Capping IT Off

Capping IT Off

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Labor displacement and scale of Offshore operations - is this all there is to IT Automation and Industrialization?

Category : Applications
Capgemini’s Global Analyst Day was held on June 24-25 in Les Fontaines, north of Paris, and a section of the discussion focused on Automation and Industrialization in view of the transformational shift underway - evidenced by the protest against Uber POP service on 25th which impacted the Analyst Day participants!

Much of the market proclamations are about new technology driven Automation and its impact on labor displacement, velocity of IT, etc. However, the acceleration of Business Outcomes for clients or accelerating their IT effectiveness agenda enabled by Automation (such as from the simplification of their IT landscape) does not get due attention in the current market discourse.

In Capgemini’s Global Analyst Day session on Application Management, examples were shown of Automation enabled (not driven) impact across IT Input measures (~90% cost reduction due to labor elimination on certain workloads), on IT Output measures (~20% lower workload due to simplification) and Business Outcomes (50% lift in Business KPI of a key process). Further, a case was discussed where there was an 80% reduction in the incoming workload while the User base grew threefold, along with the experience that the client in question saw value in retaining the same team to carry out additional work (researchers at MIT found that when firms hit the highest level of IT performance, IT Budgets increase owing to its value creating nature!). All of these results were achieved by a blend of in-house and a few Market based Automation solutions that harness the latest technology (Robotic Automation, DevOps, etc). Hopefully, such experiences will contribute to a balanced market discourse on Automation.

It is insightful to learn from the transformational shifts in the Car Manufacturing on the various facets and impact of industrialization (in which Automation is just one). Since the 1900’s it has progressed substantially, from scattering parts on the floor before assembling cars, to large scale (but inflexible) transfer lines, Globalization (for Factory location, Procurement, etc.), then to pull-based manufacturing using Just-In-Time, Kanban, Cell based Manufacturing (a smart organization model construct), Culture (e.g. The Toyota Way), Robotic Automation (excesses in Automation was a trigger for the largest merger in the industry!), re-use of platforms across different models, etc. All of these delivered enhanced value to customers (as profiled by independent research), while accelerating the manufacturer’s time-to-market, profitability, etc. These accomplishments demonstrate the Cost Reduction and innovation that leads to Business Outcomes are but two sides of the same coin. Over the course of this transformation workforce size grew substantially (unlike the current proclamations for IT)!

Furthermore, while the Internet of Things is proclaimed as yet another new technology disruption, for a couple of a decades now, in an unobtrusive manner, on-board computers and sensors have been communicating in real-time in most production cars, contributing towards safety, fuel efficiency, etc. In addition, some forward looking initiatives dating back several years, allowed for scheduling predictive maintenance based on messaging from cars to dealer workshops, etc. Despite all of this, car manufacturers today feel the heat to become customer centric and even more flexible and frugal in their industrialization!

Likewise in Application Management, effective industrialization harnesses (a) constructs around smart organization models which cascade from the core purpose of the firm and characteristics of the Applications (extending beyond Offshore headcount or Staffing Pyramids or Managed Services).  Industrialization also encompasses (b) effective governance, processes (Agile when fused with DevOps, is adopting best practices from Cell Manufacturing!) and procedures incorporating meaningful Automation, (c) techniques to eliminate workload at source, rather than keep the workload ‘as-is’ but eliminate a fraction of the labor using Automation! etc. Capgemini’s Speed-to-value tools (optimized for use on Mobile devices, and demonstrated in the Global Analyst Day) has several performance enhancement levers (supported by cases, methods, Automation solutions and ‘what-if’ simulation capability) to understand the impact of effective industrialization and practical IT transformation, aligned to IT Input, IT Output variables and Business Outcomes.

Effective industrialization (is about Cost Reduction and innovation that leads to Business Outcomes and as two sides of the same coin) enables clients to become faster-better-cheaper and smarter enterprises and thereby prosper in their marketplace (savings some millions in Application Management spend by solely automating tasks is not material to the overall success of firms).

A good way to initiate effective industrialization (and Automation) is for clients to ask deep enough questions (after all, questions from customers led to transformation of the Car Manufacturing industry!), and for Service Providers to harness the best and deliver in a client-centric manner (and not push the latest bright and shiny bare metal technology) even if appears to lead to cannibalization of their revenues.
 

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Ramesh Kumar Ramamurthy
Ramesh Kumar Ramamurthy

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