Hear about the open innovation platform for SAP, our partners, and our customers, and learn specific Professional Services solutions in this episode of Industry Insights by SAP. Josephine Monberg interviews Anthony Aughterson, Founder of Keytree and Partner at Deloitte, and Jonathan Rhodes, Global VP, Head of Professional Services Industry Business Unit at SAP.
Hello everyone, and welcome to this episode of our podcast. If you tuned into previous episodes, you’ll know we’re talking a lot about something called SAP’s Industry Cloud. You’re still wondering what the heck it is. Well, keep listening because we’re going to talk about it on this episode again. Focus of today’s episode is SAP’s Industry Cloud, but we’re looking at it in the context of a specific industry as we normally do. Today, the industry is the Professional Services industry. And, as always, I’ve brought on two very smart people that are industry experts to talk about this. Today I have John Rhodes with me. He is the head of Professional Services at SAP, and then I have Anthony Aughterson, who is the founder of Keytree, and now a partner at Deloitte. Super excited to have both of you joining. I thought maybe you would both give a quick introduction of yourselves, so our listeners can get to know you. Perhaps starting off with Anthony, tell us a little bit more about yourself, Keytree and your journey to Deloitte.
Anthony Aughterson (01:27):
Hi Josie. Thanks very much for having us, having me here today. I was one of the founders of Keytree. We were a technology consultancy, started up about 15 years ago and work in the SAP and the digital transformation space. And just last year, October, we were acquired by Deloitte, which is very exciting and has helped make Deloitte number one SAP partner globally. That’s terrific. And I’ve got lots of experience in the Professional Services industry from building our own company, we were of course Professional Services organization, and I’ve also worked with a whole range of different Professional Services companies as customers in my time.
Well, glad to have you on. And John, how about you tell us a little bit more about yourself.
John Rhodes (02:28):
Yeah, delighted. It’s always great being invited somewhere I’m described as expert is wonderful. John Rhodes, I head up the Industry Business Unit of Professional Services of SAP. Our main role is to guide SAP’s products from an industry perspective, really thought leadership into development, and then strength staying as that trusted advisor to our customers. As always, really great to join you today.
Same. And I’ve had you on before John, I’m excited to have two Brits on the podcast today. I think that’s always a good thing. Let’s get to it. I want to first talk a little bit more about the industry from a high level perspective and look at what’s going on. And I think it’s not possible today to talk about how industries are being impacted without talking about something called COVID. Because that’s obviously impacting all industries and all of our lives. In the light of COVID, what trends do you think are impacting the Professional Services industry today? Perhaps I start off by asking you John.
John Rhodes (03:35):
Yeah, I think we did have a discussion probably nearly a year ago even, and we would know that it’s still going on and we’re still being impacted as we are. I think we’re still seeing the challenges of deploying organization skills on a remote basis, and we saw a shift to digital. But I think like not really coming out of it, we’re just adapting to that going forward, and we’ll talk a little bit about that, I’m sure, shortly. But what we are seeing is how do you take all the skills which you would bring to bear and really present that to your clients in the best way. And this idea of skill shortages we’ll see is going to be critical as well because you know, acting in a remote environment and you don’t have a usual intake of skills and identification of skills. It’s not that hard, nobody’s sorry anymore. That’s one thing where the talent supply chain and management of skills I see as something which will continue post COVID, if we can call it post COVID, essentially, it’s going to be a, whatever it is calling the new reality, and being able to take the best of those people. Our non-people-based assets is going to be critical going forward. That’s one of the key things that we see. And I’d certainly be interested to get the views of Anthony as well in terms of being in Professional Services and seeing the transitions he’s seeing and what he’s seeing there as well.
Yeah. Anthony, what are you seeing?
Anthony Aughterson (05:03):
What’s been extraordinary is how quickly everyone has adapted to working remotely and still keeping their businesses moving and being successful. I think what underlies all that is resilience. Firms that have done very well are those organizations that were already digitally set up to succeed in that environment. Obviously Zoom and communication tools like that is part of it. But it’s also the underlying systems that support organizations, and people being able to use their finance systems, their HR systems, their sales systems, and so on remotely and therefore digitally has been hugely interesting and hugely important for, I think, most Professional Services firms. There’s a huge thing about resilience there. That to John’s point, that’s not going to go away. That’s important to firms that want to be successful in the future, and it’s hugely important as part of whatever this new normal is as well, because COVID feels like it’s got a long tail and we’re going to continue to see disruption, I think over not just this year, but it’ll go into next year as well. There’ll be probably unfortunately another wave of this somewhere, whether it’s the UK or other places in Europe. That resiliency is being really important. The key point, I think.
I think you’re spot on. And John, I just came to think about what you said, which is that we did an interview about a year ago talking about COVID and here we are talking about it again. I just think it proves that it’s not something that’s just going to pass that companies in all industries and especially of course, also in the Professional Services industry really have to be able to figure out what the long-term strategy is. Anthony just talked a little bit more about how firms are responding to what’s going on. Do you have anything you want to add to that, John?
John Rhodes (07:36):
Yeah, we spoke a little bit on about different routes to market in different services and the key driver. And we see that across a number of different industries as well, this idea of repeatable revenue or subscriptions or a way to have a predictable revenue stream. And that goes back to the idea of resilience. I think a lot of Professional Services firms, traditionally, you could have like this idea of a feast or famine, so I could have lots and lots of work and lots of projects, and then like a drop-off. I think what COVID showed us was that you can still engage customers and get new work for in a remote basis, but having some form of consistent revenue stream over knowledge as a service, digital products, and that type of thing is something which is highly attractive because it gives you more predictability. And also, you can manage the, you know, the peaks and troughs from the talent network perspective as well. I do see that continuing. I also think in me, we looked at this and we expected a few years ago to have it, the new competitors coming in and we are seeing increased competition, but we’re also seeing quite a lot of acquisition strategies as well. Where we have new competitors coming into the market who you know, potentially would have historically kept on growing and growing and growing, they get to a certain size and they’re never acquired. There’s a lot of consolidation happening. And I think part of that consolidation as well as to get some of the assets and IP-based activity as well, that some of the bigger players are trying to do. It’s very dynamic of a moment, both in terms of the types of services Professional Services firms want to deploy how they find people and also how they are growing. Not purely organic, but quite a lot of acquisition that we’re seeing.
I think you guys talked a lot about the ability to be resilient, which is obviously crucial in today’s world, but I also think being able to innovate fast is critical. And I believe that’s really one of the prime reasons we’ve introduced SAP’s Industry Cloud in order to give our customers a platform where they can rapidly innovate with our partners and our big ecosystem very quickly with that unique industry flavor. I said at the beginning, we’d talk about Industry Cloud and I just love to get your thoughts on that. John, how do you think we’re helping, SAP is helping firms address the trends and industry challenges that we’re seeing today?
John Rhodes (10:10):
Yeah. I think that’s one of the key things you haven’t nailed on the head. Industry Cloud to me is a way to be very quick and agile in bringing some break through new functionality and capabilities to firms. But at the same time, it’s very carefully curated by SAP. We’ve had a very strong focus in Professional Services on the Professional Services value chain. How do I win work? How do I plan that work and engage it? How do I resource people, you know, ultimately build, get money and make profit. That value chain, what we’ve tried to do and succeeded with Industry Cloud is identify areas where we can really enhance what the firm is doing. We’ll talk in more detail a little bit with Anthony and his solution, but essentially it’s examples like better matching of supply and demand for resources, more efficient input of time, better planning of engagements. These are all things which traditionally, you know, you might be taking quite a long time to roll out to your users and your practitioners. We have an Industry Cloud approach. It’s a cloud-based solution, which is integrated into the core of SAP. It’s a functionality that can be adopted in a quick and agile way, and typically that’s what firms need. They need a quick approach to roll things out now, cloud-first, which is obvious, but also it needs to fit very well with the core SAP assets. And that’s what Industry Cloud does essentially it’s providing breakthrough take capabilities in the cloud, tightly integrated to our core solutions.
Thank you for that explanation, John. And we talked about Industry Cloud is impossible without our partners, and Deloitte as one of the first partners to deliver an Industry Cloud solution. Anthony, I’d love to hear from you what you see that the benefits of this approach is for our customers, our partners, and for SAP.
Anthony Aughterson (12:09):
Okay. Yeah. I think first point is that the Industry Cloud is part of the overall reference architecture from SAP. There they concept of the intelligent enterprise, and it’s important to put it in that context. What the Intelligent Enterprise concept is that you, as a firm, are connected to your suppliers and your customers and your talent. Your contingent workforce via digital technologies. You have cool, clean, on touch solutions at the heart of your business, your ERP, which would be S/4 HANA, and your HCM systems, that’s SuccessFactors, for example. Then for your innovation, you do that in the cloud, outside of those core applications, and that’s where the Industry Cloud fits in. It is a space where we can create specific solutions for specific industries, be they CPG, be they ultimate bill, and so on. In this case Professional Services where they connect via our APIs, they don’t give you a huge TCO as a firm because you’re keeping that core clean, but you’re delivering innovation to those organizations in a modern architecture. Then you underpin all of this with data platform, Business Technology Platform from SAP, and then underneath that you have hyperscaler infrastructure that gives you the scale. That’s, I think hugely important context because the Industry Cloud is part of that big picture of what is the future enterprise, and it gives, in my view, the Industry Cloud a real credibility because it’s built on that future looking style of platform and then within it, within the Industry Cloud itself the concept I think provides a few things. You have a business model that’s actually really good for customers. That’s the number one important thing. Customers get benefit from this. Instead of them investing in innovations and developments, they can get them as a service from me, the partner or SAP, and the cost is much lower, and they don’t have to worry about that innovation. A big tick for customers, big tick the partners, because most SAP partners, Professional Services firms, and therefore thereafter that repeating recurring revenue, that’s a stream for them. And it’s a big tick for SAP because it means that they can fit wide space where their products don’t quite do, what the specific industry organizations require. We fill that white space and we have a complete end to end solution that gives you real, real value to customers. That’s two of the things. The third thing is community. I think the Industry Cloud gives both customers and partners a focus point to collaborate on delivering new value in these spaces. We’ve seen that actually as being part of the Industry Cloud in the Professional Services industry, we’ve been collaborating with another partner firm who actually, we would probably never have come across, but we’re now sharing ideas with them about, you know, how we can deliver more, more value to customers in the Pro Services industry. I think that’s sort of a softer, but still important benefit as well.
Oh, a hundred percent. I think what we’re seeing today is that being able to create communities coming together, building off of the strengths of each other is crucial to be able to win. All in all, I think that this is a winning strategy for everybody who’s involved with SAP’s Industry Cloud. Just to make this a little more tangible, because sometimes things can seem abstract when we don’t have concrete examples. Can you give us some details about the solution that you’ve been working on that’s part of SAP’s Industry Cloud, Anthony?
Anthony Aughterson (16:40):
I’d love to. Yes. It’s called resource pro and it is a sales and operation planning app for the Professional Services industry. It’s built for S/4 HANA. It sits in the SAP’s Industry Cloud, and it drools data from sales systems, CRM style systems, HR systems, and project delivery systems, which in the main is going to be S/4 HANA. What it does is it enables customers to balance their demand. So, the sales pipeline they’re sold projects with their supply, which is their employees, their contingent workers, recruitment, and also digital workers. And by balancing that supply and demand, you get a very, very clear view of what’s going on with your business. Why is that important? Well, essentially you get to see your shortfalls or oversupply against all of your different resource types in different time windows. So short, medium, and long-term, and it allows you to take action on that. That has in Pro Services firms, particularly ones whose main business is projects. That’s really high impact because you drive up utilization, so you drive up your margins. Again, another secondary sort of benefit of it is customer satisfaction goes up because you can move quicker and you can resource your product projects more accurately. You also have better staff morale as well because your staff aren’t sitting around on the bench because they’re better utilized.
Yeah. It’s, it sounds like a winning solution, all in all. John, do you have anything you want to add to that? Because I know, obviously we’ve talked about being able to collaborate and this has been a very collaborative approach. What’s it like to have been working with Anthony on this solution?
John Rhodes (18:47):
Yeah, I mean, it’s great. This is one of the benefits of Industry Cloud. I don’t know how long ago it was… Maybe 18 months ago. We discussed this in so many tables saying, how do we crack that mystery of sales and operations planning in a Professional Services firm? We have very detailed resource management, but if you think about the equivalent to what manufacturing firms do it look at, you know, what is my demand coming down stream? What is the supply and match it? There was nothing like, I really felt, for Professional Service firms. When we think about some of the trends we spoke about, about resilience and predictability of revenue, that’s one of the key things you need to be able to do. You need to have an idea of, you know, what is my work or backlog, what I’ve got, how am I going to satisfy that? And if I can’t satisfy it with resources, can I do it with contingent labor? Perhaps I can use automation in some cases. The whole process of thinking about the challenges of the Professional Services industry collaborating with Anthony and team to come up with a solution, I mean, getting to a point where you have this fantastic approach and solution to do it it’s really the evidence, and this was, I guess, pre Industry Cloud when we started talking, but it’s a perfect example of industry client based on Business Technology Platform. You don’t have open heart surgery on your ERP system, but it provides you have always tools to be forward-looking as we discussed you need to be. So, great experience. Essentially said it does require close collaboration between SAP and partners. And that is, I think the future, as well as we go forward with, as you mentioned, this network of organizations. Yeah, Very exciting times.
It is exciting times, even though we are still in the midst of a global pandemic. I do actually genuinely think that the Professional Services industry is such a fascinating industry, especially when you look at it in the context of COVID, right? Because for example, I take someone like my brother, who’s a lawyer in Denmark, who’s never been able to understand the fact that I always work remotely, virtually, and now he’s doing it and seeing that transition and what’s happening, like you talked about in the beginning that you have to be able to use digital technology today, regardless of the industry you’re in is a really fascinating thing to me. Speaking of COVID and what’s going to happen, I always joke on the show and say, take out your crystal balls, and everyone starts to get a little bit nervous because I don’t think it’s very possible ever to predict the future, but perhaps even a little more difficult during these times, but let’s try it anyways. Just to pick your brain first, Anthony, what are you seeing? What do you think will happen in the future where we talk about the Professional Services industry and the post COVID, if there’s ever going to be a post COVID era?
Anthony Aughterson (21:51):
Well, I think try and think about it in categories because otherwise it’s just a big lump of everything, isn’t it? I think about it in terms of increasing competition and there’s a number of things that come out in that area. It’s very real, you know, customers are in a stronger position than ever before. They’re better informed. They’ve got much more choice. There’s lower barriers to entry. There is this real sense of increased competition in Professional Services. There is skills shortage. We know about it across the globe, particularly in technology. I think we’re seeing, and we will see certain trends as a result of that. And then the third category is this dry for repeatable revenue. We’re seeing some things as a result of that. I guess first off the competition things that we are saying, and I think we’ll see more of is competitive pricing. Sorry, yeah, natural, right? Now what does that mean in Professional Services? It means call pressures, but also things like outcome-based contracts. There is a trend that we are seeing for that. It’s not just about fixed price contracts, but it’s also about attaching value to payments. There’s things like packaged solutions, that’s something that we did at Keytree and that we are also doing within Deloitte is this concept of package solutions where we have fixed price, fixed scope, fixed time. We give that certainty to customers now, as a result of that, those Professional Services firms take on more risk. Therefore there’s opportunity there for solutions that support managing that risk. But that’s definitely, definitely, you know, a real, a real trend. I think the other thing in the competition space that we see is this drive for innovation. I mean, this whole thing is blurred, you could say, well, technology is the driver for that rather than competition. Sure. There’s lots of factors here, but the innovation is necessary for firms to jump out from the competition. Why do you choose Deloitte over Accenture? And actually, you know, often the answer is, well, because we’re hugely innovative, because we have these products in the Professional Services industry that we’ve created because we’re thinking about the future or because we have innovative commercial models or because we have the environments to help our customers drive innovation as well. There’s a lot going on there as a result of that competition. I’ve probably talked enough around that point.
Yeah, I think that honestly makes perfect sense. And I think this is not a time to sit still and think that you can run business as usual because most like your stakeholders, your customers will see that happening. I think innovation is the key to continue to progress. John, what are your thoughts? Do you agree with what Anthony said?
John Rhodes (25:32):
Yeah, I totally agree. And I think if I look at it from, perhaps three different lenses, one from a customer perspective, traditionally, a lot of customer relationships with their providers were very personal ones. It was you would know the person who came to visit you and it would be hard actually to switch providers because you had that personal relationship. I think some of that is slightly moving away and now you’re looking at initially remote relationships. It’s easier to establish relationships so that competition angle increases because you could go to obviously providers locally, but also globally, and the delivery is remote anyway. It doesn’t matter if a person is halfway around the world as long as they can do it. From a customer’s perspective, you’ve got a huge amount more choice and that increases the competition. I think from the firms themselves, there’s probably two angles I would look at it. One is how do we in future keep on developing the skills and the people and not allow them to be isolated. Obviously over time, we’ll get back into the office and we can do that, but it’s really ensuring that we can get people back into what I would say we’re a combination of remote working. I don’t think we’ll ever go back to spending huge toolbox full of people that we need to make sure that people are continuing to develop our skills. And I think networking and mentoring was obviously part of that and that needs to continue more effectively.
Anthony Aughterson (26:55):
I think that’s really interesting because there is this idea of you know, we’re all going to stay remote. You know, you’ve seen some firms say that some globally massive firms say. The concept of what is this new hybrid approach is going to be fascinating because I think it’s going to be more innovation in that space now, what actually works best for our employees. And I think in the Professional Services space, there has always been this, learning from being around the senior experts concept. You bring on your firms, your big four consulting slash accounting firms, and the smaller ones they bring on smart graduates. They go through good systems to learn through projects, through seeing senior people make mistakes or conduct themselves in certain ways. In the remote world that is really hard. And I think, you know, it’s just going to be very interesting to see how that plays out. Do we force all of our people back in buildings to ensure that the next generation gets the skills that they need, or do we find a different way of doing it?
Anthony Aughterson (28:18):
Yeah. But one thing I can’t help but think of when you’re talking about all of this is experience. If I think what you’re essentially saying is that we’re going to perhaps move into a hybrid model of digital and physical and we have to figure out what does that world look like. Doesn’t that also include the experiences as a competitive differentiator for both when we look at the employees, but also the customers who wants to risk to take that one.
John Rhodes (28:50):
Yeah, I totally agree. And I think that there’s the experience in a classic way is trying to understand and capture feedback and that’s going to be important going forward is capturing feedback from your customers, especially in a remote world. Wellforce Dawson who said when interaction turns to digital, you need some way to capture feedback because you’re not actually going to sit there in front of them and get that direct feedback. There needs to be some way of doing that and capturing that experience is critical. Then the actual experience of the individuals, and that’s where we do see an increasing use of technology to identify cross transferable skills or equivalents and things like that. Somebody who’s being great in a particular area, we can see that being cross transferrable to somewhere else. It’s something which as Anthony pointed at, you maybe would’ve picked up on it if you were assigned a project office together, you’d just see what they were like, but it’s really hard to do when all you see is a bunch of utilization and time sheets. Absolutely spot on, Josie, there. I think the digital ones interesting that firms will increasingly look to have some form of digital products, which don’t require people headcount. Let’s say we spoke about nonlinear growth some time ago, and that idea of I can sell a digital product to a thousand times a person once. That will increasingly be the case with firms that there’ll be balancing if you imagine a portfolio of really smart people and resources, physical resources, event, digital resources, and in future, that’s going to be the balancing act of using people to build digital resources and people as a differentiator to your customer. As I said, I think people show as a short term thing originally now, it’s what is this hybrid approach going to look like? Technology will help firms do that. As well as I think a changing culture to a degree as well. Once again, we’ve got to use some of the experience management systems to help with that.
Well, on those words, I think we can wrap this up. This was for me, such an exciting podcast episode to do. And I think John, you kind of hit on the really critical piece, which is culture, and I’m excited to see what’s going to happen in the future as we move into this hybrid world of digital and physical and see how the culture is also going to shape the way that we work together internally in companies, but also how we engage with our customers moving forward. John, Anthony, thank you so much for coming on the show. You were thrilling guests to have on and who knows, maybe we’ll be doing another episode in a year. Hopefully it’ll be less about COVID more about the new hybrid world that we will be living in. But thank you for coming on the show.
Anthony Aughterson (31:48):
Thank you very much.
John Rhodes (31:51):
Yeah. It’s been lovely. Looking forward to a year’s time when we’re in a brave new world and we’re not talking about it. Definitely.
Anthony Aughterson (31:57):
Let’s make it sooner and do it face to face.
John Rhodes (31:57):
Exactly! That would be great.
Agreed! That’s how we approach the physical part of it. Right. Thanks to all our listeners. We’ll hopefully see you on the next episode. Bye, everyone.