The rapid onset of Digital business models is having a number of implications for developing a service provider – client contract, including:
Lack of defined outcomes: Engagements are starting to have a more open ended nature: the end result is not clearly defined nor are the steps needed to get there. Experimentation and agility are key characteristics of many new engagements.;
Challenges of embracing new tech: Accelerating change driven by more and more emerging technologies that affect the operating environment of enterprises and service providers;
Setting future milestones: Plotting a detailed course of action (and relevant KPIs!) over multiple years has become virtually impossible: one simply cannot know what one needs in 2 years’ time, let alone look 5 years’ ahead
I see service providers and buyers struggle to deal with this new reality.
Existing commercial models and contracting practices are no longer viable to capture the outcome of the engagement, let alone the spirit of collaboration, co-innovation and partnership.
The old way of contracting is not sustainable and leads to sub-optimal results in a Digital, As-a-Service world. What should the sales process, the contract, governance, contract duration and responsibilities then look like?
The big issue here is trust. In a situation that calls for innovation and new ways of working, there is a double trust dilemma. It’s the classic “agency problem” times two: neither party has an information advantage in the relationship and aligning interests is very difficult in situations with a lot of moving parts and uncertainty about goals and how to get there. Trust requires mutual understanding of people’s and companies’ interests and culture. A huge part of trust is predictable behavior, knowing what to expect from the other. Understanding each other and customers’ customer is critical in creating mutually beneficial relationships.
In typical (legacy) engagements today, many parties have failed to contract in a way that cements trust.
Thick documents, dozens if not hundreds, of KPI’s to measure performance, and other metrics, which all create a (false) sense of certainty. This hasn’t been terribly effective, as business environments change and KPIs often don’t as they are part of the contract, and it is even less satisfying from a perspective of really solving business problems. Business cases are often based on a best estimate or just plain guesswork as the glass ball gets more foggy as tech driven change accelerates. Enter even more uncertainty, velocity and tech driven change and it becomes almost undoable to define the goals and terms of contracts.
So what is the way forward for contracting in an age of uncertainty and novelty?
HfS is going on an ambitious journey to answer the key questions:
What ways are there to tackle the double trust dilemma?
How to deal with the open-ended engagements?
With more risk involved, is there a tendency to share risks? If so, how does that work out, what works, what doesn’t
What ways of contracting are actually enabling innovation rather than hindering innovation, new ways of working, collaboration and co-investing?
One solution we are exploring is that of an “Uncertainty premium” for the service provider taking on more risk in new commercial constructs. This uncertainty premium could be in the form of an “Innovation bonus” which entails achieving innovation and/or cost savings (with the savings earmarked for innovation). This approach could then drive budget for additional innovative work, benefitting both parties. One increasingly popular measure is the introduction of Robotic Process Automation into an engagement – one oil and gas firm stipulated that if the service provider can hit a 20% saving, that 20% will be added to a budget earmarked for innovation projects. Another I’ve heard is along the same lines but with the savings being earmarked for more industry talent / SME’s to be paid for by the client, and so introducing more quality and higher value work into the engagement.
We have launched our research initiative recently with selected buyers and providers. We will report back to the industry in twofold: a report and a session at the HfS Buyers Convention in New York September 14-16 2016.
Superhero movies have been particularly popular over the past several years, but long before then they’ve been a staple of our culture. We love the hero coming to save the day, helping fellow citizens and making the world better. In the movies (and in real life) there are superheroes who save countless people from human trafficking, sweat shops, and other dangerous conditions. I want to be a superhero and do these things too. And guess what? I’m going to do it. How? By helping companies buy IT products and services ethically and by helping suppliers create new opportunities for themselves and their people.
Will you be a superhero with me? Here’s what we can work on together to make our world a better place:
Buyers, make it your mission to use sourcing for the good of your company and all workers/locations touched by a deal.
Source ethically. Searching for the lowest cost labor (and then negotiating even lower rates) often can lead to firms ignoring warning signs of poor ethical labor practices. Don’t be one of the companies that will choose the lowest price over a supplier that treats it workers fairly and gives them good working conditions.
Don’t rush through compliance and treat it as a “check the box” activity. Use compliance and regulatory requirements to shine a light on where your value chain can be improved. Try to exceed regulations on supplier ethics and work practices.
Monitor, test, and remediate on supplier compliance obligations. It’s expensive, annoying, and time consuming to audit whether suppliers were telling you the truth on their security, compliance, and other obligations. Do it anyway. It’s important for your legal and regulatory obligations. It’s also important for you as you try to make the world better. Hold your suppliers accountable – make them fix what’s wrong or pick different suppliers.
Suppliers, use new technology to create opportunities. Don’t just settle for doing the same thing with fewer people or for less money.
Use automation to find new ways to employ your talent and spend more on retraining before choosing staff reductions. HfS’ latest research shows automation taking away about 1.4 million jobs. Will you just take those jobs (and people!) out of your company, or will you find new things for them to do, new places to invest, new frontiers to explore? Don’t get lazy and settle for doing the same thing faster and cheaper. Find new things to do and create more opportunities for your people and your clients’ people.
Show clients your worker conditions and how you’re making the world better for your people and the communities where they live. Clients need to know you’re following legal and ethical practices. Go beyond that to proactively showcase the programs you have in place to enhance the lives of your workers. Turn corporate social responsibility into a differentiator.
Follow compliance guidelines in practice, not just on paper. Just like buyers need to make sure they’re not just “checking boxes,” suppliers need to make sure they follow the spirit of these regulations and use them to drive business and worker improvements.
Influencers (analysts, deal advisors, self-proclaimed evangelists,) Find and expose areas where the market is hurting workers and communities, and talking about ways to fix those areas.
Educate the market on opportunities coming from new technologies and service models. Many of us in this space are automatically attracted to new things and shiny objects, so this one might not seem difficult. But as you look at these new areas, get beyond the sunshine and roses to discuss downsides and how to avoid them or to balance those negatives by positives in other areas. Explain to buyers why ethical sourcing is important for their specific engagement and for the market.
Help buyers find suppliers who can collaborate on the superhero-mindset of the market instead of road-blocking it. Clients that want to find suppliers who are legitimately invested in avoiding issues like poor worker conditions need help from advisors who feel the same way. Make worker conditions, people issues, and other similar areas a more explicit part of selection criteria and educate buyers on how to validate supplier responses to those criteria.
Guide suppliers to find ways to deliver services that treat employees fairly, serve market needs, and create growth opportunities for both suppliers and clients. Just as suppliers should find ways to expand the market as new technologies emerge, influencers should work with them to discuss how suppliers can operationalize their ideals.
With no physical danger to ourselves, we can help stop poor working conditions, human trafficking, and a host of other challenges affecting the world right now. We only need to do our existing jobs well. I want to do that. I want to be a superhero. What about you?
We hear a lot about the cost of healthcare, among these being the high cost of additional treatments or elongated stays when patients fall in hospitals, and of readmissions when people who go home after treatment don’t follow care plans. It’s amazing to think that a solution could involve something as simple, cost effective, and comfortable as clothing, such as a garment made with Hitoe® (That’s hee-toe-ay, not high-toe!).
Hitoe is a fabric that is also a sensor, contributing heart rate and brain and muscle activity to analysis for health and care analysis and plans
Earlier this week, Adam Nelson, VP Healthcare and Pharma at NTT Data, came by the HfS Research office in Cambridge, Massachusetts, with a shirt. This shirt is essentially “living data collection wear.” When someone wears it, the fabric collects and transmits data such as heart rate and muscle activity. Data transmitted from the shirt shows (as we saw firsthand, thanks to Adam’s clothing of choice that day) posture and movement through a 3D rendering, and heart rate through an electrocardiogram. The system it feeds can be programmed to send an alert, such as when someone makes a sudden dramatic movement like a fall, or even a change in posture that indicates getting up (picture a patient that shouldn’t be getting out of bed), enabling a care giver to intervene or provide help faster. It also shows data on muscle activity, helping to determine movement versus atrophy, as input for rehabilitation plans.
There are healthcare machines that capture and transmit the same type of data. But a garment made with Hitoe fabric could mean one less “hookup” during care and treatment. It also means that someone could be monitored remotely versus spending time in a hospital for the same reason. Also, compared to machines, the fabric seems pretty comfortable to wear, and is less expensive to buy and use at scale. So it could help address patient comfort, refinements in care plans, hospital and care costs, and even less waste in the environment. Hitoe, a partnership between Toray Industries and NTT, uses nanofiber technology, bringing the threads incredibly close together, with an electropolymer adhered, to monitor vital signs and send signals to the cloud (but it can also be put in a washing machine). Then, using something like the NTT DATA Optimum Exchange integration platform, the data can be combined with electronic medical records and other data input for patient data analysis to impact diagnosis, treatments, and care plans. And, by the way, creating a services opportunity too, for NTT DATA (and eventually, for Dell Services as the two come together).
A solution using Hitoe doesn’t require a lot of adjustment in a person’s life to use it, increasing the potential for engagement in their own health and care
This example of “IoT” caught my attention in particular because it is so approachable—it’s clothing, the most literal example for the new wave of “wearable” technologies that are becoming more commonplace. The fabric can also be sewn into a ball cap, for example, and capture brain activity, for use in diagnosis or treatment. While one version we saw fit snugly, to be used by fitness and sports programs, another looser fitting garment option (nylon) feels like the softest sheet with the highest thread count imaginable. The key is to find the balance of comfort and practicality—it has to consistently capture and transmit data that is uninterrupted by shifts in the clothing, and clinicians needs to trust this new data source. NTT DATA is working with an array of partners, including IndyCar driver Tony Kanaan whose team uses the heart rate and muscle activity data analysis to coach him during races, staving off fatigue and arm cramps. Hitoe-based clothing, worn comfortably and automatically transmitting data that can be combined with electronic medical records and monitored and analyzed, seems to hold promise for increasing the comfort and reach of health and care, as well as the impact.
We’ll wait to see how NTT DATA unpacks the potential that Hitoe represents for healthcare. In the meantime, here’s a video (link) of Tony Kanaan tearing up the IndyCar tracks as he tests out Hitoe in the field—transmitting heart rate and muscle activity that helps his team support his performance—that may provide greater inspiration that any description.
But all is not lost! I see some very powerful paths Procurement can take to become a more appreciated and valuable business function in enterprises.
Procurement is suffering from a reputation problem
Many executives express their frustration with procurement frequently claim, “they just don’t understand what I need, and obstruct me from achieving my goals”. Procurement is often seen as that last hurdle before reaching the finish line like a police officer trying to find holes in your story, looking to give you a slap on the wrist if they can. Everyone tries to circumvent Procurement when they need to buy products or services.
The underlying issue often lies in the emphasis on the transactional side of procurement in enterprises. People are subjected to procurement processes and form-filling that are very time-consuming, valueless and inefficient, feeling like they’re being sent from one desk to the other.
Of course, there is a role for Procurement. Of course an enterprise needs to have expertise and capability in contracting, buying and using services from third parties. And of course rogue spending is an issue for enterprises. But it’s time to take the next step. If being restrictive didn’t bring you the seat at the table you envisioned, if ‘the business’ still doesn’t ‘get’ you and doesn’t take you serious, its time to change the tune. But how?
Guides of the As-a-Service Journey
I want to argue Procurement is in a unique position to reinvent itself and that we should love Procurement.
HfS sees a dramatic shift in services towards the As-a-Service Economy. Key characteristics of the As-a-Service Economy are:
More and deeper collaboration between suppliers and buyers
A focus on business outcomes
Usage of digital platforms, analytics and automation to facilitate the convergence of people, technology and process
Services that are multi-client, leverage new opportunities for efficiency and quality and focus on the customers’ customers.
Procurement can be the enabler of the As-a-Service Journey. Don’t look further…. Procurement should be the broker of capability. Haven’t you noticed how “IT Services” and “BPO” and “software” have become procurement categories in so many buyers today? As services and technology become increasingly commoditized, standardized and commonplace, the greater the opportunity for Procurement to take the lead in adding value beyond merely negotiating price points.
The future of the supplier-buyer relationship is collaborative engagement and that starts in the contracting phase. Procurement should have a clear vision on the way the enterprise wants to form relationships with suppliers, what the nature of the collaboration should look like and how contracts facilitate collaborative engagements.
Procurement Brokers of Capability
The key to becoming a broker of capability is to be the spider in the web. In my years as a consultant, I often didn’t have a formal team. I went out into the organisation, identified the people and capabilities I needed to tackle the problem, formed informal teams of the right people and made it happen with them. I was a fixer more than anything, understanding the problem, limitations, possibilities and I knew the right people and brought them together. Not always easy, but a lot of fun. This is how I envision the future of the procurement professional. Identify business needs (you do this by actually talking to these people, understanding what they have to achieve), dive into your network and get the capabilities together that are needed. If you take a partnership approach, look at relationships long-term rather than short-term transactions, people are willing to do a lot for you.
So what is needed to truly become Brokers of Capability?
Be a business function, not a finance function – Procurement should be immersed in business units to understand the business, understand the needs, understand the market. Business executives have to allow Procurement into their world, Bram was right to point to business executives as a source of Procurement’s woes.
Category Expertise – One of the hardest areas to fix for procurement is strategic sourcing and category expertise, especially in the tail of indirect spend. This requires deep expertise of the category and the market, which is a challenge for enterprises to build in-house.
Information – At the heart of every buying decision lies information. Procurement has more data at its disposal than ever before. Information and insights derived from all this data is critical for the evolution of the profession. Digital platforms have emerged and are quickly growing in adoption and capability. Advanced analytics are drastically improving the insights and decision-making processes for Procurement.
Relationships – Building and maintaining relationships, internally and externally, is critical for modern Procurement. Price isn’t everything and it’s definitely not a predictor for the willingness to go beyond the contract and take a relationship approach to the engagement. Time and time again in reference calls for HfS Research Blueprints and in our discussions with services buyers at HfS events, the best service providers are perceived to be the ones investing in the long-term relationship, going above and beyond expectations and contractual obligations to deliver real business value to the client. Incorporate these tenets in your sourcing practices and your enterprise will benefit.
End-to-end focus – Key to realizing business outcomes and benefits of good procurement are closed loop processes and follow through after the ink on the contract is dry. Turning theoretic savings into real ones is still pretty hard to achieve.
Tech savvy – Technology platforms with embedded process automation and advanced analytics are emerging at the core of Procurement. Procurement professionals need to be more tech savvy than ever before to make sure they use and leverage the available technology platforms.
Ok, we agree it’s Procurement’s job to know what is out there, what the quality of products and services are, what going rates are and which terms are acceptable. They are the ‘go to guys’ when you as a business executive need something to achieve your goals.
I’m not naive. I know there are still a lot of people in Procurement hiding behind procedures and forms, terrified of becoming obsolete without them, clueless what your business goals are.
The Bottom-line: It takes two to tango
Friends in Procurement, if you don’t have a vision of Procurement being a business facilitator, now is a good time to get one. And “business”, this asks for different behaviour from you as well.
Refusing to change our ways in today’s energy sector is a certain recipe for failure. There are a lot of inefficiencies in Oil & Gas, which in times of high oil prices and high margins, are largely hidden and/or ignored. In today’s continued low oil price environment with low margins and profitability—what we believe to be the new normal—Oil & Gas companies need to take out inefficiencies and find new ways to optimize production and bring down operating costs like never before. Our Energy Operations Blueprint highlights the way Oil & Gas companies are looking at digital technologies, automation and outsourcing as avenues for change, and levers to pull to drive new efficiencies and value creation.
Sustaining the current momentum of change in today’s environment is a huge challenge for Oil & Gas companies and their service providers. Changing for new results requires progressive change from within, not just rearranging the deck chairs hoping for a different result. The Blueprint identifies eleven trends that are currently taking place, and while they all serve a purpose to address the trends impacting their world, there are a few that bubble to the top.
Four trends that we see as an opportunity for focus by service buyers and providers to increase the value of their engagement over time:
Evolve analytics capabilities to cater for energy-specific applications. Analytics offerings have started to progress from being based largely on access to data science talent and unique algorithms to include industry specific analytical applications delivered by service providers that deeply understand a client’s enterprise and marketplace. We see good progress in analytics that improve the drilling process and analytics capabilities underpinning the 24/7/365 monitoring of thousands of units of critical equipment from a central support center in Exploration & Production.
Leverage data to look into the future, not the past. Predictive and prescriptive analytics are starting to enable more real-time decision-making and continue to have a huge impact on the operating models in the industry. The industries’ strict requirements for safety, reliability and uptime in operations, often in harsh circumstances and remote locations can be better met with advanced analytics capabilities offering real-time and actionable insights. Knowing what went wrong through descriptive analytics simply doesn’t cut it.
Put IoT at the heart of your planning. The (Industrial) Internet of Things holds tremendous promise and we expect adoption to accelerate as there are already huge numbers of connected assets in the industry and providers and Oil & Gas companies have to focus on connecting those assets to the internet to bring tremendous value. Think about how in Midstream, pipeline sensors providing data on transportation of product and the health of the pipes replaces the need for field workers to get sensor readings in person. And using drones and connected sensors to inspect the gigantic stretches of pipeline in difficult terrain instead of visual inspections by field workers.
For future effectiveness, focus on IT/OT integration and the Digital Oilfield. The digital footprint is increasing in Energy Operations, bridging the gap between Information Technology and Operations Technology. In Upstream, advanced analytics improve operations in drilling, reservoir modeling and engineering and remote monitoring.
Bottom Line: It’s time to dare the industry to build—not inhibit—momentum for change
Here are two dares I want to put forward to Oil & Gas executives and service providers respectively, both of them critical to sustain the change momentum and achieve the innovation that is so desperately needed:
Energy Buyers – Dare To Reinvest Cost Savings into Innovation Funds: It is very attractive to put cost savings achieved by outsourcing in the hands of the CFO. However the CFO isn’t going to turn around and say “great job, let’s all sit back and celebrate that 20% off the bottom line”. We recommend to reinvest these savings in further innovation, perhaps make it a part of a Collaborative Engagement arrangement: “Service provider, save us 20% and we can both reinvest the 20% as next year’s innovation budget”. For example, saving driven through the offshoring of application development and accounting work could be funneled into a digital oilfield project.
Energy Service Providers – Put Your Money Where Your Mouth Is: Pro-actively and aggressively push the innovation agenda around automation, analytics, drones, 3D printing for MRO, simulating with digital twins, machine learning, deep learning, cognitive computing. Present clients with use cases, examples and capabilities to “unfreeze,” inspire and build credibility in innovation.
There’s no two ways about it. I’m excited to be on the cutting edge of a Design Thinking-led services engagement in healthcare to address patient experience. Thank you to Lawrence General Hospital (LGH) and Sutherland Global Services for inviting me through the door and into this initiative…. and especially for agreeing to let me blog about it! We are constantly looking for where companies are “taking a detour with design thinking” and finding results to share. This time, we’re bringing you along on the journey.
We’ll start with a workshop led by Sutherland Labs, and follow their version of this human-centered, iterative innovation methodology over the next few months. The goal is to re-think the patient experience at LGH, and I’ll be sharing the progress here in my blog as we go. After months of researching, interviewing, and writing about Design Thinking and the value it can bring to a services engagement, I will be able to give you an inside look as well. If you have done this before, you can compare it to your own experience and perhaps find some new ideas; and if you haven’t, here’s a way to get some further exposure to a work in progress
Design Thinking can play a strategic role in helping healthcare organizations to better service the consumer as the patient, member, caregiver, clinician, etc… and rethink operating (and business!) models.
We believe design thinking can help bring about a more healthcare consumer focused type of engagement, which is so needed in health care today. With the latest news burning the wires that in the U.S., premiums are going up yet again, healthcare consumers are just going to get more discerning about how and what services they are receiving for their money. Value – always defined by the beholder – is changing for healthcare consumers. Being aware of that, and aligning the organization –front, middle, and back office – is simply becoming an imperative to the future health and success of healthcare providers, period. And service providers can play a role in doing so.
Despite the potential, and early success stories in and outside of the industry to date, the use of Design Thinking in healthcare for impacting business outcomes through operations is fairly nascent, as seen in Exhibit 1 from our recent Intelligent Operations Study, which included 45 Healthcare Operations Services Buyers. Only 23% of the respondents say they are using Design Thinking today, so we see LGH and Sutherland as pioneers here. For those of you who have not yet jumped into the waters, you can also find some ideas on how to get started in my recent interview with Charlotte Bui, Global Lead of Design Thinking at SAP… and stay with us here as this story with Lawrence General Hospital and Sutherland Global Services develops.
The LGH and Sutherland partnership to put patient experience at the center of reimagining the hospital business operations – the use of Design Thinking – exemplifies one of the 8 Ideals that HfS Research considers critical in the move to more “intelligent business operations.” As it is also one of the least mature of the Ideals in this services industry, they are breaking some new ground here.
Exhibit 1: The Maturity of Design Thinking in Helping Achieve “Intelligent Operations” in Healthcare Organizations
At the same time, fellow HfS analyst Hema Santosh, and I will be launching an update to the Design Thinking for the As-a-Service Economy Blueprint we published with Phil Fersht in early 2016. We expect to hear more about how service providers are using Design Thinking and incorporating innovation into their engagements, to be more forward thinking and investing in the long-term value of outsourcing services partnerships.
If you have a story to share, questions to ask, or challenges to pose, please fee free to post them here, or contact me at [email protected]. And, stay tuned…
A company’s security posture changes often. The change can be company-created, for example, by opening an office in a new geography or entering a business with different regulatory requirements for data protection. Security posture also changes as new threats like previously unknown malware emerge, and more sophisticated techniques for hacking evolve.
When engaging a managed security services provider, it’s tempting to believe that keeping up with changing security posture is “being handled” by the provider. But is it?
Providers Often Forgo Innovation For Operating Efficiency
A very common complaint among outsourcing and managed services clients is that the providers rarely suggest changes unless the client brings it up – unless, of course, that change benefits the provider’s ability to run the process. In security environments, this heads-down approach goes beyond ineffective – it can cause significant damage to clients as threats and mitigation options change quickly.
Yes, providers generally do a security posture assessment before beginning the engagement. However, in our current blueprint research we found little evidence that providers re-assess security posture formally during the ongoing engagements.
Recently, in fact, we even heard of one provider that regularly discovered threats in a client environment but didn’t report them to the client because the particular threat types were out of scope of the engagement. The client found out only months later, and by accident, about the omissions.
Even with such egregious scenarios of intentionally not alerting the client, many providers miss threats. They miss them because they’re not looking for them and their analytics engines aren’t detecting new patterns.
Be Proactive With Incident Monitoring And Reporting
There are many ways you can work with your managed security services provider to ensure that changes to your security posture are being addressed. From most quickly implemented to longest, here are some actions you can take:
First and foremost, monitor news and trends in security and threat intelligence. Don’t wait for your provider to flag new threats types to you.
Be proactive in asking questions about changes and new threats. Sometimes even a quick email asking the provider about a new ransomware technique that you read about will spur discussion about making changes to the service scope.
Include security market changes and news as part of monthly meetings. Make it an agenda item to discuss what’s happening in the market. And build into the provider’s mindset not to wait for the regular meetings to bring up new events.
Expand the scope of your engagement to include regular security posture re-assessments. This can depend on your industry and other factors, but it might be quarterly, semi-annual, or annual.
Include a new engagement metric on the provider’s ability to find and address new threats. The provider’s ability to keep your data and organization protected from threats even as those threats change needs to be part of the provider’s success metrics if it isn’t already.
Bottom Line: Don’t let inertia set in on your security managed services engagement—make sure your engagement includes specific, proactive approaches to staying current with your security posture.
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?
At HfS, we hear quite a bit about the challenges of incorporating RPA and AI into business operations, so when I spoke with a healthcare operations leader about his experience at a U.S. healthcare payer recently, I wanted to share it… but can only do so anonymously. Here’s how RPA first – and AI down the road – is being incorporated into the business operations, by defining appropriate scenarios, thinking outside the box, managing proactive communications with staff, and looking to get people excited about the positive impact on jobs, relationships between payers, providers, and patients and healthcare consumers and on health, medical, and financial outcomes.
What is the use of Intelligent Automation in your organization today?
We are building momentum from our business case into implementation with robotic process automation (RPA) and defining a conceptual “bridge” to get into artificial intelligence (AI) – what is the use case and how to use to impact financial and medical outcomes.
Where and how did you get started?
Started by looking at RPA to drive additional efficiencies from labor and financial perspective and then realized that the organization needed to be considering a broader strategy. It isn’t just about the technology but how does it change the experience of the internal employees and the health plan members directly? We have a plan that we are iterating as we go… as we learn more about the capability and the potential impact. Using RPA and AI can change our internal processes and free up talented staff. We can change the way our employees interact with members, providers, and patients in a way that changes their experience and medical and financial outcomes.
How will employee roles change when RPA is introduced?
RPA – and eventually AI too — will free up our employees to engage more directly and interactively with our stakeholders such as healthcare consumers and clinicians. For example, today, the provider office has to fax authorization and wait for response. How can we use RPA and AI to ingest the form on a front end web site, have an algorithm that runs to identify “we always provide authorization for this service” and flip it back in seconds; or if not, route it for the appropriate review. This kind of intelligent automation frees up the care management team to do something more important; and hopefully, that translates into relationship and outcome uplift for the provider, member, or both.
Employees who are processing claims and reviewing authorizations, for example, have interactions and engagement with members, providers, and patients that are reactive and responsive. We could get in front of these same people more proactively if those processes and reviews were automated and only potential denials or exceptions were flagged. These employees could be reaching out, instead, to discuss a pended claim or questions about authorization. Our hope is that “in a year or two, we can shake our heads and say, wow, we used to have hundreds of people who are now creating personal interactions instead of processing behind the scenes.”
Who in the organization do you need to work with and how does that play out?
First, we had to go through a process with the enterprise architecture team and get approval to proceed. We are working with a service provider who helped define the scenarios and evaluate the technology. We then moved forward with a proof of concept that showed what we could deploy around claims payment and pended claims, the business story for our business unit colleagues. Then we laid out what is RPA and AI and demonstrated how it works—how you could address a claim that 15 people used to work on full time just for one fall out. It resonated. Over the years, I have had to advocate for software that we were excited about – rarely have had to sell a product or idea where the senior level is buying into it before the grassroots technical effort. That was the case here. The executive team could see the opportunity and get enthused about it.
How is the move to intelligent automation and “digital labor” impacting your workforce?
From a technical perspective, our CIO team is working through the details. As the senior leaders get excited and then go into the team to talk to subject matter experts to codify RPA based solutions, the employees are concerned that their job is going to be automated and eliminated. You have to be able to tell the story to help employees understand that what is being automated is this routine action you do in the back shop today – that here is an opportunity to parlay your experience into interaction and impact with the members, providers, and patients. It’s a dialogue that is playing out pretty well.
We believe that as we move services people to working more directly with the providers and members, they will be performing work they will find more enriching. We also realize that we need to understand what skills and capabilities are needed for this. We are building out a robotic operating committee and working with business leaders to talk about – as we deploy these solutions and staff becomes available for different roles, what are those roles and what capabilities do people need for them. And we don’t want to move them into doing work that will be automated “next.” We are in early stages here. So far our efforts with intelligent automation have been grassroots with excited senior executives how have said, go into my organization and show me how it works. As we get scale, we will work through retooling.
Tell me about how the funding and business case development is coming along.
Our organization is quite rigorous around investment. When we talk about RPA and provide evidence of 4:1 and 5:1 return on investment the story becomes easier. We are always focused on continuous improvement and how that parlays into impact. Again, the story of using automation to free up skilled staff is powerful. For instance, in finance, changing manual reconciliation at the close of month with large team to be automated and the more complicated work being the focus of the human effort, the logic becomes more apparent and the investment, obvious.
From these “early stages” of about 12 months in, the momentum and excitement is gaining, and I anticipate that we will pick up speed with RPA and into AI over the next year with top down sponsorship. What excites me most is the possibilities of what we can do to free up our own employees and at provider offices to anticipate and be more proactive about issues and concerns and eliminate bottlenecks and slow downs for higher quality service and interactions.
Bottom line: While this interview is a bit like the old dating game where one person asked questions and the other sat behind a black curtain, it helps shed light on how enterprises that have been working one way for so long are making progress in moving forward with RPA and AI, considering talent and technology and how it changes the way we need to work going forward in healthcare operations.
Infosys has announced the acquisition of the UK-based design-thinking firm, Brilliant Basics, and if it plays out according to the name, it is exactly what Infosys needs to bridge design to execution and impact. The acquisition brings in a digital, strategy, and customer experience design capability, a global studio network, and brand name credentials including HSBC and INSEAD (online education experience) as well as new startups like CBI bank (business strategy and omnichannel touchpoints). These are all valuable resources to Infosys and its clients, but what the service provider has had real challenges with is addressed in this quote from the Brilliant Basics web site – a framework and resources for scale:
“Our deep experience in working with talented people in the areas of service design, user experience and technology has allowed us to create repeatable processes for building digital products and services.” – Brilliant Basics
Infosys committed to training internal resources and using design thinking but faltered in scale and consistency
Influenced by CEO Vishal Sikka’s interest in design thinking, Infosys introduced human-centered design into its digital transformation methodology called AI KI DO, which receives positive feedback from clients. And, through Zero Distance, Infosys provides a framework for account and service delivery teams to work on getting to know their customers, ask questions, and make suggestions for change. Infosys is also using design thinking to help companies identify new growth opportunities and to change its own operations as the company grew fast and got a bit stuck in the “old ways” of hierarchical, process-centric decision making. (Read further: Is Infosys Stretching Past the Growing Pains?)
However, while Infosys partnered with Stanford d.school, brought in leaders with deep design expertise, and aggressively trained its leadership team and workforce on the concepts of design, it has not been able to address three challenges that stood out in the evaluation we did earlier this year on the use of design thinking to help reorient and/or transform business operations for impact on business outcomes:
(1) project management;
(2) moving from design to execution, identifying opportunities for reusable assets to scale; and
It looks like the design approach of Brilliant Basics and the influx of design and customer experience experts could help address the gaps.
This type of acquisition is overdue by Infosys but it is not too late and shows its commitment to integrating human-centered design
Even though Infosys was one of the first to appreciate the value of design thinking for human-centered service design, other service providers moved faster to acquire and integrate design firms into their companies to bring in skilled resources and re-orient their methods and cultures (see: How design thinking plays an integral role in outsourcing, service design, and delivery). This work is still underway, though, with only early results and impact. It’s still not “par for the course” with any service provider yet. Infosys needs to focus on integrating Brilliant Basics into the organization, the culture, and the sales and delivery, quickly. This will be a challenge as Infosys has not done many acquisitions, and this one is very different from the traditional Infosys.
Bottom line: Brilliant Basics could be exactly what Infosys needs – the ability to manage and scale innovation. It appears to bring the kind of project management capability and design-to-action methodology that has been a missing link between the design expertise Infosys has hired and the solid engineering and service delivery capability it’s developed over the years. Infosys needs to put a strategic focus on bringing this one into the fold in a way that builds on and out these capabilities that can help realize its vision to partner with its clients in a more consistent innovative and meaningful way.
