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Customer Service Automation: Human-Robot Collaboration Best Practices

Zinnov sits down with Scott Merritt of Jacada for an insightful, two-part interview on the current state, and future of RPA.

Did you know that enterprises spent more than $2.3 billion on RPA in FY19? And that this number is expected to grow exponentially by 35-40%, to reach more than $11 billion by 2024?

RPA and Intelligent Automation have not only become mainstream conversations but are being implemented across enterprises at a rapid pace. Further, with attended and unattended scenarios making visible inroads in enterprises’ automation journeys, there is a renewed focus on Intelligent Automation. Based on Zinnov’s research and analysis, we estimate that attended RPA (bots working together with humans) accounts for approximately 30% of the market share and is growing at a steady pace.

Given the attention that Intelligent Automation is receiving across companies, and irrespective of industry vertical, Nischay Mittal, Engagement Manager at Zinnov caught up with Scott Merritt, Vice President, Global Head of Automation and Marketing at Jacada, to gather his perspectives on the key trends within the RPA space, especially the growing focus on attended RPA and Customer Service Automation (CSA).

Here’s an excerpt from the interview.

Zinnov: The RPA space has been growing at a rapid pace over the last 2 years. What are the top 2-3 trends you are witnessing within RPA?

Merritt: One of the biggest trends that we are witnessing is customers struggling to understand what or where to automate next. Customers often get through the proof of concept (POC) stage, start accepting the technology as a viable part of their architecture, but they fail to go beyond those initial use cases and pilots. This challenge to scale RPA for early adopters has quickly accelerated the industry from say RPA 1.0 to RPA 2.0, which is bringing to light a much-needed focus on a broader “intelligent automation” toolset rather than just an RPA only bot operation.

As a result, RPA companies are investing in additional capabilities to expand their offerings in order to drive meaningful business outcomes instead of just delivering a somewhat commoditized back-office RPA bot that can navigate a UI on behalf of a user.

Another trend stemming from this scale gap in RPA is the growing focus on Attended RPA. Formerly known as “desktop automation”, Attended RPA is a 10+ year old automation approach that grew out of a need in the contact center to integrate non-API ready applications and automate the many manual microtasks that bog down agents during a call, impacting handle time and customer experience (CX). At Jacada, we often find two dozen or more solutions on the agent desktop and they are a combination of these API-ready and non-API ready legacy applications. Automating for this type of environment, however, requires a different type of discovery approach and supporting RPA framework, one that is built for human collaboration vs the one built for robots (unattended).

Zinnov: We are witnessing immense traction within Attended RPA scenarios (or automation of front office processes) over the past year. Even some of the bigger RPA tool vendors are now increasingly focusing on Attended RPA use cases. What do you think are the key reasons for that?

Merritt: There are many reasons but one I often site is “back office blinders” or too narrow a scope. Let me explain. The original entry point for RPA unattended vendors and SIs was to target high volume / low complexity processes that could be automated end-to-end in back office departments like IT, Finance, Accounting, HR, etc. While these groups do have a need for RPA, they don’t always represent the ideal use case environment for RPA… or at least not after the low hanging fruit is picked off during the first few projects. What you often find here are smaller departments of people working on many disparate, more complex tasks; which often require human discretion at some point in order to complete the process. For example, one regional bank I worked with in the past had 80 back office workers in their card services division working on 160 different exception-based processes in any given month. Going into this environment with an unattended RPA only approach, it’d be difficult to support an ROI that would justify the project but several companies like this bank have moved forward based on limited options and poor guidance. We are now a few years into this approach and over 50% of companies have deployed < 10 robots and haven’t scaled their RPA programs beyond their original list of projects. This represents a flawed RPA strategy at the foundation and unfortunately one that was pushed by many of the new players in the market along with many of the SIs.

To counter this misstep and open up new use cases for RPA, vendors are addressing the more complex back office use cases with add-on capabilities like OCR, ML, Computer Vision, etc. However, to unlock RPA’s full potential, you have to add Attended bot capabilities to your intelligent automation stack allowing you to expand into areas of the organization where a much higher volume of people and tasks exist. A strategy that often brings you to the customer service operations arena.

As some of the larger unattended players realized this new fertile ground, they pivoted strategy and began to market this new type of bot with “attended” and “customer service” banners flying on their websites. These vendors are quickly finding that successfully managing this automation triangle of Customer-Robot-Employee is very different (in approach and supporting RPA technology) than building automation solutions for robots.

Zinnov: Currently, there are a lot of RPA tool vendors in the industry. How does Jacada differentiate itself vis-à-vis some of the other players? Can you elaborate on Jacada’s positioning within RPA? What would you say is your USP?

Merritt: Jacada is a niche player in the RPA space but at the same time, I would argue that all RPA vendors are niche players based on their core use cases and technology strength. Jacada‘s niche targets end to end customer service interactions by focusing on human and robot collaboration use cases in both digital self-service and customer assisted service scenarios. We have a strategy and supporting technology stack that has been transforming customer interactions for almost 30 years now. The space is unique compared to back office RPA as it involves an additional layer of complexity which is that all automations involve real-time interactions with agents and/or customers. As a result, we go to market with a Collaboration-First approach where capabilities like UX design, conversational AI, guidance, and automations have to be designed and orchestrated together in order to deliver a successful solution at scale for both customers and agents. All capabilities that reside within our low code intelligent automation platform, a unique offering compared to other RPA players in this space who often have to bring together multiple technology partners to deliver this kind of end to end customer service value proposition.

Zinnov: Is it safe to say that more complex processes would require more intelligence or leverage of cognitive tech?

Merritt: It all depends on how you define “complexity” quite honestly as process complexity can come in different forms when it comes to RPA.

Sometimes complexity is defined by the complex desktop environment that bots must navigate relative to the automation triangle I mentioned earlier. One of the exciting areas where we use AI to enhance RPA is in real-time speech to intent trigger. For example, when a customer calls a contact center, we leverage AI to power real-time speech analytics to orchestrate different bots throughout the live interaction. A speech bot can listen to the conversation and wait until a trained intent is recognized and then trigger a new guidance flow or bring back the answer to a customer question using Attended RPA without the agent having to touch the keyboard. This is a situation where a combined RPA and AI strategy can deliver on more complex use cases to enhance both the agent’s and customer’s experience.

Process complexity can also be defined by the complexity of the applications or application types that a bot needs to work with. Perhaps the number one challenge we see in the market is a result of a vendor platforms’ inability to integrate and automate with all of the necessary application types needed to automate the desired use cases. Known in the industry as “application coverage”, those vendors who lack broad and deep coverage of applications will require more investment in their RPA tech stack, not necessarily more AI to solve this problem. Unless of course, you include computer vision into the mix but that would be a different conversation altogether.

Another form of process complexity could come from the need to automate processes that involve converting unstructured data from forms or documents as a first step to automate a process end to end. Once again, the vendor would first need to have enhanced capabilities within their RPA platform to support OCR, computer vision, or other methods that can be used to access the unstructured text. When that is achieved, AI/ML can provide a more scalable way to identify and structure this data thereby removing a significant amount of human effort from the process.

Look, the future of AI within automation is exciting and all of us are focusing on R&D to further enhance our platforms with it. However, it is not always the best first choice when trying to solve for process complexity, despite what vendors may say to convince you. Very often I see organizations jumping too quickly into the AI vortex hoping for that quick fix before they have established a proper RPA foundation.

What is your focus on – Intelligent Automation, or leveraging cognitive tech such as AI/ML, NLP, CV, etc.?

Merritt: Our focus is on bringing together the relevant customer service automation capabilities into a common intelligent automation platform in order to automate customer service interactions. This customer outcome-driven approach guides our investment in AI and other cognitive technology. Take Natural Language Processing (NLP/NLG) for example. Our use cases and supporting capabilities for conversational AI focus on leveraging intent and sentiment recognition to understand in real-time a customer request regardless of channel. To support these different use cases, we have developed in-house AI capabilities to enable automation design while offering an intelligent automation and AI hub that allows clients to use their own preferred conversational AI platform whether it’s Google, Facebook, Watson, or other best-in-class providers. This open AI platform approach offers our clients complete flexibility while at the same time provides a plug-and-play environment for them to tie the entire customers’ interactions together in one low code design environment.

This is similar but yet different from the AI investment approach you typically see in back office unattended RPA use cases which often target data structuring to automate things like a document or email processing. The point here is that every RPA platform provider is investing in some form of cognitive/AI/ML technology to expand the number and type of outcomes they can deliver to their customers. As a result, RPA buyers really have to understand what outcomes they are trying to achieve and select the right vendor(s) accordingly – if they are trying to match invoices by leveraging AI/ML, there might be a certain vendor path for them; if they are looking to understand intent and deploy a virtual assistant for employees, that might result in a different vendor selection. Today there is not one vendor who covers use cases across all verticals despite the vendor claims (going back to my point of view that all RPA vendors are niche players right now). I think it’s about finding the vendor who has the relevant expertise and experience to match the outcomes, use cases and application integration requirements as per the customer demand.

Zinnov: Thank you, Scott.

Even though it’s the new-age disruptive technologies that form the spine of any successful automation initiative, organizations often struggle with the implementation aspect of Customer Service Automation. Read the second part of this interview blog to get Scott’s insights on the challenges and key drivers of RPA implementation.

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Becoming An Employer Of Choice In A Competitive Landscape

There has been a significant shift in the pecking order of employers in India. While in the past, product companies use to rule the roost and were the employer of choice, today Tech Giants, Unicorns, and niche start-ups are enjoying the major share of the India talent pie. In addition, Public Sector Units are competing with Service Providers and are fast becoming a threat to MNCs as well. This major shift in the competitive landscape is compelling organizations to push the envelope and assess their talent management strategies

Today organizations are taking a multi-pronged approach to attract, retain, and engage top talent. Right from employer branding to charting top-notch L&D strategy, organizations are relooking at their entire talent management strategy value chain to gain a competitive advantage over tech giants and start-ups.

Zinnov’s 8-pronged methodology to become an employer of choice

Here are some of the initiatives that can help multinationals and product organizations become a preferred employer of choice:

1. Employer Branding

As a function of the increasing competition, branding has become a crucial part of any talent management strategy. To become an employer of choice, companies need a thorough branding strategy that will cater to people within and outside the organization. The branding strategy must be structured around four key themes :

a. Center level branding: Companies need to spread awareness regarding the work that is being done at the center across BUs, its values, and culture. This includes media roundtables, hackathons, knowledge sessions like TEDx, start-up and university boot camps, and site visits.

b. Management team branding: This includes positioning the management team as thought leaders by sponsoring conferences, leveraging speaking opportunities and through social media positioning. Encouraging the management team to become council members also brings along the necessary opportunity to network and build a personal brand along with that of the company. A case in point is PayPal. It constantly promotes its management through print and social media.

c. Internal employee branding: Companies must constantly reinforce their brand on the existing workforce. This could be done through branded merchandise, Thought Leadership Blogs and videos, and external and internal award nominations. Creating a Life at ‘XYZ’ series also helps employees resonate with the organization’s brand. For instance, Intuit’s ‘I Am Intuit’ campaign featuring the employees’ pride and belief in Intuit was a huge success and resulted in a significant increase in traffic to the organization’s India career site.

d. Global stakeholder branding: Timely visits from Global stakeholders help in internal branding, where the employees get a chance to see the bigger picture and the impact that they are making on the global teams. Media announcements and Global Stakeholder press conferences further help in the external branding of the company.

2. Providing Meaningful Work

This lever is perhaps the most important one of all. To attract the new-age talent and become an employer of choice, Global Centers of Excellence (GCoEs) today are transitioning from being cost centers to doing work that adds greater value to the global organization and propels innovation. They look at the bigger picture and increasingly focus on adopting innovation and maturity of work as key levers to engage talent.

GCoEs are also focusing more on product development and are increasingly building deep capabilities by establishing more Centers of Excellence (CoEs). Apart from engineering, activities across IT, Sales & Marketing, and HR are being delivered from India-based Global Shared Services Centers. All these initiatives attract young professionals and reinforce the fact that their work is making a difference.

3. Competitive Total Rewards Strategy

Compensation, of course, has an eminent role to play in any organization’s talent management strategy. In order to become an employer of choice and retain new-age digital talent, companies generally adopt one of the three compensation philosophies mentioned below:

4. New-age strategies for Talent Acquisition

With the new-age talent moving online, to become an employer of choice companies need to move the hunt for talent online and leverage a plethora of technologies to attract talent. Organizations are revamping their hiring techniques by using a combination of active and passive hiring. There is an evident increase in the use of new-age technologies for attracting talent. Some of the most sought-after new age hiring techniques that companies are resorting to are: a) Acquihiring b) Hackathons/Codeathons c) AR/VR d) Gamification e) Hiring through social media

5. Best in class L&D

Building an effective and engaging L&D blueprint is a key element of a talent management strategy. A robust L&D framework can help future proof your talent and also attract fresh blood into the system. The first step in building an attractive L&D plan is conducting a skills gap analysis as a part of which companies need to align with the current needs of the project and also the changing business needs. Based on this analysis, the next step is to plan the career path based on the individual’s long-term and short-term career aspirations. This step could be facilitated through employee skill survey, mentor-mentee programs, etc. The last and final step is to launch a full-fledged program. It could be an informal program that would include demo days, peer-to-peer learning, meetups, and others. The mode of training could also vary from being online/offline, or flexible learning options that are self-paced and mobile.

To keep employees motivated, organizations are also using the philosophy of ‘learning as a reward’ methodology, where the top performers are getting more learning as a benefit.

6. Commitment to I&D and Association with a cause

Inclusion & Diversity conversations are becoming mainstream today. GCoEs are rapidly promoting their I&D agenda and taking various initiatives to build an inclusive work culture. A case in point is the “Chetana” program that was launched by the Government of Karnataka in association with Samsung & Infosys foundation to educate, enable, and empower girl students who have topped in Secondary School Examination from Government Schools across Karnataka. Another example is that of Intuit providing key benefits for LGBT employees among its many other initiatives. Intuit also partnered with Pride Circle for RISE (Reimagining Inclusion for Social Equity), India’s first LGBTI job fair, marketplace, and conference, to bring forth 20 LGBTI owned Small & Medium businesses across India. Such initiatives are attracting millennials to become a part of a workforce that is diverse and inclusive and believes in doing its bit for the society.

7. Building a long-term Campus Strategy

GCoEs are actively leveraging the university ecosystem to foster innovation and hire top fresh talent. There are various ways in which GCoEs can collaborate with universities:

8. Building a Digital Workspace

A digital workspace that has technology-enabled processes, intelligent automation, and a high focus on innovation and speed to market is fast-becoming talent magnet. Especially with millennials and tech-savvy workforce entering the market, having a digital workspace is a huge plus. A digital workspace encompasses several aspects of a workplace – from chatbots to knowledge repositories to enhancing the onboarding experience by leveraging platforms and technologies, and much more, all these elements together have a huge impact on the workforce both internally and externally, and can help an organization become the employer of choice.

DNA of an Employer of Choice

The 8 factors above clearly parse the ‘becoming an employer of choice’ conundrum. Right from building an effective brand, to leveraging unique techniques for talent acquisition and employing L&D strategies that engage talent – these factors encompass the entire value chain of an organization’s talent strategy. However, building a digital DNA will be a key enabler of these factors.

The new-age workforce today wants to be a part of an organization that has innovation and digital in its DNA. Hence organizations need to build a digital culture that is conducive of all the changes that are happening in the industry and embrace them. The culture should be such that encourages collaboration and diversity of ideas. A culture that believes in continuous learning and in being agile. A culture that can be called a digital culture.

The value systems of this digital culture will enable holistic transformation of the organization and will help it enable its talent strategies. Several tech giants and start-ups have successfully built this culture and are capitalizing on it in terms of attracting and retaining talent. They have cracked the code of becoming an employer of choice. To stay relevant, it is about time that GCoEs and product companies up their talent game and employ these factors to move up the employer of choice pecking order.

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Why Your RPA Strategy Is Failing

In FY2019 alone, enterprises spent USD 2.3Bn on Robotic Process Automation (RPA), while the global RPA addressable market stands at a whopping USD 50Bn. It’s no wonder that organizations are accelerating the process of putting programs in place for implementing an RPA strategy and broader Intelligent Automation. However, organizations often lack a structured path to success.

Reason? 

A perspective.

Some organizations have looked at their RPA strategy from a task-based perspective rather than a process-centric and outcome-driven approach. In this scenario, automating a few mundane tasks may not impact the broader organization as such, and merely scratches the surface of what RPA has to offer. However, automating a process goes a long way in making top-line and bottom-line impact.

For instance, automating an insurance claims process can have a direct positive impact on customer experience, cost of processing, and accuracy. Similarly, automated clinical documentation at a healthcare facility or automated customer service management at a retail facility can help in cost reduction, increased speed and productivity, and also aid in scalability.

To understand why organizations are walking a tightrope instead of sailing smoothly through their RPA journeys, we sat down with Mohandoss Thulasidoss, Advisor, Zinnov, to get his perspectives and insights on why companies are lagging and how companies can resolve the issues that are roadblocks in realizing ROI in their RPA strategy.

What are the top reasons why automation initiatives fail?

There can be many reasons as to why automation initiatives fail, like selecting the wrong process to automate or the wrong tool to do it with, skill gaps in the organization to implement the solution, to name a few. However, the top challenges that are inhibiting the progress include –

1. Setting Management Expectations

For enterprises, defining success is crucial. The success measures have to be ambitious but not outlandish. If the management has unrealistic expectations from the RPA strategy, then even substantial success may be construed as a failure. Often such unachievable goals/expectations get foisted on the automation COE (Center of Excellence) team – a team dedicatedly focusing on automation initiatives. Hence, while setting up a CoE, it is important that the automation COE leader and the team calibrate the expectations with the management continually. There should be pre-defined KPIs that are measured and reported periodically.

2. Getting employee buy-in

Often, employees misconstrue RPA and automation as reasons for job losses. Employees could develop insecurities due to the enterprise’s automation efforts. However, with clear and premeditated communication, employees can be reassured and brought on board with the idea of change. Enterprise leaders must show the employees the bigger picture and emphasize on the fact that RPA and automation will replace the mundane work with more interesting, challenging, and strategic work. Employees need to be made to realize that automation is an ally in their quest to do ‘significantly more with the same.’ In today’s hyper-competitive world, the reality is that organizations often grow their number of customers with lower revenue realization per customer. Hence, to sustain organizational profitability, the employees have to buy into the notion that automation and RPA are essential tools.

3. Security and Governance

Regulations govern enterprises across industries, especially, enterprises in the financial services and healthcare industries. The automation team needs to understand the impact of these regulations as any non-compliance may push the automation efforts back by a few years. Identity and access to systems will have to be governed not just for team members but also for bots. Another dimension of governance that enterprises need to be cognizant of is that if the automation efforts are being led by the shadow IT team, they should comply with the approved IT processes for the build, release, run, and retire processes.

4. Identifying the right approach to automation and building skills

Some organizations do not take the right approach to automation and overall RPA strategy. For this, we have outlined two different approaches that enterprises can consider in making their automation initiatives successful. The first, classical approach or process-first approach and the second, opportunistic approach or tool-centric approach. In the classical approach, enterprises need to first, (DI)gitize, then (R)eengineer and lastly, (A)utomate – we call it DIRA.

The processes that need to be automated can have a structured methodology, which is pivoted to the process first, technique next, and vendor tool the last.

In the opportunistic approach, a tool is used to automate the processes, often without resorting to any reengineering effort. In this approach, enterprises can follow the TOPS thinking – TO: diligence in Tools Vendor Partnership, and PS: Process Selection to ensure that success can be achieved. Enterprises use the capabilities of a tool on selected processes and show tangible outcomes. Thus, the savings that are obtained are used in more substantial process reengineering efforts.

Both these approaches are viable, but it boils down to skills, an appropriate methodology, and proper program management, required for the teams to execute the projects. Any gaps in the areas mentioned above may result in sub-optimal delivery of value and thus inhibiting the efforts to scale.

So, to sum it up, not getting management and employee buy-in, weakly structured security and governance, not selecting the right process, and not having right skill sets are the top areas where organizations fail in their RPA strategy.

For companies that are starting to initiate their automation efforts with an RPA strategy, the critical challenge is to build the team with the right set of skills. Due to the dearth of talent and advanced tech skills, often, automation initiatives are nipped in the bud. Another challenge for companies that are just starting their automation journey is to ensure that they set the right expectations with the management and get their buy-in.

On the other hand, for companies that are already on their automation journey but want to scale, need to relook at their journey so far from a process and business outcome perspective. Such firms also struggle with democratizing their automation efforts, especially RPA bot development activities. For this, they must govern some key factors centrally, while handing over the responsibility of the project execution to the BU teams, so that automation efforts can be accelerated. Another factor holding back organizations that are already on their RPA adoption journey is that they do not push themselves to move into tougher processes and techniques that are challenging. They must have the ambition to scale and accelerate to achieve their objectives.

In my opinion, there are three key levers of success when it comes to automation initiatives, and this is irrespective of companies that have just begun their journey or companies that want to scale. The three key areas are People, Process, and Technology.

The People aspect, I believe, is perhaps one of the most critical elements that enterprises must look at to succeed. Having a business and social capital can make or break an enterprise’s RPA strategy. In addition to getting top management buy-in and setting the right expectations, getting the social capital, which is the employees’ buy-in, is crucial. Enterprises need to narrate the automation story and share their vision with the employees at a BU level so that they can enable the automation initiatives and ensure its success.

With Processes (methodology), enterprises need to accelerate process discovery with process mining tools. Process mining tools can perform Automated Business Process Discovery (ABPD), process policy and procedure adherence checks, and also identify bottlenecks. The organization needs to combine these tools with a multi-disciplinary team with design thinking specialists, Six Sigma specialists, and analysts with algorithmic skills to ensure proper process selection and solution design.

Technology is another critical lever, most of which comes down to the talent and tools aspect. Enterprises need to keep pushing the envelope by employing the right skills in the right place. They must build a cross-functional team with multi-disciplinary skills that are in-house to leverage the power of tools that they have. The team should have the skill set in advanced technologies such as RPA, Machine Learning, Deep Learning, Natural Language Processing, Natural Language Generation, Natural Language Understanding, Business Process Management, Speech processing, etc.

So, focusing on PPT – People, Process, and Technology can help organizations to overcome the inherent challenges of automation and also scale their automation initiatives. Enterprises need to have a clear vision of what they aim to achieve with automation. To be able to traverse smoothly on their automation journey and to make their RPA strategy a success, several enterprises are partnering with digital specialists and program managers who can enable use case identification, tool selection, Service Provider selection, Governance, and change management. Partnering with such experts can help organizations not just find this RPA needle in the Digital haystack but also sew a plethora of digital opportunities with it.

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The New-Age Talent Strategies For A Never Normal Economy

Talent is everything – The key enabler, a vital catalyst, and an inevitable component in the success narrative of organizations – big and small.

Putting people first is no longer a leadership fad, or a mere fancy vision statement that finds its place in elaborate boardrooms. Talent is not just a support component but the very engine that is at the helm and drives growth in an organization. It is strongly capable of slingshotting organizations to unprecedented heights or make them plummet to hit a new low.

With the ubiquitous digital transformation accentuating the dire need for skilled talent, how are Enterprises blitzscaling their talent strategies to stay ahead in the race? Read on.

The Phoenix Analogy

According to Greek mythology, the fabled phoenix bird is said to live for 500 years or more and is known to cyclically regenerate itself.

Taking inspiration from the mythical creature, Enterprises need to continuously reinvent themselves with respect to their talent strategies to handle the dynamic talent landscape today.

The DRAUP team at Zinnov, in a view to understanding talent which is the fulcrum of businesses today, studied the various trends that are prevalent in the new age talent landscape. Let us delve into what’s in vogue in the talent market, and how reinventing is the way forward.

Aldi – A Case In Point

With an ever-changing economy and a dynamic talent landscape, the incumbents are being forced to reimagine their fundamental business models. An intriguing case in point is Aldi, and how it is disrupting the Retail space.

Aldi, a supermarket chain native to Germany is posing serious competition to the retail giant Walmart in the least expected ways. Aldi does not disrupt Walmart from a technology standpoint, but races past Walmart in an aspect they are best known for – cost savings. (Core business model transformation)

The following are the features of the store which has led them to industry-leading efficiencies and has allowed their customers to save a whopping USD 2.2Bn per year:

• Long conveyor belts to reduce queue • Just-in-time procurement • Multiple enlarged Barcodes on products • Seated employees: Scan and Work Faster • Minimum Staffing • Cross-functional Employees • Vendors’ Supply of 1300 essential items

These aspects have enabled Aldi to cause significant disruption in the retail industry to the extent of Walmart being forced to bring down the prices of 40 common goods by 17% in Houston, to keep pace with them.

What is evident from this case study is the clear inclination of Aldi towards people-focused workforce strategy vis-a-vis the automation stance that most organizations are taking. Even though this approach has worked well for Aldi, Automation is the future and is emerging as an inevitable new-age talent strategy.

Automation – The Dread And The Dire Need

Aldi’s talent strategy is a clear-cut example of how automation is feared, especially by the task-based workforce. But that doesn’t take away the spotlight from the blatant necessity of the day that automation is.

This solicits quoting two researchers who have done visionary work on Automation.

The first one is a research by Carl Benedikt Frey & Michael Osborne who built a machine learning model to predict what percentage of jobs will be automated/disrupted in the future. He analyzed 702 jobs and concluded that about 47% of American jobs can be automated by 2030. What won his paper worldwide recognition and extensive citations is the pathbreaking statement that he made: ‘About 90% of the job roles in Ethiopia can be automated.’

The other notable research on automation as a new-age talent strategy is by Daron Acemoglu & Pascal Restrepo who addressed automation from an opportunity standpoint and not from a fear angle.

The research classified the Western Countries into two clusters. They are:

Countries     aging rapidly like Japan, Germany

Countries     that are aging slightly slower like France and Britain

It was observed that the countries that are aging rapidly are deploying bots faster and are industrializing faster. His research quotes that in a country like China where 124 Million people are moving out of the workforce by 2020, there is a need for approximately 2 Million robots to be deployed by 2040, to bridge the deficit.

With the need for automation etched in stone, is the pace of automation poised to catch up with the requirement? Well, currently the numbers are dismal.

The Gaping Skill Gap & The Automation Deceleration

Automation is clearly not happening fast enough, and the following are the factors that contribute to the slow pace:

• The difficulty in training machines • The complexity of the Automation process • Long Cycle Time • Skill Deficit

The automation process involves preparing the required data, running it through classification models, building the science, and waiting for the science to yield utility. This leads to a greater cycle time of automation projects which leads to most of the initiatives not translating to desired outcomes. An example of one such unsuccessful automation initiative is IBM’s AI-based drug discovery program which was abandoned due to the project not yielding the desired results. The autonomous cars are still a distant dream due to the lack of time and money.

The Skill Deficit

A critical roadblock in the journey towards achieving the automation goals is, however, the striking skill gap. Organizations would need at least 3 times more ML engineers than what’s available today to achieve normal growth in the automation space. An explosive growth will, however, need a much larger skilled workforce.

Given the growing skill gap in areas like Artificial Intelligence and Data Analytics, it is imperative that organizations reimagine their talent strategies and accelerate in the right direction.

Dichotomous Nature Of The Labor Market

Furthermore, substantiating the skill gap data, there’s the Unemployment-Vacancies ratio indicating the lack of availability of the right skillsets.

In South Africa, the unemployment of youth is around 35% whereas the vacancies account to 15% clearly suggestive of the fact that it is not the lack of jobs that is the pressing issue but the lack of the required skills. The pattern holds good for countries across the globe with fluctuations in the ratio.

Is keeping a major chunk of the workforce out of availability a key reason behind these skewed ratios? The answer is a ‘yes’, which is a war cry for organizations to revisit their inclusion strategy to attract new-age talent, and narrow the supply-demand deficit in the labor market.

The Inclusion Narrative

With the dismal numbers of skilled talent ringing an alarm, one aspect that comes under scrutiny is the percentage of women in the workforce. The waning percentage of women in the Labor Force Participation Rate (LFPR) in India (released by the NSSO) does not paint a favorable picture of an inclusive workforce.

What are the initiatives that can help organizations inch towards the goal of a rich talent pool? Providing reskilling opportunities and avenues for growth enables the women workforce to augment their capabilities and make them contribute significantly to the skilled talent pool.

The journey of Nicole O’Keefe of how she climbed up the career ladder in the highly masculinized electrical engineering job role in a mining company, is a case in point of how 

inclusion initiatives

 can be efficiently orchestrated, and how workforce diversity is emerging as a new-age talent strategy.

The Way Forward

“A Skilled worker regardless of the Job Description, remains a treasure” – Madeleine Kunin.

While skills and its relevance make an employee irreplaceable, a study by DRAUP with Citizens Bank identified 15Mn professionals with a ‘High Digital Replaceable Quotient’. This data substantiates the paucity of skilled, irreplaceable talent and it is a business imperative for organizations to blitzscale their talent strategies and progress towards favorable workforce demographics.

The emergence of technology microhubs, reskilling initiatives, returnship programs to bring the dormant talent into the workforce, hybridization of job roles are some of the key trends that will draft the new-age talent narrative.

The talent trends across the globe accentuate the writing on the wall – Skilled Talent is not just a component but the core of sustainable businesses.

[alexjosephalex-blog]

Digital SMBs – Key Pillar Of India’s Economy – 2019

This is a comprehensive view of the Indian SMB landscape, which covers key aspects like –

The     number of SMBs and their GDP contribution to India’s economy

The     current technology adoption by SMBs to enhance digital discoverability

The     transition from traditional SMBs to ‘Digital SMBs’

The     impending opportunity owing to SMB digitalization

The     initiatives that the ecosystem players are taking to tap into the     opportunity

The     way forward

A few interesting insights that were gleaned from the study include –

The     Indian SMBs contribute 40% to India’s GDP and generate ~180Mn jobs.

An     emerging category of SMBs such as Housewife Resellers, Media Content     Creators, Cab Drivers, and Delivery Partners are enabled by Aggregators in     their digital journey.

600+     Aggregators, many of them new-age start-ups such as Udaan, Oyo, Meesho,     Ola, Swiggy, etc., have already enabled over 10Mn SMBs and will continue     to play a vital role in SMB digitalization.

[alexjosephalex-blog]

How Do Hackathons Work – Hackathon Playbook

Driving True Value from your Hackathon

Technology enthusiasts coding all night, a constant inflow of caffeine and grub – if this is the image that a hackathon evokes in your mind, you are missing the big picture.

So, how do hackathons work? A hackathon is not just a competitive event that facilitates crowdsourcing solutions, it is a tool to drive disruptive innovation, find best-in-class tech talent, and discover new problem statements. But the first step towards tapping into the full potential of a hackathon is by not thinking of it as a sprint but a marathon. It is not a 48-hour-long technology talent showcase or a PR gig; it is a premeditated strategy that has the potential to add long-term value to a company.

Why conduct hackathons at all?

The war for talent is incessantly intensifying as start-ups join the talent war and aggressively compete with multinationals when it comes to attracting the crème de la crème of technology talent. Hackathons are one of the most common ammunition that MNCs and other companies deploy to establish themselves as innovation leaders in the market and attract young talent. Several companies have hackathons listed as one of the most effective hiring strategies. However, often, companies don’t have a hackathon playbook and defined guidelines on how do hackathons work. Before charting a plan for a hackathon, having a clear objective and planning for it is half the battle won.

Here are some of the objectives that companies seek to achieve while conducting hackathons:

Idea or Solution Discovery: Often, companies conduct hackathons that are centered around their key offerings. This helps them gain new perspectives and ideas around their products and services, and rapidly prototype a new feature/use case that can be adopted as part of the product roadmap. Companies also use hackathons to find newer and unique problem statements in the market that they can solve for in the future.

Problem Discovery: Hackathons are also conducted with the intent of gaining feedback on a product and getting real-time inputs from customers. The intent is to seek feedback from a large group concurrently and iterate on the product features accordingly. Twilio’s Flexathon – a hackathon to test the Twilio Flex platform, is a case in point.

Talent Discovery: While employer branding is one focus area, identifying talent quickly and at scale is a key win during recruitment. Hackathons help in attracting top talent and are also increasingly becoming popular as tools for engaging with employees, especially with the Gen Z workforce. Many companies are leveraging hackathons as a means of familiarizing employees with new and emerging technology concepts.

While it is very important for companies to have a defined objective before planning a hackathon, it is also necessary to think of a hackathon as a strategic initiative that can reap long-term benefits. For this, companies must look at hackathons as a B2C activity, where the key focus should be on delivering a good customer experience to the developers who participate in the hackathon. This will help companies derive maximum value from their hackathons.

The Lifecycle of a Hackathon

Companies today, are highly focused on customer centricity; however, they often overlook the crucial narrative of treating their employees as customers. If companies chart a hackathon, it would be much more impactful for employees as well as developers. Perceiving the developers participating in the hackathon as customers can help companies plan the pre-, during, and post-hackathon activities more effectively. The first principle is to consistently think of a customer journey as a circle and complete the circle. A hackathon doesn’t end post the event; the experience of the developer has an important role to play in closing the loop on this journey. From getting the developer onboard to their experience during the hackathon, and following up with them post the event – all this is part of the journey.

Let’s look at how a hackathon can be divided into three distinct phases:

Pre-hackathon: Before the hackathon, the first step is to choose a theme and create a checklist of all the to-dos. Marketing is one of the most important elements that runs horizontally throughout the hackathon (pre-, during, and post-). However, the role of marketing is most crucial before the event. Creating awareness through social media buzz, creating catchy hashtags, word of mouth, etc., is important to attract more developers to participate in the event. Also, defining the venue, attendees, and theme of the hackathon is also important from a marketing perspective. Outlining a budget way in advance helps in managing the hackathon end-to-end and planning things ahead of the event. Here’s a checklist for companies to follow for their pre-hackathon activities:

During the Hackathon: Primary areas of focus during the event should be on having the right infrastructure, layout, and evaluation criteria. Companies should have a team onboard to take care of all the nitty-gritties during the hackathon – right from choosing the venue to keeping the energy levels up during the event. The team should be accountable for running the hackathon smoothly, end-to-end. The company needs to have an exhaustive checklist of must-haves like Internet, power, technology requirements, APIs, etc. necessary for a smooth hackathon. The workflow of the day will also need to be charted out with prior planning for breaks, meals, product demos, start-up pitches, and other fun activities. All the activities, breaks, and demos will need to be interspersed throughout the hackathon.

Post-hackathon: Post-hackathon is the most important phase for companies to truly gain value from a hackathon. This phase involves tracking key metrics, evaluating the metrics, and taking necessary steps to better it for the next time. The metrics may include the number of ideas generated, the media exposure received, growth in participation, cost and benefits analysis, etc.

One of the most important aspects of this phase is to take and close the loop on the feedback received from the participants as well as send acknowledgment notes to everyone who made the hackathon a reality. This will further help the company in converting the developers into communities. Here’s the value chain for the closure mechanism that companies must include in their hackathon playbook:

Post-hackathon, companies need an idea harvesting mechanism that will quickly implement the solutions that emerged at the hackathon or take forward a product developed during the hackathon. For this, companies must create a roadmap for the shortlisted prototypes and build a valid business case to get sponsorship support. They must ensure that they define a timeline for prototype development to avoid unwanted delays and to keep up the motivation levels. To channelize the outcomes in the right direction, companies must clearly communicate the roadmap with the hackathon winners so that they can lead the initiative. To drive maximum value from hackathons, idea harvesting is a crucial step for companies.

Why Hackathon is a Marathon and not a Sprint

The ‘Like’ button, the ‘timeline,’ tagging people in the comment section, uploading videos – all these popular features on Facebook were results of strategic hackathons. Facebook is known for its culture of hackathon and owes many of its loved features to this culture. What Facebook does best is quickly develop and integrate those features into its platform. The stage it provides to the developers is huge, and the way the tech giant closes the loop across the lifecycle of a hackathon is commendable.

Companies can draw a leaf out of Facebook’s hackathon handbook to conduct successful hackathons. And it’s not just Facebook, but several other multinationals rely on hackathons to develop newer solutions and products and find new-age talent. Clearly, hackathons are an innovation and talent vehicle. However, it is imperative that companies treat it like a marathon and focus on driving good customer experience so that developers spread the word and encourage others to participate in future hackathons. And since hackathons provide a great recruitment opportunity, a developer at the hackathon today could be your potential employee tomorrow. Hence, it is all the more important for companies to deliver top-notch experience and establish an innovation-friendly brand during the hackathon.

[alexjosephalex-blog]

The Quintessential Digital Transformation Strategy For Large Enterprises

Public-listed Large Enterprises in India are undergoing a transformation, thanks to the massive digitalization wave sweeping across the sector. Digitalization is not only enabling Large Enterprises to achieve growth, but is also helping them attain scale while generating more employment. But how critical is outlining a digital transformation strategy in Large Enterprises?

The numbers speak for themselves. In 2018 alone, the IT Spend by public-listed Large Enterprises in India was nearly USD 14Bn, of which USD 1.4Bn was their digital spend. By 2023, this digital spend is expected to grow at a CAGR of 40% to touch USD 3.6Bn, clearly indicating a strong focus on digital initiatives by Large Enterprises.

Digital Spend in Large Enterprises

Digital spend enables finding newer possibilities to maximize customer experiences and operational efficiencies. It also includes UI/UX Design, Predictive Analytics, Connected Systems, Artificial Intelligence (AI), Robotic Process Automation (RPA), Internet of Things (IOT), etc., and overhauling of the existing IT infrastructure to enable digital use cases and execute data-driven business processes.

In fact, Zinnov research suggests that by 2021, the digital spend in public-listed Large Enterprises is set to contribute ~20% to the overall IT spend across verticals. Currently, BFSI, Manufacturing, IT/ITeS, Retail/CPG, Telecom constitute nearly 80% of the overall market for digital spend. To achieve higher growth, technology teams of Large Enterprises need to focus on –

a) Multi-cloud strategies b) Advanced technologies like AI/RPA/IOT including Edge/Blockchain

The following illustration provides a comparison of the current scenario versus the future outlook of Large Enterprises and unicorns’ focus on advanced technologies. These technologies are being leveraged to enhance customer experience, acquire new customers, and create brand awareness.

As the image illustrates, by 2021, 100% of the Large Enterprises’ workloads will be on the cloud, with AI coming in a close second at 88% focus, followed by IOT at 65%. Large Enterprises are expected to adopt new-age digital technologies to augment their business growth as well as scale.

Playbook for Large Enterprises in India

While most Large Enterprises have been around for a long time in India, they haven’t really focused on expanding their digital footprint. For Large Enterprises looking to diversify and increase their digital footprint in India, this four-step playbook will help them outline a comprehensive digital transformation strategy that aligns with their business vision.

Identify business outcomes: When outlining the company’s digital vision, there is     no one-size-fits-all solution. However, a few overarching outcomes need to     be identified, such as –     a) alignment with industry and consumer trends     b) a direct impact on overall business goals     c) an overhaul of the organizational DNA     d) leveraging digital technologies

Build digital infrastructure: Large Enterprises need to create digital     infrastructure to drive their digital objectives. The key components     include –     a) modernizing the underlying IT infrastructure through a combination of     microservices and API-led architecture and a legacy modernization approach     b) digital initiatives leveraging modern technologies including AI, RPA,     Blockchain, IOT, etc.

Innovation group led by CDO: People and organization structure-related factors     are critical to the success of digital initiatives of any company. Hence,     Large Enterprises need to focus on leadership and organization structure     by creating central innovation groups headed by the CDO/Head of Digital.     The ownership structure for digital initiatives need to be laid out along     with clear objectives and milestones to be achieved.

Define enterprise programs: Large Enterprises need to run organizational     programs such as corporate accelerators to co-innovate solutions with     ecosystem players. Large Enterprises need to orchestrate start-up     engagement and incubation, connect with academia through universities and     research labs, and onboard technology vendors working in new-age digital     technologies. Another avenue that Large Enterprises can explore is     enterprise-wide programs to foster innovation.

Playbook for Tech Players to engage with Large Enterprises

To engage successfully with Large Enterprises, tech players need to undertake a few key initiatives –

a) Products – tech players need to create custom-made solutions/products for the India market b) Partnerships – incumbent tech players need to explore partnerships with digital natives c) Co-innovation – tech players need to explore co-innovating products and solutions with end customers d) Offerings – these tech players need to create vertical-specific offerings e) Collaboration – tech players need to engage with tech ISVs, mid-tier Service Providers (SPs), and start-ups f) C-suite Access – tech players need to explore distributed ownership of digital engagement where they don’t just deal with CIOs but also with other CXOs and BU Heads g) Talent – there is a need for tech players to invest in digital talent to strengthen their offerings for Indian market

Way forward for India to become a USD 4Tn economy

While the Large Enterprises and the tech players are bolstering their growth prospects through dedicated digital initiatives, the government of India has a crucial role to play as well. To boost growth and revenues for Large Enterprises and to propel India to become a USD 4Tn economy, some of the initiatives that can be undertaken by the government include –

a) Improve digital infrastructure: Although India has over 30,000 WiFi hotspots, 8Mn more hotspots are required to meet the global average.

b) Create a digital dashboard: Measuring and tracking key leading indicators, focusing on outcomes for digital adoption across key sectors are necessary.

c) Incentivize private participation: Launch a policy framework and offer incentives for the development and roll-out of digital services by private players.

d) Enhance cybersecurity mechanism: A centralized surveillance and security mechanism to monitor and safeguard India’s cyber threats is essential.

e) Launch a platform to reskill existing labor: There is a need for launching a Public-Private partnership (PPP) platform for reskilling 4Mn IT employees in new areas like AI, Big Data, Blockchain, RPA, etc.

If these recommendations are taken up by the Government of India, the potential impact it will have on the country’s economy is huge. Widespread digitalization will help propel India’s GDP to touch USD 4Tn by 2023.

Nearly 2Mn people are expected to work on advanced technologies in the next 4 years. With the increased focus on digitalization, about 80% of Large Enterprises will be expected to onboard a dedicated CDO/Head of Digital to enhance their digital journey by 2020. Further, there will be a significant rise in the number of billion-dollar Large Enterprises from ~146 to ~200 – a clear consequence of digitalization on the Indian economy. However, without concerted efforts from all the critical players – Large Enterprises, tech players, and the Government of India – this won’t become a reality by FY2023.

*Any organization that has a headcount exceeding 1000 is considered to be a Large Enterprise.

[alexjosephalex-blog]

Berlin – The AI Talent Hotspot in Europe

A city that got the better of Bonn and emerged as the capital of Germany. A vibrant city known for its colorful street arts that exude creativity. A city that still has hollow remains of a tumultuous history. Berlin is now making its mark on the world with its new avatar of an AI talent hotbed.

The need for AI talent is no longer limited to digital natives like Google, Amazon, and Facebook, given the application of the technology transcending industrial boundaries and spreading its wings to Banking and Financial Services, Retail, Healthcare, etc. With a gaping talent deficit in the AI space that organizations are battling to bridge, Berlin has taken significant strides in upping their AI talent game, drawing attention to the lesser explored Europe.

Berlin’s Bet on Tech

The German capital boasts of a rich technology ecosystem of homegrown tech giants, MNCs, and tech start-ups that hold the lion’s share of the country’s tech talent. Berlin houses 3300 technology employers, backed by multipronged support of government institutions, VC Ecosystem, and research collaborations.

In our recent Zinnov Talent Landscape analysis of Berlin, we leveraged DRAUP’s proprietary Talent Module and concluded that the city has a rich Technology ecosystem. Here’s a snapshot of what Berlin has to offer:

So, what makes Berlin such a go-to technology talent hotspot? Let us delve into the factors that facilitate a rich technology ecosystem in Berlin.

1. Immigrant attraction factors in Berlin:

A significant contribution of the migrant population accentuates the diversity and richness of the Berlin Technology Ecosystem. The city strikes a favorable demographic balance as it attracts immigrants from central EU region, US, and China – Thanks to its favorable immigration policies, job opportunities, and relaxed visa policies. The following numbers give a clear picture of how migrant-friendly the city is.

Berlin has the     2nd highest percentage (43%) of immigrant start-up founders in the world     (behind Silicon Valley)

A sizable     16.5% of Berlin’s population comprises of immigrants from 186 different     nationalities. Within the start-up scene, 49% of the start-up workforce is     foreign.

Visa: It has     the 3rd highest acceptance visa rate in the world at 77%.

About 34,000     foreign students are matriculated for the winter semester 2016/17. This is     roughly 27% of all students in Berlin. Most foreign students are from     China, Turkey, Poland, France, Russia, the USA and Italy.

The rich mix of various nationalities complements Berlin’s indigenous capabilities clearly acting as an enabler in firmly ensconcing Berlin’s position as a talent hotspot.

2. Key Talent enablers

Talent – An inevitable resource, the engine of an economy, and an envisioned cause of the next world war, is definitely a critical component that contributes to the richness of an ecosystem. Berlin boasts of six aspects that contribute to its growth of talent:

a. Growth Infrastructure & Environment

Berlin ranks high with respect to the availability of crowdfunding and business angels funding or the overall access to capital. It also ranks good in the Managerial & Monitoring Assistance category but lacks the overall availability of a competitive digital infrastructure. Access to funds, and mentorship/monitoring therefore creates an environment conducive for attraction and growth of the tech talent.

b. Innovation and Entrepreneurship Accelerators:

Berlin is a powerhouse of innovation with more than 200 accelerators and workspaces* that foster fresh ideas and encourage entrepreneurship. Factory Berlin is the world’s first business club for start-ups, attracting talent from over 12 nations to foster technological innovations and entrepreneurship. The members of the factory include technical developers, designers, strategists as well as start-ups and global corporations.

B! Grundet is a network of Universities focussed on fostering university-based entrepreneurship. It is responsible for encouraging and providing ecosystem support to academic start-ups from universities and research institutions.

Such initiatives act as a launchpad for inquisitive minds to make it big and contribute significantly to Berlin’s technology ecosystem.

c. Start-up competency:

There are over 3000 start-ups centered in the Berlin region, catapulting the city to the top 10 of the largest start-up hubs in the European Region. Berlin start-ups are estimated to generate 100,000 jobs by 2020 as predicted by many local analyst reports. The data clearly indicates the mushrooming of new ventures in the German capital, adding weightage to the start-up component of the tech ecosystem.

d. The Digital Hub Initiative:

The German Federal Ministry of Economic Affairs & Energy’s Digital Hub Initiative has highlighted 12 Centres of Excellence (CoE) to connect medium-sized businesses and large corporates with innovation partners from start-ups and scientific communities. There’s a specific focus on innovation in areas such as IoT and Fintech, thereby augmenting the contribution of these areas to the robustness of Berlin’s technology ecosystem.

e. Breakthrough Funding:

With more than ~800 funds & corporate investors, 3000+ Funding rounds & exits*, Berlin is copiously funding the new initiatives, spurring the start-up culture in the city. This trend encourages the entrepreneurial mindset and contributes immensely to the absorption of the tech talent into the ecosystem.

f. Dual Vocational Training System:

The government, in collaboration with several universities, vocational schools, and corporations, has created a dual vocational training program wherein a student spends 1-2 days at the school gaining theoretical knowledge on subjects ranging from Mechatronics Engineering and Electrical Engineering and the rest of the days gaining practical hands-on experience at a partner company. This focus on the development of a robust curriculum aligned to well-designed learning objectives contributes to the growth of young tech talent.

It is therefore evident that Berlin possesses a multitude of factors that create a conducive environment for the growth of a talent ecosystem. However, how does Berlin fare when it comes to AI talent which is much in demand and in vogue.

Berlin at the center of THE AI TALENT STORM

Artificial Intelligence is not confined to technology companies anymore owing to a wide range of use cases; countries are therefore grappling to leverage the opportunity and garner their pole positions in the AI race. The city houses 223 AI-focused companies that employ about 5,000 people and generate almost 500 million Euros in revenue**.

Berlin is a frontrunner of Artificial Intelligence in Europe and is evidently carving a niche for itself in the space. Some of the key indicators of the fact that Berlin is fast becoming an AI capital of the world are:

a. The Tech giants are setting up their AI shops in the German capital:

“Artificial intelligence was already supported here at a time when that wasn’t popular,” – A Ph.D. from Berlin himself – Ralf Herbrich, Amazon’s Director of ML, vouches for Berlin’s prolonged association with AI. The Amazon Berlin Development Center employs 800 people with approximately 100 resources working on developing AI.

Google has expanded its operations in Berlin; as of January, 300 employees are working primarily in the field of AI. Their work is on machine learning, and deep learning in particular. The spectrum of work ranges from foundational research to applications of AI involving language, images, and video.

The other industry giants unlocking the AI potential of Berlin include SAP, Rolls-Royce, Siemens, and Telecom.

b. The AI start-up scene:

Berlin is home to eleven unicorns and ranks at No.10 globally with respect to the number of unicorns. With the growth of start-ups in the German capital evident from the numbers, what is the scenario as far as AI start-ups are concerned? The answer is that 48% of all German AI start-ups founded between 2012 and 2017, had their genesis in Berlin, substantiating that AI is definitely one of the key focus areas of the Berlin start-ups.

c. Research in AI:

From 2007 to 2017, 273 AI-related research projects in Berlin-Brandenburg that were supported by federal ministries with a total of 117 million Euros in funding were identified***.

There are 50-65 professors involved in research on AI-relevant subjects at universities, technical colleges and non-university research institutes in Berlin-Brandenburg. The research spans subjects ranging from speech recognition systems to collaborative Robots***.

Last year the German government announced an investment plan of 3 Billion Euros to enhance the country’s AI capabilities over the next six years. Private sector companies are poised to catch up with that number, bringing the total investment to 6 Billion Euros. This strategy encompasses plans to build 12 AI Research & Development centers and create 100 university chairs focused on augmenting AI capabilities.

“Older people sit down and ask, ‘What is it?’ but the boy asks, ‘What can I do with it?” .

Steve Jobs

Clearly, research is the foundation of innovation, and Berlin is evidently betting big on this essential capability.

Berlin beckons

The vibrant tech ecosystem, an incredible start-up scene, Federal funding, proximity to Technology universities, availability of academicians pursuing research in AI and a truly international culture are reasons enough for organizations looking to augment their AI capabilities to set up their centers in Berlin. Berlin has clearly carved a niche for itself in the AI space and is definitely an enticing location with a rich AI talent pool for global organizations to tap into.

[alexjosephalex-blog]

Digital Transformation – The Driving Force For Large Enterprises In India

Large Enterprises* form the backbone of the Indian economy and contribute revenues equivalent to as much as 40% of the country’s GDP. Till date, these enterprises have generated close to 7Mn direct jobs, which has grown at a rate of 7% year-on-year. Interestingly, 45% of these Large Enterprises are growing slower than India’s GDP, despite India being one of the fastest-growing trillion-dollar economies in the world.

A combination of factors such as unicorns, digital natives, and technologically advanced global players eating into Indian Large Enterprises’ revenues; digital disruptions wrought by the emergence of new-age technologies such as Artificial Intelligence (AI), Machine Learning (ML), Robotic Process Automation (RPA), Internet of Things (IOT), etc.; and lower than needed investments into digital initiatives have caused this slower growth.

Digitalization and Indian Large Enterprises

India took 60+ years since independence to become a USD 1Tn economy, while the next couple of trillion dollars were added in 7 years and 6 years respectively. This timeframe is further expected to shrink to 3 years, when India is expected to become a USD 4Tn economy by 2023. A combination of focused globalization, dedicated structural reforms, generous government spending, and widespread digitalization will help propel India to achieve this feat on the global stage. In fact, the Indian government is allocating nearly USD 100Bn to boost the physical as well as the digital infrastructure across the country.

Key segments driving business demand in India

The following key segments are currently driving business demand in India –

Public-listed Large Enterprises: There are nearly 1200 Large Enterprises in India, which     contribute close to 40% of India’s GDP. In 2018, around 160 companies were     listed on the BSE (Bombay Stock Exchange), of which 20 were Large     Enterprises.

Small and Medium-sized Businesses (SMBs): There are 60+Mn SMBs in the country, with more     than 50% of them being technology-influenced.

Global Capability Centers (GCCs): There are close to 1250 GCCs active in India,     which have been set up by more than 900 MNCs. Among these, 40-45% belong     to Global 2000 companies.

Start-ups including Unicorns: India is home to about 7700 start-ups, making it     the third-largest start-up ecosystem in the world and one of the most     vibrant in the technology ecosystem. Unicorns, the start-ups with a     valuation in excess of USD 1Bn, are also included in this mammoth number.     Collectively, these start-ups provide employment to about 1.7 lakh people     in the country.

Government: There     are over 300 companies under the Central Government. In 2018 alone, the     government invested ~USD 500Mn in planned digital initiatives.

Digital Consumers: Digital     consumers are driving business demand thanks to increased Internet     penetration and the proliferation of smartphones. Currently, India boasts     of 100Mn+ e-commerce customers, who will spend an estimated USD 100Bn by     2020.

Public-listed Large Enterprises – the Backbone of Indian Economy

Of the 1200+ public-listed Large Enterprises in India, around 11% have their HQs in tier-2 and tier-3 cities such as Coimbatore, Vadodara, and Jaipur. These enterprises collectively bring in a revenue of USD 1.1Tn and house close to 7Mn talent, of which 1-2% is digitally skilled talent, capable of working on new-age digital technologies like AI, RPA, Blockchain, Cloud, etc.

Further, the billion-dollar Large Enterprises (companies with more than USD 1Bn in annual revenue), witnessed a growth of 10% year-on-year, while around 150 of these Large Enterprises have clocked in approximately USD 700Bn in revenue in 2018 alone. An interesting trend is that ~50% of these billion-dollar Large Enterprises have a Chief Digital Officer (CDO) or a Head of Digital, who focuses mainly on digital initiatives in the enterprise. Interestingly, of the total USD 42-48Bn IT spend in India in 2018, 32% was contributed by Large Enterprises alone.

Reasons for Slower Growth

Over 45% of these enterprises are witnessing a slower growth in annual revenue than India’s GDP growth. Disruptors like unicorns, digital native start-ups, and technologically advanced global players are impacting incumbent Large Enterprises across traditional verticals such as Banking, Transport and Hospitality, Organized Retail, etc.

NPAs and low capital to risk-weighted assets ratio (CRAR) have led to slower growth in BFSI, followed by financial inclusions. In retail, restrictions on FDI and an inability to retain relevant talent are a few factors hampering growth.

Digital Native start-ups like Oyo, Paytm, have raised billions of dollars in funding, which they are investing in building digital infrastructure, hiring skilled digital talent, and creating awareness in the market.

Oyo is a case in point. Having raised in excess of USD 1.7Bn in funding, it has an inventory of more than 500,000 rooms worldwide, with plans to earn 90% of its revenue from the franchise model. Oyo has achieved this feat in a mere 6 years, propelling its current valuation to exceed that of India’s top 4 listed hotel chains. Further, asset-light businesses like Uber, Airbnb, Ola have revolutionized their respective verticals by focusing on building robust platforms that bring together all the ecosystem players. In fact, the impact of digitalization on public-listed Large Enterprises is undeniable.

What is Driving Business Growth in Large Enterprises?

Digital has become a core focus area for Large Enterprises, especially in recent years. In fact, Zinnov research revealed a strong correlation between the digital spend and the business growth of Large Enterprises. Enterprises with a strong digital focus have witnessed higher business growth. Enterprises such as Reliance, HDFC, and even unicorns such as Swiggy, are great examples of companies that have derived significant business outcomes with their focused efforts on digital initiatives.

The digital natives and start-ups are putting pressure on the incumbents to invest aggressively in digital strategies for their very survival. Across verticals, enterprises are investing in cutting-edge digital use cases such as omnichannel experiences in Retail, connected cars in Automotive, blockchain in BFSI, drone surveillance in Telecom, AR/VR in Media & Technology, to name a few.

Case in point is Reliance Jio, a digital native Indian enterprise that achieved explosive growth in record time. Some of the key digital technology initiatives undertaken by Jio include an AI-based voice command feature, leveraging ML algorithms to hire high-impact talent, setting up of a dedicated research center and CoE for Big Data/Analytics.

From forging strategic partnerships to offering a bouquet of new services, Jio is leaving no stone unturned to cement its place at the top. This has not only helped Jio acquire new customers faster and enhance customer experience, it has also significantly reduced the time-to-market of new services.

Impact of Digitalization on Large Enterprises

Digitalization is helping Large Enterprises become agile, grow faster, and compete better in the current volatile business environment. In fact, Large Enterprises that are investing in strategic digital initiatives are witnessing 2x growth in their revenue and 40% growth in their profits. Additionally, they are also witnessing a significant gain in savings through cost optimization. This aggressive growth will be sustainable only if enterprises invest more in digital.

Zinnov research suggests that the total IT spend by public-listed Large Enterprises in India was approximately USD 14Bn in 2018, of which USD 1.4Bn was spent on digital initiatives. However, over the next 3 years, this digital spend is estimated to grow at a CAGR of 40% to touch USD 3.6Bn by 2021, while the total IT spend will grow to touch USD 17Bn.

But what is the impact of digitalization on Large Enterprises? How can Large Enterprises capitalize on their digital initiatives to propel India to become a USD 4Tn economy by FY2023?

*Any organization that has a headcount exceeding 1000 is considered to be a Large Enterprise

[alexjosephalex-blog]

What Makes Czech Republic A Software Talent Hotspot

f you are reading this article on your laptop, there’s a high probability that your system is being protected by Avast – an anti-malware application. Avast was founded in Czech Republic, which went on to become a global cybersecurity giant and is used globally by more than 435 million users. Did you know? Czech Republic is amongst the top 10 best-protected countries against cyber-attacks in the world.

Czech Republic, despite being a small country, has cast a huge shadow on the world with its technical prowess in the field of cybersecurity. This meteoric growth of cybersecurity technology in the country is only one of the shining examples of what makes Czech Republic an innovation, software talent, and technology hub.

Eastern Europe and Czech Republic

Zinnov analysis highlights that four Eastern Europeancountries have become massive software talent hotspots, namely Poland, Romania, Czech Republic, and Hungary. These four Eastern European destinations are on every companies’ radar today because of the availability of STEM talent in abundance, and of course, cost arbitrage. Companies based out of the US and Western European countries are also more driven towards Eastern European countries due to convenient time zones and ease of communication.

 CZECH & CYBERSECURITY

Czech Republic was the first country in the European Union to draft a legal framework that protected Critical Information Infrastructure (CII).

It was also the first country to prepare and sign the Memorandum of Understanding on Cyber Defence in NATO.

Czech Republic also boasts of winning the prestigious international live-fire cyber defence exercise, ‘Locked Shields 2017.’*

What makes Czech Republic stand out

Apart from its cybersecurity excellence, Czech Republic boasts of a thriving automotive industry. In fact, it has a 122-year-long history with the automotive industry. It is one of the country’s largest industries, employing more than 150,000 professionals. 55 of the global top 100 tier-1 auto suppliers have at least one production facility in Czech Republic**. The country is steadily becoming an ideal location to set up automotive centers of excellence and R&D centers.

Likewise, the Banking and Financial Services vertical has created ~17% of the total jobs in Czech Republic, while Software & IT vertical has created about 8.5% of the total jobs. Opportunities in the Software-as-a-Service, Cybersecurity, and Networking verticals are also set to witness high growth in the coming years as a function of digital profusion. R&D centers in the Electrical/Electronics vertical are continuously increasing their headcount due to the accelerated adoption of digitalization. Besides Prague, more companies are focusing on Czech’s other cities such as Ostrava, Olomouc, and Brno.

Factors driving the Czech tech ahead

Known as the heart of Europe, Czech Republic, with its rich software talent pool of English-speaking tech professionals, is complemented by Prague’s proximity to the rich market areas of Berlin, Warsaw, Vienna, and Krakow, making it a favored location for global center setup. In addition, the following factors contribute to Czech Republic becoming a hotspot for setting up an offshore center or a Global Capability Center –

a) Ease of Doing Business

According to the latest World Bank Ease of Doing Business rankings, Czech Republic is ranked 35 among 190 economies. The tax benefits are also lucrative for companies looking to set up their R&D centers in Czech Republic.

The Corporate tax rate in Czech Republic stands at a moderate 19%. Czech Republic provides a special tax allowance of up to 100% of specific R&D expenses (or costs). These R&D costs are claimed twice – first as a normal tax-deductible cost and second as a special tax allowance. Furthermore, companies can claim an additional deduction of 10% as an allowance from the difference by which the current year qualifying costs exceed those of the prior period. Investment incentives are available to both Czech and foreign investors in areas like technology centers, business support services centers, shared services centers, software development centers, call centers, and data centers.

Investments incentives are provided in the following forms:

Income     tax relief for a newly created entity for up to 10 years;

Cash     subsidy for the creation of new jobs, training, and retraining employees;

Financial     support in the case of strategic investments in manufacturing or in     technology centers.***

b) Universities

Education in Czech Republic, like the other Eastern European countries, is focused on Science, Technology, Engineering, and Mathematics (STEM). The Czech Republic boasts of having more than 80 universities, with Charles University, Czech Technical University, and the Brno University of Technology being its top three universities. The enrolment rate in higher education in Czech stands at ~64%, with Science and Engineering & Technology being the two most favored courses. The total number of graduates across all courses in Czech Republic sums up to more 400K. However, the universities in Czech Republic have limited supply of software talent, cumulatively providing ~6,000 software graduates per year.

c) Start-up ecosystem and Innovation

One of the major reasons why Czech Republic is evolving into a head-turning technology hub is its progressive attitude towards foreign investments and openness to innovation. This has helped Czech house a start-up ecosystem with close to 900 technology start-ups. The top technology start-ups in the country have a high focus on building Cyber Security solutions, Developer Platform, ML, AI, and Big Data platforms. Apiary.io, GoodData, Kiwi.com, ROI Hunter, Gamee, SocialBakers, and many such well-known start-ups have their roots in Czech Republic.

Accelerators such as StartupYard have also helped Czech Republic attract foreign software talent and bolster its international image in the technology space. The DELTA Programme, a major initiative by Czech Government, has been driving technological innovations and collaboration with foreign technological and innovation agencies. A large number of technology giants are also engaged in these initiatives with an aim to tap into Czech’s thriving start-up ecosystem.

Installed talent pool analysis

Between 1996 and 2017, Czech Republic saw a significant economic growth with their Gross Domestic Product (GDP) per capita growing by 62%. This growth was a function of heightened exports, foreign investments, and EU funds. Czech Republic has a total working population of 5.3 million people, with more 5000 installed fresh STEM talent pool and 3000+ start-up talent pool. There’s a total of 45K+ installed engineering and technology talent pool that is split across 5 job roles as shown in the visual below.

Also, given below is a vertical-wise split of engineering talent in Czech Republic, which indicates that Czech Republic has the maximum talent in Computer Software/IT and Automotive verticals, making it an ideal location for technology and automotive companies to set up their global centers.

Czech Mate to Disruption

The dense software talent pool of Czech Republic stands testament to the fact that there’s more to Czech than breathtaking baroque, Gothic architecture, Castles, and Chateaux. As the technology talent hunt becomes more intense across the globe, companies are desperate to find the right talent that can help them tap into the new-age technologies and keep their edge in the ongoing digital talent war.

Czech Republic is one of the most fertile technological ecosystems in the Eastern European region. However, the government still has to make additional regulatory changes and ease business regulations to attract more foreign investors and multinationals to the country. Underneath Czech’s traditional beauty and landscape lies a thriving start-up ecosystem and a technological potential that could leave a lasting impact on the world.

[alexjosephalex-blog]

What Makes Hungary The Top R&D Talent Hotspot In Eastern Europe

“Land of Magyars” or Hungary as the rest of the world know it, is Central European land-locked country. Nestled in the Carpathian Basin, Hungary is unique not only for speaking a Uralic language that is not related to any other major European language but also for its skilled IT and R&D talent pool. A combination of factors such as geographical accessibility, the world’s third-fastest 4G network speed, an innovation-oriented mindset, a strong focus on higher education through dedicated public universities, and a vibrant technology start-up ecosystem has made Hungary an attractive location in Eastern Europe for setting up global delivery centers.

Hungary’s unique attributes have already drawn several large organizations to build their presence in the country. The Land of Magyars is already home to many organizations across varied verticals like engineering, technology, FMCG, manufacturing, medical devices, healthcare, and automotive, to name a few.

Hungary Rising

With a population of ~10Mn, of which nearly 4.5Mn is working, Hungary is the fifth most populous country in Central and Eastern Europe. Budapest, with its 1.8Mn inhabitants, is not just the capital city, but also the hotspot where the majority of R&D centers are concentrated in. Debrecen, Szeged, and Miskolc are the other cities that are slowly emerging as technology talent hubs in Hungary besides Budapest. In fact, Debrecen is emerging as a key destination for mechanical and software talent. Low operational and functional costs in the city is attracting MNCs to set up their businesses in Debrecen.

Hungary has a diverse technology ecosystem with software development being one of the most dynamic sectors. The sector contributes as much as 6% to the country’s economy. The Information Technology vertical on the other hand is contributing ~15% y-o-y. Besides these, Hungary’s technology ecosystem is a hotbed of technology talent, thanks to the various ecosystem players such as universities, technology start-ups, and the existing R&D, delivery centers, and shares services centers across functions like finance, accounting, HR, customer services, and IT tech support.

6 Factors propelling Hungary to the top of the Globalization chart

1. Geography

Budapest is strategically located in central Hungary, at the crossroads of three main pan-European transportation corridors. Hungary has 6 international airports, of which 2 are in Budapest. From most places in Europe, Budapest is a mere two-hour flight ride away. Additionally, Hungary boasts of more than 1400 kilometers of motorways according to the State Motorway Management Plc. The Hungarian motorway network is comprised of 13 motorways, 13 expressways, and some fast roads. Thus, Hungary’s strategic location makes it an attractive location for organizations to consider it to set up their global centers in.

2.Communication Network

Hungary has the highest rate of broadband penetration among the V4 countries. V4 is a political and cultural alliance between 4 Eastern European nations – the Czech Republic, Poland, Slovakia, and Hungary. Further, thanks to the presence of five of the major global network and telecommunications companies located in Hungary, the country has the third-fastest 4G network speed in the world. This not only helps in faster communication, but also helps large organizations and tech start-ups working on cutting-edge technology products and services.

3. Innovation Mindset

Hungary has notably improved its position in the overall ranking in the Global Innovation Index, jumping up six positions since 2017 to reach 33 in 2018. Also, Hungary improved its ranking in the Tholons Services Globalization Country Index that ranks the top 50 Digital Nations, jumping up to 22 in 2019. Hungary has made considerable efforts in areas such as talent, skill and quality, cost and infrastructure, innovation/digital, business catalyst, etc., to leap 7 places in one year.

The top technology start-ups of Hungary have a high focus on building cybersecurity solutions, developer platforms, AI/ML and Big Data platforms. Hungary is home to ~300 technology start-ups, some of which have raised significant amounts of funding. Almotive is a case in point. Almotive is a provider of camera-first, AI-powered, Level 5 self-driving technology that is engineered to answer all the challenges of autonomous mobility. Till date, the start-up has raised USD 47.5Mn in funding and employs 100+ technology talent. Technology organizations need to have Hungary on their radar when exploring Eastern Europe for possible R&D center setup.

4. Universities

Hungary houses more than 40 colleges and universities, with 6 of these making it to the respected QS World University Rankings 2019. Across all courses offered in these institutions, there are over 300,000 graduates, of which 3,000+ are enrolled in software and technology-related courses.

The three largest universities in the country are the University of Szeged, Eötvös Loránd University, and the University of Debrecen, offer technological courses. The University of Debrecen is one of the oldest continuously operating institutions of higher education focused on Engineering and Technology-related programs. The 40+ universities offer numerous undergraduate, postgraduate, and doctoral programs in engineering and technology-related subjects, helping boost the technology talent pool year on year.

5. R&D Tax Rate

The Hungarian government offers an R&D tax relief through a tax allowance for R&D centers, allowing them a full exemption from social security contributions. The corporate tax rate in Hungary stands at 9%, a record-low since it peaked to 50% in 1989. Further, Hungary ranks fifth among OECD and other major economies, in terms of the total volume of government support for business R&D, equivalent to 0.31% of GDP. In fact, tax incentives account for nearly 50% of the total public support for business R&D in Hungary.

6. Installed Engineering and Technology Talent Pool

We analyzed the Hungarian installed talent pool by leveraging DRAUP’s proprietary Talent Module. Of the total 4.5Mn working population, 4K+ is installed fresh STEM talent pool and an additional 2.5K+ is start-up talent pool. Further, there is a total of 26,000 installed engineering and technology talent pool.

The vertical-wise split of the installed technology talent pool illustrated below indicates a skewed number towards computer software and IT, making Hungary an attractive destination for organizations to set up their global R&D centers in.

Hungary hungry for Globalization?

Hungary’s geographical advantage, the high-speed communication network, a dynamic tech start-up ecosystem, the skilled technology talent, and the university ecosystem have all driven Hungary to be one of the favored destinations for large organizations to set up centers. The innovation mindset and dedicated government efforts to attract foreign companies to set up shop don’t hurt Hungary’s cause either. Any organization looking to globalize should have Hungary on their radar.

[alexjosephalex-blog]

Why GCoE Accelerator Is The Perfect Scale Fast, Fail Fast Mechanism

The decision to globalize is fraught with challenges. It requires thorough planning around business outcomes, scale, infrastructure, and costs. With so many variables involved, the risks of globalizing are amplified, forcing companies to face the dilemma of when and how to globalize. The main deterrent in this journey is the huge CapEx investment and high risk of sunk costs.

In our 17+ years of experience in helping companies set up their global centers, we have worked with organizations from varied verticals, of varied sizes, with their own unique set of challenges. However, some common underlying concerns that have surfaced are –

Leadership Challenges

·          Leadership’s mental bandwidth is occupied with Globalization transition management

·          Leadership and senior management spend time and energy on logistics and other tactical operations instead of technology and product development

Operational Challenges

·          Lack of on-ground support in the selection and management of vendors (legal, entity incorporation, hiring, real estate, technology experts)

·          Challenges around selecting the right location due to lack of knowledge and insights on the local ecosystems and capabilities

Transition Challenges

·          Difficulty in the identification of the right project/product to transition

·          Long waiting time before the center is set up, resulting in a delay in starting actual technology development

·          Lack of infrastructure to get started with the hiring process, which leads to substandard hiring experience for candidates

Scaling Challenges

·          Lack of maturity in new centers.

·          Lack of flexibility in scaling operations, which includes ramping up beyond the initially estimated office space capacity or the sunk cost of ‘unused real estate or other infrastructure’ as you ramp up

Regulatory Challenges

·          Complex regulatory and compliance mandates in some geographies and lack of local support to manage the regulatory expectations can hinder the center setup process

In addition to these challenges, there’s also an undeniable need for companies to be fast. The Global Center of Excellence (GCoE) Accelerator model speeds up the globalization process by ensuring that there’s ease of implementation of strategies and that the leadership spends their time focusing on technology deliverables and innovation.

So, what is the Global Center of Excellence Accelerator Model?

The Global Center of Excellence Accelerator model is a plug-n-play center, where all activities of the center setup are owned by a partner and delivered as a managed services model. It offers a one-stop solution for companies to build and rapidly scale their global delivery presence in a global location.

The role of the partner in this model is crucial as they will help organizations identify the right projects and products to transition, and manage knowledge transfer, L&D programs, leadership coaching, etc. They will also streamline the recruitment process to find the top talent, which also includes creating an employer brand in the local ecosystem.

In a traditional Global Center of Excellence setup model, an engineering head or R&D head is usually the sponsor of the center setup project. However, due to a plethora of other commitments that the sponsor has, the project takes a hit and tends to get delayed. With the Global Center of Excellence Accelerator model, the entire setup is taken care of by the partner, which includes:

a. Design Phase – This includes strategic advice in designing the custom playbook for the center, which is customized and tailor-made as per the company’s requirements.

b. Implementation Phase – This includes end-to-end management of center set up by the partner, including entity incorporation and registration, finance and accounting, statutory compliance, HR-related services, IT, infrastructure, plug-and-play office space, recruitment, technology transition management, change management, and hiring.

The GCoE Accelerator model ensures a hassle-free setup process for the sponsor and gives them a chance to focus on the core functions to be delivered from the new center.

Why the GCoE Accelerator Model works

Here are the major advantages of a Global Center of Excellence Accelerator model over traditional GCoE setup models:

Setup in weeks: Typically,     a center takes months to set up and with heavy involvement of current     teams, which makes it harder to make progress. With an optimized project     management framework and end-to-end process mapping of setup activities,     the time to set up the center is highly accelerated, thus saving valuable     time and resources of the company. With the GCoE Accelerator, the center     can be up and running in a few weeks with minimal support from the     company’s current cross-functional teams – HR, Finance, Legal, Recruiting,     and Facilities; all this while providing complete transparency to the     teams working out of HQ.

Cost Savings: The     Accelerator allows companies to trade capital expense (long term lease,     leasehold improvements, hiring of functional teams) for the variable     expense and only pay for what they consume. The infrastructure and support     costs are payable as a managed service on a per-employee basis with a     commitment of only 6 months. Plus, the variable expense is much lower     because of the larger economies of scale.

Agility and High Value: The Accelerator allows companies to innovate faster     because they can dedicate global resources on developing products that     differentiate their business and transform customer experiences rather     than managing infrastructure. With GCoE Accelerator, companies can quickly     hire the right people and transition the important existing and new     products to the teams in the new center using a product transition     framework. The Global Center of Excellence Accelerator model also allows     companies to get easy and fast to access a broad range of globalization     tools, frameworks, and experts as per their requirements. The cost of     failure in this model is low as companies can flexibly de-provision     resources without substantial risks.

Flexibility: The     pay-as-you-go model and on-site support from the partner eases the     migration process and provides flexibility to move at the speed which the     current teams are comfortable with. The partner’s goal here is to make     globalization a cakewalk for companies while helping them generate the     highest value from their global talent.

Safe Launchpad: The     Global Center of Excellence Accelerator model can be a good way to test,     experiment, and explore the talent bed of a new geographical location     without incurring upfront huge CapEx cost on real estate, etc. The plug-and-play     office space enables the flexibility to incur costs in line with the     current team size. It can further help companies plan for scaling or set     up centers of excellence based on the availability of niche talent.

Look beyond the Operational Advantages

The Global Center of Excellence Accelerator model doesn’t just accelerate the center setup process but also accelerates the maturity of the center. As a part of this model, the partner helps organizations identify the right projects and products to transition, and manage knowledge transfer, L&D programs, leadership coaching, etc. The partner also takes care of the recruitment process to find the top talent, which also includes creating an employer brand in the local ecosystem. The GCoE Accelerator model ensures that there’s ease of implementation of strategies, and leadership spends their time focusing on technology deliverables and innovation.

Today, in a world where time is of the essence and there is a need to fail fast and scale fast, the GCoE Accelerator model could be just the strategic initiative that companies need to differentiate themselves from the competition.

[alexjosephalex-blog]

Why Digital Engineering Will Fuel The Next Wave Of ER&D Growth

Large R&D spenders are increasingly facing disruption from digital natives like Uber and Airbnb. This disruption has forced these large companies to rethink their product strategy, thanks to digital having gone beyond being a mere buzzword to permeate into every vertical. Digital products, digital services, digital solutions have become the new normal, with digital increasingly defining the core of companies. It has become imperative for every company to have a digital strategy to survive in this increasingly disruptive era. Further, increasing maturity of digital technologies such as AI/ML, IoT, RPA, blockchain is enabling newer products and services across verticals.

Massive investments that are being made towards digital engineering by companies across the globe, including the top global 1000 companies (Z1000) are a testament to this change. Currently, the global spend towards digital engineering stands at USD 293Bn, which is expected to more than double to a whopping USD 667Bn by 2023. In the next 5 years, this staggering amount will drive the future growth in Engineering R&D and is expected to account for 39% of the overall spend.

Top ER&D spenders are investing in digital engineering themes to drive velocity in manufacturing processes and new product development, while also enabling alternative revenue streams. Zinnov defines Digital Engineering spend as the investments made in

building     digital infrastructure to digitally modernize the product launch and development     process as well as building capabilities in new digital technologies such     as AR/VR, AI/ML, etc.

building     new, smart, and connected products as well as providing new services such     as predictive asset maintenance, remote diagnostics, etc.

Investing in digital engineering capabilities ensures –

velocity     in product development

enhanced     product ownership experience

enhanced     new product portfolio to stay relevant

alternative     revenue streams

Factors driving increased Digital Engineering spend

The increased focus on building digital products and solutions to drive differentiation, irrespective of vertical, has propelled the rise in digital engineering spend. Further, the growth in digital engineering is being driven by three distinct factors – a) the convergence of technology and business model innovations; b) the growth of tech giants and start-ups, thus creating a vibrant global digital ecosystem; and c) the digital disruptions currently happening in the technology ecosystem.

Although there is a rise in digital engineering spend across verticals, Software & Internet vertical will account for nearly half the global digital engineering spend, to touch USD 322Bn by 2023.

Some of the key factors driving this spend in software & Internet vertical include –

(i) Increasing consolidation of ER&D spend by Software & Internet giants  • The tech giants – Amazon, Google, Microsoft, Facebook, Baidu, Alibaba, Tencent – spent close to USD 70Bn on R&D in 2018 alone. This dominance in spend is expected to continue as these giants expand into newer technologies and markets.  • Chinese tech giants are increasing their R&D spend at a much higher rate of 41% as compared to other tech giants at 18%.

(ii) Market leaders foraying into non-core areas • Market leaders, along with Chinese giants, are increasing their spend across non-core areas such as healthcare, media, automotive, and telecom, and are posing serious challenges to traditional incumbents. Large scale investment announcements can be expected in these areas as leaders look to diversify and increase their presence across industries.

(iii) Increasing dominance across the digital engineering stack • Software companies will continue to play a pivotal role in driving the digital engineering revolution through investments across the stack:  i. Digital Engineering Infrastructure ii. Digital Platforms iii. Digital Applications

(iv) Focus on new-age technologies • Software & Internet companies will continue to be the drivers and adopters of technological disruptions. Four key areas are expected to drive investments in the near term: i. Artificial Intelligence/Machine Learning ii. Augmented Reality/Virtual Reality  iii. Big Data Analytics iv. Blockchain

Vertical-wise view of Digital Engineering spend

An increasing trend that has been evident in the last few years is that across verticals, digital engineering is outpacing legacy ER&D spend and will further drive growth for the future. Automotive is one of the biggest spenders on ER&D. The digital engineering spend which forms a mere ~15% of the total ER&D spend in the Automotive vertical, is expected to grow at a CAGR of 14% to touch USD 41Bn by 2023. Automotive companies are investing this spend in building autonomous vehicles, connected cars, ADAS, and Factory 4.0, with Volkswagen leading the pack with a cumulative ER&D spend of USD 16.5Bn.

Consumer Electronics companies are spending on connected and smart devices, platform-based launches by leveraging existing open source systems, and reducing time to market. While Apple is the biggest spender in Consumer Electronics at USD 15.7Bn, Samsung is a close second at USD 15.6Bn.

Compared to the above industries, the digital engineering spend in verticals such as Industrial, Semiconductor, Aerospace & Defense, Medical Devices, and Peripherals & Storage is negligible, growing at a CAGR of 10%+. However, one common theme across these verticals is the investments in newer technologies such as IOT, RPA, Robotics, AI/ML, Hyper Converged Infrastructure, etc., indicating the determined march of companies towards embracing digital.

Increased Digital Engineering Spend in verticals hitherto non-core to Engineering

The impact of digital engineering is being felt across verticals and non-core verticals such as Media & Technology (M&T), Banking & Financial Services/Insurance (BFSI), Retail are invested in digital technologies for not merely internal consumption but also to build new products and services to drive differentiation. Zinnov research suggests that BFSI and Retail companies are investing significantly on building digital engineering capabilities, and this will grow at a CAGR of 29% by 2023 to touch USD 31Bn and USD 22Bn. Similarly, digital engineering spend of M&T vertical will grow at a CAGR of 24% and Healthcare Payers & Providers vertical is expected to grow at 21%.

Companies in the BFSI space are making huge investments in payments technology, telematics-based insurance, robot advisory through AI and ML. On the other hand, Retail companies are enhancing customer experience by transforming in-store shopping experience through IoT, introducing smart shelves and connected products for monitoring and feedback. Media & Entertainment is another vertical that has been increasingly leveraging digital technologies like AI and ML to provide personalized viewing recommendations to users. M&T is also where intelligent platforms are enabling targeted advertising, thus morphing into the realm of hyper-personalization.

With digital taking over the world – in every sense of the word – companies can’t afford to lag behind in investing in building and nurturing digital engineering capabilities. In fact, every company is now a digital entity. Although companies are raising their digital engineering spend considerably, skilled digital talent will be key to driving profitability in the long run. Strategic partnerships with Engineering Services Providers will be key for companies to not only augment their digital engineering investments but also to gain access to skilled talent.

[alexjosephalex-blog]

Why Unicorns Are Ruling The Roost In The Start-up Ecosystem

‘Be a unicorn in a field of horses.’

We are in an era where the start-up ecosystem is inundated with unicorns, with horses left behind far enough in the fields to graze! A unicorn is a privately-held start-up/company which is valued at over $1Bn. As the valuation of these unicorns rises, so do their names – a pentacorn is valued at over $5Bn, a decacorn is a company with valuation over $10Bn, and a hectacorn is valued at over $100Bn. Interestingly, unlike an established company’s valuation which is based on past years’ performances, a start-up’s valuation is arrived at through its growth opportunities and expected long term development for its potential market.

While the term was coined in 2013 by Aileen Lee comparing these rare companies to the mythical creature, unicorns have only multiplied exponentially, especially in the past 5 years. As of January 2019, the number of unicorns stands at a whopping 335, with a total cumulative valuation of ~$1090Bn, according to CBInsights.

The Unicorn Landscape

In the last 5 years, the Unicorn club in the startup ecosystem has seen exponential growth, with a hockey stick rise, in terms of the number of companies formed. Verticals such as TravelTech, Enterprise Software, and eCommerce/Marketplace are home to a large number of unicorns. When it comes to capital, unicorns have leveraged a diverse group of non-traditional investors such as public market funds, along with micro-investors like angels and accelerators across growth stages to reach the hallowed halls of the Unicorn club.

Historical data suggests that technological innovations have given birth to unicorns, a phenomenon that has reached its peak in recent years. However, as more technological innovations come to the fore, more unicorns are being birthed. But, in the recent past, being part of the Unicorn club hasn’t been all that rare, because of the sheer number currently in existence. While the US housed the most number of unicorns till about 2015, geographies such as China, India, and the UK are homes to unicorns today. In fact, 63% of unicorns established from 2012 to 2017 are outside of the US.

Unicorns and Traditional Industries

Unicorns have disrupted several traditional industries, as a direct consequence of global user base, optimizations in technology product development, and a change in customer mindset to adapt to new products. A few prominent examples include Uber disrupting the traditional taxi industry, Airbnb disrupting the lodging industry, and with a lean team of 50 engineers, WhatsApp disrupting the telecom industry in less than 4 years.

Verticals such as automotive, telecom, media & entertainment, retail, enterprise software, and healthcare & pharma are leading the pack with a large number of unicorns. From sharing economy to OTT to personalization to immersive experience, unicorns have caused disruptions and put customer experience and expectation at the core.

All that glitters is not gold

One of the primary aspects fueling the growth of unicorns is the investment that is being pumped into these companies. A varied set of investors, ranging from angel investors to public market funds – mutual funds and hedge funds, to venture capital firms to corporate venture arms have invested in unicorns. While these investments are propelling these companies to taste stratospheric growth in a compressed time frame, there have been some serious concerns as well.

One example is Square, which priced its IPO at $9 a share in November 2016, well under the $15+ that private investors paid the year before. Though the share price did rise during the IPO, the firm’s valuation leveled off at around $4Bn, just two-thirds of the $6Bn that Square was valued at.

Theranos is another exalted unicorn which fell flat early on. Started in 2003, by a then-19-year-old Stanford dropout, Elizabeth Holmes, Theranos was the blood testing start-up that had everyone hankering to get a piece of. Theranos, once valued at a whopping $9Bn, came under repeated fire for vaunted core technology, unreliable results, questionable methodology, and inadequately trained staff. Following a furor over the false claims of the breakthrough technology used as well as the very small amounts of blood required for the tests, the company was shut and its assets subsequently liquidated.

The large investments being made in unicorns are eerily similar to the infamous tech bubble era of the mid-nineties. Many unicorns, though valued in excess of $1+Bn, are operating at low revenues and fewer customers. Additionally, some of the unicorns that have gone public, have posted poor post IPO performance which further cement the comparison to the dot com bubble era.

Despite these missteps by some unicorns, these high valuation companies are real, much bigger, and different than the failures of pre-2000 era. Three key factors are shaping the stratospheric growth of these unicorns –

a) Larger addressable markets: Since inception, unicorns are targeting global markets. Additionally, 3.9Bn people who have access to the Internet and are spending close to $3Tn online, the world has truly become flat.  b) Higher revenues before IPO: Today, unicorns are posting higher revenue growths before filing for IPOs than the younger companies of the Internet bubble era. In the pre-2000 era, 65% of investments were funneled into companies that were less than 3 years old, while in 2016, 80+% of current investments were made in 3+ year-old companies. c) Born global: Unicorns and other start-ups are accessing global markets and targeting multiple industries in the early growth stages itself, thus casting a wider net to gain customer access. They are leveraging a much larger customer base across global markets, across verticals such as TravelTech, Food delivery, AutoTech, and Aerospace.

Key Enablers and Growth Drivers of Unicorns

Besides the broad level factors outlined above, three key enablers are further fueling the seemingly sudden explosion of unicorns, thus making it easier for young companies to scale up in a short time frame –

a) Digital Disruption: Digital technologies have impacted businesses, irrespective of verticals. In fact, every business is transforming into a digital business. Companies leveraging digital technologies to disrupt key industry verticals has been the modus operandi of most members of the hallowed Unicorn club. Digital technologies have also enabled companies to provide personalized experiences to customers (through mobile), develop products through agile processes (cloud), and take data-driven decisions in real-time (big data and social).  The impact of digital is far-reaching and is being felt by large organizations as well. They are establishing new age business units that are focused on digital platforms. General Electric (GE) set up a digital business unit, GE Digital, to compete in the IoT market with IBM and other large analytics players. Walmart established Walmart Labs to develop technologies and solutions for its global eCommerce business.  b) Open Innovation Ecosystem: In the wake of start-ups – especially unicorns – disrupting the way traditional organizations across verticals operate, these organizations have realized the potential of working with unicorns. Hence, large organizations are creating a viable ecosystem for start-ups to prosper and grow through multiple avenues such as venture arms, accelerators, mentorship support, etc. Further, the democratization of computing through cloud computing and open-source platforms have enabled organizations to scale rapidly with limited capital budgets.  Large R&D spenders are building the core infrastructure and platforms across emerging technologies to enable newer companies to invest in vertical use cases. Additionally, these large spenders are also creating an open innovation ecosystem through multiple avenues such as accelerators and venture arms, which provide specific support in areas such as product GTM, customer and investor connect, business and technology mentorship, ecosystem partnerships, to name a few. c) Favorable Funding Environment: Several reasons have laid the ground for creating a favorable funding environment for the exponential growth of start-ups.  (i) The lower interest rates set by the Federal Reserve since 2009 have pushed a large number of investors into the private market. This has propelled the rise in participation from micro-investors like angels and accelerators, who are investing in numerous start-ups, which promise higher returns than conventional investment channels.  (ii) Late-stage investment valuations have been fueled by the interest of mutual funds and hedge funds in the private market. Also, the private market is yielding higher returns to investors than the public stock market. (iii) Near-zero interest rates are driving investments away from bonds and fixed-income securities into start-ups that promise higher returns.

In a time when unicorns and start-ups are rewriting the rules of the game and are bigger, faster, and better than ever before, traditional organizations have their work cut out for them. It’s a game of do or die, with very little room for the in-betweeners – those that are barely in the game, playing safe. Unicorns are here to stay, and their ilk will only grow and expand in the years to come. With the average age of an S&P company bottoming out at a mere 20 years, traditional companies need to gear up and build a moat around their business – stat!

[alexjosephalex-blog]

How to Build a Successful Partnership Between a Start-up and a Corporate?

Before understanding the ways to build a successful partnership between a start-up and a corporate, let’s understand why corporates and start-ups need each other. After corporates reach a stage of maturity, they tend to become more reactive in their approach rather than proactive. The addressed market also becomes saturated as consumers get jaded and later end up trying out new products and services in their quest for novelty. So, if companies need to survive and perform well in the market, they must find newer markets for them to grow and generate more revenue. For this, corporates should always have their eyes and ears on what’s happening in the start-up world.

 On the other hand, start-ups are more focused on innovation and look forward to collaborating with corporates to get access to bigger deals, lower customer acquisition costs, build a reputation, and gain exposure to bigger markets. However, not all partnerships lead to the desired outcomes. Here are a few ways to build a successful partnership between a start-up and a corporate.

 Ways to build a successful partnership between a start-up and a corporate 

 1.   Define your goals clearly

2.   Knowledge of strength and weakness

3.   Choosing the right partner 

 Define your Goals Clearly

This is the most important aspect of planning a successful partnership. However, very few corporates define their goals clearly to their start-up partners. Most of the corporates end up in a partnership without establishing what exactly they want to do and what they expect. 

 So, before a corporate get in touch with a start-up, they should understand the start-up’s potential and the ability to handle the scale of the given project or engagement. Thereafter, corporates must define a clear objective that they want to achieve from the engagement. 

 Identify the strength and weakness of the start-up

Before a corporate chooses a start-up for collaboration, it is important to identify its strengths and weaknesses. This helps in maintaining a long-term relationship and make things more transparent.

 Choosing the right partner

This is the most important factor to consider. Corporates should be able to find the right start-up for a partnership so that they can grow their business in a meaningful way. Corporates must look at and assess the plethora of start-ups that are available out there and then choose the right one that will fit the company’s vision and long-term business strategy. 

 Corporates

hence need to be constantly looking for the innovation happening in the

start-up

space and be proactive in tapping into the opportunities by forming effective partnerships.

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How to leverage a business incubator to positively impact your business?

A startup business needs support to grow both effectively and efficiently. This is where business incubators play a key role. There are various types of business incubators and the mission for all of them is to offer resources and support to small businesses or start-ups that need it. Also, they provide resources for entrepreneurs who are trying to build a successful business.

 Apart from the resources offered, leveraging a business incubator can showcase a positive impact on your business as well. Here are the benefits of using a small business incubator:

  Provides Cost Reduction     Opportunities

Provides you a Professional     Environment

Provides a Productive     Space 

Opportunities for more Learning

More Funding Opportunities

Marketing Support

 Provides Cost Reduction Opportunities

Businesses can have fixed or varied costs. So, it becomes a critical thing to distinguish between the two types of expenses and ways to cover them. You can analyze your expense and then you need to identify various opportunities to save money ensuring your pricing covers all costs of doing the business.

 Provides you a Professional Environment

The need for a proper working office is essential for any business to create a professional environment. An incubator acts as a safe place that supports all the important meetings to present an authorized front to the prospects and investors. It can provide you the feel of a professional environment.

 Provides the space for Productivity

A productive environment is essential for any business to grow. Administrative resources for productivity like space, freedom, and the peace of mind to focus on growing the business are also essential. Uninterrupted internet access is also essential for productivity. An incubator provides all these for better productivity of the business.

 Opportunities for more Learning

Those who want to grow their business must be open to any new opportunities for gaining more knowledge. Mentor relationships, workshops, and other training opportunities abound within business incubators must be utilized fully to attain new knowledge.

 More funding Opportunities

Initial funding is considered as the major obstacle while starting a new business. By leveraging the connections of the incubator, the business owners can get more exposure to investors, loan opportunities, and other financial guidance.

 Marketing Support

During the initial days of any business, the biggest challenge is to prove yourself to your consumers. This is a bit challenging. You need to build your connections with marketing experts in the industry to learn the know-how so that you can plan the marketing strategy that can help in the growth of your business.

  In short, a

business incubator

can help you positively to grow your business. But, before choosing one, it is good to do proper market research to make sure that it is in line with your business needs and falls in the same niche.

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Key components in building an effective Vendor Management Program

Nowadays, many of the businesses are depending on vendors to improve their operations for specialized projects and services to customers. On the other hand, this is allowing the third-party vendors to get access to an organization’s security system and other sensitive information that can put the business and its customers under risk.

 An enterprise-wide approach to vendor management is often a necessity in an organization, however, the enterprise fails to implement it due to several barriers like limited adoption of vendor management policies, lack of authorized contact for enterprise vendors and standardized vendor management process, etc.

 Since third-party access is a risk, it becomes important for businesses to choose the vendors, evaluate them, and monitor them throughout their term of service. The implementation of a robust vendor management program helps in building a proactive approach to risk management, thereby providing a competitive advantage to businesses. 

 Designating a Program Owner

Assigning a third party to access the secure and sensitive information of an organization is always a risk. So, the organization should designate a program owner to monitor and evaluate the vendors and to completely own the vendor management program end-to-end. This includes approval of vendors and ensuring that the vendors agree to the approved policies and procedures of the company. Businesses should not look for a decentralized approach when it comes to engaging vendors that are based on relationships. Any decision should be based on considering the risk factors to the organization and its customers.

 Comprehensive Policies and Procedures

Before assigning any vendors, the company should develop written policies and procedures to provide a clear understanding of the governance of the vendors. These procedures and policies also provide the framework to ensure that the company works in compliance with the needed regulatory requirements. But all the vendors don't need the same level of attention. Creating a risk-based approach helps in creating better efficiency and efficacy in the vendor management process where more attention is given to high-risk vendors than the moderate or low-risk vendors.

New Ways to Risk Rate Vendors

The vendor management program must be able to differentiate the procedures, policies, and other documentation requirements among high, medium, and low-risk vendors. This approach will help in allocating the resources where high-risk exists by still maintaining the efficiency of those low-risk vendors. Companies should be well-aware of the vendors and should consider their previous services while evaluating them.

 Clear Understanding of the Vendors & Auditing

So, what is the most crucial factor in a vendor management system? – It’s vendor selection. Companies should learn about these vendors before hiring them, where the entire vendor compliance is covered. Companies should take care of these high-risk vendors and ensure that these vendors are monitored timely. 

 Required Documentation

When organizations conduct vendor audits, it is important to document the responses as well. Apart from the responses, the vendor should also provide the qualifications on their experience, proofs on their insurance, licenses, references, etc. along with the agreed applicable laws and regulations. Apart from these, information around security, network access, physical access, disaster recovery, termination provisions, performance benchmarks, software development management, and training programs should also be collected from every vendor.

  Organizations must ensure that a

vendor management

program is in place and can help accomplish tasks with the best solutions available in the market.