These days, we talk about Robotic Process Automation as if it’s the remedy to all modern business woes. But, as with all technologies, the capacity for RPA to deliver value has its limits.
Last week I had the privilege of attending an RPA user group event hosted by the Global Sourcing Association packed with service providers, buyers, and experts – where this solutions capacity to deliver was laid bare. After two refreshingly honest presentations by automation gurus from Symphony Ventures and Thoughtonomy, the roundtable discussions kicked off. Several buyers joined me, alongside two of Symphony Ventures finest consultants, Katharine and Nick, who were both more than willing to impart honest and impartial advice. While the parameters of the conversation were broad, there are four key takeaways that I’d be happy to share with you. I have built all of the following out of the challenges brought to the table by practitioners and buyers. With the answers that came from the knowledge and expertise of the experts or those having weathered some implementations.
1. RPA isn’t the salve for all wounds
There’s no doubt about it, the technology is powerful, but it’s important to recognise that there are limits. Environments with chaotic data sets or irrational processes are not suitable without a huge amount of refining. Nor are you likely to find much success if processes rely too heavily on external data sources – unless the owner of the source is particularly liberal with access.
RPA works best on processes that are formulaic and rules-based. If your process has a set input required to achieve the desired outcome, with a series of consistent steps in between it’s in scope. Even if there are a huge number of steps or the rules to follow are relatively complex, a solution can be built, albeit with the hard work and knowledge of providers and experts.
2. Don’t be tempted to go rogue
Some of you may be tempted to leave other areas of the organisation, especially IT, out of an RPA project. However, all the experts in the room warned against doing so. Inviting IT to the party is essential to help navigate through some of the trickier aspects of the implementation with solid business and technical knowledge.
Some of the providers I spoke to at the event provided plenty of examples of when their implementation was made just that little bit harder when relations between the buyer and IT were…less than harmonious. The key is to build relationships with all stakeholders before embarking on the project to ensure your RPA project delivers the most business value and has the greatest chance of success.
3. The process may have RPA written all over it, that doesn’t make it suitable
Let’s say you have a process that ticks all the boxes – boring, formulaic, rules-based stuff that nobody wants to do. Although it seems perfect, it may not be suitable for a simple reason: the ROI isn’t there. Examples abounded of processes pushed forward for consideration that was already relatively inexpensive to handle, making the cost of automation fail to add up. Such as a long-winded rules-based process that, in practice, was only handled by a single person in the first place.
After all the calculations are laid out on the table, the economics of automation may not add up, at least from a cost saving perspective. However, be careful of ruling it out completely as it’s possible that freeing up someone’s time or improving the process may add economic value in another way, by improving customer and employee experience, for example.
4. In some cases, RPA is the last solution on the list
For some processes implementing RPA is the equivalent of hitting a nail with a sledgehammer (I ruined a perfectly good shed attempting that). For others, it’s like sawing a plank of wood with a fish, just plain unnecessary. For example, a process highlighted for consideration due to its resource demands may, in fact, also be managed elsewhere in the organisation. The simple fix would be to merge all parallel processes to not only ensure consistent outcomes but also to reduce the resource overheads significantly.
Halting unnecessary processes or merging duplicate ones may be the solution businesses are looking for instead of automation. Katharine and Nick, the consultants we spoke with advised that they often start an engagement first by taking a holistic view of all processes before jumping in with an RPA implementation to make sure it’s the best solution for the problem.
Summary
RPA simply isn’t the right solution for every problem, and these are just a few of those discussed at the user group. Perhaps it’s the right time for the industry to take a step back and understand what value the technology can add in different situations. Instead of pushing it as the miracle cure for all business woes – a perception facilitated by buyers looking for a shiny new tool and providers seeking to make the most of the RPA Gold Rush.
Bottom Line: Without a doubt, RPA is a powerful technology, but for some business challenges there are far more effective solutions to consider.
The presentations and interactions at the recent Sitel customer event illuminated a few key themes that customer experience oriented companies can take away as they look to implement customer experience strategies within their organizations and in conjunction with their service providers:
Align the entire organization to customer centricity. To effectively serve the digital customer, what we at HfS call operating as OneOffice, the corporate focus needs to create a work culture where individuals are encouraged to spend more time interpreting data, understanding the needs of the front end of the business and ensuring the support functions keep pace with the front office. T-Mobile shared an initiative where people in the organization that traditionally have “nothing to do” with customer experience listen to phone calls with various problems from customers. They found that someone in a back office support function listening to the issues on customer calls helps “make things real” in other parts of the business. Hearing the customer’s experience of a fallout from an order management issue, for example, really helps to illustrate how every function in the company impacts the customer experience—and the business. It also, in turn, helps discussions for how to improve operations from the back to the front office.
Find the right blend of digital and human touch to meet customer expectations. This is not going to start with technology, it’s going to start with understanding your customers, their expectations, and pain points. Companies thinking about digital customer experience need to start mapping the customer journey, which in many cases means using digital technology along with the human touch. Intuit discussed its implementation of “SmartLook” video chat, which has been a successful initiative to better support customer inquiries about their TurboTax product. Intuit finds itself competing with the in-person tax preparation services, so in order to supply that high-touch experience, the software company set up the capability for one-way video so that the customer can see the representative helping them with tax questions, and also the ability for the rep to draw on the customer’s screen. They quickly found that customers really value the human connection, and scaled from 100 to 4500 live video agents in a matter of months, including special training for being on-camera and shipping out uniforms and blue backdrops for its work-at-home agents. The results are impressive: decreased call handle time, a resolution rate improvement of 10 points, and an NPS increase of 20 points putting Intuit in the 80s (world class service levels!). It’s a great example of the blend of digital technology and the human touch that is still very relevant for many customers and types of interactions. This is not without drawbacks of course—there were many lessons learned about the training involved and implications of having a live agent on screen with customers (i.e. customers taking unflattering screenshots of the agents…). Finding this balance will always be a work in progress as technology and customer preferences change.
Support customer experience by making digital assets universally accessible, and embracing the cloud in a way that enables genuine scalability. As the CMO of Wyndham (a chain that opens two new hotels every day) pointed out, there’s a lot of integration behind the scenes in order to be fast and nimble enough to meet customer expectations. Two years ago the hotel group did not have high-resolution photos for all of its properties. Digital images were spread across five different content management systems, which didn’t have the space to store them—and in fact, it was often up to the individual properties to manage and store these images. Wyndham decided to make the digital team part of the CMO organization, and using several partners, shot a million high-resolution photos in the last 18 months and consolidated them on to one cloud-based content management system. Adding these photos to its websites and mobile apps has already generated a 40% conversion increase, a 52% mobile bookings increase and a 10% of return visitors. The next steps in Wyndham’s transformation journey will be to use all of these images along with customer data to create better, personalized experiences online, and the company needed this streamlining to get to the next step in their digital transformation.
Embrace design thinking as an ongoing method to promote customer centricity and design frictionless customer experience. CapitalOne described its desire and journey toward becoming a tech company first and a bank second. Because of the threat from the growth of fintech companies, the bank has altered its core business strategy, impacting who they hire and how they operate. One major change has been the use of design thinking as a way of learning. They use the term “customer back”—meaning always start with the customer and work your way back. As this has culturally taken hold at CapitalOne, the bank has found that it is not just for people with design in their title, it’s being embraced across the organization. Results from these efforts have included customer-focused changes which remove barriers and make the customer experience more intuitive, such as ways that customers can pay their bill. For example, customers can now use Echo to ask Alexa what their balance is and pay a bill. CapitalOne has also implemented a chatbot named Eno who is available on SMS—customers can pay bills, get their balance and other basic functions. By listening to customer feedback, they’ve also implemented the ability to “unfreeze” a card that’s been flagged for fraud for just 15 minutes through their mobile app—for the busy customer that just needs to make a transaction while on the go. Involving customers in the design process has increased their ability to serve customers in the ways they prefer. It’s important that design thinking continues as an ongoing effort, as markets evolve and business needs change.
As each industry is being disrupted in new and different ways, it’s important for every organization to start somewhere – take these lessons and embrace small and quick wins in order to move forward in becoming more customer-centric organizations.
Acticall Sitel Group is undergoing a “moment of transformation,” as they put it – “pivoting from a contact center to a group of global services, innovative and socially engaged, dedicated to providing exceptional customer experiences.” What this really means in a world overflowing with overhyped CX buzzwords isn’t easy to tell, and here’s what I learned as one of the analyst community members that spent time with Sitel executives and 70+ clients and prospects at its 2017 Miami Analyst Day and corresponding Customer Summit this week: that a company in transformation needs a North Star – one that is bright and shiny to illuminate the path forward. Acticall Sitel has a lot of stars, but it’s not yet clear which one will stand out to lead the way.
Diversification: The Ventures Ecosystem
The “New Sitel” is the portfolio of companies: the traditional Sitel contact center business and a number of other “venture” companies brought on with Sitel’s acquisition by French based Acticall Group in 2015. This new Sitel has been a couple of years in the making, but the story that is emerging is an interesting and compelling one to buyers of contact center services and those of us who are enthusiasts of the contact center being a core element of customer experience design. A few highlights from the event:
The Social Client, one of the ventures, is a customer experience consulting and strategy company focused on implementing design elements like visual IVR, employing design thinking and journey mapping.
The Learning Tribe, a training and learning entity focused on digital aspects of learning, i.e. mobile and social learning, brings gamification and certification elements to training environments in need of transformation. As the head of training for a major corporate bank said, “we need to be digital internally within our organization as well as externally with customers.”
The Premium Tech Support venture is providing white glove services to clients and generating revenues through cross-sell and upsell opportunities while utilizing the Customer Insights analytics venture to optimize its services using predictive customer analytics.
The big picture of the new Sitel still seems a work in progress, especially in terms of commercial engagements, as the service provider retrains its sales staff and restructures incentives to more effectively sell across the ecosystem—but the passion and vision is certainly present. And Sitel is also investing in AI with a quality monitoring tool, empowering a trend the provider calls “botshore,” the use of bots as a lever along with offshore and nearshore options– a concept which jives well with HfS’ vision of using increasingly intelligent automation as just one of the levers to pull when it comes to engagements with service providers.
Pivoting the ventures toward American business will be a challenge, but very recent leadership additions, including a creative agency veteran in the role leading The Social Client and a BPO sales mogul in place leading sales in the Americas will bolster the potential for execution across the organization. Sitel will need to continue to think through the messaging and branding of these ventures: What truly represents the capability and value of each one and as part of the whole new business? For example, the name “The Social Client” is limiting and not representative of its capabilities. Sitel seems to be sitting on a gold mine and needs to unearth the potential to let it shine.
The Bottom Line: The time is ripe for a legacy call center provider to really transition to a customer experience design leader
In this world of “digital transformation”, many enterprise buyers are asking the question, who do we go to for design? Instead of paying boatloads of money to a traditional consulting firm, can they leverage their trusted contact center service providers who already know their customer inside AND out, and are investing in capabilities? I think the opportunity is there. We have been talking about it for years, but have yet to see a pure play contact center BPO provider really cultivate and hone a brand for the customer experience design element.
One of the elements that has consistently made Sitel’s events relevant and useful in the past (even pre-Acticall) is their transparency and willingness to give accessibility to their clients—especially at an event like this one, where we had the opportunity to meet with customer experience leaders from many industries and with various goals. The customer presentations were extremely valuable in understanding these enterprises’ mindsets and they were clearly getting a lot of value from each others’ stories as well. It’s quite a network that Sitel is establishing here.
What we now need to see from Sitel and its peers is real life examples of using the “value-added” services” – including digital marketing and customer experience design- which are presently a tiny percentage of revenues for Sitel and other contact center companies. On the same note, buyers who are constantly screaming “bring us innovation!” need to get involved and work with their service providers about the opportunity engage in these services. As soon as we start seeing more case studies and success stories of turning this theory into practice, the doors will open wide for those providers and buyers willing to invest and take the risk to really transform.
This is me jumping on the bandwagon with an opinion about the global WannaCry ransomware attack last Friday. As of my writing this, this attack hit over 200,000 companies, hospitals, universities, and other groups in more than 150 countries according to Europol. It’s been headline news.[1]
While bandwagon jumping generally has a bad connotation (doing or supporting something just because it’s hot at the moment,) security is one of the bandwagons you should proactively jump on. Right now. Really.
Security tools, services, articles, etc. are all popular because security attacks are popular – and increasing. So yes, if in the past you thought your passive following of whatever standards were placed in front of you was good enough, you need to break out of that rut and get proactive. Too often, standards aren’t keeping up with the changing threat landscape. You need to constantly search for new security tools, skills, and services to help you protect your firm, your employees, and your customers to achieve digital trust in the market.
In fact, the recent attack only brings findings from HfS’ recent Managed Security Services Blueprint into clearer perspective. We heard from both providers and security executives that effective security programs shared key characteristics:
Automation everywhere possible. There are too many threats and attempts for your security team to monitor them without automation – you’ll never collect the necessary data manually. Your automation investments need to include appropriate analytics to evaluate and find patterns in the data so your team can take appropriate next steps.
Investment in cognitive computing. Predictive analytics and cognitive computing investments for tomorrow aren’t negotiable. Today’s environments can collect and analyze, but you also need to be focused on systems that learn from current data to build predictive models and help you prevent attacks, not just respond to attacks as they happen.
Focus on employees and the human element. This takes two tracks: 1) Educate employees more often and more consistently about phishing and other techniques that attackers can use to get credentials and other sensitive information from workers to attack company systems. And 2) keep your security team’s skills up to date. The talent shortage in security is exacerbated by the skills gap – staying current on all security trends is daunting but necessary. And security teams are so overwhelmed already that it may seem they don’t have time for training. It’s time to evaluate your hiring and training for security to look for ways to bring in non-traditional talent and get them up to speed faster to ensure you’re protected.
Bottom Line: Treat security as your business, not as an enabler
Without effective security your business won’t survive – either your company systems will be brought down, or more likely, customers won’t want to do business with you if they see you as a threat to their own information security. The WannaCry ransomware attacks is another proof point that security threats are increasing in number, scope, and scale. Jump on the security bandwagon and follow practices of leading edge security practioners for effective programs.
It’s always more fun to be the disruptor than the disrupted in markets where innovation is the key differentiator and commoditization the curse. The world of technology is a constant challenge as programming languages become commonplace, processes increasingly standardized and automated, and global service delivery efficiency a bread-and-butter offering. How can you continue to grow at a double-digit clip, while maintaining profit margins of 20%+ amidst cut-throat competition and clients forever eager to batter down their costs?
Fortunately, the entire role technology plays is changing at a pace that is faster than most industries that can barely tolerate, which keeps driving new opportunities for smart firms with a disruptive appetite at their core and a willingness to live outside of their comfort zones. Today, enterprises are asking for business problems to be addressed and simply expect their service partners to get the job done. It’s no longer “Provide me with 50 developers for this amount of time to perform these tasks”, it’s more, “We need to redefine our healthcare insurance business to be more competitive in the market to survive – come help us do that”, or “These new banking regulations are crippling our ability to remain viable – what can we do to get ahead of these and operate effectively in this environment, faster than our competitors?”
Hence, it’s up to the ambitious service providers to pivot how they address their clients’ needs by redesigning business operations through smarter automation, process design and a much more proficient understanding and orchestration of their critical data sets. This is what digital is really all about – and this is where Cognizant CEO, Francisco “Frank” D’Souza is determinedly taking his organization. Cognizant has been Wall Street’s golden child of IT services growth over the past decade, the firm ballooning from $2bn in 2007 to $13.5bn exactly a decade later, and last week announced 11% year-on-year revenue growth and a 26% increase in year-on-year net profits to $557m. Cognizant continues to outperform the market with relentless growth and appears to be on a new upward growth trajectory after a challenging 2016, which saw the whole IT services industry tackle this new secular shift, which Frank believes if the most pivotal transition since the onset of the Internet itself.
I caught up with Frank this week in London to get a little deeper into this pivotal industry shift and learn more about how he intends to keep disrupting his market.
Phil Fersht, CEO and Chief Analyst, HfS Research: Frank – great to see you again. Was good for the whole industry to see you guys announce strong results last week – is the gloomy cloud that’s been hovering over our industry lifting, from Cognizant’s vantage point?
Francisco D’Souza, CEO Cognizant: Phil, last year was an important foundational year in our pivot to digital. I think we were ahead on some of the digital thinking, code halos and SMAC (social, media, analytics and cloud), we have been talking about those for many years. I think last year was the year that picture, at least in our minds, and our clients’ minds, crystallized around what are the specific opportunities around digital. Prior to last year, digital was the typical catch-all term used for lots of different things.
I think it’s become very clear, Phil, with every day that goes by, is the notion that if you think about a company’s enterprise model (what is the business model, what’s the operating model and what’s the technology model) it’s now become clear what is the implication of digital technology at each layer in that stack and by industry. What does that mean for financial services, what does that mean for healthcare, what does it mean for insurance?
Last year was about crystallizing around that – we reorganised the business we took all our capabilities, we grouped them into three big practice areas: digital business, digital operations, digital systems and technology. Within that we really focused and emphasized the key digital themes and trends in each of those areas. If you think about the technology space we built and emphasized the cyber security aspects, we built and emphasized performance and scalability, we built and emphasized complex engineering, agile, DevOps, so really focused on what is the technology enterprise of the future and what it will look like. Enterprises are going to be increasingly asked, and need, to deliver technology with ‘Amazon-like’ scale and agility, speed and so forth. So that’s Cognizant digital systems and technology.
Turning to digital operations, there are two big thrusts and areas of focus, which are related. Number one is continuing to scale-out platforms. We’ve had great success with the acquisition of the TriZetto platform. It was two years ago that we did that acquisition and it has scaled really well for us. Every day that goes by, the pipeline of opportunities for TriZetto enabled operations, increases. It has convinced us that the model works, we can pull our capabilities together to build and operate these industry platforms. We have continued to look at software assets that we want to own or that we want to operate to create these utilities, that’s number one. And number two is that RPA and IPA is a major disruptor. We are focused on disrupting ourselves, disrupting industries, using RPA and IPA – that’s the focus of Cognizant digital operations.
In Cognizant digital business it’s about the front end, about how we work with clients redesigning business models around the new opportunities that digital is creating and enabling. There our focus has been largely acquisitions and investments that we have done. We invested in ReD Associates a year ago. ReD Associate’s core skill is that they are anthropologists and sociologists and they think about products and services from a human factors standpoint. They are based in Denmark. If you think about the traditional Cognizant model, ReD Associates are far upstream from our traditional engagement with a client. This is why we chose to invest in them as opposed to acquire them. We own a percentage of the company and have a very tight partnership with them. We then bought Mirabeau, Brilliant Service, Idea Couture, etc., firms that bridge the design, tech, business, and re-imagination gap. We are scaling up that capability through spaces that we call ‘Collabatories’, which are client co-innovation spaces. The last piece is data, data sits across all of that – we have always had a very strong foundational capability, going back to the Dun & Bradstreet days, and that’s serving us well. Underpinning everything is this notion of big data and what analytics can enable at all layers of the stack. That architecture for our business has proven to be quite powerful because it lines up with where our clients are taking their businesses. That was the big pivot for 2016.
Phil: That’s interesting, because most of the computer science grads, today, aren’t thinking the way we were thinking 5-10 years ago. They aren’t thinking about programming languages, they are thinking about data sets and business logic, which is why it’s so interesting to hear about the partnerships that you are getting into, and the acquisitions you are making. We believe you can’t truly be a digital provider unless you are true digital organization yourself. I notice you are making investments in globalizing the company more, but also trying to become smaller, but with higher growth and higher profitability at the same time. That sounds like a tremendous challenge, can you share a bit about the big plan and how you think the company is going to evolve?
Francisco: Firstly, Phil, the implications for Cognizant and for our clients, as we go through the shift on breadth of skills and capabilities that you need to enable digital transformation, is very interesting. For example, we are now, and always have been big employers of data scientists — so that has been a core capability for some time. Design talent is increasingly becoming a bigger part of the company. Industry domain expertise has always been an important capability, but now we are looking to deepen this knowledge. Consulting is incredibly important and technology is always the core.
Our view is that to create digital solutions you must bring together multi-disciplinary teams around data science, design, industry, domain expertise, consulting and technology – all coming together. That talent is dispersed around the world. Just as a decade ago India was and continues to be a concentration of technology talent. You are starting to see concentrations of data science talent in Eastern Europe, design in certain hubs in Europe and the US, and so on. That requires us to be more dispersed than we have been in the past.
Secondly, the type of work we are doing now is co-creation/co-innovation that requires us to be more proximate to clients in those practice areas. That is also creating the phenomenon that you described which is that we are closer to the customers and therefore getting a little bit more distributed as an organization.
In terms of how we think about the company, one of the pivots that we recently announced in Q4 as part of our roadmap for accelerating our shift to digital, we talked about moving away from our historical approach of industry leading growth at a constant margin. We had this 19-20% non-GAAP operating margin target for a long time. What we have said now is we will continue to drive high quality, durable growth, and will gradually increasing margins. As we look at our opportunity set, we think that we can pivot the business to higher value digital work and we are going to drive that. We think that’s the long-term direction of our clients and therefore that’s where we want to be and we are pivoting more towards that kind of work and taking the company in that direction. We are also taking the opportunity to simplify and streamline the business in places where that’s appropriate. That’s all part of this broad approach that we call, accelerating our shift to digital, as we make digital a more foundational and important part of the overall mix of the company.
Phil: The concept of globalization of talent is a good one, bringing together different skills across different parts of the world is such a fascinating dynamic. One of the things we are seeing more of is – 5 years ago – clients would call you up and tell you what they wanted, now clients don’t quite know what they want and want partners to work with them to get more out of the business model to figure it out. It’s less about solving problems and more about finding them. One of the things that has always differentiated Cognizant, Frank, is that you take a portfolio view of clients and I have seen you win deals more because you look at the whole solution, you didn’t just look at apps, storage, BPO etc, within the stack. I believe it’s the sum of the parts rather than the parts themselves, and this is where it’s all shifting, really bringing it all together as a more integrated model.
Francisco: This notion that we want to serve a small number of clients and we want to serve them deeply has been a core tenet for us from day one and that continues. The way we implement that is that our industry verticals and geographies are the primary channel to market. If you think about the capabilities in our three big practice areas, it’s really the verticals that aggregate those capabilities, that integrate them and create the solutions for the client. What we are talking to clients about is the solution to some industry problem that aggregates our capabilities in some way, to delivers a compelling industry solution. If I am with a healthcare client I am not talking about digital business or digital operations or digital systems and technology. I talk to them about patient experience or getting better at how they manage claims or how they keep patients well. Behind the scenes we aggregate our capabilities together to deliver that business result.
Industry by industry we have got strong digital solutions at all layers of the stack and that helps us get out there and have a business relevant conversation with our client.
Phil: So is this as much fun as it used to be 10 years ago when you were the new kid on the block?
Francisco: It’s more fun. We are going to look back at this period of time, 10 years from now, and we are going to say technology literally changed everything. We are right in the middle of that. Compared to 10 years ago, we have the big shift in technology which is one part of what makes it exciting. The other part that makes it exciting is where we are as a company. We have an incredible position in the marketplace. We have got great clients in the industries that we serve. We serve the biggest most significant, most substantial clients in those industries and we serve them in big meaningful ways so it gives us the platform to have a substantial dialogue with them. That wasn’t the case 10 years ago. We have great market position today and we are in the middle of an incredible shift in technology. I wake up every morning and think I have the best job in the world. It’s breath-taking how fast technology has moved and I don’t think we are even in the first inning. It’s really early days.
Phil: I think we are leaving our comfort zone, I think it is getting more challenging for people, their careers, we are talking more to clients about how to manage their careers and their growth paths, more now than ever. They are worried, thinking “where do I go, how do I think differently, how do I behave differently?”.
Francisco: 3 or 4 years ago my narrative was that once in a decade you have these big shifts in technology and we were living through one of periods. I don’t think that was untrue, but what is interesting about this shift, is that it’s not a once in a decade thing. The innovation seems to be happening continuously and faster than it ever has before. If you go back to the last time we had a big shift it was probably the Internet. There was a period of very rapid innovation over a short period of time and then there was a decade or so when all of that was implemented and became pervasive throughout the economy.
I thought that would be the case with digital. 5 years ago when we started talking about SMAC, which are very profound technologies, I thought it would have the same adoption cycle as the Internet – very rapid innovation over a short period of time and then we would see that stabilise throughout the economy. What actually happened is we are in a second wave of disruptive technology. SMAC is still there and I would argue in many cases it is still in the early phases of adoption, especially when you look at cloud and analytics. But then you look at whole new generation or second wave of disruptive technologies, whether it’s Blockchain or Additive Manufacturing or AI, the list goes on, and you can look at any of those and each one is fundamentally disruptive in its own right, potentially as disruptive as SMAC was and this is a phenomenon that has been going on for several years now. That’s what is foundationally different along with the pace of innovation. Maybe it’s coincidence or structural, I don’t know. History will judge that, but we are living through a time when the ground is shifting faster than I have ever seen it and that’s challenging, but it also creates opportunity for those who learn and react fast.
Phil: Terrific catching up again, Frank. The ship still sails, even though waters continue to get choppier!
Francisco: A pleasure Phil, and all the best with HfS.
Whether its cognitive automation or RPA tools they’re trying to implement, a large percentage of services buyers are stuck in a sort of robotic limbo. As we launched our new automation council “FORA” at HfS, Phil brought up a huge challenge, “Why aren’t those [anticipated] 40% cost savings happening each time someone slams in some software and hopes it somehow eliminates manual labor because they can access a bot library? In fact, why are a third of RPA pilots just left hanging with no result?”
Why are PoCs entering robotic “limbo” or failing, and what is working out there?
Here’s what I heard from two automation practitioners in large financial services organizations:
PoCs that don’t begin with the right kind of buy-in have a longer time to value
The VP at a financial services company considered using Watson technology to help their sales force be better informed when first interacting with potential customers. They designed a PoC that would allow a sales person to ask questions like, “Who are this customer’s competitors?” Watson could take this natural language query and apply it to the company’s own and external data sets and come back with a synopsis of facts to make it easy to identify trends. However, after the PoC, it became apparent that various stakeholders like the operational heads of the lines of business didn’t understand the breadth or relevance of the technology. Was Watson overkill for their needs? After the PoC ran, these executives asked, “Isn’t this what Google does? Why do you need to invest in this solution?”
With the Head of Sales behind the project, the organization found it easy enough to get started but then got waylaid on the way to the finish line. The team had to backtrack to explain how the fundamental cognitive technology can help achieve more meaningful and timely answers to the questions the sales team could ask. The stakeholders didn’t understand the difference that data mining could bring – versus manual searches for each company or trend. The solution would bring more relevant and actionable data to sales teams that could impact closure rates and revenues. After a rather lengthy “limbo” in educating all parties, the VP involved the top performing account managers and used their ideas to design the front-end user interface. This helped the team build a relevant solution that leverages the capabilities of Watson and build internal acceptability, which accelerated the path to live deployment. The team is now expanding its user base and exploring ways to leverage more Watson APIs in the solution.
PoCs could get dismissed as hypothetical technology proofs with no grounding in reality
Peter Quinn, Managing Director of Automation at SEI Investments Co. started the RPA journey in their organization’s securities processing function late last year. He took a position not to do PoCs, feeling that they are too easy for skeptics to shoot down, and only prove hypothetical scenarios while exhausting time and resources. Instead, his team decided to run production pilots, a hybrid of PoCs, pilots, and production phases. With this format, the solution is designed with more rigor than a PoC, and is deployed in a live production environment with real transactions taking place.
Peter stresses the importance of demonstrating to the larger organization the efficacy and effectiveness of the bots deployed since they are working in a live environment. He shares, “I wanted to do things that weren’t trivial, like RPA tools that just gather information and create reports. When those processes work with 98% accuracy, that could be considered as acceptable. But when they are moving client securities or money, no margin of error is acceptable. We are running functions that are core to the financial operations of the bank rather than something that’s low in criticality. When they work, the results speak for themselves – we are seeing greater accuracy from the lack of manual errors.” The implementation challenges that this team faced with the production pilots were related to other aspects of their technology landscape that needed to be fixed, such as conflicts with how the environments were configured. It could have gotten “stuck in limbo” because to really build automation as part of the core processing backbone, they had to work through a lot of unanticipated factors. It didn’t however because they had relevant business and technical stakeholders involved and a general spirit of collaboration. SEI is now armed with “real-life proof” and is undertaking several more process automation.
Testing and sharing as you go help ensure you are solving the right problem and updating it as needed, as well as adjusting the technology solution.
What is common in these practitioner experiences is the importance of building stakeholder buy-in. You need to have them involved in defining what problem to solve as well as testing the solution and being ready to make quick adjustments to address what else in the infrastructure or environment is impacted as RPA is rolled out. The problem you are trying to solve, the complexity, and the level of stakeholder involvement are all necessary factors to consider. It can influence the type of approach you take and help identify the issues you need to tackle upfront before even getting started with automation tools, as well as adjust quickly along the way.
The Bottomline: Don’t feel obligated to jump into automation PoCs only to be left in limbo down the road. Iron out the ‘whats’ and the ‘whys’ before getting into the ‘hows’.
There’s more than one way to kick-start your intelligent automation journey. Find the one that works for your organization’s culture and political structure—do you need to educate or provide examples or both?
Without a doubt, the impact of automation on the IT Services industry is a topic of much debate and contention. The challenge is that speculation drives much of the discussion, rather than quality data and analysis.
While the subject of automation has been discussed a few times on the blog, I feel compelled to add my experiences and those of the IT professionals I met on my travels to the discussion.
Not long before joining HfS, I spent several months presenting research on automation at events and conferences across the UK. While the research covered a broad range of topics, automation in IT services was by far the most popular. After a few presentations discussing the increased adoption of automation and the growing capability of the tooling, it became apparent where the popularity of the topic originated – fear. After each session, a small gathering of IT professionals would question me on job security, headcount decreases and how automation augered a bleak future for the industry.
It’s not difficult to see why the audience felt this way. The mainstream media and even some analyst firms have been stoking the climate of fear with considerable vigor.
So I went back to the drawing board and changed my presentation. I took a fresh look at the data to examine what was happening in the industry – did we genuinely need to worry? Beginning with an impactful quote most media outlets were running with – something along the lines of “be terrified, the robots are coming” – I started to dismantle these theories with my research data on employment trends, headcount increases, and industry perception.
While many argued that automation would lead to job cuts, my data showed the opposite. Organizations recognized the importance of technology to their businesses and were investing in the services needed to support it. The data revealed that in organizations with higher levels of automation, workers were not disappearing, they were moving to higher value areas of the support structure – taking on strategic projects or developing services.
At the end of the presentation, I concluded that the reality of automation’s impact on modern IT services was far from the bleak picture painted by other analysts and consultants.
Nevertheless, a few minutes after the session ended the same horror stories started to emerge: IT leaders facing a backlash from staff as automation projects ramp up and professionals working themselves into a frenzy over their job security if projects continued. It was frightening stuff.
Crucially, my research revealed that the cause of this panic doesn’t come directly from the automation itself – there were almost no real-life examples of automation leading to sweeping changes in any of the organizations I was working with. Without a doubt, much of the fear was generated by analysts and media outlets whipping up this distorted perception, but surely there must have been another force at work.
After a bit of digging around the real cause of the hysteria became clear. In organizations with little or no perception issues, it was clear that the leadership team had taken the time to communicate with their teams. Conversely, those with stressed and worried staff had not.
When I questioned an executive who sought advice on soothing fears in his team if he had clearly explained his vision, and what the outcome of the project would be, he replied that it was obvious what he was trying to achieve. If that were true, the perception crisis in his organization would not be there.
Successful automation projects have an engaged team working behind them. The most effective I have seen understand what will be automated and why. They know what impact it will have and, for the most part, agree it was an area of manual work they found repetitive, boring and unfulfilling anyway. They eagerly anticipated a time when they could dedicate their efforts to more meaningful and valuable work.
Under different circumstances, this committed group would be dealing with the same fear and stress as their peers in organizations with less effective communication.
In the noisy information age we now live in, it’s easy to get caught up in the hype. Business leaders have an obligation to provide clear, effective communication that outlines the vision and journey of automation projects. Without the context and understanding they provide, an engaged team can quickly turn into a stressed one. And a stressed team will undoubtedly hold your project back. It’s not hard to understand why an individual afraid of becoming obsolete may not be working towards your goals with total enthusiasm.
Bottom Line: Effective communication strengthens the fine line between a successful automation project and one held back by a nervous and stressed team.
A few weeks ago, I was fortunate enough to spend some time talking with the head of IT of a large transportation company – and we talked about the future of his job and the most important things impacting his role. When I asked him what was the main issue getting in the way of him adding value to his business, he said it was a cloying inertia brought about by a thick soup of negative thinking.
The number of people in his organization that focus on the way things have been done in the past and the reasons why things can’t change, were a source of incredible frustration to him. Incremental change was possible, colleagues understand how processes evolve, so innovation could be staged, but it was very hard to implement anything totally new. We joked that original thinking was being pecked to death by negativity, like a flock of miserable seagulls.
As an analyst, this is something really close to my heart – if we are to produce anything that approaches original thinking, we need an environment where ideas are cherished and even the craziest thought is welcome – although it will ultimately need to stand up to scrutiny, the original thought can’t be wrong. It’s only when you make cerebral room to nurture some crazy, orthogonal thinking do you create inspirational work like the Digital OneOffice.
So what needs to happen, how can this change? How can we get people to take leaps of thought rather than increments?
Phil’s recent blog “Is your current job the end of the line?” delivered seven action points directly to the chief “peckers” of the world. Distilling that, the most important thing organizations can do to encourage this behaviour and become more open is to move away from traditional hierarchical relationships, look at the idea itself and any data that supports the idea. It is the addition of data and more evidence that helps to shift thinking from more traditional decision making.
It’s interesting that the message, at least in terms of its overall importance, seems to be getting out at last. In a recent survey of 300 major Global 2000 enterprises, we asked IT leaders about the importance of some c-suite directives to their IT strategy.
This graphic shows that IT decision makers realise the best way that they can increase the relevance of IT within the organization is by supporting more predictive decision making. This is a crucial change in mindset, taking IT away from its most recent manifestation which has almost been as a custodian of IT, or a gatekeeper, focused on reigning IT in and keeping the costs down.
Bottom Line – data gives crazy thoughts wings
We suspect that part of the embracing of data by IT departments goes back to my friend and his battle with the naysayers. Data levels the playing field and gives more people a voice. It gives more power to the elbow of anyone seeking to make a change. An IT department that delivers insight will be listened to, as opposed to being largely ignored as a legacy function tasked with keeping the lights on. Let’s stopped being pecked to death.
A new trend is developing in the tech and business world and the speed at which it is happening is alarming. The need for people is waning as companies seek to scale themselves profitably on a digital backbone – and it’s having a serious impact on our career paths.
When companies historically did layoffs, it was because they were in financial peril and had no choice but to saw off costs to stay solvent on the balance sheet. It was always painful, because you needed people to grow your business. Sacking people was not a good thing to do.
Suddenly it’s in vogue to shed people
However, if you were unfortunate enough to get caught in a layoff, you dusted off your CV, went out on the job market and (usually) found yourself something pretty quickly. Companies needed people – whether they were superstars, or solid foot soldiers; when you needed an employer, you would always find something.
Now something different is happening in the mindsets of business leaders – companies which are doing really well are in the process of proactively removing staff – both at junior and senior levels. You really don’t want to get caught up in one of today’s layoffs if you’re eager to stay in a similar job in future, because the modern business is adopting a new mentality – cut costs and scale profitably with a digital backbone. Adding armies of people is no longer the order of the day when you peer into an uncertain future, and many savvy businesses are eagerly looking to get ahead of making savage future labor reductions by making them now, in a more incremental fashion.
Case in point, Cognizant has been the golden child of IT services growth over the past decade, the firm ballooning from $2bn in 2007 to $13.5bn exactly a decade later, and yesterday announced 11% year-on-year revenue growth and a 26% increase in year-on-year net profits to $557m. The company continues to outperform the market with relentless growth. Meanwhile, the same firm has recently (reportedly) laid off ~6,000 staff in India and has just offered voluntary redundancy to 1,000 director-and-above US staff – a sizeable chunk of its US workforce.
Meanwhile, we witness firms merging together, such as CSC and HP, with the prime goal to rationalise their armies of people, while IBM’s US marketing employees were recently instructed that they must report to and work at one of these main offices in America: New York, San Francisco, Austin, Cambridge, Atlanta, or Raleigh – and offering redundancy options to those unwilling to make the move (who have renamed their firm “I’ve Been Moved”). And expect similar activities involving many of today’s IT juggernauts, such as Accenture, Capgemini, Deloitte, Infosys, TCS, Wipro, etc – all these firms are looking to deliver more “digital” services for clients with less people, as part of their “digital automation” drives. We’ve also been hearing about leading BPO providers bragging about delivering their traditional services on 10-20% less people, because they have figured out how to automate their services using RPA software and are making progress adopting machine learning techniques to speed up data driven work.
This isn’t just about corporate greed anymore – firms just don’t need people like they used to
One constant between now and the Great Recession of almost a decade ago is the insatiable greed of corporations and their shareholders to maximize quarterly profits at whatever cost to society and long-term planning. However, the rapidly emerging trend that is really causing alarm, is this determination to grow businesses while reducing their workforces, because the majority of people are now very replaceable with technology. We’ve never seen a situation where firms are growing their revenues, maintaining (and often growing) fat profit margins, but eagerly looking to trim whatever “fat” they can find.
New data from our 2017 State of Operations and Outsourcing Study, covering the dynamics of 454 global enterprises, highlights the emerging dynamics of C-Suites seeking both to slash costs (85%) but also to digitize their operations by breaking down the barriers between front and back offices and driving real-time data to support decisions (four-fifths see this as mission critical / increasingly important). Most alarmingly, only 26% of C-Suites now view developing talent quality as mission critical, while only 12% have not yet embarked on investments in automation and machine learning to reduce reliance on both low-end and mid/high-level labor:
The skills that were in demand, even 5 years ago, are now almost defunct, as marketing, programming, accounting, administration skills that were reliant on people, now being significantly enhanced by software, analytics and algorithms. What required 50 programmers, analysts or accountants 5 years ago, can be done by a handful of smart thinkers and much smarter systems. If you are in a profession like HR or procurement, the chances are your firm gave up on scaling up your division a decade+ ago and the emergence of affordable technology suites that do the job has already left these functions operating with as lot less people. Now this is happening right across the board, as the value or programming is diminishing (the future of IT is about smart logic and smart algorithmic thinking, not programming), the need for data analysts is shifting to simplicity as opposed to complexity, marketing is more about data science than content creation and finance is more about predicting data than archiving it.
So how do we survive? Here are seven tips to seriously save you
Before we embark on steps we can take to save ourselves, I would love to recommend a host of courses you can take to sustain your relevance in the modern workplace. However, there really isn’t a defined curriculum for this stuff – you need to develop a strong “unlearning” appetite to develop yourself on the job to get better at communicating and articulating your ideas, understanding how to manage data sets with greater logic and focus, and become a better collaborator, team player and driver of initiatives, with really visible impact on the business.
Firstly, you need to Unlearn – and fast. The first thing we all need to do is unlearn the work habits we picked up over the last decade or two. What was considered sufficient to check the boxes 5 years ago is now already in the legacy box (or, as I hate to call it, the “voluntary redundancy” box). The good news if your company probably still turns in a lovely fat profit, so they can still afford you. The bad news if you need to adopt a mindset of helping them grow profitably if you want to keep your job long term.
Secondly, crank up the urgency. You must focus on speed and urgency with short-terms plans to realize your long-term vision. Really look to deliver results in weeks not months and keep delivering robust outcomes as you go to enhance your credibility . Think of each individual project as a milestone achieved on a longer journey.
Thirdly, you must leave your comfort zone. Everyone in our industry needs to get out of our comfort zones, being bold, and smart about trying new ways of thinking, interacting, collaborating and driving positive energy. You have to venture outside of your comfort zone and take your colleagues and partners with you. You have to believe in what you’re doing and make smart, pragmatic – and sometimes bold decisions along the way.
Fourthly, focus on “quick wins”. Get stakeholders onside by demonstrating meaningful, impactful outcomes without major resource investments. Find a broken process that you can quickly fix with RPA or a SaaS/mobile app, or simply by converging data. Then find another… self-contained projects where you can prove your value quickly are the way forward, not hiding behind big projects that are hard to prove the ROI and seemigly never-ending.
Fifthly, focus on much more dynamic reporting relationships. The need for dynamic management is desperate in so many firms today: managers and staff must constantly interact to fine-tune performance against evolving outcomes. You need to manage up and down in the same constant manner, where relationships are fluid and dynamic – where you are constantly challenging each other with new ideas and ways of doing things . The days of the old “weekly box checking meeting” is over..
Sixthly, be smart about data and how it drives value to your job. Whether you like it or not, data is at the core of every modern enterprise – and you need to get with the program. If you can’t automate and digitize your rudimentary processes, you will quickly run out or value to any organization in today’s era. Being smart about data is no longer geeky, its career-critical.
Seventhly, put your ego aside and get used to flatter org structures. Companies need to kill the hierarchies and most emerging digital business have already adopted a flat structured approach to team building. People naturally collaborate in cross-functional teams motivated by shared outcomes. So put aside your old mentality of climbing the greasy corporate pole and get used to a whole new wave of politics – that of collaborating in flatter, autonomous teams where egos are driven by collective success, not just individual achievement.
This week we crossed the Atlantic to meet the cream of the crop of the utility industry in Miami for the International Utilities and Energy Conference, hosted by Accenture. A packed agenda entertained the brightest minds in the utility space from around the globe.
We were in for a surprise: from the first session to the closing key-note it was one big future-oriented gig, focusing on business value instead of enabling technology. No sales pitches from the provider (many providers can learn from this), zero bad jokes… and a highly engaged audience (yes, we are still talking about utility executives here) that wanted to smell, touch and work towards a better future with more and better client interaction. They all want to be more profitable but more important (for real) greener! Their customers demand it; the infrastructure is ripe for an upgrade, and so the question is, why not make it happen?
Fossil is the new uncool, and renewable energy (with loads of digital components for their clients) the new hipsters, the future of utilities!
Let us explain with a couple of fantastic examples that had a high impact on your peers at this week’s event. Over to you Derk!
Thanks, Bram. We had an interesting time for sure. Let me give you some quick pointers on the new, the unexpected and the future that headlined IUEC 2017.
A dizzying barrage of industry shattering disruptions thrown at attendants
As one Utility executive put it; the first day of the event was a succession of shock and awe, fear and nausea. Florida Power & Light CEO Eric Silagy set the stage immediately; the unstoppable force of renewables and how being clean is good business. It is a vision that not everyone dares to execute on as radically as Florida Power & Light, but they are doing it without hesitation. CEO Silagy provided an excellent example of lowering his customer’s bills by taking the most polluting oil and coal plants offline.
In this picture, you see a perfectly well-operating oil based power facility Florida Power & Light just blew up (after many people try to stop them) to build a far cleaner and more profitable (not only for them but also their clients) and this is just one of many examples. Don’t wait, just do it. There are always excuses, but just doing it will pay off in the end.
Further, he explained his strategy for relationship building with the regulators, being proactive and ahead of the curve and highlighted Florida Power & Light’s investments to build a more resilient infrastructure to deal with (the ever increasing) hurricanes’ ravaging effects in his service area.
Salim Ismail of ExO Works and Singularity University, talked about Exponential Organizations, and the drastic competitive forces these present in many markets. As electricity shifts from a scarce resource to an abundant resource, the dynamic of the market changes. Exponential organizations find business models to leverage abundance. Ismail explored Airbnb, GE and Ford’s journeys. One key takeaway that resonated with the audience is how innovation in large organizations is almost impossible. Innovation needs to be positioned at the edge, insulated from the internal organization. Large organizations have immune systems that attack any threats to the status quo, i.e. innovation. This is particularly relevant to utilities; being large, engineering-oriented and traditionally conservative organizations.
Accenture’s Digital guru Mark Sherwin brought his analogue chicken Penny to illustrate digital business models (his chickens and eggs turn out to be some of the world’s most expensive when factoring in the services he gets offered through digital channels to make his and the chicken’s life easier, from predictive food delivery to chicken hotels).
MIT professor George Westermann implored the audience to challenge pre-digital assumptions, as those hamper real transformation, reinforce the status quo and limit the ability to think outside the current frame of reference. Unintentionally providing great input for Design Thinking exercises.
Accenture’s Chief Strategy Officer Omar Abbosh shed light on disruptive forces over the last decades, from mainframes to IoT, AI, and Quantum Computing. He provided a great comparison of how he and Accenture’s leadership reinvented the strategy five years ago to rotate to “the new,” completely overhauling the organizational structure to change the culture, and how utilities are on a similar trajectory.
Vlogger and, more importantly, former monk Jay Shetty reflected on the Millennial mind, demystifying and busting myths. It turns out; millennials are not as scary as you might think. Jay called on the audience to incorporate four ‘Millennial mindsets’ (which are great for anyone by the way): the leadership of a coach, the fresh eyes of a child, community thinking and the mindset of a coder.
Missy Cummings, one of the first ever female US Navy’s fighter pilots and currently Duke professor of the Humans and Autonomy Laboratory Duke Robotics, talked about the highly relevant topic of drones and other unmanned vehicles and robotics’ potential in the utility industry. One of the key points she made addressing the fear robots will destroy jobs, is robotics and automation will likely create more jobs than destroying them, albeit different jobs requiring different skills, providing examples of people and robots working side by side in aviation.
It was time to evaluate all this and time to hit the Miami’s South Beach and more specifically Nikki Beach. The first feedback trickled in, and people had a lot to think about. Clearly, the platform that is IUEC worked.
Day two focused on more practical, “how to” examples and some great new research findings from Accenture and Bloomberg New Energy Finance about the industrialization of renewables, and Accenture’s global lead for Smart Grids Stephanie Jamison presented fascinating findings from a study of distributed generation (DG), focusing on business disruption of DG and the lack of clear forecasts utilities have around the impact of DG integration.
What stood out
At previous editions of IUEC, there were still reservations amongst executives about how fast digital and renewable energy would force change upon them. Those reservations are completely gone. Overall, utility executives have a positive outlook. Solid examples and cases are providing proof points and inspire the way forward, but there still a lot of work to be done.
A terrific event was wrapped up by living legend Clay Christensen, the godfather of disruptive innovation and Silicon Valley’s favorite guru. He gave the audience an excellent perspective and frame of reference of disruptive innovation and clues to shift capital investments to disruptive innovations to prevent becoming the next Blockbuster.
The Bottom Line
It is all about disruption and making a play instead of being played. Harvard Business School professor Christensen expressed his desperation for his industry – higher education – being disrupted with lightning speed by online learning and corporate universities. He did not worry too much about Harvard itself, but many universities are not that well funded and will be disrupted by new forms of learning leveraging technology. His response, without any hesitation, to a question about disruption in the utility industry was: “If you all pray for me, I will pray for you.”
From Derk and Bram; Godspeed, safe travels back home and until next time.
