How can enterprises make automation core to their operations strategy and not merely a peripheral activity? Let’s be blunt here, many service providers have been automating routine tasks with their clients for years, yet as my HfS colleague, Tom Reuner, has noted, the innovations referenced by the notion of RPA and Intelligent Automation are “often at sub-process levels…not at the heart of a delivery backbone.” We are seeing the momentum pick up here, though, particularly when automation is a shared strategy between service providers and their clients. We heard one such case highlighted by Peter Quinn, Managing Director of Automation at SEI Investments Co., (NASDAQ: SEIC) a wealth management solutions company, at the recent NIIT Technologies Industry Analyst/Advisor Day.
Service buyers want to partner for automation, but where - and how - is it actually working?
When we asked 53 service buyer executives what would improve the quality and outcome of their current outsourcing engagement, 45% of them selected “roll out an automation strategy in tandem with our provider.” (see Exhibit)
Exhibit: Service Buyers Could Improve Quality and Outcomes by Changing the Nature of Their Engagement
There are risks to be taken by buyers and providers – but is the greatest risk avoiding core automation?
For service buyers, challenges include getting the IT department on board and addressing concerns about data security while selecting and licensing the appropriate software. Service providers also face the investment challenge of taking hits to their existing FTE-based revenues and margins in order to safeguard existing clients and win new ones. So, how can buyers and providers truly get to a shared automation strategy that’s genuinely core to the engagement? It’s simple: both need to be willing to take risks to drive new business outcomes. But you can also look at the risk of not taking the risk – failure to achieve effectiveness through automation could ultimately lead to the buyer enterprise leaders falling on their swords, while those service providers clinging to the legacy FTE model will eventually be displaced by those with a genuine automation capability and offering.
The SEI and NIIT Technologies Experience with Governing Core Automation
Here’s one such story: It starts with SEI getting excited about the potential impact of automation on security, quality, speed to results, and employee engagement.
Peter Quinn, Managing Director of Automation at SEI, set out the expected outcomes for an extensive use of automation:
- Improve SEI employee quality of work experience by eliminating the repetitive, mundane tasks, thereby transforming the culture and eliminating the revolving door in certain departments
- Reduce risk of off-shore data privacy breach – corporate investment to ensure all offshore access to data is secure was still being met by the question of “what if”… no matter what the effort to address it
- Eliminate risk of geopolitical event impact on BPO
- Reduce human error and associated costs (financial, client impact, SEI industry image)
- Achieve rapid deployment
- Create instant and profound scalability: license robots versus on-board and train people
- Achieve cost reduction through staff savings
“Yes, of course we are looking for lower cost,” as Peter Quinn, Managing Director of Automation, SEI says, “but if you can get rid of human error… that’s key, because errors have financial, client experience and brand impact.” A data security breach or other human error on an investment portfolio of a client can have expensive short- and long-term consequences on customer experience and brand loyalty, for example, for a company that builds its business on its clients’ trust. And it seems like no matter how much is invested in time, money, and resources on security, it’s never quite enough for regulators. Automation helps drive more predictable and reliable results.
To get full benefit from the use of robotic process automation, end-to-end processes need to be automated to the fullest extent possible. SEI would be evaluating all the work they do from end-to-end, including considering what is done in-house, what is outsourced, and where the hand-offs are. That means work that had been outsourced and managed by its partner, NIIT Technologies, would be in scope. NIIT Tech, for its part, typically evaluates the work it does, looking for opportunities to increase efficiencies, including the use of automation.
This is the point at which the two parties come together in a more strategic approach to automation
“We will automate as much as possible, and that includes potentially repatriating work that had has been outsourced for years,” Peter Quinn of SEI told NIIT Tech. Pause. The response from NIIT Tech: “How can we help?” This response may or may not have been immediate – perhaps there was a little surprise involved—but the point is that NIIT Tech took a step forward to stay involved. Yes, NIIT Tech would lose current work, but from their perspective, this move takes their efforts to the next level of efficiency and relevance to SEI’s business; it also gives their own organization the same benefits as those listed above by Peter Quinn regarding employee quality of work and business results. Participating in discussions about what and how SEI wants to run their business and the supporting operations also gives NIIT Tech the context and opportunity to share new ideas for their role going forward.
A critical part of the automation strategy – governance – includes representation from internal stakeholders and external partners
While as an industry we agree automation is increasingly integral to business operations and outsourcing roles and results, how to bring automation into outsourcing partnerships and engagements – from strategy and governance to contracting – is still a work in progress.
Quinn, reporting to SEI’s CIO, chairs the Automation Governance Committee, which includes NIIT Tech so that they can be an active participant in all discussions. It also has representation from all market, geographic, and operating units, and includes business managers, legal counsel, and IT. The committee serves as a forum to:
- Exchange ideas and needs, find commonalities, and build the business cases
- Assess new requests
- Determine best tool / best fit
- Prioritize 90-day inventory for each tool (e.g., company impact, ROI)
- Review tool capacity saturation
- Evaluate new products as the market changes
The intent of the Automation Governance Committee is to weave intelligent automation into the fabric of the company. Too often, we hear stories of automation being used piecemeal in different areas of companies, which can lead to the use of it being sub-optimized at a point in a process versus as part of an end-to-end strategy, and complicated and expensive with separate licenses and approaches. The automation strategy should drive the ecosystem of partners within and outside a company to ensure that all the participants supporting the operations of a business are aligned and integrated.
The Bottom Line: The challenge for service providers is pivoting to meet clients’ future goals
Can NIIT Tech develop the capabilities to achieve the clients’ goals, still deliver value as a long-term partner, and realize margin for their business by having “sacrificed” the FTE-based work? “I believe the days of FTE-based work are coming to an end,” says Dan Spaventa, NIIT Tech’s client partner for SEI. Looking ahead, the service provider is developing automation-based solutions in targeted market areas like “SmartTransfers” in financial services, to bring automation into the core as part of the regular cadence of work in the service industry. These are moves that NIIT Tech – and other service providers – have to make to be a viable service provider partner in the future of outsourcing in the As-a-Service Economy.