Tata Consultancy Services Enters the Cognitive Software Market with Digitate and ignio A Neural Automation System

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1 INSIGHT Tata Consultancy Services Enters the Cognitive Software Market with Digitate and ignio A Neural Automation System David Schubmehl David Tapper IDC OPINION The emergence and commercialization of cognitive software platforms is promising to transform both the software marketplace and the world of work over the next decade. Organizations are beginning to look to cognitively enabled applications to automate business processes, improve revenue, and increase innovation. Traditional software vendors are moving to enable their enterprise applications to become expert advisors providing predictions, recommendations, and decisions that humans have traditionally had to do alone. Cognitive software platforms are the tools being used to perform these tasks. To date, there have been a limited number of these platforms available for these tasks and even a smaller number that appear to be well suited for "back office" operations. To meet this need, Tata Consultancy Services Ltd. (TCS) has been developing a cognitive software platform to address these challenges and has also created a separate organization, Digitate, to offer "next-generation products, systems, and platforms geared toward the digital enterprise." Further: Led by Harrick Vin, Digitate has announced and released ignio, which the company calls a "neural automation system." ignio is a cognitive software platform that uses machine learning to automate and optimize IT operations and processes within an enterprise. According to Vin, ignio is being used to build intelligent agents that understand the operation and maintenance of complex software and hardware installations, can monitor the running of the installations, can solve problems, analyze the impact of change, and even recommend possible solutions with a minimum of human intervention. It constructs a 360-degree view of the enterprises' technology environment by ingesting information such as software and hardware manuals, log reports, and problem reports automatically and then uses the view together with experiential learning over time to be able to provide a level of automation that has not been available with more traditional operations tools. This allows ignio to minimize time to value and time to adapt to enterprises' context and change. Digitate believes that this approach and the ignio system can be applied to many types of back-office challenges from financial monitoring and systems administration to more effective manufacturing, supply management, and logistics. This is a different approach than other cognitive software platform vendors have taken to date and as such, TCS has an opportunity to be a leading vendor in automating enterprise operations. The need for more intelligent applications and advice is more acute today than it has ever been. Cognitive software supports human decision making with more accuracy, confidence, speed, and agility based on broader and deeper bodies of evidence applied to a more comprehensive view of pertinent conditions without bias. TCS ignio promises to be a significant solution to a wide variety of back-office challenges. October 2015, IDC #259734

2 IN THIS INSIGHT This IDC Insight discusses Tata Consultancy Services' ignio, which is a recent entry into the market for cognitive software platforms, and the company's new venture, Digitate that will be offering ignio as a software-as-a-service (SaaS) product and platform supporting both an on-premise and a cloud-based deployment models. SITUATION OVERVIEW Cognitive software platforms provide the tools and technologies to analyze, organize, access, and provide advisory services based on a range of unstructured information. These platforms facilitate the development of intelligent, advisory, and cognitively enabled applications. The technology components of cognitive software platforms include some combination of text analytics, rich-media analytics (such as audio, video, and image) tagging, searching, machine learning, categorization, clustering, hypothesis generation, question answering, visualization, filtering, alerting, and navigation. These platforms typically include some kind of knowledge representation tools such as knowledge graphs, triple stores, or other types of NoSQL data stores. The platforms also provide for knowledge curation and continuous automatic learning based on past experiences, both good and bad. The functional attributes of a cognitive software platform include the following: Performs deep natural language processing and analysis for both information ingestion and research as well as to provide human style communication (usually posed as questions and answers) Conducts learning in real time as data arrives Has the ability to identify similar past experiences and use learning to current situation Predicts and recommends possible outcomes Score those outcomes with evidence for human analysis Cycle back to the start so that the continuous learning is practiced, making the system better over time Cognitive software platforms can also include components and technologies that one would normally associate with unified information access systems such as connector frameworks and metadata management tools. IDC predicts the worldwide cognitive software platforms market will grow from $827 million in 2014 to $3.7 billion in 2019, with a compound annual growth rate (CAGR) of 35%. Cognitive software platforms are the tools upon which organizations and software vendors are beginning to build intelligent applications that provide advice, recommendations, and predictions for a wide range of uses from healthcare diagnosis and well being to operational decision making and automation of back-office processes such as system administration and monitoring. Examples of these cognitive software platforms and the companies that are building them for commercial use include IBM's Watson, TCS's ignio, and Cognitive Scale. Although a number of vendors have announced cognitive software platforms, most of these platforms focus on front-end processes where interacting with a human is part of the requirements. In addition to these front-office processes, there is a wide range of back-end processes that have yet to be automated using cognitive systems. To date, these processes have been the realm of rule-based workflow or decision management systems, which, in many cases, has proven too brittle to provide real "lights out operation." 2015 IDC #

3 This is the area that TCS and its new business venture, Digitate, have decided to attack. According to TCS, the development of ignio has taken approximately three years. ignio has the ability to ingest both structured and unstructured information, such as manuals, documents, blogs, and other materials to build what TCS calls its operational knowledge base. This knowledge base contains information about specific technology entities, such as servers, networks, hypervisors, middleware, and databases, along with diagnostic information and other data useful for day-to-day operations. In addition to this knowledge base capability, ignio also includes an automated continuous learning subsystem, which can recognize tasks and learn about them as well as performing them. The learning subsystem uses the knowledge base but can also adapt to changes or new learnings and also update the knowledge base with this experiential learning. Finally, ignio can recognize when it makes errors and works with the learning subsystem and the knowledge base to automatically make changes so that those errors don't happen in the future. ignio does require human intervention to build and curate the knowledge base and also to oversee the training of an application based on the platform. Because of this, ignio uses what is called "supervised learning" to provide this level of training, but once the system is trained, it can operate without human intervention. As shown in Figure 1, the types of problems that ignio has been addressed to solve are primarily infrastructure management challenges. This is an area where many tools exist today, but most of them are not flexible or resilient enough to provide truly automatic operation. This is also an area that TCS knows well and has a tremendous amount of institutional knowledge and operations expertise. Applying that knowledge and expertise into applications based on the ignio platform would seem to be a huge win for both TCS and its customers IDC #

4 FIGURE 1 ignio System Automated Monitoring and Administration Capabilities Source: Tata Consultancy Services, 2015 When it comes to outsourcing-managed services, buyers are elevating their expectations of their service providers and outsourcers considerably, particularly in areas related to operational efficiencies, speed to market, agility, and localizing to specific business unit needs. In the area of operational efficiency, buyers are looking for high levels of availability and reliability of services, particularly for outsourced cloud services. A good example of this involves hosted contact center services for which nearly 40% of U.S. buyers expect just 15 minutes of monthly downtime (99.98% uptime). In the area of speed, IDC research shows an increasing share of buyers, nearly 10% of U.S. buyers, are looking to have an application provisioned by their service provider in just one day or less, whether using traditional IT or cloud. When it comes to agility, buyers require the ability to migrate applications and data from their datacenter to a public cloud as well as migrate applications and data among multiple cloud providers depending on their business and IT requirements. Finally, buyers are looking to utilize cloud services as a means of controlling the sourcing of their own IT solutions in order to localize for specific business unit needs (e.g., sales, marketing, corporate communications, customer support). Complicating all of this is an accelerating rate at which buyers are interested in shifting their sourcing strategy by substituting cloud options such as IaaS, SaaS, and BPaaS for traditional outsourcingmanaged services engagements. As for types of suppliers, U.S. buyers, in particular, indicate that the share of "pure-play" providers (e.g., Google, Amazon, salesforce.com) that they will utilize across their total pool of service providers-outsourcers will increase to 59% in 2020 from 45% today (2015), which is up from 33% in Combined these significantly elevated service requirements (speed, agility, availability, localization) and changing sourcing strategies are placing extreme pressure on outsourcers and service providers to make fundamental changes in how outsourcing-managed services have traditionally been consumed and delivered from using significant levels of labor to investing in automation IDC #

5 FUTURE OUTLOOK Over the next 5 10 years, cognitive systems and cognitive-enabled applications will become ubiquitous. Cognitive systems will be the next major disruption in the world of technology having significant impacts on businesses, healthcare, work, society, and our economies in general. Cognitive systems will cause significant changes in the way that enterprises conduct manufacturing, handle processes, do business, and innovate in general. Cognitive software platforms like TCS ignio will be at the forefront of these changes. Many organizations are and will continue to develop cognitive systems technology. Almost every discipline that uses or touches information in one way or another are candidates for these next generations of cognitive systems, and most of the large technology companies are moving to learn about and utilize these technologies in their offerings. With Digitate and ignio, TCS is ahead of the curve in terms of back-office automation and products and applications based on systems like ignio stand to disrupt the infrastructure management industry. Technology vendors need to examine and study the potential ramifications of cognitive systems like ignio to their markets and product offerings. Current infrastructure management software vendors need to be investing in similar technologies or look to partner with companies like TCS and Digitate in order to hold onto their market share. For enterprises, cognitive systems based on tools like ignio represent a way of doing business better, faster, and more reliably than ever. Cognitive systems will provide disruptions to many traditional enterprise business models. Enterprises need to be aware of this and start thinking about how they are going to deal with the disruptions that come about due to cognitive systems technology in general and to the back-office processes that can be automated in particular. Enterprises should actively consider and plan for cognitive systems within their organizations. While most of the focus to date has been on front-office systems, organizations need to keep in mind that back-office processes are also candidates for cognitive systems. TCS ignio is one of the first cognitive software platforms focused on back-office processes, and as such, it should be something that every company that wants to improve its back-office operations should understand and evaluate carefully. For providers of outsourcing-managed services, automation will be a critical building block in meeting customer requirements (speed, agility, availability, localization). As a provider of these services, TCS' investments into its ignio automation platform should help the company align with changing buyer needs of these services. ignio's capabilities in areas such as blueprinting, administration, provisioning, compliance, and analytics should enable TCS to transform its traditional methods of service delivery (e.g., labor oriented) to much more automated capabilities, such as cloud services, across the spectrum of applications, infrastructure, and business process. Automation will also help drive improved productivity. However, TCS, like all other providers of traditionally based outsourced-managed services, will need to make adjustments to the business model of outsourcing. By definition, automation should cannibalize traditional services models, which will require providers to pursue new markets, particularly the small and medium-sized businesses (SMBs). This will also require that they radically overhaul their talent pool away from using significant pools of labor required to support ongoing operations of technologies and business processes. If successful, the new talent pool should be considerably smaller and with much different skills IDC #

6 The result of this shift away from using labor to expanding the use of automation should drive improved productivity for service providers and outsourcers. A proxy for the level of productivity that the "next generation" of outsourcers and service provider can achieve is reflected by providers of cloud/saas offerings for which buyers are looking to these services as a substitute for traditional outsourcing-managed arrangements. Examples of this range from NetSuite that drove $165,709 per employee in fiscal year 2015 to salesforce.com, which generated $335,849 per employee. In light of these challenges, IDC believes that TCS is taking the right steps in making a major investment in automation to help transform its own business to compete more effectively with newer service delivery models as well as newer types of service providers (e.g., Amazon, Google, salesforce.com). IDC believes that TCS can leverage its success in infrastructure outsourcing and platform-based BPO business to drive opportunities with ignio. IDC also believes that TCS should consider creating a distinct business unit centered on provisioning outsourced-managed services using this automation given many fundamental differences between traditional delivery methods and automated models of services with which TCS can transform itself to a "next generation" outsourcer IDC #

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