Tag: robotics

Arago in Automation Growth | Sherpas in Blue Shirts

As part of our efforts to profile the rapidly evolving service delivery automation (SDA) landscape, I am speaking with the leaders of many of the technology players who are helping stimulate innovation in this space. This second of a series of blogs on SDA technologies, is based on observations and learnings from a recent briefing with Hans Christian (Chris) Boos, CEO of Arago.

Arago and its Proposition

The company was founded in 1995 but its intelligent automation software for enterprise IT, in its current form, became generally available only 2-3 years ago. Arago has since experienced rapid growth, more than trebling revenue since 2011.

Arago’s flagship product is AutoPilot. This uses an inference engine with, what essentially sounds like, a neural network to speed up processing, although the term was not used by Boos during the briefing. Instead, he refers to human brain like activity to learn and apply learning (knowledge items) to new or changing environments to infer how to process requirements automatically. The machine gets more useful the more knowledge it gains but it also has to manage the knowledge, for example, deal with rules that contradict each other. It does this in a mathematical way and uses analytics. According to Boos, it can apply this approach to different areas such as database management, incident management and also to more architectural processes and business logic.

Arago figures show that AutoPilot processed nearly 2 million tickets (as produced by infrastructure management tools such as BMC) for clients in 2013. Circa 87% of these were fully automated. Processes automated at the middleware layer, AutoPilot’s sweet spot, had the highest level of automation at 98%.

Clients are typically large organizations or IT service providers. These include two major global IT service providers.

The software is available as a service, as well as on premise but interestingly the majority of clients want it on premise.

Two licensing models are available from Arago:

  • Outcome-based pricing: Based on the number of tickets that are automated
  • The second model is the traditional software licensing model.

AutoPilot comes with built connectivity to infrastructure management tools such as BMC and IBM Tivoli and with APIs for integration with other packages.

Arago’s proposition comes with an estimated cost saving of between 30% and 50%.

The Inference Way

If AutoPilot can successfully tap into its acquired knowledge to handle non-standard environments or changing conditions, then it could minimize the need for predefined scripts, to automate parts of IT that are more challenging to automate. I believe this can complement other automation tools that are highly scripted and which are used in other parts of IT infrastructure. The potential benefits in large and highly heterogeneous IT environments, could soon accumulate.

This is advanced technology and could also increase complexity, potentially leading to tickets itself, at least initially while the knowledge-base is being developed.

In terms of Arago’s target market, the company is selling to a converted crowd – IT service providers and IT departments of large organizations that have automated parts of their IT infrastructure already. Its challenge is its size which is not big enough for the demand that it is seeing. Arago is enhancing its partnership network. It is also expanding geographically. At the moment Arago operates out of Germany with all its 92 staff currently based there. It is looking to open an office in the United States soon but it has no physical presence in other countries such as India.

Other measures include creating a community where clients can share automations/knowledge items for free or buy or sell them.

These plans will start to pay off but for now demand is likely to remain choked by lack of scale, I believe, particularly, in initial consultancy and client training services.

Future Direction

AutoPilot is still a relatively new product and I expect some functionality enhancements to be on the cards. More work on the UI is already underway.

Growth opportunities include selling to smaller companies. Arago has released a community edition that can give smaller organizations a fully functioning AutoPilot that is only limited in the size of the IT that it can automate. This is a clever bit of marketing that prepares the ground for attracting large companies of the future.

Arago’s core technology is application agnostic. The company chose to apply it to IT first but the core product can also learn to handle business logic, potentially leaving Arago with opportunities to expand into business process automation in the future.

Celaton Puts the Artificial in Intelligent Business Process Automation | Sherpas in Blue Shirts

As a part of our efforts to profile the rapidly evolving service delivery automation landscape, I am speaking with the leaders of many of the technology players who are helping stimulate innovation in this space. It is an exciting time for automation and the following observations and learnings come from one of my recent conversations, a briefing with Andrew Anderson, founder and CEO of Celaton. Stay tuned to learn more as I speak with other leading players.

Celaton and its Proposition

UK-based Celaton was born out of the management buyout of Redrock software from Netstore plc and the acquisition of DG Tech in 2004. Today it has revenue of circa £2.5m and the same amount of investment by Business Growth Fund to enhance its sales and marketing capabilities.

Celaton’s artificial intelligence software, inSTREAM is designed to handle labor intensive administrative tasks. It takes unstructured content, such as correspondence, complaints, letters, faxes, e-mails, and attachments, learns to understand the content and context and then processes the information. inSTREAM is a self-learning system. When it is first deployed it will need human guidance on what to do. It learns from experience. The more it does the faster it becomes as it learns how to handle different requirements according to the rules and knowledge that it accumulates.

inSTREAM reads unstructured content and applies rules to it to identify and understand key information such as context, sentiment, importance and urgency. It then structures the content and feeds it into the appropriate line of business application (LOB) for processing. The objective is to get guaranteed perfect structured data that can be fed into a line of business system such as ERP, CRM, and workflow, so that the data can continue along its corporate journey. In many instances, the data that goes into the LOB system has to be connected to its source e.g. route to source in the insurance industry where there is the need to go back to the original document for audit purposes. InSTREAM retains the data that it has processed including the original source document. It delivers the data to the LOB system and the document to a document management system.

InSTREAM is a non-invasive system.  Integration is done via web services or the data can be delivered to a holding area for the target system to pick up.

inSTREAM runs on Microsoft platforms utilizing SQL Server, Internet Information Server and .NET technologies. It can process all types of incoming documents, and it is platform agnostic. It is provided on a hosted basis. Subscription rates are based on volumes, complexity of the processes in question, and the levels of benefits that it is expected to generate.  Pricing starts from £1500 per month and can go up to £60k or more per month.

Celaton’s typical customers are retail, travel and insurance companies. Benefits are realized through increased productivity and improved customer management. One client, a UK loss adjuster, has reportedly reduced its head count by 85% while managing a fivefold increase peak in demand in insurance claims.

Celaton has a reselling partnership with Agilisys, the UK technology and outsourcing services company, was the first to sign up. Agilisys Automate, based on inSTREAM, is targeted at UK local government sector and has its first customer, a London borough council, signed up already. There are more council deals in the pipeline.

Carving a Niche in AI-based Business Process Automation

Celaton is carving a niche for itself in textual and document processing automation. It is in the right place at the right time to grow with rising demand in the market.

My take on the company’s proposition, benefits and challenges:

Competition: There are not many competitors in this field with AI-based standalone tools, but some capabilities are on offer as part of other offerings. Examples include Oracle RightNow Email Management Cloud Service and its Email Management which is integrated with a self-learning knowledge base and across customer interaction channels. Optimized for smartphones and mobile web devices, this receives enquiries via email and web forms and automates responses. New entrants to the market are highly likely with at least one new product on its way – a new cognitive engine from a well-known IT services automation company.

Marketing: The cost advantage of automation can clearly be significant but there are challenges too. Celaton has to overcome buyer uncertainty about machines doing the job of an employee in a service-line, such as in-bound document management, which has to deal with highly unstructured content. A Good marketing of a few success stories could work wonders. Anderson is doing a good job of telling the Celaton story and the company also has a substantial investment by BGF to orchestrate a robust marketing campaign.

Go-to-market and Scaling Up: I believe one way for Celaton to find more willing clients is to target companies that have outsourced their in-bound document handling and who are looking beyond labor arbitrage and offshoring to build on efficiencies. Celaton also has to look for ways that it can scale up to respond to demand. At the moment it is the only company that can fully configure, deploy and host inSTREAM. Agilisys is coming up to speed but more deployment partners are needed to meet the two objectives of reaching the right client segment and gaining scale.

Outsourcing service providers are also looking for new ways to increase their cost competitiveness, but they need to think about alternative pricing to the FTE-based model.

Service Provider Investment Quandary

Service providers will be investigating partnership opportunities with Celaton and other automation technology providers, such as Blue Prism, and asking themselves the classic question about timing new investment. Do they invest in business process automation today or wait for the opportunities to come before spending on new capabilities? Agilisys has gone halfway – with Agilisys Automate, it is focusing on technology sales for now and gaining new skills.  Other service providers, such as Sutherland Global Services and Capita have already invested in automation (e.g. Blue Prism). For the undecided, there are lessons from the journey of analytics into the business process services market. What started as added value is now being built into specific offerings by some leading vendors. A similar approach to automation could lead to a significant competitive edge through automation.

Check back for more of our views on technology players in service delivery automation.

The Coming Disruption in BPO | Sherpas in Blue Shirts

We at Everest Group have been exploring robotics and understanding its potential. What we’re seeing is that it’s relatively easy and cheap to implement. Where it has been implemented to date, it results in somewhere from a 15-20 percent reduction in critical shared services or BPO functions, depending on the transactional nature of the BPO function. If this proves to be true across the industry, we’re looking at disruption of a similar magnitude to the disruption I’ve blogged about regarding workloads migrating from an asset-heavy environment into the cloud.

Explained very simply for those of you who are not aware, robotics is a software program that can take screenshots or data from system such as ERP, apply logic to that and input it back into the system or into another system.

The reason this is disruptive to the BPO industry is that BPO is largely based around activities (such as finance and accounting, HR procurement, invoicing and customer service), which are performed by labor in low-cost destinations. For some providers, a significant or meaningful proportion of their FTEs are dedicated to these activities.

Here’s the issue: if you reduce the number of FTEs by 20 percent, it’s reasonable that revenue will drop by approximately 20 percent. And up to this point, revenues had been growing at 5-6 percent per year. Customers will capture the lion’s share of the benefit of reducing FTEs.

This will further complicate an already-maturing industry that is struggling to sustain growth levels that it has enjoyed for the last five years. Furthermore, in a contracting industry, price becomes a weapon. So we would expect a knock-on effect that pricing will become more competitive as companies struggle to replace revenue from automation by challenging competitor businesses.

The net result is potentially quite disturbing if you’re a service provider and attractive if you’re a customer.

These are early days and we have yet to complete our full study around how widely applicable robotics technology is. But our early analysis leads us to believe that it has serious implications for the BPO industry.

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