Move Away from Your On-premise Business, and Embrace Digital Disruption

By Bob Cecil, Principal, Shared Services and Outsourcing Advisory, KPMG LLP

Modern businesses are wasting no time to move up to a higher level of value and performance through the use of digital technologies. The global tech industry has witnessed a long period of relative stability. Now, however, business model disruption is pervasive. The market is in a state of rapid evolution, with companies competing against each other to win new customer base. Organizations have cut down costs on traditional business solutions to deploy a new service based on innovation and customer experience.

The more advanced enterprise and forward-thinking business service organizations are using Global Business Services (GBS) delivery models with “As-a-Service” attributes to respond to the demands of their customers, and to address four digital disruptors that are driving significant transformation in how business services are delivered.

      

• Robotics and cognitive automation are disrupting traditional offshore outsourcing and captive models by displacing cheap labor with even cheaper, service quality-improving software.

Example: A major telecom provider has replaced more than 1,000 full-time employees (FTEs) with RPA software “robots” over a six-month trial period. Initial projections suggest that each robot can perform activities equivalent to three FTEs.

• Cloud and companion integration technologies are breaking apart the traditional on-premise ERP stack, and augmenting existing systems of record with cloud-based systems of engagement.

Cloud deployments can dramatically reduce the time to install, upgrade and customize processes and software, reducing overall operating expenses and enabling reinvestment of cost savings to support growth. Cloud also offers scalability, speed to market and centralization to coordinate and manage applications across various devices.

Example: Through implementation of multiple cloud-based applications for membership subscription and sub-ledger tasks, a leading motor club in North America has significantly reduced finance and accounting costs, and decreased reliance on legacy platforms through solutions that are more easily configurable, support greater business process consistency, and ensure faster implementation timeframes.

• Data and analytics provide improved services, insights, outcomes and solutions. This capability can also be used with business intelligence technology to develop virtual data warehouses, advanced visualizations and other services to meet increased competition and growing customer demands.

Example: A global financial services institution requires a quarter of its IT resources to focus on data issues, including running up to 30,000 experiments a year to test the success of new products and programs. This has resulted in an 87 percent reduction in customer retention costs and an 83 percent reduction in the cost of acquiring new customers.

• Social and mobile technologies enhance an enterprise services organization’s engagement with its customers and partners, e.g., a digital storefront developed through design thinking to mimic the way customers increasingly use smart phone and tablets to conduct work.

Example: A computer storage and data management company has leveraged mobile applications and social media to completely revamp its employee on boarding process and create an improved mobile digital experience. This customizable solution has helped personalize the on boarding experience, removed silos between different functions such as IT and HR, and improved communication and services for new hires.

The impact of these disruptors will continue to grow, as each one is integrated and used in conjunction with the others. Services buyers are progressively waking up to the enhanced business services and services delivery benefits they enable. Providers that fail to keep pace, clinging to antiquated labor-based offshore and legacy technology models, will quickly become irrelevant.