Uncertainty, globalization and trust: How PwC suits the Japanese market

In describing PwC’s presence in Japan, firm leaders said professionals in the consulting practice make up 2,500 of 7,300 total at the PwC Japan firm, with the practice’s revenues growing more than 20% year-to-year.

Echoing sentiments expressed by PwC consulting leaders last month in New York City, the Japan-based team said systems integration (SI) work, currently earning approximately 20% of consulting revenues, would expand in coming years as the BXT model pulls through long-tail SI opportunities. Speaking more broadly about the Japanese market, PwC’s leaders noted that their own research revealed that Japanese companies believe the U.S. and China matter most with respect to overall growth, with the U.S. economy increasingly more important to Japanese companies than China’s economy. In addition, while global executives have cited overregulation, terrorism and geopolitical uncertainty as the top three threats to growth, Japanese executives are worried most about the availability of key skills, especially in digital and emerging technologies. Further rounding out the landscape, PwC’s Japan-based leaders said local companies have expressed a renewed interest in overseas M&A opportunities, in part due to saturation of the Japanese market. PwC leaders added that previous “misconduct” by acquired companies and overseas subsidiaries makes some Japanese companies nervous, causing them to exercise caution and restraint when considering potential acquisitions. Even after folding in cybersecurity issues and overall political and economic risk, plus the costs associated with post-merger integration, the M&A picture appears positive, but quietly so. Within this complete market environment, PwC’s local leaders, including Susumu Adachi, Consulting CEO (Japan); Yukinori Morishita, Group Markets leader; and Nobuaki Otake, Business Transformation lead partner, repeated the message that PwC’s expanding role in Japan revolved around trust—a familiar refrain from previous PwC Experience Center visits and analyst events in Miami, New York, Shanghai, Toronto, and Frankfurt, Germany.

On Oct. 3, PwC’s Tokyo Experience Center hosted its first-ever Analyst Day in Japan, marking a significant expansion of the firm’s BXT approach across the globe. Leading the event, Koichiro Kimura, PwC’s Japan group chairman and territory senior partner, outlined the firm’s growth and strategy in Japan as well as initiatives launched by both the Experience Center and the firm’s Data & Analytics (D&A) practice. PwC leaders and Japan-based clients rounded out the event with detailed examples of the firm’s relationships and work across multiple offerings, including cybersecurity, business process reengineering, artificial intelligence and change management.

UiPath brings robots ‘to life’ through business-first approach

Under the slogan “a robot for every person” UiPath’s CEO and Co-founder Daniel Dines’ vision for automation takes a pragmatic approach and furthers Bill Gates’ 1980 Microsoft mission of “A computer on every desk and in every home.” While UiPath and/or any of its competitors are far from making this vision a reality, it certainly summarizes the company’s total addressable market. As UiPath executes on its vision, the company’s comprehensive portfolio of attended and unattended robots as well as a SaaS orchestrator solution meet current market needs for solutions addressing brokerage and management of structured and unstructured data across the front, middle and back office. Additionally, UiPath’s approach to automation through a business lens makes it an appealing vendor that can help consultancies and other alliance partners better target line-of-business leads, especially clients with backgrounds in Six Sigma and Lean methodology training.

While UiPath will continue to have the tough task of overcoming skepticism around the public perception that automation will eliminate jobs, educating the market on the broader ROI from the use of RPA, including increased productivity, improved accuracy and compliance, can help it counteract initial resistance and accelerate adoption. Use cases, such the one with a Japan-based bank that deployed 1,000 UiPath robots to optimize the work of 700 FTEs with the long-term goal of creating capacity for 4,000 employees and saving $500 million over three years, make for a tangible impact on operations and the bottom line.

As the pendulum continues to swing between hope for and fear of automation, accelerated by hype, UiPath’s value proposition and go-to-market strategy enables it to illustrate that automation is not a jobs killer but rather a jobs creator.

TBR attended the second annual UiPath Forward Americas conference in Miami. TBR interacted with executives from across UiPath and its partners and clients. With over 1,500 attendees, including 500 partners and client executives, the conference was three times larger than the first UiPath Forward Americas event a year ago. During the sessions, UiPath highlighted its exponential success over the past three years, with a fair dose of energy but balanced with humility. UiPath provided an update on its financial performance and portfolio road map and laid out new initiatives including the launches of UiPath Go, the Academic Alliance, the UiPath Venture Innovation Fund and the UiPath Partner Acceleration Fund. These new initiatives connected well with the discussions about the need for democratization of automation and collaboration among business leaders, IT and the partner ecosystem.

The continued interweaving of the technology component market with Internet of Things (IoT) techniques delivers a well-defined path to long-term sustained growth for many IT and operational technology (OT) vendors, especially those vendors that are best able to differentiate their portfolio and position themselves as critical partners for a wide set of IoT solutions.

The hype surrounding IoT has only served to confuse and overwhelm customers and vendors, but efforts by both parties to cut through the hype is driving the growth of installed IoT solutions. As the hype fades, vendors are better able to rationalize their go-to-market strategies and messaging, particularly around how to assemble IoT solutions, leading customers to better understand how to apply IoT.

However, while it is becoming easier to assemble an IoT solution, it is still challenging to design and implement the IoT technique. We don’t expect a huge explosion of revenue; IoT itself isn’t a “killer app,” but it will enable moderate and slowly accelerating revenue growth for the various components involved in an IoT solution.

In our 3Q18 reports and thought leadership, TBR will focus on three topics that we believe are currently the most impactful on the wider IoT ecosystem: the increasing maturity of the IoT technique, the growing consolidation of generic platforms, and how increasing commoditization around IoT is working in favor of economies of scale and enabling the growth of installed solutions.

IoT is growing up: Increased ecosystem maturity will lead to increased customer adoption

TBR, through discussions with vendors and customers as well as our use case databasing, is noticing growth in installed IoT solutions, whether from net-new deployments or expansions of existing IoT deployments, signaling improved maturity. IoT maturation is not so much about the components of IoT as it is about businesses developing their ability to leverage technologies and techniques that are increasingly applicable to a growing number of business problems.

A major driver of this maturity is greater clarity around IoT techniques, led largely by go-to-market realignment and improved messaging by vendors, organization around IoT by customers, shifts from competition to coopetition by vendors, and general improvements in the construction of the technology that facilitate advanced usage of the IoT technique.

As we start the final three months of 2018, TBR’s Professional Services Practice (PSP) has begun wrapping up analysis on the year as a whole and thinking more about what 2019 will bring, specifically in the areas of healthcare IT services, data management and consulting. Top-of-mind issues for TBR’s clients and the PSP analysts reflect today’s driving trends and set the stage for the next few years.

Now: Cloud, competition and emerging tech uncertainty unsettle HITS vendors

TBR’s healthcare IT services (HITS) practice has noted rising interest in electronic health record (EHR) systems and other health IT solutions, for example, patient data storage and application hosting in the cloud, tempered only by ingrained concerns about data privacy and security. EHR-centric companies aggressively cross-selling emerging solutions to their existing installed base of EHR clients have simultaneously captured new EHR work in the vast white space of latent demand for EHR systems outside the U.S. Complementing those efforts, increased cloud adoption generates opportunities for systems integrators to digitally transform payer, provider and life sciences organizations alike. For example, community hospitals eager to digitize and better connect with other providers in the healthcare ecosystem have become a growth engine for many HITS vendors, a trend that favors small-scale EHR providers, especially those that have pivoted to cloud, compelling leading vendors to scale down flagship EHR platforms and adopt small- to mid-market deployment models.

TBR closely monitors and analyzes the impacts to the business models for key HITS vendors as new pressures compel a shift toward different clients and markets, including the following development:

• Will cloud-based EHRs, infused with automation analytics for care and administrative processes, artificial intelligence (AI) for genomics-informed medicine, machine learning and telemedicine become more commonplace?
• How will executives at HITS vendors approach retrofitting existing EHR systems with these emerging solutions, in addition to integrating human-centered design into new EHR platforms?

TBR perspective

At Lenovo’s Transform 2.0 event, Chairman and CEO Yuanqing Yang (“YY”) laid out the Lenovo strategy crisply in his opening remarks, relying on multiple proof points from analyst firms in the process. The company has been gaining share in a market in the aftermath of consolidation, and it sees nothing but brighter days ahead. The source of Yang’s optimism rests on scale, a traditional lever that has pulled commodity component manufacturing to Asia for decades. How Yang believes Lenovo wins stems from the company’s supply chain best practices, where it can optimize the full stack of compute to serve the full stack of instances on the one hand and create a vast array of endpoint devices for humans and machines alike on the other.

The tight partnership with NetApp (Nasdaq: NTAP) was the biggest news at the event. The venture essentially melds the Lenovo and NetApp product lines in a manner similar to the scale advantage amassed when the former Dell and EMC merged to form Dell Technologies (NYSE: DVMT). The two companies have also created a joint venture in China, with Lenovo having 51% ownership as required by Chinese law, and plan to develop a line of storage products to meet the unique requirements of customers in China while leveraging Lenovo’s scaled manufacturing footprint in region.

Supply chain alone cannot help vendors differentiate, as many past Asian manufacturing giants have come to learn as overlapping channels confused markets and compressed middleman margins in the bygone era of transaction selling. Services selling requires an equally as deft and varied set of commercial offers to fit the financial strategies of the business entities Lenovo targets, and the seeds of these early “as a Service” commercial offering wrappers have been in flight for several years.

Commercial flexibility, while lagging the supply chain competencies, remains far ahead of the professional services wrapper commodity components required in the pivot to selling outcomes or solutions. Lenovo’s partnerships with leading systems integrators will be imperative for enterprise adoption as the business translation and advisory services increasingly relegate the compute and device acquisition to a derived decision.