Tag: strategy

Why is TCS So Successful? | Sherpas in Blue Shirts

August 18, 2015

TCS has a sophisticated suite of apps and delivery tools. They accept small engagements with the intent to grow those accounts by being reliable and over-delivering. And they’re willing to shift away from their comfort zone. But this isn’t why TCS is a leader in the services industry.

Why are they so successful? To answer this question, we used Everest Group’s framework of six characteristics necessary for success.

Assessment framework technology service companies

Our assessment is that TCS’s success is due to aligning all six aspects in the framework. By doing so, they perfected an industrial global services model in which they are able to take a pragmatic and cost-effective approach to large-scale processes. These processes must have at their core the ability to deploy TCS’s local services offshoring model in a highly repetitive or highly predictable consistent-quality manner.

Using this core understanding of who they are, TCS operates in a wide variety of geographies across a wide variety of industries. They apply this core understanding to a bewildering set of disciplines ranging from applications to infrastructure to F&A to customer service. On the surface, these service disciplines look highly unrelated. But when you dig deeper, they all have in common the ability for TCS to apply an industrialized global services model to the benefit of their clients.

This understanding of their essence and their discipline about applying it has allowed TCS to emerge as a true industry services leader.

Photo credit: Flickr

FOMO (“Fear of Missing Out”) – the Service Provider’s Ebola | Sherpas in Blue Shirts

July 14, 2015

FOMO is reaching epidemic proportions among service providers. We see it particularly in the Indian firms, but it’s not confined to the Indian providers. It starts in the sales teams as they fall behind in their sales goals; then it spreads and infects the entire organization.

You can easily identify the providers infected with FOMO. In the marketplace, there is no RFP or opportunity they don’t want to contest. The FOMO infection causes them to run from client to client with the newest PowerPoint presentations of great promises. But the decks aren’t compelling and lack depth, so the buyers don’t believe the providers’ messages. The buyers aren’t infected with FOMO, so they aren’t blind enough to believe that one company can be great at everything.

Because of FOMO, the providers don’t spend enough time with the existing or potential client to be able to develop the necessary depth.

Those free of FOMO actually outperform in the market consistently and build a much more relevant perspective unique to a client because of their effort to gain a more in-depth understanding of the client.

They focus on a client’s issues rather than chasing every RFP. They only go after opportunities where they have developed a perspective. They put most of their sales resources into focusing on existing clients instead of developing go-to-market schemes for yet-uncaptured clients.

Paradoxically, not only do disciplined providers outperform other providers with their existing clients, but they also outperform in the marketplace with new clients. This is because when they do engage, they engage in a thoughtful, impactful way.

Fortunately for services buyers, FOMO hasn’t infected the entire services industry.

Photo credit: Flickr

Taking the Internet of Things Journey from Pilot to Program | Sherpas in Blue Shirts

July 10, 2015

In the services world, how can we create business value from the Internet of Things?  As I’ve blogged before, the IoT is replete with opportunities to apply the data flow among IoT devices to business processes and transform the world. Therefore, it should open an unending series of opportunities for service providers to create completely new lines of service for their customers. So why is that potential primarily resulting in disjointed pilots and not evolving to programs?

I’ve observed the same pilot-to-program problem also occurring in analytics and cloud. How can service providers solve this problem?

I think the answer in most cases, and certainly in the Internet of Things, is that the pilots are not focusing on solving a real business problem. I acknowledge that some revenue-generating programs are successfully underway in some companies. But many can’t get to programs because the pilot doesn’t start with the right focus.

Let’s use service warranties as an example and look at how to apply the right focus.

First, define the issue – a real business problem – and then ask: “How can the IoT affect the warranty of our products and solve this problem?”

The answer to the question gives focus to what you want to try to accomplish. With this focus defined, you know what signals to look for from the data. You understand what data you need to acquire, the location of the relevant signals, and how to act on those signals to enhance your customer’s warranty experience or service experience.

Then you can build warranty platforms that apply broadly across multiple companies. And you’ll be able to transform the customer service processes and the device maintenance services.

If you start by characterizing a business problem and then ask how the IoT can solve the problem, you can move from a series of disjointed pilots to a program that can capture significant funding and create robust business results, gain market share, improve customer satisfaction and potentially even lead to creating additional service offerings.

The warranty service example is just one of many opportunities for the Internet of Things. I’d be interested in your opinion as to other IoT opportunities for the services world.

How Service Providers Can Illuminate Clients’ Path to Transformation | Sherpas in Blue Shirts

May 28, 2015

One of the biggest issues facing executives today is that they see the need to change their organization through automation, analytics, or other big ideas that are clearly vetted, but they struggle to drive the change. Their organization is reluctant or frightened to change, much like horses in a steeplechase race that shy at jumping the fences. Consequently, service providers are frustrated. They see potential for their business, but they’re unable to move from project to program. How can a provider help clients to jump the obstacles instead of shying away from them?

How can a provider illuminate the path forward to transformation and get the client on board for change? Let’s start by talking about what doesn’t work – white papers. No executive these days reads white papers. It just doesn’t happen. As I’ve blogged before, they’re too dense, too theoretical and too preachy.  And they’re nakedly self-interested.

So what are the tools that enable clients to jump the fence? At Everest Group we’ve been thinking about and researching this. Executives need simple yet rigorous, relentlessly objective instruments that they can use to challenge their organization. And once they examine an instrument, a clear path forward opens up behind it.

What would such an instrument look like? It might be a maturity index showing competitors’ degree of progress in the field. Everest Group’s PEAK Matrix™ is another example of a first step in instrumentation; it illuminates providers’ capabilities in the marketplace.

Every organization is unique, and they struggle with how to apply transformation or disruptive technologies to their uniqueness. A set of objective instruments allows executives to have a conversation in their organization and challenge their organization. The organization can then ask for help and imagine a roadmap – without a provider telling them what the roadmap should be.

Simple but rigorous instruments will illuminate the way to transformation and assist in the organization internalizing the path forward through the challenges.

Photo credit: Flickr

Services Sales through the Looking-Glass | Sherpas in Blue Shirts

May 22, 2015

Lewis Carroll is famous for his novel, “Through the Looking-Glass, and What Alice Found There.” In this whimsical world, everything starts out as familiar things but, on examination, turn out to be nonsense. It puts me in mind of many service providers’ sales pitches.

Perhaps my favorite part of the Looking-Glass novel is Jabberwocky, a poem in which Carroll strung together nonsense words. When put together, they sound impressive and one wants to believe they tell a story. But as you can see in the verse below, the words are just nonsense.

’Twas brillig, and the slithy toves

Did gyre and gimble in the wabe:

All mimsy were the borogoves,

And the mome raths outgrabe.

It’s like service providers’ sales teams that talk to potential clients about a transformation agenda and driving business value from IT. They throw in words such as “agility,” “flexibility” and “cloud.” Or phrases such as “consumerization of IT” and “as a service.” They even sprinkle in entire sentences such as “outsourcing will allow you to variabilize costs.”

These pitches sound wonderful and sound like there is deep thought associated with what the speaker says. But on examination, one finds the claims are largely nonsense. For instance, there is no variabilization of costs; it’s virtual, and there is little time to business value. And the supposedly agile environment is anything but agile.

It’s very easy to grasp for platitudes and read blogs and take the ideas without really understanding them.

So just like Alice, we find ourselves asking, “Which way should I go?” Well, like the Cheshire Cat says to Alice, “It all depends on where you want to get to.” Providers’ impressive-sounding presentations, on examination, are often just gobbledygook and attempts to intrigue the audience and get them to buy services. But they fall apart on close examination.

Successful sales depend upon a clear understanding about what the customer and provider will try to accomplish, how they will do it and the steps necessary to accomplish the goals. The best presentations use common, plain language to identify the issues and how to meet the goals.

Photo credit: Flickr

Lessons from IBM | Sherpas in Blue Shirts

May 11, 2015

Have you noticed how few service providers have the ability maintain a market leader role when the market changes to favor new technologies, or new service models? It’s very difficult to make this shift, and I’ve seen very few companies achieve the shift – let alone do it three times. Just one. Wow!

If we look back at the service provider landscape in the early 1990s in the classic outsourcing space, the leaders in the service industry were Accenture, CSC, EDS, IBM, and Perot.

Then the growth opportunities shifted to the labor arbitrage model in the late 1990s and early 2000s. Suddenly the group of leaders changed to Accenture, Cognizant, IBM, Infosys, and Wipro.

Now as we move away from those classic leaders and shift to the new models (SaaS, BPaaS, platforms, and consumption-based), there are three leaders: ADP, IBM, and Salesforce.

Lessons from IBM

Looking back at the market leaders over the years, some have disappeared, as the figure above illustrates. EDS is now owned by HP, Perot is owned by Dell, and ACS is owned by Xerox. What stands out in the graph is that only one company has been able to consistently shift when the market shifts – IBM.

How have they managed to do this? Here are some lessons we can learn from Big Blue.

  1. Be willing to divest. IBM has been absolutely ruthless and relentless in forcing itself to divest businesses that constrain the firm and prevent them from successfully moving into the markets.
  2. I blogged about the noise in social media earlier this year about IBM’s potential layoffs and explained it was a reskilling issue. I think this is yet another example of the firm having the discipline to take the medicine and do the things that allow it to succeed and maintain a leadership position.
  3. Buy, don’t build. IBM’s approach to entering new markets is often through acquisitions. The firm is quite willing to learn from others and leverage an existing business. IBM recognizes that business models are different, and it’s very difficult to build a new business model inside of the old one. Therefore, they buy new companies.
  4. Protect new businesses. After acquiring a company, IBM protects that business. They incubate them and allow them to grow. In the last two years, IBM launched two new divisions: analytics (Watson) and cloud. The firm pulls those businesses out of the rest of the company and connects the R&D to Big Blue’s customers in a tight loop. It also protects these businesses from IBM’s mainstream businesses, which would tend to prey on them and inhibit their progress.

These four strategies have enabled IBM to maintain market leadership despite market shifts. They stand out as lessons for other firms seeking to stay relevant and stay in leadership positions in the market.

Photo credit: Flickr

Services Industry on the Cusp of a Changing Provider Landscape | Sherpas in Blue Shirts

April 21, 2015

I’ve blogged before about consolidation in the services industry, and I believe the industry is now on the cusp of a new round of significant acquisitions. But don’t expect a repeat of the usual M&A strategy. We’ll see a shift from the usual tuck-in acquisition strategy to billion-dollar-capability acquisitions. At this game-changing level, consolidation could have an immense impact on the industry.

Market conditions are ripe for consolidation: a maturing marketplace, the cost of capital is very low and there is a changing perspective in executive ranks toward major acquisitions. As a result, the number of highly acquisitive players has jumped dramatically.

Cognizant led the way with its TriZetto acquisition, which changed the game in terms of size. ATOS acquired the infrastructure arm of Xerox. At Everest Group we also see Capgemini, Fujitsu, Genpact, NTT Data and Wipro as highly acquisitive players. And we wouldn’t be surprised to find others driving consolidation.

It will be interesting to see who these companies acquire – and whether they will acquire each other.

Photo credit: Flickr

Service Providers are Killing the Goose That Lays Golden Eggs | Sherpas in Blue Shirts

April 9, 2015

I blogged last year about the growing anti-incumbent bias in the services industry. That’s not to say that clients are biased against incumbent providers, but there are more clients who want to switch out providers than there used to be. This is true across every segment of global services (applications, infrastructure and BPO). We can trace at least some of this client mindset back to providers’ actions that are similar to the farmer in Aesop’s Fable who killed his goose that laid golden eggs. In their haste to get more golden eggs (more profitability), providers unintentionally kill the golden substance inside their goose (existing client base).

At the heart of the issue is providers’ wrong view of their clients. As a result, they take actions that cause clients to believe the provider exploits them, as the actions benefit the provider’s revenue. When a client believes the provider is only interested in maximizing its revenue, the client no longer sees the provider as a trusted advisor.

Here are three examples I’ve observed in which providers appear to act for their own interests, which results in clients no longer trusting them.

  1. The provider moves from an FTE-based model to a transaction-based model, but the provider’s revenue stays the same. Basically the provider finds a way to charge the client more for volume, which wouldn’t need to happen under the FTE-based model. Clients see through that, and the provider loses its trusted position. Clients realize the provider is exploiting them rather than serving them.
  1. The provider moves to a productivity model, promising to support portfolio apps at lower cost through a managed service. What actually transpires? The provider nickel-and-dimes the client, which ends up paying more money over time. Functions that were delivered in the FTE model are now a la carte, outside of the new model; so the client actually pays twice for the service.
  1. The provider flattens out its factory model and optimizes it to use junior resources instead of senior resources. The net result for the client is churn in the provider’s resources, so the provider doesn’t build client or industry knowledge. On top of the churn, the client actually ends up with lower productivity because junior people now do what senior people were doing.

And that’s how providers kill the goose that laid golden eggs.

Photo credit: Flickr

Why Everest Group Changed its Point of View on Infosys | Sherpas in Blue Shirts

April 6, 2015

Since publishing our two most recent blogs about the business situation at Infosys (Connecting All the Dots and Silicon Valley company) and comparing those perspectives to our blogs over the past two years, people have asked us: “Why did you change your point of view about Infosys?” Here’s why – it’s because most of what we predicted about Infosys came true.

We have a relentlessly objective point of view, and our blogs over the past couple of years pointed out the internal problems we observed at Infosys. We called the firm out early on its arrogance and hubris in the marketplace, evidenced in its commitment to premium pricing despite the unsustainability of its pricing vis a vis the marketplace, along with its inward-looking focus instead of focusing on customer intimacy.

Because of these actions, in the midst of the maturing AO market and changing customer expectations, we predicted a slow down at Infosys. And it happened.

As the board at Infosys started to understand the same things that we called out, they made some interesting moves; and we’re largely supportive of the moves. If they want Infosys to be a leading high-tech firm, they need to bring in different leadership. They did that by bringing in an external executive as the new CEO in 2014. And it’s clear that the firm’s leadership is now deploying a customer-facing strategy rather than continuing to be inward-looking. This isn’t just a story line; Infosys is backing up its statements with investments in new leadership talent over the past two months as well as in other actions.

Before, we saw a once-proud firm with internal problems, which talked the talk but didn’t walk the walk. We increasingly see Infosys pivot strongly to next-generation leadership, taking steps to give the firm a chance at success again.

It’s too early to say whether the recent moves and strategy will work. And as I said in my earlier blog, execution eats strategy. But the next step in strategy is putting their money where their mouth is, and there is every sign that Infosys is starting to do that. As such, we applaud Infosys’ progress.

As we called out Infosys when we saw problems, we now comment on it as it moves forward. To date, history validated our point of view. Now that Infosys is dealing with its issues and taking consistent actions to move the firm forward, we’ve acknowledged their progress and amended our point of view accordingly.

Photo credit: Infosys

 

Is Infosys Repositioning as a Silicon Valley Company? | Sherpas in Blue Shirts

April 2, 2015

At Everest Group, we’ve heard industry rumors that Infosys CEO Vishal Sikka – formerly on SAP’s Executive Board and global lead for products and innovation – recently hired two former SAP executives based in Silicon Valley. This move comes on the heels of Sikka planning to invest in startups in Silicon Valley. What does all this mean for Infosys and for the rest of the services industry?

Upon hiring Sikka from SAP, we knew Infosys was changing its direction to become an IP company, and we expected him to make significant changes. In addition to his former exec role at SAP, he earlier worked in Xerox’s research lab in Palo Alto in the Valley. He is a well-known figure in the American software world, and he continues to be based out of Silicon Valley.

As I predicted in a blog three months ago, Sikka had begun the transformation and I thought his next step would be to build on the Infosys talent pool by bringing in selected additional talent. Now he has done that and is using his relationships at SAP in Silicon Valley to recruit other executives to join him at Infosys.

This move means a number of things. Most importantly, it means that Infosys drinks its own champagne. Following Cognizant’s example, Infosys is establishing North American headquarters – but going one better. Rather than basing its business in New Jersey as Cognizant did, Infosys is building on its next-generation theme and basing its American business in Silicon Valley. This strategy has a number of potentially positive attributes for Infosys.

Commitment to disruptive technology wave 

First, it helps reinforce the brand that Infosys is committing to the “leading technology” aspect of its new-and-renew strategy. And lining up Silicon Valley executives to supplement the Infosys leadership team is another clear demonstration of its strategy.

Significantly, having North American headquarters in the middle of the Silicon Valley ecosystem allows Infosys to tap into the Valley’s rich innovation talent pool as Infosys moves from its traditional labor arbitrage-based model to an IP-based model. It also places Infosys close to its customer base. Soon to be gone are the days of the factory control from Bangalore dictating to customers how to use services.

I think this speaks volumes around the provider’s commitment and willingness to stay the course and pace as the services industry evolves with the digital world’s new technologies and new business models. Infosys is trying to catch that wave of next-generation digital disruptive technology that emanates from Silicon Valley’s ecosystem.

Sikka talks about Design Thinking, which puts him right into the heart of how Silicon Valley thinks and tries to behave. Infosys is making a commitment to be at the heart of the Valley’s ecosystem to better leverage that thinking. Bangalore is a long way from that ecosystem. New Jersey is closer, but Infosys chose to be in the heart of it, right in the Valley.

Will Infosys succeed in these new moves? 

I think this starts to ask hard questions of the rest of the industry, and I believe the rest of the industry will watch Infosys intently to gauge its success. In the event that Infosys succeeds in making this pivot, I think we can expect other Indian pure-plays to follow suit quickly.

Photo credit: Flickr

EG with tagline Neg
Linkedin-in Facebook-f Play Instagram
Better Decisions Powered by Tenacious Research    

Contact Us

Who We Are

About Us

Newsroom

Office Locations

Partners & Affiliations

What We Offer

Memberships

Custom Decision Support

Published Research

Careers

Why Everest Group

Explore Openings

Equal Opportunity Employer

Resources

Access Reports

Citation Policy

Everest Group Market Intelligence (EGMI)

Legal

Using the Reports Portal

©2023 Everest Global, Inc.         Privacy Notice          Terms of Use        Do Not Sell My Information

How can we engage?

Please let us know how we can help you on your journey.

Contact Us

"*" indicates required fields

Please review our Privacy Notice and check the box below to consent to the use of Personal Data that you provide.
Consent*