The future of enterprise operations
The past two years have been tumultuous for every industry. In fact, the list of enterprise challenges seems like it was ripped from a Hollywood superhero plotline: a global pandemic, surging cybercrime, extreme weather, environmental calamity, the rise of robots and automation, and a tangle of bureaucratic compliance and data regulations that seem to thwart all action. What’s a hero to do?
If you’re Amit Dixit, head of operational excellence at London-based QBE European Operations (one of the world’s largest insurers), you stay focused on customers. “For us,” he says, “the key to success is developing the right technology that fits the needs of our customers and our business, while ensuring that people and technology work alongside each other to deliver the best result for the customer.”
To maintain operational resilience in the face of disruption, QBE has used robotic process automation (RPA) to automate an estimated 30,000 customer claim tasks per week. In a time of great staffing difficulty, the bots enabled the global insurer to save about 50,000 person-hours a year – the equivalent of 25 full-time employees who are then freed up to focus on more high value work – and build a more agile organization for the future.
Increasing resilience in the face of relentless disruption is top of mind for a majority of operations professionals these days. That’s according to Pega’s 2022 “Future of operations” survey of 750 industry leaders across several industries, including financial services, insurance, healthcare, manufacturing, public sector, life sciences, and telecom. Most survey respondents seem to be expecting a bumpy road in the next three to five years as rising automation, cybercrime, environmental sustainability, and government regulatory compliance (GRC) pressures continue to rock their worlds.
“I sense chief operating officers in just about every industry fear what could come next, and they want to be ready for it,” says Pega CTO Don Schuerman. “COVID-19 was just the tip of the iceberg. Most business leaders know more costly financial challenges could be lurking around the corner.”
Companies report that one or more months of disruptions now occur every 3.7 years, according to McKinsey. Over the course of a decade, these issues can add up to losses equaling nearly 45% of one year's profits.
Indeed, organizational disruptions – and the costs associated with them – are becoming more frequent and expensive concerns. Companies report that one or more months of disruptions now occur every 3.7 years, according to McKinsey. Over the course of a decade, these issues can add up to losses equaling nearly 45% of one year’s profits.
Automated technologies, for instance, are seen as one of the main disruptors that organizations will have to address. As technologies like artificial intelligence (AI) and machine learning (ML) become mainstream, respondents see general-purpose jobs disappearing. In their place, they expect more specialized and technically skilled positions to emerge. At the same time, they predict AI and ML will cause operational functions to shrink and, quite possibly, merge into other departments.
Cybercrime is another major disruptor. In 2021, cyberattacks against corporate networks leapt 50% compared to the previous year, according to Check Point Research. Not surprisingly, most Pega survey respondents (59%) ranked cybercrime and fraud as their top challenge, and 43% say it’s their highest priority for future operating models.
Environmental sustainability and corporate responsibility also rose to the top of disruptors, concerning 68% of respondents worldwide. The study suggests investors, shareholders, employees, regulators, and even the general public are likely to put more pressure on organizations to deal with these issues.
Regulatory changes will cause significant bottlenecks in several industries, with insurance and financial services feeling it the most, according to Pega’s survey. Overall, 64% of respondents say they expect the need for greater corporate governance to weigh heavily on operations over the next several years.
To get on top of these disruptors, respondents to the Pega survey expect to embrace entirely new business models. For example, rather than relying on a plethora of tools, technologies, and processes that can assist them in the moment, organizations will look more and more to platforms and other scalable solutions that simplify and set them up for ongoing, long-term, company-wide resilience.
In the next three to five years, such organizational preparedness, according to the Pega survey, will no longer fall solely to an organization’s chief operating officer’s team. Instead, multiple departments will be responsible for enterprise resilience – helping the organization comply with cybersecurity best practices, sustainability and diversity commitments, and GRC.
The makeup of operations teams is also expected to change quite dramatically as part of this, according to the survey. For example, with AI and ML taking over routine and manually intensive jobs, 51% of respondents say future ops professionals will need more specialized skill sets (see: “The rise of the specialist,” page TK). Similarly, 42% say professionals will need to be more tech savvy to make use of important technologies like AI, ML, and RPA, as well as business intelligence and analytics.
Operations departments will look radically different too, respondents say. Many could even disappear. With the need for resilience rising across organizations, 61% of respondents foresee operations, IT, and business strategy becoming more joined at the hip, and 28% think departments will consolidate and merge. As this happens, about 20% of respondents expect operations-type decisions to be made by non-ops leaders as digital technology provides access to organizational and departmental data.
“Around organizational structure, digital transformation has brought the business closer together,” says a financial services operations director who participated in Pega’s survey. “You’ve now got better visibility. Everyone’s working more closely together.”
A huge part of that collaboration will involve organization-wide efforts to deliver differentiated customer experiences. Automated technologies will undoubtedly help with this. But respondents seem to be warning organizations against putting too much stock in AI and ML for these efforts. Instead, they recommend striking a hybrid balance between technology and human touch.
Indeed, Pega’s survey respondents see an opportunity for companies to differentiate by emphasizing their people over and above their cool technology. That would be a big shift. Many companies have been enamored with technologies like AI and ML for the past few years and haven’t been shy about touting those deployments. But respondents say automation should augment human touch – not replace it.
“[Should] operations move towards zero human touchpoints?” asks one healthcare COO from the Pega survey. “For healthcare, the answer is absolutely ‘no.’ But I would say that easily 50% of the traditional healthcare processes can be digitized and need not have that human touch.”
Operational resilience will also need to extend to manufacturers and supply chains, which have been hard-hit by the pandemic. Unable to consistently produce let alone deliver goods over the last several years, manufacturers have all but abandoned the lean, just-in-time manufacturing model, where items were created to meet immediate demand. Now, 54% of survey respondents say they are looking to apply automated technologies to supply chain and logistics operations to head off potential disruption.
“Resilience against disruption is becoming the operative phrase for C-suites in every industry,” says Schuerman. “If the lessons of the global pandemic have taught the business world anything it’s that you’ve got to expect the unexpected – because it will inevitably come your way. Business and ops leaders have to do whatever it takes to build agility and remain vigilant against the unknown.”