The IT leaders I work with are aggressively using artificial intelligence and advanced analytics software to digitally transform their enterprises. And they’re using it in bedrock areas of the business – customer service, product development, finance and accounting, supply chain, procurement, human resource management, talent acquisition and engagement, employee experience, IT operations and more.
In today’s world, technology needs to be closely embedded into the business as enterprises embrace digital reimagination to come up with newer business models, products and services, customer segments and channels. When they use cognitive technologies to redesign IT and business operations in these areas, CIOs can markedly improve their firms’ performance. They also establish a strong foundation for future improvements.
While IT leaders understand this message, the strategic execution roadmap is still hazy.
In TCS’ 2020 Chief Information Officer survey of 1,010 CIOs and other IT leaders, we asked them to assess the degree to which a number of areas in their companies were digital – from 0% (a totally physical product with no digital aspect, or a totally manual business process with no digital underpinnings) to 100% (a totally digital product – think of streaming video – or totally digital business process).
Here’s what we found: Procurement and vendor management function is at a 48% degree of digitization (i.e., lots of manual work still going on). The same holds true for finance and accounting (49% digital), human resource management (44% digital), technology and process development (49%) and information security (49%). In other words, all of these are far from being totally automated processes.
Perhaps more worrisome is that these CIOs projected that by 2030 these processes would be only incrementally more digital. They expect procurement and vendor management to be 75% digitized by 2030 (only about one in four said they expected this work would be fully digital by then). Other functions also were around the three-quarters mark including finance and accounting, HR management, technology, and process development and information security (which topped the field at 77%).
It’s understandable that many companies have not aggressively digitized these business processes. At large global firms, CIOs often manage workforces of thousands of people and budgets that can reach billions of dollars. The CIO and other C-suite officeholders many times are focused on technology adoption. For an enterprise to scale digitally, it is necessary for them to transform their operating model, break siloes and leverage their contextual know-how.
Enterprises need to look at operations across IT, infrastructure services and business processes from a holistic perspective. They must target behind-the-scenes operations in the supply chain, finance, customer experience and internal knowledge networks that enable a company to respond to a rapidly changing business environment. The technology and methods to transform these operations are available in abundance. Technologies including artificial intelligence, machine learning, analytics, and cloud computing can automate manually intensive business processes. An agile approach to process improvement, in which teams test ideas and refine results based on feedback, has become essential. Design thinking prioritizes stakeholder objectives in process improvement. Together, they enable companies to take what we call a machine-first approach to digital transformation.
We have seen the results of this work in action. We helped a global enterprise implement AI software to reinvent its procurement process. The system scanned purchase requests across multiple plants and vendors to better understand the behavior that drives purchasing price variances across the firm’s plants. The subsequent analysis helped trim annual expenses by $3.2 million.
The machine-first approach to creating intelligent operations has three main elements:
1. Using automation technologies to take over routine manual tasks and processes.
2. Extracting insights from data generated by those automated processes – insights that direct the next steps to take. This means giving machines the “right of first refusal” to taking on that work, letting computers execute an action if possible, while people perform the more complex tasks that can’t be automated.
3. Identifying process disruptions that are about to occur and automatically taking action to prevent or correct them.
The insights and automated tasks enabled by AI and analytics can make business processes more effective and efficient (faster, more accurate and less costly).
Even if it reads as a straightforward approach—and it can deliver efficiencies in short order—the shift requires CIOs and other executives to rethink business operations in three ways:
1. Moving from being process-centric to being data-centric. With data proliferating from a variety of sources, enterprises must translate it into information that makes work more effective and efficient. For example, a product development department should get real-time information on who is using the company’s products and services, and where and when they use them. If the data shows that a certain feature-set has no appeal to a customer segment, product developers need to rethink the product.
2. Automating not just the operation but the delivery of insights. Intelligent automation initiatives should share data-derived insights where they are needed in an organization. Business operations for filling orders, responding to customers, ordering supplies, and so on must be conducted automatically without human intervention. Systems supporting a cognitive operation can provide alerts that predict problems before they happen.
3. Providing real-time visibility for people to act. With automated systems delivering real-time alerts, employees can do tasks that machines cannot. This requires a business operations center to have well-designed data visualizations and useful dashboards that instruct people to take actions when necessary.
Companies that have used this approach have seen benefits such as these:
· Self-healing IT infrastructure: A U.S. fashion retailer is automatically fixing 95% of the problems in its point-of-sale systems and IT infrastructure. This was especially important during the peak shopping season when incidents increase significantly. Proactive incident prevention improved mean-time-to-repair of incidents and provided 100% uptime for critical business applications.
· Improving customer onboarding: A leading telco reduced its order activation time in half and increased its Net Promoter Score from minus 44 to positive 20 by integrating and improving its systems. The effort will cut costs by $70 million over three years.
· Improved cash flow: An automated cash forecasting system helped a large European steel manufacturer analyze data from finance and other departments to reduce disputes and increased collections 28% amidst a shrinking market for steel.
All of these efforts require organizations to share data across departments and supply chain partners. Based on our initial CIO study results, many companies are not there yet. However, new and more savvy competitors in every industry and increasingly demanding customers will mean that must change.
About the author(s)
Ashok Pai is Vice President & Global Head, Cognitive Business Operations (CBO) at Tata Consultancy Services (TCS). In this role, Ashok oversees TCS CBO, which integrates Business Process Services and IT Infrastructure Services, using cognitive technologies that deliver a high degree of efficiency, agility and intelligence to enable enterprises to reimagine business operations and make an impact on their top and bottom line.
In the world of Business 4.0, where enterprises must deliver superior business outcomes to grow at an accelerated pace, he leads efforts to transform business operations into a strategic differentiator through automation, intelligent processes, contextual insights, and cutting-edge IT infrastructure.
Drawing on over 25 years of industry experience, Ashok has played a pivotal role in helping enterprises transform for the digital economy. Prior to this role, he headed TCS’ Business Process Services (BPS) and was responsible for more than 400 customers in North America, Asia Pacific, and other regions. Ashok was closely involved in pioneering initiatives like setting up the “All Women BPS” Center (a Joint Venture with GE) in Riyadh, Saudi Arabia.
Ashok currently resides in Mumbai with his wife and daughter. Outside of work, Ashok enjoys reading, travelling, photography, cricket and Indian movies. Ashok is passionate about long distance running and has completed New York, Amsterdam, Mumbai and London marathons. Ashok earned his Masters from IIT Mumbai and is a Certified Six Sigma Black Belt.