Service Delivery Automation (SDA): Explosive Growth
Service Delivery Automation (SDA): Explosive Growth
Likely impact of RPA on locations strategy on offshore and nearshore locations, virtualization, and portfolio consolidation
The business case for RPA: high value creation with relatively low risk: cost reduction, improved processes, quicker time-to-value realization, non-invasive, easier rollout and
We have been taking a deep look at the newer types of Service Delivery Automation (SDA) technologies for business process services (BPS). These include robotic, cognitive and plug-in architecture tools. Our interim findings show a lot of similarities and many differences.
BPS automations can be successfully achieved by all the tools, albeit, in different ways and for different types of processes. Some offer richer and more rounded features that make the software more user and enterprise friendly. The features include but are not limited to visual tools, automation control and management features, and process analytics.
Some are more advanced in their utility pricing and cloud deployment options than others that, for now at least, are sticking to older styles of licensing.
Some have other advantages such as being well supported by partners and resellers while others are behind on this.
We have been surprised by some of the findings too – for example, a technology vendor seemed to underestimate the potential of its software, which we thought could tap into new opportunities if wrapped in a control and management layer. Another surprise was a vendor that turned out to be more technology-focused than we had expected. Its well-practiced demo was impressive but showed a high focus on technology versus other considerations, such as a methodology, to get clients started.
This is a dynamic and changing landscape. And the technology providers are working to enhance their offerings, for example, the software itself or the partnership relationships.
The future outlook is a mix of product and eco-sphere developments:
Another development is large system integrators building automation centres of excellence. The technology vendors will be competing to get into these centres.
Many service providers are also developing their own automation technologies. These will have to offer a more compelling outsourcing proposition to clients than in-sourced processes that are automated in-house, using the independent technology vendors’ automation software and supported by system integrators.
Keep an eye out for Everest Group’s in-depth report on SDA technologies and their assessment, which will be released soon. Our currently available SDA reports include:
Free SDA content:
I recently spent a very productive day with Wipro as they showed examples of their commitment to service delivery automation – a commitment I observed as more than in any other service provider. HOLMES, their recently unveiled artificial intelligence platform is just the beginning of this serious commitment. Here are three very important aspects of this commitment.
Some time ago Wipro recognized that the service industry is changing very profoundly, and a significant secular driver of the change is new automation technologies that allow customers to automate a dramatically higher number of services than has been automated in the past. They took concrete steps to address this change.
They recognized not only the customer impact of implement automation in their workflow but also the impact to the service provider. Over time, the value will be captured by the automation owner, not by the service provider. Therefore, Wipro decided to invest in owning its automation IP – and that involves not just funding the initial build but also ongoing investments.
That’s not to say that when Wipro deploys automation in their accounts they will employ exclusively their own IP, but they recognize the need for a significant portion being their own IP.
Wipro allocated a large, dedicated team into building its automation platform, which they named HOLMES. But unlike some other providers, they extensively used open source software to get a head start and then layered in their own development on top of the open source component. This allowed them to move quickly in bringing compelling functionality to the marketplace.
The third aspect of Wipro’s automation strategy is their commitment from CEO TK Kurien on down through the leadership ranks to bring this to the marketplace. TK and senior leadership are committed to take this service delivery capability into their existing client base as well as use the automation platform as a challenger to gain new share in the market.
I believe bringing automation into their existing client base will be the most challenging endeavor, and they acknowledge that it will be disruptive and may be cannibalistic to their revenue flows.
We await to see how they handle such disruption. The details revealed to me were somewhat vague as to how they will realign their incentives to allow their account teams to do this. But certainly the executive commitment is such that it’s possible they will take the necessary steps to make incentive changes.
They are preparing for the inevitable disruption that will accompany the drive to become a leader in automated service delivery.
Robotic Process Automation (RPA) is becoming a big deal in the services industry. For the last 10 years, the Indian IT industry attempted to affect pricing by breaking the link between FTEs and the services they provide. They tried outcome-based or transaction-based pricing. As I have blogged in the past, although this is interesting and has some utility; but it has both positive and negative consequences. And it’s an incomplete answer to severing the link; it prices the services differently, but it still maintains the link between the services and the people who do the work. But software accomplishes the goal with RPA. Here’s why it’s a big deal.
At Everest Group we’ve studied the impact of RPA’s disruption on BPO services. Automation and RPA break the link by replacing people with a piece of software sitting on a virtual server, which can be spun up at any time and then shut down when the work is done.
Great efficiencies come from RPA breaking the link between FTEs and services. Another significant benefit is that it enables delivering services in a consumption-based pricing model. Providers can match their costs against consumption. In the traditional FTE model, the people continue to be an inflexible cost over time, even after the provider switches them to work on another task or another client’s work. And reassigning them to other work draws out inherent friction and the problems of a learning curve.
In Silicon Valley, software firms used RPA to move from having 30 to 50 virtual servers per person five year ago to now having over 100,000 (and climbing) virtual servers per person. I believe the same potential lies in the services industry through leveraging RPA.
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A question that we are often asked about service delivery automation (SDA) is “What technology should we use to automate our business processes?” The answer to this, of course, depends on the organizations requirements and existing capabilities, but there are some basic and general rules that can help organizations get started on their automation journey.
Before that journey begins, to facilitate internal communication, it is very important for organizations to develop a common vocabulary for automation. For example, not every type of automation is robotic and not every robotic automation does screen scraping!
Everest Group’s first principles of SDA and definitions can help organization develop a unified vocabulary for automation:
The focus of this post is SDA in business processes. A simple way of grouping automation tools for business processes is by the type of data or information that they can handle:
If your organization is looking to automate traditional data entry processes, such as order processing, then a starting point is to look at RPA tools. If on the other hand, the process has to handle non-voice customer interactions such as emails, documents and multi-media and web content, then cognitive tools could provide the answer to your requirements. Examples include:
Other aspects of automation technology to consider include but are not limited to:
Vendors are always happy to arrange demonstrations of their software. You could give them a test scenario to set up for and demonstrate. Some organizations have gone a step further and have run different proofs of concept in parallel to find the best solution for their requirements.
It is important to note that you are not limited to one type of automation:
In my next post, I will look at the types of processes that make good starting points for automation.
Everest Group publications on SDA include:
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Since the start of 2015, we have had the opportunity to speak with a wide range of old friends, new acquaintances, and industry contacts – and spanning across enterprises, services providers, technology providers, academics, and consultants. Almost without fail, the topic of robot process automation (RPA) comes up. Most of the discussion aligns with the thinking in our report from last October (Service Delivery Automation (SDA) Market in 2014 – Moving Business Process Services Beyond Labor Arbitrage), but some goes deeper and adds fresh new colors.
In this blog we offer a quick summary of recent observations from these dialogues. Although these points are an amalgamation of many conversations, a few bear mentioning specifically. Mihir Shukla (CEO of Automation Anywhere), Lee Coulter (CEO of Ascension Health Shared Services), and Gianni Giacomelli (SVP Product Innovation/CMO at Genpact) debated the trends in disruptive technologies, particularly automation, at a recent SSOW event in Orlando. Additionally, Matt Smith and Dan Hudson – formerly leading Virtual Operations North America, now in Cognizant’s RPA group – spent some time explaining how their views have evolved as they have gone from advising service providers to actually working for a provider. We also spent time speaking with a number of enterprises with process improvement programs that are utilizing robotic process automation, plus conducted a recent webinar with Telefónica about automation.
Viability of RPA
Rate of adoption of RPA
Technology models for automation
In case you missed it, we recently released some additional information on automation and technology in business process services:
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Automation could replace as many as 25-40% of FTEs working in major BPO markets
Service Delivery Automation (SDA) and offshoring cost benefits accumulate over time to as much as 80%