Applying cognitive computing to business operations, transforming front to back office

The Services Research Company

Business Process Re-imagination in the Cognitive EraAn HfS Research Webinar Discussion with IBM and Waterfund

August4th ,2016

Host:

PhilFersht,CEO&ChiefAnalyst,[email protected]@pfersht#hfsresearchWeb:www.hfsresearch.com |Blog:www.horsesforsources.com

©2016HfSResearchLtd.

A webinar by HfS Research and IBM

Business Process Re-Imaginationin the Cognitive Era

Jason Kelley VP & Partner, Global Business Solutions, Design and Innovation, IBM

Dr. Chitra Dorai IBM Fellow & VP, CTO Cognitive Services, IBM

Scott T. RickardsPresident, CEO and Founder, Waterfund LLC

Overview:

• 20years’businessexperienceintheglobalITandbusinessprocessoutsourcingandsharedservicesindustry

• Coinedthe“As-a-ServiceEconomy”in2014• Industryanalyst,author,speaker,strategistandblogger• Advisedandcogitatedon100’sofglobalITservices,BPOand

sharedservicesengagements• Meddleswiththelargestglobalnetworkofenterpriseservicesand

operationsprofessionals

CareerExperience:• PracticeLead,ITServices&BPOResearch,Gartner,Inc• GlobalBPOMarketplaceLeader,DeloitteConsulting• ConsultingPracticeLead,IDCAsia/Pacific• ITMarketsPracticeLead,IDCEurope

Education:

• BSwithHonorsinEuropeanBusiness&Technology,CoventryUniversity,UnitedKingdom

• DiplômeUniversitairedeTechnologieinBusiness&TechnologyfromtheUniversityofGrenoble,France

[email protected]

Phil Fersht, CEO and Chief Analyst, HfS Research

HfS Research Has Been Writing About Intelligent Automation for 4+ Years

The “Intelligent OneOffice” will emerge from Digital + Automation

TheDigitally-DrivenFrontOffice

Mobile,Social/Interactive,Real-timeactionabledata,DesignThinking

DigitalUnderbellyIntelligentAutomationofmanualprocessesDigitizationofdocumentsIoT

IntelligentDigitalSupportFunctionFrontoffice-alignedIT,Finance,HR,Procurement,SupplyChain

IntelligentDigitalProcessesPredictive&OperationalAnalytics,Cognitive.

TheCustomer-firstDigitalOrganization

TheEnablingIntelligentOneOffice

The Nervous System, incepting & Processing

all Inputs

The Neural System

The Circular System

The Service Providers will Bifurcate into two groupings

BackOfficeOutsourcersEfficiency,Automation,LaborArbitrageandScalability

OneOfficeEnablersDataOrchestrationandHumanCollaboration

How buyers would improve the quality and outcomes from their current service relationships…

28%

13%

9%

45%

4%

2%

Lettinggoandgivingupmorehigher-valueworktoourserviceprovider(s)

Threateningtoentertaincompetitivebid(s)toforceyourcurrentprovider(s)touptheirgame

Bringbackmoreworkin-houseandimproveitourselves

Rolloutanautomationstrategyintandemwithourprovider

Bringinaspecialistadvisortorecalibrateourrelationship(s)andgetusontherightcourseforAs-a-Service

Notalot– wepaidfor“cheapandcheerful”andthat’swhatwe’restuckwith

Source:TheHfSWorkingSummitforServiceBuyers,December2015(Sample53enterpriseoutsourcingleads)

One-in-Four IT Outsourcing Buyers contemplating switching their Provider (Half Moving to As-a-Service)Whatareyourplansregardingyouroutsourcing/managedservicesagreementsyouhaveforanyofthefollowing?

Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371

6%

8%

7%

9%

7%

11%

10%

11%

12%

14%

3%

4%

6%

5%

7%

4%

7%

5%

10%

12%

9%

13%

13%

14%

14%

15%

16%

17%

22%

26%

FinanceandAccounting

Sales

HumanResources

Marketing

SupplyChainandLogistics

CustomerService/SalesSupport

Procurement

Industry-specificProcess(i.e.claimsprocessing)

ITapplicationmaintenance&development

ITandNetworkinfrastructuresupport

Likelytochangeproviderorgoouttocompetitivetenderwithsimilarcontract

Likelytochangeproviderorgoouttocompetitivetenderwithanas-a-servicestylecontract

Intelligent Automation is the Place to Start for well over half of Enterprises Whatisthemostimpactfultimingtobegintheseactions?

19%

18%

19%

20%

24%

21%

23%

31%

33%

33%

32%

30%

34%

34%

30%

32%

29%

26%

30%

28%

26%

15%

11%

13%

16%

12%

10%

12%

6%

6%

7%

5%

4%

7%

4%

Accomplishcreativeproblemsolving/"DesignThinking"

Retrainexistinginternaloperationstalenttoredesignprocesses

Investinspecializedchangemanagementsupporttoreorientoperationsstaff

InvestininternalITtalenttohelpusmigrateawayfromlegacysystems

Investineffectiveanalyticstools&skills

Identify/hireatransformationalleader/changeagent

Investinintelligentautomation

Now Withinthenextyear Within3years Within5years Never

Source: “Intelligent Operations" Study, HfS Research 2016Sample: Buyers = 371


INTRODUCING THE PANEL

Overview§ Waterfund develops financial risk management products for the

water industry and is best known for its partnership with IBM to create a Global Water Cost Index. Scott has been based in both the Middle East and Latin America as a hedge fund investor and developer of financial products.

§ He was most recently Senior Business Development Executive at the Dubai Multi Commodities Centre (DMCC), an agency of the Dubai Government, responsible for Dubai Commodity Asset Management, a hedge fund and ETF investment platform licensed by the Central Bank of the United Arab Emirates.

§ Scott earned his BA from Columbia University and holds an MA in International Economics from the Johns Hopkins School of Advanced International Studies (SAIS) having studied in Bologna, Buenos Aires, Zaragoza, and Washington, D.C.

https://www.linkedin.com/in/scott-rickards-aa73464

Scott T. Rickards, President, CEO and Founder, Waterfund LLC

[email protected]

Overview§ Jason Kelley provides global leadership for the solutions, design,

and innovation business in IBM’s Global Business Services. He is responsible for working with enterprise clients to ensure IBM brings high valued business innovation that differentiate them from their competitors. His teams bring endless energy, creativity, and client focused outcomes for IBM clients around the world. Shaping, developing, and delivering unique business capability with the marriage of analytics, automation/robotics, Watson, and cloud technologies Mr. Kelley brings together the best of one IBM team.

PreviousExperience§ Prior to his current role, Mr. Kelley was the CTO and design leader

for the IBM Business Process Outsourcing business and previously had responsibility for managing IBM’s Analytics and Big Data business in North America, China and Asia Pacific. For more than 20 years Jason has provided collaborative executive business leadership inside and outside of the IBM company.

§ Additionally, as well as founding and leading a successful marketing services firm prior to joining the global team at IBM Mr. Kelley has continued to start new businesses within the IBM corporation.

Jason E Kelley, VP & Partner, Global Business Solutions, Design and Innovation, IBM

https://www.linkedin.com/in/jason-kelley-599330

[email protected]

Overview§ Industry Expert (Banking, Customer Care, Financial Markets, Digital

Media), Globally Renowned Thought Leader and Scientist. Deep R&D expertise in: Cognitive Computing, Industry Analytics, Computer Vision and Machine Learning. Extensive IBM client engagement experience. Formerly at IBM Research, now the CTO of Cognitive Services in IBM's Global Business Services unit.

§ 25 years of R&D experience and extensive portfolio of research work in Computer Science: Cognitive Computing -- Computer Vision, Industry Analytics (Banking, Media & Entertainment, Financial Markets), Multimedia Systems, Machine Learning, Stream Processing, and Cloud Computing.

§ Speaker on Cognitive Computing panel at HfS cognition-themed New York Service Buyers Convention in September

Dr. Chitra Dorai, IBM Fellow & VP, CTO Cognitive Services, IBM Global Business Services

@ChitraDorai

https://www.linkedin.com/in/chitra-dorai-7793162


Can you summarize the key items and recap on where we left off in the last webinar?

Technology forces …

Analytics and cognitive CloudMobile Internet of Things

… are creating new experiences …

Experience journey Digital ubiquity Omnichannel

… and disrupting operational models. Traditional value chain Ecosystem

Social Security

Disruptive technologies are driving creation of new business models and digital ecosystems.


Can you summarize the key items and recap on where we left off in the last webinar?

• RadicalCollaboration• EmpathyfortheEnterprise• Outcomesfocused

Global Water Supply Investments through Superior Financial Analytics and Insight

Can you very briefly explain the journey Waterfund is on and how you are looking to reshape the company?

THE WATERFUND PRODUCT PLATFORM

INSIGHTSA dashboard of cloud-based financial applications based on proprietaryWater Cost Index (WCI) values, developed in conjunction with the Accelerated Discovery Lab at IBM. Powerful analytical tools for governments, corporate water managers, and investors.

INVESTMENTSInfrastructure opportunities sourced and operated by Waterfund in a wide range of water projects and utilities. Game-changer for water investors

WATER COST INDEX

Waterfund and IBM Research created a platform for calculating the all-in cost of water in hundreds of cities and projects around the world – the Water Cost Index (WCI)

IBM and Waterfund now have an asset (WCI) that can be used by regulators, inves-tors, water agencies, and others as a tariff benchmark, an indicator of investment per-formance, and a cost savings

WATER COST INDEX = Total cost of productionTotal delivered freshwater volume (m3)

TOTAL COST OF PRODUCTION is calculated as the sum of operating costs, capital costs, and identified subsidies.

TOTAL DELIVERED FRESHWATER VOLUME(in m3)is the amount the producer reports as delivered, and excludes water lost either due to system leakage, pilfering, or other forms of loss. This penalizes producers with a large fractionof production volume being lost due to system inefficiency.

Overtime,cognitivesystemswillsimulatemoreofhowthebrainactuallyworksandhelpussolvetheworld’smostcomplexproblemsbypenetratingthecomplexityofBigData.

käg-nə-tiv (adjective): of,relatingto,orinvolvingconsciousmentalactivities(suchasthinking,understanding,learning,andremembering)

Cognitivecomputingandcognitive-basedsystemsaccelerate,enhanceandscalehumanexpertiseby:

Understandingnaturallanguage(orsensorydata)andinteractingmorenaturallywithhumansthantraditionalprogrammablesystems

Reasoning- forminghypotheses,makingconsideredarguments,planning

Learningandbuildingknowledge

Can you help define cognitive solutions for us?


Cognitive systems have three key capabilities that open new doors for innovations in business process services

Createnewinsightsandnewvalue

Providebias-freeadvicesemi-autonomously

Interactandassistthroughunderstandingandreasoningofbothcontentandcontext

Discovery

Decision

Engagement

Source:IBM,GlobalTechnologyOutlook



Desktop Automation

Cognitive Automation

Simple Transactional Data

Autonomic Process

Automation (

Structured Data/ Simple rules

Unstructured Data/ Complex Rules

Variety of Data

Desktop Automation

Robotic Process Automation

Cognitive Automation

§ ERP Scripting§ Workflow § Macros§ Screen scraper§ Auto eMailer

§ Extensible and adaptive pre-built process object libraries

§ Global robotic command center and dedicated SMEs

§ IBM/partner resilient, secured virtualized infrastructures

§ Autonomous decision-making (“reasoning and remembering”)

§ New insights and data discovery (“learning”)

§ Personal and interactive support (“engagement”)

§ Insight-driven knowledge

§ E.g. Industry-specificvirtual assistants,Cognitive Buy Assistant

§ Extension of RPA capabilities by addressing common obstacles of unstructured data and complex rules

§ E.g. Datacap driven unstructured data processing with WPM(Watson Policy Manager) enabled automation for complex rules

HigheststageintheIntelligentAutomationContinuumtotransformbusinessprocesses



HelpclientstoprogressontheAnalyticstoCognitivejourneytocaptureincreasingvaluethroughoutcome-driven,actionableinsights

Dataexploration

Prescriptivemodeling

Descriptive/reporting

Predictivemodeling

Datafoundations

Cognitivecomputing

OptimizedforScale

§ Integratingdatasources

§ Assessingdataquality§ Addressingdata

governance§ Broadeningthe

definitionofenterprisedata

§ “Democratizinganalytics”—facilitatingaccesstoquickinsight

§ Buildingadata-drivencultureinorganizations

§ Actionableinsights§ Testinghypotheses§ Gainingbusiness

stakeholdersupportandadoption

§ Embeddinganalyticsintodecision-makingprocesses

§ TrackingROIondata-drivenLoBprograms

§ Elevatingexperienceformaximalbusinessbenefits

§ Servingupreal-timeinsightatkeypointsofengagement

§ Creating“singlesourceoftruth”reporting/structuredKPIs

OptimizedforInnovation


For more information and additional use cases:ibm.biz/Doraiblog


WatsonPerfectOrderAssistforOrderManagement

Watson ContactAssistforO2CCollections

CognitiveInquiryAssistinInvoiceProcessing

§ TracksandpredictsthePerfectOrderIndex(POI)andlinkstodrivers/rootcausesofperformance

§ Industry: CPG,Manufacturing,LifeSciencesandTelecom

§ TracksandpredictsA/Rbalancesandlinkstodrivers/rootcausesofDSO

§ Industry-agnostic

§ Understandsnatural languageinquiry,launchesreal-timeanalysisofpaymentdataandallotheraspectsofinvoiceprocessing

§ translatesontheflyasneeded,andpresentsresultsfromrootcauseanalysisrelatedtodelays/issue

§ Industry-agnostic

New Order to Cash cognitive services focus on your customer to offer insightful customer engagement, enhance operator expertise and drive intelligent processes


Can you provide us with some other real world examples of where and how enterprises are transforming their functional operations - in Finance, Procurement, HR, etc. through the lens of cognitive solutions?

Blue HoundPricing IQ

Contracting

Supplier risk management

Supplier evaluation & qualification

Cognitive Solutions for Procurement Operations

Supplier IQ

User experience journey

Cognitive Procurement Assistant

Procurement

Pricing negotiation

Supplier lifecycle management

Supply Chain Risk Insights

Deep supplier insight Dynamic pricing info Instant contract analysis

Predictive risk mitigation insights

Requisition Purchase

Trusted, delightful user experience

Empowered consumers

Changingregulations

Changing demographics

Product redesign / demand

Supplier resiliency

Spend reduction

Process standardization

Policy compliance

Cost optimization

Adherence to contractual terms


Can you provide us with some other real world examples of where and how enterprises are transforming their functional operations - in Finance, Procurement, HR, etc. through the lens of cognitive solutions?

Is this activity largely driving what you see as being the 'next generation of service delivery?'

Key requirements for 'next generation of service delivery'

Theinnovatorandoperatorskillsetsneed

toco-exist

Redesignworkflowstoachieveuserdelight

endtoend

AgiledeliveryofcomposablesolutionsusingBPaaSplatforms

Apartnerwhocaninnovate,design,implementandoperatesharedservicescollaborativelytoachieveend-to-endoutcomes

Adesign-thinkingledapproachtoreimagineworkflowsusingRobotics,AnalyticsandCognitivecapabilities

Apre-builtsetofreusableassets,solutionsandtechnologiesexposedviaAPIsforseamlessintegrationandrapidpersonalization


Global Water Supply Investments through Superior Financial Analytics and Insight

Can you share with us what motivated your company to start your journey, how is it impacting the business, and what outcomes are you anticipating?

INSIGHTS AND INVESTMENTS: A VIRTUOUSCYCLE

Continually refine and hone WCI based not only on public

data, but also on water production assets owned by Waterfund

WCI delivers superior insights into true cost of

water production

Identify and acquire industry outperforming

water production assets

Glean detailed operational data on cost inputs based on asset performance and public data

WATERFUND INSIGHTS SERVICE

FACILITATING TRANSPARENT AND EFFICIENT WATER INVESTMENTGreater insight into outcomes: enables a holistic view of the financial costs and impact of owning and/or using water-related assets.

Greater efficiency in decision making: widens knowledge of water use impact and demonstrates immediately the benefits of operational behaviour changes.

Greater transparency and auditability: enhanced visualisation allows all stakeholders to observe impacts of water use – managers, shareholders, govt., public

OPTIMISING DATACHOICES

IDENTIFYING OPPORTUNITY AND TARGETING RISK

CASE STUDY | KUWAITENERTECH,AWHOLLY-OWNED SUBSIDIARYOF THE KUWAIT INVESTMENT

AUTHORITY, KUWAIT’S $600 BILLION SOVEREIGNWEALTH FUND,HAS TAPPED WATERFUND TO CREATEAWATERCOST INDEX (WCI) FOR KUWAIT

• The Kuwait WCI will be the basis for a water investment dashboard, a suite of analytical tools created by Waterfund to empower users and optimize policy and investment decisions regarding water security and investment in water technology

• Other users for the dashboard and Kuwait WCI initially will include the Kuwait Foundation for the Advancement of Sciences and the Kuwait Institute for Scientific Research, two leading academic centers for sustainable water resource management in the Middle East and globally

THIS ISAN INITIALSTEPTOWARDS THE CREATION OFAWATERDATACENTER FOR KUWAIT IN PARTNERSHIPWITH WATERFUND

• Waterfund’s Kuwait WCI and data analytics will play an instrumental part in determining water tariffs in Kuwait• Furthers Waterfund’s objective to inform the debate about water pricing and its crucial role in sustainability globally

through superior data and analysis

How do you see the introduction of cognitive solutions altering your company's priorities going forward? And what areas of investment - both from a monetary and a resource/people perspective - are most impacted?


For those listening unsure of where to start or where to focus, what advice do you have as someone who has begun the journey to those dipping their toes in the water?

Cognitivecomputingisajourney!1 2 3

Laythefoundation ManagethechangeDefinethevalue

Find the right opportunities for cognitive

Define the value proposition and chart a course for cognitive

Be realistic about value realization

Invest in specialist human talent

Build and ensure a quality data corpus

Consider impacts, business processes, and policy requirements

Ensure executive involvement along the cognitive journey

Communicate the cognitive vision at all levels

Continue to raise the cognitive IQ level of the organization

32 IBM Confidential

Our Approach – IBM Design Thinking with Agile DeliveryHuman Centered framework for inspired innovation and collaboration

Understand

Explore

Prototype

Evaluate

Understand and develop empathy for

users

Explore the process of generating potential

solutions for your users’

problems

Evaluate and decide whether to move forward with an idea or generate alternate solutions

Prototypeideas as concrete

experiences

Key Principlesü A Focus on User Outcomes – “Make the User our North Star”ü Multidisciplinary Teams – “Succeed or Fail as a Team”ü Restless Reinvention- ”Bias towards Action”


How does design thinking help teams approach such transformational journeys? What building blocks should enterprises have in place?

Insummary,ourapproachtoBusinessProcessRe-imaginationleveragesinnovativetechnologyacrosstheend-to-endlifecycle.

BPR

Assess

§ Evaluate process designs with analytics-driven assets including BlueWorksLive, TVC, Maturity Models, etc.

§ Identify key work drivers to prioritize improvements

Judgment based automation

§ Apply cognitive analytics to monitor customer, supplier, employee behavior

§ Push prescriptive guidelines to enable team to act on insight

Rules based automation

§ Apply technology to automate end-to-end activities

§ BPaaS, BPM, Workflow, Analytics, Robotics, Mobile Apps

Monitor

§ Track status § Monitor inquiries and

ensure resolution§ Alert management§ Advanced visualization§ Mobile apps

BusinessProcessRe-imagination


How does design thinking help teams approach such transformational journeys? What building blocks should enterprises have in place?


“Cognitive is the destination, and digital is the necessary path to get there.”

Ginni Rometty, CEO, IBM

About HfS ResearchWecoinedthe As-a-ServiceEconomy termbecauseweseeaprofoundchangeunderwaythatismoreall-encompassingthan

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Applying cognitive computing to business operations, transforming front to back office

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