IPSoft's Amelia

NelsonHall recently attended the IPSoft analyst event in New York, with a view to understanding the extent to which the company’s shift into customer service has succeeded. It immediately became clear that the company is accelerating its major shift in focus of recent years from autonomics to cognitive agents. While IPSoft began in autonomics in support of IT infrastructure management, and many Amelia implementations are still in support of IT service activities, IPSoft now clearly has its sights on the major prize in the customer service (and sales) world, positioning its Amelia cognitive agent as “The Most Human AI” with much greater range of emotional, contextual, and process “intelligence” than the perceived competition in the form of chatbots.

Key Role for AI is Human Augmentation Not Human Replacement

IPSoft was at pains to point out that AI was the future and that human augmentation was a major trend that would separate the winners from the losers in the corporate world. In demonstrating the point that AI was the future, Nick Bostrom from the Future of Humanity Institute at Oxford University discussed the result of a survey of ~300 AI experts to identify the point at which high-level machine intelligence, (the point at which unaided machines can accomplish any task better and more cheaply than human workers) would be achieved. This survey concluded that there was a 50% probability that this will be achieved within 50-years and a 25% probability that it will happen within 20-25 years.

On a more conciliatory basis, Dr. Michael Chui suggested that AI was essential to maintaining living standards and that the key role for AI for the foreseeable future was human augmentation rather than human replacement.

According to McKinsey Global Institute (MGI), “about half the activities people are paid almost $15tn in wages to do in the global economy have the potential to be automated by adapting currently demonstrated technology. While less than 5% of all occupations can be automated entirely, about 60% of all occupations have at least 30% of constituent activities that could be automated. More occupations will change than can be automated away.”

McKinsey argues that automation is essential to maintain GDP growth and standards of living, estimating that of the 3.5% per annum GDP growth achieved on average over the past 50 years, half was derived from productivity growth and half from growth in employment. Assuming that growth in employment will largely cease as populations age over the next 50 years, then an increase/approximate doubling in automation-driven productivity growth will be required to maintain the historical levels of GDP growth.

Providing Empathetic Conversations Rather than Transactions

The guiding principles behind Amelia are to provide conversations rather than transactions, to understand customer intent, and to deliver a to-the-point and empathetic response. Overall, IPSoft is looking to position Amelia as a cognitive agent at the intersection of systems of engagement, systems of record, and data platforms, incorporating:

• Conversational intelligence, encompassing intelligent understanding, empathetic response, & multi-channel handling. IPSoft has recently added additional machine learning and DEEP learning
• Advanced analytics, encompassing performance analytics, decision intelligence, and data visualization
• Smart workflow, encompassing dynamic process execution and integration hub, with UI integration (planned)
• Experience management, to ensure contextual awareness
• Supervised automated learning, encompassing automated training, observational learning, and industry solutions.

For example, it is possible to upload documents and SOPs in support of automated training and Amelia will advise on the best machine learning algorithms to be used. Using supervised learning, Amelia submits what it has learned to the SME for approval but only uses this new knowledge once approved by the SME to ensure high levels of compliance. Amelia also learns from escalations to agents and automated consolidation of these new learnings will be built into the next Amelia release.

IPSoft is continuing to develop an even greater range of algorithms by partnering with universities. These algorithms remain usable across all organizations with the introduction of customer data to these algorithms leading to the development of client-specific customer service models.

Easier to Teach Amelia Banking Processes than a New Language

An excellent example of the use of Amelia was discussed by a Nordic bank. The bank initially applied Amelia to its internal service desk, starting with a pilot in support of 600 employees in 2016 covering activities such as unlocking accounts and password guidance, before rolling out to 15,000 employees in Spring 2017. This was followed by the application of Amelia to customer service with a silent launch taking place in December 2016 and Amelia being rolled out in support of branch office information, booking meetings, banking terms, products and services, mobile bank IDs, and account opening. The bank had considered using offshore personnel but chose Amelia based on its potential ability to roll-out in a new country in a month and its 24x7 availability. Amelia is currently used by ~300 customers per day over chat.

The bank was open about its use of AI with its customers on its website, indicating that its new chat stream was based on the use of “digital employees with artificial intelligence”. The bank found that while customers, in general, seemed pleased to interact via chat, less expectedly, use of AI led to totally new customer behaviors, both good and bad, with some people who hated the idea of use of robots acting much more aggressively. On the other hand, Amelia was highly successful with individuals who were reluctant to phone the bank or visit a bank branch.

Key lessons learnt by the bank included:

• The high level of acceptance of Amelia by customer service personnel who regarded Amelia as taking away boring “Monday-morning” tasks allowing them to focus on more meaningful conversations with customers rather than threatening their livelihoods
• It was easier than expected to teach Amelia the banking processes, but harder than expected to convert to a new language such as Swedish, with the bank perceiving that each language is essentially a different way of thinking. Amelia was perceived to be optimized for English and converting Amelia to Swedish took three months, while training Amelia on the simple banking processes took a matter of days.

Amelia is now successfully handling ~90% of requests, though ~30% of these are intentionally routed to a live agent for example for deeper mortgage discussions.

Amelia Avatar Remains Key to IPSoft Branding

While the blonde, blue-eyed nature of the Amelia avatar is likely to be highly acceptable in Sweden, this stereotype could potentially be less acceptable elsewhere and the tradition within contact centers is to try to match the nature of the agent with that of the customer. While Amelia is clearly designed to be highly empathetic in terms of language, it may be more discordant in terms of appearance.

However, the appearance of the Amelia avatar remains key to IPSoft’s branding. While IPSoft is redesigning the Amelia avatar to capture greater hand and arm movements for greater empathy, and some adaptation of clothing and hairstyle are permitted to reflect brand value, IPSoft is not currently prepared to allow fundamental changes to gender or skin color, or to allow multiple avatars to be used to develop empathy with individual customers. This might need to change as IPSoft becomes more confident of its brand and the market for cognitive agents matures.

Partnering with Consultancies to Develop Horizontal & Vertical IP

At present, Amelia is largely vanilla in flavor and the bulk of implementations are being conducted by IPSoft itself. IPSoft estimates that Amelia has been used in 50 instances, covering ~60% of customer requests with ~90% accuracy and, overall, IPSoft estimates that it takes 6-months to assist an organization to build an Amelia competence in-house, 9-days to go-live, and 6-9 months to scale up from an initial implementation.

Accordingly, it is key to the future of IPSoft that Amelia can develop a wide range of semi-productized horizontal and vertical use cases and that partners can be trained and leveraged to handle the bulk of implementations.

At present, IPSoft estimates that its revenues are 70:30 services:product, with product revenues growing faster than services revenues. While IPSoft is currently carrying out the majority (~60%) of Amelia implementations itself, it is increasingly looking to partner with the major consultancies such as Accenture, Deloittes, PwC, and KPMG to build baseline Amelia products around horizontals and industry-specific processes, for example, working with Deloittes in HR. In addition, IPSoft has partnered with NTT in Japan, with NTT offering a Japanese-language, cloud-based virtual assistant, COTOHA.

IPSoft’s pricing mechanisms consist of:

• A fixed price per PoC development
• Production environments: charge for implementation followed by a price per transaction.

While Amelia is available in both cloud and onsite, IPSoft perceives that the major opportunities for its partners lie in highly integrated implementations behind the client firewall.

In conclusion, IPSoft is now making considerable investments in developing Amelia with the aim of becoming the leading cognitive agent for customer service and the high emphasis on “conversations and empathic responses” differentiates the software from more transactionally-focused cognitive software.

Nonetheless, it is early days for Amelia. The company is beginning to increase its emphasis on third-party partnerships which will be key to scaling adoption of the software. However, these are currently focused around the major consultancies. This is fine while cognitive agents are in the first throes of adoption but downstream IPSoft is likely to need the support of, and partnerships with the major contact center outsourcers who currently control around a third of customer service spend and who are influential in assisting organizations in their digital customer service transformations.

HCL is offering robotics both in the form of robotics software plus operations to its new & existing BPO contracts. HCL is typically deploying robotics in two forms:

• Virtualized workforce, directly replacing the agent with robotics (~70% of current activity by value). Here HCL estimates that 50%-70% efficiency gains are achievable

• Assisted decisioning, empowering the agent by providing them with additional information through non-invasive techniques (~30% of current activity by value) and achieving estimated efficiency gains of 20%-30%.

In general HCL is aiming to co-locate its robots with client systems to avoid the wait times inherent in robots accessing client systems using a surface integration techniques a through virtual desktop infrastructure (VDI).

The principal sectors currently being targeted by HCL for RPA are retail banking, investment banking, insurance, and telecoms, with the company also planning to apply robotics to the utilities sector, supply chain management, and finance & accounting. Overall, origination support is a major theme in the application of RPA by HCL. In addition, the company has applied robotics to track-and-trace in support of the logistics sector.

HCL currently has ~10 RPA implementations & pilots underway. Examples of where RPA has been applied by HCL include:

Account Opening for a European Bank

Prior to the application of robotics, the agent, having checked that the application data was complete and that the application was eligible, was required to enter duplicate application data separately into the bank’s money laundering and account opening systems,.

The implementation of robotics still requires agents to handle AML and checklist verification manually but applying automated data entry by ToscanaBot robots and presentation layer integration thereafter removed the subsequent data entry by agents leading to a refocusing of the agents on QC-related activities and an overall reduction of 42% in agent headcount.

Change of Address for a European Bank

This bank’s “change of address” process involved a number of mandatory checks including field checks and signature verification. However, it then potentially involved the agent in accessing a range of systems covering multiple banking products such as savings accounts, credit card, mortgage, and loan. This led to a lengthy agent training cycle since the agent needed to be familiar with each system supporting each of the full range of products offered by the bank.

While as in the first example, the agent is still required to perform the initial verification checks on the customer, robotics is then used to poll the various systems and present the relevant information to the agent. Once the agent authorizes, the robot now updates the systems. This has led to a 54% reduction in agent headcount.

Financial Reporting for a Large U.S. Bank

HCL has carried out a pilot with a large U.S. bank to address the challenges inherent to the financial reporting process. Through this pilot HCL proposes to replace manual activities covering data acquisition, data validation, and preparation of the financial reporting templates. In this pilot HCL estimates that it has achieved 54% reduction in the human effort and double digit reduction in the error rates. FTEs are now largely responsible for making the manual adjustments (subject to auditor, client and fund specs) and reviewing the Robot output instead of the usual maker/checker activities.

Fund Accounting for U.S. Bank

HCL has also carried out a pilot to address fund accounting processes with a U.S. bank. The principle was again to concentrate the agent activity on review and exception handling and to use robots for data input where possible. Here once RPA was implemented, following the introduction of workflow to facilitate hand-offs between agents and robots, the following steps were handled by agents:

• Upload investor transactions

• Review cash reconciliation

• Review monetary value reconciliation

• Review net asset value package

Robotics now handled the following steps:

• Book trade & non-trade

• Prepare cash reconciliation

• Price securities

• Prepare monetary value reconciliation

• Book accruals

• Prepare net asset value package.

This shows the potential to automate 60% of those activities formerly handled by agents.

In addition, HCL has implemented assisted decisioning for a telecoms operator, with robots accessing information from three systems: call manager, knowledge management, & billing, and in support of order management for a telecoms operator. In the latter case, order management data entry required knowledge of a different system for each region, again making agent training a significant issue for the company.

HCL’s robotic automation software is branded ToscanaBot, and as an integral part of the Toscana Suite which also includes HCL’s BPM/workflow software.

ToscanaBot is based on partner robotic software. The current partners used are Blue Prism and jacada, with in addition Automation Anywhere currently being onboarded. In the future, HCL plans to additionally partner with IPsoft and Celaton as the market becomes more sophisticated and increasingly embraces artificial cognition within RPA.

HCL aims to differentiate its robotics capability by:

• Combining robotics within a portfolio of transformational tools including for example ICR/OCR, BPM, text mining & analytics, and machine learning. In particular, HCL is looking to incorporate more intelligence into its robotics offerings, including enhancing its ability to convert non-digital documents to digital format and convert unstructured data to structured data

• Process and domain knowledge, HCL has so far largely targeted specialist industry-specific processes requiring significant domain knowledge rather than horizontal services and is working on creating add-ons for specific core software applications/ERPs, to facilitate integration between ToscanaBot and these core domain-specific applications

• Creation of IP on top of partner software products.

Within BPO contracts, HCL is aiming to offer outcome-based pricing in conjunction with robotics, but in some instances the company has just sold the tools to the client organization or provided robotics as part of a wider ADM service.

Overall, HCL may be lagging behind some of its competitors in the application of RPA to horizontal processes such as F&A, though HCL is applying RPA to its own in-house finance & accounting process, but is at the forefront in the application of RPA to industry-specific processes where the company has strong domain knowledge in areas such as banking and supply chain management.

The EFaaS service has arisen from HCL’s Next Gen BPO tenets, namely domain orientation, innovation and improvement focused, based on output/outcome/flexible constructs, utilizing HCL’s Integrated Global Delivery Model (IGDM), and addressing risk and compliance. In particular, the EFaaS service aims to deliver business function services as utilities by undertaking elements of business operations transformation, IT standardization (e.g. SAP/Oracle transformation, unified chart of accounts, reduced reporting platforms, data warehouses etc.), platform transformation, and infrastructure consolidation and to achieve 25%-35% cost reduction within each utility. Accordingly, HCL is:

• Looking to create domain-specific global shared centers
• Use business outcome based constructs to put “skin in the game” in transforming the organization’s enterprise function
• Focusing on enhancing risk and compliance and HCL will engage with global accounting firms for SAS compliance
• In addition to cost reduction benefits, the carve-out of a business function utility aims to deliver increased business agility, enhanced controls, and faster scalability.

HCL has a five-step approach, typically spread over 24-30 months, to implementing EFaaS, namely:

• Due diligence and risk assessment, in conjunction with a Big 4 consulting partner, including developing process maps, integrated IT-BPO roadmap, co-governance model
• Process consolidation, including functional alignment, adjusting grade mix and location mix, and shared services utility creation
• Commercialization, including market assessment, asset monetization, and revenue sharing arrangement
• Carve out and transition, including carve out, transition, rebadging, and organization change management
• Platform transformation, including creating common data model, data & platform consolidation, new platform implementation and analytics.

HCL is working with global strategic partners in the development of these utilities, with partners assisting in:

• Benchmarking with world class enterprise functions
• Cost/benefits evaluation
• Performance and change management frameworks
• Stakeholder assessments and leadership alignment
• Communications strategy.

HCL initially targeted a number of major banks, all of which are looking to achieve multi-billion dollars of cost take-out from their operations. In particular, these banks typically face the following issues:

• How to carve-out non-core business functions
• How to boost their controls and put in strong compliance & control environment.
• How to manage complex IT environments typically involving use of the major ERPs plus a number of regulatory point solutions.

HCL has so far signed two contracts for EFaaS, both in the banking sector. In HCL’s initial contract for EFaaS, the contract scope covered four principal business processes within the client organization:

• External reporting, for example to the FCA and Bank of England
• Management reporting
• Cost utility, covering allocations/adjustments/accruals
• Regional and Group reporting & consolidation under U.S. GAAP, IFRS, U.K., GAAP and multiple local GAAPs.

Across these four process areas, HCL undertook a multi-year contract, undertaking to take out 35% of cost, while simplifying the IT environment with no up-front IT investment required by the client organization. In addition, the client organization was looking to establish a private utility or utilities across these functions that could then be taken to wider banking organizations.

In response, HCL established a private utility for the client organization across all four of these process areas and identified external reporting as the area which could be most readily replicated and taken to market. In addition, the process knowledge but not the technology aspects of the “cost utility” processes could be replicated, whereas management reporting is typically very specific to each bank and can’t be readily replicated. Accordingly, while private utilities have been established for the initial banking client organization across all four target process areas, only external reporting is being commercialized to other organizations at this stage.

Process improvement and service delivery location shifts have been made across all four process areas. For example, prior to the contract with HCL, 60% of the reporting was done by the bank in Excel. HCL has standardized much of this reporting using various report writing tools. In addition, HCL has implemented workflow in support of the close process, enabling the life-cycle of the close process to be established as an online tool and increasing transparency on a global basis.

Within the external reporting function, the approach taken by HCL has been to use Axiom software to establish and pre-populate templates for daily, monthly, and quarterly external reporting, extracting the appropriate data from SAP and Oracle ERPs.

In terms of delivery, HCL is creating global hubs in India (~80% of activity) with regional centers in the U.S. in Cary and in Europe in Krakow.  HCL has also put in place training in support of local country regulations, for example the differences between U.S. GAAP and U.K. GAAP.

HCL is continuing to take EFaaS to market by targeting major banking and insurance firms, initially approaching existing accounts. In terms of geographies, HCL is selectively targeting major banks and insurers in U.S., U.K., and Continental Europe.

The banks and insurers are expected to retain their existing ERPs. However, HCL perceives that it can assist banks and insurers in adoption of best-in-class chart-of-accounts design and governance and best practices around data management and simplifying the various instances of ERPs.

In general, within its EFaaS offering, HCL is prepared to fund projects for banks and insurers that involve cost take-out and where HCL can take fees downstream based on criteria where HCL has control of the outcomes.

HCL perceives “speed of replication” to be a key differentiator of the EFaaS approach, and the EFaaS framework initially used has now been replicated for another banking institution in support of their finance operations and external reporting processes.

This service is a timely response to the needs of capital markets firms in particular, that have been seeking to take considerable costs out of their operations and to carve-out and commercialize non-core functions into separate third-party-owned utilities. It is likely that capital markets firms will carve-out a relatively large number of narrowly-focused utilities with some of these being successfully commercialized by third-parties. The retail banks are likely to follow this pattern subsequently, though probably to a lesser extent than capital markets firms.

In addition to Finance as an enterprise function, HCL’s EFaaS model will be subsequently developed to target other enterprise functions such as procurement, HR, risk & compliance, legal, and marketing functions.

1. BPO will increasingly contribute to the “C-level” vision and not just fine tune operations
2. BPO will increasingly morph into “business services”
3. BPO governance will become more partnership-oriented as BPO is incorporated within client Global Business Services organizations
4. BPO will necessitate wider country coverage
5. Cost will remain “king” with pricing becoming more transactional in nature
6. Vendors will build labor arbitrage within labor arbitrage
7. Automation be “front-of-mind” with buy-side organizations
8. Analytics will increasingly address business insight as well as process improvement
9. Web chat and social media will continue to increase in importance in support of CSAT and revenue uplift
10. There will be a resurgence in emphasis on front- and middle-office BPO.

The principal trend for BPO in 2014 is the need to move beyond addressing short-term process excellence in the narrow context of the process outsourced and to provide a vision and a roadmap, and ongoing execution, in a wider business context. The need for external process expertise has always been a key driver for BPO as organizations have sought process excellence and standardization alongside achievement of upper quartile cost performance. However, this need for external expertise has now moved beyond a short-term view of improved global process models, with organizations expecting vendors to lead with a long-term vision of how the outsourced process, whether finance & accounting, or HR, or elements of supply chain management, or customer service, will contribute to the wider goals of the overall business within their industry.

For example, recruitment process outsourcing should demonstrate how it can contribute to the wider talent management goals of the organization including succession planning and performance management. Similarly F&A BPO should, for example, demonstrate how it contributes to more effective allocation of capital to value-creating opportunities or shareholder value creation. Supply chain management BPO should demonstrate, for example, how it contributes to increased customer retention and cross-selling to existing customers as well as improving joint innovation with suppliers.

This need to demonstrate to ‘C-level executives’ that they are being taken on a transformational journey that transcends the immediate process or sub-process being outsourced is also leading to a change in the service mix within BPO, with an increasing need for consulting and systems integration skills to be deployed in conjunction with operational delivery. Nonetheless, these consulting skills need to be routed in the capabilities of “operational consultants” with shop-floor level domain expertise and be less top-down than those found in traditional consulting organizations.

Successful BPO has always been about partnership and the ability of the client and service provider to work together. Nonetheless, this has traditionally remained something of an arm’s length relationship. This is now changing as major organizations increasingly establish internal Global Business Services organizations. Indeed one NelsonHall survey indicates that the proportion of major organizations implementing GBS will double between 2014 and 2016. Besides assisting in cost reduction, the adoption of GBS operating structures will lead to improved control and change management and be more responsive to business change. In particular, GBS operating structures will lead to improved communication and more collaborative working, with the majority of major organizations adopting GBS also adopting a mixed economy for service delivery. Consequently, it is highly important for BPO vendors to adjust their governance models to assist organizations to achieve a step change in their KPIs by contributing to the process vision within a GBS environment.

The requirement for BPO country coverage is continuing to expand. Even where processes such as finance and accounting or HR have been widely standardized on a regional basis, there have typically been a wide range of countries that were too small to service within the framework used for the client’s mainstream countries. These have traditionally been served by specialist or local vendors, often acting as subcontractors. However, the more mature BPO adopters have now moved beyond the standardization of processes in their major countries and are seeking to apply standardized processes to the next level of geographies. This is increasingly being supported through SaaS-enabled services using software such as NetSuite and Microsoft Dynamics. However slimmed down processes and software are insufficient in themselves, vendors also need to demonstrate that they are “a safe pair of hands” and have thorough knowledge of the compliance requirements for each specific country.

Despite all the discussion of BPO being about wider business value, and it is, the ultimate metric for many BPO processes remains cost reduction, and many buyers will continue to judge vendors on their ability to deliver year-on-year cost reduction. At the same time, many organizations want to move from static fixed price and per FTE pricing and these will increasingly transition to a transactional pricing structure. While organizations are increasingly talking about outcome-based pricing, the majority of the reality behind “outcome-based pricing”, once these models are deconstructed, will in 2014, as previously, continue to be a variant on transaction-based pricing.

Notwithstanding increasing use of automation and all the talk of non-linear costs and pricing, labor-arbitrage will continue to deliver the bulk of cost savings in 2014. Accordingly, while considerable marketing will be geared to automation, it will also be important for vendors to build labor-arbitrage into their existing labor arbitrage and continue to develop an n-tier location portfolio incorporating both lower cost onshore locations and lower cost offshore locations into their global delivery models. And these global delivery models must incorporate seamless interoperability and a strong business continuity component across centers.

Nonetheless, with many organizations having already derived considerable cost benefit from low cost locations, buy-side organizations are now placing a higher than ever emphasis on process automation. While fears of wage inflation and unfavourable and volatile exchange rates have receded for the time being, buyers do worry about these factors and view automation as a means of risk mitigation against both these factors and staff turnover. Accordingly in 2014, buyers will increasingly prefer an automated approach over people-based service delivery. Indeed, new technologies such as robotics are increasing the perception that vendors should be able to help organizations to automate even if the means of automation is frequently unknown to their clients.

In 2014, the primary role of analytics will remain in support of process fine-tuning. However, analytics will increasingly provide wider business insight into customer and supplier behaviour and not just process optimization support.

In customer service, web chat has been the fastest growing channel in 2012 and 2013 and this will continue in 2014, with the timely and informal nature of the channel lending it, if not to cost reduction, then definitely to enhanced CSAT and increased sales in support of online commerce. Social media has so far been a minor part of customer service, principally being used for offline customer insight and some brand protection. However, social media agents are increasingly being used in support of sales in specialist areas of the retail industry and in 2014, the usage of social media agents will increase in support of sales outreach in a wider range of industries.

Overall, the adoption of BPO will accelerate in 2014. BPO has been through a period of relatively low growth during the downturn, with organizations unwilling to commit in a period of economic uncertainty. However, as demonstrated by NelsonHall’s quarterly BPO Index, the level of BPO contract activity has steadily built during 2013, and BPO is entering 2014 with strong activity in Europe, growing activity in “growth markets” and some resurgence in the U.S. In particular, resurgence in the financial services sector, with capital markets firms increasingly looking for creative approaches from BPO vendors and contract activity once again increasing in retail banking, is driving a renewed focus on industry-specific BPO. This trend is being reinforced by increased emphasis on supply chain support within the manufacturing sector.

This might sound like the traditional IT-led role of consulting and systems integration. However, while the desired goals may be broadly the same, there is a fundamental difference in the background and approach of the “consultants” involved. Traditional consulting and systems integration was always strong on “vision” but often had inadequate understanding of operations at the agent level and tended to place IT ahead of process with a consequently high failure rate. Conversely, traditional BPO delivered a high capability to incrementally improve existing processes and deliver relatively narrow process excellence but typically lacked the vision to achieve strategic business change.

The emerging expectation of BPO is that it will finally combine these two virtues, with “operationally-oriented” consultants bringing both a knowledge of existing processes and current process excellence together with a vision of how future process models can lead to a step change in key business metrics and performance. In the short-term, complementing this longer-term process vision, organizations are additionally looking for one-off sub-process improvements led by process and analytics consultants. Accordingly the level of consultancy within BPO engagements will increase significantly but using consultants well-grounded in operations and process analytics to implement global process models, to deliver sub-process reengineering, and to support the longer-term business vision.

The level of IT-related delivery within BPO will also increase. Buy-side organizations are now placing a much greater emphasis on eliminating use of people altogether, with automated processes rather than people-based processes being seen as delivering greater long-term cost certainty and reduced operational risk. This renewed emphasis on automation will accelerate the deployment of vendor and third-party tools around client core systems. There is a particularly high emphasis on using these tools to facilitate use of mobile and digital channels and analytics, and in 2014 a high proportion of these tools will be hosted by the vendor, even if typically still in single instance rather than multi-client mode, leading to more rapid adoption. In addition, there are increasing opportunities to utilize application management services to hasten modifications to client ERP and core systems to hasten process change.

Accordingly, BPO has now come full circle, moving from being an operational adjunct to consulting & systems integration and IT outsourcing services led by a high level business vision, to being the operational vision increasingly supported by consulting & systems integration and IT outsourcing services. In commercial terms for vendors, this means that consulting & systems integration and IT outsourcing are now necessary adjuncts to protect BPO revenues, instead of BPO being the vehicle which helped to protect consulting & systems integration and IT outsourcing revenues as in the past.