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Research

Digital Labor Transforms Business Support Functions

Jones,Stanton
by Stanton Jones

What is Happening?

A key concept running through the accelerating digital transformation of business—and a major theme of 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 a human makes decisions, is on the verge of transforming business support functions. Digital labor—applied to 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 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 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 predicts, diagnoses and remediates 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 burdened 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 human’s 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 to focus on his or her job—to analyze—rather than on finding the relevant data to determine if it’s 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—up to 66 percent in some cases—for ITO buyers.

We are finding the same story about 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 (COE), often led by an internal automation champion. We are also finding that organizations that use an agile approach to 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 at digital pace, and given the pressure support functions are under to respond to rapidly increasing digital business needs, the introduction of digital labor is an inevitability. Organizations that learn how to harness the benefits of digital 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.

About the Author

Stanton helps enterprise IT and sourcing leaders rationalize and capitalize on emerging technology opportunities in the context of the global sourcing industry. He brings extensive knowledge of today’s cloud and automation ecosystems, as well as other disruptive trends that are helping to shape and disrupt the business computing landscape. During his tenure at ISG, Stanton has helped clients develop, negotiate and implement cloud infrastructure sourcing strategies, evaluate and select software-as-a-service platforms, identify and implement best-in-class service brokerage models, and assess how the emerging cloud master architecture can be leveraged for competitive advantage. He has also guided a number of leading service providers in the development of next-generation cloud strategies. Stanton is a recognized industry expert, and has been quoted in CIO, Forbes and The Times of London. You can follow Stanton on Twitter: @stantonmjones.