hfs webinar slides: smart process automation in enterprise business

The Services Research Company

Getting Smarter with Process Automation A Webinar Discussion Advancing the Conversation

June2nd,2016

Host:

PhilFersht,CEO&ChiefAnalyst,[email protected]@pfersht#hfsresearchWeb:www.hfsresearch.com |Blog:www.horsesforsources.com

Overview:• 20years’business experienceintheglobalITandbusiness process

outsourcing andsharedservices industry• Coined the“As-a-Service Economy”in2014• Industryanalyst,author,speaker,strategistandblogger• Advised andcogitatedon100’s ofglobalITservices, BPOandshared

services engagements• Meddleswiththelargestglobalnetworkofenterpriseservicesand

operationsprofessionals

CareerExperience:• PracticeLead,ITServices&BPOResearch,Gartner,Inc• GlobalBPOMarketplaceLeader, DeloitteConsulting• Consulting PracticeLead,IDCAsia/Pacific• ITMarketsPracticeLead,IDCEurope

Education:• BSwithHonorsinEuropeanBusiness &Technology, CoventryUniversity,

UnitedKingdom• DiplômeUniversitairedeTechnologie inBusiness &Technology fromthe

University ofGrenoble, France

[email protected]

Phil Fersht, CEO and Lead Analyst, HfS Research

• World’slargesttaxicompanyownsnoTaxis:• Uber• Themostpopularmediaownercreatesnocontent:• Facebook• Largestaccommodationproviderownstorealestate:• Airbnb• Largestphonecompaniesownnotelecominfrastructure:• Skype,WeChat• World’smostvaluableretailerhasnoinventory:• Alibaba• Fastestgrowingbankshavenoactualmoney:• SocietyOne• Theworld’slargestmoviehouseownsnocinemas:• NetFlix• Largestsoftwarevendorsdon’twritetheapps:• Google• Themostpopularemergingresearchfirmdoesn’tsellresearchreports:• HfS

Data is Eating our World!

Senior Management Driving Customer First Thinking

PleaseindicatewhetheryouagreeordisagreethatSourcingofexternalas-a-Servicemodelswillbedrivenbya“CustomerFirst”strategy

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

51%

46%

SVP+ VPandbelow

Overhalfofuppermanagement(51%)viewthisasimpactingsourcingmodel

changeandstrategymorethananyotherbusiness driver

2020 Vision: The “Intelligent OneOffice” will emerge from Digital + Automation

TheDigitally-DrivenFrontOffice

Mobile, Social/Interactive,Real-timeactionable data,DesignThinking

DigitalUnderbellyIntelligentAutomationofmanualprocessesDigitizationofdocumentsIoT

IntelligentDigital SupportFunctionFrontoffice-alignedIT,Finance,HR,Procurement,SupplyChain

IntelligentDigitalProcessesPredictive&OperationalAnalytics,Cognitive.

TheCustomer-firstDigitalOrganization

TheEnablingIntelligentOneOffice

The Nervous System, incepting & Processing

all Inputs

The Neural System

The Circular System

©HfSResearch2016(Proprietary)

Howenterprisebuyerswouldimprovethequalityandoutcomesfromtheircurrentservicerelationships…

28%

13%

9%

45%

4%

2%

Lettinggoandgivingupmorehigher-valueworktoourserviceprovider(s)

Threateningtoentertaincompetitivebid(s)toforceyourcurrentprovider(s)touptheirgame

Bringbackmoreworkin-houseandimproveitourselves

Rolloutanautomationstrategyintandemwithourprovider

Bringinaspecialistadvisortorecalibrateourrelationship(s)andgetusontherightcourseforAs-

a-Service

Notalot– wepaidfor“cheapandcheerful”andthat’swhatwe’restuckwith

Source:TheHfSWorkingSummit forServiceBuyers,December2015(Sample53enterpriseoutsourcingleads)

©2016HfSResearch

ServiceProvidersOverallRPAActivityinF&ABPOas%ofDealsNumberofContracts=267LiveContractsin2015

RPA use focused on IT currently, with F&A in a high adoption swing

8%

8%

8%

9%

8%

8%

10%

6%

9%

10%

17%

17%

18%

17%

19%

21%

19%

23%

23%

23%

HumanResources

Procurement

Industry-specificProcess(i.e.claimsprocessing)

Sales

SupplyChainandLogistics

CustomerService/SalesSupport

Marketing

FinanceandAccounting

ITapplicationmaintenance&development

ITandNetworkinfrastructure support

FullscaleRPA Implementing/usingRPAactively


©2016HfSResearch

RPA 1.0

HfS Research has been writing about Intelligent Automation for 4+ years

Over the last 4 years we have seen the following emerge:

nAnactivemarketforthirdpartyIntelligentAutomation(andmixedresultsforserviceproviderdevelopedproprietarytools)

nAnincreasinglywidespreadunderstandingofthethebasebusinesscaseforRoboticProcessAutomation(RPA)inenterprisesandserviceprovidersbutcontinuedconfusionoverCognitive

nTheinclusionofIntelligentAutomationinnewsolutionproposals(andalmostallrenewals/re-bids)

nEarlyadoptersofIntelligentAutomationtakingaleapoffaithindeploymentsandbydoingsobeginningthechangetheservicesindustry

©2016HfSResearchLtd.

But today, the topic of Intelligent Automation is in danger of becoming overheated, overhyped and confused

nEnterprisesandserviceprovidershavebecomefixatedonpotentiallyunattainable%savingstargets

nToomanyenterprisesare”Lockingdown”processesastheyaretodayratherthanreinventingprocessesaroundthetechnology

nManyIntelligentAutomationdeploymentsarefocusedonthesub-process(“granular”)ratherthanbeingenterprise-wide(“holistic”)


The HfS Service Buyer Summits…

www.hfsevents.com/new-york-2016

The focus on efficiency and effectiveness should be across the HfS Continuum of Intelligent Automation

triggerbased

Characteristicofprocess

rulesbaseddynamiclanguage

rulesbasedstandardized language

Structured

Characteristicofdata/information

Unstructured withoutpatternsUnstructured patterned

DataCenterAutomation:

RunbookScriptingSchedulingJobcontrolWorkloadautomationProcessorchestration

SOAVirtualizationCloudservices

RPACognitiveComputing

ArtificialIntelligence

BPMWorkflow

ERP

Autonomics

What’s Hype versus Reality?

WhatdoyoubelievetobethemostimportantcomponentsofthevaluepropositionforIntelligentAutomation?(ChooseTop3)

Source:"Idealsof As-a-Services"Study,HfSResearch2015Sample:Total=716;EnterpriseBuyers=178;Advisors/Consultants=176;ServiceProviders=372

65%

50%

38%

35%

32%

29%

24%

21%

18%

3%

Drivingmorepredictabilityandhigherqualityin theprocesses

Speedingup thetimetocomplete theprocesses

Freeingupstafftomovetodifferentprojects

Reducingcostsonacontinual basis,beyondthescopeofthecontract

Creatingmorereliabledatasetsforanalytics

Increasingthestandardizationofprocesses

Enablingustomovetobusiness-outcomesvs.FTEpricing

Eliminatingstaffpositions

Increasingcontrol/visibilityofend-to-endprocesses

Gainingacompetitiveadvantageinmyindustry

What does “Smart” mean?

SPAcombinesallofthetoolsnecessarytoautomateacomplexbusinessprocessfromendtoend:

OCR WebScraping

TextAnalytics

InfoExtraction

MachineLearning-enabledsolutionstoreplacepreviousgenerationtech

Business ProcessMgmt.

RoboticProcessAutomation

Foundationalcapabilitiestoturn ITprojectsintobusinessinitiatives

OrchestrationofHumanLabor

Toolstofindthebestworkers,andsendtheworktojusttherightpersonviagreatUX

CognitiveAutomation

Shiftcognitiveloadtomachines,re-deployhumanworkerstohigh-valuework

InsightsDon’t speeduptheprocess,refactortheprocess

It’simportanttounderstandthetypeofmanualworkthat“Robotics”and“Cognitive”eachautomate:

Handwork

Robotics“aka”RPA

i.e.enteringdatafromoneapplication intoanother

Headwork

CognitiveAutomation

i.e.extractinginformationfromunstructuredsources

Cognitive automation uses machine learning (ML) to train on a process by watching humans on a worker interface:

TheML-poweredcognitiveapproachlearnsandimprovesalgorithmaccuracyasmoredatacomesin.

Source the data

Produce the output

Create the model Refine the model

CASE STUDY

Globalfinancialinstitutionachieves80%smartautomationand100%complianceforainvoiceprocess

1

Situation§ Aglobalfinancialinstitutionwasmanually

reviewingandapprovingasamplingofvendor invoices

§ Only10%ofthousandsofinvoiceswerereviewedduetoresourceconstraints

§ Eachinvoicerequired5-8minsofhumanwork

Approach§ WorkFusion’shuman-in-the-loopOCR

improvedaccuracytoover99%§ Roboticautomationdeployed fordesktop

UIs§ Machinelearning(ML)cognitive

automationdeployed forcategorizationandextractionwork

§ Exceptionsautomaticallyescalatedtohumansforprocessesandcontinuousalgorithmoptimization

Results

Smart ProcessAutomation Rate:

80%Achieved Accuracy Rate:

99.6%Projected FTE Reduction in 2016:

55%

SmartAutomation

80%

100%

80%

60%

40%

20%

0%InitialState Robotics Cognitive Human

30%cognitiveautomation

5%humanworker

UXimprovements

TargetStateofInvoiceProcess(TraditionalRPAvs.WorkFusion)

45%robotic

automation

25%Additional GainsviaOCR+Digitization

20%TraditionalRPA

AchievedTo-Date TargetState

Questions?

[email protected]

What does “Smart” mean

in 2 years’ time?

What does “Smart” mean

to the Enterprise?

How important is Natural Language Processing to the

evolution of automation?

What has to change to make this a reality?

(In technology, enterprise behavior, the market overall, the economy)

Is Intelligent Automation the Place to Start?What isthemostimpactfultimingtobegintheseactions?

16%

19%

18%

19%

20%

24%

21%

23%

28%

31%

33%

33%

32%

30%

34%

34%

33%

30%

32%

29%

26%

30%

28%

26%

18%

15%

11%

13%

16%

12%

10%

12%

5%

6%

6%

7%

5%

4%

7%

4%

Replaceyourexisting(legacy)serviceprovider(s)with“As-a-Service”drivenproviders

Accomplishcreativeproblemsolving/"DesignThinking"

Retrainexistinginternaloperationstalenttoredesignprocesses

Investinspecializedchangemanagementsupporttoreorientoperationsstaff

InvestininternalITtalenttohelpusmigrateawayfromlegacysystems

Investineffectiveanalyticstools&skill

Identify/hireatransformationalleader/changeagent

Investinintelligentautomation

Now Withinthenextyear Within3years Within5years Never


What types of skills do we need now versus the future?Towhatextentarethefollowingtalentrequirementsincreasinginimportance,inordertogainmorevaluefromyouroperations? (Increasingsignificantly)

32%

34%

34%

36%

36%

39%

27%

27%

29%

27%

29%

36%

Analyticalprowesstoimproveoperations/productivity

Exploringnewwaysofpartneringacrosstheservicesecosystem

Understanding/usingdigitaltechnologytoimprovebusinessperformance

Proactivelyidentifyingnewwaysofdoingthingsthatbreakoldhabits

Understanding/usingautomationtoimprovebusinessperformance

Definingbusinessoutcomes

VPandBelow SVP+


Where do we see greater value? Software or the

services around it?

About HfS ResearchWecoinedthe As-a-ServiceEconomy termbecauseweseeaprofoundchangeunderwaythat ismoreall-encompassing than

asimplebusinessmodelorproductline. It'saglobalshiftthatwillleavefewsectorsofbusinessorsocietyuntouched.

TohelpourclientsandthemarketgettotheAs-a-ServiceEconomy,weservethestrategyneedsofbusinessoperationsandIT leadersacrossfinance, supplychain,humanresources,marketing,andcoreindustryfunctionsinorganizationsaroundtheworld.HfSprovidesinsightfulandmeaningfulanalystcoverageofbestbusinesspracticesandinnovationsthatimpactsuccessful businessoutcomes, suchasthedigitaltransformationofoperations,cloud-basedbusinessplatforms,servicestalentdevelopment strategies,processautomationandoutsourcing,mobility,analytics andsocialcollaboration.HfSapplies itsacclaimed BlueprintMethodology toevaluatetheperformanceofserviceandtechnologyintermsofinnovatingandexecutingagainstthosebusinessoutcomes.

HfSeducates andfacilitates discussionsamongtheworld'slargestknowledgecommunityofenterpriseservicesprofessionals,currentlycomprising100,000+subscribersandmembers.HfSResearchfacilitates theHfSSourcingExecutiveCouncil,theacclaimed elite groupofsourcingpractitionersfromleadingorganizationsthatmeets bi-annuallytosharethefuturedirectionoftheglobalservicesindustryandtodiscussthefutureenterpriseoperationsframework.HfSprovidessourcingexecutivecouncilmemberswiththeHfSGovernanceAcademyandCertificationProgramtohelpitsclients improvethegovernanceoftheirglobalbusinessservicesandvendorrelationships.

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