Cognizant sees a digital future with a dual mandate

Profile picture for user slauchlan By Stuart Lauchlan November 6, 2014
For traditional IT services houses like Cognizant, digital represents an opportunity for radical reinvention of existing go-to-market business models.

I was amused to note the comments from Georgina O’Toole over at Techmarketview today when she notes:

When we reported on Atos’ H114 results in July, Atos was still an “international IT services company”. Since then some self-styling appears to have taken place, such that Atos in its Q3 results has become “an international leader in digital services”. We wonder how long the word “digital” will be popular for...

It’s a good question, but then of course in the ‘dedicated follower of fashion’ world of enterprise IT, we have always been at war with Eurasia - wherever Eurasia happens to be at any given point in the hype cycle.

But Atos appropriation of the digital handle isn’t unique. Over at fellow services giant Cognizant, CEO Francisco D’Souza sees becoming a digital services provider as critical to the future success of the firm.

We have invested over the past three years to build our digital capabilities, and as previously indicated have seen significant traction of our social, mobile, analytics, and cloud offerings with clients. Across industries, we are seeing business reinvention, driven by the rapid consumerization of technology. This is bringing the physical and the digital worlds close together, and as a result, almost every physical process is being instrumented and digitized.

D’Souza sees a number of emerging trends as a consequence:

Digital technologies are becoming prevalent throughout our clients businesses, which is resulting in opportunities to expand beyond the CIOs office to departments such as marketing.

We see a need for deep, scalable expertise and foundation of technologies of social, mobile, analytics and cloud, which when combined with appropriate security models will be critical for enabling clients to realize their digital ambitions.

He adds:

In order to quickly realize value from digital technologies, we are working across our business units and bringing together strategy and industry knowledge, design, process thinking, and technology and data science.

We are seeing an integration of SKUs combining new skills like data science, design, instrumentation, and embedded sensors, with traditional skills like consulting and technology. These SKUs then work closely with client teams to produce rapid, short cycles of innovation.

Distilling and applying meaning from the digital data surrounding every person, process, organization, and device, or what we call a Code Halo, is leading to an urgent demand for interdisciplinary skills around data science, artificial intelligence, and mathematics.

Dual mandate

All of this means a new business model for the firm:

Many quarters back we saw signs of significant technology shift and a corresponding business model change driven by the ongoing volatility in major economies on one hand and the advent of new digital technologies on the other.

We said that the only way for businesses to adapt would be to simultaneously execute on efficiency and scale with existing systems, while driving business innovation through newer technologies. We refer to this as the dual mandate.

D’Souza points to the healthcare industry as a case in point:

Healthcare, especially in the US is seeing significant disruption on account of regulatory reforms, aging populations, new technologies, greater need for transparency and increasing price competition. As a result healthcare clients are increasingly demanding end-to-end solutions that help them drive efficient operations, while investing for future growth to deal with the challenges facing the healthcare industry today.

With an underlying software platform running on infrastructure provided by Cognizant, delivered over the cloud, combined with the services required to run the business process, we will be able to offer a fully-integrated service to our clients and charge them on a per transaction or per user basis.

On one side of the dual mandate solutions like these allow us to work with healthcare peers and providers to optimize existing G&A spend, while improving the quality of their service. And on the other side of the dual mandate we’re actively working with healthcare clients on digital technology based innovation, creating for them increased agility in launching new products and participating in new markets to drive new sources of revenue.

Francisco D'Souza

Last month Cognizant beat other services giants, reportedly including Wipro, Accenture and Infosys, to acquire TriZetto, a US healthcare solutions company, for $2.7 billion With Trizetto platforms serving half of the US population and a quarter of the providers in the US, it’s first and foremost a good investment in expanding the firm’s healthcare footprint.

But there may also be some additional next generation digital offshoots, suggests D’Souza:

TriZetto have some very interesting advanced automation, software robotic kind of technology which we think could be relevant across the industries. We think that advanced autonomics and software robotics are very important advanced automation technologies that will be very relevant to our business going forward, across the industries and in particular lines of business like our BPO, BPS service offerings, our IT infrastructure service offering.

At the end of the day, digital is of course a term that is open to multiple interpretations and expediencies, as D’Souza concedes:

So much of what we do now is across the business, is what I would broadly categorize as digital or digital related that it really comes down to sort of a definition of what you are defining digital to be.

The measure I use that I think is most relevant is, how we are doing in the marketplace and what are our win rates and how our customers telling us we are doing with respect to digital technologies. I feel very good about that. Our win rates are solid. The work we are doing for clients is transformational and digital, and we feel good about how we are positioned going into next year from a digital standpoint.

My take

The efforts of the traditional IT services and outsourcing firms to reinvent themselves to ride the digital wave is an ongoing process with some firms more obviously succeeding than others. Cognizant is certainly talking the right talk.