You hear about digital projects at their clients, but you don’t hear much from outsourcers about their own transformations. Cloud competitors like Amazon, contract manufacturers like Foxconn and digital agencies have dramatically changed the landscape of services. So it was refreshing to spend some time recently with Raj Mehta, President of Cognizant, to discuss their internal realignment. He assumed that title in September of 2016 after a career in various field roles.
Here are some excerpts from that conversation:
“We were hearing from clients their needs were changing. They did not need large testing factories. They wanted to leverage automation trends. They did not need as big a BPO operation. They wanted more Cloud, Agile and Digital. And they would come to us and complain they had to go to individual practice areas to share their vision. Cognizant was not organized enough around the way clients were thinking.”
“We embarked on a 2020 vision project and realized we had not re-organized since 2009. The world has changed so much since (see graph above with 2015 figures from that strategy document).
“We have been executing against that 2020 vision and are now organized around three service lines aligned with our various digital opportunities (see graph below). They leverage our industry expertise in verticals which we have traditionally been strong, like financial services and healthcare, our consulting/strategy groups (which is now much tightly integrated with our vertical and horizontal units) and (our) much larger global footprint. Our Accelerator has been making more venture investments, including one in a startup called Measure, which offers drones-as-a-service. The Global Technology Office (GTO), our R&D arm, is also more aligned with the Accelerator.”
“It’s easy to say we’ve organized around these three service lines – Digital Business. Digital Operations and Digital Systems & Technology. To change a two hundred and sixty thousand person organization, it’s a big ship to change. We had to change the metrics on which our units are measured and how they are structured in terms of leadership. So, in our traditional model you heard us talking about two in the box. We’ve made our client partners more consultative and complemented them with traditional engagement and delivery leadership. We are on a journey – I cannot say we are done, and it means always making sure we have the right people in the right roles.”
“We are delivering a variety of new digital services. We’re heavily engaged now working with auto manufacturers not just looking at their supply chains. Helping them design their (vehicle) displays, designing new features, what are the types of – how do you display these units, right? So, more focused human interaction on the digital side. Or the drone investment – how can insurance, telecom companies leverage drones. Robotic Process Automation (RPA) for a number of clients. So, you’re starting to see us in new areas than you would have in the past.”
“Look at the opportunity around digital healthcare. A large percentage of all Medicare/Medicaid claims go through our Trizetto platform. We have visibility through the whole supply chain from consumer to the providers, the pharma companies and the payers. Now overlay the wearables we are all adopting. I hope with all that data and where I’ve been traveling and which planes I’ve been on, the chances are pretty high we can tell I may get the flu bug in the next three days!”
“If you look at new business models, we are going to clients with outcome-based thinking. Take application management – it’s a totally different conversation than just the traditional on-site/offshore managed services. So, how can we bring down your cost over a period of time by retiring some of your applications, moving others to the cloud, and give you an application-based pricing model?”
“We have been telling clients for a while to Run Better, Run Different. Cognizant has the opportunity to do the same. How do we run our large HR operation more intelligently? How do we manage our attrition, how do we better manage (our) talent pools around the world, and how can we leverage automation to help us make those kinds of decisions?”
‘The timing has been fortuitous. We had an activist investor (Elliott Management) and we have agreed to improve our margins over the next couple of years. Our realignment, already underway, helps me – as you can imagine, by bringing a lot of these units together, it helps me free up a lot of dollars internally.”
It was a really interesting conversation and hope I can spend more time with him and write a case study about their digital transformation in an upcoming book.
(Cross-posted @ Deal Architect)