hfs webinar slides: the great roboboss debate

The Services Research Company

The Great Robo-Boss Debate!

An HfS Research Webcast,

November 10th 2016

Host: Phil FershtChief Analyst and CEO, HfS Researchphil.fersht@hfsresearch.com@pfersht

©2016HfSResearch

Overview:• 20 years’ business experience in the global IT and business process

outsourcing and shared services industry • Coined the “As-a-Service Economy” in 2014• Industry analyst, author, speaker, strategist and blogger• Advised and cogitated on 100’s of global IT services, BPO and

shared services engagements• Meddles with the largest global network of enterprise services and

operations professionals

Career Experience:• Practice Lead, IT Services & BPO Research, Gartner, Inc• Global BPO Marketplace Leader, Deloitte Consulting • Consulting Practice Lead, IDC Asia/Pacific• IT Markets Practice Lead, IDC Europe

Education:• BS with Honors in European Business & Technology, Coventry

University, United Kingdom • Diplôme Universitaire de Technologie in Business & Technology from

the University of Grenoble, France

phil.fersht@hfsresearch.com

Phil Fersht, CEO and Chief Analyst, HfS Research

©2016HfSResearch

Automation Fantasy…

• McKinseybelieves asmuchas45%ofcurrentjobs couldbereplacedusingtechnologythatalreadyexists;

• Forresterclaims1millionUSB2Bsalesjobs willgoawayby2020;

• Gartnerpredictsoneinthreejobswillbeconvertedtosoftware,robotsandsmartmachinesby2025– andBy2018,morethanthreemillionworkersgloballywillbesupervisedby"robo-bosses”by2018

• AccordingtoanOxfordUniversityStudy,about47 percentoftotalUSemployment isatrisk;

• StephenHawkingwarnsusthat AIwouldbethebiggest– andpossiblythelast– eventinhumanhistory;

• TheGuardian(blessthem)evenhighlightsScientistMosheVardi’sviewthattheoldestprofessionintheworldisunderthreatofbeingrobotized;

Cognitive Automation Reality…

• RoteB2Bsalesandcustomerservicejobshavealreadygoneaway

• Manufacturingjobshavealreadybeenautomatedout

• Transactionalback-officeandITworkhasalreadybeenmovedoffshore

• Automationinthebackofficeisaboutproductivityimprovements,notdirectheadcountreduction

• Thereisonlyoneveryshakyexampleof"robo advisors"intheindustry(RBS)

• Westillhaven'thadarealdebateontheethicsofautomationandcognitivecomputingintheB2Benvironment

• Thespeedofinternalorganizationalchangeispainfullyslow

• Cognitivetoolswithrealbusinessapplicationsareonlyjustemerging…

©2016HfSResearch

Automation Impact Scenarios on Services Professionals by 2021

Scenario1ModerateLowskilledjobsfallingby22%

Mediumskilledjobsincreasingby13%

Highskilledjobsincreasingby57%

Totaljobsfallingby2%

Scenario2Likely

Lowskilledjobsfallingby30%

Mediumskilledjobsincreasingby8%

Highskilledjobsincreasingby56%

Totaljobsfallingby9%

Scenario3Aggressive

Lowskilledjobsfallingby36%

Mediumskilledjobsincreasingby1%

Highskilledjobsincreasingby55%

Totaljobsfallingby14%

~300,000jobsatrisk ~1,400,000jobsatrisk ~2,200,000jobsatrisk

©2016HfSResearch

Total Impact of Automation on IT/BPO Services Workers by Major Country (all skill-levels across all workers)

1.00

1.54

3.38

4.90

4.43

1.08

1.47

2.90

4.30 4.18

-20%

-15%

-10%

-5%

0%

5%

10%

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Philippines UK India US Other

%Cha

ngeinW

orkforce

ServicesW

orkers(M

illions)

2015 2021 %Change

Research sources: 1477 industry stakeholder interviews 2015-16, NASSCOM, US National Bureau of Labor Statistics, UK ONS, Selected others, HfS Analyst judgment

©2016HfSResearch

Total Impact of Automation on IT/BPO Services Workers by Major Country (likely scenario, low-skilled workers)

0.73 0.74

2.28 2.34

0.670.54

1.641.57

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0% 0.0

0.5

1.0

1.5

2.0

2.5

Philippines UK India US

%DecreaseinW

orkforce

ServicesW

orkers(M

illions)

2015 2021 %Change

Research sources: 1477 industry stakeholder interviews 2015-16, NASSCOM, US National Bureau of Labor Statistics, UK ONS, Selected others, HfS Analyst judgment

©2016HfSResearch

Total Impact of Automation on IT/BPO Services Workers by Major Country (likely scenario, mid-high skilled workers)

0.28

0.80

1.11

2.56

0.41

0.94

1.27

2.73

0%

10%

20%

30%

40%

50%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Philippines UK India US

%In

creaseinW

orkforce

ServicesW

orkers(M

illions)

2015 2021 %Change

Research sources: 1477 industry stakeholder interviews 2015-16, NASSCOM, US National Bureau of Labor Statistics, UK ONS, Selected others, HfS Analyst judgment

©2016HfSResearch

Reality… Meet the new Robo-boss!

©2016HfSResearch©2016HfSResearch Proprietary│Page11

©2016HfSResearch

Define Robo-Boss… what should it be?

©2016HfSResearch

How HfS Defines Intelligent AutomationRobotic Process Automation describes a software development toolkit that allows non-engineers quickly to create software robots to automate rules-driven business processes. E.g. digitizing the process of collecting of unpaid invoices, that involves mimicking manual activities in the RPAsoftware, the integration of electronic documents and generation of automated emails to ensure the wholecollections, process is run digitally and can be repeated in a high-throughput, high intensity model.

Cognitive computing is the simulation of human thought processes in an Intelligent Automation process or set of processes. It involves self-learning systems that use data mining, pattern recognition and natural language processing to mimic the way the human brain works, without continuous manual intervention. E.g. an insurance adjudication system that assesses claims, based on scanned documents and available data from similar claims and evaluates payment awards.

Autonomics is referring to self-learning and self-remediating engines, where the system makes autonomousdecisions, using high-level policies, constantly monitoring and optimizing its performance and automaticallyadapting itself to changing conditions and evolving business rules and dynamics. Increasingly minimal humanintervention. E.g. a virtual support agent continuously learning to handle queries and creating new rules/exceptions as products evolves and queries change.

Artificial Intelligence is where intelligent automation systems go beyond routine business and IT process activity to make decisions and orchestrate processes. E.g. an AI system managing a fleet of self-driving cars or drones to deliver goods to clients, manage aftermarket warranties and continuously improve the supply chain.

©2016HfSResearch

How far from reality are today's viewpoints from other "experts" - what's real and what's fantasy?

©2016HfSResearch

Do we need a Code of Ethics for Intelligent

Automation and Cognitive?

©2016HfSResearch

Where are we going to see “real Cognitive

applications” in the short-medium term?

©2016HfSResearch

The “Intelligent OneOffice” will emerge from Digital + Automation

The Digitally-Driven Front

OfficeMobile,

Social/Interactive, Real-time actionable data,

Design Thinking

Digital UnderbellyIntelligent Automation of manual processesDigitization of documentsIoT

Intelligent Digital Support FunctionFront office-aligned IT, Finance, HR, Procurement, Supply Chain

Intelligent Digital Processes Predictive & Operational Analytics, Cognitive.

TheCustomer-firstDigitalOrganization

TheEnablingIntelligentOneOffice

The Nervous System, incepting & Processing

all Inputs

The Neural System

The Circular System

©2016HfSResearch

Where should we start our Cognitive journey?

©2016HfSResearch

Intelligent Automation is the Place to Start for well over half of Enterprises Whatisthemostimpactfultimingtobegintheseactions?

19%

18%

19%

20%

24%

21%

23%

31%

33%

33%

32%

30%

34%

34%

30%

32%

29%

26%

30%

28%

26%

15%

11%

13%

16%

12%

10%

12%

6%

6%

7%

5%

4%

7%

4%

Accomplishcreativeproblemsolving/"DesignThinking"

Retrainexistinginternaloperationstalenttoredesignprocesses

Investinspecializedchangemanagementsupporttoreorientoperationsstaff

InvestininternalITtalenttohelpusmigrateawayfromlegacysystems

Investineffectiveanalyticstools&skill

Identify/hireatransformationalleader/changeagent

Investinintelligentautomation

Now Withinthenextyear Within3years

Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371

Are today’s service providers really going to be the enablers of

Cognitive?

©2016HfSResearch

Source: “Making that leap from effective to strategic BPO/BPM" Study, HfS Research 2016Sample: 343 Industry Stakeholders (Enterprise Buyers = 115, Advisors = 55, Service Providers = 173)

Barely half of today’s buyers are looking to their providers for value beyond operational support

25%

27%

28%

71%

86%

95%

89%

91%

89%

10%

30%

31%

71%

83%

90%

72%

90%

83%

14%

16%

17%

34%

39%

43%

44%

47%

48%

Deliverycenterlocations

On-siteaccountmanagers

Sourcing“fresher”talent

Continuousimprovementprograms

Consultingskillsforprocessredesign/reimagining

Datascientistsandanalyticsskills

Cognitivecomputingplatforms

Processautomationtools

Designthinkingcapability(e.g.,methodologies,tools,…

Buyers Advisors ServiceProviders

Whichcapabilityattributesfromserviceproviderswillbetheimportant2018?(moreimportantormuchmoreimportant)

The Service Providers will bifurcate into two groupings

BackOfficeOutsourcersEfficiency,Automation,LaborArbitrageandScalability

OneOfficeEnablersDataOrchestrationandHumanCollaboration

Buyers - if you could start this all over again,

what would you do differently?

How can we develop “Cogno-boss” skills?

Top skills in 2020 shift to critical thinking, creativity and Emotional Intelligence…

Source: Future of Jobs Report, World Economic Forum, 2016

©2016HfSResearch

What is the Real Endgame with Cognitive?

©2016HfSResearch

Endgame: Vertically infused insights and data??!!Insights,Data

VerticalProcesses

Verticallyinfusedinsightsanddata

BPaaS,BPOas-a-stack,Industryplatforms.

Machinelearning,Neuralnetworks,Enterprisesearch,ArtificialintelligenceAnalytics

Automation is in the eye of the beholder