The Vexing Aspect of Service Delivery Automation | Sherpas in Blue Shirts

The advantages of service delivery automation add up to significant value realization. Unfortunately, it’s not a one-time step change. Automating is a continuous shift, and it’s never over. You first assess where it should happen. Then you get comfortable with the tools, get data on the process, get comfortable with the organizational implications of automation, then you learn from automating the functions. And then you do it again. And then you get comfortable with an even higher degree of automation. And then you do it again. And again.

Moving into an increasingly automated world is an ongoing journey – which poses a number of challenges for service providers.

Perhaps the most significant challenge is customers’ interests often are not aligned with their service provider. This quickly becomes obvious when the services are priced in FTEs. Automation reduces the quantity of FTEs, which means revenue loss for the provider. But if services are in a transaction-based model, automation dramatically reduces the cost of processing the transaction, and the customer wants a share of that cost reduction.

I think this is a startling challenge to the BPO industry. At a time when revenue growth is already slowing, if revenue drops proportionately with the level of automation (and it makes sense that it would), service providers not only won’t be able to grow revenues but will have to run very fast to stay even with their revenues.

Certainly automation won’t remove all people from a process; but more and more will be removed over time as the tools expand and become more mature and as companies become more comfortable in using the tools and as their learnings and the data from the tools allow them to continue to drive deeper levels of automation. So we can expect the effect of service delivery automation to increase over time.

Thus I believe we’re looking at substantial change and disruption coming to the services industry. And it’s not a one-time impact. It will be an ongoing impact.

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