Automation technologies are more about liberating humans - or to be more specific, improving the engagement level and quality of their tasks, than challenging their daily bread. In a way, the automated processes deployed in businesses take the robots out of humans. By managing the repetitive, onerous and tedious tasks it provides the workforce with the opportunities for more right-brain pursuits that drive higher satisfaction.
However, the changes are just beginning to manifest themselves, future has just about begun. The next couple of years will see the impact of technologies like AI, ML, and blockchain more profoundly, both on businesses and employees. What are those changes going to be? Are we truly moving away from physical to a completely digital organization? Is blockchain going to drive the next industrial revolution? Where do these technologies lead the human workforce? These are some of the questions that were deliberated upon in our recent webinar titled Taking the Robots out of Humans, where Phil Fersht, CEO and Chief Analyst, HfS Research spoke to Dr. Mary C. Lacity, Curators’ Distinguished Professor at University of Missouri - St. Louis and Visiting Scholar at MIT CISR, and Malcolm Frank, EVP, CMO and Chief Strategy Officer at Cognizant.
Moving Towards Digital Operations
| “In the next two to three years there will be strategy enabled business models built on the transformational technologies to deliver value to the customers”
- Dr. Mary C. Lacity, Curators’ Distinguished Professor at University of Missouri - St. Louis and Visiting Scholar at MIT CISR |
Digital operations are fast becoming a hygiene factor in businesses than an exceptional technology investment. Technologies like Artificial Intelligence, Machine Learning and Blockchain do not signify digital transformation but are just a means for the organizations to achieve the goal of complete digitized operations. Right now, these technologies are being discussed and explored to drive fundamental changes in the way businesses operate. However, as Malcolm Frank put it, these technologies must deliver business value. And, we are closer to it as the service provider industries are trying to bring these technologies together to build solutions for digital operations. In the next two to three years there will be strategy enabled business models built on the transformational technologies to deliver value to the customers, claimed Mary Lacity.
The Hybrid Model – Coexistence of Data Driven and Physical Engagements
| “The digital or virtual elements are not going to displace the traditional industries but complement their physical aspects. This is the hybrid model where some parts will remain physical while some will move towards digitization and it is this combination will drive business value to the customer”
- Malcolm Frank, EVP, CMO and Chief Strategy Officer at Cognizant |
As our recent research points out there is a distinct shift towards digital and virtual experience and far more focus is on predictive decision making based on real-time data. However, not many firms are truly digital. “It all depends on how the senior management view data and how the employees, the data junkies, view and capitalize data in managing their business”, argued Malcolm Frank. He believes the digital or virtual elements are not going to displace the traditional industries but complement their physical aspects. This is what he calls the hybrid model where some parts will remain physical while some will move towards digitization and this combination will drive business value to the customer. For example, Uber has the physical car and the driver supported by high-end technologies like GPS to deliver seamless convenience to the riders.
This drive towards digitization puts pressure on operations and calls for an integrated approach where the silos of front, middle and back offices are broken down for a OneOffice approach. If the front-end interfaces are digitized, for example, through mobile experiences but not sufficiently integrated to the middle-level processes and the backend legacy systems, this is only going to leave a “trail of tears” with frustrating outcomes that do not add up as a whole. “CXOs are asking tough questions on revenue generation, impact on bottom line etc. afforded by front-end digitization, in response to which executives are left staring in the wild,” said Malcolm and insisted that digital at scale requires the front, middle and back offices to work in harmony.
Mary Lacity took this a step further and said that the digital operations must also be viewed in terms of enhancing employee experience which in turn will improve the overall organizational performance. In a way, the true holistic digital experience for all the stakeholders – customers, suppliers and customers may well come from the digitally nimble start-ups in not so distant future. The large industries who claim to be investing in and adopting digital technologies are not the disrupters in the sense that they are only utilizing these technologies to improve business as usual, felt Lacity. “Future blockchain will have the digital underbelly. The idea of completely decentralized peer to peer platforms may completely obliterate the incumbent base model”, she claimed.
Opportunities or Threats?
HfS' research of over 400 businesses show a whopping 84% CEOs agreeing to the fact that the digital disruption offers more opportunities than threats. But are they being over optimistic? There is certainly a long way to go. Many organizations may be training their eyes on short to midterm vision, and in that, disruption is not exactly what they are after but performance improvement. Talking about digital that matters, it will continue to be driven by the focus on customer value creation – offering them more choices, allowing them to pay for only what they consume and providing them ease and convenience. Malcolm shared an interesting anecdote where his teenage son found his old music albums in the attic and was amazed that he had to buy the whole album when he actually liked only 2 or 3 songs in it. “It made me think how unethical it was! It is a matter of mindset… how much are we willing to tolerate, not just in the elective industries but more in fundamental systems like healthcare, government and community”, he said. And any noteworthy digital disruption must address the issues of customer tolerance and value delivery.
Not only in the customer-facing business but the concept holds true while dealing with business buyers too. In B2B space the emergence of SaaS and subscription model has brought in the much-needed respite from huge but not necessarily essential technology investments. Amazon Web Services (AWS) for example liberates the enterprise customers from buying the whole stack of technologies and then integrating those to their systems by allowing them to simply “rent” what they require. This enhances digital adoption. Mary Lacity added that the current centralized business models of the more digitally advanced companies like Uber and Air BnB can be disrupted by distributed peer to peer systems facilitated by blockchain, providing the customer more choice and ease in picking a ride or booking a room!
Liberated BPO – the Future of Outsourcing
The landscape for the outsourcing industry is changing. The high spikes in growth have mellowed down but the interesting thing to note is that despite clocking 5% year on year growth, the Indian outsourcing and service providers industry has actually recorded a downward trend in headcount. What does it mean? Is human workforce being short-changed in favor of process automation?
Not exactly. It only points towards the changing nature of jobs and the evolving prospects. “There is still going to be a lot of human touch in future businesses, knowledge-based occupations are not going away, anywhere”, Mary Lacity was confident. Phil agreed that there are more medium and high skill roles being developed to deliver more value to the clients in digital operations space. In fact, it is the service providers’ industry that can be the biggest consumers of technologies like RPA in terms of its competitive advantage. Malcolm cited the example of US Law departments that have automated discoveries. “Instead of impacting the paralegals adversely, it has made them more valuable as judges are now asking for more nuanced discoveries. At the unit level, there is less human activity but there is so much more that requires human intervention. Paralegals are busier and happier than ever before for they are doing much more meaningful work… and we are going to see such things at scale”, he said.
There is a huge market opportunity for outsourcing industries today as Fortune 500 companies thrive to become digital to the core, run their businesses on the insights driven from data and create a more digital customer experience. The unit cost or the atomic nature of projects may be on the downhill but those who can navigate through it will emerge stronger and those who cannot “will become the working data of future service providers”, Malcolm added.
The Left-brain Enabled Right Brain Capabilities
This shift towards the digital core brings in the shift in the nature of jobs and future of workforce. HfS research shows that more and more CEOs are looking for creative and entrepreneurial talent to take their innovation to next level. However, these enterprises are not looking to add more people to enable it. Herein lies the opportunity for service providers and consulting firms, the hitherto left-brain providers, to enable right brain capabilities in their clients, claimed Phil. Malcolm agreed that the Fortune 500 CEOs are looking to embrace change and are in a way searching for a combination of “Spock and Kirk”. There is certainly demand for talents in Design Thinking, IoT, AI, ML and Cyber Security. The service provider firms need to develop a formula to leverage left brain capabilities to solve right brain issues such as developing new business models and creating new customer value propositions.
Rising above ROI
The new technologies as they emerge, the focus must shift from immediate goals of cost reduction to a greater value creation. RPA, for example, must rise above the ROI focus, insisted Mary Lacity. It is not just lack of business use cases (as HfS research shows) that hinders the large-scale adoption of transformational technologies like RPA. “The bigger advantage lies in how you can reconfigure the workforce design and drive more shareholder value than just cost saving through better compliance, agility and increased scalability”, she claimed. It is this demonstrated value that can aide higher adoption of such technologies and create greater buy-in from boards and shareholders. The employees, though much concern is raised on their job security, are embracing process and workflow automation as it brings them greater opportunity for higher level engagement. The conversations thus must now shift from FTE reduction to value creation.
Blockchain Fails the Mother Test
Blockchain is a superstar technology riding on high bets with billions of dollars’ worth investments going in and thousands of proves of concepts being developed. But, blockchain based enterprise solutions are yet to emerge. “We are still where we were in 1992 with world wide web, as far as blockchain is concerned. It is difficult to understand as it is not a binary… it is a wild west, as of today”, said Lacity. Malcolm agreed that blockchain is yet to be understood properly. “It is kind of marketing problem in that if you explain that blockchain is a distributed ledger technology that no one owns – your mother is going to wonder if I sent you to the right school – it fails the mother test”, he insisted. We are still a good couple of years away from the time when vendors are able to build “industry use cases that are specific and not at thirty thousand feet”, he added.
The future looks promising, there are untapped opportunities for both vendors and buyers. What is needed though is specificity and focus. The hype around technologies is fine, now it is time to build demonstrated business value.
A special thanks to Mary and Malcolm for the fantastic conversation.