July 14, 2015

Two Thirds of Enterprises Not Prepared for “As-a-Service Economy,” According to Accenture and HfS Research Study

Yet more than half of senior operations leaders view As-a-Service as critical for business value

NEW YORK and BOSTON; July 14, 2015 – The ways enterprises buy and receive services to augment their operations are undergoing unprecedented change, according to a new research study sponsored by Accenture (NYSE: ACN) and published by industry analyst firm HfS Research. The report finds that while cost effective business services will always be important, achieving the next threshold of value creation is dependent upon transitioning to the emerging “As-a-Service Economy.” In this model, value is delivered via on-demand, highly scalable plug-and-play services that impact business outcomes. Simplification is king – eliminating complexity, poor processes and manual intervention in favor of working smarter through simplified, but intelligent operations.

According to the report, “Beware of the Smoke, Your Platform is Burning,” which is based on a survey of 716 enterprise service buyers, advisors and service provider executives, 53 percent of senior executives view As-a-Service as critical for their organization, yet 68 percent of enterprises report that their core enterprise processes will not be delivered As-a-Service for five or more years.

“Enterprises are facing enormous challenges from the digital business evolution and other competitive forces to increase revenue and decrease costs while improving the client experience but our research shows that there’s still not enough of a burning platform – or capability – to drive change in the near term,” said Michael Corcoran, senior managing director, Global Growth and Strategy, Accenture Operations. “As outsourcing moves beyond labor arbitrage, process efficiency and transaction processing and into a new era of service delivery, both buyers and providers need to make a concerted effort to transition to an As-a-Service model to remain competitive. By applying technology, data and analytics, and talent smartly – what we call Intelligent Operations – buyers are in a better position to innovate faster, create new services and exploit new business opportunities to drive material business outcomes.”

The report identifies the following eight ideals for moving from legacy operations to the As-a-Service Economy:

Key research findings based on the As-a-Service ideals include:

• Analytics, automation and proactive intelligence are critical. Half of enterprise buyers (51 percent) believe having these capabilities today would have “massive impact.” These are necessary precursors to streamlined, high-quality data sets for analysis. Approximately seven out of ten buyers expect to make “some” or “significant” progress over the next two years around analytics and automation (69 percent) and proactive intelligence aimed at enabling employees to do more with data (66 percent).
• Senior leaders want change, delivery staff do not. More than half of service buyer senior leaders view As-a-Service as critical and 61 percent are ready to replace legacy providers in order to align with more visionary providers to achieve their desired end state. But these leaders need to motivate and enable their middle manager and delivery staff, as just 29 percent see the value of As-a-Service in the same way.
• Service providers recognize the importance of As-a-Service. Eighty-three percent of service providers view As-a-Service as critical. However, investments in robotic process automation (32 percent) and cognitive computing (24 percent) are surprisingly low considering the impact these technologies can have on efficiencies and results over time.
• Cloud holds the most promise for delivering new value As-a-Service. One in four buyers (27 percent) believe they will see significant progress from current investments in “plug and play.” Forty-four percent of senior executives would be willing to write off legacy IT investments and move straight to the cloud if they could find the right solution that gave them speed to value.

“The way outsourcing services are delivered and managed is changing before our very eyes, and many enterprise operations executives and service providers must make intrinsic changes to how they operate to stay relevant in an uncertain and challenging future,” said Phil Fersht, CEO and founder, HfS Research. “It’s the forward-thinking service buyers and providers who set out their vision and path forward for sourcing with defined business outcomes aligned to the As-a-Service Ideals, that will achieve success. The conservative among us who refuse to accept these times of unprecedented, disruptive transition will be competitively challenged.”

Key Recommendations
Evolving to the As-a-Service Economy will require the following:

• Address the disconnect between leadership ambition and operation lethargy. One of the biggest obstacles to the As-a-Service ideal is the huge chasm between the desire of operations leadership to make the transition and the lethargy of the middle management layer. If this gap cannot be closed, enterprises will eventually see their competitiveness slip away due to an overly complex, expensive and inefficient operating model.
• Go for more “big bang change.” Companies need to create a “pivot point” for their transformation. Incremental fixes are not working for all stakeholders. We have entered an economy where writing off legacy investments needs to occur. The emergence of process delivery in cloud platforms with the appropriate transactional and context-based support is helping enterprises “rip off the proverbial Band-Aid” and move beyond obsolete processes and technologies.
• Collaboration is key. Service buyers and providers need to group together in unprecedented ways to embrace change, disruption and design thinking approaches.
• Focus on talent development and workforce engagement. The focus needs to shift from skills to capabilities, and create an environment where people have the freedom to mold their careers and cross functional boundaries to add more value to their enterprises.
• Take advantage of technology to simplify operations. Leverage technology to effectively simplify process automation, to support smarter analytics, to embrace the mobile experience, and to leverage cloud-based solutions and security elements. These elements combine to create an overall sense of digital trust, and increased end-user value and experience for processes moving forward.

The full report can be accessed here.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 336,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.

About HfS Research
HfS Research is the leading independent global analyst authority and knowledge community for the business and IT services industry. HfS serves the research and strategy needs of business and IT operations leaders across finance, supply chain, human resources, marketing, customer management, and core industry functions. HfS provides detailed and thoughtful analyst coverage of the various areas that impact successful business outcomes, namely, process automation and outsourcing, global business services frameworks, mobility, analytics, and social collaboration. HfS also focuses heavily on talent acquisition, development, and motivation strategies. HfS applies its acclaimed crowdsourced Blueprint Methodology TM to evaluate the performance of service providers in terms of innovating and then executing against those business outcomes.

Now in its seventh year of publication, HfS Research’s acclaimed blog “Horses for Sources” is widely recognized as the leading destination for unfettered collective insight, research, and open debate about sourcing industry issues and developments. Its home page is www.hfsresearch.com.

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Contact:
Hannah Unkefer
Accenture
+ 1 415 537 4848
hannah.m.unkefer@accenture.com