Smart Hands, Smart Robots

My colleague at Cognizant's Center for the Future of Work, Paul Roehrig, has been talking about the way "smart hands" and " smart robots" will interact for a while now. Read his thoughts below on how the combination of the two is going to change how organizations use external business process services to reconfigure work patterns and practices.


Smart Hands and Smart Robots: The Next Wave of BPO

By Paul Roehrig, Cognizant

Global companies are adopting new ways of working — including new sourcing strategies — to drive greater levels of productivity and competitive advantage. The traditional business process outsourcing (BPO) industry is evolving toward next-generation business process services and solutions that streamline complex, dynamic knowledge work.

This new category of externally sourced business process services integrates human process work (the smart hands) with collaboration and automation via technology platforms (the smart robots). Whether it’s a pharmaceutical firm’s clinical data management, or a phone carrier’s complex order management processes, or a financial institution’s retirement and asset management products, next-generation business process solutions can transform critical knowledge-intensive processes and generate extended business value.

Traditional sourcing has made operational processes — such as IT infrastructure or software management services — cheaper and more efficient. Cost savings and operational improvement will always be relevant and critical, but they alone won’t help an organization become a better bank, retailer, insurance firm, or movie studio. Decision makers — rightfully — want service providers to drive productivity beyond initial cost savings. To make that happen in a sourcing context, decision makers need to tighten their focus on what is truly core to the brand, re-think how dynamic work is actually performed, and consider new sourcing solutions to revamp the value equation.

The New Way to Work

What’s behind this development? The combined forces of globalization, the new technologies of social/mobile collaboration, new virtualized business models, and a new mindset brought about by demographic changes and the rise of millennials — all these forces are reshaping the future of work and igniting new business process services.

·         The New World of Work. Declining interaction costs and improved collaboration are making it increasingly cost-effective for organizations to tap global talent.

·         The New Worker/Consumer. The “millennial mindset” is penetrating the enterprise with new values, technology demands, and modes of working. Enterprises are now embracing new technologies to facilitate collaboration.

·         The New Way to Work. Organizations are aggressively deploying virtualized work processes to increase productivity and maximize knowledge sharing. This helps companies respond to, act on and even predict market developments.

·         The New Working Technologies. Companies that adopt social, mobile and cloud-enabled technologies can make more informed decisions, often in real time, resulting in faster response to customers and more proactive insight to outperform the competition.

As companies embrace these opportunities and challenges, they are leveraging new third-party sourcing solutions that integrate technology platforms of collaboration and talent to deliver business process work effectively and efficiently.

A New Class of Business Process Services Is Real — Now — And Growing

Outsourced or not, virtually every complex, dynamic business process includes some level of human work — including decision-making, routine work, problem solving, etc. — coupled with some form of technology enablement, including telephones, spreadsheets, systems of record (such as ERP applications) and Web-based collaboration systems.

There are essentially three archetypes of business process service:

·         Traditional BPO services leverage process improvements and labor savings, often from lower-cost locations, and generally focus on transactional work, such as call centers, invoice processing, or procurement. Although there is some level of technology enablement, customers usually pay according to staffing level or service level agreement. BPO delivers significant value, but ongoing improvements can be difficult given the commitments to labor, customized processes and long-term deal duration.

·         Business Process as a Service (BPaaS) solutions weave together IT infrastructure, collaboration platforms, and talent to perform knowledge work and deliver business outputs to customers. Payment models are scalable and flexible based on tangible, pre-defined business outcomes. Services can be industry-specific such as healthcare claims processing, investment banking trade settlements, or clinical data management.  Services can also be more common horizontal functions — e.g., payroll, order management, or procurement — leveraging platform automation and collaboration.

·         Business Process Utilities (BPUs) are more highly automated services with a greater level of standardization and only a thin layer of labor. Gartner predicts that cloud-sourced, on-demand, transactional BPUs will account for 15% to 20% of the BPO market by 2012.7 Examples include ADP payroll processing or highway toll pass solutions such as EZ Pass in the U.S. or Via Verde in Portugal, in which sensors automatically charge drivers for highway use against on-file credit card accounts.

In short, these solutions can be viewed along a continuum ranging from labor-intensive BPO that predominantly leverages globally based process actors — the “smart hands” — to heavily automated BPU solutions that leverage automation and technology — the “smart robots.”

BPaaS solutions can support complex, high-value, knowledge-based work with solutions that harness advances in computing, orchestrate collaboration across groups and integrate the global workforce to deliver new levels of economic value. These services are already providing business agility and savings today.  For example, Eli Lilly and Cognizant have created a BPaaS solution (commercial intelligence as a service) that delivers commercial analytics, sales force planning, sales incentive compensation, customer relationship management, business reporting, data warehousing and state compliance reporting.

 By 2015 as many as 50% of new BPO deals will likely have some aspect of BPaaS delivery. Business leaders are seeking new levels of technology-enabled value, and BPaaS offerings provide value to organizations that are creating or restructuring knowledge work.

The continued pressure to increase profit margins, improve business flexibility, and strengthen balance sheets will compel business leaders to outsource critical but non-differentiating business processes. New business process service models are increasingly relevant as they help companies jettison, automate, and derive insights from workflows that are critical to operations but do not differentiate the brand.

Traditional outsourcing models will continue to thrive, but BPaaS solutions — which integrate global process actors with automated platforms of collaboration — will offer improved economies of scale from standardization, access to more collaborative work environments, as well as flexible and cost-effective cloud-enabled technologies.