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Monthly Archives: May 2017

Here Cometh Cognitive Procurement with SAP Ariba and IBM joining forces

May 17, 2017 | Derk Erbé

We are now seeing real commercial business applications getting serious about their cognitive potential, with the new announcement of SAP Ariba and IBM joining forces to cognify contracting and sourcing processes, as a start. At HfS, we believe this is just the start of core business applications being immersed in cognitive capability to deliver a new threshold of business value for enterprise clients.

In the recent HfS Procurement As-a-Service Blueprint, IBM, an HfS Winner’s Circle industry leader, invested in transformation-led delivery with a ‘Consult to Operate’ strategy, focusing on on-demand consumable digital processes for procurement fueled by analytics and cognitive.

Looking ahead to 2020, HfS recently wrote: "Towards 2020 IBM will be leading in the cognitive procurement services space. Underpinned by a strong BPaaS platform, most clients will look at IBM first when it comes to new cognitive technology-driven services with vastly improved data analytics capabilities. The biggest challenge for IBM to succeed with cognitive procurement is to bring clients along this journey".

The goal of this partnership is to take cognitive procurement to the next level. SAP Ariba and IBM are creating two centres for Cognitive Procurement, in Palo Alto and New York. The cognitive procurement capabilities will be expanded through a joint go-to-market strategy and a joint development roadmap. But there is more to this deal… 

"Making procurement awesome on steroids"

Asked what the biggest benefit of the partnership is, Moray Reid, IBM Procurement's Global Offerings Leader, took SAP Ariba’s motto up a notch; "Make procurement awesome on steroids”, by really bringing leadership to the procurement space and enabling smart new technologies to allow customers to make better decisions in real-time. SAP Ariba and IBM truly believe this is a case of ‘better together’.

In a recent article - 'What will The Procurement As-a-Service Provider Landscape look like in 2020?’ - HfS wrote, "IBM has a massive supply chain, which it smartly leverages in its procurement offerings. IBM is bullish on cognitive procurement. IBM BPS is morphing into Cognitive Business Solutions. Its own procurement provides a great playground for applying and road testing all the new cognitive procurement solutions, giving it an advantage over providers who don't manage procurement for their own organization or have less 'cognitive savvy’ clients”.

The partnership with Ariba is a serious step forward for the cognitive procurement ambitions of both organisations. SAP Ariba is a dominant player in the procurement space, with a mature, horizontally integrated platform, the world’s largest business network and end-to-end suite of source-to-settle applications that cover all categories of spend. SAP Ariba and IBM are developing the first cognitive use cases together and creating new services, adopting IBM’s Consult to Operate model, leveraging consulting capabilities in operations to deliver value on an outcome basis. One of the use cases under development is in contract intelligence; Watson sifting through structured and unstructured contract data to gain insights and improve contract compliance, a big step towards actually achieving benefits, one of the toughest challenges in procurement. Part of the work will further the development of intelligent procurement solutions and services, with IBM and SAP Ariba working side by side to explore applications of emerging technologies, including blockchain.

What’s in it for SAP Ariba?

SAP Ariba needed a new differentiator as competition is heating up and competitors, like Tradeshift and Coupa, accrue assets and client wins. With SAP Leonardo alongside Watson, it gets a credible cognitive engine. Further, to leverage network effects and grow its value, the network needs to expand by adding more suppliers. Bringing IBM’s huge supplier base on board will boost the value of the Ariba Network increasing its size and scale.

What’s in it for IBM?

Emptoris has been a good foundation for IBM’s procurement services and BPaaS delivery, but lacks the network. Instead of betting on two horses, by continued development of Emptoris for internal use and partnering to provide the business network capability to clients, IBM will, over the coming period, transition all its BPaaS offerings to SAP Ariba. This is a big operation, but it makes a lot of sense. There must be hard assurances and safeguards in the partnership agreement, otherwise it’s a risky bet to put your As-a-Service/BPaaS future in the hands of a partner.

Competing on multiple fronts

Watson is IBM’s big platform bet of the decade – its main challenge is being a bit too far ahead of its time, pushing a cognitive story at clients that simply are too bogged down in other initiatives to take the time and consider the ROI of injecting cognitive capability into their processes. Positioning it as one of the largest procurement platforms makes a lot of sense from the perspective of not only competing for Procurement As-a-Service services with other providers, but also allowing IBM to be a technology provider to competitors via SAP Ariba. If you can’t beat them on the services front (you can’t win them all), at least get a piece of the action via the procurement platform side.

What’s in it for buyers?

Many buyers see cognitive procurement as the next frontier, but don’t have a clear understanding, or plan, on how to make it work for their organisations; the majority of procurement organizations perceive themselves as far removed from advanced innovative procurement capabilities. They are fixing the basics, getting procurement technology to work and pondering the opportunities RPA could bring the procurement function. The gap between cognitive procurement and the (perceived) level of maturity and change readiness of procurement is the hurdle IBM needs to take to make its cognitive ambitions reality or be at risk of running too far ahead of the game.

IBM and SAP Ariba will focus on a step-by-step approach to ease clients into the world of cognitive procurement, the key being small steps with tangible benefit. Buyers who need to see a serious roadmap and a partner with deep domain expertise and consulting capabilities gain a valuable option for their journey to the future of procurement.

Questions left to be answered

How will other partners react? Eleven out of fifteen service providers in the 2016 ‘Procurement As-a-Service Blueprint’ have a partnership with SAP Ariba. Just as when Wipro announced its strategic partnership and investment in Tradeshift earlier this year, the SAP Ariba and IBM folks will be fielding a lot of calls from concerned partners. What will this mean for their partnership with SAP Ariba, IBM or both? How much influence and access will IBM have on SAP Ariba’s architecture, roadmap and governance? How valuable is our partnership to SAP Ariba, now IBM stepped to the plate in such a manner?

The bottom-line: Procurement buyers; there is light at the end of the cognitive procurement tunnel

Two giants putting their weight behind cognitive procurement is a big step in taking the promise of cognitive into the realm of procurement.

Hand holding will be required to take clients along the journey and IBM and SAP Ariba vow to be the ones to extend their hand.

HfS will closely follow the value this partnership will create for service buyers, particularly in the fields of strategic sourcing and category management. How will those upstream procurement areas benefit from the cognitive capabilities on top of a business network? Can it find clever ways to address the scarcity of category talent and expertise? Is this partnership bringing true digital procurement closer, with pulling more suppliers onto the digital platform than before?

Focusing Watson on processes that can significantly benefit from tangible cognizant results, especially areas like contract management and general sourcing, is a smart way forward.  HfS expects IBM to follow this with other initiatives across other business processes where the firm has real strength and depth, such as HR and F&A – and eventually broader supply chain.  We should also expect further forays of Watson in the healthcare sector, where IBM has proven credibility supporting medical research and life sciences work (see our earlier report on Watson’s potential in medical research).

Posted in: Cognitive ComputingProcurement

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Facing A Perfect Storm of Disruption. How is the Utility Industry Dealing with Existential Challenges?

May 17, 2017 | Derk Erbé

In the HfS Blueprint Report for Utility Operations, we take a close look at how you can better find support for business model creation, IT/OT integration and customer experience improvement in engagements.

Electricity is the lifeblood of our economy and society. Electricity is what makes your smartphones, computers, TVs, refrigerators, and lamps work. Many core processes in our lives and businesses are electricity dependent, and electric appliances are everywhere. Gas, coal, oil, nuclear, water, wind, and sun – all of these resources are used to power the grid, the world’s largest machine and one of the humankind’s greatest engineering achievements. And today’s infrastructure is overwhelmed.

The current infrastructures are built for a bygone era. Utilities need smarter and seamlessly connected grids that allow renewable production and local energy generation. The emergence of micro-grids and residential- and utility-scale battery storage for electricity, for example, will give a push to local energy systems. But, integrating all these new technologies, building new business models around them and improving customer experiences require utilities to drastically change its way of working. This is where smart utilities leverage service providers.

Employing Utility Operations services to get ahead of being disrupted

The HfS Research Blueprint Report for Utility Operations provides a comprehensive overview of services for the utility industry. This Blueprint looks at business process services, information technology services, and engineering services across the utility value chain areas of generation, market operations, transmission, distribution and metering, marketing and retail, and cross-value chain BPO, engineering, and ITO services.

This report analyses and reviews how the market is evolving toward more business-outcome focused, flexible, and collaborative services and how service providers are (or are not yet) meeting the needs of utility organizations. It also includes profiles and assessments of 14 providers of Utility Operations services.

Top challenges include: 

  • Modernizing the power infrastructure to support renewable integration and optimization 
  • Leveraging digital in the grid infrastructure
  • How the power generation fuel mix changed for good
  • Changing customer expectations
  • Disruption of business models
  • New competitors enter the arena
  • Cybersecurity: of paramount importance, but still often overlooked

These challenges underscore three key market dynamics:

  1. Utility Operations services adoption accelerates. The market is vibrant and in growth mode, with several service providers reporting high growth rates for their Utility practice, outpacing other horizontal and vertical practices. This strong growth is a sign of an industry pulling the services lever hard to make up for lost ground. Having been reluctant and conservative about investments in technology and now, in the face of so much disruption and technology-driven opportunities, utilities are partnering with service providers to catch-up. For their part, many service providers have started to strike the right cord with a mix of outcome based services, partnerships, strategy and messaging around technology-driven areas like smart grid, smart metering, renewable energy integration and intelligent automation.  There’s a refresh underway for partnerships in this market.

  2. The value of partnerships. No one company can deliver all the services and solutions required for the transformation the utility industry is experiencing. In the digital age, breaking down silos, creating end-to-end processes and information flows, and unleashing the actionable insights derived from advanced data analytics are critical imperatives for survival. We see this in the convergence of operational technology (OT) and information technology (IT) and in the increasing role of digital platforms across the value chain. Leaders in the utility industry are forming partnerships as brokers to find and bring together the best capability to impact. Examples are utilities that partner with service providers and Original Equipment Manufacturers to create resilient, autonomous, solar micro-grids incorporating equipment, battery technology, sensors, analytics and on-demand services. The result is a resilient emergency demand response solution.

  3. Plug-and-Play services emerge. We see interest emerging among service buyers for plug-and-play digital business services, particularly for analytics and retail platforms. These modular, on-demand services give utilities the advantage of easy implementation and the ability to tap into a business outcome, increasing speed to value. Plug-and-play services are in the initial stage of development with significant progress forecasted over the next few years as service providers become more comfortable with being platform developers.


Bottom Line: Utility executives, you will find guidance in this report to reinvent customer experiences, processes and operating models, and to tap the unmatched potential of renewable energy, digital technologies, and storage.

The challenges outlined in this blog and the Blueprint report form an existential threat to the utility industry as we know it. Utilities must face these challenges head-on or risk becoming irrelevant, with others - new entrants or savvy current competitors - taking its role in the value chain and its customers. The service providers in the Utility Operations Blueprint are reliable options to partner with and charge ahead together.

HfS Premium Subscribers can click here to download your copy of the new 2017 Utility Operations Blueprint Report. It includes coverage of the following service providers: Accenture, Atos, Capgemini, Cognizant, Cyient, EXL, HCL, IBM, Infosys, Luxoft, TCS, Tech Mahindra, Tieto, Wipro.

Posted in: Utilities & Resources

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The FORA Council has assembled the industry's leading minds in cognitive automation

May 17, 2017 | Phil Fersht

When an industry is enduring a secular shift that is literally redefining how we do work, it's pretty important to get some real, unfettered dialog going among all the key stakeholders this impacts. We need to break free from the glitzy paid-for sales presentations, robot keyrings, stress balls, nasty logo-ed leather notepads and greedy events firms vying for a quick buck from vendors eager to part with cash to promote themselves to all their competitors.

That's why we're assembling 75 of the industry's finest leaders in a single room for a whole afternoon to thrash out the mandate for the future of operations in the robotic age for our inaugural FORA council session in Chicago, 19th September.  And promise no sponsors, stress balls or bad white papers to take away...

Here's just a sample of the industry robo dignitaries who've already committed:

  • Alastair Bathgate, CEO, Blue Prism
  • Chetan Dube, CEO, IPsoft
  • Chip Wagner, President, Emerging Business Services, ISG
  • Cliff Justice, Partner, US Leader, Cognitive Automation and Digital Labor, KPMG
  • David Poole, CEO, Symphony Ventures
  • Jesus Mantas, Managing Partner and General Manager, IBM Business Consulting, IBM US
  • Lee Coulter, Chair for the IEEE Working Group on Standards in Intelligent Process Automation
  • Dr. Mary C. Lacity, Curators' Distinguished Professor of Information Systems, UMSL, and Visiting Scholar MIT
  • Max Yankelevich, CEO, WorkFusion
  • Mihir Shukla, CEO, Automation Anywhere
  • Peter Lowes, Partner, and Head of Robotics & Cognitive Automation, Deloitte US
  • Shantanu Ghosh, SVP, CFO Services and Consulting, Genpact
  • Thomas Torlone, U.S. Leader of Enterprise Business Services, PwC
  • Weston Jones, Global RPA Leader, EY

We also have leaders of cognitive and automation initiatives from the following buyside firms already signed up to get stuck into the debate:

So let's cut to the chase - it's time to have the real, hard conversation about where we really are as an industry. Why aren't those 40% cost savings happening, each time someone slams in some software and hope it somehow eliminates manual labor because they can access a bot library? In fact, why are a third of RPA pilots just left hanging with no result?  Yes, people, it's time to wake up and smell those robotic roses and have those really tough conversations about what is real, versus why so much of this stuff just isn't working - and why we're not putting together properly governed RPA rollout plans like we do with ERP software and SaaS platforms.  Why are we making such a mess with this, when we could have so much to benefit from?

So join us in Chicago this September 19th for FORA the inaugural council meeting that finally debates the true Future of Operations in the Robotic Age

FORA is the very first industry council is established to bring together buyside operations leaders, service providers leaders, expert advisers and technology developers to steer industry’s transition to the Digital OneOffice™.  

FORA’s mission is to bring together the leadership from senior buyside operations leaders, service provider leadership, expert advisers, and technology developers to set the agenda for the transition to the Digital OneOffice™, and to develop an industry mandate for navigating and managing the creative destruction that looms. Supporting the FORA initiative is the IEEE’s Intelligent Process Automation Standards initiative that will encourage further research and investment, leading to powerful and attractive new service offerings. But the commercial frameworks needed to encourage and sustain wider deployment of these technologies are lagging because they fundamentally threaten established models.

In order to communicate the learnings from the FORA meetings, the group will produce a quarterly “FORA Mandate” that communicates core recommendations to the industry from the group meetings that will be held at quarterly HfS Summits.

So how can you get considered for Council Membership?

HfS will consider applications to the FORA Council based on seniority and relevance. Are you interested in participating? Just email us at [email protected]

This is a really important development as we consider the future of services and operations amidst all this creative disruption. I hope to greet many of you personally in Chicago this September.

Cheers,

Posted in: Outsourcing Events

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Stop sawing that plank with a fish: An RPA 101

May 16, 2017 | Ollie O’Donoghue

These days, we talk about Robotic Process Automation as if it’s the remedy to all modern business woes. But, as with all technologies, the capacity for RPA to deliver value has its limits.

Last week I had the privilege of attending an RPA user group event hosted by the Global Sourcing Association packed with service providers, buyers, and experts - where this solutions capacity to deliver was laid bare. After two refreshingly honest presentations by automation gurus from  Symphony Ventures and Thoughtonomy, the roundtable discussions kicked off. Several buyers joined me, alongside two of Symphony Ventures finest consultants, Katharine and Nick, who were both more than willing to impart honest and impartial advice. While the parameters of the conversation were broad, there are four key takeaways that I’d be happy to share with you. I have built all of the following out of the challenges brought to the table by practitioners and buyers. With the answers that came from the knowledge and expertise of the experts or those having weathered some implementations.

 

1. RPA isn’t the salve for all wounds

There’s no doubt about it, the technology is powerful, but it’s important to recognise that there are limits. Environments with chaotic data sets or irrational processes are not suitable without a huge amount of refining. Nor are you likely to find much success if processes rely too heavily on external data sources – unless the owner of the source is particularly liberal with access.

RPA works best on processes that are formulaic and rules-based. If your process has a set input required to achieve the desired outcome, with a series of consistent steps in between it’s in scope. Even if there are a huge number of steps or the rules to follow are relatively complex, a solution can be built, albeit with the hard work and knowledge of providers and experts.

2. Don’t be tempted to go rogue

Some of you may be tempted to leave other areas of the organisation, especially IT, out of an RPA project. However, all the experts in the room warned against doing so. Inviting IT to the party is essential to help navigate through some of the trickier aspects of the implementation with solid business and technical knowledge.

Some of the providers I spoke to at the event provided plenty of examples of when their implementation was made just that little bit harder when relations between the buyer and IT were…less than harmonious. The key is to build relationships with all stakeholders before embarking on the project to ensure your RPA project delivers the most business value and has the greatest chance of success.

3. The process may have RPA written all over it, that doesn’t make it suitable

Let’s say you have a process that ticks all the boxes – boring, formulaic, rules-based stuff that nobody wants to do. Although it seems perfect, it may not be suitable for a simple reason: the ROI isn’t there. Examples abounded of processes pushed forward for consideration that was already relatively inexpensive to handle, making the cost of automation fail to add up. Such as a long-winded rules-based process that, in practice, was only handled by a single person in the first place.

After all the calculations are laid out on the table, the economics of automation may not add up, at least from a cost saving perspective. However, be careful of ruling it out completely as it’s possible that freeing up someone’s time or improving the process may add economic value in another way, by improving customer and employee experience, for example.

4. In some cases, RPA is the last solution on the list

For some processes implementing RPA is the equivalent of hitting a nail with a sledgehammer (I ruined a perfectly good shed attempting that). For others, it’s like sawing a plank of wood with a fish, just plain unnecessary. For example, a process highlighted for consideration due to its resource demands may, in fact, also be managed elsewhere in the organisation. The simple fix would be to merge all parallel processes to not only ensure consistent outcomes but also to reduce the resource overheads significantly.

Halting unnecessary processes or merging duplicate ones may be the solution businesses are looking for instead of automation. Katharine and Nick, the consultants we spoke with advised that they often start an engagement first by taking a holistic view of all processes before jumping in with an RPA implementation to make sure it’s the best solution for the problem.

Summary

RPA simply isn’t the right solution for every problem, and these are just a few of those discussed at the user group. Perhaps it’s the right time for the industry to take a step back and understand what value the technology can add in different situations. Instead of pushing it as the miracle cure for all business woes – a perception facilitated by buyers looking for a shiny new tool and providers seeking to make the most of the RPA Gold Rush.

Bottom Line: Without a doubt, RPA is a powerful technology, but for some business challenges there are far more effective solutions to consider.

Posted in: Robotic Process Automation

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Transforming the Digital Customer Experience—Four Ways to Move from Theory to Practice

May 16, 2017 | Melissa O'Brien

The presentations and interactions at the recent Sitel customer event illuminated a few key themes that customer experience oriented companies can take away as they look to implement customer experience strategies within their organizations and in conjunction with their service providers:

  • Align the entire organization to customer centricity. To effectively serve the digital customer, what we at HfS call operating as OneOffice, the corporate focus needs to create a work culture where individuals are encouraged to spend more time interpreting data, understanding the needs of the front end of the business and ensuring the support functions keep pace with the front office. T-Mobile shared an initiative where people in the organization that traditionally have “nothing to do” with customer experience listen to phone calls with various problems from customers. They found that someone in a back office support function listening to the issues on customer calls helps “make things real” in other parts of the business. Hearing the customer’s experience of a fallout from an order management issue, for example, really helps to illustrate how every function in the company impacts the customer experience—and the business. It also, in turn, helps discussions for how to improve operations from the back to the front office. 
  • Find the right blend of digital and human touch to meet customer expectations. This is not going to start with technology, it’s going to start with understanding your customers, their expectations, and pain points. Companies thinking about digital customer experience need to start mapping the customer journey, which in many cases means using digital technology along with the human touch. Intuit discussed its implementation of “SmartLook” video chat, which has been a successful initiative to better support customer inquiries about their TurboTax product.  Intuit finds itself competing with the in-person tax preparation services, so in order to supply that high-touch experience, the software company set up the capability for one-way video so that the customer can see the representative helping them with tax questions, and also the ability for the rep to draw on the customer’s screen. They quickly found that customers really value the human connection, and scaled from 100 to 4500 live video agents in a matter of months, including special training for being on-camera and shipping out uniforms and blue backdrops for its work-at-home agents.  The results are impressive: decreased call handle time, a resolution rate improvement of 10 points, and an NPS increase of 20 points putting Intuit in the 80s (world class service levels!).  It’s a great example of the blend of digital technology and the human touch that is still very relevant for many customers and types of interactions.  This is not without drawbacks of course—there were many lessons learned about the training involved and implications of having a live agent on screen with customers (i.e. customers taking unflattering screenshots of the agents…).  Finding this balance will always be a work in progress as technology and customer preferences change.
  • Support customer experience by making digital assets universally accessible, and embracing the cloud in a way that enables genuine scalability. As the CMO of Wyndham (a chain that opens two new hotels every day) pointed out, there’s a lot of integration behind the scenes in order to be fast and nimble enough to meet customer expectations.  Two years ago the hotel group did not have high-resolution photos for all of its properties. Digital images were spread across five different content management systems, which didn’t have the space to store them—and in fact, it was often up to the individual properties to manage and store these images. Wyndham decided to make the digital team part of the CMO organization, and using several partners, shot a million high-resolution photos in the last 18 months and consolidated them on to one cloud-based content management system.  Adding these photos to its websites and mobile apps has already generated a 40% conversion increase, a 52% mobile bookings increase and a 10% of return visitors.  The next steps in Wyndham’s transformation journey will be to use all of these images along with customer data to create better, personalized experiences online, and the company needed this streamlining to get to the next step in their digital transformation. 
  • Embrace design thinking as an ongoing method to promote customer centricity and design frictionless customer experience. CapitalOne described its desire and journey toward becoming a tech company first and a bank second. Because of the threat from the growth of fintech companies, the bank has altered its core business strategy, impacting who they hire and how they operate.  One major change has been the use of design thinking as a way of learning. They use the term “customer back”—meaning always start with the customer and work your way back.  As this has culturally taken hold at CapitalOne, the bank has found that it is not just for people with design in their title, it’s being embraced across the organization.  Results from these efforts have included customer-focused changes which remove barriers and make the customer experience more intuitive, such as ways that customers can pay their bill. For example, customers can now use Echo to ask Alexa what their balance is and pay a bill. CapitalOne has also implemented a chatbot named Eno who is available on SMS—customers can pay bills, get their balance and other basic functions.  By listening to customer feedback, they’ve also implemented the ability to “unfreeze” a card that’s been flagged for fraud for just 15 minutes through their mobile app—for the busy customer that just needs to make a transaction while on the go.   Involving customers in the design process has increased their ability to serve customers in the ways they prefer.  It’s important that design thinking continues as an ongoing effort, as markets evolve and business needs change. 

As each industry is being disrupted in new and different ways, it’s important for every organization to start somewhere – take these lessons and embrace small and quick wins in order to move forward in becoming more customer-centric organizations. 

Posted in: Customer Experience Management

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A Moment of Transformation with the “New Sitel”

May 16, 2017 | Melissa O'Brien

Acticall Sitel Group is undergoing a “moment of transformation,” as they put it – “pivoting from a contact center to a group of global services, innovative and socially engaged, dedicated to providing exceptional customer experiences.”  What this really means in a world overflowing with overhyped CX buzzwords isn’t easy to tell, and here’s what I learned as one of the analyst community members that spent time with Sitel executives and 70+ clients and prospects at its 2017 Miami Analyst Day and corresponding Customer Summit this week: that a company in transformation needs a North Star – one that is bright and shiny to illuminate the path forward. Acticall Sitel has a lot of stars, but it’s not yet clear which one will stand out to lead the way.

 

Diversification: The Ventures Ecosystem

The “New Sitel” is the portfolio of companies: the traditional Sitel contact center business and a number of other “venture” companies brought on with Sitel’s acquisition by French based Acticall Group in 2015.  This new Sitel has been a couple of years in the making, but the story that is emerging is an interesting and compelling one to buyers of contact center services and those of us who are enthusiasts of the contact center being a core element of customer experience design.  A few highlights from the event:

  • The Social Client, one of the ventures, is a customer experience consulting and strategy company focused on implementing design elements like visual IVR, employing design thinking and journey mapping.
  • The Learning Tribe, a training and learning entity focused on digital aspects of learning, i.e. mobile and social learning, brings gamification and certification elements to training environments in need of transformation. As the head of training for a major corporate bank said, “we need to be digital internally within our organization as well as externally with customers.”
  • The Premium Tech Support venture is providing white glove services to clients and generating revenues through cross-sell and upsell opportunities while utilizing the Customer Insights analytics venture to optimize its services using predictive customer analytics. 

The big picture of the new Sitel still seems a work in progress, especially in terms of commercial engagements, as the service provider retrains its sales staff and restructures incentives to more effectively sell across the ecosystem—but the passion and vision is certainly present. And Sitel is also investing in AI with a quality monitoring tool, empowering a trend the provider calls “botshore,” the use of bots as a lever along with offshore and nearshore options-- a concept which jives well with HfS’ vision of using increasingly intelligent automation as just one of the levers to pull when it comes to engagements with service providers. 

Pivoting the ventures toward American business will be a challenge, but very recent leadership additions, including a creative agency veteran in the role leading The Social Client and a BPO sales mogul in place leading sales in the Americas will bolster the potential for execution across the organization.  Sitel will need to continue to think through the messaging and branding of these ventures: What truly represents the capability and value of each one and as part of the whole new business? For example, the name “The Social Client” is limiting and not representative of its capabilities. Sitel seems to be sitting on a gold mine and needs to unearth the potential to let it shine.

The Bottom Line:  The time is ripe for a legacy call center provider to really transition to a customer experience design leader

In this world of “digital transformation”, many enterprise buyers are asking the question, who do we go to for design?  Instead of paying boatloads of money to a traditional consulting firm, can they leverage their trusted contact center service providers who already know their customer inside AND out, and are investing in capabilities?  I think the opportunity is there.  We have been talking about it for years, but have yet to see a pure play contact center BPO provider really cultivate and hone a brand for the customer experience design element.

One of the elements that has consistently made Sitel’s events relevant and useful in the past (even pre-Acticall) is their transparency and willingness to give accessibility to their clients—especially at an event like this one, where we had the opportunity to meet with customer experience leaders from many industries and with various goals.  The customer presentations were extremely valuable in understanding these enterprises’ mindsets and they were clearly getting a lot of value from each others’ stories as well. It’s quite a network that Sitel is establishing here. 

What we now need to see from Sitel and its peers is real life examples of using the “value-added” services” – including digital marketing and customer experience design- which are presently a tiny percentage of revenues for Sitel and other contact center companies.  On the same note, buyers who are constantly screaming “bring us innovation!” need to get involved and work with their service providers about the opportunity engage in these services.  As soon as we start seeing more case studies and success stories of turning this theory into practice, the doors will open wide for those providers and buyers willing to invest and take the risk to really transform.

 

Posted in: Customer Experience Management

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WannaCry emphasises the dire need for automation and cognitive in security

May 16, 2017 | Christine Ferrusi Ross

This is me jumping on the bandwagon with an opinion about the global WannaCry ransomware attack last Friday. As of my writing this, this attack hit over 200,000 companies, hospitals, universities, and other groups in more than 150 countries according to Europol. It’s been headline news.[1]

While bandwagon jumping generally has a bad connotation (doing or supporting something just because it’s hot at the moment,) security is one of the bandwagons you should proactively jump on. Right now. Really.

Security tools, services, articles, etc. are all popular because security attacks are popular – and increasing. So yes, if in the past you thought your passive following of whatever standards were placed in front of you was good enough, you need to break out of that rut and get proactive. Too often, standards aren’t keeping up with the changing threat landscape. You need to constantly search for new security tools, skills, and services to help you protect your firm, your employees, and your customers to achieve digital trust in the market.

In fact, the recent attack only brings findings from HfS’ recent Managed Security Services Blueprint into clearer perspective. We heard from both providers and security executives that effective security programs shared key characteristics:

  • Automation everywhere possible. There are too many threats and attempts for your security team to monitor them without automation – you’ll never collect the necessary data manually. Your automation investments need to include appropriate analytics to evaluate and find patterns in the data so your team can take appropriate next steps.
  • Investment in cognitive computing. Predictive analytics and cognitive computing investments for tomorrow aren’t negotiable. Today’s environments can collect and analyze, but you also need to be focused on systems that learn from current data to build predictive models and help you prevent attacks, not just respond to attacks as they happen.
  • Focus on employees and the human element. This takes two tracks: 1) Educate employees more often and more consistently about phishing and other techniques that attackers can use to get credentials and other sensitive information from workers to attack company systems. And 2) keep your security team’s skills up to date. The talent shortage in security is exacerbated by the skills gap – staying current on all security trends is daunting but necessary. And security teams are so overwhelmed already that it may seem they don’t have time for training. It’s time to evaluate your hiring and training for security to look for ways to bring in non-traditional talent and get them up to speed faster to ensure you’re protected.

Bottom Line: Treat security as your business, not as an enabler

Without effective security your business won’t survive – either your company systems will be brought down, or more likely, customers won’t want to do business with you if they see you as a threat to their own information security. The WannaCry ransomware attacks is another proof point that security threats are increasing in number, scope, and scale. Jump on the security bandwagon and follow practices of leading edge security practioners for effective programs.

 

[1] A few of the news stories include:

https://www.nytimes.com/2017/05/12/world/europe/uk-national-health-service-cyberattack.html

http://www.bbc.com/news/technology-39924318

https://www.cnet.com/news/watch-wannacry-attack-geography-in-real-time/

Posted in: Security and Risk

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Frank D'Souza: We're now experiencing the biggest shift since the Internet

May 12, 2017 | Phil Fersht

 

It's always more fun to be the disruptor than the disrupted in markets where innovation is the key differentiator and commoditization the curse. The world of technology is a constant challenge as programming languages become commonplace, processes increasingly standardized and automated, and global service delivery efficiency a bread-and-butter offering. How can you continue to grow at a double-digit clip, while maintaining profit margins of 20%+ amidst cut-throat competition and clients forever eager to batter down their costs?  

Fortunately, the entire role technology plays is changing at a pace that is faster than most industries that can barely tolerate, which keeps driving new opportunities for smart firms with a disruptive appetite at their core and a willingness to live outside of their comfort zones. Today, enterprises are asking for business problems to be addressed and simply expect their service partners to get the job done. It's no longer "Provide me with 50 developers for this amount of time to perform these tasks", it's more, "We need to redefine our healthcare insurance business to be more competitive in the market to survive - come help us do that", or "These new banking regulations are crippling our ability to remain viable - what can we do to get ahead of these and operate effectively in this environment, faster than our competitors?"

Hence, it's up to the ambitious service providers to pivot how they address their clients' needs by redesigning business operations through smarter automation, process design and a much more proficient understanding and orchestration of their critical data sets. This is what digital is really all about - and this is where Cognizant CEO, Francisco "Frank" D'Souza is determinedly taking his organization. Cognizant has been Wall Street's golden child of IT services growth over the past decade, the firm ballooning from $2bn in 2007 to $13.5bn exactly a decade later, and last week announced 11% year-on-year revenue growth and a 26% increase in year-on-year net profits to $557m. Cognizant continues to outperform the market with relentless growth and appears to be on a new upward growth trajectory after a challenging 2016, which saw the whole IT services industry tackle this new secular shift, which Frank believes if the most pivotal transition since the onset of the Internet itself.

I caught up with Frank this week in London to get a little deeper into this pivotal industry shift and learn more about how he intends to keep disrupting his market.

Phil Fersht, CEO and Chief Analyst, HfS Research: Frank – great to see you again. Was good for the whole industry to see you guys announce strong results last week – is the gloomy cloud that’s been hovering over our industry lifting, from Cognizant’s vantage point?

Francisco D'Souza, CEO Cognizant: Phil, last year was an important foundational year in our pivot to digital. I think we were ahead on some of the digital thinking, code halos and SMAC (social, media, analytics and cloud), we have been talking about those for many years. I think last year was the year that picture, at least in our minds, and our clients’ minds, crystallized around what are the specific opportunities around digital. Prior to last year, digital was the typical catch-all term used for lots of different things.

I think it’s become very clear, Phil, with every day that goes by, is the notion that if you think about a company’s enterprise model (what is the business model, what’s the operating model and what’s the technology model) it’s now become clear what is the implication of digital technology at each layer in that stack and by industry. What does that mean for financial services, what does that mean for healthcare, what does it mean for insurance?

Last year was about crystallizing around that – we reorganised the business we took all our capabilities, we grouped them into three big practice areas: digital business, digital operations, digital systems and technology. Within that we really focused and emphasized the key digital themes and trends in each of those areas. If you think about the technology space we built and emphasized the cyber security aspects, we built and emphasized performance and scalability,

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Posted in: Digital TransformationIT Outsourcing / IT ServicesOutsourcing Heros

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Are automation PoCs leaving you in robotic limbo?

May 09, 2017 | Reetika Joshi

Whether its cognitive automation or RPA tools they’re trying to implement, a large percentage of services buyers are stuck in a sort of robotic limbo. As we launched our new automation council “FORA” at HfS, Phil brought up a huge challenge, “Why aren't those [anticipated] 40% cost savings happening each time someone slams in some software and hopes it somehow eliminates manual labor because they can access a bot library? In fact, why are a third of RPA pilots just left hanging with no result?” 

Why are PoCs entering robotic “limbo” or failing, and what is working out there?

Here’s what I heard from two automation practitioners in large financial services organizations:   

PoCs that don’t begin with the right kind of buy-in have a longer time to value

The VP at a financial services company considered using Watson technology to help their sales force be better informed when first interacting with potential customers. They designed a PoC that would allow a sales person to ask questions like, “Who are this customer’s competitors?” Watson could take this natural language query and apply it to the company’s own and external data sets and come back with a synopsis of facts to make it easy to identify trends. However, after the PoC, it became apparent that various stakeholders like the operational heads of the lines of business didn’t understand the breadth or relevance of the technology. Was Watson overkill for their needs? After the PoC ran, these executives asked, “Isn’t this what Google does? Why do you need to invest in this solution?”

With the Head of Sales behind the project, the organization found it easy enough to get started but then got waylaid on the way to the finish line. The team had to backtrack to explain how the fundamental cognitive technology can help achieve more meaningful and timely answers to the questions the sales team could ask. The stakeholders didn’t understand the difference that data mining could bring – versus manual searches for each company or trend. The solution would bring more relevant and actionable data to sales teams that could impact closure rates and revenues. After a rather lengthy “limbo” in educating all parties, the VP involved the top performing account managers and used their ideas to design the front-end user interface. This helped the team build a relevant solution that leverages the capabilities of Watson and build internal acceptability, which accelerated the path to live deployment. The team is now expanding its user base and exploring ways to leverage more Watson APIs in the solution.

PoCs could get dismissed as hypothetical technology proofs with no grounding in reality

Peter Quinn, Managing Director of Automation at SEI Investments Co. started the RPA journey in their organization’s securities processing function late last year. He took a position not to do PoCs, feeling that they are too easy for skeptics to shoot down, and only prove hypothetical scenarios while exhausting time and resources. Instead, his team decided to run production pilots, a hybrid of PoCs, pilots, and production phases. With this format, the solution is designed with more rigor than a PoC, and is deployed in a live production environment with real transactions taking place.

Peter stresses the importance of demonstrating to the larger organization the efficacy and effectiveness of the bots deployed since they are working in a live environment. He shares, “I wanted to do things that weren’t trivial, like RPA tools that just gather information and create reports. When those processes work with 98% accuracy, that could be considered as acceptable. But when they are moving client securities or money, no margin of error is acceptable. We are running functions that are core to the financial operations of the bank rather than something that’s low in criticality. When they work, the results speak for themselves – we are seeing greater accuracy from the lack of manual errors.” The implementation challenges that this team faced with the production pilots were related to other aspects of their technology landscape that needed to be fixed, such as conflicts with how the environments were configured. It could have gotten “stuck in limbo” because to really build automation as part of the core processing backbone, they had to work through a lot of unanticipated factors. It didn’t however because they had relevant business and technical stakeholders involved and a general spirit of collaboration. SEI is now armed with “real-life proof” and is undertaking several more process automation.

Testing and sharing as you go help ensure you are solving the right problem and updating it as needed, as well as adjusting the technology solution.

What is common in these practitioner experiences is the importance of building stakeholder buy-in. You need to have them involved in defining what problem to solve as well as testing the solution and being ready to make quick adjustments to address what else in the infrastructure or environment is impacted as RPA is rolled out.  The problem you are trying to solve, the complexity, and the level of stakeholder involvement are all necessary factors to consider. It can influence the type of approach you take and help identify the issues you need to tackle upfront before even getting started with automation tools, as well as adjust quickly along the way.

The Bottomline: Don’t feel obligated to jump into automation PoCs only to be left in limbo down the road. Iron out the ‘whats’ and the ‘whys’ before getting into the ‘hows’.

There’s more than one way to kick-start your intelligent automation journey. Find the one that works for your organization’s culture and political structure—do you need to educate or provide examples or both?

Posted in: Robotic Process Automation

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Automation doesn’t have to be a dirty word…

May 08, 2017 | Ollie O’Donoghue

Without a doubt, the impact of automation on the IT Services industry is a topic of much debate and contention. The challenge is that speculation drives much of the discussion, rather than quality data and analysis.

While the subject of automation has been discussed a few times on the blog, I feel compelled to add my experiences and those of the IT professionals I met on my travels to the discussion.

Not long before joining HfS, I spent several months presenting research on automation at events and conferences across the UK. While the research covered a broad range of topics, automation in IT services was by far the most popular. After a few presentations discussing the increased adoption of automation and the growing capability of the tooling, it became apparent where the popularity of the topic originated - fear. After each session, a small gathering of IT professionals would question me on job security, headcount decreases and how automation augered a bleak future for the industry.

It’s not difficult to see why the audience felt this way. The mainstream media and even some analyst firms have been stoking the climate of fear with considerable vigor.

So I went back to the drawing board and changed my presentation. I took a fresh look at the data to examine what was happening in the industry – did we genuinely need to worry? Beginning with an impactful quote most media outlets were running with – something along the lines of “be terrified, the robots are coming” – I started to dismantle these theories with my research data on employment trends, headcount increases, and industry perception.

While many argued that automation would lead to job cuts, my data showed the opposite. Organizations recognized the importance of technology to their businesses and were investing in the services needed to support it. The data revealed that in organizations with higher levels of automation, workers were not disappearing, they were moving to higher value areas of the support structure - taking on strategic projects or developing services.

At the end of the presentation, I concluded that the reality of automation’s impact on modern IT services was far from the bleak picture painted by other analysts and consultants.

Nevertheless, a few minutes after the session ended the same horror stories started to emerge: IT leaders facing a backlash from staff as automation projects ramp up and professionals working themselves into a frenzy over their job security if projects continued. It was frightening stuff.

Crucially, my research revealed that the cause of this panic doesn’t come directly from the automation itself – there were almost no real-life examples of automation leading to sweeping changes in any of the organizations I was working with. Without a doubt, much of the fear was generated by analysts and media outlets whipping up this distorted perception, but surely there must have been another force at work.

After a bit of digging around the real cause of the hysteria became clear. In organizations with little or no perception issues, it was clear that the leadership team had taken the time to communicate with their teams. Conversely, those with stressed and worried staff had not.

When I questioned an executive who sought advice on soothing fears in his team if he had clearly explained his vision, and what the outcome of the project would be, he replied that it was obvious what he was trying to achieve. If that were true, the perception crisis in his organization would not be there.

Successful automation projects have an engaged team working behind them. The most effective I have seen understand what will be automated and why. They know what impact it will have and, for the most part, agree it was an area of manual work they found repetitive, boring and unfulfilling anyway. They eagerly anticipated a time when they could dedicate their efforts to more meaningful and valuable work.

Under different circumstances, this committed group would be dealing with the same fear and stress as their peers in organizations with less effective communication.

In the noisy information age we now live in, it’s easy to get caught up in the hype. Business leaders have an obligation to provide clear, effective communication that outlines the vision and journey of automation projects. Without the context and understanding they provide, an engaged team can quickly turn into a stressed one. And a stressed team will undoubtedly hold your project back. It’s not hard to understand why an individual afraid of becoming obsolete may not be working towards your goals with total enthusiasm.

Bottom Line: Effective communication strengthens the fine line between a successful automation project and one held back by a nervous and stressed team.

Posted in: Robotic Process Automation

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Don’t let our crazy orthogonal ideas be pecked to death by negativity

May 08, 2017 | Jamie Snowdon

A few weeks ago, I was fortunate enough to spend some time talking with the head of IT of a large transportation company – and we talked about the future of his job and the most important things impacting his role. When I asked him what was the main issue getting in the way of him adding value to his business, he said it was a cloying inertia brought about by a thick soup of negative thinking.

The number of people in his organization that focus on the way things have been done in the past and the reasons why things can’t change, were a source of incredible frustration to him. Incremental change was possible, colleagues understand how processes evolve, so innovation could be staged, but it was very hard to implement anything totally new. We joked that original thinking was being pecked to death by negativity, like a flock of miserable seagulls.

As an analyst, this is something really close to my heart – if we are to produce anything that approaches original thinking, we need an environment where ideas are cherished and even the craziest thought is welcome – although it will ultimately need to stand up to scrutiny, the original thought can’t be wrong. It’s only when you make cerebral room to nurture some crazy, orthogonal thinking do you create inspirational work like the Digital OneOffice.

So what needs to happen, how can this change? How can we get people to take leaps of thought rather than increments?

Phil’s recent blog “Is your current job the end of the line?” delivered seven action points directly to the chief “peckers” of the world. Distilling that, the most important thing organizations can do to encourage this behaviour and become more open is to move away from traditional hierarchical relationships, look at the idea itself and any data that supports the idea. It is the addition of data and more evidence that helps to shift thinking from more traditional decision making.

It’s interesting that the message, at least in terms of its overall importance, seems to be getting out at last. In a recent survey of 300 major Global 2000 enterprises, we asked IT leaders about the importance of some c-suite directives to their IT strategy.

This graphic shows that IT decision makers realise the best way that they can increase the relevance of IT within the organization is by supporting more predictive decision making. This is a crucial change in mindset, taking IT away from its most recent manifestation which has almost been as a custodian of IT, or a gatekeeper, focused on reigning IT in and keeping the costs down.

Bottom Line – data gives crazy thoughts wings

We suspect that part of the embracing of data by IT departments goes back to my friend and his battle with the naysayers. Data levels the playing field and gives more people a voice. It gives more power to the elbow of anyone seeking to make a change. An IT department that delivers insight will be listened to, as opposed to being largely ignored as a legacy function tasked with keeping the lights on. Let’s stopped being pecked to death.

Posted in: IT Outsourcing / IT ServicesGlobal Workforce and Talent

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Is your current job the end of the line?

May 06, 2017 | Phil Fersht

 

A new trend is developing in the tech and business world and the speed at which it is happening is alarming. The need for people is waning as companies seek to scale themselves profitably on a digital backbone - and it's having a serious impact on our career paths.

When companies historically did layoffs, it was because they were in financial peril and had no choice but to saw off costs to stay solvent on the balance sheet. It was always painful, because you needed people to grow your business. Sacking people was not a good thing to do.

Suddenly it’s in vogue to shed people

However, if you were unfortunate enough to get caught in a layoff, you dusted off your CV, went out on the job market and (usually) found yourself something pretty quickly. Companies needed people – whether they were superstars, or solid foot soldiers; when you needed an employer, you would always find something.

Now something different is happening in the mindsets of business leaders – companies which are doing really well are in the process of proactively removing staff – both at junior and senior levels. You really don't want to get caught up in one of today's layoffs if you're eager to stay in a similar job in future, because the modern business is adopting a new mentality - cut costs and scale profitably with a digital backbone.  Adding armies of people is no longer the order of the day when you peer into an uncertain future, and many savvy businesses are eagerly looking to

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Posted in: Cognitive ComputingRobotic Process AutomationGlobal Workforce and Talent

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How a chicken, Clay Christensen, Nikki Beach and a bunch of Utility executives provide a sunny outlook

May 05, 2017 | Derk ErbéBram Weerts

This week we crossed the Atlantic to meet the cream of the crop of the utility industry in Miami for the International Utilities and Energy Conference, hosted by Accenture. A packed agenda entertained the brightest minds in the utility space from around the globe.

 

We were in for a surprise: from the first session to the closing key-note it was one big future-oriented gig, focusing on business value instead of enabling technology. No sales pitches from the provider (many providers can learn from this), zero bad jokes... and a highly engaged audience (yes, we are still talking about utility executives here) that wanted to smell, touch and work towards a better future with more and better client interaction. They all want to be more profitable but more important (for real) greener! Their customers demand it; the infrastructure is ripe for an upgrade, and so the question is, why not make it happen?

Fossil is the new uncool, and renewable energy (with loads of digital components for their clients) the new hipsters, the future of utilities!

Let us explain with a couple of fantastic examples that had a high impact on your peers at this week's event. Over to you Derk!

Thanks, Bram. We had an interesting time for sure. Let me give you some quick pointers on the new, the unexpected and the future that headlined IUEC 2017.

A dizzying barrage of industry shattering disruptions thrown at attendants

As one Utility executive put it; the first day of the event was a succession of shock and awe, fear and nausea. Florida Power & Light CEO Eric Silagy set the stage immediately; the unstoppable force of renewables and how being clean is good business. It is a vision that not everyone dares to execute on as radically as Florida Power & Light, but they are doing it without hesitation. CEO Silagy provided an excellent example of lowering his customer's bills by taking the most polluting oil and coal plants offline.  

 

In this picture, you see a perfectly well-operating oil based power facility Florida Power & Light just blew up (after many people try to stop them) to build a far cleaner and more profitable (not only for them but also their clients) and this is just one of many examples. Don't wait, just do it. There are always excuses, but just doing it will pay off in the end.

Further, he explained his strategy for relationship building with the regulators, being proactive and ahead of the curve and highlighted Florida Power & Light’s investments to build a more resilient infrastructure to deal with (the ever increasing) hurricanes’ ravaging effects in his service area.

Salim Ismail of ExO Works and Singularity University, talked about Exponential Organizations, and the drastic competitive forces these present in many markets. As electricity shifts from a scarce resource to an abundant resource, the dynamic of the market changes. Exponential organizations find business models to leverage abundance. Ismail explored Airbnb, GE and Ford’s journeys. One key takeaway that resonated with the audience is how innovation in large organizations is almost impossible. Innovation needs to be positioned at the edge, insulated from the internal organization. Large organizations have immune systems that attack any threats to the status quo, i.e. innovation. This is particularly relevant to utilities; being large, engineering-oriented and traditionally conservative organizations.

Accenture’s Digital guru Mark Sherwin brought his analogue chicken Penny to illustrate digital business models (his chickens and eggs turn out to be some of the world’s most expensive when factoring in the services he gets offered through digital channels to make his and the chicken’s life easier, from predictive food delivery to chicken hotels).

MIT professor George Westermann implored the audience to challenge pre-digital assumptions, as those hamper real transformation, reinforce the status quo and limit the ability to think outside the current frame of reference. Unintentionally providing great input for Design Thinking exercises.

Accenture’s Chief Strategy Officer Omar Abbosh shed light on disruptive forces over the last decades, from mainframes to IoT, AI, and Quantum Computing. He provided a great comparison of how he and Accenture’s leadership reinvented the strategy five years ago to rotate to “the new,” completely overhauling the organizational structure to change the culture, and how utilities are on a similar trajectory.

Vlogger and, more importantly, former monk Jay Shetty reflected on the Millennial mind, demystifying and busting myths. It turns out; millennials are not as scary as you might think. Jay called on the audience to incorporate four ‘Millennial mindsets’ (which are great for anyone by the way): the leadership of a coach, the fresh eyes of a child, community thinking and the mindset of a coder.

Missy Cummings, one of the first ever female US Navy’s fighter pilots and currently Duke professor of the Humans and Autonomy Laboratory Duke Robotics, talked about the highly relevant topic of drones and other unmanned vehicles and robotics’ potential in the utility industry. One of the key points she made addressing the fear robots will destroy jobs, is robotics and automation will likely create more jobs than destroying them, albeit different jobs requiring different skills, providing examples of people and robots working side by side in aviation.

It was time to evaluate all this and time to hit the Miami’s South Beach and more specifically Nikki Beach. The first feedback trickled in, and people had a lot to think about. Clearly, the platform that is IUEC worked.

Day two focused on more practical, “how to” examples and some great new research findings from Accenture and Bloomberg New Energy Finance about the industrialization of renewables, and Accenture’s global lead for Smart Grids Stephanie Jamison presented fascinating findings from a study of distributed generation (DG), focusing on business disruption of DG and the lack of clear forecasts utilities have around the impact of DG integration.

What stood out

At previous editions of IUEC, there were still reservations amongst executives about how fast digital and renewable energy would force change upon them. Those reservations are completely gone. Overall, utility executives have a positive outlook. Solid examples and cases are providing proof points and inspire the way forward, but there still a lot of work to be done.

A terrific event was wrapped up by living legend Clay Christensen, the godfather of disruptive innovation and Silicon Valley’s favorite guru. He gave the audience an excellent perspective and frame of reference of disruptive innovation and clues to shift capital investments to disruptive innovations to prevent becoming the next Blockbuster.

The Bottom Line

It is all about disruption and making a play instead of being played. Harvard Business School professor Christensen expressed his desperation for his industry - higher education - being disrupted with lightning speed by online learning and corporate universities. He did not worry too much about Harvard itself, but many universities are not that well funded and will be disrupted by new forms of learning leveraging technology. His response, without any hesitation, to a question about disruption in the utility industry was: “If you all pray for me, I will pray for you.”

From Derk and Bram; Godspeed, safe travels back home and until next time.

Posted in: Energy

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“Igniting Innovation”: KPMG features an experiential approach to digital transformation in its Analyst Day

May 05, 2017 | Christine Ferrusi RossBarbra McGannMelissa O'Brien

Just about 90% of CEOs who participated in a KPMG survey are concerned with the issue of changing customer loyalty, and the majority believe current their company’s products and services won’t be relevant to current customers in 3 years. That means they need innovation – now. They see technology (often referred to as “digital”) as an opportunity to move, but 85% of the surveyed CEOs feel they don’t have time to think about disruption and how to respond to it with innovation. This sets the scene for KPMG’s Analyst day recently in Boston. KPMG looks to bring purpose and passion for helping clients be successful in making innovation a part of the core of their businesses – through a diverse workforce, solutions, and collaboration.

With this backdrop, four themes stood out to us during the day about how KPMG is working with its clients:

  1. A vision for “OneOffice” – work designed to address customer needs using “digital labor” and systems. Digital transformation is (finally) moving from the front office (customer touchpoints) to include the middle and back office (business functions and transactions) – and talk is moving from “how do we use ‘digital’” to “what problem do we want to solve for our customers and how do we use the possibilities of talent and technology to do it.” At HfS, we refer to this concept as “OneOfficeTM” – the need for businesses to break down silos in their organizations to create a more effective data and workflow for business outcomes, so this theme resonated with us.

As we are focused on “ making it real” and providing examples of where it is happening, we appreciated the story that KPMG told about a client they worked with to map out the customer experience. They registered a number of customers on an app and these customers recorded their experience in real-time, as did employees. KPMG captured the data in the Pathfinder tool and used it as input during a journey mapping session with employees from across the organization, front and back office, including a finance director, a customer service manager, and a valet. They talked through the points in time when the customers and employees had a poor experience and came up with ideas that were then prioritized for addressing through the client’s own innovation management approach. What stands out here is the breadth of people included in capturing the experience (customers and employees from different business units and IT) and the way the experience was captured (an app in real-time), which led to in-person workshops to map out various customer journeys and an action plan.

 Additionally, staying true to the “ embedding innovation” theme, KPMG trained a number of the employees in departments throughout the client on the design thinking principles and methods used in the initiative. These people are networked as a COE. The team also has access to an analytics tool to continue to capture and analyze data on their journey.

2. A focus on defining and enabling the evolving role of workers and work. “Even in a digital world, humans are still the most important investment, the secret element of our brands, and the magic asset in the company,” said Robert Bolton, capturing the tone of the recent day. One example of a workforce transformation in progress was launched when a client started a discussion about the size and shape of the workforce of the future. This has led to questions such as “How do you know you have the right size?” “How does it have to change because of the advent of RPA and artificial intelligence?” “What are the impact on entry level jobs and the way those jobs provide a launching pad for careers?” “How does it impact learning, training, career paths?”

KPMG is not just working with clients to address these questions but shared its own experience in a changing workforce through the use of digital labor. For example, instead of having new hires who are eager, smart MBAs do mundane and repetitive audit work while they “pay their dues,” KPMG is able to automate much of that work and provide a more stimulating and challenging role for the talent they’re bringing on board.  It’s changing the culture and employee work allocation models.

This area of “ digital labor” is one that the shared services and outsourcing group at KPMG is hearing a lot of questions about as well, according to the group’s global head, Dave Brown. Digital labor and cognitive are on the forefront of activity in evolving operating models and defining who (or what) does what. “Digital labor, simply put, is another form of outsourcing,” said Dave Brown.

4. Innovation starts with culture. Innovation needs to be a way of working in companies – it can’t just be siloed in one department or area. Key features of a culture that embrace innovation include diversity – of workforce and partner ecosystem; collaboration; and experimentation (these are also principles of design thinking). Having a culture and environment where it’s “OK to fail” is also a lynchpin of innovation.  To provide a “space” and showcase for innovation, KPMG has broken ground for a new facility in Orlando to provide its clients and train its workforce with a multidisciplinary, hands-on, collaborative, high-tech experiential approach. And it’s partnering with the academic community to help develop (via technology, data sets, and case studies) the future workforce during the university years – for example, combining soft skills like teaming, collaboration, and critical thinking with critical technology skills for analytics and the subject matter expertise of accounting.

5. Deep investments in software to improve and automate complex processes. KPMG’s Spectrum unit created several “business intelligence engines” to automate and analyze several complex corporate processes like third party risk, contracts, and regulatory compliance like Automatic Exchange of Information (AEOI.) Beyond Spectrum, other tools KPMG discussed at the event include its KPMG Digital Responder, for security threat discovery and analysis and its KPMG FIRE regulatory reporting automation tool. While the KPMG teams mentioned a number of tools and IP throughout the day, and showcased a handful, a little of it felt “mysterious” – they were referenced by name and not explained or shown. These days when everyone is still exploring what digital really can do for them, showcasing case studies and tools can be really impactful in getting the message across.

What does this mean to you?

Digital transformation and innovation continue to dominate corporate boardrooms as buzzwords. But actually implementing requires a lot of complex detailed decisions that spur significant changes to the ways companies operate every day. What’s impressive about KPMG’s message is the firm’s ability to talk at the 100,000-foot strategy level but then dig into the last mile delivery details.

For clients that already work with KPMG, if you’re not seeing the kinds of messages the firm presented at the analyst day, then it’s time for a meeting with your account team. Talk about how some of KPMG’s new (and even not so new) techniques are being or could be, applied to your engagement. Don’t take it for granted that your account team will automatically propose new ideas so be proactive in asking for innovation.

For non-clients, take a look at Spectrum and other KPMG tools as stand-alone solutions. The Spectrum team told us they do sell the tools separately – they don’t just get embedded into larger services deals. This gives you the opportunity to get access to KPMG IP and operational expertise without having to exit any existing services engagements you have in place.

For an organization that candidly admits it was on the slower end of developing a stake in front office, its recent investments and acquisitions (a whopping 51 in the last 3 years) show that it’s quickly catching up, and also tying together the concepts of front, middle and back office nicely and in a forward-thinking way.  Using their own interpretation of OneOffice, KPMG is forging ahead to help clients (and itself) break down the legacy barriers to become more intelligent and responsive client-centric enterprises.

Posted in: Digital TransformationDigital OneOffice

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Dealing With Failed Attempts On A Blockchain Application: Security And Fraud Prevention Questions To Ask Your Vendors

May 05, 2017 | Christine Ferrusi Ross

A client asked me recently what happens to attempted transactions that are unsuccessful and do not go through. Does a blockchain implementation capture that data anywhere? The answer, barring the potential of some apps I’m not aware of, is no. Blockchains record completed transactions but attempted transactions that get rejected just go back out into the ether. 

From a technology and business operations perspective, this isn’t a big deal. The system works just like it’s supposed to work. But if you’re interested in capturing data on failed transactions so you can monitor for fraud threats or do a forensic investigation if someone manages to execute a fraudulent transaction, then you’ll need a way to capture, store, and analyze the failed attempts.

Also, we need to distinguish a couple of points about blockchain security: 1) In this blog we’re writing about failed transaction attempts, not hacking attempts. Managed security services provider SecureWorks told me, “Hacking attempts are not the same as failed transaction attempts. Security systems don't often monitor failed transactions in blockchain just as they don't track failed attempts to use credit cards. The credit card systems capture that data about failed attempts." 2) We’re writing about individual failed transactions that one particular company would care about. For example, Ethereum has penalties for trying to load bad blocks onto the network that dissuades bad behavior by participants. Also, at the network level, there isn’t a need for a system to capture failed attempts across all the participants, only the ones that pertain to one participant. Because a company wants to track how many times another party has attempted a fraudulent transaction specifically with it, not with all participants. 

In essence, a failed transaction in this context is when someone uses stolen or fake credentials to try and create a transaction. This is the same as, for example, someone who uses stolen credit cards – sometimes successfully and sometimes unsuccessfully. It’s not a hacking attempt in the way security professionals think of them. But for those transactions that fail, companies might want to keep track and determine if any further action is needed, depending on the nature and criticality of the process. Actions could include suing the person or company attempting the fraudulent transaction(s) or changing some of the smart contract business logic to prevent such attempts in the future. 

This leads us to the crux of the matter: you can’t expect your security team to protect you from threats they’re not able to detect. Instead, detection and monitoring of failed attempts need to be built into the application or integrated at the application level. Then your action plan should follow similar action plans that you follow with other applications regarding attempted transactions.

Bottom Line: As you experiment with blockchain and do some proofs of concept, make sure to ask your application vendor AND your blockchain services provider about blockchain security around failed attempts.

Here are some questions you can ask:

  • What’s your perspective on security considerations regarding failed transaction attempts?
  • Do you have any capability to detect and analyze failed transaction attempts? If not, why not?
  • What recommendations do you have to reduce fraud in your blockchain-based implementations and how are they different from recommendations for other kinds of applications?

Posted in: BFSIBlockchain

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A Heavy Dose of Transparency: Impressions from the SAP SuccessFactors Influencer Summit 2017

May 03, 2017 | Steve Goldberg

The SAP SuccessFactors Influencer Summit, held in California recently, was an opportunity to see up-close-and-personal how the major HR Tech vendor views the concept of transparency, as not all players in this space view it the same way. It was, in a word, refreshing. Mike Ettling, company president, set the tone early by reminding participants what the company committed to the year before so they can be held accountable. Presentations were also ”open kimono” about execution areas they want to be better at in the next year, sharing many plans in detail - not just product plans and strategies (staples at such events) but spending hours on areas like delivery, support and even data centers (partly under NDA due to being within the earnings quiet period).

Throughout the event, speakers offered bold and somewhat surprising statements, and not always ones that blanketly served the software vendor’s interests. Ettling, for example, stated, “no one will be logging into HR Systems in five years time”. Other executives highlighted some subtle aspects of digital disruption; e.g., “it’s all about cloud adoption” (implication: not product adoption), and “trust is central to everything we do” (a great word for a company you’re taking a major journey with, and one which conveys product quality without saying those words).

As to Ettling’s proclamation about what is essentially the “no platform HR Tech platform” in five years, it led to a discussion of one of the company’s product strategy pillars, “Conversational HR.” The concept is to enable your employees to use interaction channels and platforms such as Slack, plus HR bots and “intelligent services” that connect and predict application actions and are embedded into daily work. Intelligent services are designed to transform HR operations through targeted analytics and machine learning, and cutting across relevant business processes. They were announced in August 2015 and there are 40 predefined intelligent services today; e.g., change of manager, employee department or job. This results in delivering a user experience that’s outside the traditional walls of both system modules and singular HR processes, and also involves linking HR and non-HR data. Also of note, SAP SF is now integrating Slack with its Continuous Performance Management functionality so employees and managers interact around, versus execute a process.

Improving the customer experience

The emphasis on usability and the customer experience was evident throughout; e.g., it’s fairly unusual to hear targets like this from an HR Tech vendor: Unlimited scalability, 99.9% availability and 80% of support cases resolved within 2 days. And the company has learned more about “attention to detail” in the mobile experience from its collaboration with Apple. I was also impressed with seeing plans to bring the customer support function into the digital era and make it a more engaging, tailored experience; e.g., by using such mechanisms as guided answers and even a tool for customers to easily schedule 1-to-1 “expert sessions” at a mouse click.

A “Peer Match” capability is now also being leveraged by the base. This is the company’s direct, peer-to-peer connection tool that allows SAP SuccessFactors’ customers to connect and share experiences with their counterparts within other SAP SF customers, from implementation to best practices to thought leadership. More than 227 “advisors” have self-registered and have made 200 connections in short order. Frankly, actively participating in a customer community (and sharing lessons learned for example) is one of the major benefits enjoyed by HR Tech customers of the cloud model, as you are on the same software instance and version. One other example of the customer experience focus is the new Digital Boardroom soon to be in production. It is touch-(boardroom) screen, dynamic, visual, based on multi-sourced data, and SAP SF’s HR Department was the design partner.

Fast take-up of newer capabilities

Continuing the theme of transparency, we learned that 260+ SAP SF customers have enabled or are using Continuous Performance Management: real-time coaching, feedback and learning even though it was more vision than seamless product capability when it was launched just two years ago. That is changing.

And beyond the vendor’s continuing product emphasis on candidate relationship management, internal mobility, better mid-market penetration and removing gender bias in decision making, two other interesting takeaways:

  1. The “marketplace” concept is catching on in the HR Tech space, as now another vendor is making it easier to find and inter-operate with 3rd party apps that are innovative or focus on a specific area of HCM functionality. It’s a great marketing / PR tactic, as current/future competing products probably won’t find their way to the marketplace. 157 apps are available today.
  2. Diversity really does matter to SAP SF, as highlighted in the anecdote shared about a developer asking: "How come in the org chart a blank image (for a vacant position) is always a man?", thus bringing about a change in the vendor’s org chart.

Outstanding questions

While the presentations and sessions with experts and customers provided considerable information and insights, I’m left with a few additional questions:

  • Shouldn’t HR Tech vendors also be transparent about their product roadmap prioritization process, not just the roadmap itself?
  • How can change management be done effectively when you’re so focused on reducing deployment times?
  • Will SAP SF’s support of more flexible organizational structures cause similar issues that Workday customers experience when interfacing HCM with 3rd party Financial Systems?

Bottom Line: For more than 10 years, SuccessFactors has emphasized cool, innovative features, an engaging, consumer-like user experience - and in more recent years, rolling out a Core HR System and additional Talent Management components (e.g., recruiting and learning). Now, by also addressing issues like diversity and biased decision making, and by embracing and executing on the Conversational HR vision, SAP SuccessFactors is poised to weather uncertain times in general, and maintain its top-tier market position.

Posted in: HR Strategy

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IT’s relationships with the business functions – get better at supporting them, or risk getting bumped

May 03, 2017 | Jamie Snowdon

And here’s another core finding from our “State of IT Services Survey 2017”, where we spoke to 302 IT service decision makers from the Global 2000 to find out what they think of their IT services and digital consulting providers.

We asked IT decision makers to rate how successful different business units were at engaging with IT. The chart shows the top level results for all the business units.

 

                                                             Click to enlarge

The good thing is that the majority of business units have a broadly successful relationship with IT, with 66% of responses being successful or very successful – which is encouraging. Although that means 34% of business units don’t have successful relationships with their IT departments – which for Global 2000 organizations in such an increasingly digital age is worrying. Although we are likely seeing the tension of business units’ desire to use IT to operate more dynamically being tempered by their IT departments’ conservative nature to act in a safe operating environment. 

HR departments have the worst relationships on average, with 40% of IT managers questioning whether the engagement is successful. This is concerning as IT departments need to demonstrate how technology can be applied in an HR setting – it is not just about buying the latest SaaS product like Workday. Looking at how data can help fuel better decision making for HR leaders, use predictive analytics to identify employee needs and use IT tools to assess potential employees more objectively. HR also has a key role to play in data protection and instilling the right culture of data protection within the organization. Given that employees pose one of the biggest data protection threats, IT should get HR onside.

Bottom Line – good IT fosters good relationships, poor IT fosters poor relationships

What has not detected in our surveys is an inflection point in IT and business unit relationships – whether the reliance from one to the other is increasing or decreasing as when we compare with similar survey work the change is only small on average. However, it does appear that the better relationships seem to be getting better and the worse relationships seem to be getting worse. Given that the choice to use external IT is easier (if not necessarily cheaper) than it has been – the fact that the worse relationships are getting worse is a worrying sign for IT departments. With the growing increase in the functionality and the breadth of SaaS and cloud services, it is not mad to envision a time when a large organization could move beyond the internal IT department toward a matrix of cloud procured products and services. So it is vital that IT continues to foster these relationships – get better or get bumped.

Posted in: HR StrategyIT Outsourcing / IT Services2017 State of Industry Study

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Half of today’s enterprises are exploring or already benefiting from AI in HR – time to get with the program

May 01, 2017 | Steve Goldberg

The intersection of Artificial Intelligence (AI) and personalization in HR / HCM offers the opportunity to significantly elevate service delivery, and therefore employee and manager satisfaction and engagement. It also highlights the looming challenge of getting the mix right between human and machine or “bot”-based HR. These critical topics were discussed during our recent Digital HR webcast.

The evidence? Our annual “State of Operations and Outsourcing” study of 454 major global enterprises, conducted with KPMG, just revealed that 52% of enterprises are already evaluating, piloting or implementing robotic process automation (“RPA”) solutions for HR processes. HR executives: Like it or not, the new world of HR Tech automation has arrived, and you need a definitive strategy to deal with it.

How are enterprises approaching RPA in the HR domain today?

Source: HfS Research in conjunction with KPMG, State of Business Operations 2017 N=454 Enterprise Buyers

We already know that “science” has for years been leveraged in the recruiting domain in the form of assessments that predict the best talent, culture fit, leadership potential, retention likelihood, etc. And with the initial wave of HR chatbots or digital HR assistants converging with many new personalization capabilities to further enhance the user experience, the range of potential use cases linking these two themes for enterprise benefit is only limited by one’s creativity and understanding of operational HR.

Here is a small sampling of what HR Tech buyers will likely see from their vendor partners, and in many cases, sooner than one might expect. HfS Research just published a detailed POV (point of view) with more examples under the categories listed below. It can be accessed here.

HR Tech vendor Beta / early release capabilities

  • Slackbots: SAP SuccessFactors is now testing “Slackbots.” These chatbots use their new technology partner Slack’s messaging tool within a performance review module to manage various process-related communications and tasks. HR Tech vendors like Zenefits and BambooHR, popular with smaller and medium-sized businesses, also integrate with Slack.
  • Sourcing bots: Crowded Inc. is a startup sourcing technology provider with a bot that asks questions of software developers applying for a job, and uses their responses to complete an application vs. making them type in the information themselves. TextRecruit is a California startup with a recruiting chatbot named Ari that organizations can use to field questions from job seekers. This allows recruiters to prioritize questions from actual candidates. Finally, Fama, founded in 2015, uses natural-language processing to scan news stories, social media and deeper web content for indications of a higher-than-acceptable risk profile in candidates.
  • Heavy usage bots: And multiple new chatbots from global ERP and HCM platform company Ramco Systems, and one from Boston startup Talla, are designed to respond to various, typically predictable and common employee HR questions and issues in real time. And if appropriate, the new (digital) HR staff initiates an approval or notification process. Bot-driven PTO-related interactions seem popular with both software vendors.

Right around the corner

  • HR admin chatbots: Extending the heavy usage bots theme, this category refers to Q&A capabilities using text messages and messaging applications (e.g., Slack), in concert with AI (e.g., natural language processing and machine learning), to manage many of the routine questions that come into HR, Payroll and Benefits departments every day. These include “I joined last week, when is my first check?”, “Our baby is due next week, how can I adjust my Benefits coverage?”, and “How do I know if a planned leave of absence is eligible for FMLA (Family Medical Leave Act) coverage?” These chatbots accept and answer questions in a flow of natural language and provide links to appropriate forms, workflows or content.
  • Highly personalized onboarding experiences: Given that mentors and courses don’t address much of the social side of getting acclimated, the convergence of personalization and AI will soon lead to having particular colleagues being alerted to welcome the newbie because they have a college or town of residence in common, or the same former company, or similar interests or career goals. This capability should be right around the corner given that all the relevant data is available between the corporate HRMS and tapping into pretty standard social media.

Likely a bit further out (2018/2019)

  • Reporting line and team member matching: HR Tech platforms can also be expected to make recommendations about who someone should report to, or which team they should join, based on analyzing where that employee tended to be most successful in the past, specifically from a behavioral, personality type or cultural compatibility perspective. Anyone who’s been in the workforce for some time knows there are certain types of bosses – and teams -- that bring out the best in them, and others that do not.

Further out still?  We shall see

  • Span of control alerts: An “HR” or organizational design issue that occasionally surfaces for C-suite residents is the span of control of their direct reports and one level below that, as it can get unwieldy at times. Compounding this, what if there was higher than average employee retention risk in the particular department where a manager’s span of control (number of direct reports) was already way above average? If the HR bot could let the senior manager or C-level executive know all this, it would be an example of the Bot leveraging two things: KPI info on desirable span of control for different roles, and as above, one of the humans on the HR staff for complementary consultative support around viable options.

Bottom line

Continuing advances and the obvious momentum building within the Digital HR (including AI in HR) arena highlight three important calls to action: (1) the need for a very symbiotic relationship between human and bot HR staff; (2) the need for crafting a vision for this relationship “asap” and (3) the need to bring together HR Tech customers, vendors and representative end-users, along with HR practitioner and corporate culture experts (and ultimately, perhaps legal advisors) to start developing best practices for this new and exciting frontier.  

Posted in: HR OutsourcingHR Strategy

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