the services research company the future is the digitally ... · • industry analyst, author,...

The Services Research Company

The Future is... The Digitally Automated OneOfficeTM

Phil Fersht CEO & Chief Analyst, HfS Research

[email protected]

GBS Roadmap Series, 2nd March, 2017

©2017 HfSResearchLtd.

Overview:• Industryanalyst,author,speaker,strategist,entrepreneurandblogger• 20years’intheglobalITandbusinessprocessoutsourcingandshared

servicesindustryspanninganalystandconsultingroles• Coinedthe“As-a-ServiceEconomy”in2014• Coinedthe“DigitalOneOffice”in2017• Advisedandon100’sofglobalITservices,BPOandsharedservices

engagements• Overseasthelargestglobalnetworkofenterpriseservicesand

operationsprofessionals

CareerExperience:• FoundedHfSResearchin2010,overseeinganunprecedentedgrowth

storyintheanalystindustry• PracticeLead,GlobalITServices&BPOResearch,Gartner,Inc• GlobalBPOMarketplaceLeader, DeloitteConsulting• ConsultingPracticeHead,IDCAsia/Pacific• EuropeanITMarketsPracticeLead,IDCEurope

Education:• BSc.HonorsinBusiness&Technology,CoventryUniversity,UK• DiplômeUniversitairedeTechnologieinBusiness&Technology,

UniversityofGrenoble,France

[email protected]

@pfershtWeb:hfsresearch.comBlog:horsesforsources.com

Phil Fersht, Chief Analyst and CEO, HfS Research


…With a More Serious Side Too! www.hfsresearch.com


Agenda

HowDataisEatingtheServicesIndustry


• World’slargesttaxicompanyownsnoTaxis:• Uber• Themostpopularmediaownercreatesnocontent:• Facebook• Largestaccommodationproviderownstorealestate:• Airbnb• Largestphonecompaniesownnotelecominfrastructure:• Skype,WeChat• World’smostvaluableretailerhasnoinventory:• Alibaba• Fastestgrowingbankshavenoactualmoney:• SocietyOne• Theworld’slargestmoviehouseownsnocinemas:• NetFlix• Largestsoftwarevendorsdon’twritetheapps:• Google• Themostpopularemergingresearchfirmdoesn’tsellresearchreports:• HfS

Data is Eating our World!


B2BDigitalSpendCouldreach$2

TrillioninNorthAmericain

2020,ashighas$7

TrillionGlobally


InvestmentBanking

RetailBanking Insurance Technology


Can we have some Change Please? -- The Innovation Killer Org Chart


Ifyouaretosurvive,youmust…


Design Thinking… we must change our focus to findingbusiness problems

1ENVISIONING SUCCESS

Discovering our challenges to re-imagine new solution opportunities.

2DEFINING DESIREDOUTCOMES

Determining the right questions to ask of ourselves

3PRIORITIZINGOUTCOMES

Exploring meaningful ways to implement outcomes-based solutions

4IMPLEMENTING OUTCOMES

Piloting initial outcome-based initiatives

5REALIZING OUTCOMES

Analyze continuous feedback on the solutions provided to measure impact

It’s all about working smarter, not cheaper….


Agenda

ForgetLocation,Location,Location…it’snowaboutSkills,Skills,Skills….


ChangingUseofOffshoring– Outsourcing

Howwilloffshoreusechangeinoutsourcingandsharedservicesoverthenext2years?(Netincrease/decrease)

22% 13%

18% 20% 23%

12% 15% 19% 15%

-4% -3% 5%

12% 16% 7% 3% 3% 6%

2014 Today

Increase

Decrease

Source: HfS Research in Conjunction with KPMG, “State of Operations and Outsourcing 2017” Sample: n=454 Enterprise Buyers


All Outsourcing - Traditional v As-a-Service 2015 – 2020 ($b)

59 70 81 92 105 121 136

310 308 306 302 298 295 290

369 378 386 394 404 415 426

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

2014 2015 2016 2017 2018 2019 2020

TraditionalOutsourcing AASOutsourcing

CAGRUSDbillion

-1.2%

14.2%

Source: HfS Research, 2017


C-SuitewantsOneOfficeintegration,predictivereal-timedataandspeedtomarket– whileaggressivelydrivingdowncostsHowcriticalarethefollowingC-Suite directivestoyouroperationsstrategy? (SVPsandabove))

20%

22%

24%

26%

29%

30%

31%

31%

42%

48%

46%

38%

55%

50%

45%

48%

48%

43%

19%

19%

17%

13%

17%

20%

15%

15%

8%

12%

12%

21%

5%

4%

5%

6%

6%

7%

Invest in cognitive technologies and machine learning to reduce reliance on mid/high skilled labor

Invest in process automation and robotics to reduce reliance on low-skilled labor

Policies that restrict the hiring of people

Improve the quality of operations talent

Scalable / Flexible services

Accelerate speed to market with new products

Create real-time data that supports predictive, not reactive decisions

Align middle/back office operations to improve customer experiences

Drive down operating costs

Mission Critical Increasingly Important Emerging Not a Directive



C-SuiteDirectives:Hi-techmostfocusedonchangeandgrowthHowcriticalarethefollowingC-Suite directivestoyouroperationsstrategy?(“MissionCritical”responses– allbuyers)

0%

20%

40%

60%

80%

Drive down operating costs

Accelerate speed to market with new products

Create real-time data that supports

predictive, not reactive

decisions

Align middle/back

office operations to improve customer

experiences

Improve the quality of

operations talent

Policies that restrict the hiring

of people

Invest in process automation and

robotics to reduce reliance on low-skilled

labor

Invest in cognitive

technologies and machine learning

to reduce reliance on

mid/high skilled labor

BFSI Manufacturing Healthcare&LifeSciences Retail Software&HiTech Energy&Utilities



Agenda

DigitalTechnologyisnowattheCoreofServices – EntertheDigitalOneOfficeTM


Why the The Future Operations and Outsourcing Framework is the Digital OneOfficeTM

• TheDigitalOneOfficedescribesthedesignandimplementationofthedigitalcustomerexperienceandthecreationofanintelligent,singleofficetoexecuteandsupportit.

• Inthiscontext,“Digital”describestheinteractivechannelsthatdrivecustomerengagement,suchasmobile,social,textandchat.

• “OneOffice”describestheenablingtechnologies,suchasunifiedanalyticsandcognitiveautomation,thatenablereal-timepredictivecapabilitiesandanengagingdigitalexperiencethatunifiesallthestakeholdersacrosstheorganization: thecustomers,partnersandemployees.

• TheDigitalOneOfficeiswheretheorganization'speople,intelligence,processesandtheinfrastructurecometogetherasoneintegratedunit,withonesetofunifiedbusinessoutcomestiedtoexceedingexpectations.


TheFutureofOperations:TheDigitalOneOfficeTMOrganization

• Source:HfSResearch2017


Senior Management Driving Customer First Thinking – but they are unsure who will be their partners PleaseindicatewhetheryouagreeordisagreewiththefollowingstatementsaboutYOURIntelligentOperationsmind-settoday

31%

34%

38%

42%

48%

53%

55%

53%

50%

45%

16%

11%

9%

9%

7%

SourcingofAs-a-Servicemodelswillbedeliveredbytheexistinglandscapeofserviceproviders

SourcingofAs-a-Servicemodelswilllargelybedeliveredbyaconstellationofnewproviders

SourcingofAs-a-Servicemodelswillbedrivenbyanoperations-first,or“processfirst”strategy

MovingtoIntelligentOperationswillallowourprocessinteractioncoststodecreasedramatically

SourcingofAs-a-Servicemodelswillbedrivenbya“customerfirst”strategy

Agree Neutral Disagree

Source: “Intelligent Operations" Study, HfS Research 2017Sample: Buyers = 371


Barely half of today’s buyers are looking to their providers for value beyond operational support

25%

27%

28%

71%

86%

95%

89%

91%

89%

10%

30%

31%

71%

83%

90%

72%

90%

83%

14%

16%

17%

34%

39%

43%

44%

47%

48%

Deliverycenterlocations

On-siteaccountmanagers

Sourcing“fresher”talent

Continuousimprovementprograms

Consultingskillsforprocessredesign/reimagining

Datascientistsandanalyticsskills

Cognitivecomputingplatforms

Processautomationtools

Designthinkingcapability(e.g.,methodologies,…

Buyers Advisors ServiceProviders

Whichcapabilityattributesfromserviceproviderswillbetheimportant2018?(moreimportantormuchmoreimportant)

Source: “Making that leap from effective to strategic BPO/BPM" Study, HfS Research 2017Sample: 343 Stakeholders (Enterprise Buyers = 115, Advisors = 55, Service Providers = 173)


The Service Providers will bifurcate into two groupings

DigitalOrganizationEnablersEfficiency,Automation,LaborArbitrageandScalability

DigitalBusinessDesignersDataOrchestrationandHumanCollaboration


Agenda

BreakingthePainThresholdtoSurvivethisMaelstromofRobo-Unpredictability


A state of non-denial unravelling? Greater urgency to change the model from Leadership…HowquicklywillyourcoreenterprisefunctionsadapttobecomeIntelligentOperations?

6%

50%

37%

6% 2%

7%

36%

44%

9%

4%

Wearealreadythere

Within2years Within5years Within10years Never

SVP+ VPandBelow

Overhalfofuppermanagement(56%)wantchangewithin2years



SeniorManagersBelieveProvidersArePartners.MiddleManagersdonot…Howwouldyoubestdescribeyourcurrentprimaryserviceprovider?

2%

8%

24%

25%

42%

Promises a lot, but constantly disappoints

Provides access to cheap labor, but not much beyond

that

A true partner that proactively innovates and invests with

you to find new thresholds of value to achieve co-defined …

Efficient vehicle to drive out cost and improve efficiencies

A competent partner that provides access to skills,

global scale, domain knowledge, and technology …

2%

3%

35%

17%

43%

1%

11%

15%

31%

41%

VPandBelow SVP+

ManagementLayer



Many Buyers want their Service Providers to work with themHowwouldyouimprovethequalityandoutcomesfromyourcurrentservicerelationship?

28%

13%

9%

45%

4%

2%

Lettinggoandgivingupmorehigher-valueworktoourserviceprovider(s)

Threateningtoentertaincompetitivebid(s)toforceyourcurrentprovider(s)touptheirgame

Bringbackmoreworkin-houseandimproveitourselves

Rolloutanautomationstrategyintandemwithourprovider

Bringinaspecialistadvisortorecalibrateourrelationship(s)andgetusontherightcourseforAs-

a-Service

Notalot– wepaidfor“cheapandcheerful”andthat’swhatwe’restuckwith

Source:TheHfSWorkingSummitforServiceBuyers,December2015(Sample53enterpriseoutsourcingleads)

©2017 HfSResearchLtd.Source:BureauofLabor Statistics,HfSResearchAnalysis(datato2015)

Recessions destroy jobs, not robots…

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

AnnualJobGrowthUS


Automation Impact Scenarios on Services Professionals by 2021

Scenario1ModerateLowskilledjobsfallingby22%

Mediumskilledjobsincreasingby13%

Highskilledjobsincreasingby57%

Totaljobsfallingby2%

Scenario2Likely

Lowskilledjobsfallingby30%




Scenario3AggressiveLowskilledjobsfallingby36%




~300,000jobsatrisk ~1,400,000jobsatrisk ~2,200,000jobsatrisk


Total Impact of Automation on IT/BPO Services Workers by Major Country (likely scenario, low-skilled workers)

0.73 0.74

2.282.34

0.67

0.54

1.641.57

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0% 0.0

0.5

1.0

1.5

2.0

2.5

Philippines UK India US

%DecreaseinW

orkforce

ServicesW

orkers(M

illions)

2015 2021 %Change

Researchsources:1477industrystakeholderinterviews2015-16,NASSCOM,USNationalBureauofLaborStatistics,UKONS,Selectedothers,HfSAnalystjudgment


Total Impact of Automation on IT/BPO Services Workers by Major Country (likely scenario, mid-high skilled workers)

0.28

0.80

1.11

2.56

0.41

0.94

1.27

2.73

0%

10%

20%

30%

40%

50%

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Philippines UK India US

%In

creaseinW

orkforce

ServicesW

orkers(M

illions)

2015 2021 %Change

Researchsources:1477industrystakeholderinterviews2015-16,NASSCOM,USNationalBureauofLaborStatistics,UKONS,Selectedothers,HfSAnalystjudgment


§ Workasateamtochange:Healthedisconnectandunrealismbetweenleadershipambitionandrealmiddlemanagementoperationalchallenges...

§ Timetothinkbigwithanattitudetowrite-offlegacy:Incrementalfixesclearlydonotwork– forallstakeholders.Stopretro-fitting!

§ Becomeastudentagain:Thisisabouthumansfindingmoreproblemsthroughcollaboratingandlearning– andembracingDigitalandIntelligentAutomationtoolsnowavailable

§ It’saboutthenatureofworkchanging: Athirdoftoday’sworkforceismadeupofMillenniumsseekingdifferentworkexperiences

§ DesignThinkourfutures:Reallyworkoutourunifiedoutcomesacrossourwholeenterprisevaluechainandworkbackwardstoachievethem

Actions to drag ourselves into the Digital OneOfficeTM


Introducing Today’s Panel…


Define what Cognitive Automation means to your organization


What’s Hype versus Reality? What has to change to make this a reality?


Is Intelligent Automation the place to start?


Intelligent Automation is the Place to Start for well over half of Enterprises Whatisthemostimpactfultimingtobegintheseactions?

19%

18%

19%

20%

24%

21%

23%

31%

33%

33%

32%

30%

34%

34%

30%

32%

29%

26%

30%

28%

26%

15%

11%

13%

16%

12%

10%

12%

6%

6%

7%

5%

4%

7%

4%

Accomplishcreativeproblemsolving/"DesignThinking"

Retrainexistinginternaloperationstalenttoredesignprocesses

Investinspecializedchangemanagementsupporttoreorientoperationsstaff

InvestininternalITtalenttohelpusmigrateawayfromlegacysystems

Investineffectiveanalyticstools&skill

Identify/hireatransformationalleader/changeagent

Investinintelligentautomation

Now Withinthenextyear Within3years Within5years Never



What types of skills do we need now versus the future?

©2017 HfSResearchLtd.Source:Bureau of Labor Statistics, HfS Research Analysis (data to 2015)

The bad news. Some individual Occupation Areas are Declining – Replaced by Technology

Decline in jobs from 2004 to 2015Index 100 = 2004

0

20

40

60

80

100

120

140

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Motion Picture ProjectionistsExecutive Secretaries and AssistantsDesktop PublishersEmbalmersPhoto processorsCompensation & Benefit Managers

Telephone Operators

Law Clerks

Data Entry ClerksFishers & Related

©2017 HfSResearchLtd.Source:Bureau of Labor Statistics, HfS Research Analysis (data to 2015)

The good news. The human touch, creativity and data drive job growth

Growing jobs from 2004 to 2015Index 100 = 2004

50

100

150

200

250

300

350

400

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Models

Massage Therapists

Sales Reps

Social Science Teachers (top) / ManicuristsOperations Research Analysts (Analytics?)Application Software Developers

Economists

Residential Advisers (top) / Food scientists

Athletics Trainers


Refocus our skills! Top skills in 2020 shift to critical thinking, creativity and Emotional Intelligence…

Source: Future of Jobs Report, World Economic Forum, 2017


Is Cognitive part of an “Intelligent Automation”

Continuum, or do we need to approach it differently?


Intelligent Automation Continuum Expanding Fast

triggerbased

Characteristicofprocess

rulesbaseddynamiclanguage

rulesbasedstandardizedlanguage

Structured

Characteristicofdata/information

UnstructuredwithoutpatternsUnstructuredpatterned

DataCenterAutomation:

RunbookScriptingSchedulingJobcontrolWorkloadautomationProcessorchestration

SOAVirtualizationCloudservices

RPACognitiveComputing

ArtificialIntelligence

BPMWorkflow

ERP

Autonomics

Self-learning&Self-remediation


Where are we going to see “Real Intelligent Automation applications” in the short-

medium term?


TheFutureofOperations:TheDigitalOneOfficeTMOrganization

• Source:HfSResearch2017


So who really should manage this stuff?


ValueLeversofNewGenerationGovernance

OperationsTodayareallaboutIntegratingCapability

DataData

Automation

Process Digitzation, Cost-Cutting, Legacy Trade-offs, Change Management, Complex technology, Bot Farms

Software Platforms

Standardize Processes, Scale, Write Off / Ring-

Fence Legacy

Self Learning,Cognitive

Continuous Improvement, Less Human Interaction

for routine activities, Change Management

Digital Business

Holistic View of all Customer Engagement

Cost, Expertise, Scale, Immigration Compliance

GlobalLabor

Shared Services, GICS

Centralization/Efficiency/Standardization


Are today’s service providers really going to be the enablers of

Cognitive?


Source: “Making that leap from effective to strategic BPO/BPM" Study, HfS Research 2016Sample: 343 Industry Stakeholders (Enterprise Buyers = 115, Advisors = 55, Service Providers = 173)

Barely half of today’s buyers are looking to their providers for value beyond operational support

25%

27%

28%

71%

86%

95%

89%

91%

89%

10%

30%

31%

71%

83%

90%

72%

90%

83%

14%

16%

17%

34%

39%

43%

44%

47%

48%

Deliverycenterlocations

On-siteaccountmanagers

Sourcing“fresher”talent

Continuousimprovementprograms

Consultingskillsforprocessredesign/reimagining

Datascientistsandanalyticsskills

Cognitivecomputingplatforms

Processautomationtools

Designthinkingcapability(e.g.,methodologies,tools,expertise)

Buyers Advisors ServiceProviders

Whichcapabilityattributesfromserviceproviderswillbetheimportant2018?(moreimportantormuchmoreimportant)


Do we need a Code of Ethics for Cognitive Automation?


What is the Real Endgame with

Cognitive?

©2017HfS Research Proprietary│Page54

Endgame: Vertically infused data and insights?!

Insights,Data

VerticalProcesses

Verticallyinfusedinsightsanddata

BPaaS,BPOas-a-stack,Industryplatforms.

Machinelearning,Neuralnetworks,Enterprisesearch,ArtificialintelligenceAnalytics


What’s one thing attendees can go back and do on

Monday to move Cognitive Automation forward in their

companies?


About HfS ResearchHfS ResearchisTheServicesResearchCompany™—theleadinganalystauthorityandglobalcommunityforbusinessoperationsandITservices.Thefirmhelpsorganizationsvalidateandimprovetheirglobaloperationswithworld-classresearch,benchmarkingandpeernetworking. HfS Researchwasnamed"IndependentAnalystFirmoftheYearfor2016"bytheInstituteofIndustryAnalystRelationswhichvotedon170otherleadinganalysts.HfS ChiefAnalyst,PhilFersht,wasnamedAnalystoftheYearin2016forthethirdtime.

HfS coinedtheterms"TheAs-a-ServiceEconomy"and"OneOffice™",whichdescribeHfS Research'svisionforthefutureofglobaloperationsandtheimpactofcognitiveautomationanddigitaltechnologies.HfS' visioniscenteredoncreatingthedigitalcustomerexperienceandanintelligent,singleofficetoenableandsupportit.HfS’ coremissionisabouthelpingclientsachieveanintegratedsupportoperationthathasthedigitalprowesstoenableitsorganizationtomeetcustomerdemand- asandwhenthatdemandhappens.WithspecificpracticeareasfocusedontheDigitizationofbusinessprocessesandDesignThinking,IntelligentAutomationandOutsourcing,HfS analystsapplyindustryknowledgeinhealthcare,lifesciences,retail,manufacturing,energy,utilities,telecommunicationsandfinancialservicestoformarealviewpointofthefutureofbusinessoperations.

HfS facilitatesathrivinganddynamicglobalcommunitywhichcontributestoitsresearchandstagesseveralOneOffice™Summits eachyear,bringingtogetherseniorservicebuyers,advisors,providersandtechnologysuppliersinanintimateforumtodevelopcollectiverecommendationsfortheindustryandadddepthtothefirm’sresearchpublicationsandanalystofferings.

Nowinitstenthyearofpublication,HfS Research’sacclaimedblogHorsesforSources isthemostwidelyreadandtrusteddestinationforunfetteredcollectiveinsight,researchandopendebateaboutsourcingindustryissuesanddevelopments.

HfS wasnamedAnalystFirmoftheYearfor2016,alongsideGartnerandForrester,byleadinganalystobserverInfluencerRelations.

the services research company the future is the digitally ... · • industry analyst, author,...

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