HfS Webinar: The Next Evolution of Digital - Driving Real Growth and Competitiveness with OneOffice

Proprietary │Page 1© 2018 HfS Research Ltd.
HfS Webinar:
The Next Evolution of Digital - Driving Real
Growth and Competitiveness with OneOffice
Phil Fersht
CEO and Chief Analyst
HfS Research
Paul Roehrig
Chief Strategy Officer
Cognizant Digital Business
June 25, 2018
Sandeep Dadlani
Chief Digital Officer
Mars
Saurabh Gupta
HfS Research

Panelists for today
Phil Fersht
CEO and Chief Analyst
HfS Research
Paul Roehrig
Cognizant Digital Business
Sandeep Dadlani
Chief Digital Officer
Mars
Saurabh Gupta
HfS Research

Defining Future Business Operations

We all know that the business impact of new digital technologies is massive,
and we’re all warming up to it, right...?
• It’s time to strengthen your digital core. Senior
leaders who think it’s hype, or who say “I’m sure
we’re doing just fine...” well, they’re in for a
rough ride. If you’re not a digital leader today,
quit stalling.
• HfS and Cognizant researched nearly 400
$1Bn+ enterprises across the globe to
understand the impact of a digital business
model on their operations and learn the best
practices – and the worst – for tomorrow
• Full report available on www.hfsresearch.com

Agenda for today
• What sets “digital winners” apart from the rest
• What is “Digital OneOffice” and how do we get there
• Journey to Mars? A practitioner’s reality check
• Question and answers

What sets “digital winners” apart from the rest

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Digital Core
Strength
Means

65% Say “Digital” is no longer Core IT,
it’s ALL Technology
66%
Imperative to align business
processes to human wants and
needs
Source: Make Digital Your Core Strength!, 2018, HfS Research and Cognizant, n=395

The Early Digital Birds….
Are Already
Ahead!

The Revenue Growth
“Chasm” between Digital
Leaders and Laggards
Source: Make Digital Your Core Strength!, 2018, HfS Research and Cognizant,
n=395
34%

Start Small
Don’t seek a
“Godbot”
Find your process/experience
pain points
Source: Make Digital Your Core Strength!, 2018, HfS Research and Cognizant,
n=395

Beware Lurking
Narcissism…

80% Think they’re better than everybody
else right now
60% Lowest performers think they are
well ahead of their competitors

Yeah, right…

Basic laws of
physics are
still in effect

High Performers
Wrestle with
Culture…
51% of high
performers fear
culture is holding
them back
… And It Pays Off
(Big time)
36% more revenue
growth than those
unconcerned with
culture change

So become a “paranoid
optimist”
• “Only the paranoid survive”
• Complacency breeds pink
slips
• Optimism fuels change
Source: The Work AHEAD, Cognizant Center for the Future of Work

Your back-office just
became your
customer experience
(Surprise!)

Say it’s business-critical to
work without the rigidity of
traditional organizational “silos”
74%

Source: The Work AHEAD, Cognizant Center for the Future of Work, n= 2,000
Aggregate cost decrease per
year on average due to digital
over 36 months
1.3%

Pan your business
processes for gold

Software should be eating
your back (and front) office
Use the savings to
fuel digital innovation
Source: The Work AHEAD, Cognizant Center for the Future of Work

What is “Digital OneOffice” and how do we get there

Rule #1. Talent focus is on the Right-brain, not the Left!
What are your top workforce requirements required today?
Source: HfS Research, 2018
Sample: Global 2000 Enterprise Buyers = 460
Less Critical Skills:
Operational experts
to enable smart
execution
Critical Skills:
Creative thinkers
who reach across
the business
ecosystem to
define and design
businesses
solutions.
Change is the norm
3%
2%
4%
10%
14%
18%
32%
3%
7%
8%
13%
9%
22%
9%
Understanding business processes and using
automation and AI to improve business…
Improving end-to-end processes
Analytical prowess to improve operations /
productivity
Vision and ability to drive change
Defining business outcomes
Creative, entrepreneurial spirit & curiosity for
innovation
Exploring new ways of partnering across the
services ecosystem
Ranked First Ranked Second

Q. What are your greatest challenges holding back your journey to achieve the Digital OneOffice Framework?
You must work your mindsets and ensure you have the technical expertise
12%
10%
23%
29%
21%
0%
23%
25%
6%
35%
8%
8%
6%
13%
6%
6%
We’re held hostage by legacy technology
Lack of talent internally
Legacy thinking / lack of a “digital mindset” from IT
Legacy thinking / lack of a “digital mindset” from biz functions
We’re held hostage by legacy technology
Lack of talent internally
Legacy thinking / lack of a “digital mindset” from IT
Legacy thinking / lack of a “digital mindset” from biz functions
Rank 1 Rank 2
IT
C-Suite
Business
C-Suite
Source: HfS Research 2018
Sample: C-Level Enterprise Executives = 100

Q. How would you best describe your current primary service provider in relation to your digital transformation journey?
Rule #2: Evaluate your Partnerships very Carefully
Source: HfS Research, “Journey to the OneOffice Study, 2018”
Sample: Global 2000 Enterprise Digital Decision Makers = 395
57%
34%
8%
43%
38%
16%
A true partner that proactively
innovates and invests with you to find
new thresholds of value to achieve co-
defined business ourcomes
A competent partner that provides
access to skills, global scale, domain
knowledge, and technology - provided
you pay for it on a per headcount
model
Efficient vehicle to drive out cost and
improve efficiencies
Highest Quartile of G2000 Performers Lowest Quartile of G2000 Performers
Those who got you here may not be the ones to escort you on the Next Phase of
your OneOffice Journey….

Enterprise intentions for Offshore/Nearshore Slowing and Focus shifts from
“Cost” to “Value”
Q. To what extent is your use of offshoring/nearshoring is likely to change in the next 2 years across the following functions?
(Combined outsourcing and share services results)
22%
13%
18%
20%
23%
12%
15%
19%
15%
-1% -2%
5%
12%
11%
6%
1%
2%
8%
1%
3%
4% 5% 5% 5% 4%
5%
4%
Finance and
Accounting
Human
Resources
Procurement IT application
maintenance &
development
IT and Network
infrastructure
support
Customer
Service / Sales
Support
Supply Chain
and Logistics
Industry-specific Marketing
2014 2016 2018
Increase
Decrease
Source: HfS Research in Conjunction with KPMG, "State of Operations and Outsourcing” Surveys 2014, 2016 and 2018
Sample: Global 2000 Enterprise Buyers = ~400

2018 Investment intentions: “Humans-plus-Bots” now the norm as processes
are digitized
63%
58%
54% 53% 53% 52%
50%
39%
33%
40%
10%
20%
32%
24%
20%
10%
29%
19%
Telecom Insurance Retail/CPG Energy Travel (H&L) Manufacturing BFS Utilities Healthcare
Significant Investment in RPA Significant Investment in Outsourcing
Source: HfS Research in Conjunction with KPMG, "State of Operations and Outsourcing 2018, May 2018
Sample: Global 2000 Enterprise Buyers = 381

Rule #3. Separate hype from reality
2.27
Global Service
Providers
(IBM, Accenture,
Capgemini)
India-heritage
Service providers
(TCS, Cognizant,
Wipro, Infosys )
RPA providers Enterprise
blockchain
S&P 500
(record all-time high
historically!)
1.99 3.53
25-50
500+
Reality Fantasy?
Price to Sales (PSR) ratios as we enter 2018
(PSR = Market capitalization / revenues)
Sources of information
• S&P 500 PSR: multipl.com
• Global and India Heritage Service Providers: Y Charts and financial reports
• RPA providers: HfS estimates
• Enterprise blockchain: Coinmarketcap.com and HfS estimates

Rule #4. Focus on outcomes, not technologies
Corollary: Leverage the power of AND not OR
Holy grail of service
delivery

Rule #5. Develop and execute a strategy across three-horizons

We examined the respondents Financial Performance dividing them into four groups (Quartiles) based on their stated
annual growth, operating margin, and net income.
Urgency
Enterprises that expect their
competitors to move well ahead of
them in the next 2-3 years have a
higher revenue growth of 30%
compared to average growth,
displaying a sense of urgency
Deer-in-the-headlights
Lowest digital performers suffer
alarmingly from complacency, with
60% believing they are “well ahead
of the competition, compared with
only 37% of the highest mature
digital enterprises.
Paranoid culture
Recognition of organizational
challenges helps to conquer the
challenges. 51% of the highest
performing enterprises see their
cultures as holding them back. Only
36% of the lowest performing
enterprises identify culture as a
problem
Rule #6. Don’t be complacent

Journey to Mars? A Practitioner’s Reality Check

Journey to Mars? A practitioner’s reality check

Why Digital OneOffice?
Why?
How?
What?
Digital organizations must have an operating
framework that maps out how they have to operate
in the future.
Traditional operating models, while creating some
incremental productivity value if managed
effectively, struggle to drive the unification of digital
business models with emerging technologies across
a business's operations
• A true digital business cannot succeed without
unifying front, middle, and back offices
• Traditional approaches (organizational
restructuring) have failed to have a purpose
beyond incremental efficiency / productivity
• The Digital OneOffice is the organizational end-
state to survive and succeed

How to achieve Digital OneOffice?
Why?
How?
What?
The Digital OneOffice is the framework for
achieving a true digital organization:
• CX is not just fancy UI
• Cost reduction is not a strategy
• Weed out the people unprepared to change
• Your tech infrastructure is everything
• Build co-innovation relationships and shed legacy
relationships
• Stop kicking the intelligent technology can down
the road
• Stop thinking about the Future of Work. It’s
already here...act now!

What is Digital OneOffice?
Why?
How?
What?
The Digital OneOffice focuses on real-time customer
and employee engagement. OneOffice is:
• Collaborative (Collective outcomes)
• Unified (Without silos and hierarchies)
• Dynamic (Agile and scalable)
• Intelligent (Predictive, not reactive)
• Responsive (Real-time)
• Simple (Touchless and autonomous)

The HfS Mission & Vision:
Defining Future Business Operations
• HfS defines and visualizes the future of business
operations across key industries with its OneOfficeTM
Framework.
• The HfS mission is to provide visionary insight into the
major innovations impacting business operations:
Automation, Artificial Intelligence, Blockchain, Internet of
Things, Digital Business Models and Smart Analytics.
• HfS influences the strategies of enterprise customers to
develop OneOffice backbones to be competitive and
partner with capable services providers, technology
suppliers, and third party advisors.

HfS Webinar: The Next Evolution of Digital - Driving Real Growth and Competitiveness with OneOffice

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HfS Webinar: The Next Evolution of Digital - Driving Real Growth and Competitiveness with OneOffice