India's $150 billion big legacy IT services sector, which has been growing at a break-neck speed over the past two decades, has recently been struggling as its formerly cost-effective services were replaced by an even cheaper approach: intelligent IT automation solutions.
At its Gartner Symposium/ITxpo 2017, the analyst firm announced this week that it expects that the costs of commodity services will be reduced by 15% to 25% annually until intelligent automation tools can be up to 65% less expensive than offshore-based staff! That is devastating news to the almost 4 million people currently employed in this sector, as about 70% of those jobs will be rendered irrelevant by automation in the next couple of years.
Now, Wipro, Infosys, and other large Indian IT services companies are heavily investing in or acquiring startups to compete with their better positioned European and American counterparts. But while the problem is more acute in India, system integrators around the globe have been struggling to hold on to steadily declining margins, hire and retain quality employees, and keep customers happy.
The Traditional SI Body Model Is Failing
Five years ago, when a system integrator was asked to submit a request for proposal, for example to manage the application packaging during an enterprise-wide operation system migration, they would calculate the project cost based on how many applications had to be packaged and tested, how many people it would take to do so and how long the project would take.
The SI would then add a relatively slim profit margin on top of the base price and hope that nothing went wrong — because any inefficiencies in their process would have to be paid for by that buffer or eaten by the company.
The problem with this body-based business model is that it is very heavily reliant on hiring and retaining hundreds or even thousands of skilled staff that need to be utilized properly to keep their revenues high, which is increasingly harder to accomplish.
In addition, as the velocity of change has significantly picked up over the past years, clients have become more demanding when it comes to turn-around times. An SI with the traditional body model will just throw more people at it. This might save a few months on the project timeline, but the time frame is still maybe 12 to 18 months.
IT Automation As An Opportunity, Not A Threat
Customers, generally, need a much faster solution than that. They are looking for a true partner to enable them to operate in a business-as-usual modus operandum on their path to achieving Evergreen IT and the traditional body model simply cannot accomplish that. That's where IT automation comes in.
Today, I want to share with you five ways that system integrators can leverage IT automation:
- As a competitve differentiator in request-for-proposal stage,
- During the discovery process to gain a more accurate project scope faster,
- To position themselves as a strategic partner in Business-as-Usual scenarios,
- To increase their own team's profitability, scalability, and contribution to the company's bottomline,
- To exceed customer expectations leading to longer customer engagements.
So, let's go through each point in more detail.
Gain A Competitive Advantage In The RFP Process
While the overall cost is still a big deciding factor, competing on cost alone isn't going to win the deal anymore.
Many IT project managers have gone through past IT Transformation initiatives that were mostly or at least partially outsourced to a third-party — and they experienced first hand that the scope changed six months into the project, things took much longer than initially expected, and the budget had to be adjusted as more people were needed to rescue the venture.
Now, they know to ask further-reaching questions, such as "How will you ensure you will deliver on time?" or "How will you manage the application packaging and testing workflow?" This is where IT automation can bring a significant competitve advantage to the table.
By using intelligent IT automation solutions, such as Access Agent or Access Capture, you can already, in the sales phase, lay out a detailed plan on how you will automate the packaging and testing of 60-75% of their application estate through Access Capture within days rather than months. The more manually intense remainder of the packaging workload will still go through the business-rule driven and fully auditable workflow but then handled by your experienced staff. This way, the automation tool does not compete with your body model, but enhances it — allowing you to build best practices and industry expertise around this problem.
Fast Out Of The Gate & Quick Wins
How you kick off a project often determines its long-term success. Instead of spending months gathering all the data in already out-of-date spreadsheets that have to be handed around from group to group, you can leverage Access Capture's intelligent re-certification capabilities to quickly and accurately determine the scope of your packaging and testing workload. It enables you to automatically:
- Gather relevant information, such as product names and install commands, by connecting to your SCCM or a similar desktop management program. The tool then detects whether the file is an MSI, EXE or App-V 4.x file and if a silent switch has been applied, and follows up accordingly.
- Create required resources, such as virtual machines, notify product owners, etc. Even the most non-technical product owners are now empowered to test their own products and supply Capture with a pass or fail result.
- Prioritize to find low-hanging fruit first. About 40% of your application estate can go right for automation, 30% are Windows MSI files to which your product owners will have to apply a simple wrapper, and the remainder will need more intensive, manual intervention.
By automating this process and finding the easy wins as quickly as possible, your team can get some big numbers on the board fast while building rapport and trust.
Position As A Strategic Business-as-Usual Partner
Windows 10 and Office 365 force many organizations to re-evaluate their IT management approach and consider going "Business-as-Usual" to manage the faster pace of upgrades. Any of those new versions delivered twice a year are mini-migrations that require substantial work.
While Microsoft's marketing message is that that you don’t have to retest 94 to 99% of your applications, most of the enterprises will actually have to test, at least, all their high-risk applications, but most of them will have to test all of their apps.
By implementing IT automation strategically from a Business-as-Usual perspective as you are helping customers to go through the initial migration process, you can upsell them. In addition, you can gain new customers that struggle to handle the workload resulting from Microsoft's new servicing model.
Increase Your Efficiency, Scalability, & Profitability
It's very simple: The more people you've got billing, the better your utilization levels are, the better your profitability is. Since most outsourcers work on a consultancy level, they will just throw more people at a struggling project and bill the client at a normal daily rate. This model worked while customers were completely dependent on SIs. However, times have changed and the power has shifted to the client. Now, enterprises will push back saying they simply cannot wait 18 months for their apps to be packaged. If we're waiting 18 months, we will be three Windows upgrades behind.
Now, the pressure is on the SI. Your clients are looking to work with partners who not only have the manpower and skill sets to manage an IT Transformation project of that scale, but also bring added efficiency, scalability, and speed to the table — and IT automation tools can do just that for you!
But this scalability extends beyond just one client. As a service integrator, you could also choose to bring IT automation tools like Access Capture or Access Agent as part of your standard tool kit and increase your accounts' profitability significantly.
Exceed Customer Expectations, Leading To Longer Engagements
Finally, IT automation allows you to manage projects more efficiently and professionally than by handing around outdated spreadsheets:
- Significant smaller margin for errors compared to manual labor. For example, by packaging an application through Access Capture, a compatible app including complete documentation and complete MSI package is guaranteed, while that often isn't the case for manual packaging.
- Streamlined business processes driven by pre-defined intelligent workflows. Instead of scrambling to get the right product owners, resources, and machines together, our IT automation tools do so automatically and proactively. This ensures better compliance and collaboration among teams.
- Less resource intensive. Automate labor-intensive, tedious, and boring tasks, such as application packaging creation, so you can focus your resources and skills where your team can make the most impact.
- Increased speed and agility. Businesses need to be much more agile when it comes to IT management than they have ever been. Processes, like OS migrations, that took 2-4 years, must now be completed within 6 months. IT automation can accelerate your progress significantly, cutting the project down to 25-30% of the original workload.
These are only a few of the benefits that you and your clients will benefit from as you start adding IT automation to your skilled team of people.
While there are no two ways around the fact that IT automation will be cheaper and more efficient than manual labor at managed workplace services, DD Mishra, research director at Gartner says: “Intelligent automation will alter the provision of managed workplace services over the next few years, increasing service quality at a lower price. Sourcing and vendor management leaders must prepare to restructure these services and renegotiate contracts to leverage intelligent automation. Automation-driven improvements in service delivery and pricing will allow sourcing and vendor management leaders to select a wider range of moving managed workplace services (MWS) outcomes that will improve quality and cost simultaneously.”
Service integrators need to embrace IT automation, instead of shying away from it, to stay relevant. There is a short window of opportunity here to use it to gain a significant competitive advantage when bidding in an RFP process, extend existing client contracts or gain new customers by positioning IT automation strategically in a "Business-as-Usual" scenario as well as increase your own efficiency, scalability, and profitability.