Digital Transformation

Digital Business Summit 2016 – Digital Labor Transforms Business Support Functions

Stanton Jones Research Alerts

What is Happening?

A key concept running through the accelerating digital transformation of business, and highlighted in sessions at our 2016 Greenwich and Chicago Digital Business Summit events, is that of digital labor. Understanding how digital labor includes software capabilities, well beyond robots replacing humans, is key to unlocking the possibilities of Digital Business.

Software that works like a human, or mimics the way humans make decisions, is on the verge of transforming business support functions. Digital labor, applied against common support functions such as IT, HR, F&A and customer care, is fundamentally changing long-held assumptions about how much work an employee can accomplish, how quickly they can accomplish it, and the level of quality they can deliver.

Digital labor makes existing employees more productive by freeing them up from low-value tasks, enabling them to focus on more higher-value work. For example, banks are using virtual agents, created by a Digital Workforce Platform (DWP) to diagnose, remediate and escalate thousands of alerts from transaction monitoring systems to their human agent counterpart. In IT, virtual engineers are intercepting alerts from event management systems and are proactively resolving server and network failures before they happen. And finally in HR, RPA bots are filling the gaps between ERP systems and the myriad of other systems that need to be kept up to date, but cannot be programmatically interfaced.

Digital labor is different than traditional automation in that the virtual analyst or engineer works as if it were a human, by logging into and out of systems, and in more advanced systems, it can predict, diagnose and remediate problems using “learned” behavior to solve issues that may not be linear in nature.

Why is it Happening?

Enterprise employees are overwhelmed with data. This data is most commonly generated by event management systems that create alerts when unexpected behavior is observed. These systems, developed over the past two decades, are based on the assumption that humans have the capacity to analyze and diagnose the data being generated. Given the massive increase in complexity within enterprise environment driven by digital business, the volume of data these systems produce is simply too overwhelming for any human to manage.

When this is added to existing strains on employees born by the lack of connectivity between ERP and other systems, the volume of data that needs to be analyzed and addressed is now far beyond any humans ability to manage.  Digital Workforce Platforms are solving this challenge by creating virtual agents and engineers to sit in front of, and in-between, these systems. These virtual workers can analyze and key data, as well as predict and remediate problems, exponentially faster than a human. This frees up time for the human analyst focus on their job – analysis – rather than on finding the relevant data to determine if its relevant.

Net Impact

ISG research indicates that employee productivity is surging due to digital labor. As was detailed in our September 2016 Automation Index, our analysis of ITO contracts signed over the past 18 months shows a significant increase in productivity across all IT functions. In some cases, we observed a 50 percent reduction in the number of service provider employees needed to support an IT function. This is leading to double-digit savings, sometimes up to 66 percent, for ITO buyers.

We are finding the same story – significantly increased productivity – in our work with clients that are taking a “do-it-yourself” approach to digital labor. These enterprises are buying one or more Digital Workforce Platforms, and are driving digital labor into their organizations using an automation center of excellence, often led by an internal automation champion. We are also finding that organizations that use an Agile approach to introducing digital labor, using sprints, backlogs and story points to estimate, are finding more success and are realizing better outcomes.

Digital labor within enterprises will expand quickly, so we are encouraging enterprises to start now by identifying a champion and creating a COE. Given the fact that virtual agents and engineers will improve a digital pace, and given the pressure support functions feel to response to rapidly increasing digital business needs, the introduction of digital labor is an inevitability. Organizations that learn how to harness the benefits of labor and apply it to their business support functions will create a strategic advantage over the next 12 to 18 months. These organizations will be able to add capacity on-demand, and will, over time, avoid the costs of incremental hires. This will set the stage for these organizations to apply digital labor to customer-facing functions, opening the opportunity for new business models based on the idea of an always-on workforce that consistently applies the best knowledge of the organization.

This Research Alert was originally published by ISG Insights, our ongoing globally-focused premium subscription research service. To learn more about ISG Insights, go to where you can register for a Research ID that will provide access to some of our complementary content.

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