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The Advent of R-BPO: Is the Future of BPO Robotic?

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The BPO market is being rocked by the onslaught of Robotic Process Automation and Cognitive Intelligence. The future of this $322 billion industry could become distinctly robotic, as software agents are able to replicate (and improve on) the labor arbitrage model, while also delivering higher accuracy and lower risk. 

Will today’s current cast of BPO providers be able to survive the transition, and will their clients hang around long enough? Or will Robotic-BPO become the new normal for business services engagements? 

In this webinar, we will explore how R-BPO, unburdened by legacy contracts and surplus FTEs, is set to become the new business model for outsourced business services. 
  
HfS experts, along with executives from Symphony Ventures and ADP, will discuss the incredible opportunities and array of options open to enterprises today, as they navigate the multitude of options open to them. 
  
Participants will be better positioned to understand: 

- The rationale for bringing automation in house vs. implementing with BPO service providers 
- The opportunity to leverage the emerging R-BPO suppliers, rather than renewing with legacy providers 
- The potential of combining RPA, AI and human experts in delivering “As a Service” solutions 
- What the future will look like as “Digitally Native” businesses emerge and many traditional legacy enterprises struggle to transform their legacy operating models and IT infrastructures

Published in: Business

The Advent of R-BPO: Is the Future of BPO Robotic?

  1. 1. The Services Research Company The Advent of R-BPO: Is the Future of BPO Robotic? Webinar, July 15th 2016 Phil Fersht Chief Analyst and CEO, HfS Research phil.fersht@hfsresearch.com @pfersht
  2. 2. © 2016 HfS Research Overview: • 20 years’ business experience in the global IT and business process outsourcing and shared services industry • Coined the “As-a-Service Economy” in 2014 • Industry analyst, author, speaker, strategist and blogger • Advised and cogitated on 100’s of global IT services, BPO and shared services engagements • Meddles with the largest global network of enterprise services and operations professionals Career Experience: • Practice Lead, IT Services & BPO Research, Gartner, Inc • Global BPO Marketplace Leader, Deloitte Consulting • Consulting Practice Lead, IDC Asia/Pacific • IT Markets Practice Lead, IDC Europe Education: • BS with Honors in European Business & Technology, Coventry University, United Kingdom • Diplôme Universitaire de Technologie in Business & Technology from the University of Grenoble, France phil.fersht@hfsresearch.com Phil Fersht, CEO and Chief Analyst, HfS Research
  3. 3. © 2016 HfS Research
  4. 4. © 2016 HfS Research HfS Research Has Been Writing About Intelligent Automation for 4+ Years
  5. 5. © 2016 HfS Research The “Intelligent OneOffice” will emerge from Digital + Automation The Digitally- Driven Front Office Mobile, Social/Interactive, Real- time actionable data, Design Thinking Digital Underbelly Intelligent Automation of manual processes Digitization of documents IoT Intelligent Digital Support Function Front office-aligned IT, Finance, HR, Procurement, Supply Chain Intelligent Digital Processes Predictive & Operational Analytics, Cognitive. The Customer-first Digital Organization The Enabling Intelligent OneOffice The Nervous System, incepting & Processing all Inputs The Neural System The Circular System
  6. 6. © 2016 HfS Research The Service Providers will bifurcate into two groupings Back Office Outsourcers Efficiency, Automation, Labor Arbitrage and Scalability OneOffice Enablers Data Orchestration and Human Collaboration
  7. 7. © 2016 HfS Research 62% 49% 29% 29% 26% 24% 18% 13% 11% 33% 45% 40% 31% 48% 43% 30% 23% 25% 19% 22% 21% 24% 37% 29% 26% 12% 18% 5% 9% 16% 35% 38% Drive down operating costs Cost effective, flexible services Better address risk and regulation Accelerate speed to market with new products/services End-to-end process optimization Real-time data-driven insights Improve the quality of operations talent Restrict the recruitment of labor where possible Invest in process automation and robotics to reduce reliance on labor Mission Critical Increasingly Important Emerging Not a Directive How critical are the following C-Suite priorities/directives, in terms of shifting from a Cost Focus to a Value Focus with your operating model? C-Suite operations directives focused on “more from less” Source: HfS Research and KPMG LLP, 2015 Sample: 168 Enterprise Buyer Executives from “Achieving Value Beyond Cost” Study, 2015
  8. 8. © 2016 HfS Research RPA use focused on IT currently, with F&A in a high adoption swing 8% 8% 8% 9% 8% 8% 10% 6% 9% 10% 17% 17% 18% 17% 19% 21% 19% 23% 23% 23% Human Resources Procurement Industry-specific Process (i.e. … Sales Supply Chain and Logistics Customer Service / Sales Support Marketing Finance and Accounting IT application maintenance & … IT and Network infrastructure … Full scale RPA Implementing / using RPA actively Source: “Intelligent Operations" Study, HfS Research 2016 Sample: Buyers = 371 Thinking about the use of RPA within the following business functions, what stage of maturity have you reached?
  9. 9. © 2016 HfS Research
  10. 10. How buyers would improve the quality and outcomes from their current service relationships… 28% 13% 9% 45% 4% 2% Letting go and giving up more higher-value work to our service provider(s) Threatening to entertain competitive bid(s) to force your current provider(s) to up their game Bring back more work in-house and improve it ourselves Roll out an automation strategy in tandem with our provider Bring in a specialist advisor to recalibrate our relationship(s) and get us on the right course for As- a-Service Not a lot – we paid for “cheap and cheerful” and that’s what we’re stuck with Source: The HfS Working Summit for Service Buyers, December 2015 (Sample 53 enterprise outsourcing leads)
  11. 11. © 2016 HfS Research RPA 1.0
  12. 12. © 2016 HfS Research How HfS Defines Intelligent Automation Robotic Process Automation describes a software development toolkit that allows non-engineers quickly to create software robots to automate rules-driven business processes. E.g. digitizing the process of collecting of unpaid invoices, that involves mimicking manual activities in the RPA software, the integration of electronic documents and generation of automated emails to ensure the whole collections, process is run digitally and can be repeated in a high-throughput, high intensity model. Cognitive computing is the simulation of human thought processes in an Intelligent Automation process or set of processes. It involves self-learning systems that use data mining, pattern recognition and natural language processing to mimic the way the human brain works, without continuous manual intervention. E.g. an insurance adjudication system that assesses claims, based on scanned documents and available data from similar claims and evaluates payment awards. Autonomics is referring to self-learning and self-remediating engines, where the system makes autonomous decisions, using high-level policies, constantly monitoring and optimizing its performance and automatically adapting itself to changing conditions and evolving business rules and dynamics. Increasingly minimal human intervention. E.g. a virtual support agent continuously learning to handle queries and creating new rules/exceptions as products evolves and queries change. Artificial Intelligence is where intelligent automation systems go beyond routine business and IT process activity to make decisions and orchestrate processes. E.g. an AI system managing a fleet of self-driving cars or drones to deliver goods to clients, manage aftermarket warranties and continuously improve the supply chain.
  13. 13. © 2016 HfS Research HfS Sees Intelligent Automation As-a-Continuum trigger based Characteristic of process rules based dynamic language rules based standardized language Structured Characteristic of data/information Unstructured without patternsUnstructured patterned Data Center Automation: Runbook Scripting Scheduling Job control Workload automation Process orchestration SOA Virtualization Cloud services RPA Cognitive Computing Artificial Intelligence BPM Workflow ERP Autonomics Self-learning & Self-remediation
  14. 14. © 2016 HfS Research Intelligent Automation Continuum Expanding Fast trigger based Characteristic of process rules based dynamic language rules based standardized language Structured Characteristic of data/information Unstructured without patternsUnstructured patterned Data Center Automation: Runbook Scripting Scheduling Job control Workload automation Process orchestration SOA Virtualization Cloud services RPA Cognitive Computing Artificial Intelligence BPM Workflow ERP Autonomics Self-learning & Self-remediation
  15. 15. © 2016 HfS Research Endgame: Vertically infused insights and data??!! Insights, Data Vertical Processes Vertically infused insights and data BPaaS, BPO as-a-stack, Industry platforms. Machine learning, Neural networks, Enterprise search, Artificial intelligence Analytics
  16. 16. © 2016 HfS Research So We Need To Transform What Knowledge Work Means New Jobs Data Insight Manager Augmentation Integrator Visualization Interpretation "Bot" Employee Oversight Automation Overlord Endangered Jobs Data Entry Invoicing / Collections Abstracting & Indexing Data Reconciliation L1 Customer Support Master Data Management
  17. 17. © 2016 HfS Research Automation Impact Scenarios on Services Professionals by 2021 Scenario 1 Moderate Low skilled jobs falling by 22% Medium skilled jobs increasing by 13% High skilled jobs increasing by 57% Total jobs falling by 2% Scenario 2 Likely Low skilled jobs falling by 30% Medium skilled jobs increasing by 8% High skilled jobs increasing by 56% Total jobs falling by 9% Scenario 3 Aggressive Low skilled jobs falling by 36% Medium skilled jobs increasing by 1% High skilled jobs increasing by 55% Total jobs falling by 14% ~300,000 jobs at risk ~1,400,000 jobs at risk ~2,200,000 jobs at risk
  18. 18. © 2016 HfS Research 1.7 2.7 4.8 5.2 8.8 6.1 0 4 8 12 16 2015 2021 IT Services and BPO Employees (Millions) Low Skilled Services Jobs Medium Skilled Services Jobs High Skilled Services Jobs Impact of Automation on Services Jobs – Likely Scenario Impact • Low skilled jobs falling by 30% • Medium skilled jobs increasing by 8% • High skilled jobs increasing by 56% • Total jobs falling by 9% Outlook • Low skilled jobs phasing out to automation through RPA/Autonomics • Starting to affect medium skills as cognitive computing augments these skills • Increasing demand for high skilled positions involving creative problem solving, analytics and critical thinking
  19. 19. © 2016 HfS Research Total Impact of Automation on IT/BPO Services Workers by Major Country (likely scenario, low-skilled workers) 0.73 0.74 2.28 2.34 0.67 0.54 1.64 1.57 -35% -30% -25% -20% -15% -10% -5% 0%0.0 0.5 1.0 1.5 2.0 2.5 Philippines UK India US % Decrease in Workforce Services Workers (Millions) 2015 2021 % Change Research sources: 1477 industry stakeholder interviews 2015-16, NASSCOM, US National Bureau of Labor Statistics, UK ONS, Selected others, HfS Analyst judgment
  20. 20. © 2016 HfS Research 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 % Increase in Workforce Services Workers (Millions) 2015 2021 % Change Research sources: 1477 industry stakeholder interviews 2015-16, NASSCOM, US National Bureau of Labor Statistics, UK ONS, Selected others, HfS Analyst judgment
  21. 21. © 2016 HfS Research Total Impact of Automation on IT/BPO Services Workers by Major Country (all skill-levels across all workers) 1.00 1.54 3.38 4.90 4.43 1.08 1.47 2.90 4.30 4.18 -20% -15% -10% -5% 0% 5% 10% 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Philippines UK India US Other % Change in Workforce Services Workers (Millions) 2015 2021 % Change Research sources: 1477 industry stakeholder interviews 2015-16, NASSCOM, US National Bureau of Labor Statistics, UK ONS, Selected others, HfS Analyst judgment
  22. 22. © 2016 HfS Research David Poole Co-founder and CEO Symphony Ventures Ian Barkin Co-founder and Head of Strategy Symphony Ventures Johnny Ramondino Senior Director Product Management ADP The Panel
  23. 23. 23 Orchestrating the world’s work© 2016 Symphony Ventures – Confidential and Proprietary This Game is Changing
  24. 24. 24 Orchestrating the world’s work© 2016 Symphony Ventures – Confidential and Proprietary Our Observations Regarding RPA Take-Up Robotic BPO Pure Players • Automation process specialists • Implementation experience and capability extending into operate and run • Extensive process model and object library • Human augmentation in exception handling and expert knowledge provision Shared Services and GBS • Direct / implementation partners • Centers of excellence BPO • Clients taking a multi-channel approach - In-house / specialist firms vs BPO providers • Slow provider take-up and limited partnering strategy • Outcome-based providers win over FTE-based providers • Opportunity for digital innovation
  25. 25. 25 Orchestrating the world’s work© 2016 Symphony Ventures – Confidential and Proprietary World-Class Process Standardized & Controlled Process World-Class Process World-Class Process “Process as a service” – standardized world class processes utilizing leading SaaS tools, enablers and accelerators. RPA provides the integrations between the tools and the interfaces to and from core legacy systems. Staff will handle the tasks requiring human intervention. World-Class Process Unstructured Common Process ”As-a-Service” Processes
  26. 26. The Changing Landscape Driving BPO (Business Process Outsourcing)
  27. 27. 27 ADP is transforming HCM Copyright © 2016 ADP, LLC. Proprietary and Confidential. Interconnecting Technology with Expertise 27
  28. 28. 28 Supporting our clients throughout their lifecycle Service delivery evolution • ACA cost and compliance analysis, scenario modeling • HR, Pay and benefits regulations and best practices • Sustain and improve quality of service & speed of execution • Optimize scope of services to improve value proposition • Speed up transition to stable state after major initiatives • Business case support • Compensation planning, job/ position codes, salary banding • HCM integration and process improvement • Wellness strategies • Workforce planning • Data driven decision support • Rapid standup model • Combined technology stack and service teams • Proven track record mitigating risks • Controlled cost • Supports all sizes of clients • Manages differences in complexity needs when requirements change • Large geographic footprint • Strategy & personalized tools to educate employees and improve engagement • Change Management for organizational, process and technology changes Intelligent Automation Advisory Services Communication & Change Management Acquisition & Carve out Support Compliance & Regulatory Affairs Scalable Service Model
  29. 29. The Services Research Company The Advent of R-BPO: Is the Future of BPO Robotic? APPENDICES Phil Fersht Chief Analyst and CEO, HfS Research phil.fersht@hfsresearch.com @pfersht
  30. 30. © 2016 HfS Research How HfS Defines Intelligent Automation Robotic Process Automation describes a software development toolkit that allows non-engineers quickly to create software robots to automate rules-driven business processes. E.g. digitizing the process of collecting of unpaid invoices, that involves mimicking manual activities in the RPA software, the integration of electronic documents and generation of automated emails to ensure the whole collections, process is run digitally and can be repeated in a high-throughput, high intensity model. Cognitive computing is the simulation of human thought processes in an Intelligent Automation process or set of processes. It involves self-learning systems that use data mining, pattern recognition and natural language processing to mimic the way the human brain works, without continuous manual intervention. E.g. an insurance adjudication system that assesses claims, based on scanned documents and available data from similar claims and evaluates payment awards. Autonomics is referring to self-learning and self-remediating engines, where the system makes autonomous decisions, using high-level policies, constantly monitoring and optimizing its performance and automatically adapting itself to changing conditions and evolving business rules and dynamics. Increasingly minimal human intervention. E.g. a virtual support agent continuously learning to handle queries and creating new rules/exceptions as products evolves and queries change. Artificial Intelligence is where intelligent automation systems go beyond routine business and IT process activity to make decisions and orchestrate processes. E.g. an AI system managing a fleet of self-driving cars or drones to deliver goods to clients, manage aftermarket warranties and continuously improve the supply chain.
  31. 31. © 2016 HfS Research HfS Automation Labor Impact Model – Key Assumptions & Methodology This model predicts likely impact of the most recent wave of automation on the IT Services and BPO industry. We estimate the current total IT Service and BPO employs c15 Million in 2015. With c3.5 Million in India, c1 Million in Philippines, c5 Million in North America and c4 Million in Europe. The workers within the industry have been divided into 3 categories: low skilled, medium skilled and high skilled. With low skilled workers conducting simple entry level, process driven tasks that require little abstract thinking or autonomy. High level workers undertaking complicated tasks that require experience, expertise, abstract thinking and autonomy. The model then applies underlying growth rates for each category linked to market growth. Each scenario has a different set of parameters that will impact each level of worker setting out likely degree of automation for each group and the probability that the job will be automated and in what time frame this is likely to happen. There parameters are set out in full on the “Scenario Parameters” slide. The model then predicts the reduction in each level of the workforce based on the probability of automation within the scenario. This is taken from the underlying growth figure to produce a number for the work force at each level. The underlying growth rates assume current market growth will continue and is varied between the levels based on demand – so given the increasing demand for higher level workers the underlying growth in this category is larger irrespective of increases in automation.
  32. 32. Automation is in the eye of the beholder
  33. 33. © 2016 HfS Research What is IASK? The Intelligent Automation Starter Kit is a specific workshop series for end-user organizations. It provides a one-stop orientation for enterprise teams looking to understand Intelligent Automation technologies including the potential applications to their business To get involved, email iask@hfsresearch.com
  34. 34. © 2016 HfS Research About HfS Research HfS Research is the leading analyst authority and global network for IT and business services, with a specific focus on global business services, digital transformation, and outsourcing. HfS serves the research, governance, and services strategy needs of business operations and IT leaders across finance, supply chain, human resources, marketing, and core industry functions. The firm provides insightful and meaningful analyst coverage of best business practices and innovations that impact successful business outcomes, such as the digital transformation of operations, cloud-based business platforms, services talent development strategies, process automation and outsourcing, mobility, analytics, and social collaboration. HfS applies its acclaimed Blueprint Methodology to evaluate the performance of service and technology in terms of innovating and executing against those business outcomes. HfS educates and facilitates discussions among the world's largest knowledge community of enterprise services professionals, currently comprising 150,000 subscribers and members. HfS Research facilitates the HfS Sourcing Executive Council, the acclaimed elite group of sourcing practitioners from leading organizations that meets bi-annually to share the future direction of the global services industry and to discuss the future enterprise operations framework. HfS provides sourcing executive council members with the HfS Governance Academy and Certification Program to help its clients improve the governance of their global business services and vendor relationships. In 2010 and 2011, HfS Research's Founder and CEO, Phil Fersht, was named “Analyst of the Year” by the International Institute of Analyst Relations (IIAR), the premier body of analyst-facing professionals, and achieved the distinctive award of being voted the research analyst industry's Most Innovative Analyst Firm in 2012. In 2013, HfS was named first in rising influence among leading analyst firms, according to the 2013 Analyst Value Survey, and second out of the 44 leading industry analyst firms in the 2013 Analyst Value Index. Now in its seventh year of publication, HfS Research’s acclaimed blog “Horses for Sources” is widely recognized as the most widely read and revered destination for unfettered collective insight, research, and open debate about sourcing industry issues and developments. Horses for Sources today receives over a million web visits a year. To learn more about HfS Research, please email research@HfSResearch.com.

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