smart process automation (spa) - cybernetic … process automation ... •the business case for...

Smart Process Automation (SPA)

… Critical Component for a Successful Digital Transformation Program

June 2016

COMMERCIAL IN CONFIDENCE | © Internal Consulting Group 2016

• Share our points of view regarding the digital transformation imperatives for

enterprises and the role of Smart Process Automation tactics in enabling successful

digital transformation

• Our storyline includes the following points:

• Enterprises must either “Disrupt” or “Be Disrupted”

• Digital Transformation enhances “Disrupt” and mitigates “Be Disrupted”

• Smart Process Automation is a critical component of a Digital Transformation agenda

• An explanation of what we mean by Smart Process Automation and how it can be used to

drive value

• The business case for Smart Process Automation – cost, insights, quality, risk, skilled

resources, customer journey

• Getting started with Smart Process Automation

• How ICG can help

Our Objectives Today

Robotic Process

Automation

CognitionDigital Labor

Artificial Intelligence

Autonomics

(Deep) Machine Learning

Automated Process

Discovery

COMMERCIAL IN CONFIDENCE | © Internal Consulting Group 2016 3

40% of the Top Ten Incumbents in Each Industry Will Be Displaced

• Digital Transformation is the

main driver of business

disruption

• McKinsey recently published a

paper titled “An Incumbents

Guide to Digital Disruption”1

that explores this business

challenge. They say:o Companies often fail to recognize

disruptive threats until it’s too late

and, even if they do, fail to act

boldly enough

o The right actions to take depend on

whether disruption is detectable,

clear, inevitable, or the new normal1 McKinsey Quarterly article May 2016


• Companies that are “Digital Masters” have 9% more revenue growth and 23% more

profit1

• Companies who invest heavily in advanced analytics outperform the S&P 500 by an

average of 64%2

• Firms who have effective end to end process management grow 42 % faster and are

28% more efficient.3

• Companies with stronger transformation management intensity are more profitable,

have higher market valuations than those that don’t (+26% and +12 % respectively)4

• The “Everyday Bank5” is highly industrialized with automated front and back offices

that are integrated and optimized for speed with:

o Back Office effort slashed by 80%

o Managed application portfolio reduced by 70%

o Time to market cut by 70%

o Operating Income increased up to 30%

2016-08-20Wanilah Advisors Draft for Discussion 4

1 “Leading Digital”; Harvard Business Review Press 2014

2 2011 Accenture Enterprise Analytics for Banks 2011

3 CEB Operations Council Process Ownership Survey 2013

4 The Digital Advantage: How digital leaders outperform their peers in every industry, Cap Gemini MIT Sloan 2011

5 Digital Banking: Stretch the boundaries to the Everyday Bank, Accenture (July 2015)

The Case for Digital Transformation is Compelling


And The Paradigm is Shifting

Then We Must Rapidly

Reality Implications

Digital Disruption is Driving

Significant Change

40% of “traditional” businesses will be disrupted by the arrival of new competitors with lower cost

or revolutionary operating models - Uber, ABnB, Amazon, …

The Status Quo is Not Safe Changing / evolving your operating model to survive is an imperative

Customer Journey Design/

Execution is the New Battle

Ground

Customers are more demanding, better informed and expect a full Omni channel experience (and

they will leave if they do not get it); redesigning your processes to enable and enhance the client

experience is critical to surviving and out-competing

Operating Models are Being

Redesigned / Reimagined

Artifical intelligence, robots and cognitive computing and decision-making, and digital technology

are fundamentally changing the way work is done

Analytics Is Driving Operational

Effectiveness

Data analytics about operational effectiveness with timely insight is now used by many

organizations to improve their business

Skilled labor (experts) are

becoming increasingly scarce

Applying digital labor to operational functions mitigates this risk and frees the best and brightest to

bring more value to the enterprise

Process Automation Lowers

operating costs and improves

quality

Digital labor reduces the cost of a traditional employee by 40% to 60%, and can work longer with

fewer errors

Smart Process Automation is

maturing

Not just Hype - but a critical success factor to enhance and ensure Digital Transformation


Look At All Three Dimensions to Successfully Transform

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PeoplePeople govern andexecute the process

People attrition and loss of institutional knowledge and skills are a risk

ProcessProcesses are not standard; they are typically in people’s heads or on sticky notes

The “rules” are often “judgemental”

TechnologyTechnology must aid and guide the process

People are the glue

Banks are vulnerable if someone changes the game

Adaptive, real-time business coaching• identification of

relevant and curated best practices and improvement levers

• Ask for help boards , codified business rules

Internet of things• real time

performance monitoring

• real time geo-location inventory/work in progress monitoring

• As digital as our clients and maybe more

Business Ecosystem• fail safe redundancy

of business suppliers

• digital Integration into customer business models

• part of the Banks/Clients infrastructure and operating model

Applied business acumen(IA)

• self-correcting and optimising operating processes

• physical and virtual resource optimisation

• heuristic guided semi-automated problem recovery

• digital process measurement and tracking of the inline operational experience

Business Analytics • real time big data

monitoring of actual business performance

• signalling and contingent decision making to relevant business partners (Suppliers, Banks, Clients )

• syncs with all operating systems

Leaders have historically made choices to

have either strong:

• People,

• Processes, or

• Technology

Typically organizations cannot afford to do it

all, But now with the advances in digital

capability and availability of big data, they

are seeking to compete on all three

dimensions.

Making this transformation without looking

at the blend of people, process and

technology is like trying to solve a quadratic

equation when you only know one variable

LOOK AT PEOPLE, PROCESS AND

TECHNOLOGY TOGETHER


What is Smart Process Automation?

7Source: Sylvan Digital 2016

Replacing human labor in operations centers and

centers of excellence with digital labor performed

by software robots following rules and learning

from human experts, through pattern recognition

and machine learning, to improve efficiency and

reduce reliance on human experts over time.

Smart Process Automation disrupts the

operating paradigm by positioning human

experts as the overseers and exception

handlers and the technology tools as the

primary for executing operational functions


“Digital Labor” Matures and Gains Experience



Understanding How SPA Gains Maturity and Efficiency as Insights Develop



Workforce Orchestration

Robotic Automation

Cognitive Automation

The Three Major Components of SPA

10


Orchestration, Robotic and Cognitive Automation

11

OCR and Convert Documents

Transfer Linked Content to Content Field

TaxKeywords- Keyword Check

Clear Content Field

Extract Company Name and Jurisdiction

Normalize Data

W-8ECI –Updated XPath

W-8ECI Extraction

W-9 Extraction (Name Only, Always US Jurisdiction)

Name Jurisdiction

Detection

doc type

Robotic Tasks

Robotic Task

SME Task

Cognitive TasksProcess

Transparency is

critical to the initial

SPA Implementation


Using SPA to Build a Successful Digital Transformation

OCR Web Scraping Text Analytics Info Extraction

Internal Data Feeds

(Inbound / Outbound)External Data Feeds

(Inbound / Outbound)

Robotic Process

Automation

Business Process

Management

Orchestration of Human Labor

Cognitive Automation

Insights

100s of structured

data sources must be

integrated

… and many of the data sources required are unstructured

Employing tools that can learn embeds continual process improvement and

transparency into the operational ecosystem

Use of integrated technology tools to accelerate and improve business

processes

Allows for the efficient application of skilled

experts to support and oversee the processes

instead of performing all but the exceptions

The information generated in such an ecosystem

supports analytics that inform and enable digital

transformations

12


Using SPA to Enable Digital Transformation Makes Good Business Sense

25% - 30% Plain old

outsourcing and offshoring

10%- 15% robotic

automation on offshore,

40% on onshore

resources

10%- 20% cognitive

automation on top of robotics

5%- 10% human worker

analytics / UX improvements

30%

+50%

Initial State Sourcing Robotics Cognitive Future State

Intelligent Automation

13


Examples of Outcomes

ANZ Bank with Automation Anywhere Global Bank Invoice Process with WorkFusion

Global Retail Bank Technology Services with Arago

14

Telefonica with BluePrism


The Market Players in Automation Eco-Systems

15

Artificial Intelligence

Cognitive Computing

Autonomics

Robotic Process Automation

Limited Automation

Jacada Cicero

… and a multitude for purpose automation tools that focus on automating specific Use Cases

Accenture’s “MyWizard IPSoft’s “Amelia”

Celeton’s “Infostream” Arago’s “Hiro” WorkFusion

BluePrism UIPath KryonIPSoft OpenSpan KofaxAyehu Nice Automation Anywhere

IBM’s “Watson” Google’s “Brains”

Wipro’s “Holmes”

TCS’s “Ignio” Infosys’s “Mana”

Increased Application of

Pattern Recognition and

Machine Learning


The Case for Digital Transformation and How SPA Helps

16

Robots and Digital Transformation Change the Game …

By Facilitating the Application of Highly Skilled Experts Where They Are Needed Most,

And Providing Consistent Availability of Metrics and Process Transparency

to Drive the Digital Transformation AgendaSource: World Economic Forum 2015


Recent Analyst Predictions

17

The opportunities extend far beyond labor savings.

When we modeled the potential of automation to

transform business processes across several industries,

we found that the benefits (ranging from increased

output to higher quality and improved reliability, as well

as the potential to perform some tasks at superhuman

levels) typically are between three and ten times the

cost.

McKinsey Quarterly Q1 2016

Boston Consulting Group predicts that by 2025, up

to a quarter of jobs will be replaced by either

smart software or robots, while a study from

Oxford University has suggested that 35% of

existing UK jobs are at risk of automation in the

next 20 years.

Forrester predicts that 25% of tasks across every

job category will be automated by 2019. The

magnitude of change caused by digital disruption

is even greater – it is expected to affect 44% of

tasks.

Forrester, February 2016

Our research suggests that as many as 45 percent

of the activities individuals are paid to perform

can be automated by adapting currently

demonstrated technologies.

McKinsey Quarterly Q1 2016


The Business Case Benefits of SPA

Digital Labor typically reduces the cost of the cost of human labor 40% to 60%

No cost associated with attrition, benefits, paid leave, facilities, technology systems and support

Minimal training expense

Cost

Insights

Skilled Resources

Quality

Customer Journey

Richer, consistent metrics and visibility to operational processes facilitate insights leading to continuous improvement and process redesign

Consistent quality and accuracy lead to faster cycle times with less re-work, and better, more timely compliance performance

Risk Reduction of human involvement in process execution removes some risk mitigation

costs and makes risk associated with process execution more predictable

Change Management is more reliable without human bias and cultural considerations

Using Digital Labor for 60% to 80% of process execution frees the most skilled operations experts for other functions

Consistently performing, highly scalable operations can be designed to drive improvements in customer experience


A Case for Action Requires Understanding Where to Start

Back Office

eInvoice (P2P)

Data Entry / Compliance

Marketing Research

Travel & Expense Management (T&E)

Data Entry / Compliance

Lock Box Processing

Commerce

Category Management

Search relevancy Optimization

Collections

Master Data Management

Corporate Actions

M&A Transactions Announcements

Corporate News Extraction

Real Time Dividend / ETF / Bond / Shares Outstanding

Announcements, etc.

Client Driven Events

KYC – Legal Entity, People Search, Monitoring

Standard Settlement Instructions (SSI)

Tax – K1 Forms / foot notes processing

Consumer Personal Assistant

Bookings

Travel Research

Reservations

Purchases

Customer Support

Entities and Instruments

Company Legal & Financial Information

Business Classification

ETF / Bonds / Term Sheets / Prospectus Attributes

Filings Extractions

Hierarchies / Taxonomies

Legal Entity Monitoring

Company Products and Services

Loan Data Extraction

19

Automation Friendly /

High Functional Impact

• Assess your

process portfolios

• Learn by picking

the right pilot


Getting Started … Disrupt or Be Disrupted

• These transformative initiatives are happening in most

global enterprises today - at an ever increasing pace and

with significant results for success

• Active executive sponsorship for programs of this nature

is critical

• The steps forward typically include:

o High level case for action

o Process Portfolio assessment & ranking

o Pilot deployments

o Business Case and Roadmap

o Governance Plan

o Execution Plan

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Next Steps

• Develop a “Case for Action”

• Assess and Rank the “Process

Portfolio”

• Conduct Internal Education to

drive senior leader consensus

and buy-in

• Select a “Pilot” to drive

learning


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Thought Leaders – all can be made available to you and your internal team


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COMMERCIAL IN CONFIDENCE | © Internal Consulting Group 2016UNBUNDLED CONSULTING • PROJECT SUPPORT • CAPABILITY BUILDING • PROFESSIONAL ASSOCIATION

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John E. Petronzi, ICG Accredited Professional

[email protected]

+1 (917) 353-7470

Thracy Varvoglis, ICG Accredited Professional

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mailto:[email protected]

