May 18, 2011 | By Rey Villar
We were briefing Gartner analysts John Hagerty and Kurt Schlegel on Ajilitee strategy, plans, and client work. We shared with them our belief that markets, especially mid-markets, are moving towards a world of managed analytics–analytics that are performed by third parties like Ajilitee and which are tuned to a specific business process and contracted through a managed services agreement.
Our sister division Discovery Health Partners (DHP) is a great proof-point on how managed analytics can deliver a fully outsourced business process in a SaaS model, in this case for healthcare payers who want to recover claim overpayments and subrogate third-party liability. The DHP Intelligent Cost Containment platform runs completely on Amazon Web Services. We also shared that Ajilitee will deliver the entire information management stack to one healthcare company and will provide process-specific reference data to support business rule processing in “smart” claims processing to a second—both using Amazon’s cloud.
Near the end of the conversation, Gartner posed some questions for us. Do we think that traditional system integrators, such as the large IT consultancies, are all poised to become a new type of analytics provider to companies? Well, we think the answer is no, and of course, not surprisingly, it’s also a yes. Here’s why.
On the one hand, systems integrators have been trying to integrate analytics all along as part of building an annuity revenue stream and as an extension of their efforts to integrate applications and business process. In neither case have these efforts changed the game. Let me explain.
First of all, large consultancies have thrived on large packaged-application implementations: SAP, Oracle and the like. These are huge, complex projects that typically span years, continents, and literally hundreds of millions of dollars. This is revenue they can count on, year after year—the concept of a revenue annuity. Instead of selling a new consulting project each year, which is a lot of work, why not have something locked in for a multi-year contract?
The packaged-application projects have almost always been about improving, standardizing, centralizing or otherwise improving business processes. To answer client demands in these multi-year commitments, the large application vendors have spent millions, perhaps billions, developing footprint extensions in the analytics space to try and help clients understand the business process metrics as well as the end results of the business process, e.g., how much money did you make last quarter? Some packages have even integrated more advanced data mining components. My old company, Thinking Machines, had a data mining product called Darwin that was sold to Oracle for just that reason.
So the idea of analytics closely coordinated with the business process software has always been an area of interest, an intention. However, while the analytics packages are okay, they are not always best-of-breed or useful in standalone situations. They are often considered footprint extensions of the main ERP application–they are not a focus.
Secondly, system integrators have always tried to build “solution sets” representing preintegrated business process solutions. After all, system integrators are in a great position to understand the nuances of a client’s business process and inject analytics at the right place, in the right way, using the right tools. For years, going back to the time that I was at PricewaterhouseCoopers (PwC), producing these solution sets was a goal. Since I was in the management analytics (data mining) practice at the time, the idea was to produce analytical products that could be resold. We did not have a lot of tools, infrastructure was always hard to get allocated, and generally there were logistical issues that prevented us from realizing our dream. The solution sets didn’t get built.
So, in one sense, the answer is no, system integrators are not a new type of analytics provider in the market. They have been trying to do this all along–for the annuity revenue and as an extension of what they had always been working on with applications and the business process. Analytics has been on the agenda for awhile.
Alright, because we are also consultants, we also have to say yes. Here’s why.
System integrators are also a new analytics provider to companies because the tools and technologies, whether open source or commercial, are now becoming available at a scale that allows a system integrator to create, evolve and manage complex applications more easily and cheaper. In short, creating analytic solutions has become a viable business for them.
Several enablers make this possible. Cloud computing has greatly enhanced the capability to create sandboxes, analysis environments and scalable analytical production systems, like scoring engines. Open source and commercial analytics software have more flexible licenses or architectures–there is probably even a hadoop app for your iPhone coming out soon that taps into your top-10 friends’ smartphones. And of course, the web has opened new analytical output delivery mechanisms that were not envisioned a decade ago. Taken together, these evolutions make it easier to deliver results.
So there is also a “yes” answer to the question because, at long last, new technologies allow a system integrator to engage in this area in a way that makes economic sense to the clients.
Inside client organizations, challenges may be creating more opportunities for system integrators to step in as analytics partner. Analytical talent is still a scarce commodity and is shifting overseas. Creating analytics capabilities inside a company has been harder than clients envisioned, given budget, skillsets, and focus. At the same time, time to market, the speed of delivery, required to make an improvement in a company’s top or bottom line has increased. Data integration and data management, which are core competencies to power industrial-sized analytics—is hard work.
Considering Gartner’s question makes me smile. Yes, system integrators are making major noise in this space, and they are buying some companies here and there and forming internal groups to harvest their clients’ intellectual property and produce products. While they haven’t succeeded on a large scale in the past, things may be different in our evolving environment.
Ajilitee is already in this space and we are innovating. We do this in the healthcare market today where security and privacy are paramount and we do it on a large scale across multiple clients. We do it with cloud computing technologies and our information management stack. We do it because we have the business and technical talent to advise clients on how to make analytics work in their business process. We do it because we passionately believe that this approach helps our clients compete and improve their results. That’s what we are about.