HfS webinar slides - How enterprises are embracing cognitive AI to transform their customer engagement

Proprietary │Page 1© 2018 HfS Research Ltd.
Embracing Cognitive AI to Transform Your
Customer Engagement
May 10, 2018

Overview:
• Industry analyst, author, speaker, strategist, entrepreneur and blogger
• 20 years’ in the global IT and business process outsourcing and shared services industry spanning
analyst and consulting roles
• Coined the As-a-Service Economy in 2014
• Coined The Digital OneOfficeTM in 2017
• Advised and on 100’s of global IT services, BPO and shared services engagements
• Overseas the largest global network of enterprise services and operations professionals
Career Experience:
• Founded HfS Research in 2010, overseeing an unprecedented growth story in the analyst industry
• Practice Lead, Global IT Services & BPO Research, Gartner, Inc
• Global BPO Marketplace Leader, Deloitte Consulting
• Consulting Practice Head, IDC Asia/Pacific
• European IT Markets Practice Lead, IDC Europe
Education:
• BSc. Honors in Business & Technology, Coventry University, UK
• Diplôme Universitaire de Technologie in Business & Technology, University of Grenoble, France
phil.fersht@hfsresearch.com
@pfersht
Web: hfsresearch.com
Blog: horsesforsources.com
Phil Fersht, CEO & Chief Analyst, HfS Research

Our panel today
Chetan Dube
CEO
IPsoft
Matt Tomlinson
Global Director of Innovation,
Customer Experience Labs
Electronic Arts
Melissa O’Brien
Research Director,
Customer Engagement,
Retail and Travel Strategies
HfS Research

In a study conducted in partnership with IPsoft, HfS Research
interviewed 100 C-Suite executives to understand their views,
expectations, and strategies, along with their investment plans for
cognitive technologies. This report discusses opportunities and
challenges that business leaders see for moving their organizations
toward being truly intelligent—knowing their customers, using
technology most effectively, and infusing cognitive technology into the
fiber of their business operations.
Download a free copy of the study
Download the report

The HfS Mission & Vision:
Defining Future Business Operations
• HfS defines and visualizes the future of business
operations across key industries with its OneOfficeTM
Framework.
• The HfS mission is to provide visionary insight into the
major innovations impacting business operations:
Automation, Artificial Intelligence, Blockchain, Internet of
Things, Digital Business Models and Smart Analytics.
• HfS influences the strategies of enterprise customers to
develop OneOffice backbones to be competitive and
partner with capable services providers, technology
suppliers, and third party advisors.

HfS FORA Summits around the World
Cambridge University UK – July 2018
Bangalore – September 2018
New York City – December 2018
London – March 2019
www.hfsevents.com

The Six Value Levers Driving the Digital Operations Industry

Cost still dominates C-Suite directives, but the way to get there is
driven by the smart management of data
How critical are the following C-Suite directives/objectives to your operations strategy?
32%
20%
25%
37%
38%
36%
48%
29%
43%
49%
40%
40%
44%
39%
Enabling the hyper personalization/customization of
products to customers' requirements
Foster an entrepreneurial culture that drives more business
value
invest in cognitive technologies and machine learning to
drive more value from labor
Align middle/back office operations to improve customer
experiences (OneOffice)
Adopt/invest in process automation and robotics to reduce
reliance on labor
Create real-time data that supports predictive, not reactive
decisions
Drive down operating costs
Mission Critical Increasingly important
Predictive Data,
Automation, AI
and OneOffice –
gateway to new
cost / operating
models
Source: HfS Research in Conjunction with KPMG,
"State of Operations Study” April 2018
Sample: Global 2000 Enterprise Buyers = 381

Q. Can you estimate the proportion of structured v unstructured data in your organization?
Unstructured data plagues enterprises
0%
9%
40%
29%
20%
2%
0% / 100% 10% / 90% 25% / 75% 50% / 50% 75% / 25% 100% / 0%
Only 22% of
organizations have more
than half their data
structured
Source: HfS Research, 2018
“Intelligent Operations Study” conducted in association with Accenture
Sample: Global 2000 Enterprises = 460

AI is all about driving new revenues, augmenting knowledge labor
than merely reducing transactional costs
26%
25%
23%
12%
8%
6%
1%
To augment the
capabilities of knowledge
labor and create new
revenues
To replace transactional
labor and reduce overall
costs
To replace knowledge
costs
Creating entirely new
processes and services for
new revenues
Leverage data to create
new vertically-relevant
insights
To advance toward to
service integration and
orchestration
Create end-to-end
processes
What do you believe to be the greatest potential benefit of AI Computing?
Source: HfS Research “State of Automation 2017”
Sample: Global 2000 Buyers of AI = 181
RPA much more
about cost
AI more about
adding value

Crunch time for enterprise adoption of data, cognitive machine
learning, and automation as targets set in the next 1 to 2 years
Source: HfS Research in Conjunction with KPMG, "State of Operations and Outsourcing” 2018, March, 2018
Sample: Enterprise Buyers = 381
In what timeframe do you expect to achieve YOUR C-Suite directives for the following?
35%
32%
27%
37%
34%
31%
41%
14%
22%
29%
22%
25%
31%
23%
Creating a more touchless virtual operation minimizing
physical interactions
Fostering an entrepreneurial culture that drives more
business value
Adoption of process automation and robotics to reduce
reliance on labor
The hyper personalization/customization of products to
customers' requirements
Aligning middle/back office operations to improve customer
experiences (OneOffice)
Adopting in cognitive technologies and machine learning to
drive more value from skilled labor
Create real-time data that supports predictive, not reactive
decisions
Within 12 months Within 2 years
Expect C-Suite to
focus on
outcomes of
investments in
the next 1-2
years…

The Digital OneOfficeTM
Framework

“The Digital OneOffice framework is where teams
function autonomously across front, middle and back
office functions to promote broader processes with real-
time data flows that support rapid decision making.
It’s where front, middle and back offices will cease to
exist, as they will be, simply, OneOffice.”

24%
29%
26%
31%
30%
32%
27%
32%
29%
34%
29%
32%
33%
38%
Adopt a collaborative digital customer engagement model, such as
Uber and AirBnB
Changing digital customer interfaces / interaction channels with
our organization
Data analysis, insight and sense-making on information derived
from all customer touchpoints
Creating broader roles in the enterprise & aligning performance
with the achievement of common business outcomes
Cultivating employees that understand and apply new digital
opp'ties afforded by algorithms, automation and AI
Teams to work autonomously across functions to develop seamless
end-to-end processes across the enterprise
Implementing Design Thinking to help your talent share problems
and solutions to better meet customer needs
Mechanisms to support a digital operating model that achieves effective real-time
customer alignment
Newly in place
In place within 1-
2 years
Source: HfS Research, “Journey to the OneOffice, 2018”
Sample: n=395 Digital Decision Makers (Global 2000)
Digital success is more about changing how we work with existing
talent and cultivating algo, automation and AI capabilities

And here’s…. Chetan

How Can You Deliver: (RPA)
Cognitive
= 1Desk >> RPA
Convergence of Front Office (cognitive) and
Back Office (autonomic)
• End-to-end Automation
• Improved MTTR/Self-empowered service
• Disintermediation of classic L0/1/2 IT and BP ops
• RPA: Dissatisfaction is 45% because of manual config and
part solution: Weakest link
• Automated learning inherent in the system
• Operating System for Enterprise:
• Shared services (IT, HRMS, FMS, CRM, ERP)
• Natural Language Cognitive OS
• Digital Colleague:
• Acting as genie for every task from inception to completion
CIO Challenges
• Cost Savings
• Better NPS
• Improved Control

▪ Virtual engineers have functional skills
▪ Integrates with existing systems
▪ Records and collects information
▪ Analyzes and improves existing processes
▪ Conversational platform for all business users
▪ Unified experience for IT, HR, finance and
administrative support
▪ Learns from interactions
▪ Available 24/7 and easily scalable
Virtual Agent
Autonomics
Creating the Digitally Efficient Enterprise: IPsoft’s 1Desk™
Platform brings together
the front-office & back-
office, with virtual
agents, autonomics and
humans working
together. Employees can
interact at any time with
Amelia to complete
tasks and resolve issues
efficiently.
FrontofficeBackoffice
™

Melissa O’Brien, Research Director, Customer Engagement, HfS
melissa.obrien@hfsresearch.com
Overview
▪ Melissa O'Brien is Research Director, Contact Center and Omni-Channel Operations and BPO at HfS Research. Her research
coverage includes customer experience management services, exploring ties with marketing operations and developing thought
leadership around intelligent automation for contact center and vertical specific customer engagement business processes.
Previous Experience
▪ Prior to HfS, Melissa spent four and a half years at IDC as Research Analyst managing the Worldwide Customer Experience
Management Services program. Her role at IDC included analysis of evolving contact center business process and consumer
communication trends and delivering reports, presentations and custom consulting projects including market forecasts and in
depth competitive assessments.
▪ Melissa previously worked within the BPO industry as Client Services Manager at PSG Global Solutions, an outsourced recruiting
services business. Melissa held various roles at PSG Global, including new client implementation, program design, and training,
including development and delivery of the original training program in their Manila and Cebu, Philippines offices.
Education
▪ Melissa graduated with honors from the University of New Hampshire with a BA in English and Communication, and is a member
of the Phi Beta Kappa honor society.

About the Survey
This study is based on the responses of 100 C-Suite executives in a survey that was
piloted in December 2017 and fielded in January 2018. These interviews were a
combination of phone and online surveys. Other specifics include:
◼ All companies had $500Mn in revenue and above
◼ Job profile was C-suite business leaders
◼ Respondents were from North America (60%), Europe (20%) and Asia Pacific
(20%)

Which of the following digital business imperatives are a top priority for your organization in 2018?
Cognitive is Driving Intelligent, Self-Learning Business Operations
Source: HfS Research “C-Suite
Automation 2018” Sample: C-Level
Enterprise Executives = 100
1%
6%
7%
8%
10%
17%
22%
29%
2%
4%
9%
20%
16%
10%
14%
23%
6%
9%
13%
12%
16%
22%
12%
11%
9%
19%
29%
40%
42%
49%
48%
63%
Training existing talent to understand digital and cognitive
technologies
Investing in hiring new talent which understands digital and
cognitive technologies
Micro targeting customers / hyper personalization and
customization of products to meet customer requirements
Automate processes to reduce labor costs
Making more predictive decisions based on real-time data across
the organization
Automate processes to create faster, smarter process flows
Implement cognitive / artificial intelligence solutions to drive more
intelligent, self-learning business operations
Invest in digital/virtual experiences to minimize physical/face-face
engagement
Rank 1 Rank 2 Rank 3
Source: HfS Research 2018
Sample: C-Level Enterprise Executives = 100

What do you see as the primary benefits of breaking down barriers between front, middle and back office moving toward an operating
framework like the OneOffice?
C-Suite’s Desires from OneOffice Reorganization: Better Data and
Alignment of Operations to Business Outcomes
0%
9%
22%
19%
9%
31%
4%
4%
14%
6%
11%
15%
11%
34%
6%
12%
10%
10%
18%
7%
19%
10%
35%
38%
40%
42%
49%
57%
Increase competitiveness in the wake of digi disruption
Increased operational simplicity
Greater efficiency /reduced cost
Improved workplace culture
Improved quality and speed of execution
Stronger alignment of business operations to business
outcomes
Better data to drive the business forward
Rank 1 Rank 2 Rank 3

Q. What are your greatest challenges for the execution of a OneOffice like concept?
IT Lacks Talent, Business Lacks Mindset…
12%
10%
23%
29%
21%
0%
23%
25%
6%
35%
8%
8%
6%
13%
6%
6%
We’re held hostage by legacy technology
Lack of talent internally
Legacy thinking / lack of a “digital mindset” from IT
Legacy thinking / lack of a “digital mindset” from biz functions
We’re held hostage by legacy technology
Lack of talent internally
Legacy thinking / lack of a “digital mindset” from IT
Legacy thinking / lack of a “digital mindset” from biz functions
Rank 1 Rank 2
IT
C-Suite
Business
C-Suite

For the cognitive solutions you have invested in, how satisfied are you with the following business value achieved?
Security and Process Simplification are the biggest winners with
cognitive implementations to date
Source: HfS Research “C-Suite Automation
2018” Sample: C-Level Enterprise
Executives = 100
17%
18%
20%
21%
22%
22%
24%
27%
36%
41%
37%
35%
33%
33%
32%
32%
31%
25%
30%
28%
29%
27%
29%
29%
11%
9%
7%
10%
11%
9%
8%
7%
2%
2%
2%
2%
2%
4%
2%
2%
3%
5%
3%
5%
3%
5%
4%
3%
Faster issue resolution time
Reduced cost of business operations
Increased employee engagement
Improved customer experiences and satisfaction
Ability to scale for increased demand
Free up staff to focus on higher-touch work
Simplified business processes
Improved security
5 Exceeding expectations 4 3 2 1 Not meeting expectations Too early to say

Introducing Matt Tomlinson

AI is all about driving new revenues, augmenting knowledge labor
and also reducing transactional costs
26%
25%
23%
12%
8%
6%
1%
To augment the
capabilities of
knowledge labor and
create new revenues
To replace transactional
costs
To replace knowledge
costs
Creating entirely new
processes and services
for new revenues
Leverage data to create
new vertically-relevant
insights
To advance toward to
service integration and
orchestration
Create end-to-end
processes
What do you believe to be the greatest potential benefit of AI Computing?
Source: HfS Research “State of Automation 2017”
Sample: Global 2000 Buyers of AI = 181

The Digital OneOfficeTM
Framework
Source: HfS Research, 2018Collapsing the front and back office into OneOffice

Focus is on the Right-brain, not the Left!
Q. What are your top workforce requirements required today?
Source: HfS Research, 2018
“Intelligent Operations Study” conducted in association with Accenture
Less Critical Skills:
Operational experts
to enable smart
execution
Critical Skills:
Creative thinkers
who reach across
the business
ecosystem to
define and design
businesses
solutions.
Change is the norm
3%
2%
4%
10%
14%
18%
32%
3%
7%
8%
13%
9%
22%
9%
Understanding business processes and using
automation and AI to improve business…
Improving end-to-end processes
Analytical prowess to improve operations /
productivity
Vision and ability to drive change
Defining business outcomes
Creative, entrepreneurial spirit & curiosity for
innovation
Exploring new ways of partnering across the
services ecosystem
Ranked First Ranked Second

What tools have I
looked at that can
add real value to
our business?
What new
relationships
have I made that
add value to our
business?
How can I energize
my colleagues, get
to know them and
include them in my
initiatives – and
vice versa?
How have I helped
add value to new
business wins?
And do my
colleagues see it?
How have I
contributed to
new corporate
initiatives?
The Digital
Worker’s Survival
Guide

Over Half of Enterprises Bracing for Major Changes in Internal Roles
Q. In terms of the number of transactional internal roles within the following process areas, what proportion do you expect to be
significantly impacted by automation in the next 2 years? ( Average Across Functions)
4%
8%
11%
26%
31%
21%
N/A Prefer not to say Under 10% 11-20% 21-50% 50%+
% Employees Impacted by Automation
Source: HfS Research in Conjunction with KPMG, "State of Operations and Outsourcing
2018, March, 2018

A “Digital Labor Strategy”: More Emphasis on the LABOR Please!

Appendix

Please specify your company's industry
About the Survey: Industry Groupings
Source: HfS Research “C-Suite Automation 2018” Sample: C-Level Enterprise
Executives = 100

What are your company's annual revenues? (in U.S. dollars)
About the Survey: Company Size Groupings Used
Executives = 100

Where are you located?
About the Survey: Location
Executives = 100

What (job) title best describes you?
About the Survey: Job Title
Source: HfS Research “C-Suite Automation 2018” Sample: C-Level Enterprise Executives = 100
Executives = 100

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