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Infosys partnership with IPsoft breaks new ground in service automation
Tom Reuner, principal analyst, IT Services, Ovum
"While some competitors have conducted small-scale proof-of-concept projects, Infosys will be the first global service provider to implement this innovative model on a large scale. Even with a lower percentage of cost savings, the impact on Infosys's bottom line could be significant. Given that many competitors have been evaluating these concepts for some time, Ovum expects a raft of similar announcements or even M&A activity should Infosys's move prove to be successful. However, it should not be forgotten that full automation of complex services depends on the orchestration of diverse initiatives. That is, the conductor is more important than the first violin.
The dynamics of IT service and business process delivery are accelerating
"The idea of IT automation is by no means new. From IBM's Autonomic Computing manifesto in 2001 to the hype of cloud services, the direction has always been toward the industrialization of services with the re-use of assets and a high degree of automation. However, the pace of this transformation has always been evolutionary, and many hopes, most notably around service-oriented architecture (SOA), have been dashed. Therefore, offshoring has been the biggest single factor in driving down costs for both organizations and service providers.
"IPsoft is not alone in capturing attention around automation. BluePrism, a UK software company, is advocating the use of software robots on top of business processes, while Be Informed, a Dutch software company, is pushing dynamic case management that allows a holistic view of a case. Many of the advances in delivery efficiency are underpinned by business process automation suites. However, many service providers are stuck in a conservative approach that focusses on tools, scripts, and coding as a kind of plumbing alternative to the more innovative approaches that Infosys and IPsoft have adopted.
Infosys makes a bold move to accelerate large-scale automation
"Infosys is at the tail end of its "Infosys 3.0" transformation project, which has seen a change in management, a rebalancing of its portfolio, geographical expansion, and a focus on IP-based assets. Yet this transformation is not an accelerator of profits to placate shareholders. Rather, it is a necessary long-term realignment. The financial headwinds facing Infosys are well documented. Therefore, the bold step of becoming a first mover with a concept that is yet to be proven on this scale is, in Ovum's view, a clear reaction to its challenging environment. Infosys will set up an Autonomics Center of Excellence and plans to train over 5,000 employees on the IPcenter platform. But the move needs to be seen in the wider context of Infosys's other moves, such as the build out of the Edge business process platform, as well as other IP-based assets. Ovum views the move as a positive step to address the above-mentioned challenges.
IPsoft is catapulted into a different league
"The partnership with Infosys has catapulted IPsoft into a different league. While the company is fast growing and has an impressive list of reference customers, it has neither the scale nor the structure of the likes of Infosys when it comes to supporting large global customers on its own. Its IPcenter platform is an end-to-end automation framework encompassing Level 1 and Level 2 activities. Algorithmically enforced process engineering provides a technology that continually learns and automates manual processes, thus reducing critical headcount. Conceptually, the product is IT service management (ITSM)-as-a-service that is fully compliant with ITIL v3. The partnership with Infosys, which is not exclusive, will move IPsoft significantly up the process stack, and Ovum expects similar partnerships so long as the results match the aspirations. IPsoft has successfully penetrated large organizations, but the partnership is a critical milestone in its attempt to extend its proposition to service providers.
Automation will allow for more complex pricing models
"The main challenge for Infosys and IPsoft is to demonstrate that their approach will yield the suggested cost savings despite the complexities that have so far curtailed the success of SOA and cloud services. If successful, their approach will advance more complex pricing mechanisms such as outcome-based pricing that have so far only been adopted by very mature organizations and in specific use cases. This could allow Infosys to leverage its investments in platforms and IP-based assets.
"The advance in automation would lead also to a significant cultural change that, in Ovum's view, should not be underestimated. It would further de-emphasize labor arbitrage and might, on the flipside, prove to be challenging in certain political environments. Recent headlines about "Robotistan" and possibly even the end of offshoring underline the ambiguities that inevitably need to be addressed. Thus a move on this scale by Infosys is a bold gamble that Ovum will be following closely. We will outline the wider implications in a forthcoming report that has the working title: Beyond Labor Arbitrage: Assessing the Next Frontier in IT Services Delivery and Business Process Automation."
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