Posted in : Absolutely Meaningless Comedy, Robotic Process Automation

It’s time to close the chapter on the legacy analyst industry that has lost its energy, its identity, its independence and sense of purpose.  HfS was founded seven years ago to shake this up, and what’s astounded us is the stubborn refusal of the rest of the industry to change, preferring to milk the remnants of a stale model.  So we’ve worked very hard behind the scenes to develop a knowledge platform that impacts, with an engagement style that shakes our clients from their slumbers.  Welcome to our ThinkTank…

Why is the legacy analyst industry stuck in a depressing holding pattern?

The analyst industry never made it out of 1.0.  Despite all the guff about analysts using twitter and blogs, the sporadic number of boutiques and one-man/woman bands that slipped in (and out) of the analyst market over the last decade. Despite the “freemium model”, where there was a pretence of free research “disrupting” the market, but most of it being regurgitated supplier press releases. We are still trapped in the old analyst model:

Let’s face it, this current model has steadily deteriorated over the last decade, with most analysts firms selling their praise to willing vendor marketeers only too happy to fund the propaganda, adding increasingly damp fuel in vein attempts to heat up their sodden sales decks and watery marketing brochures.  Even firms like NelsonHall, Everest, Zinnov and others have got in on the act of putting out endless scatterplot quadrants of supplier positions in all sorts of markets – as if customers really take this stuff seriously anymore? Is this the only way these firms can forge a living these days? How can you “influence” a market when your only impact is a few thousand quasi-human twitter followers, you don’t run customer summits, you don’t provide your clients with research labs, you don’t provide relevant data products and the only people you ever talk to are suppliers?

I would even go as far as declaring some of these “analyst” firms should be more correctly reclassified as supplier marketing support firms.  How can you be an “analyst” when all you do is take money from marketing people to reinforce their products?

The current model is increasingly desperate, we now see tech suppliers buying up advance licences of Quadrants, Waves and Marketscapes at the beginning of their budget cycles, before they are even written, so they can pick and choose which scatterplots to buy licenses when they like the outcome.  Yes, people, this really happens. 

How did it get this bad?  Simple – most analyst firms are just not very good. They are jaded, they are too stingy to invest in real talent with real experience, and just reel out the same old dinosaurs whose only value to industry is to market the wares of their paying customers.

Fortunately, we have started to see light at the end of this rather dingy tunnel. Which is about time, as  there’s nothing more depressing than bemoaning a stagnant industry encircling the drain before its eventual plummet into the plug hole of irrelevance. 

Don’t lose hope. Analyst 2.0 is finally here!

The industry is reaching its first major Come-to-Jesus moment, where growth is flat, there is mass confusion surrounding the real impact of “disruptive digital business models”, with the potential creative destruction of automation, the lack of clarity of the business benefits of cognitive and AI, and the blurry potential of blockchain in its nascent pre-industrial form.  It’s well past time for enterprise customers, suppliers and other key stakeholders to come together and really collaborate and think about what their true options are moving forward.

But, all is not lost, folks, because HfS is kick-starting a new era in the analyst biz with the HfS Impact model.  Let’s be honest, the analyst 1-800 hotline market, where you have to wait 3 weeks to talk to some clueless kid, and those strategy days when you got subjected to an endless deluge of dull slides explaining the basics of your industry that you were reading about in 2003, are fizzling out.  No one cares anymore.  No one bloody cares.

We’ve made it our mission  to drag this business kicking and screaming out of these dark ages of obsolescence. So, welcome to  Analyst 2.0, a model based entirely on Knowledge and Influence, centred around our revolutionary ThinkTank:

The ThinkTank approach is all about getting the industry collaborating again, where we use Design Thinking techniques to drive joint problem-solving.  Our mantra is that the analyst role is shifting from passive observer to facilitator. To make this happen, we have dedicated an entire floor of our new offices in Cambridge England, in addition to facilities in Chicago and Boston, to hosting day long ThinkTank sessions with our clients. ThinkTanks are where we invite customers, suppliers and even advisors to spend entire days with us Design Thinking their desired goals, and solving the problems that are preventing their achieving these outcomes.  This is where we challenge you, you challenge us, and we work together, supported by our research, to drive genuine achievement, defining where you need to go and clearing the path to get there. And yes, we lock all our phones away in a safe, while we drive this whole ThinkTank process. Learn more about the ThinkTank.

The Bottom-line:  The HfS Mission is to Revolutionize the Industry and lay the Analyst 1.0 model to rest.  For good

HfS’ mission is to provide visionary insight into the major innovations impacting business operations: automation, artificial intelligence, blockchain, digital business models and smart analytics. We focus on the future of operations across key industries. We influence the strategies of enterprise customers to develop operational backbones to stay competitive and partner with capable services providers, technology suppliers, and third party advisors.

HfS is the changing face of the analyst industry combining knowledge with impact:

• ThinkTank model to collaborate with enterprise customers and other industry stakeholders.
• 3000 enterprise customer interviews annually across the Global 2000.
• A highly experienced analyst team.
• Unrivalled industry summits. 
• Comprehensive data products on the future of operations and IT services across industries.
• A growing readership of over one million annually.

The “As-a-Service Economy” and “OneOffice™“ are revolutionizing the industry!

Posted in : Business Process Outsourcing (BPO), IT Outsourcing / IT Services

So we’ve determined that 58% of enterprises which have adopted RPA are satisfied with both cost and business impact (see recent post).  But how does this differ by business processes?

Let’s consider this data:

IT processes and apps are clearly the biggest beneficiaries of RPA. There’s nothing like music to the ears of cash-strapped CIOs and CFOs than prolonging the life of those once-expensive IT systems that just don’t integrate with each other. Plus, isn’t it great to make band-aid patches over those spaghetti codes to keep those cobol monstrosities functioning for a few more years yet? Suddenly that “technical debt” doesn’t feel quite so bad.  The thing about writing off legacy, means you really only write off the stuff that just doesn’t work anymore… RPA is highly effective at prolonging the life of legacy systems by recording actions and workflows to give these things a new lease of life, allowing for technology investments to be made elsewhere (read our recent example of NPower).

Marketing functions have a lot of unnecessary manual fat that can be trimmed.  There is one function that perennially suffers from excessive manual work and real issues integrating systems and processes, and that is marketing.  Simple tasks (or tasks that should be simple), such as linking together databases of customers, subscribers, and prospects to align with campaigns, collateral, automated emails etc., are the bane of every CMO’s existence. So… rather than spending millions on consultants to recreate new processes, CRM capabilities and training people to use them, why not get what you have working better, while you figure out where to make those really valuable marketing investments in the future?

Procurement can really benefit from process automation.  One function that has been cut to the bone – and still uses the fax machine as a mission critical tool –  is procurement. RPA has the most positive impact on functions beset by poorly integrated processes, where the goal is to get things functioning better, than those functions where the goal of automation is really just to drive out cost. Being able to link together procurement systems, analytics tools and cognitive applications with the manual work that still creates major breakdowns in speed of execution and quality of data, is a major benefit for those customers which map out an RPA plan and execute against it.  The more you can use procurement to support the business and speed up the cash cycle, the more effective the function becomes.  HR is somewhat similar to procurement, in the sense that the fat has already been long-trimmed from most companies, and RPA adds value to processes in similar ways, such as supporting better analytics and linkages between legacy systems and processes.  Payroll, in particular, is emerging as a major area where RPA can have a huge value impact, where all the critical employee data is housed and can be integrated with other knowledge systems to support better decision making.  Another area is recruiting, where the whole process can be massively transformed simply by linking together actions, databases, social media, OCR etc.  RPA can provide a great temporary fix while companies figure out where they really need to invest in the future – and “temporary” could mean a very long time indeed…

Finance and Accounting disappoints from a cost take-out standpoint. With only 40% of enterprises satisfied with the direct cost impact of F&A, we can conclude that many of them have their expectations set too high that RPA will drive short-term headcount elimination. On a more positive note, half of them are happy with the business value impact of RPA on F&A, so clearly there are process improvements, just not enough to remove the human cost of administering them immediately. Considering F&A is the number one process being used for F&A today (it dominates 50% of installs) it’s clear that the suppliers are playing the cost take-out game too aggressively and leaving many customers disappointed.  As with outsourcing, it’s one thing separating tasks and removing workload elements from staff, it’s another being able to remove headcount simply my improving or digitizing processes. Customers must take a more transformative view that if they can free up 50% of an employee’s time, they need to focus on refocusing her/him on alternative activities. That is where the value is to be found.

RPA satisfaction in Customer Service functions is mixed.  For a function that can truly benefit from intelligent data and digitized processes, it’s surprising that barely 50% of customers are experiencing either cost or business value benefits from RPA. The reason for this is two-fold: firstly, customer service functions are too mired in the legacy practice of managing shifts of low cost agents, whether they are inhouse or outsourced – and have little time or funds to investigate the value of RPA, which may require upfront investment and longer term planning. Consequently, with this short-term mindset to cater for, most the call center BPO suppliers have little pressure to change how their sell their services, if their clients are not clamoring for RPA solutions.  While we are seeing significant interest in chatbots and virtual agent solutions, and established automation vendors in the call center space, such as Nice, have established relationships with many customers, the whole call center space seems to be lagging behind other functions when it comes to embracing how to leverage the benefits of RPA effectively – which could be significant when you take into account the dysfunctions across customer interaction channels. 

The Bottom-line: RPA satisfaction is a lot higher when the motivation and mentality is one of process improvement, not cost-elimination

The main issue with RPA, in today’s market, is this misconception that customers will make significant headcount reductions in the short-term.  With outsourcing, the cost savings are staged carefully over a 5 year engagement as work is moved to cheaper locations, better technology and processes are introduced, in addition to automation, and the processes are re-mapped over time to allow for work to get done, ultimately, with less people.  Simply plumbing in RPA and not having a broader plan to transform the work, pulling several other value levers, in addition to the patching of processes and digitization of manual work, will likely result in a mismatch between expectations and reality.  RPA needs to form part of a broader strategy to automate and streamline work, where people, processes, analytics tools, SaaS platforms, outsourcing models and carefully developed governance procedures, are taken into account as part of the broader transformation plan.

Posted in : the-industry-speaks

Infosys has announced the acquisition of the UK-based design-thinking firm, Brilliant Basics, and if it plays out according to the name, it is exactly what Infosys needs to bridge design to execution and impact.  The acquisition brings in a digital, strategy, and customer experience design capability, a global studio network, and brand name credentials including HSBC and INSEAD (online education experience) as well as new startups like CBI bank (business strategy and omnichannel touchpoints).  These are all valuable resources to Infosys and its clients, but what the service provider has had real challenges with is addressed in this quote from the Brilliant Basics web site – a framework and resources for scale:

“Our deep experience in working with talented people in the areas of service design, user experience and technology has allowed us to create repeatable processes for building digital products and services.” – Brilliant Basics

Source: Brilliant Basics web site

Infosys committed to training internal resources and using design thinking but faltered in scale and consistency

Influenced by CEO Vishal Sikka’s interest in design thinking, Infosys introduced human-centered design into its digital transformation methodology called AI KI DO, which receives positive feedback from clients. And, through Zero Distance, Infosys provides a framework for account and service delivery teams to work on getting to know their customers, ask questions, and make suggestions for change. Infosys is also using design thinking to help companies identify new growth opportunities and to change its own operations as the company grew fast and got a bit stuck in the “old ways” of hierarchical, process-centric decision making. (Read further: Is Infosys Stretching Past the Growing Pains?)

However, while Infosys partnered with Stanford d.school, brought in leaders with deep design expertise, and aggressively trained its leadership team and workforce on the concepts of design, it has not been able to address three challenges that stood out in the evaluation we did earlier this year on the use of design thinking to help reorient and/or transform business operations for impact on business outcomes:

(1) project management;

(2) moving from design to execution, identifying opportunities for reusable assets to scale; and

(3) unifying into single Infosys versus a technology/digital/product-focused Infosys and Infosys BPO. (HfS Blueprint: Design Thinking in the As-a-Service Economy)

It looks like the design approach of Brilliant Basics and the influx of design and customer experience experts could help address the gaps.

This type of acquisition is overdue by Infosys but it is not too late and shows its commitment to integrating human-centered design

Even though Infosys was one of the first to appreciate the value of design thinking for human-centered service design, other service providers moved faster to acquire and integrate design firms into their companies to bring in skilled resources and re-orient their methods and cultures (see: How design thinking plays an integral role in outsourcing, service design, and delivery). This work is still underway, though, with only early results and impact. It’s still not “par for the course” with any service provider yet. Infosys needs to focus on integrating Brilliant Basics into the organization, the culture, and the sales and delivery, quickly. This will be a challenge as Infosys has not done many acquisitions, and this one is very different from the traditional Infosys.

Bottom line: Brilliant Basics could be exactly what Infosys needs – the ability to manage and scale innovation. It appears to bring the kind of project management capability and design-to-action methodology that has been a missing link between the design expertise Infosys has hired and the solid engineering and service delivery capability it’s developed over the years. Infosys needs to put a strategic focus on bringing this one into the fold in a way that builds on and out these capabilities that can help realize its vision to partner with its clients in a more consistent innovative and meaningful way.

Posted in : Design Thinking

At HfS, we hear quite a bit about the challenges of incorporating RPA and AI into business operations, so when I spoke with a healthcare operations leader about his experience at a U.S. healthcare payer recently, I wanted to share it… but can only do so anonymously. Here’s how RPA first – and AI down the road – is being incorporated into the business operations, by defining appropriate scenarios, thinking outside the box, managing proactive communications with staff, and looking to get people excited about the positive impact on jobs, relationships between payers, providers, and patients and healthcare consumers and on health, medical, and financial outcomes.

What is the use of Intelligent Automation in your organization today?

We are building momentum from our business case into implementation with robotic process automation (RPA) and defining a conceptual “bridge” to get into artificial intelligence (AI) – what is the use case and how to use to impact financial and medical outcomes.

Where and how did you get started?

Started by looking at RPA to drive additional efficiencies from labor and financial perspective and then realized that the organization needed to be considering a broader strategy. It isn’t just about the technology but how does it change the experience of the internal employees and the health plan members directly? We have a plan that we are iterating as we go… as we learn more about the capability and the potential impact. Using RPA and AI can change our internal processes and free up talented staff. We can change the way our employees interact with members, providers, and patients in a way that changes their experience and medical and financial outcomes.

How will employee roles change when RPA is introduced?  

RPA – and eventually AI too — will free up our employees to engage more directly and interactively with our stakeholders such as healthcare consumers and clinicians. For example, today, the provider office has to fax authorization and wait for response. How can we use RPA and AI to ingest the form on a front end web site, have an algorithm that runs to identify “we always provide authorization for this service” and flip it back in seconds; or if not, route it for the appropriate review. This kind of intelligent automation frees up the care management team to do something more important; and hopefully, that translates into relationship and outcome uplift for the provider, member, or both.

Employees who are processing claims and reviewing authorizations, for example, have interactions and engagement with members, providers, and patients that are reactive and responsive. We could get in front of these same people more proactively if those processes and reviews were automated and only potential denials or exceptions were flagged. These employees could be reaching out, instead, to discuss a pended claim or questions about authorization. Our hope is that “in a year or two, we can shake our heads and say, wow, we used to have hundreds of people who are now creating personal interactions instead of processing behind the scenes.”

Who in the organization do you need to work with and how does that play out?

First, we had to go through a process with the enterprise architecture team and get approval to proceed. We are working with a service provider who helped define the scenarios and evaluate the technology. We then moved forward with a proof of concept that showed what we could deploy around claims payment and pended claims, the business story for our business unit colleagues. Then we laid out what is RPA and AI and demonstrated how it works—how you could address a claim that 15 people used to work on full time just for one fall out. It resonated. Over the years, I have had to advocate for software that we were excited about – rarely have had to sell a product or idea where the senior level is buying into it before the grassroots technical effort. That was the case here. The executive team could see the opportunity and get enthused about it.

How is the move to intelligent automation and “digital labor” impacting your workforce?

From a technical perspective, our CIO team is working through the details.  As the senior leaders get excited and then go into the team to talk to subject matter experts to codify RPA based solutions, the employees are concerned that their job is going to be automated and eliminated. You have to be able to tell the story to help employees understand that what is being automated is this routine action you do in the back shop today – that here is an opportunity to parlay your experience into interaction and impact with the members, providers, and patients. It’s a dialogue that is playing out pretty well.

We believe that as we move services people to working more directly with the providers and members, they will be performing work they will find more enriching. We also realize that we need to understand what skills and capabilities are needed for this. We are building out a robotic operating committee and working with business leaders to talk about – as we deploy these solutions and staff becomes available for different roles, what are those roles and what capabilities do people need for them. And we don’t want to move them into doing work that will be automated “next.” We are in early stages here. So far our efforts with intelligent automation have been grassroots with excited senior executives how have said, go into my organization and show me how it works. As we get scale, we will work through retooling.

Tell me about how the funding and business case development is coming along.

Our organization is quite rigorous around investment. When we talk about RPA and provide evidence of 4:1 and 5:1 return on investment the story becomes easier. We are always focused on continuous improvement and how that parlays into impact. Again, the story of using automation to free up skilled staff is powerful. For instance, in finance, changing manual reconciliation at the close of month with large team to be automated and the more complicated work being the focus of the human effort, the logic becomes more apparent and the investment, obvious.

From these “early stages” of about 12 months in, the momentum and excitement is gaining, and I anticipate that we will pick up speed with RPA and into AI over the next year with top down sponsorship.  What excites me most is the possibilities of what we can do to free up our own employees and at provider offices to anticipate and be more proactive about issues and concerns and eliminate bottlenecks and slow downs for higher quality service and interactions.

Bottom line: While this interview is a bit like the old dating game where one person asked questions and the other sat behind a black curtain, it helps shed light on how enterprises that have been working one way for so long are making progress in moving forward with RPA and AI, considering talent and technology and how it changes the way we need to work going forward in healthcare operations.

Posted in : Healthcare and Outsourcing, Robotic Process Automation

The HfS’ Blueprint reports are our temperature check of an industry. A guide to some of the trends that are already in play, and those starting to bubble under the surface. We have just launched the first in our series of IT Services reports focused on Infrastructure Services, and it’s some the trends around this research we’d want to shine a light on today. Of course, if you’re interested in all of the market information and dynamics covered in the research, you can get your hands on a copy here.

The industry breaks with tradition

When we talk about infrastructure services, the mind immediately jumps to build and manage or “lift and shift” engagements. Indeed, for a long time, it was this type of work that was the most in demand and lucrative of providers operating in the space. However, this is no longer the case as businesses seek to secure more holistic IT Services to support their digital ambitions. As we researched the mechanics of the infrastructure and enterprise cloud industry, it became apparent that providers are breaking with the traditional services and models they used to thrive on, and are seeking to focus on higher-value transformational activities instead. For some providers, this is more of a pivot, as they grapple with providing traditional services as well as new ones. While for others it is a more decided and strategic shift, in which “lift and shift” engagements are avoided entirely in favour of juicier transformative projects.

Our expectation is that this will transform the way some vendors pitch their infrastructure services completely. Polarising some to either end of the spectrum – those focused on high-value transformation, and those solidifying their position in at the traditional end. Somewhere in the middle, we’ll see some of the larger firms, capable of spreading themselves across the spectrum to handle a broad range of engagements.

Service Brokerage enables firms to become a one-stop-shop

Another dynamic, undoubtedly linked to the commotion caused by an industry pivoting and refocusing engagement models, is the decidedly increased role service brokerage plays. Many firms are moving toward semi-impartial and fully-agnostic service brokerage models to enable clients to secure best-in-class services through them. Many firms are moving toward semi-impartial and fully-agnostic service brokerage models to enable clients to secure best-in-class services through them, allowing them to offer a one-stop-shop for sourcing services across the IT spectrum.

However, some firms will find this easier than others, particularly those who have invested considerable sums in building proprietary technologies. For these firms, balancing the incentive to protect investments and assets against the industry shift to brokerage will be tough. But potentially necessary if client expectations set the pace at the agnostic provision of best-in-class services.

As this trend develops, we can expect to see larger and more tightly woven partner ecosystems in the space. Alongside increased activity from vendors trying to prove their credentials to partners in a bid to take relationships to the next level, while articulating their brokerage credibility to clients.

Consultancy-led engagements focus on business outcomes

The two preceding trends have the potential to completely alter the dynamics of the infrastructure and enterprise cloud industry and, indeed, IT Services as a whole. In part client expectations and demand are leading these challenges as business scream out for services and solutions that meet their digital and operational ambitions. Of course, businesses vary considerably, and the suitability of one IT Service offering varies accordingly. Leading to another shift away from tradition, as providers seek to deploy higher value solutions that tackle the core of a businesses problems.

We can see this trend play out in various ways – such as evolving pricing models that focus on business outcomes – but there’s another way that paints an encouraging picture. A picture of an industry refocusing its engagement model away from core, unadaptable services and towards the design and implementation of those which tackle a particular challenge. At the forefront of this shift is the increased focus on consultancy-led engagements that seek to understand a business and its challenges and objectives.

Approaches like this will be necessary if firms are to thrive in the changing marketplace. For example, it’s only through understanding a client’s needs that a provider will be able to select and recommend the right services through its brokerage model or if the firm is to assess whether the engagement fits in with their model and approach.

As this trend develops, we can expect to see firms shoring up their consultancy brains and brawn to support engagements across IT Services from initiation to completion.

Bottom Line: Trends impacting the infrastructure and enterprise cloud industry signal a potentially turbulent future albeit one packed with opportunity for dynamic and agile providers.

Posted in : Cloud Computing, IT Outsourcing / IT Services, it-infrastructure

Adjusters have traditionally been a critical part of claims handling… but can their role be eliminated today? With the combined use of modern technologies, field operations and remote analysis, it is now possible to radically redefine the entire claims workflow and get better results. As the processes get smarter, the traditional roles and responsibilities of adjusters also stand to be fundamentally changed. Genpact made an acquisition announcement today that gives it the potential to play a role in this transformation. Genpact bought Massachusetts based OnSource, a property, scene, and vehicle inspection specialist that has an insurance client base in the US.

Insurance carriers in the property and casualty market have a complicated relationship with their internal and independent appraisers and adjusters, resulting in a complex, lengthy and costly process to appraise the property and settle claims. The main scenarios where carriers feel the resource crunch include:

• Catastrophe claims and adjusting are arguably the most distressing, where thousands of adjusters will spend weeks investigating affected regions. Not only is the damage inspection time consuming, it is often hazardous, as property inspectors need to brave floods, ice storms and worse to get the job done. This is where drone image capturing is starting to play a huge role.
• Similarly, drones can be used for appraisals in large commercial properties such as factories that need a significant time to inspect in-person. This is an area where OnSource has combined drone image capture with 3D image rendering.
• Auto insurance needs separate triage outlets for the higher volume of small, non-complex claims. Often, carriers club appraisal efforts for all exposure types, and end up hiring expensive independent appraisers to supplement their teams for these small claims. This is another area of focus for OnSource, which offers a self-service photo-taking app for customers to submit their data through their smartphones.

Onsource’s model allows carriers to customize the level of physical/digital connectedness in the process, as it not only offers the self-service app and drone options, but also a field inspection team and a “screen-sharing” type of virtual inspection service. The likely implications for a carrier, with a partner like OnSource is that the carrier can maintain a leaner appraisal and adjuster staff, rely less on external help, undertake more desk-based evaluations, provide more self-service options for customers and potentially create more straight-through processing for certain exposure types. Thinking about the future of appraisers and adjusters, we don’t see the roles disappearing, but they will be significantly altered. You will always need teams to undertake special investigations, liaise with intermediaries, customers, and witnesses, etc. What will change is the nature of work for some, e.g. not all appraisers will want to move from field ops to desk-based writing.

What is interesting is the possibility of what Genpact as a large-scale insurance operations partner can start to offer with the addition of OnSource. This is yet another example of a service provider who is thinking beyond legacy “BPO”. Taking a step back and evaluating the entire value chain of processes and service experiences, instead of just decoupling tasks that can be done offshore/offsite. The insurance business process services industry is so mature at this point, that we are staring at this step-change in roles for service providers. Who can help carriers with the messy “feet on the street” work that takes up so much time and resources and exorbitant costs to orchestrate the evaluations done by underwriters, adjusters and appraisers? Helping prepare underwriting case files, pulling information together using remote teams has some benefit, and was the story so far. Most providers hadn’t touched claims adjudication, and work around the processing and settlement areas instead. This acquisition follows similar moves made by competitors such as EXL that acquired underwriting support specialist Overland Solutions a few years ago (read our analysis here). Genpact faces tremendous competitive pressure from its closest peers such as EXL and needed to create more differentiation in a fairly commoditized market. What is different with OnSource is that Genpact is not just taking more ownership of the process value chain, but doing so in a forward-thinking way, using modern technologies to simplify the work and the experience itself for all parties involved.

We will continue to observe how Genpact leverages OnSource’s capabilities in coming months. The acquisition is part of Genpact’s strategy to provide more “end-to-end” solutions in insurance, in particular, in P&C claims. It has already acquired claims adjudication and support services capability with the addition of BrightClaim and National Vendor in the last year. Genpact is challenged in integrating all these capabilities together, as acquisitions haven’t been its strongest suit in the past. Further, the service provider will need to put significant focus on shifting its go-to-market strategy for insurance.  Blending these additional capabilities will require Genpact to really move away from labor-based commercial constructs, which constitute more than half its insurance business today. Even if it does reorient internally to offer more business outcome-based models for claims adjudication, Genpact will need to recreate its perception, particularly for existing clients that see the provider primarily as a partner for backoffice processing. Overcoming these challenges is part of the solution to long-term growth for Genpact and all of its competitors in insurance operations. OnSource is a great start, as it brings more to the table by means of technology enablement in the claims management process, with the potential for better customer experiences that the P&C market so desperately needs.

Posted in : Business Process Outsourcing (BPO)

There is only one Steve Rudderham (thank the Lord).  One of the most traveled and fun guys in the world of operations and services over the last 15 years, who’s managed to somehow lead major BPO operations for leading service providers in both India and Latin America, run service delivery centers across the southern parts of the United States, before winding his way to the lovely Kalamazoo Michigan, where he today is devising the next phase of global business services for the Kellogg Company.  And all this having grown up in the small cathedral town of Lincoln in the English East Midlands. So let’s pin Steve down for a little while to find out what he’s up to and where the world of global business services is taking us…

Phil Fersht, CEO, Chief Analyst, HfS Research: Good morning Steve, it’s great to have you on HfS for the first time. You’ve had a colorful career in and around the process and operations world, can you give us a very quick run-down of where you came from and how you got to where you are with Kelloggs today?

Steve Rudderham, VP Global Business Services: Absolutely, I grew up in GE Lighting in the UK, 17 years ago I moved over to Kansas, US, to work in their Insurance business. Started off within process excellence, I was a black belt there, then went over to India to run their back office operations for what is now Genpact. I moved over to Genpact to run Latin America. I’ve also had terms with CapGemini running the Americas then more recently within Accenture doing Finance and Accounting globally for them as their product lead. I now run the global business services for Kelloggs.

Phil: How do you feel about being client side, having spent so long on the other side?

Steve: It’s been very interesting coming over to the buyer side. I think the advantage I have is that I come with a lot of knowledge of what’s available and the best practices. I also have insight into what the providers have been doing for other companies, not just within the food industry, but outside as well. If you think about Accenture, they are very strong within oil and gas, you can bring a lot of best practices over and into Kelloggs. It is slightly different in that you don’t have multiple clients that you are looking after, you have your internal clients, but the focus is within one company and it’s a mixture of internal staff and leveraging third party providers.

Phil: The industry has been through quite a few inflection points in the last few decades, are we really going through another one, or do you think this is a product of too much hype and rhetoric on social media and conference topics?

Steve: I think the difficulty, from a client perspective, is how you get through that hype, there are a lot of conferences around and social media is driving a lot of content as well, people want to be out there talking about what is going on in the digital environment and automation and AI.  The key is to understand what is real, and how you apply that to the global business services I run – that’s the difficult piece.

Phil: Coming at it from the client perspective is there a burning platform in our own environment to jump on RPA, digital and more technology based solutions. Is it something that has a strong velocity behind it, or is it more exploratory at this point?

Steve: For automation and cognitive computing there is a lot of exploratory work taking place. To answer your question around the hype – we hear a lot of how other businesses are doing it, for us, it’s how do we leverage that best within Kelloggs.  We are similar to a lot of organizations, we have a lot of transactional processes, as well as the higher value ones. We want to be spending our time on the higher value pieces. We are exploring where we can leverage automation to drive accuracy. If you consider an order to cash process, we want to be spending our time at the front end with the customers developing those relationships, not spending the time working out how we code deductions when they come in. This will be automated to drive accuracy and then we can spend our time elsewhere.

Phil: Do you think this current state of hype is the new normal, or are we going through a transition period as people get more knowledgeable about what is out there, and everyone becomes an expert in everything?

Steve: it will be interesting to see how fast people can get up to speed. I don’t think it’s just this industry – you touched on earlier – social media as a phenomenon is driving a lot of content out there – it’s driving a lot of knowledge as well. Often you are spending the time trying to see the wood from the trees, how do you actually know what’s real? I think it’s the social media environment we live in – how do you get to the information that is relevant to you, in a timely manner.

Phil: For you personally having spent time at Genpact, Capgemini and Accenture, going over to the client side and getting stuck in with lots of your colleagues and very experienced GBS shared services professionals, what advice would you give to service providers on what they are doing wrong and what they could do better? What are they doing well as they look at what is facing them in the next 6-12 months?

Steve: I think within the client side there is definitely a hunger for information. The data analytic side is very important if the providers can show the value with that, but I am always asked for where companies have had successful implementations on innovation. If a provider can show examples, then connect people with references in those companies that you can talk to, this will result in a comfort feel that you are not necessarily the first and innovative partner, and a sense of safety in that it has been tried before, it is an approved process and we can go after it in a very timely manner. On innovation, the data analytics and bringing the examples through, regardless of whether that is analytics, RPA, cognitive computing etc, if they get that right it’s a much more powerful selling proposal.

Phil: There has been some debate in the industry – “Is there an obsession about companies scaling themselves on a technology backbone as opposed to a talent backbone?” Do you think this is a potentially damaging time and what advice would you give to your fellow professionals who may be feeling uncomfortable at the moment?

Steve: Going back to the comment around the hype, organizations are trying to understand what they can leverage on the technology side v’s the people side. You’re always going to want your people to do the higher value work as much as possible, but without a completely clear road map of how you get there from the providers and from the industry, that makes it difficult. I think that some of the clarity we need, certainly as a buyer and a consumer organization, is what is real, what can I leverage and where can I focus my people and my resources on. Technology is obviously an enabler for us to drive the improvements, but to what degree we use is still in the exploratory phase.

With regards to your second point, I don’t know if there is a focus away from talent. Technology gives us an opportunity to develop our talent a lot more. You are getting people to do the higher value work as well. If you have organizations that are looking to leverage the technology you have to get with advisory groups or providers that cut through all the smoke and mirrors. That comes back to my comment about best practices, examples and references, the more you can bring the more comfort client organizations are going to have.

Phil: As you look at the future for service providers there is a lot of pressure to maintain margins and growth. Do you think there’s enough business for them to keep solvent at this pace?  What do you think will happen to service providers in the next couple of years?

Steve: Service providers in the last few years have spoken about innovation, what they can bring to a client, This has to be stepped up on the client side and I’d be more than happy to look at gain share models. We have been talking about gain share models on business outcomes for a long time, but I still don’t see a lot of them. Service providers seem to be a lot more comfortable talking about consultancy rates, hourly, or project costs, etc. I think for service providers to have skin in the game and they must really drive a true gain share model, I think that will gain the client interest. That’s certainly where I’d like to see them and see some growth of their own.

Phil: What do you think will happen to RPA software companies that have sprung up recently? Will they continue to be the flavor of the month, or do you think that industry is in for a rude awakening in the short to medium term? 

Steve: Depending on how innovative and disruptive they are, I can certainly see some of the big BPO providers buying into that talent, so you will see a concentration of the RPA providers. The big 4 BPO providers have each got their own RPA arm. I think it’s very fragmented at the moment, but I see some consolidation ahead.

Phil: You think the BPO’s are going to become the services arm, more than the advisers and the big 4 at this point?

Steve: I think they are going to want to drive to that, yes.

Phil: Finally, you have been in and around the industry a while now, if you were crowned the Emperor of the Service Industry for one week, what one change would you implement to make this industry a better place?

Steve: Emperor for a week? That’s dangerous, I think getting to this clarity of what is out there and what is real. What people can say v’s what you can actually get. What is the true value that service providers can deliver. That would certainly get the client side more comfortable with the service industry. Being able to put out very clear benchmarks, what’s being delivered, being very transparent, that would be what I would push for.

Phil: How well is Lincoln City going to do next season, back in the football league?

Steve: Interestingly it’s a 10,000 seater stadium, they have sold 6,000 season tickets, 2,000 for the away supporters and I think about 1,500 junior tickets it’s almost a sell out every game now. So the City is definitely excited about it. If they can hold on to the players, I think it could be good season, there’s a lot of optimism.

Phil: Well let’s hope those Imps have a decent run at it!  Cheers, Steve!

Posted in : Global Business Services, Outsourcing Heros

There’s nothing worse than being the “best-kept secret” in an industry… sure, it sounds cute at first, but after a while it gets frustrating as people aren’t learning about you.  And there’s nothing worse than being a best-kept robo secret in a market obsessed with propaganda, ignorance and bad analysts, many of whom have no clue what they are talking about.

So let’s change this for one solution vendor, Redwood Software, which has quietly gone about helping enterprises automate processes around SAP workflows. When we bemoan rigid, poorly integrated processes, it’s often borne out of legacy systems and ERP that have the effect of pouring concrete into a firm’s operations. So what better than to develop both robotic and digital automation capabilities around SAP’s R3 finance platform, helping financial leaders renovate more of that they have, without the costly and disruptive need to invest millions in expensive system upgrades that often only succeed in delivering a whole new suite of integration problems. Sounds like a simple way to make money? Well, it actually takes decades of practice and experience, so let’s hear a bit more from the firm’s CEO and Founder, Tijl Vuyk. and his Chief of Staff, Neil Kinson, about how they got here and where they are taking this very well-kept, soon-not-to-be so secret Redwood product…

Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Tijl and Neil – it’s great to have both of you talking to us today. Perhaps we can start with a little background on Redwood, where you have come from and what you do?

Tijl Vuyk, CEO and Founder, Redwood (pictured left): Thanks Phil. Well it’s been about 25 years since we were founded and we started in the application space where we were building Oracle applications. We saw the need for automating these applications because there were a considerable amount of manual activities running all kinds of processes within Oracle, and later on with SAP. When we started, we created a tool that would help customers build their own automated processes. In the last five to eight years we discovered that building these automations were a challenge for many of our customers. So we tried to productize the whole idea of automating these business processes and now we call this robotics – where we use the application’s functions to automate the processes normally undertaken by humans. I think that’s where we are. We came from a technology background where we built enterprise strength applications to automate primary business processes, and now we are trying to make this as easy and slick as possible to implement those processes without having customers spend too much money on services and maintenance. There is more to say about what we do, but these are the highlights.

Phil: Sure, so you’ve been around for 25 years, how did you end up in this automation space? Was it a deliberate move or was it something that evolved over time?

Tijl: I wouldn’t say a deliberate move but I love automation. If I do something twice, I ask myself, “can I do this easier and faster or not do it at all?”  And that is the attitude we have towards automation. We automate everything we can. When you see customers struggling to get things done because there are so many manual tasks, you ask yourself “can we do this better?” And yes, we can. It’s a mentality thing – you want to find better solutions that help you achieve those goals.

Phil: We hear a lot about companies like Blue Prism and UiPath, Automation Anywhere, Kofax and a few others. But you seem to be doing a lot more than just RPA basics for clients. Why would you say Redwood is different?

Tijl: I think it’s our heritage that makes us different and our approach to automation. Our heritage is around enterprise systems automation where you cannot afford any timeout. If the process stops our companies no longer operate. That’s the kind of environment we come from – enterprise class software for customers that have enormous demands, where RPA vendors are screen scrapers and you can give them any name you want, but they work through the user interface which is not really a solid basis from which to build automation.

If you think of business critical processes where failure as ‘not an option’, then basic RPA is not a solution. Only instances where failure is ‘not a problem’ (i.e it is not mission critical) is this basic RPA capability applicable. But if you are looking to replace people with automation then something you should ask yourself is “what happens if the robot stops working? If I don’t have those people anymore to do the work manually?” The feedback I get from RPA customers is that the robots do fail, and you ask what they then do, and of course, they rely on humans to take over.

At Redwood we look at process automation differently and if we automate processes then we automate them one hundred percent or as close to that as we can get. And they always run. There is no issue with our technology, it is more stable than anything. I think our customers sometimes forget it is there because it’s so efficient. If you talk to our references, there is also little or no maintenance required on the robots. That’s the big difference. It is basically the lower cost of the ownership, elimination of the risks involved in running a robotized enterprise and our approach to these problems.

Phil: I think in the early days of this recent surge in automation when we started talking about the RPA concept, we talked a lot about the intelligent automation continuum, where enterprises could start with rudimentary RPA then gravitate to more mature automation. They could start automating the automation and evolve to a cognitive, then eventually an AI strategy. Do you think this is still a logical progression, or do you think clients can now experiment with all facets of the continuum at any time? How do you see this truly evolving in your experience?

Tijl: I think you are mixing up a couple of items. I think the role of AI, if it exists is maybe a step in the process. It is not ‘The process’. You will not have any AI that will do the accounting for you for example. AI is used in pattern recognition in some form. When the pattern is recognized it kicks off a process that can do whatever it wants. But all these processes are more or less set. AI will play a role in a step of the process. If you think “oh I am going to delve a little bit in automation” then you are destined to fail. What we see is that if automation is not put on the agenda at the executive level then it becomes just one project silo and then it stops. I think automation is a way of life, you need to give it constant attention because it is not over until everything is automated. But then business might change. So for me, it’s really about continuously automating and looking for the next thing to automate.

At the moment people run a project and they stop because the project is finished and they don’t continue with the next project or expand the current footprint. I think that is the biggest danger to the success of this idea of automation or robotization. If you start out with the wrong tool then basically you start out with the wrong foundation for future development. We have a more holistic view on the approach. We want to create an environment where people can automate at an enterprise level and don’t get dragged down by the cost of maintaining and keeping things running. It needs to be low cost, easy to get started, efficient automation.

Phil: Tijl, there’s been a lot of hype about job elimination in the industry. When we look at the operations business that I’ve come from –  BPO outsourcing, shared services, captives etc. –  we have essentially grown up on efficiency and cost reduction, and as much as we hate to admit it, that’s been the core of our industry for the last couple of decades. Do you think that the emerging concept of automation is going to move the conversation to more about business value, or do you think we are perennially stuck in a cost reduction job elimination scenario?

Tijl: I think that outsourcing is a mistake and automation is the way to fix that mistake. What happens when you outsource is that you lose control. You think you give the control to someone who does your menial jobs. But then people have the upper hand because you are dependent on them.

If you eliminate all your outsourcers, by automation, you gain full control of your processes and full flexibility whilst saving cost. For me, automation is a way to regain control of your primary business processes, whilst making them more efficient, more flexible and more supportive of the business instead of being dragged down by an outsourcer, and a long contract that is designed to make things difficult.

We have seen customers building these “hells” as they call them.  They have created hell and now have to live with it. I think automation is a way to reverse the wrong decision of ten years ago and yes there is significant value beyond only cost reduction.

Phil: Looking into your crystal ball and thinking about where we have come from, the current state of the market and all the noise and conversation that we are hearing today – what do you honestly think we will be talking about, and where do you see the industry in three years time?

Tijl: This is where I like to introduce you to my crystal ball reader, Neil…

Neil Kinson, Chief of Staff, Redwood: Thanks Tijl – ‘Mystic Neil’ here…. we’ve talked a little bit about the dream of The Robotic Enterprise and if you think of a parallel in industries that are being disrupted effectively you see the notion of people doing repetitive mundane manual activities in a back office. This should be as unusual and as unthinkable as it is today to going into a shop to pick up a DVD or a video. My kids wouldn’t understand the idea that you actually drive somewhere, pick up a DVD, watch it, take it back – or take it back late and get a fine. You know that’s an industry that grew up and disappeared in 25-30 years. So is it three years? Probably not Phil. Probably longer than that. But you know that’s certainly the vision – we will see some organizations where that notion is frankly ridiculous and when you think about it in 2017, when you see hundreds and thousands of people doing activities that you can’t believe people still do today. Well that is something you see in the back offices of some of the world’s largest enterprises. So as we look into the crystal ball we see that changing and we see ourselves playing a big role in making that change.

Phil: Okay. This has been a good conversation, but I’d like to pose one final question about what you would ideally like to see change in this industry.  If you had one desire that could change attitudes or focus in this industry, what would it be? What would you change to make your customers, partners, and competitors all think differently about the way we are looking at automation today?

Neil: The key thing for me is where is your ambition? If your ambition is to get marginally and organically better than automating a few arms, legs, fingers and toes in terms of driving out change then that’s fine. But if you really want to check the future of your organization by being truly world class and reinvesting in serving your customer, not through an automated agent, but actually through real people who are passionate about the success of their customer, then focus on that. Focus on the end-to-end, on what you are trying to achieve and how you can achieve that rather than building and just employing bots for the sake of it. I often hear the term ‘Center of Excellence’, which when you drill into it is actually a ‘Center of Expense’. Because people are moving the cost from one area to another and you are actually moving people who are experts in executing the process into experts into how do they deal with a situation when a robot fails.

That doesn’t improve customer intimacy. That doesn’t drive you towards continuous process improvement, and that doesn’t help you serve your customers better. Yes, it drives out some operational cost. But let’s take a step back and look at the end-to-end process. How can you improve the quality? How does that fit with your sourcing strategy and staffing strategy over the next ten years. You know you need to raise the level of ambition and you won’t get that truly by dabbling and saying “yes I’ve done robotics” or “we are looking at robotics .. we must buy some”.

Too many people are approaching this from the point of view “this is something we need to do”, not from the point of view “this is the outcome that we are looking to achieve within.”

Phil: Okay. A very good answer! Many thanks Tijl and Neil. I really appreciate your time today and I look forward to sharing our conversation with the HfS audience.

Posted in : Cognitive Computing, Robotic Process Automation

Posted in : Absolutely Meaningless Comedy, Robotic Process Automation