TBR’s Security Benchmark makes its return to the data center portfolio this week, covering many of the current trends impacting the enterprise security market. With a new look and feel, the Security Benchmark now covers insights into emerging security trends, in addition to the traditional eight TBR segments of the enterprise security market. For example, in the upcoming report TBR explore the implications of the post-quantum world on RSA encryption and some IoT-centric security trends. Analysis and data on 25 strategic enterprise security vendors can be found in this report as well. See analysts Stephanie Long and Eric Costa for details.

Additional assessment publishing this week from our analyst teams

“As Accenture closes on another successful fiscal year, we are looking into how the newly appointed CEO, Julie Sweet, will make her mark on the company and its performance. In the meantime, we expect Accenture to continue diversifying its portfolio and global footprint to prepare itself for navigating the IT service market in the post-digital era. Investments in quantum and blockchain will accelerate as the company increases its use of automation to drive sustainable, nonlinear growth. While continuing to grow at a double-digit rate, Accenture’s cloud business is entering a phase of maturation, especially as the company seeks to solidify its relationships with key technology partners and buyers. Supporting multicloud environments through automated, fit-for-purpose IP and certified staff will help advance Accenture’s evolving relationship with IT.” — Boz Hristov, Senior Analyst

Also this week, join Ezra Gottheil for a webinar on IoT: “IoT, a technique for applying technology to generate new outcomes, has been a focal point for a wide set of IT and operational technology vendors interested in being involved in the wave of digital transformation and driving new business. In 2019 vendors are starting to solidify unique go-to-market strategies and the construction of new ecosystems and channels is taking place.”

On a recent trip to my native Bulgaria, my colleague Elitsa Bakalova and I visited one of TELUS International’s local sites. Country Managing Director Kristina Ivanova and Director of Operations Gergana Ralchovska hosted us in the recently opened TELUS Tower in downtown Sofia. With over 3,000 staff members in Bulgaria split between three offices, TELUS International has grown roots in the community not only to expand its recruitment reach but also to build local trust one event at a time, which is reflected in its extensive corporate social responsibility program.

During the tour of the facility, featuring staff who speak a total of 40 languages to serve many global, regional and local clients, the common themes of innovation, inclusion and collaboration were well displayed. As a vendor that faces the ever-evolving dynamics of the BPO industry, mainly impacted by the advent of chatbots and automation, TELUS International is well prepared for potential headwinds. From offering non-traditional BPO services, including content moderation and content management, to reskilling staff and employee engagement programs, TELUS International in Bulgaria is able to maintain an attrition rate in the teens, well below the industry average of approximately 30%.

In a rapidly evolving market such as Bulgaria, where the IT services sector presents the vast majority of career opportunities for young people, TELUS International’s approach to developing soft skills – a key attribute for working in the BPO industry – differentiates it from its direct and indirect competition. For example, TELUS International offers pre-recruitment assessments, on-site psychologists and ongoing empathy training for employees. Both Ivanova and Ralchovska indicated that the profile of current recruits has changed significantly from five years ago, when speaking one or more foreign languages was enough to get a job offer. Today, both TELUS International’s and recruits’ expectations have evolved to reflect a preference to work for a purpose-driven and customer-focused organization.

Automation means new KPIs

As culture evolves, so do KPIs. With the advent of automation, adopting new KPIs that reflect the shift from human-supported tasks to human-chatbot higher-value services is one way for many organizations including TELUS International to measure utilization and performance. TELUS International’s examples of digitization of client accounts include one client for which 1 million requests were automatically handled by a bot, saving 20,500 productive hours over 90 days, which were later billed to the client for other add-on work.

In TBR’s special report In an emerging world managed by bots, TELUS International’s culture tells us why humans still matter published in March, we wrote, “Moving forward, we expect TELUS International to continue executing on its standardized approach to customers’ digital enablement and to carefully select and manage its client base, including pursuing opportunities with enterprises that are also involved with approving TELUS International employee recruitment and training. As the BPO market evolves, the emergence of new pricing models, including outcome-, subscription- and license-based pricing, will compel the company to take on additional risk and re-tune stakeholders’ expectations around its P&L profile. As a result, TELUS International will need to continue its transformation into an increasingly automation-enabled organization with agent capabilities.”

As TELUS International in Bulgaria serves as one center of the company’s evolving framework, moving from BPO to application services exclusively is highly unlikely, but striking the right balance by blending elements of SaaS and BPaaS will certainly be at the forefront of Ivanova’s, Ralchovska’s and the global leadership team’s agenda in the next three to five years, especially as there is a heightened customer expectations for services vendors to deliver human-centric brand promises.

The Altran acquisition will develop Capgemini’s OT capabilities and improve its ability to compete in segments such as IoT and edge computing

The acquisition of Altran, announced on June 24, will expand Capgemini’s engineering and R&D services capabilities and complement the company’s established consulting and IT capabilities. Capgemini is positioning as an “intelligent industry” vendor that can provide solutions around Engineering 4.0 and Industry 4.0. and expand in smart technology-driven segments such as IoT, AI, 5G, cloud, edge, data and cybersecurity. While Capgemini has well-established IT expertise and digital transformation (DT), design and innovation consulting capabilities, as evidenced in Capgemini Invent, the company will gain Altran’s operational technology (OT) capabilities, which are a key component in IoT models (see TBR’s special report IoT is trending toward smaller, easy-to-replicate projects that will generate increased data over time).

TBR notes that Capgemini is catching up to some of its peers in IoT. For example, Capgemini’s direct competitor Atos already has a history in OT due to its acquisition of Siemens’ IT Solutions and Services business and global strategic alliance with Siemens AG, giving it a head start in IoT. Atos increased its investment in ongoing joint efforts with Siemens in IoT, and in May Atos launched the BullSequana Edge server, which manages data at the edge and can be used securely for IoT environments. But in February Capgemini partnered with AR solutions provider Idemia to develop an IoT device management platform that strengthens the security and connectivity of devices and data. The platform will be based on Capgemini’s IoT device management platform X-IoT, which securely connects and manages cloud gateways and protocols, and on Idemia’s M-Trust solution.

The acquisition of Altran, which is expected to close at the end of 2019, will add 47,000 employees and provide Capgemini with access to key decision makers and technology budget holders around intelligent industry solutions. While Capgemini already has reach with IT and business leaders, Altran will grant access to leaders in manufacturing, supply chain and engineering R&D.

HCLT’s recent acquisitions will develop software services and consulting capabilities, enabling the firm to evolve its strategy to better compete in the dynamic IT services market

At the end of June, HCLT finalized its acquisition of IBM Software products (analysis and details of which can be found in our most recent full report on the company). We believe HCLT is taking the right approach as it develops a dedicated software business unit, as opposed to transitioning corporate culture, sales models and brand identity from an outsourcer toward a software-centric organization, a strategy pursued by Infosys that resulted in culture clashes and conflicting company visions. There are bright spots in developing software products and offerings with a vertical orientation. For example, Infosys’ Finacle platform and Tata Consultancy Services’ BaNCS solution enable both firms to generate banking processes and system transformation engagements that propel financial services revenue. HCLT’s launch of HCL Software as a small business unit will help the company offer products and enterprise software without shifting the entire organization’s vision but still reaping the benefits of an increase in managed services opportunities tied to license and subscription-based revenues around the new products. HCLT is also better suited to bundle its legacy IT and emerging technology offerings using its product-focused sales staff.

In addition, the acquisition of Strong-Bridge Envision will help HCLT strengthen its advisory services. However, TBR believes the company may want to further develop its ability to guide digital transformation projects, pursuing a partnership with an established consulting brand such as PwC or EY. The additional advisory services improve HCLT’s ability to market its software portfolio while folding in offerings that address client demand for business process transformation offerings.

In a messy, transitioning and highly competitive IT services and software market, we think HCLT has been making smart moves to evolve its strategy. As 2019 winds down, we will continue looking at the company’s progress against peers and within the broader digital transformation landscape. 

After 3-plus years of licensing, Salesforce intends to acquire ClickSoftware to augment Field Service Lightning

One week after Salesforce completed its acquisition of Tableau, the vendor announced its intent to acquire ClickSoftware, a field service management solutions provider, for $1.35 billion. ClickSoftware is a practical acquisition target for Salesforce; the vendors have been partners since 2016 and Salesforce licensed ClickSoftware’s field service scheduling and optimization technology to build Salesforce Field Service Lighting. Once the acquisition closes, Salesforce would integrate the remaining capabilities from ClickSoftware’s flagship product, Click Field Service Edge, such as demand forecasting and contractor management, into Field Service Lightning. These additional capabilities would better enable Salesforce to fulfill customers’ field service needs, particularly those of enterprises to manage the scheduling and dispatching of large field service employee bases.

Field Service Lightning is part of Salesforce’s Service Cloud, which exceeded $1 billion in revenue for the first time in 1Q19. TBR expects Service Cloud will surpass Sales Cloud as Salesforce’s largest revenue driver this year. Based on the inflated value of technology companies, ClickSoftware’s revenue contribution to Service Cloud would likely be marginal. Rather than acting as a catalyst for Service Cloud’s revenue growth, ClickSoftware would fill capability gaps in Salesforce’s soon-to-be flagship offering. Why would Salesforce make this acquisition after a four-year-long successful partnership in licensing ClickSoftware’s technology? Well, that licensed technology would become part of the foundation for Field Service Lightning. If a competitor was looking to purchase ClickSoftware’s technology, it could leave an unexpected gap in Salesforce’s portfolio following a fast breakup between the two vendors. So, why not get hitched and make sure no one else takes ClickSoftware off the market?

Salesforce’s front-office portfolio will help the vendor fend off competitors in the field service space

Augmenting Field Service Lightning with the remainder of ClickSoftware’s technology will better enable Salesforce to compete with vendors such as Microsoft, SAP and most notably Oracle. In 2016, when Salesforce first launched Field Service Lightning and partnered with ClickSoftware, Microsoft, SAP and Oracle were acquiring around field service. Since then, each vendor has developed a field services value proposition. For Microsoft, field service is a module within its Dynamics 365, where the vendor also offers AR apps and HoloLens devices that can be utilized by field service workers. Oracle and SAP are leaders in the ERP market but are complementing their field service applications with growing front-office and service-related SaaS offerings. However, a broader and more deeply integrated front-office portfolio would help Salesforce fend off competition, particularly if it integrates a field service leader into its arsenal.