Procurement’s very existence is in trouble. The function must be part of the whole negotiation process, not only to protect the company from making deals that do not benefit the firm but also ensure they are sensible, cordial and well-balanced – and both supplier and buyer realize the outcomes they both want to achieve. Sadly, this is so not the case with so many pivotal business deals today.
The fact of the matter is, for some bizarre reason, most senior executives just don’t care about them, and they seem to show up when the deal is already made and “promises” have been made that are hard to break. All that transpires is both the senior executives from the supplier and the buyer end up frustrated – and feelings of mistrust can really break down what was a blossoming partnership with a very “transactional” experience.
The problem really is two-fold – executives doing the buying probably don’t even think about involving procurement, as they see no value in their contribution – or have no awareness of any potential value. They probably never even thought about involving them. In many cases, they never even intended to include them and procurement only inserted itself when they were asked to make the payment. Which means procurement’s role has been reduced merely to a last minute attempt to sabotage a deal; otherwise, its existence in the company is rendered completely useless, and you might as well phase it out (or replace with some software).
Who’s to blame when procurement comes along to mess everything up? Yourself!
To all executives out there who like to spend company money on things:
Ignoring procurement in the buying process nearly always ends in tears for everyone. I often feel the amount of time, negative energy and lost money tied to the procurement experience is simply not worth the investment of having them in the first place. So stop acting like they don’t exist and start communicating.
This means getting procurement into the loop regarding your intentions, once you know what it is you want to invest company money in. Train your sales people that procurement exists for a reason and that they are not the boogie man from the outset. The reason it often goes wrong at the end of a sales cycle is that procurement people feel they are not participating in the process and need to make last minute changes to the contract (which is usual to try and squeeze the supplier on price, which just pisses everyone off).
When procurement people are feeling ignored, all they will try and do is derail the buying process, as opposed to helping shepherd it through and add some value (or at least a few sensible suggestions) along the way. Procurement needs to feel it has a reason to exist, like any other business function. With HR, we often know it adds no “strategic” value in the hiring process, but at least it will run the background checks, the references, sort out the payroll, etc. At least HR has a role in the company, whereas procurement is in danger of extinction if its contribution is worthless. So while procurement still exists, you must involve it, or it will make everything unravel down the road.
To Procurement Executives:
Be a business relationship manager, not a transactional negotiator. Get off your backsides and serve the people who pay for your salary. Yes, we are a team, but sending these emails such as “No more discount or we need a minimum of 20% margin”, or “We only accept 90 days payment”, do not help at all. You’ve made it clear in the time your profession exists that you are not business people and care nothing for “customer service” or “employee experience”. The fact you feel you are the police of the people that call themselves “sales” is a fairy tale. You should get up and try to understand what your firm is doing, the clients you are serving and the history that exists between your company and your customers. Only looking at making a personal gain is not a solution for anyone but yourself. If you like to have war stories, join the army. Don’t pull this nonsense on the work floor.
Bottom line: Communicating with each other is the first step to getting business done
We all need to live with certain professions within a process. Some we like, some we just have to tolerate. But we can make it nice along the way to work more closely together and stop pretending we do not exist or need each other. If you listen, you will learn, if you keep doing what you always do, you keep getting what you always had. We have enough islands in this world, let us not fight internal battles all the time, but let us communicate and not harm the clients and eventually our business.
It’s easy to make a compelling case that ‘digital’ will ultimately replace what was once ‘IT’ at some point in the future as the former rapidly evolves and the latter become more and more associated with legacy technology and practices. hedging bets on what will happen and when however is a different matter entirely and hugely variable from business to business.
A historical analogy I’ve used frequently is the period when steam power slowly gave way to electrification. Steam enabled the industrial revolution and generations of power creation and transfer expertise. Simplifying, early manufacturing typically had one giant steam engine driving multiple leather belts to various ‘creating’ contraptions.
Along came electrification and boilermakers and belt tensioning experts started to work alongside electric motors and light, but the period when these two power sources co existed was surprisingly long as companies sunsetted their amortization of steam power and invested in electrical.
It wasn’t until the 1930’s that ‘as a service’ from the plug socket and light switch regulated electrical grids were established in north America. Prior to that electrification was very parochial and needs driven for the creation of electric light and to power specific factories.
Just as early use of digital media for marketing is analogous to the creation of neon signs and electric light arrays in cities as soon as their generation was possible, today the focus on ‘digital’ has been skewed towards marketing though social networks and ‘customer conversations’. Electric light displays in places like Times Square NYC were the wonder of the world only 100 years ago, initially hand switched on and off in sequence by staff.
All fascinating history, what has this got to do with our digital ‘as a service’ world? The period when steam power slowly moved to the less visible role of creation of distributed electrical power is analogous to the way enterprise computing has evolved. Cloud and mobile networks have transformed our world on an individual basis but as we all know there’s an awful lot of mainframes and cobol out there.
As HfS’s Phil Fersht recently wrote
When you consider only $15 Billion is being spent on public cloud services (IaaS) this year and $ 1 trillion being spent on services tied to traditional services delivery, there is a huge amount of “legacy” IT and BPO business in play – for another decade and beyond – to enable the enterprise digital experience.
It’s amazing to think that less than 100 years ago people would go by horse drawn carriage to see people turning arrays of lights on and off in Times Square on a Saturday night as ‘advertainment’. The pace of change has sped up enormously just within this century alone: as an example AWS delivered the first storage service (Amazon S3) in the spring of 2006 and compute (Amazon EC2) in the fall of that year.
For the services world the twin speed world we live in of legacy IT and digital evolution has some similarities to the past era of boiler makers and electricians – today most of the work is in keeping the steam boilers ever more efficient in the enterprise world, but everyone knows the increasingly automated grid is evolving fast. Making the decisions of what to focus on with staff and technology – what skill sets are needed and how and where to apply them – is doubly difficult when for decades most of your waking hours have been focused on ‘busy work’ to keep IT systems running. Quote to cash isn’t going to go away but it is certain to evolve and be ever more connected to other parts of the digital continuum most companies now have in focus strategically and aspire to.
Where steam power was rigid, brittle and inflexible despite enormous power generation, eventually ‘ always on’ electrical power provided plug and play secondary, tertiary and on usages (light, power, heat, production lines etc). This is the analogy the services sector are increasingly aware of and where ‘core digital’ is arguably emerging to supersede ‘IT’.
These are absolutely fascinating times, not least because this new world allows an astounding pace of innovation and appetite for the new. Steam power didn’t go away of course – as late as the 1960’s steam locomotives were the way people travelled by rail, and the electricity I am consuming to type this post may well have some steam generated electrons commingled. As the transition and automation of older services yield to newer digital needshere at HfS we will be commenting and informing on where the power and growth centers of the ‘as a service’ world opportunities are.
“When we first outsourced, our service provider had the newest ideas, but now three years later, we have caught up to them and they’re treading water. So what’s next?”
These are quotes from operations executives over the past months of research, when asked about whether or not they (still) consider their service provider “innovative.” Since the term is open to interpretation, for the sake of this blog, let’s view it as an ongoing improvement in the impact of the work being delivered by doing something differently… something over and above the basics of what you would have expected, beyond the letter of the contract.
And, often, these comments are followed by, “it may be… well it likely is, our organization that is holding us back.”
If you really want what’s next… your service provider might actually have the ideas… but is your leadership willing to listen, invest, give them access to your intimate data, and give it a try? Is your organization genuinely culturally ready for innovative change? And is the service provider capable and culturally aligned as well? If not, maybe you aren’t ready for innovation; or, maybe not with your current partners.
Consider three “Power Ups” to change the face and increase the value of outsourcing: Courage, Budget, and Stories
Harken back to the days of Mario brothers in the video games, when Mario and Luigi tapped into “power ups” to help achieve their goal. (Maybe this is not such a leap in time for you!) “Super mushrooms” gave them temporary size and height advantage, ability to take multiple “hits” before dying, and additional lives. The “super mushrooms” of outsourcing—to achieve innovation and increased value through partnership—are good for use by any player—operations executives, delivery staff, service buyer or service provider:
Courage: The “gumption” as a leader to “allow,” and as an employee to “take” a chance, to leave egos at the door, to experiment, to “play,” to quickly acknowledge and shut down what does not seem to be working.
Budget: Realistically, nothing much will happen without a dedicated budget to finance time and materials that support research, dialogue, and prototypes.
Stories: Visuals and stories connect with our emotions, and are memorable. When you really want someone to understand, appreciate, engage, own, and promote a concept, a result, an idea, or a change, then “show and tell.”
If you want innovation—new ideas implemented to drive step changes in results—you need to be willing to do 1-2-3. If not, you are probably keeping yourself in a dangerous continuous improvement cycle—and also likely to get lost in the dust of other companies that are innovating.
I don’t believe there is any digital business or consumer that can be 100 percent secure 100 percent of the time, unless they opt to abandon technology and live in an obsolete analog world. It’s as simple as that.
As we continue the shift from the legacy, analog economy of the last century towards a still emerging 21st century digital economy, new opportunities abound. Brands that couldn’t have existed 20 years ago now dominate our global economy. Facebook and Google are almost totally digital, while others such as Uber, Amazon, and Apple blend the physical and digital to perfection. These are among the most recognizable, but there are countless more that make up a marketplace of brands and consumers that function in a totally different way that we did a decade ago—and the change is unlikely to stop any time in the near future. As rapidly as the human race embraced the digital wave, we’re just barely beginning the transition.
But for all the opportunity, there is tremendous risk. Our human existence has been shaped for millennia by the analog experience. It’s where we learned to live, learn, and trust the world—and the people—around us. It’s also where we learned not to trust.
For modern-world youngsters born in the ‘90s and ‘aughts, the digital world is all they know. My kids and their friends have never known a world without smart, mobile phones and online shopping, or where homework was not assigned online (and the homework dropped into a teacher’s shared Google drive), or where friends—that they’ll never meet face-to-face—are found and relationships built.
But for most others, this has been a period of transition that has brought both significant challenges and even more significant risks (from the challenges of shifting from paper to electronic bills to having your personal data stolen and sold on the open market).
The same is true for businesses. As my children are digital natives, so too are many brands, but far more are struggling to change—to reinvent themselves digitally as quickly as possible and shed old analog roots in favor of digital opportunities. But the most important, and common, issue that we all face is one of trust. It’s difficult to trust the company you can’t see, the bank you never visit, or the online contact you’ve never met. It’s even more difficult to protect, and leverage, your assets now that they’ve shifted from the mattress to the great cloud in the sky.
When we talk about protecting assets, we’re talking about employing cybersecurity to protect our digital assets against the threat-actor who would hack, steal, or destroy all that is ones and zeros. This is the dark side of digital, driven not by the greater good, but by personal, or state, gain—the world of the cyber threat.
In the analog world, we know how to counter, or at least avoid, most threats. We know how to learn to trust a friend, or a brand. Digitally, however, it’s a different story. The markers we used to look for to create bonds of friendship and trust simply don’t have direct analogues in the digital world. The business processes that we used to rely upon are also no longer the same, as technology has given us a powerful tool to rethink not just what we do, but how we do it, and why.
In this blog (In Digital We Trust?), we’ll be exploring a number of themes, primarily from an enterprise, provider, and consumer perspective—themes that share a common focal point: digital trust. As cybersecurity is core to securing our information and our brands, expect a healthy dose of that. But we’ll also be taking a hard look at the way we use digital today, from the technology to the processes that keep our corporate and our personal data both safe and accessible.
Some of the questions we’ll be discussing include:
What is digital trust, why is it so important, and how can enterprises, partners, and providers collaborate to leverage it for greater business success?
What are the “transformational” roles within the enterprise that are key to digital transformation?
How can a holistic approach to security be woven into the overall business process, from product development to marketing to sales and customer support?
How will emerging technologies, such as analytics, automation, and cognitive/AI help us secure our digital assets against ever-evolving cyber threats (both within and external to the enterprise)?
Will nascent technologies, like blockchain, actually become mass-market viable and allow us to build a more transparent, and trusted, transactional infrastructure?
How are mobile and cloud, and the shift away from legacy IT models, forcing enterprises to rethink the architecture of security?
How is customer experience influenced—positively or negatively—by our ability to implement enterprise-wide holistic security?
Who are the key providers, of both technology and services, that are reshaping the digital enterprise, and how are they promoting the ability of enterprises to achieve a state of digital trust?
We won’t shy away from controversy, and we certainly won’t shy away from sharing a strong opinion or two. Where providers and enterprises are doing it right, we’ll give them props. And when they miss the mark, we’ll let you know as well.
To help kick this blog off, here’s a link to our just-released report, The State of Cybersecurity and Digital Trust 2016. In this ground-breaking research, also published today, we discuss the challenges faced by enterprise security professionals and the steps they must take to ensure the integrity, and trustworthiness, of corporate and consumer digital assets. This report digs deep into five critical gaps—involving talent, technology, organizational parity, budget, and management—that are inhibiting digital trust across all industry verticals and geographic regions. Give it a read, and let the conversation begin.
The vote for Brexit wasn’t really about debating the finer points of EU membership – it was a big thumbs down for the establishment from over half the UK voters who feel disenfranchised. This is a reflection of the ever-widening gap between the wealthy and the working classes, the educated and the uneducated, the socially-connected ambitious younger generation and the disconnected older generations, who’ve lost interest in the direction of the modern world that no longer represents their interests.
Moreover, this rebellion against the establishment can be clearly mirrored in many of our enterprises, where similar issues of disenfranchisement are rapidly permeating.
Rote jobs are being eliminated with limited reorientation and progression planning
We talk a lot about the new work and career opportunities being created by digital disruption and digital business models, but these require greater problem solving skills, critical thinking and creative capability, if the World Economic Forum’s new jobs report is to be believed:
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And while we can complacently talk about all the exciting work creation the As-a-Service Economy is bringing, we’ve already precisely pinpointed that 30% of routine, low-value positions are being phased out through automation over the next five years, far outweighing the expected new jobs being created in the medium-high skills areas:
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This means we need to ensure our businesses and colleges alike are actively involved in reorienting this 30% to avoid their exit from working society. This is serious stuff which needs to be urgently addressed by our politicians, if they genuinely want to get back in touch with their increasing base of disenfranchised voters.
The younger generation, clearly more in tune with opportunities of free labor movement and their career growth, overwhelmingly voted to remain in the EU. In fact, the majority of British voters under the age of 45 want to stay “in”; it’s the 45+ year-old people which see no value of EU membership for themselves, which opted to stick it to the faceless politicians:
And when we delve even deeper, it’s also highly obvious that the better educated the person, the more they were inclined to vote “remain”:
The Bottom-line: As automation and further outsourcing take a firmer grip on enterprises, we face an almighty challenge – and cost – to reorient staff in low-skilled jobs
We’ve long-countered the whole argument about job elimination and offshoring, with the response that businesses need to be competitive and this is all part of the natural evolution of society and business. However, when 30% of services jobs are likely to be phased out over the next five years, we need to ensure these people can orient themselves into new jobs. Politicians need to forge closer ties with business leaders to ensure this happens, otherwise we’ll have more Brexits and more fascist lunatics creating frightening futures for us.
When you have 52% of your voting public sticking it to the establishment, there is a serious situation emerging that could change the game forever: if we can’t have leadership that can get back in touch with the people doing these rote jobs, we will end up with governments that force even more draconian measures on businesses to protect jobs. And this will likely mean less competitive businesses and less jobs to go around in any case. This is a journey to the bottom if we give in to archaic government measures and an avoidance of investment in work creation through re-education and training.
Taking away EU employees from British firms, and the ability for low-wage EU workers from places like Poland, Ukraine etc to wait on tables and clean hotel rooms, the economy is much worse off. Just as a benchmark, British science is hugely dependent on EU grants and talent to keep it going. It’s the same with university programs and technology start ups benefitting from EU synergies and subsidies alike.
Many governments need to accept the fact that this 30% of future job elimination is caused by woeful education systems over the last few decades that long lost touch with the reality of business and modern day commerce. Serious investments need to be made by governments to fund the reorientation of workers to be relevant for the future workplace. Our businesses need to be funded to retrain staff and retain them, not simply look to reduce headcount wherever possible.
Brexit symbolizes the failure of government to listen to so many of their people who are just angry. They feel neglected at the ever-widening gap between the rich and the poor. There’s a reason Bernie Sanders and Donald Trump (for various reasons) gained so much popularity. Love or hate their policies, many people see them as politicians who can “hear” them. David Cameron may have fought – and lost – the cause to keep Britain in the EU, but the majority of his people felt cut off from the future and made their voices clear.
The painful process now begins for legacy establishment politicians across the globe to wake up to the reality that an increasing majority of their voting bases are fed up with their lack of affinity to the common workers, and the fact that our business leaders have limited (or any) incentives to protect them or reorient them. Otherwise, they will get voted out and we’ll have some alarming social unrest that could well put us all out of business. This is serious stuff, and we can’t afford to keep brushing these issues under the carpet in a democratic society.
It’s time we dispelled the scaremongering and hype and gave you the true picture of how advances in automation tools and methodologies, such as RPA and autonomics, will impact the global IT services and BPO industry over the next five years.
The current debate on these issues is as polarizing as it is confusing. On the consumer-facing side of technology, we have a fervent and far-reaching debate about the ethics of artificial intelligence and automation, led by executives from the likes of Google and Facebook. On the enterprise side, we frequently see quotes from studies from firms such as McKinsey and Gartner predicting seismic job losses through the impact of disruptive technologies that could have a devastating impact on the global economy and society in the next few years.
Yet, many of the leading stakeholders much closer to the true deployment of emerging enterprise Intelligent Automation tools and platforms—namely the service providers, the ISVs and the sourcing advisors—remain on the sidelines when it comes to discussing the true impact of automation as it’s adopted by many enterprises today.
We’ve been talking, for the best part of two decades, about how to “transform” business and IT processes after the cost benefits of labor arbitrage have been maximized. Well, the simple fact is that much of these arbitrage costs are close to optimization for mature services providers that have well-honed global delivery machines. As enterprise clients demand further cost advantages, and as competitors become increasingly aggressive with their service pricing, the focus shifts toward clients attaining outcomes that are not always directly linked to lower headcount rates.
“Intelligent Automation-as-a-Service” is a genuine lever for enterprises to pull for further productivity gains beyond low-cost offshore labor
Consequently, many enterprises that have chosen to externalize their service delivery can enjoy even more cost effective services, as ambitious service providers further rationalize their delivery organizations by taking advantage of automation to standardize and scale service delivery to their clients. In short, while many enterprises can invest directly in Intelligent Automation into their own processes, they can also simply outsource those processes to service providers, which can embed further productivity gains tied to automation, in addition to labor arbitrage. “Intelligent Automation-as-a-Service” is quickly emerging as a significant productivity option for enterprises as part of their service delivery.
Sadly, greater productivity and effectiveness through “digital labor” comes at a societal cost—jobs that were once required are no longer needed. However, we would point out that the jobs that are being phased out are no longer being recreated in any case, and much of this shrinkage will likely come from natural attrition as some people leave the service industry for more relevant jobs in other industries.
The Impact of Automation on Services Jobs
The following graphic shows three Automation Impact Scenarios for the IT and BPO services industry, ranging from a modest/conservative prediction which is a continuation of current RPA use to a scenario we consider more likely where adoption of RPA and more Intelligent Automation increases to an aggressive scenario, where automation adoption hits a broader range of the skills. If we examine the most likely outcome, Scenario 2, we see strong growth for highly and medium skilled personnel—with highly skilled positions in our industry increasing by 56%, and medium-skilled by 8%. However, low skilled, routine jobs drop 30% as many of these roles get phased out over the next 5 years, resulting in a net loss of 9% of jobs, totaling 1.4 million:
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The following graphics shows Scenario 2, the Likely Scenario, in more detail, outlining the number of workers being affected within each skill category over the next 5 years:
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So what does this mean for the future of the global services industry?
The business and IT services industry has grown rampantly since the early service deals in the 1960s (with the likes of EDS, IBM and Hewitt Associates) and has reached a colossal scale we estimate close to 16 million workers across the prime delivery locations. Like any major industry that reaches a saturation point, as technological and operational methods improve, the need to continue adding staff will decrease once customer demand slows to modest levels. Just look at the evolution of automotive, aerospace and general manufacturing industries; now the same is finally happening to white collar industries where it is now very feasible to digitize work that was previously manually driven. Finally, automation has truly reached “swivel chair” business processes where manual interventions to process chains can be mimicked into software “recordings” to conduct said sub-task. While smoothing out various processes has the impact of freeing up time for existing office workers to focus on other (possibly higher value) activities, the ultimate effect, besides “human augmentation” is to enable businesses to conduct more of the routine work with less human effort and, potentially, less headcount.
How enterprise buyers and service providers of IT and business services will adopt digital labor
Most buyers are constantly investigating how to improve processes and where automation makes sense for them. It’s simply not possible to automate every flawed process chain—the cost and time is simply not worth it, so they need to select processes that warrant the Intelligent Automation investment—usually ones with high intensity repetition and throughput (and lots of paperwork that can be digitized), where RPA has a sizeable positive ROI. In most cases, Intelligent Automation potential is overlooked because the buyer just didn’t have enough financial incentive to make the investment.
However, on the sell side, the more service providers can deliver standard process delivery models to their clients, the more cost effective they become and the more price competitive they can be. Hence, smart automation is critical to their business models and competitiveness, and this is where we see most of the impact in the services industry in the coming years. The service providers will delivery efficiently automated services and then be able to pass on these “savings” from “digital labor” to their clients. This is why we envisage significant updates from the service provider community as Intelligent Automation capabilities quickly get embraced and embedded in service models across all core business and IT processes.
The Bottom Line: Automation and digital labor are increasingly pivotal elements of service delivery—we need to be smart about increasing human value in services
The choice will largely be down to the workers figuring out whether they want to stay in this industry and learn new skills and ways of working, in order to continue to be effective. As the data plainly shows, the services industry, from an employee standpoint, is likely to be 10% smaller in five years’ time. That may be a significant number of workers, but this reduction is gradual and gives ambitious workers the chance to reorient their skills and job focus. Our industry will likely lose that number (or more) through natural attrition over a five-year time period, so the core issue here is to embrace the value of making processes run better and how this helps us focus on growth initiatives and customer-aligned initiatives. As the head of a call center recently declared to us: “As long as we touch the customer in a valuable way, we can’t be automated.” That says a great deal about where we need to focus as this industry goes though this evolution.
HfS subscribers can click here to download the full POV, which details the HfS sizing and forecasting methodology for the impact of digital labor
Just stare at that digital underbelly… there’s a lot of work needed down there!
When the news broke last month about the second largest IT services merger of all time (after the 2008 HP-EDS whopper), the reaction among the services cognoscenti was – and has continued to be – one of confusion. Big services mergers have just not done very well over the years. HP/EDS was a culture clash of immense proportions – and occurred right before the great recession, while other mergers, like Dell’s acquisition of Perot, has resulted in the old Perot business being flipped over to NTT Data at a significant loss, and the Xerox/ACS merger has been shaken up and spun off and needs a major reinvention under new CEO Ashok Vemuri to get the company back on track. Meanwhile, Capgemini and IGATE are still figuring out the best pieces of each other to mesh together, while not taking their eye off the ball, during the services industries’ most cut-throat transition phase.
We heard HPE CEO, Meg Whitman, excitedly address the firm’s key clients and industry analysts at HP’s recent Discover event in Las Vegas, with an obsessive focus on “digital transformation” and the impending impact of “digital disruption”. However, the real opportunity for HPE isn’t really in the design of digital business models for clients, it’s the enablement of them – it’s the provision of the agile “digital underbelly” to make digital change really happen for enterprises.
It’s easy to be cynical about legacy IT services, but there’s an awful lot of it to scrap over as enterprises are forced to fix their plumbing
Digesting the merger of these two struggling services giants has resulted in more rumination than most, considering the timing, sheer scale, transitional uncertain market and motivation. This is not a time when most traditional service providers are looking to add more global delivery scale to already large foundations – most are trying to slim down their delivery armies and sales forces, choosing to focus on new and emerging areas for growth and getting more services delivered for less FTEs by taking better advantage of automation technologies, standard SaaS platforms and more affordable cloud provision.
However, when you consider only $15 Billion is being spent on public cloud services (IaaS) this year and $ 1 trillion being spent on services tied to traditional services delivery, there is a huge amount of “legacy” IT and BPO business in play – for another decade and beyond – to enable the enterprise digital experience. Hence, the opportunity HfS sees for Newco, is to attack the IT and operations plumbing necessary to enable the fast-emerging Digital enterprise, and take on the likes of IBM, NTT/Dell, Atos, Capgemini and the Indian-heritage majors.
Why the Digital underbelly poses a massive opportunity for cost-effective agile IT infrastructure providers, such as the HPE+CSC Newco
The onset of digital and emerging automation solutions, coupled with the dire need to access meaningful data in real-time, is forcing the back and middle to support the customer experience needs of the front. Our new study on achieving Intelligent Operations (see link), which canvassed 371 major buyside enterprises, reveals two key dynamics that are unifying the front, middle and back offices:
A “customer first mindset” is the leading business driver driving operations strategies. Over half of upper management (51%) view their customers’ experiences as impacting sourcing model change and strategy, which is placing the relevance and value of the back office in the spotlight.
Three quarters of enterprises (75%) claim digital is having a radical impact. We can debate the meaning and relevance of digital forever, but the bottom line is that enterprise leaders need to (be seen) to have a digital strategy – and a support function that can facilitate these digital interactions and data needs. The old barriers, where staff in the back office don’t need to think and merely oversee operational process delivery, and those in the middle, which only venture a part of the way to aligning processes to customer needs, are fading away.
Consequently, we’re evolving to an era where there is only “OneOffice” that matters anymore, creating the digital customer experience and an intelligent, single office to enable and support it:
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The Digitally-driven Front Office drives the Digital Transformation
Digital, in its purest form, is all about transforming the business to create, support and sustain the digital customer experience. It’s about leveraging the omnichannel (mobile, social and interactive technology) and accessing meaningful analytics to make it happen. Digital enterprises need a support function to service those customers, get their products/services to market when they want them, manage the financial metrics, understand their needs and future demands and make sure they have got the talent which truly understand the outcomes of their work.
In their current forms, HPE+CSC has some real capabilities in industries like travel and insurance to lead the market here, but is its stated digital focus is going to be in the operations and infrastructure rather than on design and industry expertise; it will struggle in markets against service providers with very strong digital design practices, such as Accenture Digital and Deloitte Digiday. In fact, Newco would be smart to partner with these firms to provide the digital underbelly capabilities at scale.
The Digital Underbelly creates the building blocks
Digitally-driven enterprises must create a Digital Underbelly to support the front office by automating manual processes, digitizing manual documents and leveraging smart devices and Internet of Things, where they are present in the value chain. Smart enterprises have realized they simply can’t be effective with a digital transformation without automating processes and fixing manual interventions and breakages in their process flows. Service providers can get ahead by working with their clients to make their processes run digitally so they can grow successfully their digital businesses and create new growth for themselves. Think about a central nervous system that incepts and processes all the elements necessary to make the enterprise function.
This is where HfS views the sweet spot for Newco, provided is can really optimize the economies of scale with the merger to be price competitive with the Indian heritage majors, such as TCS, Wipro, HCL, Infosys and Cognizant. It also needs to convince clients it brings world class engineering talent, security and automation expertise to the table.
Intelligent Digital Support breaks down the legacy functional silos
Enterprises need their support functions (like an enterprise circular system), such as IT, finance, HR and supply chain, to be aligned with supporting the customer experience, as opposed to operating in some sort of vacuum, hence, we are terming this “Intelligent Digital Support”, where broader roles can be created. HPE and CSC together have tremendous depth in areas like finance and accounting, contact center and HR from HPE’s traditional services business, while CSC brings it’s newly acquired procurement capabilities from its Xchanging acquisition.
Newco’s focus needs to shift towards creating a work culture where its delivery staff are encouraged to spend more time interpreting data, understanding their clients’ needs at the front end of their businesses, and ensuring the support functions keep pace with the front office. This is especially the case in industries that are more dependent than ever on real time data, using multiple channels to reach their customers and being able to think out-of-the-box with disruptive business models.
Intelligent Digital Processes must help enterprises predict and orchestrate, as opposed merely to react and maintain
Newco much focus on enabling business processes that align with their clients’ desired digital customer experiences. It’s not about throwing off historical data just to discover what went wrong, it’s about being able to predict when things will go wrong and finding clever ways to get ahead of them. It’s about embedding smart cognitive applications into process chains, about learning from mistakes and new experiences along the way. This is the enterprise neural system. Several of HPE’s IT service competitors have already made strides here with autonomics platforms, such as IBM’s Watson, TCS with its Ignio , Wipro with Holmes, Infosys with Mana and Accenture’s evolving partnership with IPSoft’s Amelia. Without a genuine story in service orchestration and autonomics, Newco could quickly fall behind, as its customers become increasingly eager to embed cognitive and self-learning elements into their business and IT processes.
However, one key service orchestration platform where we see some real growth potential for Newco is with CSC’s industry-leading ServiceNow practice, which has enjoyed continued growth, especially following its 2015 acquisition of Fruition Partners. As CIOs increasingly seek ServiceNow implementations on their CVs (in a Workday-esque manner), Newco should be able to divert many existing HPE clients onto its newly-acquired managed service. Newco just needs to figure out how to grow that competency as two forces coming together, as opposed to ending up with competing P&Ls.
The Bottom-line: The industry is in transition and the winners are those which can pivot and focus fast. Those which can’t will fail
Let’s cut to the chase here – we’re operating in a services world obsessed with preserving the past and ignoring the new. The past was all about predictable revenue and highly-visible cost reduction opportunity – there was a method to the madness. But this was because the true value was about doing things slightly better, but at much cheaper costs. The future is not so predictable – it is about being smarter, more business aware, and technically superior to piece it all together for clients. Oh, and without increased investments. It’s hard, and requires a very different focus, which is one of developing talent to learn on the job, one of evaluating experiences professionals to assess their ability to change, of being able to learn new tools and platforms, which require a mixture of process and business understanding to align with real business outcomes.
The Newco that is HPE+CSC has as good a shot as most to survive the impending service industry carnage, as growth flattens and prices hit the floor for anything that is a mainstream service. It’s sheer size and client portfolio should help it absorb the blows as the market shakes out and the need for increasingly complex “digital underbelly” services proliferates. As we evolve the levers for the survivors to pull are the right combination of labor arbitrage, automation enablement, cognitive understanding and digital enablement. But spending years constantly reorganizing internally to create the beast to deliver all of this with the speed, affordability and agility needed will not work. These two firms need to be slammed together with an urgency and focus not yet seen in our industry. This won’t be pretty and needs to be like a very sticky BandAid being ripped off very, very quickly…because their biggest threat is within themselves.
For a deeper dive into the nuts and bolts of the HPE+CSC merger, download our POV now!
HfS Telecom guru, Pareekh Jain, is back with his second blueprint looking at service provider capability delivering telecoms business services, following his debut analysis at the end of 2014:
Click to enlarge.
Pareekh, how would you describe the current state of Telecom Operations As-a-Service?
We describe this market as a under-penetrated market. Our research suggests the current global telecom operations market (i.e., business processes under network, fulfillment, assurance, and billing) is perhaps one-third of $10 billion potential.
The telecom market is perhaps only vertical market with the dubious distinction of both enabler and victim of the digital transformation. Telcos have enabled cost-effective communication with likes of WhatsApp, Skype and in turn, they have eaten telco’s lunch. Telcos worldwide are struggling to find their right place in the digital world. As-a-Service solutions can enable service providers to help telcos to prepare for the digital era. The As-a-Service is the model today and for the future in telecom operations services.
Tier 1 telcos have generally been early adopters of telecom operations services. Now, there is an opportunity to provide services to Tier 2 and Tier 3 telcos, too leveraging As-a-Service solutions. As-a-Service solutions are driving growth in this market.
The eightservice providers we evaluated for this Blueprint approach this market in essentially two ways. Service providers with strong IT offerings focus more on non-voice solutions whereas pure-play BPO service providers focus more on voice-based solutions. Service providers with strong IT offerings have taken the lead in platforms replacing legacy stack, plug and play business solutions, intelligent automation, holistic security, design thinking, and collaborative solutions while analytics and social is on the agenda of all telecom operations service providers.
How has that changed since our inaugural Telecom Operations Blueprint in 2014?
Pareekh Jain is Research Director, HfS (Click for Bio)
Even back in 2014, we could see many ideals of As-a-Service present in service providers’ offerings. In the last two years, As-a-Service momentum has accelerated.
Compare to our analysis couple of years back, we see the rise in collaborative engagements driving business outcomes. Analytics is now embedded in most of the engagements. Service providers are launching new services incorporating design thinking. We see more examples and use cases of automation. Also, telecom operations service providers are becoming effective brokers of capability by partnering with IT, platforms, local construction companies and telecom domain experts.
We see industrialization of few new service offerings such as network rollout management, revenue assurance in last two years. Also, service providers are constantly innovating with developing further new offerings to solve telco’s pain points incorporating design thinking.
The heartening development is that we see elements of As-a-Service ideals in new contracts more than in existing contracts. These new contracts are either of new greenfield operators or MVNOs. We see some existing customers moving to As-a-Service ideals when renegotiating deals with revised scope.
Tell us, Pareekh, which service providers are leading this market today?
Our HfS Blueprint methodology assesses service providers against a variety of criteria related to Execution and Innovation capabilities of the service providers based upon buyer reference calls, market interviews, RFI submissions and detailed market briefings.
The service providers in the As-a-Service Winner’s Circle are the providers that scored highest on both Execution and Innovation and included: Accenture, Infosys, TCS, Tech Mahindra and Wipro. These service providers are all process experts and stood out for the excellence of delivery operations, solution expertise for all telecom operations processes, the plans for As-a-Service, usage of platforms, and investment plans.
We identified two service providers as Execution Powerhouses—CSS Corp and Aegis—both new to our 2016 Blueprint that excel today in the execution of telecom operations services and are making investments in innovation that should enhance future operational solutions as well.
Finally, we also identified one High Performer service provider in Firstsource, which is leveraging its expertise as a pure play BPO service provider in delivering services in different channels for telcos too.
All service providers are offering capabilities to meet the needs of today’s telecom customers.
What can you predict will happen in the next 2-3 years for telecom operations?
We see four major developments in next 2-3 years in telecom operations,
The first is that analytics offerings will evolve from operational analytics to business analytics. Some service providers already embed analytics in their all engagements. We believe analytics will become all pervasive for all tier-1 service providers.
The second is that intelligent automation and, in particular, robotic process automation (RPA) will become deeply integrated into telecom business processes reducing the size of current labor arbitrage–centric contracts.
The third is that with automation, omni-channel and self-service initiatives the share of voice channel will decrease. Subscribers will use voice for complex issues. So while the share of voice channel will decrease, the average handling time (AHT) will increase and service providers will require higher quality talent to support it.
The fourth is that network rollout management offering by service providers will become extensive. Also, we will see introduction and maturity of new telecom operations services offerings. Service providers will figure out their value proposition in IoT value chain and support telcos in capitalizing on IoT opportunity.
Futuring Gerd Leonhard will keynote at HfS’ Cognition Summit this September
Now we have finally managed to get past that frightfully riveting conversation about doing some rudimentary process automation with our invoice processing and customer collections (aka RPA 1.0), we can finally get to the heart of what new technology capability – much of which is already here – is really doing to our world.
With human brain power and computing power on collision course to become one, the enmeshing of human behaviour and thought processes with self-learning and self-remediating cognitive systems is set to confuse, frighten and – ultimately – inspire us to change our whole approach to managing our technology investments, making data meaningful, collaborating with work colleagues and creating new business models.
This is our goal, this September, in White Plains, New York, where we are, once again, bringing together the diverse stakeholders of the operations and services industry to get past the fear, and find the inspiration to drag us out of this transition phase, in which we currently find ourselves.
Phil Fersht, CEO and Chief Analyst, HfS: Good evening, Gerd. Great to have you on the HfS platform today! We’re very excited to have you join us at Cognition, our coming flagship event in New York this September. But maybe before we start, could you give me just a little bit about your background and how you’ve ended up as such a visionary in the Artificial Intelligence (AI) Space these days?
Gerd Leonhard: CEO of The Futures Agency: It’s a long story. I’m a futurist. But I started as a musician and producer, and then in the late ’90s I went on the Internet and I did a bunch of music startups. It was an interesting time, but I was too early and ahead of my days. I think I realized in about 2001, when everybody went bankrupt that my vision was better than my implementation. So basically I realized I was very good at seeing things ahead of time a little bit. Then I wrote a book called “The Future of Music,” which led to me being called a futurist.
Then over the years, the last 15 years, I’ve branched out into media, marketing, advertising and then ultimately, of course, technology and software. And now I run this company called The Futures Agency. There is about 25 of us and we’re essentially what we call futurizing businesses. So we help companies, organizations and governments, to reinvent how they do things—what they’re going to be in five years. And, of course, a lot of that has to do now with big data, artificial intelligence, cloud computing and digital transformation.
Phil: In terms of the way you see things going in the AI space, you’ve come up with some very interesting thoughts around Digital Ethics. The fact that governments and society need to take a stronger viewpoint, even a stronger regulatory viewpoint in the impact of technology on society and jobs and that sort of thing. Maybe you could share a bit more of your views and opinions here?
Gerd: Yeah. I think it’s pretty straightforward, Phil. First of all, we have to distinguish between intelligent assistance, IA. Which is really what we’re seeing these days, mostly. Then AI and then AGI, which artificial general intelligence. So IA really is anything like Google Maps and Siri—things that give you a simple assistance by having a sort of a minor brain in the cloud. You can speak to Siri but not much will happen. You can use Google Translate, but it’s kind of all minor stuff. There is no super computer in the cloud doing what Watson does.
Artificial intelligence as the next step, where you can actually have deep learning computers that are not being programmed—and this is the Google’s DeepMind, for example. This will be the self-driving car that says, “OK, I can learn how Gerd is driving. I can learn the environment and then I can act accordingly and add value beyond the programming.” That’s really what we’re seeing as the big hope of artificial intelligence: to solve very large, very complex problems like social security, air traffic, environmental control, desalination.
To basically do that with computing power that is unheard of, like a million times that we have today. At that point we wouldn’t really understand how this artificial intelligence does things. We would just know that it does it infinitely better than we do. So that’s all happening in the next few years. We’re going to realize very quickly what Ray Kurzweil calls the Singularity, which is maybe six or seven years from now, when the first computer will have the capacity of the human brain.
At that point, it becomes entirely feasible to outsource major decisions to machines that we don’t know, whether they are right or not and how. At that point, it’s basically imperative for us to use what I call the precautionary principle—which is to say that we should use this, but we should make sure that we can still control it in some way, or at least find a human leverage to it. It goes all the back to the discussion of the three laws of robotics, right? But basically at a certain point there, there is a very big question about technology going beyond our actual control and actual understanding. At that point it may become dangerous, not in a sense of Ex Machina or so, but in the sense of technology basically ruling what we do, so as a consequence we become kind of like machines. We’re forced to comply.
I think that creates all kinds of issues and ultimately, when I speak to businesses, everybody wants to use technology to be more efficient and to make more money, and to create some margin. Which is understandable. But in the end, if you have a business that’s just algorithms and just efficiency, you have no value. Because it’s a commodity then. That’s important to remember.
Phil: So Gerd, looking at how the impact on the future of work and jobs dominated the conversation at our recent event in San Francisco, we came to conclusion that a lot of the kind of the work that’s been automated today aren’t jobs that we would create today, in any case. These are legacy-type jobs that were created maybe 10, 20, 30, even 40 years ago to fulfill tasks. Now they should be automated and should be run electronically. So the bigger issue now is: How do we create work, not necessarily save legacy jobs? Is this something that you would agree with or do you think we need to go further than that?
Gerd: That’s a complicated question, Phil. First of all, I think we need to decouple work from income. So the possibility of doing work that you want to do is extremely fulfilling, but it may not make money. For example, building a playground for your kids or staying at home with your grandmother or writing a book, or whatever. Lots of us think about work as something that makes money—and that will have to stop, because, basically, technology will afford us to work a lot less for the same money because it becomes infinitely efficient and abundant.
Just like music and films are already abundant, other things become abundant, including food, transportation, electricity, energy. That’s about 15 years away. So at a certain point we have to say, it’s great if we make money with this. But maybe we can just make money and also do the work that we want to do, at which point it’s not really important if technology would remove that or not, we would do it anyway just because we want to.
The other thing is that, there is some work that can be automated that we probably shouldn’t automate. So this is a very important decision for government, for employees, for employers and for HR departments. For example, hiring and firing, in my view, should not be automated. It should use the tools, just like I use Trip Advisor to evaluate a restaurant, but I would never rely on Trip Advisor in a sole, exclusive way. It’s just a data point. So if I use IBM Watson for hiring or firing, I think that’s kind of taken to the extreme. It would probably be wrong and also unethical in many ways.
So I’d say a lot of people are always saying that technology removes the bias as an objective thing, and that’s absolutely not true. Technology will have whatever buyers were using to build it. Or whatever data give the AI to learn, is going to create the same kind of bias, right? So we shouldn’t pretend that there is no bias. We should just take it as it is and take it as a data point for a human evaluation. My view is that the jobs are shifting up the food chain, the Maslow Pyramid, basically from the very simple taken-care-of-stuff, to the meaningful or the self utilization, the purpose, the brand, the story telling, the emotional, the human thing. That’s basically what all our jobs will be in the future.
Phil: So we obviously have a big election going on in the US right now…
Gerd: Ah, really?
Phil: This is not really being discussed and it should be, in my opinion. Looking out in the future, at job and wealth creation and the impact of technology, it doesn’t seem have hit the big political conversation yet. Do you think this will happen in the next couple of years? When do you think this will become a much bigger, more societal conversation?
Gerd: We’re having a conversation in Europe everywhere now. In Switzerland, we had a referendum on the basic income guarantee. It didn’t go through this time, but we voted on it and it’s been discussed in lots of places. Basically, I think the government and the US government is looking at this. I know they have a special commission that convened for artificial intelligence. I dare say that Trump probably doesn’t know what it is, but in general I think all governments need to look at this and say, “OK, technology will really solve a lot of these issues and make it abundant, make it possible, make it cheaper in the end.”
For example, right now the cost of healthcare and medical are rising, they’re not decreasing. But ultimately when technology solves this, they can decrease. And that’s a very positive thing. In return, there are other issues that governments have to look at. For example, application of authority, dependency, addiction, which is a huge thing—we’re already at the point of where we feel kind of lost if we don’t have a mobile with us. That’s kind of a childish thing, right?
But think about five years from now, when you’re literary connected to the cloud at all times. You cannot function, like air or like water, if you’re not connected to the cloud. I think at that point we’ve closed the barrier toward human existence that is probably scary. And it’s probably not a good idea, just because it’s more efficient. That’s something to compare. I always say, we should embrace technology but we should not become technology, because when we become technology we lose the value that we have left—which is human, humanity.
Phil: I agree with you there, Gerd… maybe governments need to say, “This is where we draw the line, in terms of when technology does start to take over our lives and our jobs in a way that is detrimental to society at large.” Do you think that is going to happen, when you get to the point where technology becomes a destructive tool rather than a productive tool to society? Do you think that’s going to happen? How could this happen in a way that that could be feasible?
Gerd: I have to say, I’m, in principle, not necessarily for regulation. I’m, in principle, for being able to try things out and innovate the market, and push things forward as we’ve done in the US for a long time. However, there is potential existential risk here. Inventing things that are larger than us, and it’s like we don’t want the guys in Bern, in Switzerland, in the lab, we don’t want them to experiment with the black hole. They could basically make crater out of Switzerland. We need to find a way of saying, “Do what you need to do but without that risk.”
It’s the same with artificial intelligence, with genetic engineering—those are the major two things. And with material and nanoscience, we need to find ways to try this and to investigate it. Then we have to have control mechanisms in place. For example, if we can actually beat cancer by genomic engineering of humans, which seems doable, then we can also build super humans right? Who is going to be in charge? Until we have solved that problem, then we can’t do it. It’s just like the internet of things, we can’t realize the Internet of things until we figured out how they use all that data to its 98% benefit.
Because otherwise, my digital money, my health records, my driving records, my whole, my everything will construct a giant profile of me. Which I’m not afraid of, but I think it’s extremely dangerous when you go about it the wrong way. Until we’ve solved that, then trusting the system to take care of itself, I would say is dangerous. Look at Facebook or Google, Baidu, that sort of thing. They’ll do whatever makes money, which is a good ride in the capitalist system. But it’s still a fairly tilted relationship, Phil, right?
Phil: It is, Gerd. Finally… what can we expect to hear from you, when you speak in September? Anything up your sleeve that you’d love to share with us in advance…
Gerd: Yeah. I’ll share some tips on we can use these amazing technology that are happening all around us in the next five years without getting too many of the unintended consequences. And I think it’s also really important to realize that efficiency isn’t the final destination. People are always looking at technology and saying, “Oh, great, I can fire 80% of our call center staff to make it more efficient.” That’s probably all true, but at the same time, what is the value of a business that has so little people and so little purpose, and so little humanity in it? We have to think about what that means. Maybe sometimes it’s better not to automate and to keep the human value, even if it’s more expensive. So we have to think about what that means ultimately as to where we want to go and where we want to be in five years. I always say, it’s a combination of data, intelligence and humanity that will be the winning factors in the end.
Phil: Gerd, we cannot wait to meet you again and hear your talk, and I can tell you you’re going to have a very excitable, knowledgeable and passionate audience – see you in September!
Dinanath (Dina) Kholkar is Global Head of Business Process Services at Tata Consultancy Services
As we endlessly debate the future of the global IT service delivery in the wake of advances in automation, digital disruption and the ability to maintain double digit growth rates, one area that has steadfastly kept to respectable growth and improved delivery confidence is our beloved business process outsourcing services.
In fact, we are about to reveal to all of you that the growth in Indian-heritage BPO has been consistently out-performing IT services over the last year. Why? Because BPO is several years behind IT in terms of widespread adoption, but is now coming to the forefront as processes can be better-enabled by cloud platforms and maturing global delivery models.
In this vein, I thought it timely to interview Dina Kholkar, TCS’ global head of BPS, who has helped steer his division to $1.9 billion at a 6% growth clip… making BPS now represent 12% of the total TCS business…
Phil Fersht, CEO and Chief Analyst, HfS: Good evening, Dina. It’s great to have you on HfS for the first time. You’ve been one of the best kept secrets behind the exciting growth in the Business Process Services (BPO) team at TCS. Maybe you can share a little bit about yourself, your own background and how you ended up leading the highest-growth division in TCS today.
Dinanath (Dina) Kholkar, Vice President and Global Head of BPS at Tata Consultancy Services: Sure, Phil. I’ve been at TCS for a very long time. This is my 27th year in TCS! I started in 1990 as part of the IT business. I managed a few IT projects, went on to manage accounts across different geographies, different types of roles. The longest stint I had was in the capital markets area. I also spent a few years in TCS’ R&D unit, predominantly focusing on data warehousing and data mining. Those were the years when data had started becoming a focus in many organizations. I did have a stint in operations when I was managing customers, but I never really managed the business of running operations until I got the opportunity to manage e-Serve, which TCS had acquired from Citibank. After a few years, when it was integrated into TCS, I took on the role of the overall head of the TCS BPS business. So we’ve had quite an exciting and an interesting journey, a journey filled with lot of learning and a lot of customers we’ve been able to positively impact over the years. And I feel quite proud about the type of opportunities that I have gotten and the way I have delivered on the objectives that TCS has laid out for itself.
Phil: So what can you share with us then about the secret sauce at TCS? What is it that makes you guys really tick?
Dina: One thing which I have always seen probably over multiple generations—and all three CEO leaders of TCS—really strikes me is the customer centricity. We go the distance, which means we do whatever we need to do for the customer. We do the right things and ensure that we are taking care of the customer’s business, bringing all we have as an organization to solve problems that the customer has. I think that customer centricity is paramount in the organization. I think we also support and move with our customers. And a lot of our customers have enabled us to expand, to diversify, and take those new skills to new business lines. For example, we were predominately an IT business, but many of our customers felt we could expand and provide business process services and infrastructure services, which is why we started delivering those services.
I think customers have benefitted from our service predominantly because of our relentless focus on them. And, more holistically, look at Tata Group over a long period of time and you’ll understand the philosophy that we bring into doing the business, the ethics that we have and the overall commitment to society. There is a lot of pride in what we have managed at TCS and in the Tata Group. All in all, I think it is very important for us to delight our customers and continue to make a difference in society through the companies that we work for.
I think it’s really an ecosystem and an environment which is exciting to work with. And it’s a joy to collaborate with my colleagues. There is never an instance where I needed help and didn’t get it. You know there are always people wanting to help you whenever you need it.
Phil: So, Dina, when we look at the inflection point that’s going on in BPO services today, where do you see the challenges and opportunities for a firm like TCS? And how do you see TCS getting ahead of this disruption curve?
Dina: I would say, let’s step back and look at TCS as an organization and the way we actually started the entire BPS business. We focused predominantly on the core part of the customer’s business from an operations point of view. So in a way we actually disrupted the typical functions of operations by actually focusing a lot on the core part of the domain. The reason why we did that was we believed that, with the DNA of IT and innovation transformation we had, we could actually present more value to our customers right from the time we engage with them.
The entire idea about IT-BPS synergy and bringing value by leveraging technology into core operations is pretty much driven by us an organization. The entire digital economy has been a great change for us because it enables us to digitally reimagine our customer’s business. So when we look at where we were with BPS as a business a few years ago, we were managing SLAs, focusing on operational metrics. We have now moved and matured into leading change, influencing the entire digital journey of our customers and clearly making a difference to the business metrics. And with that, we have connected to business heads—to the CEOs and the CFOs and even in some cases the board members of our customers that we service. So clearly, I think BPS as a business has the potential to make an impact through the entire journey companies take as they embark on Digital Re-imagination™.
From a challenges perspective, clearly we have a large workforce which predominantly focuses on managing and running day-to-day operations with a significant amount of repetitive tasks. And as we drive our robotic automation agenda, using some of the relations that we are building that specifically focus on cognitive learning, we will definitely see a need for driving a lot of competency development initiatives to retool and retrain our people. And that is a journey we have already embarked on. You might have heard about the entire focus that we had on digital—within the BPS organization itself, specifically around data science and automation.
We have already started the journey of retooling our people, getting them to a different set of competencies which are required as the new order sets in the BPS organization. As far as disruption goes, we may not necessarily come up with solutions within the space we currently operate in. The disruption we will look at will be in areas where we don’t necessarily have a focus. We can potentially bring in disruption using some of the cognitive learning solutions that we are building and you will soon see some of these make an impact as we roll them out.
We are working with TCS’ Digitate unit, which has developed ignio™—enhancing it and focusing on certain areas which we believe have the potential to disrupt the marketplace and make a big difference to the entire Digital Re-imagination™ journey of our customers.
Phil: That’s very interesting. So, as we look at shifting value propositions towards outcomes and getting away from this linear scale that we have been obsessed with for so long, there has been a lot of talk about Design Thinking. How do you think this can be applied to BPS? Is this something that you, at TCS, are taking seriously?
Dina: Absolutely. You know, one of the things which I have been driving personally, given the businesses that I manage, is a multi-industry mix. One of the biggest themes that I have been driving is the interconnectedness of technology-leveraging the solutions of one industry for a completely different industry. Design thinking has been a very integral part of our entire journey. We have been embarking on building relationships with some of our partners in academia. We have a very strong alliance with the National Institute of Design in India and the Royal College of Arts in the UK. Plus, you may be aware that we have created a design studio in our Santa Clara office, where we bring in people with different capabilities and different types of skills to solve core problems. It is not just about creating solutions for the current set of issues that our customers have in their businesses, but about helping them completely reimagine their business.
You may be aware that as part of the BPS business, we launched our ValueBPS™ framework. Design thinking has been an integral part of the entire framework. We have been able to bring in different levers to solve customers’ problems, and these solutions that we are creating are very high on business impact. So as a leader, I have completely relooked at how we are currently selling value propositions to our customers and how we are bringing value to our customers.
And as I mentioned, the agility and the ability to actually make a big impact to the business is playing a big role in the way we are going forward. So the very core of our entire approach is the design thinking mode and we do believe that there is a tremendous amount of potential to help people in different walks of life solve problems from the perspective of a consumer of the end-service. And I think that will make a lot of difference to the industry.
Phil: So I am going to get to my final question here, Dina, which is: If you were given the keys to the BPO kingdom – and you rule the BPO world for one week – what’s the one thing you would do to change this industry for the better?
Dina: One thing I see when I look at the industry is that it has not gotten the credit for the knowledge and expertise that it really provides. If you really look at the types of services that we provide across industries, across different geographies, the tremendous depth of knowledge that the industry has is phenomenal. And one key difference is that we’ve probably not looked at the mechanisms of learning and specifically using cognitive learning. I believe that this can really disrupt the industry. It can learn global systems and learn about businesses across the board. A combination of people who have the expertise in running some of these operations, in creating solutions plus machine learning will make a big difference in the industry.
Today, the industry as it exists is probably a small fraction of what potentially is there as a market. And I personally believe that bringing in machine learning into the entire industry would free up people who have the expertise and the ability to do much more intellectually challenging things. Mobilizing that skill would be very important. So I would primarily focus on what is it that we can do to reimagine the BPS business itself. If we talk about Digital Re-imagination™ in the context of our customers, why can’t we reimagine our business? And I think that will be the key thing. What does Digital Re-imagination™ really mean to our business?
And one of the key things which we will look at is how to leverage the multiple levers that are available—what we call the Digital Five Forces, including cognitive learning and artificial intelligence. This is one key element I would drive. We have a huge amount of human capital in the industry, and how we are able to maximize the benefit of that human capital will make a difference to the industry as we go forward.
Phil: That’s a fantastic answer, Dina =) I really appreciate your perspective today and I look forward to sharing it with our community. It’s great to hear about the energy and the passion behind the TCS BPS business, which has been growing so well. So thank you very much for your time today.
At that point, it becomes entirely feasible to outsource major decisions to machines that we don’t know, whether they are right or not and how. At that point, it’s basically imperative for us to use what I call the precautionary principle—which is to say that we should use this, but we should make sure that we can still control it in some way, or at least find a human leverage to it. It goes all the back to the discussion of the three laws of robotics, right? But basically at a certain point there, there is a very big question about technology going beyond our actual control and actual understanding. At that point it may become dangerous, not in a sense of Ex Machina or so, but in the sense of technology basically ruling what we do, so as a consequence we become kind of like machines. We’re forced to comply.
