RPA often starts out like a teenage romance: a lot of enthusiastic fumbling around that ends quickly, frequently leading to disappointment

January 12, 2018 | Phil Fersht

Yes, folks, that was one of the key takeaways one of the delegates pointed out at the FORA Summit in London last month, where a very mature conversation took place about the real future of operations in this lovely robotic age (download your full copy here). 

This packed-out event was attended by 120 senior executives, the majority being senior buyside enterprise clients, joined by the CEOs of the leading automation solutions vendors, practice leaders across the leading service providers and global advisors. and the HfS analyst team.  This was a chance to get beyond that deluge of wooden marketing and sales hype that is murdering our sanity… and get to the real nub of the of the issues plaguing a confused – and fumbling – industry.

Ten Big Takeaways from the Discussions

1. RPA needs to move beyond the teenage romance stage. One delegate pointed out that RPA often started out like a teenage romance – a lot of fumbling around with enthusiasm that ends quickly, often leading to disappointment. Past events have focused on the importance of change management to the process, however, our recent study of 400 automation buyers shows that a lack of clarity around the business case is the major barrier to RPA adoption (change management rears its head after all the fun and games of implementing the software):

2. RPA hype is over and it's nearing time to retire the term in favor of Digital Operations and the emerging Digital Workforce. Hype needs to move from replacement to enablement. The benefit of automation and AI are not reducing the workforce, but enabling machine to human and human to machine interaction. Helping enterprises and governments make better decisions with data. Building a more virtuous cycle with automation, decision making and data.

3. The Pace of Change Cannot Be Slowed – If You Aren’t Disrupting You Aren’t Surviving. Companies that view disruption as an opportunity and are not complacent are the most successful. Paranoia about the world ahead is your friend – driving staff to innovate and disrupt. Technology in this circumstance is a tool not a solution. Our customer panel said that there are ‘burning platforms’ already being created and businesses are going to have to come to a decision at some point soon to adopt. The supplier panel were agreeing that automation is surviving for big businesses and large enterprises have less than five years to sort this out.

4. The biggest challenge for Automation is the shift to scale. It's not a technology problem, but an organizational change issue and how to achieve a broad set of outcomes at scale. Currently many implementations are sub-scale - tens or hundreds of bots instead of thousands they could potentially be.

5. Ultimately the world needs to shift its economic measure from effort to outcomes – where value is linked to achievement rather than the effort to achieve. The value of relationships need to be more interactive than ever, to make the shift towards outcome-based engagements, and away from effort-based.

6. The C-Suite is paranoid about the future and eager to make changes, while middle management is complacent and resistant to change. Culture is a major impediment to changing this dynamic. This requires a number of changes –change in the way companies operate, change in the skills that companies value, change in the incentives and the training that enterprises offer staff.

7. To adapt we need to constantly learn. This means better understanding of new technologies, better understanding of underlying processes and what can be improved. But ultimately it is about the best way to drive outcomes within the business.

8. We still need more use cases – especially as we look to Cognitive/ML/AI. As the hype shifts to higher forms of automation the need for use cases for all automation expands. There needs to be clearer understanding of where the value lies and where the process should begin. RPA is being passed over even when it offers 80% value for 20% cost and should be recognized as a valuable tool in an enterprise's arsenal.

9. The purpose of digital is to bring humans and technology together. One of the panellists made the comment that digital was not about specific technology or about a transformation. “Digital” is about the bringing together of humans and technology. It is the interface, closing the gap between the two.

10. Change management remains a vital component of automation strategies. The difficulty in delivering at scale is exacerbated by poor change management and planning. It’s clear from our event in Chicago and in London that enterprise customers and service providers need to spend more time on planning to get automation to work effectively. One senior buyer representative said “change is not like flipping a light switch… more like a dimmer where it comes to full light over time and every new leaders is a new start.” So there needs to be a clear outcome and commitment - one of the main topics of conversation during the event was around the need for better change management to ensure that nothing is left behind in the race to transform. With important advice that "change management is about educating people slowly toward what the world will look like tomorrow”.

The Bottom line: Here are the anti-fumbling themes taking the conversation to New York this coming March...

To conclude the London summit and take the narrative onto our biggest and baddest FORA summit yet, the following four themes will steer the next phase of this industry mandate:

The Technology – a means, not an end. Data is the currency of transformation

Like with many new technologies, analysts, consultants and industry practitioners become obsessed with definitions and the demarcation between automation variants: in this case RDA, RPA, AI, Machine Learning, Cognitive, and all their permutations and combinations. Whilst this might be important for market sizing and positioning – many of the conversations in London reinforced the point that technology is a means, not an end – deemphasizing this definitional obsession. All these pieces of tech are tools, not solutions themselves. Without a coherent, end-to-end business transformation strategy, “dabbling” with automation technologies frequently does more harm than good, at best yielding only meagre results.  Given the amount of potential disruption to legacy work practices businesses are facing, a deeper transformation strategy is required which will take automation at scale – “you need to go big,” as one participant put it, to get real benefit from automation.  But first, organizations must map out the path to understand where they’re going.  This brings with it another crucial part of the transformation recipe – data. Understanding the centrality of data to the digital enterprise – how to acquire, structure, interpret and act on it – is essential

The Value – shifting the metrics from effort to outcomes

Much of the discussion during the event focused on the outsourcing services industry, in part because that’s where the prevailing labor-arbitrage business model is under existential threat, and in part because that’s where automation technology is already being deployed at scale.  During his keynote Phil Fersht observed that “Transactional outsourcing’s death throws began in 2012” – dating its demise to the rapid emergence of RPA.  However, there is a new, business model within reach.  Providers have meaningful experience with automation technologies and valuable know-how, while buyers desperately need expert help with design and implementation.  What’s needed is a new value proposition – one that separates effort and time from cost and revenue, and shares risks and gains.  “Clients will have to contribute value to their suppliers,” as one participant put it, and providers will have to become more innovative and willing to expose their balance sheets – in short, being less transactional and more consultative.

The Talent – taking the robot out of the human and putting insights back into the process

As has been discussed at the FORA and HfS Summits in the past - and as noted by Professors Leslie Willcocks in London, automation is not about replacing humans, automation “takes the robot out of the human.” Taking the mundane and process-centric tasks to free up employees to engage in more meaningful activities.  Artificial Intelligence, on the other hand, augments and extends the human mind, empowering humans to make more consequential decisions.  Together, they fundamentally change human behavior and workplace management paradigms.  In the digital future, all employees will need skills in data analysis and interpretation, and middle managers in particular will need to be able to connect the work they supervise with the outcomes the business requires.  Both must be granted what one participant called “permission to change” the way they have traditionally operated, and business must invest to equip them with new skills to succeed.

The Change Imperative – the way operations support the business itself needs to be redesigned

There is a growing awareness that we are at a step-change – a discontinuity – in business history.  The challenge presented by digital and automation technologies can only be met successfully with a commitment to transformational change; incremental, tactical approaches will only yield limited results and risk failure.  As never before, senior executives in every industry face existential decisions about the future of their enterprises, and will need to “make themselves uncomfortable,” as one participant put it – to re-imagine their businesses based on the centrality of data and digital relationships (see Technology above).  They will need to shed the constraints of the “as is” and articulate the journey to the “to be.”  Success will be measured not on beating last quarter’s results but on the ability to see and grasp the scale of change required and create a viable and compelling digital vision for what one participant called the “journey to improvement.” 

HfS Subscribers can click here to download their complimentary copy of the London FOR A Mandate “Arise the Digital Middle Manager!”

Posted in: Robotic Process Automation

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How the Blockchain Six-Pack is changing how we think about business transactions, storing data and new revenue models

January 06, 2018 | Phil Fersht

Our Chief Strategy officer, Saurabh Gupta has been pioneering new research and vision across distributed ledgers, blockchain and smart contracts.  In his latest POV, entitled "The Blockchain Reality Check. Where are we, and what can we expect in 2018?" Saurabh dives into what we describe as "Blockchain Six-Pack", which describes six built-in features of blockchains that manifest into a disruptive potential over the long run for enterprises, when leveraged intelligently in relevant business use-cases. Net-net, the Blockchain Six-Pack is changing the way we think about business transactions, data storage, and even industry value chains and associated revenue models:

  1. Distributed shared data over Peer-to-Peer (P2P) network reduces single points of failiure. The most fundamental difference between DLT and the way we store data today, is that Distributed Ledgers do not have a central administrator. A distributed ledger is replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, or institutions. This allows information to be available across the network in a fully transparent and autonomous way, reducing single points of failure and enabling far better collaboration.
  2. Consensus-driven trust cuts out the middle-man. In blockchains, there is no need to trust the middle-man as you don’t have one. Trust is driven by consensus algorithms such as proof-of-work (PoW) or Proof-of-Stake (PoS) or some variation of these. As a result, we don’t need to worry about unreliable, inaccurate, dishonest or overpriced intermediaries.
  3. Immutable transactions ensure trust. Each block in a blockchain contains a timestamp and a link to a previous block. By definition, blockchains are inherently resistant to modification of the data. Once recorded, the data in any given block cannot be altered retroactively without the alteration of all subsequent blocks and a collusion of the network majority creating a single source of truth.
  4. Hashing-based data ensures integrity and security. All records are individually encrypted. Blockchains use cryptographic hash codes to verify data that drives up integrity and creates strong resilience to cyber-security concerns
  5. Automated smart contracts promote touchless interactions across process chains. Several blockchains also offer ‘Smart Contract’ functionality. These are computer protocols that facilitate, verify, or enforce the negotiation or performance of a contract, or that obviate the need for a contractual clause. This allows contracts to auto-execute based on pre-set conditions or triggers and allows for much higher levels of straight-through It can even allow the millions of IoT devices to work autonomously
  6. Permissioned and permission-less flavors give enterprise users flexibility. Much like public and private clouds, blockchains can be private (permissioned), public (permission-less), or somewhere in between (hybrid). These flavors give enterprises the flexibility to choose their solution based on their needs and preferences. Permissioned blockchains enhance privacy and take less computational power (so have higher throughput) but lack the Utopian trust that permissionless blockchains, such as Bitcoin, can bring.

Blockchain’s inherent features give it the potential to drive new touchless business models and disrupt existing ones by removing the need for intermediaries in the long-run.  This results in significant increases in the speed, security and reliability of executive processes, transactions and interactions on both micro and macro scales.  The potential is enormous, provided blockchains are adopted, sensibly regulated and executed effectively. However, HfS expects a five to seven-year horizon for blockchain to delivery fully, given the nascency of the technology and associated challenges.  In addition, media hype and fake news, in addition to negative activity from threatened legacy stakeholders and other economic impacts, could impede adoption.

What can we expect from blockchain in 2018?

In the near term, we do expect blockchain initiatives to drive significant business impact and create a frenzy of excitement as ambitious businesses jump on the potential of new technology developments like never before. Use-cases around traceability through provenance and asset tracking, digitization of contracts leading to faster settlements, management of private data and digital identity will drive significant efficiency and effectiveness gains in existing business models. Blockchain can also become a source of competitive differentiation in the medium term by re-imagining IT infrastructure that is shared and decentralized, re-defining transaction management that is transparent and immutable and driving additional trust in multi-party collaboration. 

We might not see the true disruptive potential of blockchains over the next 12-18 months, but we will see it become much more than a conversation topic with several use-cases that are generating tremendous business value for its constituents. And let’s not discount the levels of hype that tend to drive our industry in new directions, especially when the tech works.  While digital, AI and automation have been the flavors of 2017, blockchain is gearing up to lead the hype in 2018, as enterprise leaders search for new levels of value that have genuine, proven business applications.  

So don’t sit back and assume that the world is not changing, because very soon this funnel is going to flip. Go ahead and investigate blockchain!  

HfS subscribers can click here to download our new POV: "The Blockchain Reality Check. Where are we, and what can we expect in 2018?"

Posted in: Security and Risk Mgmt.

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Ready to Learn to Change in New York this March?

January 04, 2018 | Phil Fersht

Dear Friends - it's time to push the biggest events button in 2018!

Oh yes... we're excited to trigger the first nuclear tranche of speakers for the Future of Operations in the Robotic Age (FORA) Summit in New York, March 7-8.  The summit will span the entire two days with the theme "Learning to Change" rocketing the conversation.

The tech is here and is being proven, but are we really, truly ready to disrupt our underlying corporate DNA to exploit it to its full potential? Can we really change how we operate, think, collaborate and focus to embrace the new wave of data-driven transformation that is engulfing us? In true ballistic HfS style, we are bringing together some of the finest minds from enterprise buyers, academia, technology and BPM services to share how change can be realized - and how to venture outside of our comfort zone to get there. As always, this is a non-salesy sharing of best practices and research between the key industry stakeholders.  No cardboard cutouts, plastic booths or dodgy salesmen... honest!  

Do apply here to save your seat ...space is limited and filling up fast.  Let's push some great big buttons, people...

Apply here to save your seat 

Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)Buyers' Sourcing Best Practices

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2018: Why the full-time job will never be so precious, as the gig economy crumbles and judgment work is digitized

January 01, 2018 | Phil Fersht

The new “rules” of the workplace are being defined as computers are frantically being programmed to take the lead in the workplace, when it comes to judgment and intuition. We humans need to be the idea generators, the motivators, the negotiators, and the trouble-shooters to fix computer errors, if we want to govern our emerging digital environments. In short, we need to get closer to our firms, be more tightly integrated and intimate with work performance than ever before… which means the role and tenure of the much-derided middle-manager in the Dilbert Cartoons could be taking on a whole new potential twist - and a whole new (potential) level of relevance.

I would go as far as declaring 2018 as a new beginning of the value of the full-time employee – where alignment with the mission, spirit, culture, energy and context of an organization has never been so important.  We are seeing the value of contract work diminish as so much “outsource-able” work is so much easier to automate and global labor drives down the cost of getting things done quickly and easily.  Business success is more about investing in the core than ever - and that core includes the people who are the true pieces of human middleware to hold everything together.

The onus is circling back to the value of being a full-time employee, who needs to value the fruits of having a predictable income and adapt to the changing balance of how humans need to work with computers.

Remember when the rise of the gig worker was supposed to revamp how so many of us worked, as we escaped the shackles of the “evil employer”?

Almost two decades ago, the internet was creating the independent worker, as exemplified in Dan Pink’s timeless bookFree Agent Nation: How America’s New Independent Workers are Transforming the Way We Live” became the seminal guide for what is now known as the “gig worker”.

Furthermore, unless recent research from McKinsey of 8000 workers can now be categorized as fake news, 162 million people in Europe and the United States—or 20 to 30 percent of the working-age population—engage in some form of independent work today. And a recent study from freelance site Upwork (which undoubtedly wants to hype the impact of gig world) cranks up the numbers even further, claiming that a staggering 50% of US millennials are already freelancing, before declaring the freelance sector will comprise the majority of the US workforce within a decade.  Wow.

So are the days of being gainfully employed really disintegrating before our very eyes?  Or is the gig hype beginning to atrophy for many people?

The gig economy is becoming a tough place to craft a living if many of the new reports are to be believed.  And it’s not just about driving Ubers, delivering food orders and contracting for logistics firms – i.e., working for businesses that exploit the gig economy to drive down labor costs and improve services.  It’s the freelance gig economy where people forge a living writing code, supporting content development, delivering consulting work on-demand etc.  Even that lovely Upwork research admits: “While finances are a challenge for all, freelancers experience a unique concern — income predictability. The study found that, with the ebbs and flows of freelancing, full-time freelancers dip into savings more often (63 percent at least once per month versus 20 percent of full-time non-freelancers)”.  So even if the most biased of sources admits most gig workers can’t cover their living costs, we can conclude that those “Free Agents”, which McKinsey describes as the gig worker sector using gig work as its primary income, are not in a sustainable earning situation.

Today, it’s a buyer’s market for gig work

You only need to spend a little time on LinkedIn to observe just how many people are now marketing their wares as solo free agents, or as part of a company bearing their name.  It’s abundantly clear that so many people have decided to set themselves up as independents, that the market for gig talent is saturated and it’s become a “buyers’ market” for gig work.  Whether I want to commission a crack consultant to validate some RPA software, hire an analyst to endorse my product, commission a writer to produce a white-label assessment of an emerging market, produce a go-to-market strategy for my business, redesign my website, my logo, or just have someone support my business on a part-time basis… today, I am spoiled for choice.  I barely need to hire fulltime employees these days, unless they are truly core to keeping my business ticking along – and I can create real competition to get the work done for much lower costs than a few short years ago.

On top of the risks of commoditizing gig work, we have to contend with the impact of automation and Machine Learning to stay relevant and worthy of earning a paycheck

We’re not in a world rejecting human work, but a world where work is rapidly changing – and the skills of the dynamic middle manager has never been so important. In short, the increasing availability of computing power to crunch massive amounts of data, coupled with advancing tools to tag and label data and workflow clusters with breakthrough programming in languages such as Python for syntax and R for data visualization, are the game-changers that will increasingly impact how we get work done, as we develop continually smarter algorithms to keep teaching computers to do the work of the human brain.

What's more, the rapid development of Machine Learning (ML) environments such as Google's TensorFlow, the Microsoft's Azure Machine Learning Workbench, Amazon's Sagemaker, Caffe and Alibaba’s Aliyun are becoming the new environments driving armies of coders and developers to align themselves with ML value - desperate to stay relevant (and well paid) against the headwinds of commoditization of legacy coding and app development.

As ML takes over judgment and (eventually) intuition, the human-value onus moves to interaction, agenda-setting, problem defining and idea generation

In short, the disruptive ML techniques are teaching computers to do what comes naturally to humans: to learn by example. Today’s emerging ML tools use massive amounts of data and computing power to simulate neural networks that imitate the human brain’s connectivity, classifying data sets and finding patterns and correlations between them.

Net-net, pattern-matching jobs are increasingly being affected by ML – vocations such as radiologists, pathologists, financial advisors, lawyers, procurement executives, accountants etc. are all being challenged as judgment work is (gradually) being replaced by smart algorithms.  However, as elements of these types of jobs are being affected, other job elements become even more important, namely interacting with other humans, creating, setting the agenda, defining and finding the problems to go after.  They motivate, they persuade, they negotiate, they coordinate. They are the dynamic conduits of driving information and ideas in an organization and will be increasingly in the driving seat as Machine Learning advancements increasingly take hold.  The digital middle manager who can bring a team together and lead people in the right direction does not exist and likely never will…. I’d be amazed if we saw one emerge soon.

Fulltime employment is now becoming a premium situation

Having predictability of income, healthcare costs covered, guaranteed paid vacation time - and a constant supply of work to do - is fast becoming the dream scenario for the disgruntled gig worker.  So here’s a thought – go get a JOB.  Or if you’re in a job and wanted to try the gig work thing… spare a thought for what your ideal situation looks like, because last time I looked, most firms are doing everything they can to avoid hiring well-paid staff… especially if they can get the work done much cheaper from desperate gig workers.

The Bottom-Line: Five steps to keeping your job:

i) Become the conduit of ideas and information that is irreplaceable right across your organization. So we’ve now come full circle, where the value of having people really close to the business is becoming more important than ever, as computers perform more and more of the routine and judgement based tasks. To the point, the value of the full-time employee goes both ways: companies need people who really understand their institutional processes, their quirks and ways of getting things done… who are onhand to troubleshoot mistakes, but also there to keep the ideas flowing to keep the business ahead of its competition and close to its customers.  “Human middleware” is becomimg the real OneOffice glue to break down those siloes and help govern a slick business operation from front to back office.

ii) Develop a positive attitude by finding aspects of your job you do like.  Your full time job is likely the best gig-work you will probably ever get, so even if you hate your boss and most of your colleagues, ask yourself if you’d prefer scrapping around for the boring work other companies prefer to outsource.  Focus on the interesting stuff you can do and keep reminding yourself that the grass is rarely greener elsewhere.  Unless you are a whizz at Python development, the chances are your job-hopping days are numbered and you need to figure out how to stay put and make it better for yourself.

iii) Motivate yourself and become a real motivator.  Being motivated - and helping to motivate others - is probably the least computerizable trait of all.  If you aren’t motivated, you are placing yourself at risk when your leadership assess which of their team then want to take them forward into the future.  If you really can’t get yourself excited about what you do, or your company just demotivates you in such a way you can’t dig yourself out of your rut, then you may need to take that Python course and brush up your resume…

iv) Let the computers take the lead and become the controller to fix mistakes double checking, intervening when the computers do something dumb.    Humans and computers make different kinds of mistakes, so we really need to bring humans and computers together intelligently to cancel out each other’s mistakes. Fighting automation and ML is a lost cause, especially when your firm is completely bought in to the concept and it rolling out bots and working on developing smart algorithms.  Just let these things take the lead and them figure out how to make them functional and monitor their errors, ad computers will always keep making them.  You can’t fight innovation, but you can nurture it, manage it and troubleshoot it.  

v) Find your pareto balance and stop whining. Nothing in life including your current or prospective employer will be perfect. Focus on the 80% that is right, versus making yourself (and others around you) miserable by the other 20%. There is rarely a perfect fit where workers only get to focus 100% on all the things they love to do… there has to be this 80/20 compromise, or you will be forever hopping around trying to find a workplace nirvana that doesn’t exist.  And it today’s social world your reputation follows you around like never before… and employers are steering clear of the whiners at all costs.

Posted in: Design ThinkingDigital TransformationHR Strategy

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Happy 2018 all! Remember never to give up trying folks...

December 31, 2017 | Phil Fersht

Posted in: Absolutely Meaningless Comedy

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Wishful dreams for 2018: fixing our societies, our politics and our taxes

December 23, 2017 | Phil Fersht

 

With our governments going broke and looking to go even broker, here is my simple wish-list to fix our endemic societal issues, and recoup some much needed tax income, so we can start dreaming about things like improving disastrous education and health services…

Trump is gone ...and a new political party emerges in the US that isn’t controlled by greedy corporations and corruptible misogynist dinosaurs. The American voters go back to voting on policies, not stereotypes and hatred.  Wouldn’t that just be so awesome? Is it illegal to dream these days?

Britain finally gives up on Brexit, realizing that changing the color of passports from red to blue doesn’t make up for trashing the country’s economic future and hurtling it back into the 1970s.  Please can we all just admit there is not one single good thing about Brexit for any living being, so we can just consign the whole thing to the time-capsule of bad ideas, along with communism, dodgeball and the George Foreman grill. Bad ideas are OK, as long as we admit later they were bad ideas…

Political leaders finally realize that smartphone addiction is the worst disease to affect society since cigarettes and booze. In fact, it’s worse – they could fund entire health, military and education programs taxing booze and ciggies, but with smartphones, all the money is now getting sucked offshore somewhere, and into Mark Zuckerberg’s and Jeff Bezo’s bank accounts.

Re-open pubs and bad discos. Back in the pre-smartphone era, our social world was centered on bad pubs and even worse dance floors. Yes, we had to get drunk and make idiots out of ourselves to meet people and get married… now it’s just swipe left or right, a few photos and you’re all done.  Where did all the “fun” go?  Can’t governments declare what’s left of our pubs as places of national heritage and conserve what we have left of life before Instagram?  Is the joy of youth consigned to sharing bad selfies and playing online video games alone in their bedrooms?

Tax gym memberships.  What was wrong with a few extra pounds and a beer gut?  Now, if you don’t have a perfect six-pack on your chest, rather than in your fridge, you’re not exacty making friends like you used to… where did all the fun go?  Not sure about you, but I don’t have much energy left for socializing after 45 mins on the treadmill and benchpressing 130lbs, so I might as well donate the $20 I should be spending on booze to the government to fund the reopening of classic pubs.

Tax anyone trying to buy Bitcoin.  Just because.

Tax vendors double for sponsoring every ropy conference under the sun. They’re wasting their money in any case, so why not make them do something useful with it?

Place income tax on robots. This will end the inane conversation about “digital” labor, as everyone goes out of their way to call it something else, like workflow efficiency… which is what it really always was, right?

Tax vendors for using the term “digital” in their marketing.  Why not make some use out of a meaningless overused term…

Tax #fakenews.  Forget the detritus of Obamacare, this will fund a whole new health system, right? 

Tax bloggers for writing opinionated blogs, because they think they can.  Make them realize there’s no such thing as free opinion these days…

The Bottom-line: As we near the end of a ridiculous year, we can all dream, can't we?  

Happy holidays all =)

Posted in: Absolutely Meaningless Comedy

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Save the Date: New York, March 7-8 for the flagship FORA Summit "Learning to Change"

December 22, 2017 | Phil Fersht

Dear Friends,

On behalf of the HfS analyst team and global community, I am delighted to announce our flagship FORA summit taking place this coming March 7th and 8th at Convene, Times Square, Manhattan, New York City. 

This will span the entire two days with the theme "Learning to Change" dominating the conversation.  The tech is here and is being proven, but are we really, truly ready to disrupt our underlying corporate DNA to exploit it to its full potential? Can we really change how we operate, think, collaborate and focus to embrace the new wave of data-driven transformation that is engulfing us?

Key Topics up for Debate:

Intelligent Automation in Practice (not theory); Blockchain demystified; Emerging Sourcing Models and the Digital OneOffice; The Emergence of the Chief Data Officer; Making Change Management actually work.

Key Speakers and Panelists:

  • Tim Leberecht (Author of the Business Romantic); Tony Saldanha (VP, IT and GBS P&G); Phil Fersht (CEO, HfS Research);  Mike Salvino (Pioneer behind Accenture Operations and a key investment partner for Carrick Capital); Larry Carin, Professor of Computer Engineering, Duke University (More to follow.... 
  • CEOs of the leading Intelligent Automation software firms and IT/BPM service providers
  • Key enterprise leaders managing data, automation, global business services and operations initiatives
  • HfS analysts spanning emerging technologies, industries and sourcing solutions.

Why FORA is Special:

The worlds of software providers, business operations leaders, and services providers have always been chasms apart – different mindsets, vernaculars, conversations, ideas of what constitutes value – and vastly different cultures. At FORA, we are bringing together these diverse groups of people to rethink completely how we run global operations in this robotically digital era, to debate the challenges and opportunities posed by automation, AI, analytics, blockchain, global talent on our business operations and our careers.

If you have further questions regarding FORA, how you can attend, sponsor, speak, or just make suggestions, please drop us a note at [email protected]

I hope to see many of you in NYC,

Cheers!

Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)IT Outsourcing / IT Services

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2018: The year enterprise robotics software and services will reach $1.5 Bn

December 16, 2017 | Phil Fersht

When the statement "It's just like BPR from twenty years ago, but with tech that actually works" rang out at the recent London FORA Summit, the nods around the room were palpable. 

2017 has undoubtedly been the break-out year for enterprise robotics software. We witnessed a whole new industry emerge around robotic technologies that can stitch together workflows, processes, applications and desktop interfaces to provide a genuine transformation of the digital underbelly for so many enterprises, many of whom have suffered for decades from inefficient manual workarounds and spaghetti code clogging up their ability to access data and run their businesses properly. Today, the emerging solutions available on the market do not load the enterprise transformation blunderbuss with silver bullets, but they do provide a starting point to improve fundamentally the data underbelly of an organization. And, for so many organizations, they are turning to robotics software RPA (Robotic Process Automation) and RDA (Robotic Desktop Automation) as the starting point.

Robotic Process Automation

The global market for RPA Software and Services will reach $898 million in 2018 and is expected to grow to $2.2 billion by 2021 at a compound annual growth rate of 54%. 

RPA Definition: 

Example use-case: automating invoice processing across multiple business applications handling rule-based exceptions. RPA is different from traditional automation software as it is inherently capable of recognizing and adapting to deviations in data or exceptions when confronted by large volumes of data. In effect, it can be intelligently trained to analyze large amounts of data from software processes and translate them to triggers for new actions, responses, and communication with other systems. RPA describes a software development toolkit that allows non-engineers to quickly create software robots (known commonly as "bots") to automate rules-driven business processes. At the core, an RPA system imitates human interventions that interact with internal IT systems. It is a non-invasive application that requires minimum integration with the existing IT setup; delivering productivity by replacing human effort to complete the task. Any company which has labor-intensive processes, where people are performing high-volume, highly transactional process functions, will boost their capabilities and save money and time with robotic process automation.  Much fr RPA is self-triggered (bots pass tasks to humans), but requires human intervention for judgment-intensive tasks and robust human governance and to make changes / improvements.

Similarly, RPA offers enough advantage to companies which operate with very few people or shortage of labor. Both situations offer a welcome opportunity to save on cost as well as streamline the resource allocation by deploying automation. The direct services market includes implementation and consulting services focused on building RPA capabilities within an organization. It does not include wider operational services like BPO, which may include RPA becoming increasingly embedded in its delivery.

Robotic Desktop Automation

In addition to RPA, the other software toolset which comprises the emergence of enterprise robotics software is termed RDA (Robotic Desktop Automation).  Together with RPA, RDA will help drive the market for enterprise robotic software towards $1.5bn in software and services expenditure in 2018 (with close to three-quarters tied to the services element of strategy, design, transformation and implementation of enterprise robotics).  HfS' new estimates are for the total enterprise robotics software and services market to surpass $3 billion by 2021 as a compound growth rate of 39%.

RDA Definition:

Example use-case: automating transfer of data from one system to another. RDA is essentially surface automation, where desktop screens (whether desktop-based, web-based, cloud-based) are "scraped", scripted and re-programmed to create the automation of data across systems.  A well-designed RDA solution can automate workflows on several levels, specifically: application layer; storage layer; OS layer and network layer. Workflow automation on these layers requires equally specific technologies but provides advantages of efficiency, reliability, performance and responsiveness. Much of this automation needs to be attended by humans as the automation is triggered by humans

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Posted in: Digital OneOfficeRobotic Process Automation

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The HfS London FORA Summit.... we could have packed this out three times over!

December 13, 2017 | Phil Fersht

Thanks to all of you for supporting the HfS London FORA summit last week... and a terrific day's debate =)

Posted in: Outsourcing Events

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What $1000 invested in these firms ten years ago would be worth today

December 10, 2017 | Phil Fersht

As a wise man once said: “It has been a mistake living my life in the past. One cannot ride a horse backwards and still hold its reins.”  Well, if you'd listened to this horse, you may have turned a pretty profit =)

Kudos to HfS analyst Martin Gabriel for a very interesting analysis of how rich (or poor) we just could have been: 

Click to Enlarge

Posted in: Business Process Outsourcing (BPO)Cloud ComputingIT Outsourcing / IT Services

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Images from HfS FORA... An Exponential view on AI from Azeem Azhar

December 07, 2017 | Phil Fersht

Have we already passed the singularity?

Posted in: None

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Images from FORA... a power panel packing a power punch

December 07, 2017 | Phil Fersht

Terrific discussion from the FORA leadership panel featuring (from left to right) Mihir Shukla, Automation Anywhere; Dawn Tiura, SIG; Jesus Mantas, IBM; Cliff Justice, KPMG; Leslie Willcocks, London School of Economics; Mohit Joshi, Infosys and Ahmed Mazhari, Genpact.

Posted in: None

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Infosys repeats history, but this time goes for a services man in Salil Parekh

December 03, 2017 | Phil Fersht

Over three years ago, the Infosys board made the brave decision to look outside of its organization to bring in an "outsider" to transform its business and ready itself for whatever wave of disruption was coming to challenge a services model that still makes ~20% profit margins and grows ~5% a year.   Yes, they appointed Vishal Sikka, and we all know about the ensuing soap opera that followed...

The decision to look outside was made in 2014, and that hasn't changed

Hindsight is a terrific practice to follow, if all you really like to do is chew on historical occurrences to learn for the future. However, in the case of Infosys, the only real lesson to be learned from the whole Vishal saga is the firm needs a leader who understands how to grow, divest, acquire and lead a technology services and consulting business.  Vishal provided the dreams, the style, technical prowess and the cultural impact... what he failed to deliver was being able to apply these skills effectively to a traditional services business. 

Vishal was a software guy and that is the world he lived in - building very expensive platforms and hiring very expensive Californian executives to run them. Having said all that, Vishal did drive a huge amount of change, and most of it was positive - the only major negative was the fact he departed the firm, and everything he contributed left the firm in a state of paralysis.  The only saving grace for Infy has been the confused state of the services industry in 2017, where most of Infy's competitors have been too busy chugging down the Digital Kool-Aid trying to come across as a facade of flashy vernacular, rather than staying true to the secret sauce that

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Posted in: Analytics and Big DataBusiness Process Outsourcing (BPO)

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Ten predictions for 2018 that will all come true!

November 30, 2017 | Phil Fersht

Here are ten big predictions for 2018.  And they will all come true (apparently):

1.…The Digital Operations Industry has Emerged

2.…There is only OneOffice that really matters

3.…Enterprise Automation and AI will reach $10 billion

4.…Enterprise Blockchain Services will surpass $1 billion

5.…We'll see many new “Big impact” deal announcements, but mechanics and metrics will be vague

6.…The power of AND to solve business problems

7.…The rise of change management for digital labor

8.…The war for creative talent

9.…Traditional outsourcing makes way for ‘True Partnerships’

10.…The realization that there is no time for digital complacency

 

View the recording and download the slides (HfS subscribers) here

Posted in: Analytics and Big Data

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For goodness' sake, it's Jim Eastlake!

November 30, 2017 | Phil Fersht

Ever wondered how you can get your coffee maker to turn on the airconditioning, while your robotic dog pressure-cleans your car... all with a couple of clicks on your iPhone?  Well, here is the man to give you the lowdown on all embedded intelligence across all connected devices, the man who practically invented the term "IoT" for Gartner during a distinguished career with the Borg, before joining the HfS rebel forces as VP, IoT Technology and Services Research.... Jim Eastlake:

Jim - it's just terrific to be working with you at HfS! Can you share a little about your background and why you have chosen research and strategy as your career path? 

Hi Phil. I think that I can sum that up in one phrase….. 'The Big Picture'.  I began my career at Texas Instruments in 1981. It was a good place to learn the semiconductor business, but TI was very introverted in those days. So, after 6-7 years I decided to join Dataquest, THE preeminent chip research firm. It would only be for a couple of years, then I’d join another semis company. Little did I know that I would become hooked. I loved the opportunity to talk to senior management and strategists from across the industry (Gordon Moore, Charlie Sporck and Jerry Sanders amongst them), focus on the big issues…… and try to figure out what was going on. I’d then formulate my thoughts in research reports that I hoped would educate and inform, and, amazingly, I got good feedback.   

Why did you choose to join HfS... and why now?

The world has changed just a bit since then! We now stand on the cusp of the next industrial age, Industry 4.0 and all that. It is the Professional Services firms that are performing THE vital task of stitching hardware, software and services together. They enable a myriad of “digitalization” projects that deliver huge benefits to society. So, what better place to continue my lifelong exploration of the big picture than at HfS.   

Where is the industry right now, Jim? Are things really that different than five years ago when you started covering IoT?

We’re following a classic saturation curve Phil, and it’s very early days. Things change fast. The industry takes big strides forward all the time. In the past five years, much has changed: platform architectures, security, edge computing, contact T&C’s, formation of industry standards - just everything.

So what can we expect to see from you at HfS... can you give us a little snippet of what you're going to be working on?

Most certainly Phil…… 

After two weeks with the company, I’m deeply into my first IoT Blueprint, scheduled for February publication. We’ve had a wonderful response from participants, so it will be an insightful report. However, feedback from our clients is also focusing my research thoughts on some meaty topics for 2018:

  • What are the top obstacles to IoT adoption, and how can Service Providers help overcome them?
  • What IoT platforms are winning out, and why? And, is there a trend to using “standard” platforms as opposed to a Service Providers’ proprietary offering?
  • What reasoning lies behind the Edge vs Cloud computing decision in a project?
  • Why do customers choose different Providers for different projects?
  • What comprises a true end-to-end IoT solution?
  • What proven business benefits of IoT are emerging in each of the industry Verticals?

And finally, is the analyst industry as exciting as it was 10 years' ago?  

Immeasurably more so, I’d say. Simply because of Digitalization. Change has always represented an exciting time for the industry observers, there’s not been a time like this during my, nearly 40-year, career in the industry. Everything from semiconductors to Services is involved in enabling change that is Societal in scale. Also, on a practical matter, it is now so easy to communicate with clients and to get research to them. Social media, chat rooms, Webex, Skype and the likes provide us with a much more effective communications conduit.  

Jim - it's terrific to have you join us and can't wait to hear about the convergence of OT and IT!

Posted in: IT Outsourcing / IT ServicesThe Internet of Things

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Who said change management was critical?

November 28, 2017 | Phil Fersht

Posted in: Absolutely Meaningless ComedyRobotic Process Automation

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Welcome to the era of Shock and Awe automation deals... it's the only way

November 23, 2017 | Phil Fersht

Isn't it amazing how history has this habit of repeating itself?  Especially when it comes to services engagements, where the buyer hopes to shed loads of cost and the providers hope to make a handsome profit, while building a utility model to resell similar engagements to many other buyers.

And that is what we're seeing, as the services industry evolves from engagements deriving value from lower wage costs to one which combines lower wages with the RPA arbitrage of repetitive tasks being computerized in software recording devices.  As one analyst firm once famously declared exactly five years ago: "Welcome to Robotistan, Outsourcing's Cheapest New Destination".  Or is it?

The difference these days, is that many of the emerging services engagements are being based more on hope than certainty, where many buyers (often naively) think this is going to be just as easy as lumping the work offshore, and many providers simply have little choice but to sell them the dream, and live through the hell with them, if they want to stay relevant in this market. How else can you build an effective automation-led services model, if you don't have the guinea pig clients to join you on that nice packaged holiday to Robotistan... And, let's face it, how else are both buyers and providers supposed to behave, when there are so few historical benchmarks to set baseline metrics that both parties know are achievable?  Yes people, welcome to the era of Shock and Awe automation deals... it's the only way.

So let's skim over the first phase of RPA:  The discovery phase: "What is RPA?", "Do I use AA, BP or UiPath?", and  "This stuff is easy, let's just PoC it by ourselves". And don't forget the "Our attempts at CofEs always fail, but this time will be different because we've learned from our outsourcing and shared services experiences".  Let's begin the new automation-led journey at the phase where they've selected their products, appointed the CofE lead, and signed a deal with a service provider daring to escort them to the pearly gates of Robotistan:

Click to Enlarge

The issues that are starting to unravel in this robotic age, is the simple fact that most clients avoided the painful transformation to their data processes and people, during their earlier efforts to source work to lower cost global locations.  They were pretty much able to delight their CFOs with 30%+ savings, without having to do much to change their underlying process architectures (the old "lift, shift then transform" approach usually stopped after the "shift").  The reality of moving into an automation arbitrage environment is that you can't just replicate that work into an even cheaper robotic environment without really figuring out how to do this effectively. 

Bot licenses are not cheap, and simply do not make financial sense for a lot of processes, the way they are currently being operated.  You can simply end up paying $8K a year for a bot that only is utilized for 20 minutes a day, when you could streamline that process into a broader workflow and use that same bot to process a lot more work for the same cost.  Looking at several engagements already in place, clients are committing to significant staff reduction within 12-24 month of contract signing, and many are quickly realizing they are facing some serious complications if they are going to meet the metrics their CFOs are expecting.  Either they end up running operations on desperately thin staff numbers, or they own up that they need to rethink that they need a significant transformation on their data infrastructures, processes and people culture, if they are going to enjoy the delightful fruits of Robotistan.  As several early RPA adopters will already tell you: You need to do MDM before you RPA.

When you talk to some of the leading consultancies in this space, they will tell you that they are making more of their revenues on pre-implementation transformation work, just getting clients into a place where they can do this.  They will also tell you the issues are not about the technology, but much more about the change management necessary to deploy the technology effectively.

The Bottom-line: The early RPA adopters are doing everyone else a huge favor by writing the new rulebook

The biggest issue facing the services industry today is that we have run out of silver bullets, BandAids and scapegoats.  In order to get to Robotistan, you need to finally look deeply into your underbelly of messy processes, spaghetti code, manual workarounds and other funky ways of handling exceptions.  Moreover, you need to look at your people and figure out how to foster a culture of inclusion and innovation. Most enterprises have been stagnating for years, but as the guinea pigs find their way through their shock and awe of having to conduct real surgery - and psychotherapy - on themselves, a new rulebook that guides us through the steps we have to take to learn, think, calculate and act, will emerge that many of the laggards will gleefully follow.  

Posted in: Robotic Process Automation

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Sumitomo Group announces the largest-ever RPA deal, but is this really all RPA?

November 20, 2017 | Phil Fersht

Japan is currently the only major developed country that is experiencing a population decline and many of its ambitious enterprises are increasingly desperate to find new means to get work done without over-relying on human labor.

Unlike other developed economies, it is not offsetting population decline with immigration, and most its firms have proven very reluctant to engage in offshore labor arbitrage over the years. In addition, Japan has the largest proportion of elderly citizens of any country in the world. In 2014, 33% of the population was over the age of 60 and this percentage is increasing. Hence, getting the most out of its shrinking workforce to keep their enterprise healthy is of utmost importance to a country which loves long-term planning. No joke, but I was once asked to review a 100-year business plan from a major Japanese conglomerate!

Given its shrinking productive population, combined with its wealth, the cost of labor is high. Consequently, its companies are often the first to adopt new technologies, including artificial intelligence and robotics to increase productivity in a market with severe skills shortages. In addition, Japanese firms increasingly struggle to acquire necessary skills to optimize their technology investments which, in turn, raises the cost of these skills. This is leading to increases in spending with third party service providers that help to fill these skills gaps.

A massive automation-led services engagement is announced, placing RPA in a whole new bracket for value and cost impact

Hence, it was no huge shock when major Japanese financial services conglomerate, Sumitomo Group, announced an unprecedented RPA initiative (see the news release), with savings claimed to be in the hundreds of millions of dollars (also see link on UIPath's website). However, while this is a tremendous public endorsement for the potential benefits of RPA, this appears to be a massive corporate restructuring that is using RPA as a catalyst for labor reduction.  We already have discussed (see link) how Japanese firms love to deploy automation to increase productivity and competitiveness - it's in their DNA as a firm with deep technology and manufacturing roots. In short, most Japanese firms do not suffer from the same negative connotations of automation that their Western counterparts - they are proud to be able to infuse quality and efficiency into their processes.

However, we caution enterprises to take some of the grandiose claims with a bucket of salt, as we've not seen anything near these touted levels of productivity gains yet realized, as outlined by HfS analyst John O'Brien in his latest POV.

It’s being touted by some participating suppliers as the largest-ever RPA implementations worldwide, although, ironically, we don’t yet know how many robots are going to be used.

We understand it’s a significant contract in terms of dollar value, and most of the implementation and transformation work is going to IBM. UIPath is doing the (attended) front office RDA automation and the (unattended) back office RPA automation. Blue Prism has also been involved doing some unattended automation in the back office, but SMBC declined to mention them in their press release (see link) which clearly points to UIPath as the prime automation software partner in the engagement moving forward. 

According to SMFG/SMBC, the attended digital workforce supports the group’s front-office centric activities, enabling the staff to develop the automation themselves and to work alongside the robot by exerting direct command over it. Complementary, the unattended digital workforce targets all the high volume processes that do not require the human touch, working 24 hours per day and 365 days per year to sustain high-throughput, high-intensity processing. SMFG/SMBC has endorsed UiPath as ‘highly usable and scalable’ supporting the initiative during this week’s UIPath conference in New York.

Bottom Line: Massive kudos for RPA being demonstrated at scale, but this appears more like a massive corporate restructuring using RPA as a catalyst for change

There’s no doubt that right now this endorsement from SMFG/SMBC is great kudos for the RPA vendors aiming to scale enterprise-wide – the most jaw-dropping initiative yet that takes RPA to the 9-figure level in terms of perceived monetary value.

However, RPA initiatives, in general, have not nearly met cost savings and productivity targets anything near these touted outcomes.  We’re just not there yet as an industry – sure, many of the more mature deals today are yielding value benefits in the $1m-10m range, once they are being managed effectively, but to jump from these levels to the hundreds of millions is massively far-fetched. 

At HfS, while we believe there are genuine intentions from Sumitomo to leverage RPA to free-up and eliminate human labor, there has to be a much broader corporate restructuring plan, way beyond the digital labor initiative, that will get Sumitomo to these lofty targets. It’s also important to point out that these ambitious enterprise-wide deals are already going on in other organizations – for instance, we understand Blue Prism is involved in a number of projects of at least this size across the globe. But these companies are much less willing to share the details of their programs with the wider community – clients, employees, and shareholders are all going to be impacted in some way by the expectations being set, and whether they are realized or not.

Keeping quiet is often the easier way to avoid the kickbacks when things inevitably go wrong. Whether naïve or not, SMFG/SMBC’s level of disclosure means it's going to be an important test case to assess the success of scaling RPA across the enterprise.

HfS subscribers can click here to view our complimentary analysis on the initiative, by John O'Brien and myself 

Posted in: Buyers' Sourcing Best PracticesCaptives and Shared Services StrategiesRobotic Process Automation

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Mike Sutcliff, Digitally Dangerous

November 16, 2017 | Phil Fersht

Accenture's strategy has always been pretty straight-forward:  focusing on its major clients and making sure it stays ahead of the pack, where the marketing is moving. This was pretty much the story when we spoke with Accenture Digital's Group Chief Executive, Mike Sutcliff, two and a half years ago (view blog)... and today all these intentions have been backed up by billions of dollars of bold digital investments, vastly outplaying the competition:

Click to Enlarge

So we hunted Mike down for an update to talk about these massive recent investments and how this Accenture Digital business is shaping up...

Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Mike - it's been a couple of years since we first discussed the big digital push your firm is making.  Can you share an overview of how the market has evolved since then?

Mike Sutcliffe, Group Chief Executive, Accenture Digital: Sure Phil. Thank you for having me. I guess the first thing I would note is that companies started thinking about digital as a channel or a technology, and then they started to understand that they had to design omnichannel

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Posted in: Digital Transformation

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Since when did AI become the job creation antidote to automation's job destruction? Time for an augmented reality check...

November 09, 2017 | Phil Fersht

We seem to have suddenly shifted from the doom and gloom of robots taking our jobs to people proclaiming that AI is going to create millions of new jobs.  And if you haven't endured this latest round of hype, I envy your unique skill in removing fake news from your life.  

Suddenly AI is the antidote to automation!  Really?

Don’t we have a responsibility to inject some reality into this conversation?  Today’s business world is about removing physical touchpoints, about fixing our data, about running processes faster, smarter, more autonomously, and cheaper… So where are the real links between the universities, the politicians, and the businesses?  Why aren’t we really debating this stuff in the senates and parliaments if today's organizations are on an inexorable drive to sub people for better data? Instead, we have academics and "analysts", desperate for attention, making unsubstantiated predictions that are only fuelling the tech firms, desperate to sell their wares without this negative connotation that the real ROI of selling their products is tied to labor elimination.  

Let's just make the call - AI is indirectly and inextricably tied to the elimination of "unnecessary" labor, by nurturing systems that get smarter with each incident and transaction. The smarter and more autonomous your operations become, the more agile and efficient your business becomes. That's not a terrible thing - in fact, you are doing your valued staff a huge favor by keeping them employed and keeping them relevant to your business.  But you are not creating a net influx of jobs into your organization, you are becoming more fluid and competitive.  Sure, you'll probably look to add some Python and R developers, Machine Learning experts, serious data geeks and design thinkers - or you may just pay consultants to do it all for you - but the bottom-line, here, is that you're going to be shedding a lot of your left-brained staff performing jobs that can be artificially automated, at a much faster rate than you'll be adding the data-oriented people you need to digitize your business.  AI is about doing more with less, not more with even more - let's get real.

Don't get me wrong, the possibilities of faster, smarter, touchless data flows between the customer and the operations of the business, are critical to promote competitiveness and survival, but let's stop sugar-coating the true purpose of data driven intelligence - the less businesses need to rely on people and the more autonomously they can run processes, the more nimble and profitable they will become.  Now if these businesses then choose to reinvest their new-found wealth hiring loads more people, I will tip my hat to these purveyors of job hope, but let's fact facts, the companies of the future will be running a lot of smart technology with a smaller group of savvy people to manage it all.  

Let's take our much-loved services industry, which is pretty high up the tech-savvy ladder and comprises firms where efficiency and competitiveness are its very DNA

The global IT and BPO services industry employs 16 million workers today.  By 2022, our industry will employ 14.8 million - a likely decrease of 7.5% in total workers (see our research methodology and full blog here).  This isn't devastating news - we'll always lose this many people through natural attrition, but what this data signifies is this industry is now delivering

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Posted in: Digital TransformationRobotic Process AutomationCognitive

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