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EMBEDDING DIGITAL INTELLIGENCE IN OPERATIONS

lookdeeper@exlservice.com

Sumit TanejaVP and Global Lead of EXLerator Framework, EXL

Written by

September 18, 2018

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Overview

Digital transformation is one of the most pressing issues facing companies today. While many businesses have begun transforming, few have achieved significant outcomes from digital. EXL’s research found that only 33% of organizations state they are achieving significant outcomes from transformation. Considering that digital leaders are 45% more likely to report market share advantages and nearly 40% more likely to report revenue growth of more than 10% in the past two years, this gap between digital expectations and results can be concerning.

Successful digital transformation is becoming more important due to a disruptive and complex business environment. New firms are obscuring conventional industry norms and challenging established market positions. Now, organizations aiming to drive better end user experiences and outcomes must embed digital intelligence into their operations. Organizations must make fundamental shift s in their transformation eff orts

by transcending legacy industry boundaries to address emerging challenges.

Why Digital Transformation Eff orts Fail?

Successful digital transformation depends on looking beyond making surface level changes to the way a company interacts with its customers. EXL partnered with Harvard Business Review Analytics Services to survey 800 global executives about why digital transformations fails. By taking these pitfalls into account, companies can be better positioned for digital transformation success. The top three reasons why transformation eff orts fail include:

• A siloed mentality

• Insuff icient resources

• A lack of internal expertise

It can be tempting to focus on transforming the most evident opportunities, such as surface-level customer touch points. 67% of companies state that communicating with customers across their preferred channels is their

Digital transformation does not just involve technology-far from it! It is rather a continuing process of changing the way organizations do business. It calls for committed investment in the right talent and skills, upgrading legacy IT systems, a robust program management mechanism, good project governance, eff ective change management, and ongoing monitoring and intervention from topline leadership. It is also critical for transformation strategists to aim and transform at all levels rather than simply the tip of the iceberg, meaning the most evident customer touch points and pain points.

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requires integrating the need for transformation into an organization’s corporate culture and devoting suff icient internal resources to the transformation agenda. The failure to address these two areas is responsible for approximately 70% of transformation failures.

Designing an Eff ective Digital Transformation Strategy to Enhance Customer Experience

A good customer experience breeds customer loyalty. Improving customer experience takes a well-rounded, customer-centric, digital transformation strategy. When addressing customer experience, this strategy should focus on the following five components:

1. Customer Perspective: Customers form their impression about a service through multiple interactions with a service provider. If one of such interactions or elements feels bad, the entire experience might be rated as bad by the customer. Providing a seamless customer experience thus begins with keeping customer’s perspective at the center of the company’s structure.

“ You’ve got to start with the customer experience and work back toward the technology, not the other way around.” — Steve Jobs

2. Data-Driven, Behavioral Engineering Models: Data-driven behavioral engineering models can unpack the existing risk culture and its implications as part of a transition to a more customer-centric and innovative culture. This can be ensured by setting up metrics and targets that steer cross-functional collaboration at all levels of the company. However, selecting the right metrics is critical. Digital leaders are able to state they can accurately track outcomes 20-30% more than other companies.

main reason for transforming. However, this can cause companies to miss key opportunities below the surface level. Going deeper requires responding to the insights a company gains through monitoring and analyzing its interactions with customers.

The majority of the most refined digital solutions are targeted towards customer touch points and pain points at the deflection, elimination, digital intake or work management levels.

This invariably results in skewed transformation strategies aiming to address only the tip of the iceberg.

Companies must have a well-rounded digital transformation strategy that digs deep to address subsequent layers in the customer engagement process. In addition to transforming customer pain points visible at the surface level, such a strategy should also look at eliminating the need of the interaction address challenges at the operational level through concerted solutions. This

Customer TouchPoints

Operations

Traditional Digital Transformation

Most Transformation Strategies Target Only the Tip of the Iceberg

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end, because digital transformation that lacks context can’t anticipate customer needs, automate complex processes, or future-proof businesses. Organizations with open, creative minds are the ones that will be successful. This means that a business needs to either disrupt or be disrupted. Our research with Harvard Business Review Analytics Services shows that digital leaders are 45% more likely to report market share advantages, and nearly 40% more likely to report revenue growth of more than 10% in the past two years.

What separates digital leaders from their competition? The answer is digital Intelligence.

Digital Intelligence: Playing to Win

Although there is plenty of discussion in the industry around digital technology, what is truly needed to drive a successful transformation exercise is off ering appropriate interactions to customers. This essentially calls for a smart blend of deep domain understanding, analytics and technology.

3. Deploying Advanced Digital Technology: Technologies like machine learning, chatbots, and digital platforms are changing consumer dynamics. Businesses are already moving on the opportunities these technologies present, with almost one-third of companies planning on implementing AI by the end of 2018. These devices and programs off er businesses new ways to understand the voice of customers and unlock powerful insights. Finding the right ways to orchestrate technology can help break down silos, enable customer-centric value, and boost customer sentiments across touch points.

4. Building Robust Governance Mechanism: A rigorous governance mechanism should leverage technology for transparency. It should act as a one-stop shop for relevant reports and outcomes. Data-based decision making is to be encouraged, as well as collaboration between different stakeholders. Finally, effective communication with right information at the right time work magic.

“ The purpose of business is to create and keep customers.” — Peter Drucker

5. Developing Digital Talent: Talent holds the key for digital transformation. A lack of internal expertise was identified as the reason for digital transformation failure 43% of the time. Hence, coaching and providing feedback to managers and employees on customer-centric behaviors is an important step. It may be necessary to create an overarching knowledge management framework that explains key principles of how digital technologies can improve customer experience.

How Digital Transformation can Make Clients Successful

Business models are rapidly changing. It’s no longer good enough to optimize backend processes or digitize the front

Customer TouchPoints

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Digital In

telligence-Led TransformationDigital Intelligence-Led Transformatio

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Digitally empowered service providers at the vanguard must harness the potential of digital intelligence to propel powerful business and customer outcomes like enhanced end-user experience, customer retention, sustained growth and profitability for clients.

Operationalizing Digital Intelligence

Digital intelligence will address existing challenges as well as exploit opportunities created by digital technologies. Operationalizing digital intelligence entails identifying customer pain points, sensing opportunities to improve through intelligent processing and converting business insights into concrete action in the form of targeted digital interventions to deliver the superior outcomes

EXL has pioneered embedding digital intelligence in operations by following the Digital Intelligence Operating Model:

Digital intelligence is about driving the right business outcomes, especially improved customer experience, increased revenues, greater profit and reduced cost to serve. This is done by creating the right context from a customer perspective by combining business domain knowledge and deep insights from data. It is about enhancing human capabilities with advanced technologies like robotics, analytics and artificial intelligence to quickly deliver tailored, targeted and breakthrough results.

Digital intelligence-led transformation is about focusing on customer and business outcomes leveraging a combination of human intuition and digital levers.

Digital intelligence powers companies to connect to more customers, make critical decisions with confidence, and grow faster and more profitably.

DIGITIZEDPROCESSES

SMARTER OPERATIONS

DigitalQuality

Assurance

OutcomeFocused

Analytics-Led

Intelligence

CUSTOMEROUTCOMES FOCUSED

OPERATING MODEL

DigitalIntelligenceOperating

Model

Focus on customer and business outcomes

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Customer journey-based ownership model

Right combination of digital and human workforce

Embedded analytics and advanced digital technologies to provide intelligence in operations

Digital Command Centre

to control and drive the outcomes

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3. Right Combination of Digital and Human Workforce: We are seeing organizations deploying different types of digital workforce like RPA, chatbots, and virtual assistance. However, their deployment needs to be thought through and harmonized with the human workforce. Organizations needs to be deploy analytics and advanced solutions which can orchestrate human and digital workforce to delivery customer outcomes in the most efficient and effective manner.

4. Embedded Analytics and Advanced Digital Technologies to Provide Intelligence in Operations: Today’s digital era throws a very different challenge with the number of options on types of digital technologies and vast amount of data. Organizations needs to apply design thinking in order to reimagine their customer journeys and then leverage the digital technologies and analytics to deliver superior customer and business outcomes. A simplistic breakdown of any customer operations is given below and digital interventions need to be thought through keeping the customer and business outcomes at the heart of such a design.

1. Focus on Customer and Business Outcomes: Traditionally organizations have driven metrics at individual process or functional level which has resulted inefficient processes with a fractured experience for customers. In today’s digital era, success depends on understanding and measuring the right customer or business outcomes. The usual mistake in defining outcomes is that most people confuse this with process metrics (like setting up of customer on supplier’s system in five days). Process metrics were typically established due to the ‘silo’ or functional- driven operating models.

2. Customer Journey Based Ownership Model: Most organizations are segregated based on front, middle or back-office teams or specific skillsets. Operations need to be designed based on the customer touch points so that they deliver seamless service without shuttling customers between front, middle, back-office or third parties. For example, claims journey in insurance should be organized in a manner which ensures claim is settled seamlessly and the claims handler retains the ownership to ensure customer is not shuttled between different departments. Journey based design will focus on the end customer outcome and not process metrics.

Customer Touch points/Channels

Intelligent Processing (Human + Digital)

Digital Outcomes

Digital Command

Centre

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customer journeys in order to facilitate faster, real-time decision making. It is also imperative for organizations to harness data, talent, and intelligence to achieve holistic business transformation, all the while infusing their processes with agility and responsiveness. Skillfully embedding digital intelligence into operations is a sure way to deliver incomparable customer experiences and cutting-edge business outcomes, thus achieving a sustained competitive advantage.

References 1. https://www.exlservice.com/bridging-the-gap-between-

digital-expectations-and-results

5. Digital Command Centre: Digital transformation is driving a number of changes in different parts of the organization, function or customer journey, making it a challenge to keep all the different aspects in harmony. In order to orchestrate various aspects of digital operations, it is imperative to have a digital command center which will provide intelligence, control and enable our operations to deliver superior customer and business outcomes.

Conclusion

Digital transformation is setting off a radical reordering of conventional industry boundaries. It is vital that companies strive to gain a 360-degree view of their

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EXL (NASDAQ: EXLS) is a leading operations management and analytics company that designs and enables agile, customer-centric operating models to help clients improve their revenue growth and profitability. Our delivery model provides market-leading business outcomes using EXL’s proprietary Business EXLerator Framework®, cutting-edge analytics, digital transformation and domain expertise. At EXL, we look deeper to help companies improve global operations, enhance data-driven insights, increase customer satisfaction, and manage risk and compliance. EXL serves the insurance, healthcare, banking and financial services, utilities, travel, transportation and logistics industries. Headquartered in New York, New York, EXL has more than 27,000 professionals in locations throughout the United States, Europe, Asia (primarily India and Philippines), South America, Australia and South Africa.

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lookdeeper@exlservice.com