zinnov zones for digital technology services
TRANSCRIPT
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Zinnov Zones for Digital
*Zinnov’s Global Service Provider Ratings have been rebranded to ‘Zinnov Zones’
Market Landscape – Enterprise Digital Transformation
Digital Journey of Enterprises
Evolution of Service Provider Landscape
Zinnov Zones Ratings for Digital
Agenda
3
A view on IT investments by enterprises..
Source: Zinnov Analysis
Traditional IT
IT Modernisation
Digital Enablement
Enterprise Digital Transformation
Operating SystemEnterprise Application SuitesSecurity InfrastructureHardware SupportNetwork Support
Virtualisation and Cloud based infrastructureSocial Media ApplicationsMobile enterprise application suitesRelational databases and Analytics, BI applicationsIdentity management
Creating an infrastructure to provide access to business
information and manage/run business applications
Evolution of legacy IT infrastructure, including both
hardware & software, to align with changing business requirements
Investments in enabling technologies to support digital use
cases and execute data driven business processes
Finding newer possibilities to maximize the customer
experiences and operational efficiencies
Service Oriented Enterprise ArchitectureAdvanced analytics led enterprise applicationsBig Data InfrastructureOmni-channel Commerce PlatformsDigital Marketing PlatformsIoT platformsSensors and Beacons technology4Application Program InterfaceData LakesHigh Performance computing architecture
Data driven UX DesigningDigital ManufacturingArtificial IntelligencePredictive AnalyticsNatural Language InteractionImage RecognitionRobotic Process AutomationRobo-advisorsNear Field CommunicationCryptocurrencyWearable technologiesConnected ecosystemsVirtual and Augmented Reality
4
Enterprise Digital Transformation Spending
Enterprise Digital Transformation Spending
EDT market is estimated to be worth $29 Bn globally and is growing at over 30% per annum in times of otherwise stagnating IT spend
Source: Zinnov Research
1635 1692
445
845227
490
29
136
Global Digital Market Spending and Growth ($ Bn)
Traditional IT IT Modernization Digital Enablement Enterprise Digital Transformation
<1%
<14%
<17%
<36%
2015 2020
Enterprise digital transformation spending forms ~11% of the overall digital market, rest being constituted by expenditure towards digital enablement
BFSI, manufacturing and Retail currently constitute nearly 50% of the overall market for EDT
Nearly 40% of the overall spend is around use cases pertaining to customer targeting and engagement
5
~$29 Bn EDT market currently drives ~$2 Bn worth of spend with digital service providers
Source: Zinnov Analysis
Digital Enablement Spending Enterprise Digital Transformation Spending
USD 300-320 Mn
USD 2 Bn
USD 15 Bn
USD 1.4-1.5 Bn
USD 10 Bn
USD 69 Bn
USD 2.3-2.5 Bn
USD 15 Bn
USD 115Bn
USD 6-7.5 Bn
USD 37 Bn
USD 250 Bn
2015 2020 2015 2020
Share of Indian Service Providers
Services Consumed Via Digital Service Providers
Share of Services in Spending
20% realization of the total addressable Enterprise Digital transformation services market of $70 Bn; 30% realization expected by 2020
80% expenditure of services being made in-house, in addition to a small share of global in-house centers
Indian SPs account for ~15% of the services opportunity currently
6
NA and Europe are the largest contributors to global digital spending; Asian market to become the 2nd largest by 2020
Source: Zinnov Analysis
Split of EDT Spend by Geographies
North AmericaBanking, Retail, Hi-Tech and Healthcare
EuropeManufacturing, Telecom, Insurance
AsiaManufacturing, Services, Oil & Gas
2015 2020
14
6838
%
2015 2020
9
3029%
2015 2020
5
33
43%
South AmericaUtilities, Oil and Gas and Banking
Middle East & AfricaOil and Gas, Mining and Agriculture
AustraliaServices, Banking and Insurance
2015 2020
0.61.725%
2015 2020
0.31.738%
2015 2020
0.61.522%
High Concentration of large enterprises Availability of Top Digital Talent Large number of Tech Start-ups
High Cost of Digital Talent
High government focus on digital Availability of Top Digital Talent
High Cost of Digital Talent Low Economic Growth Unstable political condition
High IT spending growth Low cost talent Availability Major Offshoring and Outsourcing hotspots Rapid Economic growth
Scarcity of Top Talent
Low cost talent availability Near Shore Advantage w.r.t US geo
Low Economic Growth Unstable US government Low share of large enterprises
Start-up hubs, such as Israel Near shore advantage w.r.t. European Customers
Geo-political instability
Availability of Top talent Government focus on digital transformation
Low economic growth High cost of Digital Talent
Market Landscape – Enterprise Digital Transformation
Digital Journey of Enterprises
Evolution of Service Provider Landscape
Zinnov Zones Ratings for Digital
Agenda
8
Top global enterprises are leading adoption of Digital Transformation initiatives with Forbes 500 companies accounting for 40% of spending
Source: Zinnov Analysis
Total Digital Spend contribution from Forbes Global 500 - 2015$ 102 Billion
0-100 101-200 201-300 301-400 401-5000.00%0
0.5
1
1.5
2
2.5
Global Forbes 500 companies – by decreasing order of digital spend
Forbes 500 Digital Spend Contribution Breakup
Spen
d in
USD
Bill
ions
10%11%15%18%45%
100 200 300 400 500
Forbes 500 com-pa-nies40%
Others60%
Share of Forbes 500 Companies in Global Digital Spend
9
Disruptive impact of digital technologies and new entrants has been the highest on BFSI and retail industries
Source: Zinnov Analysis
Healthcare
Telecom
Education
Utilities
Travel & Hospitality
Manufacturing
Media & Entertainment
Retail
BFSI
Stag
e of
Dig
ital D
isru
ption
Low
Dig
ital
Disr
uptio
n
Digital led Business EnhancementsBusiness DisruptionsTimeline
Retail• Automated Warehouse Management• Mobile POS• Personalized marketing• Robotic Sales agents• Customer Churn Analytics• Drone based Delivery
• Virtual Shops• Retail 3D printing• Ecommerce/Aggregators
BFSI• Personal Financial Advisors• Fraud Detection• Internal Threat Detection• Banking Customer Sentiment Analysis
• Crowdfunding• P2P Lending• Cryptocurrency• Payment Wallets• Usage based insurance• Insurance Gamification
Media and Entertainment• Data Driven Marketing• Social Media Analytics• Digital Infotainment Solutions
• Immersive Virtual Reality• Connected TV• Programmatic Advertising• Online platforms for Aggregated Content
Manufacturing• Connected factories• Robotic Workers• Advanced SCM Analytics• Demand Prediction• Virtual Prototyping
• Additive Manufacturing• Predictive Maintenance
Travel and Hospitality• Connected hotels• Predictive Pricing • Personalized marketing campaigns• In-flight VR entertainment
• Alternative Lodging Platforms• Aggregated Hospitality & Event platforms• Travel and Hospitality Aggregators
Med
ium
Di
srup
tion
High
Di
srup
tion
Low Digital Spend Medium Digital Spend High Digital Spend
10
Enterprises are rapidly evolving on three key fronts in order to transform themselves digitally (1/3)
Source: Zinnov Analysis
1. ORGANIZATIONAL READINESS
• Technology ownership moving beyond the CIO and CTO• Investments by BUs into digital technology uptake
Enterprises are increasingly appointing Chief Digital Officers to own and implement digital charter for the organization
2 01 2 2 0 1 3 2 0 1 4 2 01 5
220 38
0 800
1600
A P P OIN TMEN T o f Ch ief Dig i t a l O ffic ers (CDO ) in Lar g e En t er p r ises g lo b al ly (2012- 2015)
CAGR: >90%
CIO and CTOLead Technology
Uptake in Pre Digital Era
Focus on running the shop (Support & Maintenance)
Digital transformation ownership extending beyond CIO/CTO office has shifted focus from “running the shop” to driving significant business benefit
Technology ownership and budgets moving beyond CIO & CTO
BU Heads
CIO/CTO
CDO
CMO
CINO/CSO
COO
CEO
60%
40%
30%
28%
25%
13%
5%
Stakeholders Within Large enterprises with Leadership role in Digital Transformation
Initiatives
New role being introduced into Organizations
11Source: Zinnov Analysis
2. DIGITAL INVESTMENTS
Enterprises across industries are setting up digital labs to foster innovation and implement technology
• Set up digital innovation labs and CoEs• Investments into hiring of relevant digital talent
Despite growth in digital talent, availability remains lowEnterprises continue to focus on acquisition and nurturing of talent to support digital objectives
2 0 1 3 2 01 4 2 01 5
11
34
65
S et u p o f d ig i t a l lab s b y Lar g e En t erp r ises
6x growth in 2 years
77%Enterprises feel that the talent crunch is
the biggest impediment to going
digital
50%Estimated shortage of
Data Scientist professionals globally
in 2015Talent Type Availability Hiring Focus
Data Scientist
UI/UX Consultant
Domain Experts
Integration Architects
Solution Architects
2 01 3 2 0 1 5
750 11
50
Glo b al A v ai lab i l i t y o f d ig i t a l Talen t ( ‘000)
CAGR: ~24%
Key Focus Areas of Digital LabsROBOTICS, IoT, ADVANCED ANALYTICS, DESIGN AND EXPERIENCE, BIG DATA, CYBER
SECURITY, COGNITIVE COMPUTING, WEARABLES, VIRTUAL REALITY
Enterprises are rapidly evolving on three key fronts in order to transform themselves digitally (2/3)
12Source: Zinnov Analysis, Start up data from Mattermark
3. ECOSYSTEM LEVERAGE
Enterprise are leveraging the exploding digital start-up ecosystem for adoption of digital technologies
• Partnerships with startups for adoption of digital technologies• Association with universities with focus on digital
Universities with high focus on research in digital technologies are being partnered by enterprises
Executives from large enterprises believe that small
businesses will support growth in
a partnership
41%
2 0 0 0 2 0 0 5 2 0 1 0 2 0 1 5
1259
203
407G row t h i n num be r of di g i t a l s t a r t - ups
CAGR: >25%
Contextual Knowledge Management
Enhancement of web-based customer engagement
In-store Robotic Assistants for Customers
Use of AI, Wearables etc. to improve worker safety
Massachusetts Institute of Technology University of Cambridge Imperial College London Harvard University University of Oxford University College London Stanford University California Institute of Technology Princeton University Yale University
Design & Experience
Big Data & Analytics
Internet of Things
Cognitive Computing RoboticsTop Global Academic Institutes
Passenger focused big data and ML applicationsWearable robotsAutonomous vehicle technology
Enterprises are rapidly evolving on three key fronts in order to transform themselves digitally (3/3)
Market Landscape – Enterprise Digital Transformation
Digital Journey of Enterprises
Evolution of Service Provider Landscape
Zinnov Zones Ratings for Digital
Agenda
14
Application engineering, and data management and analytics service offerings account for ~70% of service providers’ digital revenue
Source: Zinnov Analysis*Figures do not add up to 100% due to overlap among clients across service lines
Digital Application Engineering
Digital SMAC Applications
Mobile/ Web Apps Dev
Cognitive Solutions
Robotics and Automation
Digital Consulting & Transformation Services
Customer Maturity Assessment
Digital Road map definition
Use Case Prioritization
Design & Experience Services
Customer Experience Mapping
U/UX Development
Design on new forms
Digital Platform Integration
API Management
Horizontal Platform orchestration
Solutions Integration
Data Management & Analytics Services
Data Architecture
ETL, Data Curation
Advanced Analytics
BI & Data Visualization
38%
33%
17%
8%4%
Digital Application Engineering
Data Management & Analytics
Digital Platform Integration
Digital Consulting Services
Design and Experience Services16%
20%
23%
27%
31%
Share of Digital Services – by Service Lines (2015)
Share of Clients* (2015)
15
Service Providers need to differentiate across five key aspects in order to become leaders in the digital age
Source: Zinnov Analysis
Focus on Digital Talent Hiring
Creation of Digital Assets
Leveraging Digital Ecosystem
Agile/DevOps Development
Work on new-age delivery models
Service Providers must undertake initiatives to upskill internal
workforce and hire top talent from to build an able digital workforce
Re-usable IPs such as products and accelerators along with a robust lab
network is essential for SPs to differentiate themselves in market
Service Providers should enhance their digital capabilities by
partnering important stakeholders such as start ups and universities
Agile/DevOps development methodologies help SPs deliver high quality of services in a smaller time
frame and reasonable costs
Enterprises are demanding new age delivery models such revenue
sharing, risk-reward sharing models forcing SPs to execute on these
1 2 3 4 5
Higher lateral hiring by Digital SPs as compared to IT Service Providers
35%
Higher median compensation of Digital
employees against IT20%
Of IPs (both Solutions & Accelerators) built by SPs serve BFSI clients
28%
Service Providers have Design and UX focus in
their digital labs70%
of revenue made through outcome based contracts
Expected to grow rapidly as services mature
1%
Six Key Digital Talent Categories
Approx. 15-20% higher experience in digital workforce vs. IT/ITeS
Advantages of Digital Labs
Building cross-technology solutions through inter-BU collaboration
Development Of IPs Collaboration with ecosystem
Three Stages of SP collaboration with startup ecosystem:
Explore and Engage Partner Invest and Acquire
Few SP partnerships with universities
Growth in demand for DevOps skills over last
year70%
Need for Dev-ops and Agile
Increase in revenue for clients22%
30X Increase in speed of deployment
50X Reduction in software failures
Multiple GTM Models being explored by service providers
Consulting partner Led Customer as a channel Delivery team led 3-in-a-box/4-in-a-box model Digital as a separate P&L17%
• INTEGRATIONARCHITECT
• APPLICATIONARCHITECT
• DATA SCIENTIST• DOMAIN EXPERT• UX CONSULTANT• DEVOPS ANALYST
Key areas of collaboration include:Advanced Analytics |Mind
Controlled Robots |Cyber security | Smart city tech | IoT | Computer
Vision | Design
16
Existing capabilities of Product Engineering Service Providers provide them a head start in digital services market
Source: Zinnov Analysis
Key Advantages of a Product Engineering Vendor Over Incumbent IT Services Vendor
PRODUCT ENGINEERING
VENDORS’ ADVANTAGES
Customer Engagement
Focus
New Products & Services
Digital Stakeholder
Connects
Design Thinking & Agile
New Age TalentEcosystem
Connects
A
B
F
E
DC
>10% of global digital spend will be on new products & services, which is the prime focus
of PES vendors
Zinnov estimates >$100 Bn spend by 2020 on UI/ UX capabilities, API
management & application factories, all strong suits of traditional PES vendors
PES vendors have traditionally engaged with both startup and university ecosystem to
augment their research capabilities
PES vendors employ a large proportion of new technologies and research focussed talent, which is not the case for traditional IT services firms
PES vendors were early movers in Agile, Scrum, DevOps and Design Thinking fields
Deep connects with engineering organizations, CTO & BUs as compared to IT services firms who have traditionally restricted their engagement to CIO’s
Market Landscape – Enterprise Digital Transformation
Digital Journey of Enterprises
Evolution of Service Provider Landscape
Zinnov Zones Ratings for Digital
Agenda
18
Zinnov Zones for Digital – Analysis Framework
Source: Zinnov Analysis
Zinnov has evaluated participating service providers on two key areas basis which they were plotted on a 2-dimensional matrix
Scalability
Nurture Zone Breakout Zone Execution Zone Leadership Zone
Positioning reflects the scores on Digital Prowess and Scalability
Digital Prowess1 Scalability2
Scale of Digital Business
Product Engineering Experience
Digital Clientele
Services Spread
Ecosystem Leverage
Digital Workforce
Digital Assets
Engagement Models
Scal
abili
tySc
ale
of D
igita
l Bus
ines
s, P
rodu
ct E
ngin
eerin
g Ex
perie
nce,
Dig
ital C
lient
ele
Digital ProwessServices Spread, Ecosystem Leverage, Digital Workforce, Digital Assets, Engagement Models
19
Digital Prowess Parameters explained
Source: Zinnov Analysis
Services Spread
Ecosystem Leverage
Digital Workforce
Digital Assets
Engagement Models
Capability of delivering end to end services across the five key domains of digital technology services, namely – a) Consulting b) Design and Experience c) Application Engineering, 4) Platform Integration & 5) Data Management and Analytics
Leveraging digital ecosystem through acquisitions or partnerships with niche technology start-ups and prominent digital technology platforms | Strong connects with leading universities and academic institutes having focus on research in digital technologies| Relevant acquisitions in the digital space
Availability of digital skills such as Domain Experts, Data Scientists, UI/UX Consultants & Solution architects | High proportion of lateral hires and best in class fresh talent | Certifications & Trainings in digital platforms & technologies | Proportion of workforce with PhD | Avg. experience of Digital Workforce
Focus on creation of Digital Labs and Centres of Excellence, Intellectual Property (IPs), products, accelerators, tools and frameworks across digital technology areas
Ability to deliver across all types of engagement models including T&M, Fixed Price and Outcome based models, thus catering to digital native customers | Execution of projects on agile practices
Digital Prowess is further constituted of five key parameters:
The cumulative score of enterprises based on the Digital Prowess axis is used for classifying the service providers on one of the Zinnov Zones below-
Nurture Zone Breakout Zone Execution Zone Leadership Zone
Scalability has further been broken down into three key parameters as mentioned below-
Scale of Digital Business
Digital Clientele
Product Engineering Experience
Total Digital Revenue and Headcount across digital technology service lines | Geographic spread of revenue across key hubs of digital services demand
Width of digital client portfolio | Existence of large marque clients and a higher number of large value accounts within the digital clientele
Revenue and headcount in product engineering services, thus signifying intensity of PES experience (critical for scaling up digital business due to expertise across product development, design and R&D)
Cumulative Score on the Digital Prowess parameters defines the horizontal position of Service Providers within the framework
Cumulative Score on the Scalability parameters defines the vertical position of Service Providers within the framework
20
Zinnov Zones for Digital
Source: Data shared by participant companies, Zinnov Research
Nurture Zone Breakout Zone Execution Zone Leadership Zone
Low
HighOverall Ratings
Scal
abili
tySc
ale
of D
igita
l Bus
ines
s, P
rodu
ct E
ngin
eerin
g Ex
perie
nce,
Dig
ital C
lient
ele
Digital ProwessServices Spread, Ecosystem Leverage, Digital Workforce, Digital Assets, Engagement Models
EPAM
Persistent Systems
Mindtree
GlobalLogic
Luxoft
Ness Software Engineering Services
L&T Infotech
Syntel
IGATE*
Tech Mahindra
Infogain
Innominds
Pactera
Hexaware
Happiest Minds
Ascendum
*IGATE was acquired by Capgemini. Current positioning does not include Capgeminig details and is based on IGATE data only
Digital Consulting and Transformation Services
Ratings across 5 service lines:
Design & Experience Services
Digital Application Engineering Services
Digital Platform Integration Services
Data Management & Analytics Services Provider
1.
2.
3.
4.
5.
22
Zinnov Zones for Digital
Source: Data shared by participant companies, Zinnov Research
Nurture Zone Breakout Zone Execution Zone Leadership Zone
Low
HighDigital Consulting and Transformation Services Ratings
Scal
abili
tySc
ale
of C
onsu
lting
Bus
ines
s, Pr
oduc
t Eng
inee
ring
Expe
rienc
e, C
lient
ele
Digital ProwessVertical Spread, Ecosystem Leverage, Consulting Workforce, Digital Assets, Engagement Models
EPAM
Persistent Systems
Mindtree
GlobalLogic
Luxoft
Ness Software Engineering Services
L&T Infotech
Syntel
IGATE*
Tech Mahindra
Infogain
InnomindsPactera
Hexaware
Happiest Minds
*IGATE was acquired by Capgemini. Current positioning does not include Capgemini details and is based on IGATE data only
23
Zinnov Zones for Digital
Source: Data shared by participant companies, Zinnov Research
Nurture Zone Breakout Zone Execution Zone Leadership Zone
Low
HighDesign & Experience Services Ratings
Scal
abili
tySc
ale
of D
&E
Busin
ess,
Pro
duct
Eng
inee
ring
Expe
rienc
e, C
lient
ele
Digital ProwessDesign & Experience Services Spread, Ecosystem Leverage, Design Workforce, Digital Assets, Engagement Models
EPAM
Persistent SystemsMindtree
GlobalLogic
Luxoft
Ness Software Engineering Services
L&T Infotech
Syntel
IGATE*Tech Mahindra
Infogain
Innominds
Pactera
HexawareHappiest Minds
*IGATE was acquired by Capgemini. Current positioning does not include Capgemini details and is based on IGATE data only
24
Zinnov Zones for Digital
Source: Data shared by participant companies, Zinnov Research
Nurture Zone Breakout Zone Execution Zone Leadership Zone
Low
HighDigital Application Engineering Services Ratings
Scal
abili
tySc
ale
of A
pp E
ngg.
Bus
ines
s, Pr
oduc
t Eng
inee
ring
Expe
rienc
e, C
lient
ele
Digital ProwessApp. Eng. Services Spread, Ecosystem Leverage, App. Development Workforce, Digital Assets, Engagement Models
EPAM
Persistent Systems
Mindtree
GlobalLogic
Luxoft
Ness Software Engineering Services
L&T Infotech
Syntel
IGATE*
Tech Mahindra
Infogain
Innominds
PacteraHexaware
Happiest Minds
Ascendum
*IGATE was acquired by Capgemini. Current positioning does not include Capgemini details and is based on IGATE data only
25
Zinnov Zones for Digital
Source: Data shared by participant companies, Zinnov Research
Nurture Zone
Low
HighDigital Platform Integration Services Ratings
Scal
abili
tySc
ale
of P
latfo
rm In
tegr
ation
Bus
ines
s, P
rodu
ct E
ngin
eerin
g Ex
perie
nce,
Clie
ntel
e
Digital ProwessPlatform Integration Services Spread, Ecosystem Leverage, Integration Workforce, Digital Assets, Engagement Models
Breakout Zone Execution Zone Leadership Zone
EPAM
Persistent Systems
Mindtree
Luxoft
Ness Software Engineering Services
L&T Infotech
SyntelIGATE*
Tech Mahindra
Infogain
Innominds
Pactera
Hexaware
Happiest Minds
*IGATE was acquired by Capgemini. Current positioning does not include Capgemini details and is based on IGATE data only
26
Zinnov Zones for Digital
Source: Data shared by participant companies, Zinnov Research
Nurture Zone Breakout Zone Execution Zone Leadership Zone
Low
HighData Management & Analytics Services Provider Ratings
Scal
abili
tySc
ale
of D
ata
Mgm
t. &
Ana
lytic
s Bus
ines
s, P
rodu
ct E
ngin
eerin
g Ex
perie
nce,
Clie
ntel
e
Digital ProwessData Management & Analytics Services Spread, Ecosystem Leverage, Analytics Workforce, Digital Assets, Engagement Models
EPAM
Persistent Systems
Mindtree
GlobalLogicLuxoft
Ness Software Engineering Services
L&T Infotech
Syntel
IGATE*
Tech Mahindra
Infogain
Innominds
Pactera
Hexaware
Happiest Minds
*IGATE was acquired by Capgemini. Current positioning does not include Capgemini details and is based on IGATE data only
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