HfS Webinar

Achieving Intelligent Automation In Business Operations

July 2017

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 Today’s Speakers

Phil Fersht Brian Halpin Chinmoy Bannerjee

CEO and Chief Analyst Head of Automation, EVP and Global Head of BPS,
HfS Research HSBC Hexaware

Reetika Joshi Tom Reuner

Research Director, Senior Vice President,
HfS Research Intelligent Automation and IT
© 2017 HfS Research
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 The Future of Operations: The Digital OneOfficeTM Organization

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 Only 2% Of Enterprises Admit To Not Having An Automation
Strategy
How would you describe your organizations current Automation strategy?

31%

20%
18% 17%

13%

2%

We are integrating We are in the We have built/are Project use/case We are mandating We don’t have one
in our service process of building a Center of focused this as a
delivery formulating a Excellence requirement for our
strategy service provider

Source: “State of Automation 2017”

Sample: Enterprise Buyers = 400

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 Automation Opportunity Vast & Untapped

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 Worldwide Global Robotic Process Automation
(RPA) Market, 2016-2021
RPA Software RPA Services YoY Growth
1400 70%
63% $1224m
1200 60%

USD Million $1022m

1000 50%
42% $822m
800 40%
952
$629m 31%
600 790 30%
630 24%
$443m 20%
400 476 20%
$271m
330
200 198 10%
232 272
153 192
73 113
0 0%
2016 2017 2018 2019 2020 2021
Source: HfS Research 2017

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Worldwide Business Process Automation Market, 2016-2021

Automation - External Services & Software

Automation - internal operational spend 12,7
USD Billion 11,2
9,7
8,2
8,6
6,6 7,7
5,1 6,9
6,1
5,3
4,4
3,5 4,1
2,1 2,8
0,7 1,4

2016 2017 2018 2019 2020 2021

• External Professional Services: Relates to all external spending focused on developing business
process automation strategies / roadmaps and the use/ implementation of automation with
business functions.
• Internal Operational spend: Includes internal and external spending on automation – change
management, IT and operational teams focused on process automation and automation use as part
of existing business process management initiatives.

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 RPA is less that 10% of the Global Business Process
Automation Market

RPA Other BPA Growth (YoY)

14 $12.7 Bn 35%

12 30% $11.2 Bn 30%

$9.7 Bn
10 USD Billion 23% 25%
$8.2 Bn 19%
8 $6.6 Bn 20%
16%
11,5
6 $5.1 Bn 10,2 13% 15%
8,9
4 7,5 10%
6,2
4,8
2 5%
0,6 0,8 1 1,2
0 0,3 0,4 0%
2016 2017 2018 2019 2020 2021
Source: HfS Research 2017

• Business Process Automation is the use of technology to allow a business function or part of
the operation of a process workflow work automatically. It includes the use of RPA, BPM
suites, custom scripting, AI and related technologies.

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AI & RPA Process Automation Market, 2016-2021

AI Automation Spend RPA Spending

USD Billion 3,9

3,4
1,2
2,8
1,0
2,2 0,8

1.4 0,6

1,0 0,4 2,7

2,4
2,0
0,3 1,6
1,1
0,7

2016 2017 2018 2019 2020 2021

Artificial Intelligence, in this context, refers to the simulation of human thought processes across enterprise
operations, where the system makes autonomous decisions, using high-level policies, constantly monitoring
and optimizing its performance and automatically adapting itself to changing conditions and evolving
business rules and dynamics. It involves self-learning systems that use data mining, pattern recognition and
natural language processing to mimic the way the human brain works, without continuous manual
intervention.
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 Methodology & Study Demographics
400 participants involvement in buying decisions related to technology and services that include automation tools and
services used to improve their organizations internal operations and business processes. The interviewing was
conducted in May and June 2017 with a combination of telephone and online surveys.

Source: “State of Automation 2017”

Sample: Enterprise Buyers = 400
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 Satisfaction with RPA Installs: Still a Nascent Market

Source: HfS Research, “State of Automation 2017 ”

Sample: n=136 Buyers of RPA

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© 2017 HfS Research Proprietary │Page 13
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 The 2017 HfS Automation Maturity Model for Enterprises

Automation Goal Impact on Target areas Deployment Scalability Data usage “Bot” lifecycle Intelligent
maturity current model focus focus Automation
process alignment
Level 4: + Service Re-imagined End-to-end Integrated End-to-end Used for “bots” as Integrated
Integrate delivery processes enterprise “bots” enterprise solving shared solutions
synchronization processes managed processes business capability across RPA
independently problem across client and AI
available on
demand
Level 3: + Standardized Re- Processes Shared pool of Across Used to re- “bots” as Investigating
Institutionalize process delivery engineered with co-ordinated standardized engineer shared alignment
processes judgment- “bots” processes process capability between RPA
based tasks across client and Artificial
available on Intelligence
demand (AI)
Level 2: + Process Looking for Processes Co-ordinated Common Used for Dependent on RPA
Implement efficiency and common with “bots” shared driving each client dominates
effectiveness process unstructured processes process and process
components data efficiency
Level 1: Cost-reduction As-is / no- Simple rule- Individual Specific tasks / Used for Not specified No alignment
Investigate change based “bots” processes performance
management

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 Today’s Speakers

Phil Fersht Brian Halpin Chinmoy Bannerjee

CEO and Chief Analyst Head of Automation, EVP and Global Head of BPS,
HfS Research HSBC Hexaware

Reetika Joshi Tom Reuner

Research Director, Senior Vice President,
HfS Research Intelligent Automation and IT
© 2017 HfS Research
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Proprietary │Page 15 Services, HfS Research
 Decision Making in Automation

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 Automation Really is in the Eye of the Beholder

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 HfS Sees Intelligent Automation as a Continuum Today
Characteristic of process

trigger based rules based rules based

standardized language dynamic language

BPM
Workflow
Data Center ERP
Automation:

Runbook
Scripting
Scheduling Cognitive Artificial
Job control RPA
Computing Intelligence
Workload
automation
Process
orchestration

SOA
Virtualization
Cloud services

Characteristic of data/information

Structured Unstructured patterned Unstructured without patterns

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 Decision Making For Automation: Broad Set of
Stakeholders, Narrow Set of Decision Makers
How is the decision-making process for automation capabilities organized within your
enterprise?
Management Board 15% 43% 39% 3%

CEO 54% 31% 15% 1%

The C-suite plays a
critical role in setting CIO / IT Director 57% 32% 10% 1%
the automation
strategy CFO/Finance Director 35% 51% 11% 4%

Line of Business director 29% 44% 21% 7%

Finance Department 28% 49% 20% 4%

Procurement department 27% 47% 19% 7%

Internal Panel of experts/business leaders 24% 44% 11% 21%

Purchasing Manager 24% 48% 21% 8%

Data center Manager 22% 51% 18% 10%

Channel Partner 21% 42% 11% 27%

External Consultants 18% 48% 13% 21%

Decision Maker Influencer Stakeholder No role

Source: “State of Automation 2017”
Sample: Enterprise Buyers = 400

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 Where are customers getting their information?
Please pick the most influential source of information.

18%
17%
16%
13% 14%
12%
11%

Industry Case studies Internal Conferences In-house desk Sourcing External

analysts procurement research advisors consultant
expertise

Source: “State of Automation 2017”

Sample: Enterprise Buyers = 400

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 The Execution and Market Dynamics of
Automation with Business Operations

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 Only 2% Of Enterprises Admit To Not Having An Automation
Strategy

How would you describe your organizations current Automation strategy?

31%

20%
18% 17%

13%

2%

We are integrating We are in the We have built/are Project use/case We are mandating We don’t have one
in our service process of building a Center of focused this as a
delivery formulating a Excellence requirement for our
strategy service provider

Source: “State of Automation 2017”

Sample: Enterprise Buyers = 400

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 AI Adoption Is On A 2- All AI Techniques & Solutions
Year Horizon For 60-70% Are Getting Evaluated
Of Clients Surveyed
When, if ever, do you believe AI automation to be applicable for
When, if ever, do you believe AI automation to be applicable you within the following processes
for you within the following processes
Machine Learning (ML) 45% 21% 22%
IT including service desk 38% 32%

Marketing 33% 34%

Virtual Agents 41% 23% 19%
Industry specific processes 32% 35%

Customer Service 32% 33%

Computer Vision 37% 21% 24%
Supply Chain 30% 38%

Finance & Accounting 29% 37%

Natural Language Processing (NLP) 42% 18% 21%
Master Data Management 29% 33%

Procurement 26% 34%

Neural Networks 37% 19% 23%
HR 24% 32%

Within the next year In the next 1-2 years from now Piloted / implemented Evaluating In next 2 years
Source: “State of Automation 2017” Source: “State of Automation 2017”
Sample: n=219 Non Buyers of AI Sample: n=400

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 Automation Benefits Seem To Reflect Long-Term Thinking…
Which of the following benefits do you think Automation could deliver to your operations?

Better quality of operations 52%

More workforce agility – giving operations the ability to
49%
scale
Superior data accuracy 48%

More actionable data for operational insights 46%

More actionable data for customer insights 45%

Better visibility, auditability and compliance 38%

Improves employee motivation by relieving them of
37%
rudimentary tasks
Relieves management time to focus on customers 31%
Overcoming process bottlenecks and enabling
25%
processes to flow end-to-end
Guaranteed short term cost reduction 21%

FTE reduction 12%

We don’t believe it will deliver any significant non-cost
%
related benefits

Source: “State of Automation 2017”

Sample: Enterprise Buyers = 400

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 …But The Biggest Adoption Barrier Still Seems To Be Short-
Term Cost Benefits
What is preventing or slowing the adoption of Automation within your organization?

Immediate cost savings not attractive enough 35%

IT budgets exhausted from technology deployments 28%

Underlying platform is sufficient, don’t think

28%
automation lower cost

Lack of internal talent to evaluate and implement 28%

Bad experience with technology-driven process

27%
change

Lack of understanding of technology building blocks 25%

IT does not have the time to implement 23%

Not sure where to start 20%

Source: “State of Automation 2017”

Sample: Enterprise Buyers = 400

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 Service Providers Will Need Internal IP And Clients Willing To
Endorse Them In These Early Days
How important are the following selection criteria when choosing an external service
provider to help with you Automation strategy and implementation. Which is the most
important?
Internal Automation IP 17%

Reference clients 15%

Track record in delivering business outcomes 14%

Partnerships with Automation technology firms 14%

Track record in delivering cost savings 13%

Industry specific capabilities 13%

Specific Process knowledge 8%

Ability to deliver as part of an end to end managed service 7%

Source: “State of Automation 2017”
Sample: Enterprise Buyers = 400

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 Satisfaction with RPA Installs: Still a Nascent Market

Source: HfS Research, “State of Automation 2017 ”

Sample: n=136 Buyers of RPA

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 Key Study Takeaways

The study findings outline three immediate calls-to-action for clients:

• Enterprises are past the point of pondering about the possibilities of

automation. Challenges exist when it comes to execution, but as a whole the
shift to intelligent operations through automation is real and already starting
to deliver value.

• Artificial Intelligence will become mainstream in 2 years. Enterprise leaders

are either already piloting or implementing AI technology in some form, or
plan to do so in the next few years. Customer service leads the use cases for AI
today.

• Integrate automation in the overall service delivery strategy. We need to look

past the labor displacement arguments that are the here-and-now symptoms
and benefits of using AI, and think more holistically about large-scale service
orchestration of processes centered around automation and AI technologies.

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 Hear from industry leaders to learn how they have experienced our events

www.youtube.com/watch?v=y3XIhy9HSi0 www.youtube.com/watch?v=fvpSzcxjRQM www.youtube.com/watch?v=k7MkpXG-hys

www.youtube.com/watch?v=gIa5Zp6WrVs www.youtube.com/watch?v=-0m2p4iI62o www.youtube.com/watch?v=Us6ifQde4zo

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 HfS Research: The Services Research Company
HfS Research is The Services Research Company™—the leading analyst authority and global community for business operations and IT
services. The firm helps enterprises validate and improve their global operations with world-class research, benchmarking and peer
networking. HfS Research was named "Independent Analyst Firm of the Year for 2017" by the Institute of Industry Analyst Relations
which voted on 170 other leading analysts. HfS Chief Analyst, Phil Fersht, was named Analyst of the Year in 2017 for the third time.

HfS coined the terms "The As-a-Service Economy" and "OneOffice™", which describe HfS Research's vision for the future of global
operations and the impact of cognitive automation and digital technologies. HfS' vision is centered on creating the digital customer
experience and an intelligent, single office to enable and support it. HfS’ core mission is about helping clients achieve an integrated
support operation that has the digital prowess to enable its enterprise to meet customer demand - as and when that demand happens.
With specific practice areas focused on the Digitization of business processes and Design Thinking, Intelligent Automation and
Outsourcing, HfS analysts apply industry knowledge in healthcare, life sciences, retail, manufacturing, energy, utilities,
telecommunications and financial services to form a real viewpoint of the future of business operations.

HfS facilitates a thriving and dynamic global community which contributes to its research and stages several OneOffice™ Summits each
year, bringing together senior service buyers, advisors, providers and technology suppliers in an intimate forum to develop collective
recommendations for the industry and add depth to the firm’s research publications and analyst offerings.

Now in its tenth year of publication, HfS Research’s acclaimed blog Horses for Sources is the most widely read and trusted destination for
unfettered collective insight, research and open debate about sourcing industry issues and developments.

HfS was named Analyst Firm of the Year for 2017, alongside Gartner and Forrester, by leading analyst observer InfluencerRelations.

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 Fastest Automation is about AUTOMATION FIRST
growing IT Services Culture of automation first, no fear of

company over past 10

changing culture cannibalization; operations leadership
goaled on automation value

quarters ANTI PYRAMID

Low skill L1 won’t work, slow rotation
(CQGR of 3.1%)
GRASS ROOT
INNOVATION
Revenue: USD 526 Client centric innovation, 18M
tangible value added to clients in
Million We are far ahead in 2016 – 3% of revenue

that journey CROSS SKILLING

Focus on cross-skilling, e.g. hyper-converged
engineers, operators as automators

We want to be the Transitioned work We cannibalized

First IT services from Top 5 Indian revenues at 13000+ Employees
company to have
Origin Providers in 7

50% clients
in the past
20 clients
25 Languages
through proactive
Digital Workforce
months proposals
6
12 GDCs
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