In part one of this discussion, Alsbridge Managing Director Bill Huber spoke with Paul Burton, Senior VP and Head of Analytics and Research at Genpact, about how the growing use of analytics is redefining Business Process Management. Here’s a continuation of their conversation.
BH: What are examples of how analytics is changing BPM?
PB: BPO is outsourcing which grew up 15-20 years ago for arbitrage reasons. The emphasis is shifting to process as a service, which has nothing to do with captives or rebadging. It is more of a technology and analytics focus, to make it smarter to deliver the same service with less, but having the same group of people. Customers are coming to ask for capabilities. The cultural issue is that clients still expect to save money, even if the provider is delivering new capabilities. In customers’ minds, taking people out of the process should mean freeing up resources to allow for the addition of capabilities. They expect more for less, and not more for more.
The biggest thing is data. Clients have disparate data systems, CRM, back office banking, GL, finance, and sales. None of them are ever fully integrated. The notion of the 90s was building an enterprise data warehouse, but they never really worked. The reason was that nothing was ever static, and changes to the system were difficult to implement. The idea now is to leave the source systems alone, as they are what they are. The new thing which is important is to simply virtualize the data from multiple systems and look at it in a single view, which enables the analyst to query the data for whatever purpose needed to run a report or produce a visualization. The analyst will pull the query as often as needed. These days, compute power is cheap, and network is cheap. Data virtualization technologies are allowing you to pull together the data which used to be hard wired into the data warehouse. Now analytics can be done near real time.
BH: Can you speak to specific impacts of analytics in vertical processes?
PB: In banking, risk is the big issue, with the need for stress testing, and so forth to satisfy the regulators. Doing the model isn’t good enough. Banks need to produce the model and let a third party look at it and then refine the model. In low margin businesses such as CPG and retail, customer centricity is king. Margins are low, so analytics enables you to build scale. In businesses such as high tech and manufacturing, asset optimization is critical. Analytical insights help to predict, mitigate and optimize repair and warranty costs. For technology companies, manufacturers, airlines, and oil fields, asset optimization is huge. It enables these companies to reduces reserves for product liability issues and frees up cash reserves from balance sheets.
BH: How should clients think about the business case for analytics?
PB: Clients need to focus on how analytics will enable a culture change. It’s not sufficient to do some neat math tricks, and it can’t be based on a one-time result. Analytics need to be embedded into business process so results are continuous. This kind of culture change requires top down support, with C-level executives driving the use of analytics. The evidence is out there to support the importance of analytics. The problem is that companies have been spending money and not seeing the expected returns. The only way to spend money smartly is to change the culture so that you are realizing the benefits that you are investing in.
There are some similarities to when companies implemented ERPs. When companies simply automated ineffective processes, they spent a lot of money with limited rewards. Once they began changing the process, the software became easier to implement and companies started getting returns. The same thing applies to analytics.
BH: How can advisors such as Alsbridge help to enable more value to buyers of analytics?
PB: Advisors need to develop a view of the world that emphasizes the criticality of culture change. When that is integrated into the advisory services, advisors can play a huge role.
BH: What keeps you up at night?
PB: Not having the right skills early on. The math and analytics are easy. It’s the domain skills and business savvy to understand the industry and define the problems that are critical. The other thing that keeps me up is missing a big shift in the industry. Change is constant, and you need to always be aware of new innovations occurring.
BH: Thank you very much!