the funding through savings, which limits the enterprise’s progress toward these exciting possibilities.

The Innovation Dance Floor is Getting Crowded | Sherpas in Blue Shirts

The innovation dance floor is getting awfully crowded with a lot of eager participants. CIOs want to re-establish their traditional role of custodian of technology driving innovation. CMOs wants to be at the forefront of using innovation to change the customer experience and outreach. Data scientists are using the new analytics tools and want to participate in innovation strategy. And as I blogged recently, an IBM study found even chief purchasing officers are making a bid to join the innovation party. Unfortunately, they’re all joining the product managers, who are historically in a slow dance; so not only is the dance floor getting more crowded, but there are also a lot of different beats that they’re dancing to.

Each of these positions has its own point of view, its own agenda, and sees innovation differently. On the plus side, this provides for a rich mix of opportunity. But on the downside, few innovative ideas have come out of committees.

The IBM study indicates that CPOs are attempting to become more strategic and influential and they believe they are more critical to the enterprise. So by necessity, they have to better align with the corporate strategy and therefore want to participate in developing strategy.

I think it opens up even bigger questions:

  • In what areas will they seek to set strategy?
  • Do CPOs have the right background and perspective to do this?

Particularly in the area of services, which are an important ingredient to a change strategy and require deep understanding of the business and how to shape or manipulate the components to create a differentiated position as an advantage, CPOs may struggle as the champions of change.

Enterprises need to protect the innovation strategy

My view is that CPOs are not the right people to influence innovation. Their idea of innovation is do it at half the price rather than doing something different. A data scientist, for example, can get at a certain kind of innovation because they bring a fresh, different capability to the table. I don’t see purchasing bringing something fresh and different.

So this poses some very significant questions to the enterprise:

  • How do you allow for innovation?
  • Who do you want driving it?
  • How do you protect innovation from amateurs who may not be helpful?

Problems for service providers

With purchasing and other departments trying to crowd onto the innovation dance floor, service providers wanting to bring new innovative ideas or capabilities will have to navigate a gauntlet of powerful stakeholder groups. It certainly makes for an intriguing tango.


Photo credit: Piotr Pazola

The Services Industry Is Not Getting Its Return from Investing in Innovation | Sherpas in Blue Shirts

At the request of a BPO provider, we did a fairly exhaustive study of all vendor/provider-funded innovations and their impact on the business growth. The data were startling. Our study clearly revealed that the hundreds of millions of dollars that providers invested in innovation yielded very disappointing returns. Although they often succeeded in taking their innovations to market, they realized only scanty returns and not the kind of return that creates a differentiated accelerated growth. Why is that? Were their hopes too ambitious?

The biggest culprit in the poverty of their return on investments is that those investments didn’t have the necessities for success built into their DNA. What was missing? In many cases innovation initiatives don’t resonate with existing and prospective clients because they simply don’t meet the clients’ needs. In other cases the offerings require a different kind of sales discussion as the provider tries to sell something the client isn’t looking to buy. In both cases this creates a difficult sell and largely proves unsuccessful.

Strategy for innovation that leads to business growth

As I explained in a previous blog post about innovation agendas, these disappointing outcomes from provider-funded innovation initiatives often start with trying to design a solution for multiple clients rather than innovating on a single client’s defined needs. Providers fall into the seduction of believing it makes sense that just because one client wants a particular innovation other clients also will want it that way.

Further, building things in a vacuum away from a client is not helpful and tends to result in outcomes that are off target.

The path to innovation that accelerates growth lies with the provider working closely with clients to define their needs and then bringing the provider’s capabilities to meet those needs. It’s a powerful strategy that results in much deeper client satisfaction.

It also allows a provider to deal with the issue of changing influence structures that we’ve noted in previous blog posts, where the business stakeholder is now more influential in defining a client’s business needs and driving investment and work that goes to third parties.

Providers that interact with business stakeholders to address their needs find the effort pans out and they can move to more impactful innovations that the client will be ready to fund.

And that’s a recipe for explosive growth.


Photo credit: Matter Photography

The Ethical Dilemma of Service Provider Innovation | Sherpas in Blue Shirts

I must confess I look askance at how some services customers think. They want to keep their cake and eat it too. But it’s batty and preposterous to think you can have something both ways if the two ways conflict.

We’re seeing schizophrenia in the marketplace. Customers look to the provider community for insight and innovation to deliver services and functionalities that will change their business. Typically they say, “Bring us ideas about how we can change our business. But don’t just bring us ideas — show us that you’ve used these ideas in other clients of similar size and scale to us. Show us that these ideas have generated substantial business impact. And bring us people that have implemented and successfully delivered these services to our peer companies. BUT DON’T TAKE ANYTHING OF OURS TO THE MARKETPLACE.”

They demand complete protection about not taking to the market any of their intellectual property (IP) or any ideas generated while the provider works with them, yet they refuse to do business with any provider that hasn’t done this for other companies.

At a minimum, such a customer is intellectually dishonest.

This schizophrenic behavior underlines a fundamental dilemma of using third parties on innovation and creating competitive advantage. It ensures that if, in fact, vendors or providers stay true to these demands, they can only re-use insights and actions that are not compelling and don’t drive competitive advantage.

But customers insist that they only want to buy things that drive insight and competitive advantage, which forces providers either to be dishonest and, in some way, skirt around these commitments or to be uncompelling. The customer’s preposterous demand puts the provider in a dilemma with no possible good outcome.

As a customer, when you select a provider that brings you compelling ideas that they implemented elsewhere and that provide tremendous competitive advantage, then you must expect that they may well be violating commitments to other customers and they will take ideas generated with you elsewhere too. So you’re effectively dealing with a dishonest organization.

If they’re honest, they can only provide things that don’t create competitive advantage. And if they’re dishonest, then why are you buying from them?

So what’s the answer to this dilemma? Please post your comment on your experiences in this area.

We Don’t Get Innovation | Sherpas in Blue Shirts

The lack of innovation from service providers is a constant and mournful refrain echoing around the industry. This plaintive and mournful dirge reminds me of Sisyphus, who was cursed to endlessly roll a boulder up a hill, only to watch it tumble back down, never achieving satisfaction. Likewise, the unending efforts of service providers to provide innovation to their customers seem similarly futile, resulting in the same frustrating lack of satisfaction for either provider or customer.

Why are these efforts doomed?

Service providers and their customers have different goals. Providers invest in initiatives that drive growth or improve profitability for the provider. Customers want lower cost, increased productivity and more functionality. These goals seldom align and the parties often work at cross purposes.

What do we do about it? 

The answer is that the customer must take the responsibility for defining the innovation agenda. The customer must outline what will be impactful and make a difference in its business and then share that agenda with the service provider. Whatever the issue is — reducing receivables, stock-outs in retail, more productivity, faster time to market — the customer must illuminate and define the target for the provider.

What if the provider is reluctant to pursue the innovation agenda?

Our experience is that providers often are willing to fund innovation and work across the customer’s agenda when it’s clear that it will make a difference to the customer. In these situations, the exercises in innovation lead to higher customer satisfaction and also lead to an extended contract or changing the relationship in mutually beneficial ways for both parties.

But a provider may be reluctant to pursue some aspects on an innovation agenda. An example is driving increased productivity in the provider’s organization. In a world of (P) Price x (Q) Quantity = Revenue, the provider wants to keep Q as high as possible, and productivity issues bring quality down.

From the provider’s perspective, there are two categories of innovation:

  1. Those that the provider wants to pursue and naturally aligns with (the opportunities that give new revenue opportunities or better industry insight)
  2. Those that the provider likely won’t want to pursue (things that negatively affect its commercial environment, especially its productivity).

To avoid continuously pushing your innovation boulder uphill, keep the provider’s perspective in mind. If your innovation agenda focuses on category #1, you can expect a rewarding discussion around the areas where you and the provider are aligned. But you will need to take a much more active role in driving the category #2 initiatives that are not aligned with the provider’s interests.


Photo credit: Kristina Alexanderson

Awarding Enterprise Adoption of Cloud Computing | Gaining Altitude in the Cloud

Originally posted on CloudAve


One of the longest-running criticisms of enterprise cloud computing is the dearth of publicly referenceable implementation case studies.

Thankfully, this is starting to change. Indicators such as speaking at industry events and talking to reporters about what works and what doesn’t in cloud migration suggest that enterprises are starting to open up and share.

There are several possible explanations for this (technology maturation, commoditization of implementation models, C-suite recognition that cloud is not about cost compression), but the net benefit accrues to the entire industry: the more we share, the faster that standards and best practices will emerge.

It is with this trend as a backdrop that Cloud Connect and Everest Group are co-producing an awards program designed to recognize enterprises that have demonstrated innovation through the adoption of cloud solutions.

Called the Innovation through Cloud in Enterprise (ICE) Awards, the program will recognize companies that have shown success in leveraging cloud computing to transform business processes and unlocked new value by successfully implementing cloud strategies.

Qualifying organizations must have at least 2,500 employees with operations in North America or Europe that are consumers of cloud services. The cloud solution should have resulted in one or more of the following:

  • Striking business impact in terms of revenue, costs, pricing, reduced time to market
  • Notable technology transformation leading to process simplification, new feature functionality, flexibility, business agility
  • Significant positive effects on stakeholders, improved customer satisfaction, improved collaboration, reduced resource consumption footprint
  • Achievement of organizational transformation

Companies meeting the criteria should complete the online application. There is no fee to apply. The deadline for submission is 9 p.m. EST, July 26, 2013. Finalists will be announced on August 16, and winners will be invited to share their stories at Cloud Connect Chicago on October 21 via video and selected main-stage presentations.

The ICE Awards Judges Panel will select winners across a variety of industry sectors, including consumer goods & retail, financial services, healthcare, media & entertainment, and others. Additionally, a crowdsourcing process conducted via social media will select a winner for the “Viewers’ Choice” award.

Submission close on July 26. And remember that vendors can apply for their customers. Service providers and vendors can apply on behalf of their clients and customers. Awards programs like these can help the entire industry by expanding the library of publicly referenceable case studies. Start the application process here.

How Many Americans Truly Understand “Healthcare Reform”? | Sherpas in Blue Shirts

As the debates continue, the courts rule, and the American people become more educated on the true impact of “healthcare reform,” the question that begs for an answer is, “What, exactly, IS healthcare reform?” Read any article, tune into any top news organization, and listen to one of the political pundits or news anchors, but your view will change as soon as you hear another source. Even the politicians responsible for the legislation are confused!

The American people are speaking out like never before in gatherings and town hall meetings across the United States about healthcare reform’s cost impact on our system, especially in such a down economy. The reactions have been astonishing; but even more astonishing has been the opposite views from both sides of the issue with opposing explanations on whether traditional town hall meetings really represent the true feelings and will of the American people. New political explanations and themes are beginning to emerge. Instead of healthcare reform we now have “insurance reform.” The debate seems to be around identifying the bad guy. Is it insurance organizations, physicians, pharmaceutical companies, or government? Where is the “Bogey Man” in this?

Most of us in the healthcare technology market space agree that all this debate and posturing has caused a delay in the commitments to move healthcare industry technology forward. It has been a lean year for major providers of healthcare solutions and services to implement anything because healthcare provider organizations are confused over government mandates, stimulus and what that entails. It’s apparent, however, that whichever direction the debate moves, whatever is or is not deployed for healthcare reform, the resulting environment will require innovative technology solutions that can support access to the critical information necessary to comply to market demand and government mandates. It’s time to act on compliance demands rather than gamble that they will be moved out or go away. It’s time to plan for the next generation of services that will help healthcare organizations do more for less, rather than adding to already strained information technology budgets.

It’s not yet clear which organizations will step up to the plate and define the healthcare model for the future and the technologies that will drive that model. But what is abundantly clear is that next generation IT applied to mHealth, medical device integration, telehealth, and data center transitions will support and drive innovation that will support quality of care and wellness programs and make these affordable for consumers.

As we strive to understand what healthcare reform is, we cannot lose sight of the fact that healthcare is a costly issue, and we must make it affordable for all without consuming our national economy.

Building a Robust Global Services Management Organization | Sherpas in Blue Shirts

Today’s large, global companies face an ever-growing need for talented resources to manage their increasingly complex global services delivery organizations. The requirements extend far beyond traditional models that often found firms simply assigning the “folks who have performed the service for the past 20 years” into various leadership roles. While that was never a best practice, in today’s world, it can be catastrophic.

Global services delivery leaders of today must navigate a complicated mix of internal and external delivery engines while forecasting supply versus demand and keeping clients happy across diverse regions and cultures. To meet these demands, leading global services organizations are increasingly adopting highly integrated cross-business leadership teams sponsored at the most senior levels of the corporation.

The graphic below illustrates this concept in a hypothetical global organization.

Global services management organization

Organizations seeking to build a robust team to deliver their services globally into the next generation should consider the following best practices as observed by Everest Group in working with many of the world’s leading organizations:

  • Global governance structures should be aligned with corporate strategy and chaired by a senior leader at the appropriate level in the organization
  • The governance structure should include an Executive Steering Committee and have formal dedicated roles for key global functions
  • The structure should have responsibility for global strategy, planning, design authority, reporting, delivery, talent development, and innovation
  • The structure should have global process leaders who are responsible for the design, implementation, and compliance of standardized processes across the enterprise, with appropriate representation and input from all lines of business
  • Increasingly, business services are maturing from a legacy functional approach (Finance, Procurement, Tax, Human Resources, etc.) to an end-to-end approach (e.g., Purchase-to-Pay, Record-to-Report-to-File, Order-to-Cash, Hire-to-Retire, etc.).  Appropriate transition and transformation teams must be deployed to manage this migration
  • The structure should also ensure the effective management and integration of all delivery centers

Above all, Everest Group’s experience suggests that companies must treat global services management as a vital business unit with appropriate priority given to recruiting and retaining the talent necessary to execute with excellence and deliver the next generation of value from global services.

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