Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code

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1 DIGITAL BUSINESS Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code By digging deep to understand consumer behaviors, needs and wants, organizations can build systems that not only meet essential user needs but also uncover new business opportunities and anticipate future requirements. January 2018

2 EXECUTIVE SUMMARY Digital innovators are upending established business models across industries, from transportation and telecommunications, to banking, entertainment and more. As products and services become commoditized, enterprises must transform themselves and the user experience they deliver, or face disruption and possible irrelevance. When every bank offers about the same interest rate and financial advice, why choose one over the other? When all video, phone and Wi-Fi connectivity is about the same, why not just shop for a lower-priced provider every two years? And when you can summon a self-driving car from a ride-sharing service any time you want, why care about what kind of vehicle you own that is, if you even own one? Gaining, and keeping, competitive advantage in this digital world is not about jamming every bell and whistle into a device (or an application), only for customers to abandon them after a short time. It instead requires understanding customer needs and focusing the digital solution on meeting those needs. Delivering such insight-driven solutions will separate leaders from laggards in the digital era. This report focuses on how organizations can embrace human-centered transformation and evolve from a seller of products and services, to a provider of life-changing, human experiences. 2 Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code

3 THE SHIFTING LANDSCAPE The digital wave is proliferating with every download of a smartphone app, creation of a social media account, tweak of a big data analytical algorithm and introduction of a new cloud service. Mobile technology gives consumers unfettered access to information about products and services, not merely at an individual level, but collectively from all users. Social media buzzes real-time updates on everything from friends vacations to world events, providing enterprises with a Code Halo of digital clues into consumers wants, needs and activities. 1 Increasingly powerful and intelligent analytics can sift through this data in search of insights into consumer needs, and teach itself to deliver personalized services and offers. Empowering all this is the cloud, offering more computing resources, at lower costs, with less delay and effort than ever before possible. These technologies have remade the business landscape and turned digital natives into giants with global financial, and even political, clout. The power of digital has turned Uber into a transportation leader without a fleet of vehicles, and Airbnb into a lodging giant without owning a single room. But even greater changes are coming, including: A flood of new data from sources ranging from wearable sensors to social media, smart appliances and industrial robots. Quantum leaps in the predictive capabilities of artificial intelligence (AI), allowing businesses to more accurately anticipate customers needs. New interfaces driven by natural language technologies and virtual and augmented reality that expand the ways customers interact with the brand, and allow enterprises to deliver compelling new experiences. Increasingly capable autonomous devices, such as vehicles. The potential for distributed ledgers such as blockchain to eliminate the need for middlemen in many industries, while creating new business models and even new currencies. The growing clout of digital-first millennials, who expect businesses to incorporate these technologies into the brand experience. Given the size, power and pace of these changes, it is no surprise that businesses are scrambling to create digital-first strategies. By 2020, 50% of Global 2000 companies will see most of their business depend on their ability to create digitally enhanced products, services and experiences, according to market researcher IDC. By the end of 2017, IDC says revenue growth from information-based products will be twice that of the rest of businesses portfolios. 2 Even today, 40 of the top 100 product-based organizations are dependent on software to drive their business, says consulting firm McKinsey & Co. 3 Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code 3

4 Defining the T Word Businesses that are succeeding in this environment are using these technical and societal changes as opportunities to create new products and services, and deliver them in new and compelling ways (see Figure 1). They are reimagining everyday experiences from the perspective of the consumer, unhindered by the constraints of legacy technology platforms. They are also designing solutions from a cloud-first and mobile-first perspective, and fine-tuning them in a series of rapid iterations to ensure every feature or function meets a real emotional, human need. Meeting Digital Needs Across Industries Food Production Benefits include: Predictive maintenance from IoT data, reducing costs, increasing uptime. Self-driving machinery, cutting costs, boosting productivity. Agricultural analytics, improving yields, reducing waste. Personal Wellness Benefits include: Improved fitness and health tracking, encouraging a healthy lifestyle. Earlier diagnosis of illness, leading to better outcomes, lower healthcare costs. Big data analytics to track disease outbreaks and potential causes, leading to improved diagnostics and treatments. Financial Wellbeing Benefits include: Anywhere, anytime banking and financial information, increasing customer satisfaction and retention. Easy-to-use financial planning and management tools, attracting millennials and retaining them as their incomes rise. Status as trusted financial adviser, leading to sales of ancillary products and services. Figure 1 4 Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code

5 Turn to the social sciences (e.g., anthropology, sociology and behavioral science) to perform on-site observations of how people work, live and play, to uncover their actual needs before writing a single line of code. TRANSFORMING THROUGH DIGITAL ENGINEERING The first step businesses need to take is to focus not on technology but on understanding their customers and how new technology can meet their needs in game-changing ways. Rather than theorizing about how customers might use the latest new gadget, businesses should turn to the social sciences (e.g., anthropology, sociology and behavioral science) to perform on-site observations of how people work, live and play, to uncover their actual needs before writing a single line of code. This nontraditional, open-ended approach is meant to specifically uncover what businesses don t already know about the consumer. This is the first step in what we call Insight to Code. For example, in our observations of communications service provider (CSP) customers, we uncovered feelings of disconnection between parents and children, even when families were together at home, because family members were paying more attention to their screens than to each other (see Quick Take, next page). When we spent time with sport utility vehicle owners, we discovered that while they wanted to bond with friends and family on adventures, they found it daunting to determine the right location, round up the needed gear and coordinate everyone s schedules (see Quick Take, page 8). Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code 5

6 QUICK TAKE Digitally Engineering a Communications Service Provider CSPs face stagnant customer satisfaction, high churn and an inordinate number of customers turning to costly human-based support rather than lower-cost digital channels. One leading CSP asked us to help identify new services that would increase brand loyalty and set it apart in an increasingly crowded marketplace. To identify consumers human needs, ReD Associates, a Cognizant strategic partner, observed how families in California, Texas and Pennsylvania were using the Internet, smartphones and other devices in their daily activities. ReD discovered that customers: Rely on the Internet for work, education and social interactions, but have little understanding of how it works and how to safeguard and manage their connections. Abruptly abandon new devices such as smart watches, fitness monitors, smart appliances and virtual personal assistants, finding them too difficult to use or connect to one another or to cloud-based services. Often feel isolated from family members who are distracted by their devices, and unable to agree on how much gaming, texting, browsing and checking is acceptable. Based on this research, we developed three minimum viable products (MVP): One that enables families to collaboratively agree on how much time each person may spend online, and enforces those rules on the home Wi-Fi router. A second that tells parents based on their children s smartphone location when they fail to appear at an expected place and time, even if only to another room at home, while other family members are online. A third that enables the CSP to remotely connect devices, such as virtual personal assistants, smart thermostats and appliances, to each other and to capabilities such as the Spotify music streaming service. The CSP is currently refining these MVPs for production rollout, and evaluating monetization options, including charging for the apps, selling location-based advertising or collecting revenue from the sale of products and services associated with the smart devices. 6 Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code

7 These are not fundamentally technology issues; rather, they re human issues that can be addressed through the proper use of technology. Meeting these needs connects organizations with customers in ways that their competitors cannot easily match. Just as importantly, it opens the door to new revenue streams, partnerships and business models that provide competitive differentiation (see Figure 2). The ROI of Digital Engineering Motor Vehicle Manufacturer Trip planning/scheduling app Potential Revenue Streams Referral fees for sales of guided tours, camp sites, equipment rental, etc. Sales of location and activity-based advertising from service and product providers. Subscription fees for premium versions of the application. Sales of data-driven insights into customer needs and behaviors to other product/ service providers. Communications Service Provider (CSP) Remote application to remotely link smart home devices to each other and to third-party services. Potential Revenue Streams Fees from thirdparty services for linking those services to otherwise stranded devices. Revenue-sharing with service providers based on customers purchase of products/ services over the connected device. Increased sales of such devices, driven by the added convenience of the CSP handling the setup and configuration. Selling data-driven insights into customer needs and behaviors to other product/ service providers. Financial Services Organization Interactive, AI-guided mobile app to track spending and investments in real-time to make financial decisions based on actual spending patterns. Potential Revenue Streams Referral fees for mortgages, home inspections, attorneys and other home-related products and services. Sales of location and activity-based advertising from service and product providers. Subscription fees for premium versions of the application. Selling data-driven insights into customer needs and behaviors to other product/ service providers. Figure 2 Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code 7

8 The next step is to quickly turn these insights into production-ready code, review customers reactions and iteratively tweak them to ensure they meet the human needs revealed by the social science observations. By doing this right, organizations can deliver game-changing products and services through applications that are: Cloud-native, which provides the low-cost, accelerated time-to-market and scalability required to serve digital customers. Based on microservices, which makes it easier to develop and deploy new services and functions as needed, and to access the internal and external data sources required to develop new services. (For more on this topic, see our report Overcoming Ongoing Digital Transformational Challenges with a Microservices Architecture. ) Designed to use containers and other modern platforms, such as serverless computing, to make the most efficient use of IT resources, and provide maximum portability across environments to meet cost, performance, scalability and other needs. (For more on this topic, read our white paper Using Containers to More Effectively Manage DevOps Continuous Integration. ) Based on an in-depth understanding of human needs, rather than technical capabilities, so organizations can anticipate and meet customer needs their competitors cannot. (Learn more in our white paper Being Digital Means Being More Human. ) QUICK TAKE Applying Digital Engineering with a Global Vehicle Manufacturer As ride hailing apps tap fleets of self-driving cars to move customers from point A to point B, traditional selling points such as ride, performance and styling could become far less important to consumers. We are helping one global manufacturer remain relevant and generate revenue by meeting the needs of its sports utility vehicle (SUV) owners for adventure, self-fulfillment and increased safety and security. In 2016, ReD Associates conducted foundational research to uncover how SUV owners use their vehicles, as well as the key barriers, life dreams, needs and values they share. In response, we created three MVPs that the manufacturer tested with consumers for two weeks. We also conducted a national survey of SUV owners to understand the commercial potential of each application. 8 Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code

9 The MVP helped customers find the best new events, ideal routes and any equipment required to take part in the activity. In the first area adventure ReD Associates found that customers were being held back by everything from the complexity of scheduling time with family and friends, to the hassles of choosing destinations, making reservations and selecting, finding and learning how to use the needed equipment. We responded with a single application that, according to early feedback, makes it easier to perform these tasks and coordinate schedules. We re now working with the manufacturer to identify the potential for subscription revenue; partner with providers of vacation lodging, equipment and services; and sell data gathered by the application about consumers needs, wants and spending habits to third parties. In the second area personal enrichment ReD Associates discovered that SUV owners wanted to identify interesting nearby activities to break out of their routines, learn new skills and bond with friends and family. In this case, the MVP helped customers find the best new events, ideal routes and any equipment required to take part in the activity. We ve also identified revenue opportunities, such as advertising, sponsorship and revenue sharing with service providers, (i.e., parking garages), as well as the sale of insights about customer needs drawn from their use of the application. The third human need was to better coordinate and track rides, and keep tabs on their children s location. Consumers are already using the MVP to schedule rides for family members, receive notifications when the trip has been completed and track locations. Through the app, the manufacturer is evolving into a business that can solve human problems, such as juggling work and childcare schedules. An added benefit: The app is a less intrusive way to track children s locations than texting. Revenue opportunities include partnerships with outside service providers and location-based advertising, such as a discount for a take-out meal, if a ride has been delayed and the family will not have time to prepare dinner. As security and control is one of the reasons customers buy SUVs, this also increases the perceived value of the vehicle itself. Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code 9

10 By applying these technologies in an Agile development environment that places behavioral scientists alongside developers in quick sprints, businesses can ensure that new applications contain only features that precisely meet human needs. In our experience, this only happens when requirements-gathering and testing phases are not isolated events. In our engagements, researchers work alongside developers to create MVPs that can be quickly evaluated by users, adapted as needed and deployed in production environments to achieve first-mover advantage in emerging spaces (see Figure 3). Insight to Code: Transforming Customer Needs into Digital Solutions Insights Code Refine Deploy Discover customers human (not technical) needs Rapidly prototype solutions Continually iterate new apps Move into production Researchers observe and describe customer interactions with the business s products/ services, identifying unmet human needs. Researchers guide developers, creating MVPs to test how they meet critical human needs. Based on user feedback, the app is enhanced and refined to best meet human needs. The UI is completed, required data links are added, and the solution is deployed. 3 Weeks 2 Weeks 2 Weeks 1 Week Figure 3 ONLY THE BEGINNING No one can predict how tomorrow s consumers will react to future technologies such as self-driving cars, blockchain and virtual reality. The most effective way to meet ongoing competitive challenges and capture market opportunities is to continually understand people s human needs, and quickly deliver applications that meet them. By combining in-depth ethnographic research with ultra-agile development, businesses can: 1. Confidently invest: With the ability to continually validate new ideas with actual human insights, businesses can more confidently choose which new products, applications and services to invest in. 10 Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code

11 2. Eliminate waste: Putting human insights at the center of technology development reduces the development cycles required to tweak code to meet market needs, and eliminates the production of applications that fail to gain customer acceptance. The use of cloud-native technologies speeds time to market, allows businesses to buy only the IT capacity they need and automates costly manual IT management processes. 3. Compete in the digital economy: Applying consumer insights to the creation of production-ready code is the most direct path to competitive advantage in any industry. Applying the Insight to Code method positions businesses to create sustainable competitive advantage, and even create new markets and business models, in today s digital economy. FOOTNOTES 1 For more on Code Halos, visit our website, 2 IDC FutureScape: Worldwide IT Industry 2017 Predictions, IDC, November 2016, Id=US An Executive s Guide to Software Development, McKinsey & Co., February 2017, digital-mckinsey/our-insights/an-executives-guide-to-software-development. ABOUT THE AUTHOR Sowri Santhanakrishnan Senior Vice-President, Head of Digital Engineering Practice, Cognizant Digital Business Sowri Santhanakrishnan is Senior Vice-President at Cognizant Digital Business, heading the company s Digital Engineering Practice. He has 20-plus years of experience building and directing global business and technology operations. In this role, Sowri works with Global 1000 companies to digitally transform their business by combining strategy, technology and industry expertise that enables businesses to improve their services and products, create an omni-channel digital experience, and gain a competitive market advantage across the digital stack: mobile, social, big data, cloud and the Internet of Things. He can be reached at sowris@cognizant.com Digital Engineering: Combining Computer Science with Social Science to Translate Human Insights into Precision Code 11

12 ABOUT COGNIZANT DIGITAL BUSINESS Cognizant Digital Business helps our clients imagine and build the Digital Economy. We do this by bringing together human insight, digital strategy, industry knowledge, design, and new technologies to create new experiences and launch new business models. For more information, please visit or join the conversation on LinkedIn. ABOUT COGNIZANT Cognizant (NASDAQ-100: CTSH) is one of the world s leading professional services companies, transforming clients business, operating and technology models for the digital era. Our unique industry-based, consultative approach helps clients envision, build and run more innovative and efficient businesses. Headquartered in the U.S., Cognizant is ranked 205 on the Fortune 500 and is consistently listed among the most admired companies in the world. Learn how Cognizant helps clients lead with digital at or follow World Headquarters 500 Frank W. Burr Blvd. Teaneck, NJ USA Phone: Fax: Toll Free: European Headquarters 1 Kingdom Street Paddington Central London W2 6BD England Phone: +44 (0) Fax: +44 (0) India Operations Headquarters #5/535 Old Mahabalipuram Road Okkiyam Pettai, Thoraipakkam Chennai, India Phone: +91 (0) Fax: +91 (0) Copyright 2017, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means,electronic, mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other trademarks mentioned herein are the property of their respective owners. TL Codex 3218