Automation driving 30%+ productivity improvements across the IT stack
Sample indexed productivity improvements, 2016-18YTD
As the tech titans grapple with digital and changing consumer behaviour, their emphasis on improving productivity of their workforce seems to be paying off with utilisation levels improving by up to 600 basis points (100bps = 1 percentage point).
Assessing utilisation levels is a significant part of the financial review process as these numbers indicate the workforce efficiency of the company. With multiple winds of change impacting the IT sector – from tightening client spends to digitalisation and automation – finding the right person with the right skill, or reskilling the existing workforce, has become paramount.
Everest Group CEO Peter Bendor Samuel said, “As the industry moves from the labour arbitrage factory model to the technology-based digital model, the revenue per person rises and fewer people are needed.”
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Insurance ITO trends: Sourcing implications for buyers and service providers
I wish I had a dollar – or a couple of aspirin – for every time I heard someone claim “20 percent productivity improvement” when all they had really done was move the work to a less expensive location. When they make these claims, they’re confusing cost takeout and productivity.
Cost takeout certainly has its uses, including:
- Moving work to a talent model with a flatter pyramid
- Getting fewer people to work faster/harder
But cost takeout is not productivity, which is precisely what enterprises need to start thinking about, as most of them have already done all of the above, and then some.
As discussed in our recently released research report, “In Search of ADM Productivity,” productivity can be about (among myriad other things):
- Optimizing shared services organizational structures
- Standardizing and automating business processes, toolsets, and technologies
- Automating infrastructure and application deployment processes
In essence, productivity is an output-input ratio. Productivity improvement has been described as “doing more with less.” I believe a better definition would be “improved output-input ratio, by virtue of being done differently.”
Think about this distinction. Technology and sourcing leaders often talk about “the need to improve productivity.” And they then promptly start flogging the dead cost takeout horse, with roughly the same return as I get (exactly nothing) from listening to the “20 percent productivity gain from outsourcing” line.
The difference between the two is worth bearing in mind because identifying and focusing on the right productivity initiatives can bear startling benefits. Our research suggests as much as 20-50 percent incremental cost savings. More importantly, the emphasis on productivity can lead to increased agility and a focus on greater functionality as opposed to “managing the mess.”
The first step is to pick the right weapon, for the right battle. Or you could always stock up on more aspirin.
Robotic automation in FAO: – key value drivers:
- Productivity & efficiency
- Cost saving
- Scalability & flexibility