Know your consultancy: EY’s FinCrime practice and the future of compliance

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Be the frictionless provider of FinCrime services

Ron Giammarco, leader of EY Global FinCrime Managed Services, described EY’s foundational principles for the financial crime practice in both technology and business model terms, noting that the firm has been committed to making every new offering cloud-native, but still deployable on premises. EY’s FinCrime practice, which was established 20 years ago, generates $1 billion in annual revenue, and there are over 30 clients on the firm’s FinCrime technology platform. To further its business, EY is determined to own the technology ecosystem, including all the intellectual property within the practice and every aspect of the relationship with clients.

In Giammarco’s view, EY should provide “frictionless” experiences for clients using its different platforms and solutions, with EY smoothing out any underlying technology or partnering issues. To offer those platforms, Giammarco noted, the firm has decided to acquire and partner as much as possible, building assets internally only when needed. In TBR’s view, these foundational principles reflect a shift in EY’s approach to technology and the firm’s overall ecosystem.

Embracing the business model shift and the substantial financial investment needed to be a technology company — at least to the degree EY is now — requires reorienting around the current competitive and partnership landscape, not the more siloed and opaque environment of several years ago, when digital transformation emerged as a challenge to the traditional consulting business model. Among the significant changes, Microsoft (Nasdaq: MSFT) and SAS now list EY’s offerings within their own services catalogs, and EY expects those partners to not only provide technology support but also engage in sales efforts and the onboarding of new clients.

EY’s differentiation: Expertise, discipline and global standards

Within this changed competitive and partnering environment, EY has been challenged to differentiate from peers, an effort TBR has tracked across Strategy and Transactions, Blockchain and other EY practices. For Nic Bastable, leader of EY Global Financial Crime Managed Services Delivery, the firm’s uniqueness has coalesced around three main characteristics. First, EY has developed deep domain expertise, which continues to evolve. Bastable explained that every FinCrime interaction, even through a managed services arrangement, has eventually led to an analyst helping a bank make a financial crime risk decision, which has involved more than just following simple procedures.

EY has invested in its professionals, building career tracks for FinCrime analysts and providing ongoing training, which led the firm to have, in Bastable’s opinion, differentiated expertise. Second, within the complex environment of helping banks make decisions about risk, EY has exhibited tight operational controls — essential at the global scale of EY’s services and to meet clients’ needs. Third, over years of providing FinCrime services, EY has created a global standard operating model, distilling best practices from dozens of engagements, by thousands of professionals, across more than a million events. Underlying all this, according to Bastable, EY brought automation and efficiency to the firm’s operations and delivery, further differentiating the value of EY’s services.

In TBR’s view, while each of the core elements of EY’s FinCrime practice does not separate the firm from specialists or niche services providers, the combination, particularly with global reach and substantial scale, gives the firm a compelling story. Overall, EY’s FinCrime practice does not depend on setting itself apart from peers, especially as professional services firms rarely differentiate from one another; instead, EY succeeds through solidifying trust by offering domain depth and delivering.

With Nuance, Microsoft buys into healthcare and more

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Microsoft announced its second largest acquisition in company history on April 12 with its intent to purchase Nuance Communications for $19.7 billion. Nuance’s presence in the healthcare vertical was touted as driving the move, but TBR believes much deeper and broader strategies were behind Microsoft’s decision.

Buying Nuance gives Microsoft an opportunity, but not a guarantee, to sustain growth

The announced acquisition of Nuance is the culmination of multiple elements of Microsoft’s recent performance, strategy and growth plans. On performance, Microsoft has benefitted from the COVID-19 pandemic perhaps more than any other technology vendor. Technology demands of businesses and consumers reacting to the pandemic boosted nearly all of Microsoft’s sprawling businesses, aside from an initial downturn in advertising spend that negativly impacted the LinkedIn business. From a strategy perspective, industry specialization has been a growing focus for Microsoft over the past five years, which is a shift in its mostly horizontal technology approach throughout its long history. Healthcare has been a frequent focus, but so too have retail, manufacturing and financial services specialization.

Lastly, in growth, Microsoft has been searching for the next $10 billion plus growth business. Microsoft Office 365 and Azure are clearly carrying Microsoft’s financial performance to date, but new addressable markets are needed to carry corporate growth and profitability for the next decade. While Nuance itself cannot assume that burden, the capabilities Microsoft will acquire will make many of its core technologies relevant to a much wider audience and set of use cases. In this way, the purchase of Nuance is similar to that of LinkedIn, with the full value of the investment hinging on successfully leveraging the technology to benefit as many other business units as possible.

Healthcare is large and ripe for IT investment

Unsurprisingly, healthcare has a profound impact on modern society, with an industry size to reflect that. In the U.S. alone, healthcare spending was $3.8 trillion in 2019, representing 17.7% of total gross domestic product (GDP). Furthermore, healthcare spending increased by 4.6% in 2019, a rate far outpacing growth of the overall economy.

Those facts are only part of the reason healthcare is such an attractive market for IT companies. While many verticals have fully embraced technology-driven transformation over the past decade, healthcare has been much slower to change. While technology has fundamentally changed the retail experience and business model, healthcare’s core operations and customer experience have remained much the same. Delaying this maturity in part are the strict regulations, such as the Health Insurance Portability and Accountability Act (HIPAA), which healthcare entities in the U.S. must meet, creating substantial risk for any IT budget decision makers planning to modernize their environments with cloud, let alone pursue innovative technologies such as IoT to improve the care they provide to patients.

There are glimmers of promise that the healthcare vertical is ready to begin transformations driven by increased technology adoption. Part of the shift is a generational change in doctors and providers. The influence that doctors have within the healthcare industry is one of the attributes that makes the healthcare vertical unique. Generational change among the physician ranks is having an outsized impact on the acceptance of technology within healthcare, but that is only one of the factors pointing to an increase in technology adoption.

Outside of shifting perception, the impact of COVID-19 has forced hospitals and patients alike to embrace solutions that have been around for years but are now a necessity to maintaining the patient-doctor relationship and safety, such as telemedicine. And with all major cloud technology providers offering HIPAA compliance, along with an ecosystem of partners that can leverage those delivery platforms, the aforementioned regulatory requirements are now less of a barrier in slow technology adoption.

COVID-19 will fade, but cloud reliance will remain

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The COVID-19 pandemic and its wide-ranging effects forced businesses to adjust in 2020 and now into 2021, but these changes will persist much longer than the pandemic. Most businesses made a wide range of changes to their IT strategies over the past year, but there are a number of commonalities. The first commonality is that technology is at the heart of how organizations have adjusted to COVID-19’s effects, to service their own employees and the changing needs of their customers. Cloud-delivered technology, in particular, has been core to providing the speed and scalability needed to support these adjustments in the most agile manner possible. The other commonality in COVID-19 responses is that organizations found a way to support increased technology spending, even in a time of much economic uncertainty. Cloud investments were prioritized during the course of 2020, which is reflected in the overall stability and continued growth of the market throughout the year.

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AWS, Microsoft Azure and Google Cloud Platform are even more critical to the IT industry

While the market continued to grow and leading firms maintained their momentum, they were not unscathed by the effects of COVID-19. Vendors experienced a dip in revenue growth rates during 2Q20, at the height of uncertainty and pessimism. The dip was driven by businesses pulling back spending in anticipation of a pronounced economic slowdown. Even though COVID-19 infection rates grew worse through the end of 2020, economic expectations recovered and the uncertainty around how COVID-19 would impact business results diminished, putting cloud revenue growth from the leading vendors back on previous trajectories. Though the business strategy and dynamics were much changed, the continued growth of the leading firms was back on track.

In many ways, COVID-19 accelerated but did not actually alter the course of cloud technology’s impact on the IT market. As a delivery method, cloud was already eroding traditional IT and far outpacing the overall growth in spending. Most customers had some level of cloud investment prior to 2020, with many using cloud solutions for mission-critical elements of their enterprises. After a year of dealing with pandemic-driven disruption, cloud utilization has grown significantly. Cloud adoption happened faster than most organizations planned moving into 2020, as business changes forced customers to overcome cultural, budgetary and technological barriers in making adjustments to their operations. The good news for cloud vendors is that this change in behavior should last well beyond the direct impacts of COVID-19. The challenge is how to meet this enhanced level of demand, which requires investment now to get additional data center capacity and services online ahead of increased needs. The market may have reached this place eventually, but both customers and vendors are accelerating their cloud strategies to account for the more prominent role cloud will play in the overall IT market moving forward, even as COVID-19 fades, hopefully sooner rather than later.

Atos firing on all cylinders as it overcomes COVID-19 headwinds and expands in North America

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Building industry-specialized expertise increases Atos’ value proposition around delivering business outcomes to clients

While Atos’ (Nasdaq: ATOS) revenue growth and profitability in 2020 were negatively affected by the pandemic, the crisis pushed the company to strengthen its focus on clients and industries. Atos is working with clients to enable business continuity, such as by facilitating work-from-home environments, providing agile infrastructures and tackling cybersecurity challenges, and to address client priorities, such as cost optimization, deployment of digital workplaces, and acceleration of digital transformation. The company’s pivot to an industry-aligned go-to-market approach to better address clients’ specific business challenges and its consistent acquisition strategy over the past year to gain niche capabilities in segments such as digital security, cloud and applications consulting, systems integration, AI and big data consulting, and decarbonization services improve the company’s ability to alleviate external revenue growth pressures due to tight spending.

Atos reached its financial targets during 2020 despite the challenging pandemic environment

Market uncertainty and volatility brought on by the COVID-19 pandemic forced multiple IT services vendors to forgo setting financial objectives for 2020. However, Atos was confident about its performance and, in April, established its 2020 revenue, operating margin and free cash flow objectives, which the company achieved by the end of the year. Atos estimated that revenue would decline between 2% and 4% organically for 2020 due to the negative effects of COVID-19 and reported a 2.3% year-to-year organic revenue decline, in line with the company’s projection. Operating margin before other expenses decreased to 9% of revenue in 2020 from 10.3% in 2019, an anticipated contraction due to pandemic-driven revenue declines; however, the metric was within the targeted range between 9% and 9.5% of revenue for the year.

The company’s efforts to reshape its portfolio, including by expanding its offerings around digital, cloud, security and decarbonization, and align its go-to-market approach to six industry groups positively affected commercial activity. Atos’ highest quarterly bookings level since 1Q19, continual emphasis on digitally certifying its employees, and investment in 12 bolt-on acquisitions since February 2020 will support revenue growth improvement in 2021. Atos’ goal is to grow revenue between 3.5% and 4% year-to-year in constant currency in 2021, and TBR expects Atos to meet its revenue growth goal as the company expands its portfolio, such as through the OneCloud initiative; continues it active acquisition pace; and maintains a strong deal pipeline.

2021 Atos North America Analyst and Sourcing Advisor Event: Social distancing, country lockdowns and travel bans due to the pandemic pushed Atos to continue hosting the virtual analyst event series the company initiated in June 2020 with its first global Atos Analyst Days event. Focusing on Atos’ North America regional business, the March 2021 event provided analysts with rich content through prerecorded executive presentations on topics such as strategic priorities, sales and business development, talent advancement, and Atos|Syntel business updates as well as deep dives on six regional industries: the media, the public sector and defense, retail, manufacturing, healthcare and life sciences, and financial services. The sessions were augmented by live one-on-one meetings with Atos’ executives, which enabled TBR to gain a deeper understanding of the topics and valuable insights from Atos’ executives as well as provide our own view and assessment on the covered topics. Having access to prerecorded presentations several days prior to the one-on-one meetings allowed TBR analysts to watch the videos at our own pace.

Aiven’s managed services capabilities bring the best of open-source data technologies to multicloud enterprises

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With a core portfolio of platform services, Aiven meets the needs of developers, partners and the cloud-native enterprise  

Aiven was founded in 2016 by a team of open-source and cloud experts based in Helsinki who sought to develop a data management platform that capitalizes on the needs of more mature customers who are increasingly leveraging open-source software. As such, many of Aiven’s clients come already knowing what they want in terms of stream processing frameworks, databases, search engines, visualization and analytics. The core driver of value is Aiven’s ability to orchestrate data on a single management platform, which entails getting customers up and running with minimal deployment lag and enabling the integration with existing tool sets on any cloud. The dedication to a robust support model and transparent pricing with lower costs than many competitors are additional underlying factors that position Aiven to continue growing on pace with the expanding Database as a Service market (DBaaS); for reference, in just the last eight months the company has doubled in size to about 150 employees and is backed by a strong venture capital engine, including the company’s latest round of Series C funding worth $100 million, as well as solid new and recurring revenue streams.

Despite coopetive dynamics, Aiven benefits from allying with leading hyperscalers to support clients’ need for multicloud

As multicloud is a core component of its value proposition, Aiven provides customers availability by partnering with all three major cloud service providers (CSPs), including Amazon Web Services (AWS) (Nasdaq: AMZN), Microsoft (Nasdaq: MSFT) and Google Cloud (Nasdaq: GOOGL). In addition to Aiven’s services being made publicly available on the marketplaces of both Google Cloud and AWS, these relationships allow Aiven to provide enterprises with a way to build the services and applications that are enabled by databases on leading public cloud infrastructures, as well as offer a simple migration path for legacy customers. TBR notes that over 10% of Aiven’s customers are provisioning different services to multiple clouds and that many of Aiven’s adopters come knowing specifically which databases or monitoring tools they want to use and where they want to deploy them. While many customers often start with a preferred cloud partner, they ultimately seek to expand to other platforms for greater development autonomy and to avoid vendor lock-in. As a result, TBR believes Aiven’s role as an orchestrator for multiple database services across clouds positions the company uniquely in the market, as Aiven provides customers the degree of neutrality and third-party support required to navigate and manage various dispersed open-source projects.

However, as Aiven offers nine core services — including the widely deployed open-source platform tools Apache Kafka, PostgreSQL, MySQL, Cassandra, Redis, Elasticsearch, InfluxDB, M3 and Grafana — there is a large degree of coopetition as Aiven’s partners offer related services on their clouds and, in some cases, the clouds of other CSPs. The increasingly open, hybrid multicloud approaches of vendors like Google Cloud and even IBM (NYSE: IBM) will prove competitive, yet TBR believes Aiven still challenges its partners when it comes to enabling open-source innovation and helping enterprises deliver this innovation at scale. Meanwhile, as customers increasingly look for a partner to avoid vendor lock-in, Aiven is well positioned to challenge many vendors that trail the market in providing a degree of vendor-agnosticism.  

Open-source technology has become less of a value differentiator and more of a foundational attribute that customers in the cloud database market have come to expect. Vendors in the space must now embed other feature sets and functionality to stand out and navigate the common challenges faced when it comes to modern app development and operational management in the cloud. However, customer expectations go beyond avoiding vendor lock-in, one of the known benefits of open-source technology, to include reducing TCO while improving time to market, security and reliability. Aiven is a managed cloud database services vendor that delivers a unified data platform for both traditional and cloud-native customers looking to deploy data architectures seamlessly and across multiple clouds. By capitalizing on managed cloud services, Aiven has created a way for customers to build, deploy and manage various open-source database management and analytics tools in a self-service manner. With a variety of deployment methods available to customers in conjunction with the benefits of automated security, scalability and resilience, Aiven has demonstrated this value proposition by building a customer base that crosses multiple industries and highlights both customer-facing and back-office analytics use cases.

mimik pioneers a unique hybrid edge cloud solution that empowers the localized autonomy of devices

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The journey to capitalize on the edge is rooted in deep telco experience, coupled with a passion for breaking boundaries

A brief history lesson is important to understand how mimik came to be. It was during her tenure as CEO of Vodafone xone that mimik CEO and founder Fay Arjomandi realized the growing importance of decentralizing data analytics and processing to the edge. Through the testing of capacity improvement and utilization of network traffic, Arjomandi noted the inherent delay that occurs when traffic hits a data center, causing extensive issues such as bottlenecks as data struggles to reach the back end of the application. This was all occurring in the context of the rapid evolution of devices themselves, increasing not only in sheer volume but also in sophistication.

Arjomandi came to the realization that the existing architecture of the time was not equipped to support the ongoing shift to a hyperconnected digital world where almost every object can be smart. The future is not about vertically integrated devices that communicate in a linear fashion to the cloud or on-premises data center environments, but rather will be rooted in horizontal platforms where data can be processed and exchanged across diverse networks, platforms and systems. Created in the context of IoT but viewed with new eyes as the Internet of Systems versus “things,” mimik pioneered a new architecture in the form of a hybrid cloud edge solution that enables any computing device to act as a cloud server with the ability to communicate autonomously and locally and to make decisions across and within networks. 

Empowering local systems to make autonomous decisions is mimik’s core value 

By virtue of placing enterprise applications closer to where data is created and where insights are actionable, edge devices have always maintained some degree of autonomy. That said, there has also been an underlying perception that the cloud has an umbilical-cord-like function in that it ultimately serves as the main governing force and point at which most of the data is processed, analyzed and housed. mimik has cut the cord, recognizing that as IT becomes increasingly decentralized, localized servers and sensors are evolving beyond mere endpoints and becoming part of powerful systems that can function independently of the cloud. mimik’s Hybrid edgeCloud application development platform was born out of the realization that applications can interact locally with the power to function as clusters of communities that communicate, inform and analyze data at the source.

The edge has traditionally been viewed as a localized extension of the cloud, providing a 1+1=3 opportunity to capitalize on the inherent benefits of the cloud with localized data processing and reduced latency. In the context of an increasingly hyperconnected world, the devices and sensors that interact at the edge are taking a central role, driving more and more use cases, rather than acting just as add-ons to amplify the value of the cloud. By focusing on what devices can accomplish as part of interconnected systems at the edge, mimik, a Canada-based technology firm, has emerged with an advanced out-of-the-box solution, Hybrid edgeCloud, which enables any computing device to act as a cloud server. The multiple positive implications include lowered latency, reduced constraints on network bandwidth, heightened security and decreased cost of cloud hosting — all due to the reduction of traffic traveling to and from the cloud and the enhanced connectivity within and between systems of devices.

PwC unleashed: A professional services firm adopts Netflix-like business models

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From Products to Digital on Demand and ProEdge

We reported this time last year that PwC Products completely shifted from being an old-school, white-shoe, tax- and audit-focused professional services firm from the previous age of the Big Eight to being a business solutions provider, with those “solutions” including SaaS, managed services and platforms. Now the firm has taken another large leap forward, adopting elements of business models most notably deployed by Netflix to bring its software and solutions into clients’ environments in a completely new way, while simultaneously reorienting the firm’s professionals around the skills and capabilities needed to serve their clients in a new world. We understand that assessment sounds over the top in a market already swamped by exaggerated claims around digital transformation.  

Sustained investment and committed leadership — it is that simple

PwC launched PwC Products in early 2020, as covered in our special report, in which we noted: “PwC is a business solution provider, and some of those solutions include products — tangible, defined assets that allow the firm to be, as the PwC leaders noted, ‘better, faster, and cheaper for clients.’ Some of those assets will remain within the firm, scalable but deployed only to increase speed or efficiency in certain engagements. Some assets will remain with the client, paid for in full, through licensing or by subscription. For all of the solutions, PwC’s approach will start with a business problem in mind, rather than employing a systems integrator mindset of plugging technology into a business.”

Building on PwC Products, perhaps on a timeline accelerated by the remote-working realities of the pandemic, PwC rolled out Digital on Demand and ProEdge in late 2020, bringing to clients two distinct offerings made possible by years of sustained investment in digital capabilities, including software and the firm’s own IP, as well as a leadership commitment to adjusting the firm’s business model to fully accommodate subscription-based pricing and software-centric engagement models. In TBR’s view, the first element — investing in technology — does not differentiate PwC from peers, except perhaps in the firm’s early start in some areas and sustained commitment to an organizing framework. The second element — leadership and adjusting the business model — marks a critical difference for PwC. Even though peers have made some similar changes, PwC has aggressively gone all-in and adopted multiple changes to its business models.

Digital on Demand: All the apps you want for one low monthly price (Netflix model 1)

In essence, Digital on Demand is PwC’s version of Apple’s (Nasdaq: AAPL) App Store, but with a client experience more akin to Netflix (Nasdaq: NFLX), where every option is available immediately without separate pricing or technical concerns. Similar to how everyone can watch their Netflix shows on their own device, PwC’s Digital on Demand solutions can be downloaded into the client environment, where they can be configured.

Led by PwC Labs Partner Michelle Wilkes, from the firm’s Consulting practice, and US Automation Leader Jeff Lower, from Tax, Digital on Demand belongs within the larger PwC Labs practice and carries through a relatively basic premise: Take the automation PwC incorporated internally, curate the solutions and refine the automations, and then make them available for PwC’s clients to deploy into their own environments. According to Wilkes, PwC built the foundational 6,500 automations across its own back office and for client engagement and saved 8.6 million hours of staff time across the firm.

Starting with finance functions, where PwC has legacy strengths and strong brand permission, the firm has partnered with Microsoft (Nasdaq: MSFT), UiPath, Alteryx (NYSE: AYX) and others to provide clients a menu of downloadable automations (access to cloud-based AI models via information extraction using natural language processing and machine learning), deemed by PwC’s Wilkes as “proven and relevant” because the automations had been designed by people who are deeply familiar with the finance functions and have experience in the finance environment. In short, Digital on Demand is readily deployable software built by finance process people for finance process people. Wilkes said the firm has 393 downloadable automations today, with plans to reach 500 by May 1.

On Feb. 18 and 19, 2021, TBR spoke with several PwC leaders: Michelle Wilkes, partner, PwC Labs; Jeff Lower, US Automation leader; Suneet Dua, chief product officer, PwC US; Darren Lee, partner, PwC Consulting; Mike Mendola, senior associate, PwC Labs; and Maria D’Alessandro, strategy director, PwC Products. This special report includes information and analysis drawn from these discussions and looks at how much the firm has changed and where the future of consulting lies for PwC and its peers. 

The state of crowdsourcing

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In February TBR virtually attended the Global Technology & Business Services Council’s Global Series: Open Talent conference and heard from leaders across the technology and crowdsourcing industries about emerging themes and trends. While it is not a new phenomenon, crowdsourcing is becoming a compelling delivery model in the IT services space as enterprises increasingly embrace remote services during the pandemic and seek out new ways to fill skills gaps, drive cost savings and accelerate engagement turnaround time. Platform-based crowdsourcing companies such as Topcoder and Freelancer.com, which TBR heard from during the conference, are rapidly expanding their communities of technology-oriented freelancers and driving new use cases with large enterprises that would have traditionally gone to IT service vendors. In TBR’s view, vendors that are not embracing this shift stand to lose the most. At the same time, we question whether those that bring this model to market are really positioned to gain much.

Existential threat or just a piece of the puzzle?

Now more than ever, crowdsourcing and open talent models are proving to be significant disruptors in how services are delivered, and technology appears to be an area that can benefit the most from this trend. Prior to the Global Technology & Business Services Council (GT&BSC) event, our understanding was that organizations engaged with the aforementioned crowdsourcing platforms mostly around the ability to tap large pools of talent much faster and cheaper, but largely for low-value, task-oriented services. To our surprise, during the event TBR learned about use cases in which Fortune 500 companies and renowned research institutions turned to “the crowd” for sophisticated software and data services, which led to significant improvements in speed, cost and even quality. For instance, a coalition between several enterprises and academic institutions such as Harvard and the Massachusetts Institute of Technology (MIT) opened up a project to the Topcoder community around the optimization of a DNA sequencing algorithm, with the goal of surpassing what had been regarded as an “impossible” threshold. Dozens of submissions crossed the threshold within 24 hours. At first glance, the use of these platforms for high-value services poses a threat to IT services vendors, but TBR notes some caveats.

White-labeling labor

It is necessary to point out that the majority of IT services vendors’ activities in the crowdsourcing space happened pre-pandemic. For example, Wipro (NYSE: WIT) made a splash in the industry when it acquired Topcoder in 2016. And in the years following this, other vendors such as DXC Technology (NYSE: DXC) and Deloitte pursued partnerships that enabled the vendors to launch crowdsourcing services by tapping into Topcoder’s labor ecosystem. First, this distorts the image of crowdsourcing platforms as competition and instead reflects a more symbiotic relationship. Second, while Wipro might be able to take a small commission on engagements done through Topcoder, it lacks a significant competitive advantage over peers that partner with it or other similar platforms.

Security and trust

Soliciting bids from unknown global technologists presents obvious risks. This model is not suited for workloads involving sensitive data and therefore is not gaining the same traction in industries such as financial services or healthcare, where data security and privacy are top concerns. IT services vendors that cater to this clientele will be much more capable of steering clients away from crowdsourcing services and commanding profitable revenues. Similarly, many firms’ value propositions revolve around the reputation of the company and its quality of services, helping them garner more trust-based relationships. Clients seeking this level of service will largely be uninterested in crowdsourcing. This concern will also put pressure on services providers that partner with crowdsourcing platforms, as well as the platforms themselves, to establish guardrails against potential leaks or security breaches, but it remains no easy task to vet millions of global freelancers.   

Bottom line

These platforms are intended to optimize costs and speed. While IT services vendors likely do not want to miss out on any opportunities to engage with potential clients, partnering with a crowdsourcing provider and delivering the cheapest possible services will limit margin growth. Instead, we see opportunities for vendors to embed this open talent model into their organizations to improve utilization and more efficiently deploy staff. We learned during the GT&BSC event, for example, that Deloitte partnered with Freelancer.com in 2019 to develop an internal marketplace for Deloitte’s employees to join open projects within the firm and integrated the solution into the Freelancer.com ecosystem so Deloitte could extend its pool of external resources if needed.

What the future holds

If anything has stood out during the pandemic, it is that incumbents in every industry must be prepared to quickly pivot and adjust to new and nontraditional ways of doing business. In the IT services space, TBR believes disruptions such as the gig economy and crowdsourcing pose the biggest threat to management consulting firms, where generational and technology shifts are creating instances in which enterprises may opt to collect third-party opinions and advice through these types of platforms instead of via expensive consultancies, which can be as enigmatic as unidentified, crowdsourced respondents. In general, IT services vendors that have established pathways into this type of model will benefit from bringing new logos into account ecosystems, which will provide opportunities downstream to upsell higher-value services. We anticipate crowdsourcing will continue to play a supplementary, but necessary, role in IT services as a way for companies to easily scale services at the expense of security and margins. But much like organizations’ hesitation to fully embrace the cloud for their IT ecosystems, taking a hybrid approach to “the crowd” will likely remain the preferred method for most enterprises to minimize risk while still reaping the benefits of scalability and speed that the crowdsourcing model offers.

TBR’s Professional Services practice will continue to monitor the trends outlined above and provide analysis across our syndicated vendor reports and benchmarks, notably the IT Services Vendor Benchmark and Global Delivery Benchmark. The next iterations of these two products, which synthesize TBR’s in-depth analysis and data across covered vendors, are set to publish in April.

Eyeing the future: Accenture’s fundamentals drive human-centric technology change at scale

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‘Leaders Wanted — Masters of Change at a Moment of Truth’

Accenture’s (NYSE: ACN) recent virtual event to introduce its Accenture Technology Vision 2021 kicked off with a quick recap of the socioeconomic headwinds of 2020. These headwinds include four new concerns facing people personally and professionally: an increasing global population driving a need for new ways of interacting; the evolution of “Every business is a tech business” as technology’s role changes with the changing environment; the workforce of the future; and sustainability. Accenture Group Chief Executive – Technology and Chief Technology Officer Paul Daugherty then outlined in detail the five major trends of its 2021 vision.

Delivered under the slogan “Leaders Wanted — Masters of Change at a Moment of Truth,” the vision highlights five key areas, which we expect to drive investments not just from Accenture but also peers and enterprises, given the company’s market-making status in multiple domains.

  1. Stack strategically: While this trend at its core applies to architecting and redesigning organizations’ technology stacks to support the enterprise of the future, which includes attributes from the customer experience to the security layer, it also maps to Accenture’s core value proposition of joining consultants, designers, researchers, solution architects and delivery personnel, all through the umbrella of Accenture Innovation Architecture.
  2. Mirrored world: The resurgence of the digital twin is moving beyond experimental phases, and large enterprises are seeing an opportunity to invest in an area that, in the era of COVID-19, which has led to social distancing and reduced access to physical plants, will allow them to use IoT techniques to enable remote monitoring and control. Accenture’s ongoing investments in mobility and IoT service offerings over the past five years, along with the recent push into product engineering offerings, largely enabled through acquisitions, will enable the company to address demand and increase client stickiness.
  3. I, technologist: The democratization of technology, which has enabled workforces to do more with less and orient their productivity to higher-value tasks largely enabled by automation, while not a new trend, has certainly reached a pivotal point, given the changes over the past 12 months in how employees perform their work. Accenture’s rigorous approach to and ongoing investments in training — including spending $1 billion per year on reskilling and upskilling personnel, with efforts most recently focused on building cloud consulting, architecting and delivery skills — enable it to drive internal change at scale, and then sell its capabilities “as a Service” to clients.

On Feb. 17, 2021, Accenture held a one-hour virtual session introducing its Accenture Technology Vision 2021. While the format was different than in previous years, the 21st iteration of the summit had a similar goal: to portray Accenture’s technology prowess and appetite for innovation and scale. Hosted by Accenture Group Chief Executive – Technology and Chief Technology Officer Paul Daugherty, Accenture Senior Managing Director and Lead – Technology Innovation and Accenture Labs Marc Carrel-Billiard, and Managing Director – Accenture Technology Vision Michael Blitz, the virtual delivery of the content was both a sign of times and a demonstration of Accenture’s ability to coordinate, deliver and manage virtual events in collaboration with ecosystem partners — in this case, Touchcast. 

Who’s there?: The rise of multienterprise business networks

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Not everything about business is technology, but every business has to leverage technology everywhere

Over the last few years, executives discussed redesigning their businesses for the safe, secure and accurate flow of actionable data with as little human involvement and oversight as possible, a change Google describes as removing the “human toil” from economic activity. Business leaders called this process optimization, a process often resisted by employees which in turn slows an organization’s digital efforts. Organizations big and small have been forced to embrace a cloud- and digital-first posture to maintain business continuity and participate in everyday economic activity. In short, these efforts are being done to maintain relevance. As a result, nontechnology-savvy executives and employees will exit the workforce exponentially over the next five years.     

In this transformative period, future managers train now at new entry-level IT jobs, even as IT services vendors and other players in the technology ecosystem complain about a shortage of STEM talent in the hiring markets. The talent that does come on in new roles spread across a digitally savvy enterprise understands application interfaces, which align human interaction with technology and data platforms. By entering the business in this capacity, the incoming talent gains experience across the various elements of the business operation that executive managers require while also ensuring they are fully digitally versed for the Business of One.

Adding further complexity has been the disaggregation of business functions or value among different business entities. In technology we see this as the IP-centric elements of a business being split away from the labor, or task-centric functions. Looking at semiconductors, for example, some on Wall Street are calling for Intel to be split between the IP-laden aspect of chip design and the capital-intensive aspect of fabrication plants capable of manufacturing those designs reliably at scale. They are two businesses with entirely different rhythms and economic drivers, yet neither can thrive without the other.

The work-around to this business disaggregation taking place is to establish a network of businesses with complementary value propositions. This network is increasingly being called the multienterprise business network (MEBN). Many technology-centric firms describe this as their platform. But platforms are a stage on which something is performed, and that performance is the outcome enabled by multiple different parties. As such, viewing MEBNs from solely a technology-centric view can miss the point entirely.

As the Business of One evolves, legacy technology vendors selling on technical merits, or speeds and feeds, and selling just to IT face tremendous market pressures to pivot to selling business outcomes. Today’s reality requires understanding customers’ busines objectives and speaking directly to business decision makers.

For Technology Business Research’s (TBR) Digital Practice, this necessitates taking our core value proposition of vendor-centric business analysis of technology companies across a standard technology business value chain and combining it with additional considerations about industries and the operating best practices of business ecosystems that tie back to the specific use case and the personas integral to that use case. After having established those core frameworks, the analysis then ties back to time horizon and MEBN participant. In short, what is in it for the MEBN participant at what stage (commonly referred to as Horizon 1, 2 and 3 in today’s frameworks) in the MEBN product road map.

To illustrate the intent here, consider the creation of an MEBN for the utilization, storage and maintenance of autonomous vehicles. Having autonomous vehicles moving about a defined geography would clearly be the Horizon 3 aspiration, which is nowhere near commercial reality today.

Horizon 1 would be delivering an immediate level of business value creation to entice the participants necessary for that Horizon 3 aspiration. For example, gas stations, mechanics and parking garages, at a minimum, will need to be recruited into the MEBN for autonomous vehicles. Later, additional services for the auto owner could be added such as online ordering with brick-and-mortar pickup across various nontech-centric small businesses providing localized services. Creating a buyer network in Horizon 1 for today’s cars and owners has to provide sufficient business value for enrolling participants.

The capital investment in the technology infrastructure likely must come from the Horizon 3 business benefactor and be viewed as a long-term investment to facilitate the recruitment of the necessary member participants. In the end, those autonomous vehicles will need the fueling, maintenance and parking services to function and the adjacent human services of pickup and delivery to increase their utilization rates beyond a source of human transport. Yes, it requires a technology value chain as its backbone, but nontechnology participants are just as necessary to flesh it out into a thriving MEBN of buyers and sellers who may not even concern themselves with the technology underpinnings at all.

More colloquially, few singer-songwriters would have the capital necessary to build the technology assets for downloading music over the internet. But once Apple took a long view to their investment posture, it was able to build out a robust MEBN that profited many artists, disrupted traditional nontechnology businesses, and delivered value to many customers in the form of the iTunes platform, which itself has been disrupted by streaming services such as Spotify and Pandora.

TBR’s Digital Practice remit is to take its core value proposition of discrete company business model analysis and apply it to the MEBNs by isolating the different components through a series of frameworks. In doing this, we will then be able to assess the financial impact for the different member participants across the near-term, mid-term and long-term horizons.

Industries have different automation leverage points, enabling different personas; inexpensive tech makes possible a myriad use cases

Compute ubiquity has been well documented. The multimillion-dollar supercomputer performance of yesteryear is now contained in smartphones. The first IBM PC chip, the 8088, is now matched by CPUs the size of a grain of sand that cost $0.10 to produce. Historically, the heavily regulated industries of financial services and healthcare were early technology adopters, given the risk exposure of noncompliance with government regulation. As the cost of compute was brought down to incredibly inexpensive price points, compute expanded from those back-office functions into front offices. Today, we are at a point where, as on EY executive summed it up in analyst interaction when peppered with multiple questions: “We can do whatever you want; you just have to make up your minds.”

Making up our minds translates into codification of standard business results to digitize activity in a consistent way, and this sits at the heart of multiple game-changing technologies including AI, machine learning and blockchain. And these are horizontal technological capabilities that cascade through a variety of industries. Retail, once cost-conscious, was one of the later industries to adopt technology. Amazon, as we know, has disrupted this sector at the detriment of many high-profile brick-and-mortar brands of yesteryear.

TBR will use this construct to incubate standard coverage of markets, facilitating a way to bring analysis of that market to a vendor-centric view. TBR’s Digital Transformation research portfolio will serve as the vehicle to introduce these frameworks. The inaugural Digital Transformation Blockchain Market Landscape is set to publish in April 2021 and Digital Transformation IIoT Market Landscape will be published in June 2021. These reports will follow a semiannual publication cadence.