Predictive Operations Management Can Smooth the Path to the Digital OneOffice

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1 Predictive Operations Management Can Smooth the Path to the Digital OneOffice 1 Predictive Operations Management Can Smooth the Path to the Digital OneOffice August 2018 HFS Research Authors: Tom Reuner, Managing Partner, HFS Research; Phil Fersht, CEO and Chief Analyst, HFS Research In a market where the noise levels around RPA and AI are deafening, it is easy to forget that the bulk of the work in operations continues to be done by humans. Yet, as organizations are progressing their journey toward the Digital OneOffice, innovative technologies are changing the way operations are being managed: Exhibit 1: The Digital OneOffice Components

2 Predictive Operations Management Can Smooth the Path to the Digital OneOffice 2 Not only do RPA and other technology change agents digitize process steps and augment human activities, but predictive operations management suites can provide a much more effective way to help organizations transition their operational setup as part of their digital transformation. While operations management is hardly a sexy topic that will get prominence amongst the hype around RPA and intelligent automation, it is a crucial building block to construct the digital operating model. HFS had the opportunity to spend a day with executives from ActiveOps and its client Allied Irish Bank (AIB) to discuss those issues and learn about the practical application of ActiveOps Digital Operations Management suite. ActiveOps is standardizing the way operations are being managed ActiveOps has evolved from a consultancy with a focus on operational efficiency to a software company that develops cloud-based operations performance software for back-office operations and shared services. The result of that journey are ActiveOps Workware and Active Operations Management (AOM) solutions that provide the data and process to effectively manage digital operations. The goals of this approach are best summarized in the three following intents:» Digitize the traditionally highly analogue operations management process» Optimize the performance of the human and robotic workforce» Provide the insight to select the most appropriate transformation levers and the control delivery of the available benefits Thus, ActiveOps is intrinsically aligned with HFS OneOffice framework. The OneOffice is not just a different or fancier moniker for Digital Transformation, but a framework that describes how organizations must change to truly enable the digital experience. In a nutshell, everything about the digital organization is about engaging people in the right way by responding to their needs instantaneously. Integrating data across all key interaction channels is native to the digital organization. The aim must be to erode the barriers between functions, departments, and process chains to create the OneOffice. Everything about the OneOffice is wrapped around the needs of the people in its environment, where automation is completely native, and decisions can be made on predicting events, not merely reacting to historical data archives. While the Digital OneOffice Framework is the destination or endgame of the digital transformation journey, the broader market tends to show a myopic focus on the impact of automation and RPA rather than looking at the operating model that enables this fundamental shift. It is here where the capabilities of ActiveOps really are coming to the fore. They provide not only a repository for best practices but

3 Predictive Operations Management Can Smooth the Path to the Digital OneOffice 3 capture the data points and insights that enable the Intelligent Digital Processes that the OneOffice concept postulates. As AIB executives aptly put it, the real competition to ActiveOps are analogue capabilities and spreadsheets delivered by humans. Extending this thought further, the lack of predictive operations management is one of the key bottlenecks on the journey toward the OneOffice. Exhibit 2 is summarizing ActiveOp s approach to Digital Operations Management. Its approach is largely desktop-driven thus it differentiates from broader methodologies such as process mining or operational analytics. As executives at AIB put it, this might sound easy, but, in reality, it isn t because there are no standards available. Rather, deploying ActiveOps is allowing AIB for the first time a uniform way of communicating operational issues and challenges using a common language. They pointed out that in most organizations the focus is on transactional data rather than gleaning deeper operational insights. Exhibit 2: ActiveOps approach to Digital Operations Management Source: HFS Research, ActiveOps 2018 In summary, ActiveOps solutions are operationalizing the OneOffice by supporting data-driven decisions that are underpinned by codified best practices. It is not about a rear mirror view based on historical data but about a predictive management of disparate teams. By breaking up every process into parts that can be measured, ActiveOps is supporting the forecasting and planning of the collaboration of disparate teams. Thus, unlike the many RPA discussions, it is not about reducing headcount but about productivity enhancements that in turn leads to capacity generation.

4 Predictive Operations Management Can Smooth the Path to the Digital OneOffice 4 Effective digital operations management is about the codification of best practices and methodologies, less so about technology change The discussions with the executives of AIB were refreshingly void of buzzwords and hyperbole. Rather the hyped discussions on RPA were put in a helpful context: RPA gets all the attention, but it covers only a fraction of the processes that we manage. For AIB the biggest value of ActiveOps is to foster collaboration that is underpinned by a single pane of truth. When we walked the floor of AIBs operations teams, in many respects there appeared to be a resemblance of visiting a call center. However, the challenges were pretty much the opposite. Rather than reacting to customers reaching out to an organization in an ad-hoc way, the emphasis of the ActiveOps deployment is to allow managers to do their planning all the way up to 12 months forecasts. In the past seasonality meant for those managers a lot of negotiations and plethora of physical meetings. All too often the response of other teams to requests was just we are too busy, we can t help you. Unsurprisingly, having a single pane of truth have changed those dynamics fundamentally. While the follow up to issues raised by the ActiveOps system is often still traditional, teams have bought into the methodology behind the system. While AIB fast-tracked the rollout of ActiveOps, they were pleased with how quickly everyone bought into the new ways of working and adopted a new language.. Part of that can be explained that the introduction of ActiveOps came after the financial crisis that almost brought Ireland on its knees. Based on demonstrating early positive changes, those employees recognized the positive impact that it would bring to both the organizational efficiency but also the more effective use of their time. As Ireland is blessed with full employment, the context for the ActiveOps deployment was operational efficiency and most importantly employee satisfaction, not short-term cost savings and headcount reduction. Consequently, attrition is a big issue in Ireland as employees are spoilt for choice. Thus, the strategic goals were rather the acceleration of new product rollouts. Against this background for AIB a secondary strategic focus was to leverage the freed-up capacities for training its staff. And the results in the first year were substantial:» 23% productivity uplift» 27% reduction in correlation between work in and productivity» 11% increase of complex productivity» Over 100 leaders (team, department & executive) trained in the AOM methodology The progress of the rollout was swift. For AIB one of the big attractions was the methodology that is underpinning ActiveOps solutions and this showed in the speed of the rollout. It only took two months

5 Predictive Operations Management Can Smooth the Path to the Digital OneOffice 5 from issuing the RFP to implementation. After that the Data Insights implementation took four to five weeks, while the Planning Insights took another seven to eight weeks. For the implementation AIB leveraged ActiveOps contractors.. They felt it was not feasible to do it themselves. But after the initial implementation AIB employees advanced to the train the trainer concept which helped to make ActiveOps pervasive across their operational teams.. The result and the swift rollout are all the more impressive given the plethora of challenges AIB had faced in the past:» Disparate locations and reporting lines for operations» Teams working in silos, not sharing resources» Demand-driven reactive management» Team engagements on a monthly basis at best» Multiple teams with no consistent management method» Little data available on team performance Of those challenges, working in silos and demand driven reactive management brings us full circle to the discussion of the journey toward the OneOffice. ActiveOps is a critical enabler to overcome the systemic challenges of legacy operational environments. Suffice it to say it needs to be part of a broader change management strategy, but managing disparate operations teams more seamlessly is essential to reach the eventual goal of the OneOffice. Bottom line: Don t forget to augment your human employees when progressing toward the OneOffice In the heydays of legacy outsourcing we always felt on firm ground discussing operating models. The more we are advancing toward digital operations or even the OneOffice, the less firm the ground. ActiveOps is not filling that void, but it is providing critical capabilities and insights bringing to life what Digital Operations Management is all about. They are seamlessly integrating all forms of digital employees, be it RPA or other innovations. But the focal point remains to provide a single pane of truth and respective methodologies to manage operations from an end-to-end point of view. If the OneOffice means one thing then this end-to-end view across front, middle and back-office is mandatory. Yet, crucially despite all the noise around automation and AI, human employees have to be remain the cornerstone of all digital strategies.

6 Predictive Operations Management Can Smooth the Path to the Digital OneOffice 6 About the authors Tom Reuner Managing Partner, HFS Research Tom Reuner is Managing Partner, Business Operations Strategy, and M&A Advisory at HFS Research. Tom is responsible for driving strategic engagements with responsibilities ranging from conducting research to driving business development. He advises clients on the formulation of strategies, guiding them through methodologies and the analysis of research findings and acts as an interactive liaison with the client throughout the course of projects. Tom is driving thought-leadership and the creation of frameworks across business operations intelligent automation and artificial intelligence. (View full bio and contact details). Phil Fersht CEO and Chief Analyst, HFS Research Phil Fersht is a world-renowned analyst, writer and visionary in emerging technologies, intelligent automation and robotic process automation software, digital business services, and the transformation of enterprise operations to drive customer impact and competitive advantage. (View full bio and contact details).

7 Predictive Operations Management Can Smooth the Path to the Digital OneOffice 7 About HFS Research: The HFS mission is to provide visionary insight into major innovations impacting business operations, including: automation, artificial intelligence, blockchain, Internet of things, digital business models, and smart analytics. HFS defines and visualizes the future of business operations across key industries with its Digital OneOffice framework. HFS influences the strategies of enterprise customers, to help them develop OneOffice backbones to be competitive and to partner with capable services providers, technology suppliers, and third-party advisors. Read more about HFS and our initiatives on or