Episode 52 Transcript

Innovation in IT Services and Digital Transformation w/ Andrew Cohen

    Banoo Behboodi: Welcome to the Professional Services Pursuit, a podcast featuring expert advice and insights on the professional services industry. I am Banoo, and I'm happy to be back here with Andrew Cohen, Managing Director at Netsurit Automate. Andrew, welcome and thanks for making the time to join us on this podcast.

    Andrew Cohen: Thanks for having me, Banoo. It's nice to meet you. Looking forward to our conversation. Absolutely.

    Banoo Behboodi: Yeah. It's going to be a very interesting conversation. I know we're going to focus on your value-based go-to-market commercial model, which was very refreshing when we talked through that. I thought it was actually very ingenious what you're experimenting with. I would say experiment because you've newly introduced it.

    I know it's on top of mind for many of our listeners probably. Value-based delivery, clients, client retention, client happiness and satisfaction, all is based on them fulfilling their value. You've taken it to another level at the delivery side. I'm very excited to share some of your findings, lessons learned, and how this commercial model is working for you.

    Andrew Cohen: Terrific. Yeah, a lot of lessons learned over the last year and a half.

    Banoo Behboodi: Yeah, exactly. That's great. And so, let's get started. I think the audience probably is interested to get to know you a little bit more. If you can tell us a little bit about your life before Netsurit and then what you do at Netsurit, that'd be great.

    Andrew Cohen: On the personal front, I'm just married with three kids. I'm an older dad, and I just had my third child. She's only four months old now. That's why my beard is starting to become white. I started shaving a little bit more frequently. So if you see pictures of me on the website, I've changed my look a little bit today.

    But anyway, on the professional side, I had my own company. It was called EVOKE for about 20 years. In the end of 2021, we decided to merge, and we were acquired by Netsurit. They're a global managed services provider company, the heavy cybersecurity foundational type of work, where my company, EVOKE was really focused on digital transformation, creating modern workplaces, really leveraging companies’ availability to deliver accelerated solutions, better processes by using technology. We were doing that for quite some time before the Netsurit merger. Since January 2022, we've become part of Netsurit. In my group, I'm the managing director. It's called Netsurit Automate. We focus on the innovation arm of the business.

    Banoo Behboodi: Fantastic. Well, thank you for coming to the podcast. Getting to the topic that we're going to focus on, I know we talked about your commercial delivery models and this concept of service-based work. It was interesting for me to talk through that because intuitively, when you're delivering a service, it's obviously service based. But you clarified and discussed with me project-based service versus services-based work and the distinction with that. I think that ties well to your new value-based model. Can you just explain to the audience the difference?

    Andrew Cohen: Prior to joining Netsurit, we had a solution within our own company called EVOKE. We called it EVOKE Engage. We knew there was an opportunity. We did traditionally large, big projects where they had the milestone delivery, traditional model of software development life cycles with the design elements as well.

    We found an opportunity, especially during the pandemic, to understand when companies are trying to leverage their technology a lot more actively. So we created what we called EVOKE Engage, and it was allowing us to work with companies really quickly to define automation, innovation opportunities, but still project level-based service. When we became part of Netsurit, we launched what we called Innovate, and it's Innovate as a Service. It is a productized type of delivery model for basically creating solutions as a service on ongoing monthly cycle over the course of a calendar year.

    Why it differs from the traditional project model? There are multiple different factors. One, we can do more with a more accelerated timeline. It's a very agile type of approach to delivery, quick analysis right to development and then measurement in terms of the effectiveness of our solutions. The project type of work that we do is still in-house. We do it a lot. A lot of clients still want to go that route. But it has more of that traditional model where big milestone payments are due, a big milestone delivery. There's a lot of connectivity between the client. It's not as quite as an agile model, even though we do agile development on both sides. Innovate allows us a lot of touch points from day one to delivery of multiple solutions within the calendar year.

    That’s the difference in terms of how we approach it. Probably the biggest change more than just the delivery model is how we measure it. We have what we call return innovation guarantee. Every solution we do, we have a predefined set of metrics agreed to by our customers that define when a solution goes live. Are we hitting our metrics for success, whether it's on profitability, process improvement, risk aversion? These are the areas that we measure and target, and we share that information on a monthly basis with our clients.

    Banoo Behboodi: Diving into that model, the whole return on investment as you iterate, if I'm understanding correctly, within each iteration, you have a target to what would be the benefit and value that the client would get from that particular-- is it by iteration, or is it a solution would have multiple iterations and then at the end-- how do you define that?

    Andrew Cohen: That's a good question because it varies. How we typically engage, we do an initial immersive innovation workshop with our customers. We'll define multiple use cases that would potentially live under the Innovate service. It could be one solution, like you said, with multiple releases over the course of a year. There would be an iterative release schedule.

    Traditionally, that's the way we go with big projects. Most of the innovation offerings that we do, they will fall into those use cases where you can deliver effective solutions in a very quick period. We'll deliver one, start charting the success against that and measure the value, and move down the priority list to the next solution. They might have an automation just connected to Salesforce in a more automated manner to the distribution center or something of that nature. We'll deliver that, roll it out. That particular business unit will have that feature and start working and measuring the effectiveness. We're maybe working with another business unit within the organization that has defined another use case that we can attack.

    It's really working with the customers, working on that priority list, delivering as many solutions as we can that falls into one of our tiers of our Innovate service, and then we're measuring as soon as one rolls out into a solution.

    Banoo Behboodi: If we start at the beginning, which is the workshop you just named, I'm just interested, is that a free workshop that you do? What's the duration? Are you defining the KPIs you're going to measure success against at that point? How does that process work at the very beginning?

    Andrew Cohen: At the initial workshop, it's a free one. The first, we do like an hour, an hour and a half workshop with our potential customers. We're not engaged yet. We're not billing. It's more about defining all the potential use cases. It could be just one business unit or multiple business units within the organization. Obviously, depending on the size of the company you're working with, there could be one person for many departments, or it could be department heads for each area.

    What we'll do from that is we'll chart the activities together. We'll define the use cases, prioritize and vote on those together with the customer to define the ones that have the most feasibility and value to the business based on some of the metrics that we can define for success. Then we take that back and we deliver a report post meeting where we identify, here's the ones that have the best value to the business. Here's where we see you potentially fitting, and then we map it to the Innovate tier level that they would be at.

    Now to get that full ROI measurements, we have to do a little bit more immersion into these actual use cases. It'll be a little too high level after that first hour, hour and a half, because there might be multiple use cases we’re identifying. But we've identified within that session the most valuable ones we find, and then we dig in deeper when we start going to real engagement and business analysis work.

    Banoo Behboodi: Then you have an SOW. Do you actually state in your SOW the expected value at that point? How are you going to get measured? Is the payment based on concurrence on that value?

    Andrew Cohen: Here's how that works. We've identified those use cases. We've also agreed upon the metrics for ROI success within those use cases. It does get dropped into the SOW or proposal at that point. What we call the return innovation guarantee, the ROI, is once a solution is implemented and it's rolling, and there’s metrics we've defined together, if it doesn't deliver on the promise, on the solution, on the things we're tracking, we have to work for three months for free on us towards the end of the contract. We can add into the contract that way.

    That's already in the language of our agreement or our terms and conditions, and then how we apply it is tied to those use cases that can live. Again, we have to define those use cases based on what tier we're going to deliver. It comes in three packages: Base, Plus, and Max, and within those each, there's categories of what we can deliver in each of those different funnels.

    Banoo Behboodi: I love the fact that you've actually productized this because it actually improves your effectiveness and it supports. The team is much more comfortable in delivery in that kind of a model because they understand one package versus the next, what is at least framework or the borderlines of complexity.

    Andrew Cohen: You just said the right word, complexity. That's what defines what tier a customer could live in. If it's like a base quick thing that we can deliver a simple automation or standing up like just a quick internet that we can do very quickly that we've done over and over again or show them how to best use the tools at their fingertips with their current technology investment, that falls into our Base category. That's something we can deliver on a monthly basis. That's a lot of configuration, some limited low-code delivery, and that's pretty much what they're going to get in that year in the lower tier.

    The middle two tiers deal with more complex solutions, more automation, maybe some dashboards, things of that nature, where you're really connecting systems together and giving a better overall visual picture of the organization. It's a lot more intense in terms of effort. But like you said, our delivery team knows pretty well based on the solution profile what we're doing and how quickly they can turn these things around and deliver an optimum product.

    Banoo Behboodi: There's a lot of companies that are doing IT and digital transformation right now. They categorize it, and it's a huge undertaking, sometimes multi-year. But there's also a lot of emphasis on quick return. These transformational programs that are taking multiple years are actually fading away because everyone is striving to get quick value. I'm curious on what you think about the model you're introducing and how it fits within this movement we're seeing in terms of digital transformation.

    Andrew Cohen: No, that's great. You just speak about the inertia on this whole digital transformation journeys for a lot of companies where there’s all this energy at onset and then as you're into year two and three, it just starts to fade and then the solutions get more just de-emphasized. Our engagement model is a lot different because really, there's three pillars that our company works in in terms of there's a foundational side, which is the core side of the Netsurit business. You’re just basically helping companies move to the cloud migration. That's a heavy initial lift of digital transformation, just getting people ready for what we do, our team's focus on what we call operational effectiveness and customer experience side.

    Once they get that lift into the whole cloud, we really have an opportunity to find these quick opportunity use cases to quickly deliver solutions right out of the gate. The goal is within that first 30 to 60 days, we want that solution embedded, implemented so they can see the value right away. And then we can move down that list to other priority use cases. It's a very highly engaged initial model.

    What I find is probably the hardest lift is that first two weeks. That's where we're really digging in that deep business analysis requirements and having the documents. There's a traditional effort there that does live with this service if we're doing a complex solution. The stuff that we can turn on we call out-of-the-box solutions where almost like the no-code, low-code solutions to show clients or configure something, we can do those in days.

    Those are things that we can quickly, if we've identified something, turn on their service, work with that company, see what they really need quickly. We can find a quick win in, like I said, that first 30 days or less.

    Banoo Behboodi: It's again, fascinating model because it's almost addictive because you're proving your value as you're going versus, I'm going to hold my breath and cross my fingers hoping that the value you committed to is going to actually be delivered. It’s fascinating from that sense. I know it's relatively new, but what is your anticipation on period of engagement? Because of this progressive, iterative, proving your value, are you expecting that you’d become a long-term partner really, and is that what you're seeing?

    Andrew Cohen: You've hit on the point there. We call it perpetual innovation. We don't find it like it's a destination. There's no start and end point; it's ongoing. Most companies have so many needs and challenges. They're doing manual processes. Old systems are retiring, just how to stitch things together.

    Our traditional model is we get in with a customer, and we work with them for a long term. We've always had that kind of engagement model already in our DNA in terms of, we want to work with a company for as long as possible. We have clients that lasted over 10 years that aren't on the Innovate service. They're big enterprise companies.

    However, in this model, yeah, exactly right. We're going to identify in that first year hopefully multiple use cases we can deliver and start tracking. They're going to see a net benefit year two and three without us even being part of the picture. Our goal is we're going to keep them as a customer. We're going to define ongoing solutions as a new year. Or like you mentioned before, there could be some modifications, iterations on the current solutions we did. They want to add enhancements to it.

    And then also what we do once we deliver a solution, we move into support on those solutions as well. It's all part of that Innovate service. Once we deliver, if there's no other things in the hopper to get working on, we move into support mode. We can then go to another one of these immersive workshops to define some other use cases with the different departments that might not have been part of this solution from day one.

    Banoo Behboodi: That's excellent. Just doing a little bit of research on the company, Netsurit, you're very employee-centric. You live what you say, meaning that even your mission is around empowering doers. I may not get it completely right.

    Andrew Cohen: That's it. The Dreams of the Doers.

    Banoo Behboodi: Yes, exactly, which I loved. How does this model, in your opinion, support the doers, the team? How are they finding it? Is it helping? What part of it makes it effective from the sense of delivery?

    Andrew Cohen: That's a very good question. We preach this whole Dreams of the Doers. Orrin Klopper is the CEO. He's just a well-read guy. He always is introducing things to the company to try and incentivize and make that culture live. So we practice what we preach. The kind of solutions we work on from a delivery point of view to our clients, we're also doing it internally. We're our best patient. We really look at ourselves on the South African side of the business as well as the US side of the business because there's differences in different markets. We want to make sure we run as efficiently as possible, introduce the latest and greatest technology, reinvest in our team, because if we invest in our team and our support, training, knowledge, and certifications, it empowers them to do more.

    We can keep the teams somewhat more agile and lean without just overloading staff just because we need more bodies. By leveraging the technology and taking advantage of the latest and greatest with AI and things of that nature, we're able to really expand our teams, almost virtually at some times. The team members are excited to be part of it. The buy-in internally to the Innovate service has been tremendous. It's our most recent product launch we've done at the company. It's all the weights behind it, we're excited about. It's only a year and a half old. It's definitely a new service. But the team that get brought into that, the team members that we hire within as well, to be part of the Innovate service, it's just exciting. You’re right. It's really allowing people to realize their internal professional dreams within our organization.

    Banoo Behboodi: Yeah, I would imagine, having been many years ago in delivery capacity, it's just as fulfilling for the delivery individual to see the value and get concurrence from the customer that the value has been delivered as it is for the customer. That in itself outside of everything else you're doing.

    Andrew Cohen: Even though there's similarities between customers and customers, it feels unique. We can see the excitement from the client perspective when they get one of these deliveries in their hands, and they start seeing that it's delivering on the promise. It's just a very exciting time. The team just loves the work. They just dig in. They want to learn more about how they can expand their education around it, and we're able to just give the clients the highest value possible with this service.

    Banoo Behboodi: So a year and a half, you're clearly past the proof-of-concept period. I just was curious, what do you see the future of this model? What are some of the lessons learned and adjustments that you may make to it?

    Andrew Cohen: We found over this last year and a half a lot of insights. I'm not going to say failures. There were obviously some challenges just getting up and running, just learning how we could deliver what was traditionally a project type of work into a service model. We've actually over this last year and how we've been analyzing it, we were constantly working internally. We probably have four or five weekly internal meetings on just Innovate. It's just something we're always refining, making it better.

    Right now, we're doing a complete rework of our strategy as well. How is it working effectively? We measure. We want to make sure every customer we work with has our ROI in place. They've reviewed it. They've also done valuation of our service in terms of giving us the surveys and scores, how we're doing kind of things.

    But really, what we've learned is not everything that we do has to fit into the Innovate service because some things are still projects, and projects still have to live in our world. We're excited to do them. But what we really found is that Innovate Base is being refined right now. It's getting a kind of a, not a facelift, but just reinvigorated where we could add different digital strategist type of personalities to come in and support me to help a company that's only spending less than $2,000 a month with us to have as much maximum value as someone who's spending the full amount at Innovate Max.

    It's really constantly shifting the targets a little bit internally, how we can make it a better product, and I can tell you, it's ongoing efforts. It's something that, in a year and a half, feels like a ten-year-old product right now because we do so much work on it.

    Banoo Behboodi: Well, you lead by example. It seems like that's what you're doing with your clients is continuously evolving, process optimization, and technology optimization. You do as you preach, I guess, and you're evolving what you're doing with this particular offering.

    But just curious on the team that actually does the work, is it a dedicated team or the same members can do the project-based versus a service-based? The reason I'm asking that, I'm trying to get at what is the best skill set for effectively delivering on this?

    Andrew Cohen: That's a very good question. Now we're having two different separations of the type of personalities that work on this. We have a big delivery team over in Western Europe, in Poland. Warsaw is where a big part of our team is. They're the ones who do more of the complex solutions, really build out the traditional DevOps with some business analysis on top of it. The other areas, like what I was just mentioning before, the digital strategist area, where we can come into a company, work with them, say, okay, let's define the pain points you have right now very quickly, things that I do on every phone call, but I might actually have some hopefully team members that can do that as well.

    Within that first conversation, we'll be able to start looking at what they have from their technology stack and be able to line up really quickly how we could turn things on, show them how to have a better user adoption of their technology where they can find these very quick wins that takes no coding at all. It's not even low code. It's just configuration. So that's a really great value for that Innovate Base service. We can just come in very quickly and get some solutions right out of the gate for a customer, and then helping them learn more, be more empowered to do more with their spend all that money for licensing.

    Banoo Behboodi: Low-hanging fruits. Is the engagement then to handle that low-hanging fruit and then you uncover the bigger opportunity after you've done that? Is that how it works? You get them thirsty, and you give them water and quench it a little bit and then that's it.

    Andrew Cohen: Right. You mentioned about the addiction, how addictive this stuff is. Also, just when we deliver a solution, whether it's a large organization or a small one, it reverberates to the rest of the company. They all of a sudden say, what are you guys doing? How did you do that? Then all of a sudden, we get brought in. It is a very addictive model because once you have one working, they start thinking, how can we do more? Here's another opportunity that's a lot more complex, like you're saying. So the smaller ones, the quick wins, the low-hanging fruit can lead to complex fixes. That's where the big heavy lift from the DevOps team steps in that we call them like almost mini projects that still live within the Innovate service.

    Banoo Behboodi: Andrew, can you give us an example of where there's been that mutual gratitude and gratification between the doers and then the client?

    Andrew Cohen: That's great. It just popped in my mind. We say the Dreams of the Doers is not just an internal message. We wanted for everyone we work with, we want to create 100,000 doers outside of our company. We're always trying to help clients do more and get out of the mundane part of their jobs.

    One example of a recent solution is that one of our clients that are a big Fortune 50 pharma company, a huge company, one of the issues is an automation need they had because it was a manual effort. Two full-time employees were just basically triaging an email inbox all day long. And so we figured out a solution just to enable this person to get out of that 160 hours a month just doing manual email delivery and checking systems to automate it. This person didn't lose their job. They were actually elevate their position, and they only focused on the insights and data from the visual dashboards we created as well. All the automation of the 5,000 field sales force to home office to product and fulfillment used to be a very manual 48-hour kind of process, we've got it down to three minutes.

    Why it’s so cool is that from my point of view and why our company, our team, and the delivery side loved it, we got the feedback. Their VP of that department said it was the best example of digital transformation ever experienced at that organization, and this is a massive enterprise company. So when we hear something like that, typically, solutions to enterprise space move the needle just a bit. This just had such a massive impact, and it makes us feel really excited, and our team just loves hearing those kind of stories

    Banoo Behboodi: Yeah, a hundred percent. Well, thank you. This has been fascinating. I love the topic. I love the innovation that you guys are having, and I wish you all the best with it. But, in closing, I know I've mentioned to you that I want to ask you what is a book-- I'm always looking for books to read. Any suggestions that you may have for the readers?

    Andrew Cohen: It's funny I mentioned Orrin, the CEO, before. He's always introducing new books and ways to-- I used to not be a business kind of book reader so. Unfortunately, now my library for business books is about this high, and I'm not getting through them as quick as I'd like. But the one that really leans into what I do on a daily basis is we had the Innovate service initially without it. But we looked at how do we make it the best possible value? There's an author who is a business guru, Alex Hormozi, and he writes all these books about the $100 million dollar value and $100 million dollar leads. He's all over the internet. You can see him everywhere.

    But in terms of the $100 million Offers book is the one that fit really well into the Innovate service. Obviously, his was geared towards the health fitness industry initially. But the lessons in there about getting these quick wins and feeling that pain, can you get a customer to get rid of that pain in a very quick way makes the service almost self-fulfilling. If you can show a client, okay, your waste in a risk issue that we've mitigated by doing automation, you got rid of the manual process, you lost $40,000 in manufacturing costs last year. If we automated that, that would eliminate that risk. Would you not do it?

    So we almost give you that, yes, is always the answer because it becomes this stack type of solution that has so much opportunity to find value for your business, and then the way we are engaging the model is a full team that's always applied to it. You mentioned it wasn't a dedicated team or team members moving in and out of projects in the service. It's more of that, unless a company wants to lock in a team for an enterprise deal for a 12-month period and all we do is that one client, we'll do that. But traditionally, our teams have actively been per project or customer to customer.

    Banoo Behboodi: I think that also probably serves better for your doers because it allows them to grow and evolve versus being with one client and not because obviously their skill sets expand. So that's fantastic. I love it. I will read it. Just a suggestion, Audibles, I find, are the best discovery that I've had for business books. I love reading my fictions, but I love listening to my business books through Audibles when I'm taking my hike or whatever. So there's a suggestion for you.

    But thank you. Thank you for making the time to be with us, Andrew. We wish you all the best. Maybe we can revisit this in a year from now, and I'm sure you'll have more learnings about how this model is working out for you. But I really appreciate the time you've spent with us.

    Andrew Cohen: My pleasure. Thanks for having me. Anytime you want to have us back on, we're happy to do it. But I really enjoyed the conversation. Thank you so much.

    Banoo Behboodi: Thank you. As always, we love to hear from our listeners. If you have any follow up questions for myself or Andrew, reach out at podcast@kantata.com. Thanks, everyone.