Why Cannibalizing Your Revenue, Through Automation, Can Keep Your Clients Happy

Merriam-Webster dictionary defines “cannibalize” as: “to take (sales) away from an existing product by selling or being sold as a similar but new product usually from the same manufacturer”.

There are numerous examples of companies following this strategy that we specifically see in our daily life, for example, in the consumer electronics (phones, tablets, laptops), and CPG industries (food, beverages, cosmetics, household cleaning products).

Why do they do that? One simple reason- to be relevant in their business and for their customers.

This strategy has been slowly adopted by Global System Integrators (GSIs) for the past few years, but is now on a fast track execution with the help of Automation.

Automation has evolved over a period of time, and now, AI-driven software products are adopted by these GSIs mainly in these areas: Applications Development & Maintenance, Back office Business Process Services and IT Infrastructure managed operations (through some levers like DevOps for CI/CD, APM, RPA, scripting tools, RBA, ITPA)

How does Automation assist in cannibalizing the revenues:

To illustrate this point, let me share how we proactively leveraged Automation, in one of my Fortune 500 clients' IT infrastructure operations.

• The need to make their IT operations efficient and the team more effective, triggered this Automation transformation journey
• Created an Automation program group which included client stakeholders along with our project and delivery teams
• Created a single Automation platform with scripting and RBA (run book automation) tools along with a Process Orchestrator integrated with client’s ITSM tools and standardized the workflow templates, tools, and process
• Identified the Automation levers, and executed them, starting with the low-end and high volume tasks and finally adopted this Automation platform, tools and process into the operational delivery team to make this Automation program into a continuous improvement process
• Developed a governance model to keep all the stakeholders informed of the progress, and to gather feedback
• This resulted in over 40% efficiency improvements in the first phase and optimized the team, as they are now more effective
• Our annual revenues reduced significantly, as we shared the cost savings with the client, and in the process we improved our CSAT score which generated goodwill and extended the business relationship for many more years

There are multiple reasons for this revenue cannibalization trend within GSIs:

1. It makes business sense: If you don’t do it, some other GSI will do it for your client. So, to be relevant to their clients, they have to bring in Automation as a value-add service
2. Client's business drivers: Their top clients have limited or reduced budgets, and client teams have to do more with less, hence, they are expecting their GSI partners to do the same to enable client’s business outcomes
3. Show thought leadership: GSIs are always a learning breed who have to be on the leading edge and bleeding edge of innovative technology adoption. So, their Customer Success and innovative research teams have to proactively showcase these learnings to clients

Automation is a continuous journey with milestones along its way. It does not start or end with one project, and has to be imbibed into the delivery culture. In the next few years, GSIs become more innovative, more leaner, and will lead with Automation initiatives.

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