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New horizons in digital transformation

In the first of a series exploring the digital business transformation, Baker Tilly explores how organisations are driving change, the issues that have emerged and new opportunities opening up.

As the saying goes, you can’t control the cards dealt, only how you play the hand – and the hand dealt by the COVID-19 pandemic was unlike any ever seen.

But, forced to play, business leaders kickstarted an astonishing transformation, turbocharging the uptake of digital solutions to keep organisations moving and people connected.

In December 2019, video conferencing app Zoom just celebrated the milestone of reaching 10 million users in a single day. By April last year, daily calls on the platform exceeded 300 million. 

As lockdowns began in western countries in March, Microsoft Teams saw users jump from 12 million to 44 million in the space of just a week

For collaborative platform Slack, the climb from 1 million simultaneous users to 10 million took a gruelling four years. The rise from 10 million to 12.5 million took 15 days. 

“The pandemic forced the market to change and accelerated transformation for many of our clients.”
John Runte

In a recent survey of Baker Tilly firms, 56 per cent responded that their clients were only somewhat ready for remote working and 17 per cent reported that clients were not ready at all.

John Runte, Principal and team leader of Baker Tilly’s Digital solutions, says the pandemic pushed many businesses to rewrite the book on business and workflow practices.

“It forced the market to change and accelerated transformation for many of our clients,” he says.

“In that first phase, the questions were largely around, ‘how do we implement collaboration technologies to accomplish the daily work that we used to do within the four walls of an office?’

“Many of our clients struggled in the early days of the pandemic, they still were passing paper in certain transactions so they needed to find a way to pass that paper electronically and to complete processes where human intervention was previously involved.

“Fast-hitting technology and digital solutions were deployed to deal with collaboration and transactional workflows that were often facilitated by human intervention – we had to try and get people out of the process.”

Within one to two months of being locked out of offices, most businesses had figured out the basics of working away from the office, deployed laptops to individuals at home if necessary and worked out which collaboration platforms they would use.

But that was just the beginning. How are the next stages of digital transformation playing out and what will the future of business look like?

Designing a better mousetrap

With the tools in place to keep the business going, business leaders moved into the next phase of the digital transformation, says Mr Runte, a stage that meant taking an uncomfortable look at their data.

“For many business leaders, it wasn’t easy to digest,” he says.

“The conversations we were having went along the lines of, ‘the data we about what’s happening in our business is not very good, is it?

“They’re saying, ‘We need many more insights around where we’re actually at from a cash flow perspective, from a day’s payable and day’s sales outstanding perspective.

What’s our pipeline like? How is the supply chain and will we have sufficient inventory to meet demands? How good is the data that we’re evaluating on how our business is performing?

“Data became very important to organisations. And transformations can’t happen without it.”

It is the key step into the third phase of the digital revolution – long term, sustainable digital solutions with a strong focus on automation. Think chatbots, artificial intelligence and machine learning.

“We’re talking about using automated technology to build a better mousetrap to help run our business in a more sustainable way,” Mr Runte says.

“Let’s take insurance, it’s a great example of where there is a way to leverage AI, machine learning and different algorithms.

“These technologies can help predict which claims should fly through and be paid, just based on the characteristic of the claim.

“Then there’s claims that may make sense for human decision making, and these might be determined by a range of factors such as size and complexity of loss.

“Insurers are working on improving the number of claims that can go through from an automated perspective, so that there doesn’t always need to be the human interaction component in the decision making.”

I want a chatbot, not a real person

Contrary to anecdotes that say people want to deal with a real person when it comes to customer service, in many cases the opposite is true.

Certainly, a category or persona exists that will always desire a person-to-person interaction but increasingly the demographics orient to a digital service experience if the outcomes are more predictable.

Consumers are increasingly comfortable conversing with a machine – so comfortable in fact, that one source stated four out of five people would use one as a primary means of customer support if they could be guaranteed an immediate response.

From an operational point of view, chatbots can reduce customer service costs by up to 30 per cent and save customers about US$8 billion a year.

“These automation solutions, if they’re really designed correctly, will leverage AI and machine learning to really be predictive and increase the effectiveness of the user experience.”
John Runte

“In the early days of chatbots that we all dealt with in our personal e-commerce lives, they were pretty clunky. As soon as I could exit out of it, I wanted to talk to a real person,” Mr Runte says.

“Now I prefer to actually use the chatbot, so I don’t have to talk to somebody.

“Advanced solutions have included AI and machine learning so the chatbot solution enables increased learning of different parameters, different scenarios, different use cases that I may inquire about. The first iteration of those chatbots, they couldn’t answer my basic questions and now they often add value to my user experience by suggesting a complimentary product or service or offer valuable insights in a proactive value-added way.

“Now, more advanced solutions are almost predicting the questions that I’m going to ask next. And after they’ve solved my problem, they may predict that I might want to inquire about a different type of financial service offering or a different type of investment solution.

“It’s not unlike Netflix, where you get these set of movies that you’ve accumulated and watched over time, and they now predict which movie you might have an interest in.

“These automation solutions, if they’re really designed correctly, will leverage AI and machine learning to really be predictive and increase the effectiveness of the user experience.”

Automated solutions can help keep a lid on the company headcount, which in turn creates opportunities for growth elsewhere.

“Companies can grow with the same footprint,” Mr Runte says.

“Because the team is not focusing on reviewing claims, they can expand into new territories, they can introduce new products. But they also can improve the experience for the customer with faster payment of the claim, or as it relates to the cost of adjudicating and processing that claim.

“There’s lots of benefit to leveraging data for good and not requiring human intervention in the process .”

Robots for your robots

It’s not just in customer service that business can leverage automation. Machine learning can also help reduce downtime in, well, your machines.

“I use an analogy with some of the older chief financial officers that I work with, they remember Lotus 123 spreadsheets, which were quite clumsy compared to Microsoft Excel,” Mr Runte says.

“Excel now embeds all these widgets to do formulas and macros, for example the sum function, but in the old days you had to program all that within Lotus formulas.

“Now when we apply that analogy to new cloud-based platforms, the cloud providers have embedded high end modern digital capabilities as services, for example AI and machine learning services that can be deployed with low code or no code.

“The cloud-based providers essentially have a widget on their menu, that is almost plug and play, for things like predictive machine downtime.

“There’s a little sensor device that captures unstructured machine data, you place it on their manufacturing machine and it measures the vibration of that machine over time.

“As data streams in, the application will analyse the data and will send alerts with increases in machine vibration; that’s a predictive measure, an indicator of the need for preventative maintenance before that machine has a significant amount of downtime.

“That can be set up in hours, given the way that their services are now plug and play, and many of these AI machine learning automation analytics services that the cloud providers have, are designed to be that way.

“I used the term low code, no code earlier and that deserves some explanation. Essentially, low code, no code is the democratisation of IT application development through the use of power users that are not from a traditional programming background.

“The power user often leverages pre-packaged services, such as the predictive maintenance on manufacturing machines described previously. A lot of these solutions are being enabled by significant cloud growth and those platforms are extremely powerful.”

These are not necessarily bespoke solutions, but options that are realistic for mid-market firms and even down to small business.

“In the past, big corporate had hundreds of IT folks developing this sort of stuff and they needed high end skills to do the programming,” Mr Runte says.

“Competition is really bringing down the average price for advanced technical and digital solutions.”

What’s the next wave?

Businesses are adopting emerging technologies and rethinking traditional business processes faster than ever, with investment in innovation ramping up.

Mr Runte says change is constant – and it’s quick. With each new phase of technological change, time is being further compressed.

“There will be more change, so really being agile and having an ability to pivot quickly, will be crucial for organisations and business leaders.”
John Runte

“Not long ago we were talking about the mainframe era and then the client server era, now we’re embracing the cloud era,” he says.

“The time it takes new technology and disruptive technology to impact our markets is becoming very compact.

“There will be more change, so really being agile and having an ability to pivot quickly, will be crucial for organisations and business leaders.

“If they don’t already have it, organisations need to foster an innovation culture that has an ability to have a laboratory-type environment, to pilot and do proof-of-concept based design sessions as it relates to solving business problems.

“Innovation may someday (if not already today) be as important or more important than traditional organizational functions.

“It could very well be that the ability to solve business problems quickly with rapidly changing technology and disruptive digital solutions becomes a corporate competency.”

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John Runte

Baker Tilly United States

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