I recently went to dinner with a CIO who talked about having two major service providers in his company’s portfolio – an Indian provider and Accenture. He told me he uses both providers aggressively. We were talking about the fact that both providers have similar rate cards, large numbers of offshore workers, and they both come to him with an unending set of transformational ideas. I asked him how he chooses between the two.
Here’s his methodology:
He added that he’s not sure it’s possible for either provider to become the other. He explained that when he asks Accenture to operate from a keyboard mentality, they fight him for the steering wheel. They want to lead and want to drive the transformation. Alternatively, when he asks the Indian provider to lead, they defer to his management team and do as they’re told.
So he says he came to accept that both behaviors are effective. He needs each at different times, so he should not ask one to be the other. Both are valuable assets.
Services clients should keep this CIO’s perspective in mind. There are whiteboard opportunities and there are keyboard opportunities. If you ask providers to be something they’re not, you’ll get a frustrated response. Choose carefully.
There’s no silver bullet for driving change; it’s a challenge in any organization and services providers and their clients struggle with this. In working with providers and buyers on transformation deals over the years, I observed the need for breakthrough metrics to drive the change through the buyer’s organization.
As I mentioned in my previous blog post, transformation needs to start with defining the business outcome goal from the customer perspective and then translating it into issues and organizational implications that the delivery organization can align against. Those issues include metrics that you must clearly articulate at three levels in the buyer’s organization:
Having metrics at each level puts business transformation not in light of those who are doing it but, rather, those who are experiencing it.
Service providers need to keep in mind that this shouldn’t be a roadmap with a detailed plan. But people at each level in the client enterprise need assistance in understanding what they are trying to do, how they have to measure themselves against that goal, and what the implications are to technology, talent, policy, process, and sourcing. The metrics can’t be prescriptive.
If you’re an executive, you can break through your organization’s obstacles to change by driving change through the benefit goal and the metrics that allow the organization to understand and configure against the goal. First define the experience you’re looking for. Then ask how to accomplish that. You’ll end up with a set of metrics that defines what you have to do to get to that experience.
As an example, let’s say you want to improve the speed of the employee onboarding process. What are the technologies you have to put in place? What talent issues do you have to think through? What policies and processes do you need to think through? What are the consequences of changes to those technologies, talent, policies, and processes? Now you have the metric and sub-metrics that help guide those implications.
Once the client organization is committed to the transformation journey at each level, the service provider can then engage with them around how that should be done.
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Are you a brilliant Java coder? An expert in the R programming language? A phenomenal database administrator? A brilliant software seller? Sorry to say it, but you’re likely to soon be a member of the “extinct club.”
In corroboration of Scottish economist Adam Smith’s concept of the division of labor, organizations have historically preferred and hired specialists to develop their technologies, and other specialists to sell them. These masters of their craft had acclaimed expertise in their specific areas. And despite the evolution from mainframes to microcomputers to PCs to client server to ERP to the web, it was relatively easy for them to upskill or move to an adjacent skill, as the technologies adopted by companies rarely changed in their fundamental structure.
This gave rise to an “I am a developer, let me develop, I am in sales, let me sell” model within technology companies. It worked well, as enterprises persisted with outdated technologies they had intertwined their business models, and the cost of replacement was prohibitively high. This persistence created the specialists, who were assured of their place in the high echelons of technology as the landscape was not changing fast enough. This also gave rise to the outsourcing industry, which was leveraged to support these outdated systems and reduce the cost of management.
However, those times are gone. Due to digital transformation, organizations expect their professionals to understand not only the technology, but also business users’ perspectives, technology ease of use, consumption flexibility, and creation of top line impact. Development or sales specialists lacking a comprehensive business view are quickly losing their relevance and competitive edge.
Lack of relevance and competitive edge can, and will, also effect many technology providers. This is due, in large part, to the fact that as the cost of consumption of hardware and software decreases, organizations are increasingly willing to dismantle their existing systems and embrace newer models, e.g., migrating from one SaaS CRM to another. The idea of “fail fast, fail better” is gaining traction within enterprises, and technology companies need to align their business models accordingly to serve them.
The reality is that this sea change requires full-scale overhaul of technology providers’ entire business model – including their investment strategy, product roadmap, partnership ecosystem, and go-to-market approach. Yet executives in these businesses have made their careers and big money by developing and selling technology in a certain manner that promotes status quo. Think about a large software vendor and its partners who earn millions of dollars by just providing “certificate training” for their technologies. If the technologies become redundant, their bottom line will be severely impacted. Therefore, they will invest all their efforts in ensuring their clients stick to their technology platforms, irrespective of whether they are outdated and unable to cater to the business. Of course, there are buyers that do not want to rock the boat by changing something until it is really broken. This comfortable nexus has been going on for ages.
But the times are changing very fast. Technology providers that view their buyers as “cash cows,” rather than valuable partners to be helped to achieve business objectives, will fast lose relevance. The providers that succeed will: 1) embrace this new world of disruption, and create meaningful solutions that are more than beautified version of their outdated platforms wrapped in a pretense of user friendliness; and 2) make their prized specialists realize the new norm of the business wherein they need to at least understand, if not master, the art of viewing the world from a business and end-user perspective that incorporates a holistic paradigm beyond their usual tunnel vision.
If he were alive today, Adam Smith might well have changed his tune, instead suggesting malleable skills to enable technology companies’ success in these uncertain times of technology.
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Accenture’s set of service offerings is incredibly broad-based. They serve clients in an incredible number of business processes. They provide services in every geography. They deal with a huge variety of industries. How can a firm do so many things at the same time with such excellence?
Simply put, the answer is people. Using our framework assessing companies’ characteristics necessary for success, Accenture’s team of exceptional talent stands out. The provider is able to deal with a profusion of diversity in processes, industries and geographies because it aligns its brand, go-to-market approach, portfolio and business model with high-performance talent.
Accenture takes on clients’ big problems that require a transformational journey. Typically the challenge has a technology component or basis. And typically it requires the use of exceptionally deep talent.
Accenture’s relentless focus on high-end talent deployed against big business problems enables the provider to make decisions around what not to do. They are a talent engine, so they let others take on the roles of owning the technologies and servers. They play well in the ecosystem.
They also exit spaces that are highly commoditized where a provider can deploy less talented, cheaper resources. Accenture stays focused on big problems that require transformational journeys, which require high-end, exceptional talent. That’s why they’re extraordinarily successful in providing services in a bewildering variety of processes and industries.
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.
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.
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.
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.
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.
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Wipro just hired Abid Ali Neemuchwala as COO and group president. Clearly the provider is setting up a succession plan for him to take over Wipro from current CEO, TK Kurien, who has been driving the firm’s transformation. This is an intriguing move as Wipro appears to be succeeding in the turnaround. So it makes sense that the industry is questioning the move. If the turnaround is, indeed, happening at Wipro, why bring in an outsider?
Abid comes to Wipro from TCS with a pedigree of having run the TCS BPO business. This is a big step up for him, from running a $2 billion business to a $9 billion business. The good news is Wipro is giving him at least a year to learn the ropes.
It’s interesting to reflect on why Wipro did this. I don’t believe the firm is stepping away from the transformation that TK Kurien has been driving. Nor do I think Wipro looks to capture some of the TCS magic and execution capability. I believe the firm is reinforcing its need to continue changing and is bringing in an outside perspective to drive change. This move follows in the footsteps of Infosys, which similarly brought in outside leadership.
Wipro gave TK formidable power, and five years, to drive significant change and transformation. Like any transformational plan, it has been painful and has taken time. But as I blogged before, the transformation is starting to show promise with Wipro wins picking up in the marketplace just as TK’s five years comes to a close.
So why bring in an outsider? I believe the answer is that the journey has just begun. The services industry is at an inflection point. It is clear that with changing technologies, client expectations and business models, leadership in the existing space does not guarantee leadership in the future. I think Wipro understands this and is looks to challenge its organization with fresh perspectives.
Running faster with the old model will not allow for leadership in the future. Fresh perspectives and augmenting existing talent is necessary to give Wipro the best chance at being a leader as the market evolves.
The challenges Abid will need to take on will shape and continue to drive Wipro to change how it delivers services, takes advantage of new technologies such as the digital and analytics space, and how it deals with changing client expectations demanding value beyond labor arbitrage. And Abid will bring new perspectives on how to successfully guide Wipro through the transition into the new business models of SaaS, BPaaS, platforms and consumption-based IT and business processes.
I think it’s a good move.
Photo credit: Wipro
If this year’s International Consumer Electronics Show was any indicator, the Internet of Things (IoT) has made the transition from fascinating concept to increasing reality. Companies are developing and launching all sorts of useful products for consumers: connected lightbulbs, health sensors, parking space finders, snow monitors, smart toothbrushes, self-watering flowerpots … and just about anything else you can dream up, and probably a few you can’t.
What remains to be seen, perhaps, is what’s in it for consumers beyond the cool factor. As devices become increasingly wired and consumers become more reliant upon them, the IoT inevitably faces some real challenges. Most importantly, consumers use a broad range of electronic devices developed by different manufacturers. Because no standards currently exist, there is little interconnectivity among these devices, creating islands of potentially interesting and useful data, but virtually no causeways connecting them.
Relatedly, these devices may produce heaps of interesting data that, ultimately, is just that – interesting data. The hard work is gleaning meaningful insights from the data. Many of us can (and do!) share our step counts with anyone within our Facebook reach … but we’ve made no inroads into losing those 10 pounds we gained over the holidays.
And then there’s the issue of data security. Just who owns or has access to all of that data that is produced and just what are they going to do with it. It may seem reasonable that the company that made the device can use the data to improve their product offering, but when it comes to specifically targeting us in sales campaigns, that seems like another line we may not want them to cross.
It just may be that the challenges with the lack of standards that would cause a consumer to have to learn how to manage multiple systems and the uncertainty around the data issues may stymie the growth of IoT with consumers.
An IoT “consumer” that gets much less attention is the commercial enterprise, which is unfortunate, because there’s a lot of potential there. Enterprises are better positioned to take advantage of the IoT because they don’t face the same challenges as regular consumers do in making use of IoT outputs.
For example, organizations are accustomed to hiring systems integrators to build custom solutions to integrate across their products. They are, therefore, much more able to build the causeways to connect the islands of data that the IoT produces.
Furthermore, many enterprises have, or can hire, the resources necessary to manage the resulting data. And beyond data management, a significant proportion of organizations understand the value of collecting and analyzing data of all types, and have teams dedicated to the exercise. Ultimately, many organizations are well positioned to derive meaningful insights from the data they can collect through connected devices.
And (the recent Sony situation notwithstanding) they may be better able to control and manage the IoT data outputs, so privacy is less of a concern here than it may be for consumers.
Ultimately, though, the financial benefits offer the greatest opportunity for the enterprise consumer of IoT data. While most individual consumers can’t anticipate significant financial gain from optimally watered plants, every commercial organization can benefit by eradicating waste, speeding product delivery, and/or identifying competitive advantage.
Potentially then, the greatest short-term benefit of the IoT will go to enterprises that aggressively embrace the opportunity by leveraging the resulting data to differentiate from competitors.
Sigmund Freud once said, “Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility.” Had he added a phrase about fear of business ownership, the father of psychoanalysis could easily have been talking about most Chief Marketing Officers (CMO) in the current world of digital transformation. The freedom given by digital disruption to transform marketing function may come with a frightening responsibility of owning a P&L.
Today’s CMOs are expected to leverage disruptive technologies, and thus are receiving more technology funding than their IT counterparts. However, many CEOs will push their CMOs to own P&L if they need that funding for digital initiatives.
While most marketers dread the prospect of P&L ownership, the reality is that digital transformation has the power to enable them to assume a more strategic and central leadership role. And mobility, analytics, social platforms, and cloud services – many of which are available outside the control of corporate IT – can give them the needed ammunition to transform marketing into a business builder and create real impact than being a strategic overhead.
Those marketers looking forward to the challenge realize that unlike the traditional models, the rapid digital transformation of the marketing function enables the CMO’s office to influence and generate revenue, as well as run operations efficiently. Digital transformation provides significantly more engaging, flexible, and agile platforms to attract, retain, and grow consumers than traditional models. They allow “fail fast” with manageable cost repercussions. These new mechanisms give marketers direct, quicker, and clearer access to the end-consumer. Marketers now have the technology to run data-driven real time analysis of consumer buying behaviour and enhance their strategies accordingly.
However, to make this a reality, marketers need to work more closely with different departments within their organization, and develop perspectives on the various business units. While their lack of knowhow of organizational operations will be a recipe for disaster, increasing use of collaboration platforms and process digitization can help. Marketers can now communicate and collaborate with their counterparts from other units more effectively in a shorter time span leveraging digital services.
It’s always challenging to transform a cost center to own a P&L. In marketing’s case, it’s not only about revenue attribution, but also:
P&L ownership also impacts the way marketers are perceived in their organizations, as well as senior business leaders’ attitude toward them. Marketers will have to undertake a lot of internal selling of the idea. And a lot of organizational machinery will need to be oiled and transformed to make the marketing department own a P&L.
Most client conversations indicate this is still a utopia. However, some executives do believe it’s high time that the digital transformation makes marketing more accountable. They consider the CMO to be everything related to a customer (Chief Experience Officer, Chief Customer Officer, etc.) and believe that marketers now have the right technology and tools to create real business impact.
The onus is on the CMOs, and the opportunity is vast. However, they need to get out of their mindset as a business support function, where they are assisting businesses to leverage digital services much like an external consultant, and instead take center stage. But it’s not going to be easy.
Sigmund Freud today would probably have said “CMOs who want to enjoy the freedom bestowed by digital transformation must not scare away from the responsibility of the P&L.”