A quarterly review of Global Business Services (GBS), Intelligent Automation (IA), and related service delivery market trends.
Adoption and exploitation of solutions—including digital labor, robotics process automation (RPA), artificial intelligence (AI), machine learning (ML), and other innovative technologies such as data and analytics (D&A)—are clearly the top positive trends and initiatives for 2018 and beyond. But many negative trends and organizational challenges cited in previous years will often impede these initiatives.
Cutting costs is once again cited as the top initiative by organizations. However, leading organizations will not limit their IA usage to merely cutting costs. They will also leverage IA to help drive digital transformation efforts that can change their entire operational and business model while also addressing other challenges such as talent shortages. The paradox is that IA initiatives themselves can be impeded by a lack of talent in the organization.
Now is the ideal time for organizations to aggressively adopt IA solutions, backed by full management buyin. Accordingly, key challenges to initiatives must be addressed, including dysfunctional management and operating models, inadequate supporting IT systems, and the lack of skilled talent and IA talent in particular.
The positive and negative impacts of IA on the whitecollar workforce must be clearly understood and managed by businesses. However, weaknesses in change management capabilities and dysfunctional management practices will make this easier said than done.
The use of bots and RPA will accelerate and become mainstream in scale across a growing number of organizations in 2018, especially forward-thinking and digital-native firms. RPA in itself, however, is primarily a cost-cutting tool. Those organizations that consider themselves as competitive IA players based only on their aggressive RPA efforts are fooling themselves.
Widespread deployment of IA (especially AI and ML) will remain a rarity in mainstream and legacy organizations. But all organizations must gain the right IA tools and expertise. They also need to understand where each IA component is most applicable, whether individually or in concert with other components.
While 2018 will be the year of IA, organizations that do not adequately leverage transformation opportunities with IA will reduce their competitive advantage and become laggards rather than leaders in their industry. IA has been compared to other transformational technologies, such as e-commerce, but the difference with IA is that the split between leaders and laggards will widen much faster and the losers fall much quicker.
The growing presence of IA in 2018 as a market game changer must be understood within the context of the top negative and positive trends for 2018. Geopolitical, economic, and technological uncertainties in the global business environment have been a hallmark of the past year and will remain so in 2018 and 2019. Protectionism, nationalism, and funding limits may also impede the number and volume of M&A efforts.
On the other hand, almost 70 percent of respondents cite IA and digital labor as a positive trend, followed closely by the benefits of innovative technology such as automation, cloud, and D&A. We should also note that concerns about a weak global or regional economy are much less than in 2016, though this varies by region and country.
It is important to view both negative and positive trends in the context of one another. Negative trends tend to drive positive trends. For example, talent shortages and protectionism are part of the business drivers behind IA. Solutions based on IA such as RPA can help alleviate talent shortages by automating work and lessening the need for human resources, including offshore labor. Similarly, AI and D&A can infuse greater intelligence into business operations, whether automated or not, and help extend the capabilities of workers. However, challenges remain in finding, training, and keeping the right talent to support these technologies and efforts.
Cost cutting and IT investments in areas such as IA and D&A have remained top initiatives for organizations in 2018. Leading organizations this year, however, will also place greater emphasis on using these technologies to deliver benefits beyond cost savings.
In addition, core business processes will be redesigned, though not at the pace seen in recent years. In some cases, this is because an organization might consider IA technologies as an alternative to extensive process redesign efforts. This is largely a mistaken assumption. Certainly IA technologies, especially RPA, can serve as a short-term means to address under-optimized processes. However, IA can also be used to automate inefficient processes and eliminate unnecessary work through process redesign. Organizations should therefore prioritize their ongoing process analysis and redesign efforts, continually tweaking automation to help ensure that their core business processes stay in alignment with the business requirements they support.
Whether considering IA, blockchain, or bringing outsourced work back home, organizations need to fully understand market hype as opposed to market reality. This gets harder every year. New technologies, business practices, and business trends all have their advocates and vested interests, with organizations sometimes willing to take positions based on wishful thinking rather than market or technical realities.
For example, strong cybersecurity capabilities was considered by respondents as both highly hyped and very real. In this case, the reality is the mission-critical importance of solid cybersecurity capabilities; the hype is saying that most organizations are not there yet. Separating hype from reality is difficult and hard work, but it is a skill that organizations must master—and one that will remain a challenge to master.