FOR: Sourcing & Vendor Management Professionals The Forrester Wave : Business Technology Transformation, Q3 2012 by Stephanie Moore, July 19, 2012 KEY TAKEAWAYS Companies Need Providers Help In Transformation Engagements As companies face a growing, diverse mix of internal and external pressures, they re undertaking transformation initiatives that require deep technology and business process expertise. They re looking to external services providers to act as strategic partners capable of delivering end-to-end services. The Business Technology Transformation Market Is Changing As SVM Pros Look For New Skills Consulting partners are expected to bring in the complete set of required skills, offering both high-level business acumen as well as the technical know-how. To be relevant in this market, providers must have deep industry knowledge, change management skills, and well-honed methodologies for business and technology transformation. Leaders Are Differentiated By Business Acumen The Leaders in this Forrester Wave, Deloitte, Accenture, and PwC, were separated from the rest by their ability to communicate with business stakeholders and sponsors. The provider needs credibility with both business and IT and the ability to act as a diplomat between these two core groups. Forrester Research, Inc., 60 Acorn Park Drive, Cambridge, MA 02140 USA Tel: +1 617.613.6000 Fax: +1 617.613.5000 www.forrester.com
JULY 19, 2012 The Forrester Wave : Business Technology Transformation, Q3 2012 The Majority Of The Vendors Are Leaders In This Emerging Market by Stephanie Moore with Chris Andrews and Charles Green WHY READ THIS REPORT Today, business transformation is often about technology transformation. At the very least, business transformation is always technology-enabled, so what sort of consultants can best help clients envision and execute on their business transformation imperatives? In the past, high-level business process transformation initiatives were the domain of business consulting vendors such as McKinsey & Company, Bain & Company, and The Boston Consulting Group. Technology-focused IT services and consulting firms, many of whom used to execute on the transformation blueprints developed by the management consultants, are now starting to make a dent in that market as they begin to successfully marry their technology competency with vertical and horizontal domain and business consulting expertise. In Forrester s 18-criteria evaluation of business technology transformation vendors, we identified the 10 most significant providers Accenture, Cognizant, Deloitte, HP, IBM, Infosys, KPMG, PwC, TCS, and Wipro in the category and researched, analyzed, and scored them. This report details our findings about how well each vendor fulfills our criteria and where they stand in relation to each other to help SVM professionals select the right partner for their business technology transformation engagements. Table Of Contents 2 3 6 8 The Business Technology Transformation Market A Smorgasbord Of Providers Make Up The Market Business Technology Transformation Evaluation Overview Forrester Evaluated Key Capabilities Of Providers Providers Have A Portfolio Of Tech-Enabled Business Transformation Projects Deloitte, Accenture, And PwC Lead The Pack Vendor Profiles Leaders Have Business And Technology Acumen Strong Performers Have Specific Strengths Contenders Have A Strong Technology Focus Notes & Resources Forrester conducted services evaluations in April and May 2012 and interviewed 10 vendor companies and reference customers from each of the vendors: Accenture, Cognizant, Deloitte, HP, IBM, Infosys, KPMG, PwC, TCS, and Wipro. Related Research Documents Navigate A Changing IT Services Landscape January 25, 2012 The Evolution Of India-Centric Management Consulting November 23, 2011 Wipro Consulting Services: Can Wipro Finally Crack The Code? August 30, 2011 11 Supplemental Material 2012, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester, Technographics, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email clientsupport@forrester.com. For additional information, go to www.forrester.com.
The Forrester Wave : Business Technology Transformation, Q3 2012 2 THE BUSINESS TECHNOLOGY TRANSFORMATION MARKET The business consulting market landscape continues to undergo a deep-seated shift. Business priorities are changing in the new normal, and applied technology is the answer to most business challenges, such as lowering costs, growing revenue, avoiding marginalization, improving competitiveness, and innovating. As corporate executives face a toxic mix of shrinking or stagnant IT budgets, a rapidly changing technology environment, and a multitude of business demands, they recognize that help/relief has to come from experts who are as technology savvy as they are business savvy. In looking at Deloitte s definition of technology-enabled business transformation, we see that business and technology innovation are today inextricably linked: A technology-enabled business transformation is an enterprise transformation requiring an embedded IT transformation to achieve a targeted set of business benefits. And business centricity or technology centricity alone will not help companies achieve a meaningful transformation. The type of consultancies that are best poised to help their clients develop and execute on their business transformation projects are those that have equal amounts of business and technology acumen. In most cases, these projects start with a clearly identified business challenge, but the business professionals involved recognize that the solution will be enabled, in large part, by technology. Thus, the explicit focus of these projects is technology-enabled business transformation (as opposed to technology or IT transformation), because the projects start with the business. A Smorgasbord Of Providers Make Up The Market The business technology transformation market comprises a range of different providers, each approaching the market from its unique heritage and capabilities. The market can loosely be divided into two categories: 1) those coming from a management or business consulting background, or 2) those coming from a deep technology background. The classical management and business consulting firms are eager to evolve their IT capabilities, and the IT consultants and outsourcers are beefing up their business consulting units to capture market demand with: End-to-end services, which reduce client-side complexity and avoid value leakage. In the past, high-end consulting companies provided business strategy and domain expertise, and clients would use a more technology-centric services provider to implement the strategy. Unfortunately, when the strategy creator does not fully understand the technology landscape or the art of the possible in technology, it is impossible for it to understand what the optimal business strategy is. In addition, customers that use multiple providers for their transformation initiatives find that managing them is a significant additional effort, even if they already have strong vendor management capability. They can see the value leakage when the strategy implementer has not totally bought into or is familiar with the strategy itself. Clients understandably want to avoid the leakage associated with having to engage a separate and additional provider to implement the desired change strategy. Therefore they are increasingly looking for providers with the required business and technical capabilities to implement the transformation approach.
The Forrester Wave : Business Technology Transformation, Q3 2012 3 Business and tech capabilities, which engage new stakeholders in the transformation process. Most transformation projects are no longer being generated by IT alone but are rather being run by a combination of IT and the business. And the business, more often than not, is the transformation driver. In fact, Phil Garland, the leader of PwC s CIO practice, confirms that more than 50% of his CIO practice customers are actually outside of IT (CFO, COO, and CMO)! And Kirk Strawser, managing partner at Wipro Consulting Services, believes that the business is spending about seven times more than IT on business/technology transformations. With the increasing involvement of the business, it is crucial that the services provider has credibility with both sets of stakeholders. To be successful, the provider may often take on the role of peacemaker or translator between different sides of the client organization, which, if done expertly, will also lead to higher levels of client satisfaction. One reason the more businessfocused providers scored so well in this Forrester Wave is because they have a historical and natural connection to business executives and have learned to engage with the IT executives over the years as their businesses became more technology-focused. Vertical capabilities, which drive the front-end of the engagement. Vertical expertise enables providers to take a go-to-market approach focused on client business issues. Clients want providers to fully understand their unique business pressures and concerns, and this can only be done by providers that have deep industry knowledge and insights and that are able to engage with IT and the business in a realistic solution-focused dialogue. Deep methodological expertise, which leads to consistency and client satisfaction. Client maturity levels have risen dramatically, and this in turn has led to new and higher expectations. Clients expect methodologies and tools to not only optimize the cost of the engagement but to guarantee a successful outcome. Clients want to make sure that they are buying the institutional and collective expertise of their services provider as opposed to just the contents of their lead consultant s hard drive. Expertise in business process management, project management, change management, and technology-specific methodologies (such as Oracle Financials implementation methodology) are all now considered prerequisites from providers. BUSINESS TECHNOLOGY TRANSFORMATION EVALUATION OVERVIEW To assess the state of the business technology transformation market and see how the vendors stack up against each other, Forrester evaluated the strengths and weaknesses of the top business technology transformation providers. Forrester Evaluated Key Capabilities Of Providers After examining past research, user need assessments, and vendor and expert interviews, we developed a comprehensive set of evaluation criteria. We evaluated 10 vendors against 18 criteria, which we grouped into three high-level buckets (see Figure 1):
The Forrester Wave : Business Technology Transformation, Q3 2012 4 Current offering. We evaluated the transformation capability of vendors. This criterion also addressed the balance between technology consulting and business consulting. The maturity of the providers change management skills, and, crucially, the ability to incorporate these skills in the client engagement, were key indicators as to whether the provider was really engaging in a transformation project or a point- or technology-focused project. Client references and the ability of the provider to utilize core methodologies and tools were also evaluated. Strategy. To evaluate strategy, we assessed the ability of providers to align IT transformation strategy with key business objectives. Providers capacity to communicate with business stakeholders and sponsors was essential. To score highly, providers needed to demonstrate mature management consulting expertise. Market presence. Forrester analyzed the number of consultants who could be considered dedicated to technology-enabled business transformation, as well as the number of purely technology-focused consultants who could be leveraged for technology-enabled business transformation. Figure 1 Assessment Criteria For Evaluated Vendors Tools Internal knowledge management (KM), reuse, and collaboration platform Organizational change management (OCM) capability and integration Methodology Change management methodologies Metrics and benchmarking The balance between technology consulting and business consulting revenues What tools or engagement aids (custom-made or off-the-shelf) does the vendor use to optimize its ability to deliver business transformation consulting services? Does the vendor have one? What is it? How robust is it? How does the vendor ensure that its ability to leverage knowledge and IP is not just related to an individual consultant s own Rolodex, network, and hard drive? How does the organizational change management practice integrate with all other practices within the vendor s organization? What specific methodologies does the vendor apply to help clients transform their businesses? What are the vendor s methodologies for change management relating to culture change, incentives, retention, and dealing with change? What is the vendor s capability related to metrics and benchmarking related to a company s current IT and business performance? What s the balance between the vendor s revenue that comes from pure technology implementation projects with no process or business consulting services component and the revenue from pure process or business consulting with no technology implementation component? Source: Forrester Research, Inc.
The Forrester Wave : Business Technology Transformation, Q3 2012 5 Figure 1 Assessment Criteria For Evaluated Vendors (Cont.) Evaluation criteria Strategy Vendor s vision Consulting engagements Vertical focus and capability Business organization Organizational change practice Business alignment Management credentials Employee background Market presence Number of consultants Criteria explanation What are the vendor s business transformation imperatives today? How does the vendor help companies transform themselves? What are the most important aspects of such engagements? How does the vendor articulate and sell a technology-enabled business transformation engagement? What offerings does the vendor have that fall into this category? How many verticals does the vendor offer technology-enabled business transformation services? What are they, and which ones is the vendor focused on developing over the next one to five years? How is the vendor s business transformation consulting practice organized, and to whom does it report? Are there subpractices in different business units? How big is the vendor s organizational change management practice? What does the vendor do in a presales or early engagement to align IT transformation strategy with key business objectives? What are the credentials and track record of the consultants that run the business transformation practice(s)? How many years of experience do the consultants in the vendor s business transformation practice have? How many consultants across the company are dedicated to technology-enabled business transformation, and how many of those pure technology consultants can be leveraged for technology-enabled business transformations? Source: Forrester Research, Inc.
The Forrester Wave : Business Technology Transformation, Q3 2012 6 Providers Have A Portfolio Of Tech-Enabled Business Transformation Projects Forrester included 10 vendors in the assessment: Accenture, Cognizant, Deloitte, HP, IBM, Infosys, KPMG, PwC, TCS, and Wipro. Each of these vendors has: A portfolio of representative technology-enabled business transformation projects for enterprise class clients. The key was that these projects should include a business or business process consulting phase as well as a technology implementation phase. A technology-enabled business transformation or equivalent methodology. At least three references and two case studies that highlight its technology-enabled business transformation capability. Recent investments in developing or augmenting its technology-enabled business transformation capability. DELOITTE, ACCENTURE, AND PWC LEAD THE PACK The evaluation uncovered a market in which (see Figure 2): Vendors Deloitte, Accenture, and PwC lead the pack, combining technology and business. These three companies stood out from the rest because of their deep vertical and business consulting capabilities combined with very strong technological competency. These three vendors have the ability to drive large-scale wholesale transformation engagements. Vendors Cognizant, IBM, Infosys, KPMG, and Wipro offer competitive options. Although these vendors scored in the same segment, they are each quite different in terms of their capabilities. From a similarity perspective, each had very strong client references and could demonstrate leadership in specific areas. However, they lagged in the depth and breadth of their technical competence or their business consulting competence meaning they have not yet achieved the optimal blend of technology and business capability. Vendors HP and TCS perform strongly in technology engagements. Both HP and TCS clearly demonstrated their technological expertise and will be considered by companies looking for more technology-led transformation engagements. This evaluation of the business technology transformation market is intended to be a starting point only. We encourage readers to view detailed product evaluations and adapt the criteria weightings to fit their individual needs through the Forrester Wave Excel-based vendor comparison tool.
The Forrester Wave : Business Technology Transformation, Q3 2012 7 Figure 2 Forrester Wave : Business Technology Transformation, Q3 12 Strong Risky Bets Contenders Strong Performers Leaders Deloitte Accenture IBM Cognizant KPMG TCS Wipro Infosys PwC Go online to download the Forrester Wave tool for more detailed product evaluations, feature comparisons, and customizable rankings. Current offering HP Market presence Weak Full vendor participation Weak Strategy Strong Source: Forrester Research, Inc.
The Forrester Wave : Business Technology Transformation, Q3 2012 8 Figure 2 Forrester Wave : Business Technology Transformation, Q3 12 (Cont.) CURRENT OFFERING Tools Internal knowledge management (KM), reuse, and collaboration platform Organizational change management (OCM) capability and integration Methodology Change management methodologies Metrics and benchmarking The balance between technology consulting and business consulting revenues Client references Case studies Forrester s Weighting 50% 5% 10% 10% 5% 5% 5% 15% 30% 15% Accenture 4.70 Cognizant 3.65 Deloitte 4.85 HP 2.15 1.00 IBM 3.80 Infosys 3.28 3.50 KPMG 3.30 PwC 4.20 TCS 3.20 Wipro 4.15 STRATEGY Vendor s vision Consulting engagements Vertical focus and capability Business organization Organizational change practice Business alignment Management credentials Employee background 50% 20% 10% 15% 15% 10% 10% 10% 10% 4.90 3.90 2.60 4.10 4.10 3.85 3.70 4.50 MARKET PRESENCE Number of consultants 0% 100% All scores are based on a scale of 0 (weak) to 5 (strong). Source: Forrester Research, Inc. VENDOR PROFILES Leaders Have Business And Technology Acumen Deloitte. Deloitte clearly understands the intersection of technology and business. Its client references were among the best we received, with one project incorporating current and future business needs, future flexible architectures, and implementing state-of-the-art technology. The
The Forrester Wave : Business Technology Transformation, Q3 2012 9 depth of its capabilities surprised even Forrester, since Deloitte s brand is so much more clearly identified with its advisory services. Clearly the importance of the business decision-maker and stakeholder in business transformation projects gives the more historically business-focused consulting firms a leg up. Deloitte s approach to this practice area highlights its exemplary understanding of Fortune 500 business and technology needs. Accenture. Accenture s breadth and depth of offerings and its technology and business process expertise placed it firmly in the Leader category. In addition, Accenture believes that business transformation is the goal of the entire organization, not just a discrete group within Accenture. Thus, its consultants are able to deal with both the technology and business stakeholders. Accenture has outstanding knowledge management capability, and Accenture consultants view the reusable methods and IP and processes as the critical success factor in their everyday activities. Its ability to leverage institutional assets and knowledge allows Accenture more time and flexibility to innovate on behalf of its clients. PwC. PwC, since the end of its non-compete with IBM, has worked hard to develop, both organically and inorganically (via acquisitions of Diamond Consulting, BearingPoint s North American entity, and PRTM), its technological capabilities to be on par with its excellent business consulting capabilities. PwC realizes that deep technology expertise is absolutely required for business transformation. In addition, its knowledge capture and management capabilities and its change management approach are outstanding. Wipro. Wipro Consulting Services (WCS) uses its design with a purpose approach to provide clients with an integrated team incorporating customer insight, a target operating model, process design, business case, and a detailed implementation road map that it can either implement on its own and/or with partners. While WCS is currently relatively small in comparison with the rest of Wipro, it does report directly to Wipro s CEO, indicating the seriousness with which Wipro is approaching the consulting services market. 1 From the perspective of the pure-play Indian vendors, Wipro is the most advanced in terms of its approach and its vision for transformational consulting. IBM. IBM s Strategy & Transformation practice, which has doubled in size in the past two years, works across IBM s Global Business Services organization to integrate business consulting capabilities. Clearly, IBM has an excellent vision for technology-enabled business transformation; however, it is more focused on the technology transformation aspects of engagements as opposed to the business process consulting aspects. Given the depth and breadth of IBM s technology capability, it is not surprising that technology and technology service consulting overshadow its business consulting expertise, though IBM points to its Business Analytics Optimization and Smarter Commerce services as evidence of its increasing business focus. IBM s client partner leaders are really the key to its success with its large-scale clients. Reference feedback and consulting examples all underscored the importance of the client partner s input and influence on making projects successful.
The Forrester Wave : Business Technology Transformation, Q3 2012 10 Cognizant. Cognizant Business Consulting has grown rapidly in recent years. But perhaps because of its very fast growth rate, it did not have quite the same level of depth and maturity with regard to its tools and methodologies as some of its competitors. Nonetheless, it has a very strong vision; its client references were superb both on the business and technology side and it is clear that it deeply understands technology-enabled business transformation. Cognizant is the company to watch in this space in 2012 and 2013. Infosys. Coming from a strong technology heritage, Infosys has worked hard to shift its focus to look more extensively at business consulting. It has made significant investments in tools and engagement aids that can now match those of longer-established consulting firms such as Deloitte or Accenture. Although Infosys has integrated its former Infosys Consulting team with the larger enterprise applications consulting practice, there are still challenges in the collaboration between the two groups, and this issue is exacerbated by the fact that not all practitioners use a common knowledge management tool set. In addition, while Infosys has the business process consulting heavyweights within its ranks, the focus of its consulting projects is much more technology-centric relative to the other players. For example, while all three of Infosys references were delighted with Infosys capability, two of the projects reviewed were more technology-centric than business-consulting-centric and were described as such by the delighted reference customers who were technology or technology-product executives as opposed to business executives. KPMG. KPMG describes itself as a business integrator as opposed to a systems integrator, and this is reflected by its greater strength in business consulting than in technology. It utilizes its proprietary Value Delivery Framework (VDF) when delivering transformation services, ensuring consistency and integration across engagements. It supports its knowledge management capabilities with 50 full-time professionals responsible for the upkeep and utilization of its knowledge management repository. KPMG s strong suit is definitely the strategy and business consulting required at the beginning of a technology-enabled business transformation engagement. Its technical capability from a size and variety standpoint is small. However, KPMG has outstanding program management capabilities that allow it to work effectively with technology providers that implement the strategy KPMG consultants develop. Strong Performers Have Specific Strengths TCS. TCS clearly has significant strengths and is doing state-of-the-art consulting work, such as its groundbreaking transformational consulting work with the Ministry of Corporate Affairs (MCA21) in India. In pockets, given the lack of integrated consulting strategy in North America, TCS has some strong reference examples. Clearly, TCS has some work to do with regard to formulating a North American consulting strategy so that success is not dependent on individual client partners or relationships. TCS consulting partners in North America are top-notch, and some of the bleeding-edge tools that TCS has developed to support consulting engagements will set up the consulting group for success as it matures.
The Forrester Wave : Business Technology Transformation, Q3 2012 11 Contenders Have A Strong Technology Focus HP. HP knew that it might struggle to compete with some of the consulting stalwarts participating in this Forrester Wave given its deep focus on technology, but with its new focus on improving its business consulting capability, HP views this as an opportunity. And what we found is that HP has a strong technology transformation vision and would be a prime vendor of choice for clients looking for technology rationalization and implementation. However, it still has a way to go in terms of growing its business consulting capability and integrating that capability into the larger HP enterprise services group. It has a strong set of tools for technology analysis, and its quality management and ITSM tools will help optimize IT. Its focus is definitely on modernization and optimization of technology assets as a means to improve IT s efficiency and effectiveness. From a business innovation or business transformation standpoint, HP will need to make some inorganic investments to compete. SUPPLEMENTAL MATERIAL Online Resource The online version of Figure 2 is an Excel-based vendor comparison tool that provides detailed product evaluations and customizable rankings. Data Sources Used In This Forrester Wave Forrester used a combination of two data sources to assess the strengths and weaknesses of each solution: Vendor surveys. Forrester surveyed vendors on their capabilities as they relate to the evaluation criteria. Once we analyzed the completed vendor surveys, we conducted vendor calls where necessary to gather details of vendor qualifications. Customer reference calls. To validate product and vendor qualifications, Forrester also conducted reference calls with three of each vendor s current customers. The Forrester Wave Methodology We conduct primary research to develop a list of vendors that meet our criteria to be evaluated in this market. From that initial pool of vendors, we then narrow our final list. We choose these vendors based on: 1) product fit; 2) customer success; and 3) Forrester client demand. We eliminate vendors that have limited customer references and products that don t fit the scope of our evaluation. After examining past research, user need assessments, and vendor and expert interviews, we develop the initial evaluation criteria. To evaluate the vendors and their products against our set of criteria,
The Forrester Wave : Business Technology Transformation, Q3 2012 12 we gather details of product qualifications through a combination of lab evaluations, questionnaires, demos, and/or discussions with client references. We send evaluations to the vendors for their review, and we adjust the evaluations to provide the most accurate view of vendor offerings and strategies. We set default weightings to reflect our analysis of the needs of large user companies and/or other scenarios as outlined in the Forrester Wave document and then score the vendors based on a clearly defined scale. These default weightings are intended only as a starting point, and we encourage readers to adapt the weightings to fit their individual needs through the Excel-based tool. The final scores generate the graphical depiction of the market based on current offering, strategy, and market presence. Forrester intends to update vendor evaluations regularly as product capabilities and vendor strategies evolve. ENDNOTES 1 Forrester analyzed the newly revamped WCS in August 2011 and the investments it was making in order to differentiate itself both from its traditional Indian pure-play competition and the classic management consulting firms. See the August 30, 2011, Wipro Consulting Services: Can Wipro Finally Crack The Code? report.
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