The Move to Intelligent Operations | Five key components that drive superior business outcomes
Dr. Evangelo Damigos; PhD | Head of Digital Futures Research Desk
- Competitive Differentiation
- Sustainable Growth and Tech Trends
Publication | Update: Jan 2020
According to research from HfS and Accenture intelligent operations is key to keeping pace with customer expectations and driving superior business outcomes, the move to intelligent operations is fast becoming make-or-break for many organizations.
Organizations that leverage Intelligent Operations to make decisions and act in real-time will be best placed to thrive in the future, according to a new report from HfS Research and Accenture.
The research is based on the responses of 460 participants from Accenture enterprise clients involved in buying decisions related to technology and services. The respondents were all director level or above; working for organizations with more than $ 3 billion global annual revenue and spanning diverse geographic locations, including North America, Europe, Latin America and the Asia Pacific.
The report found that organizations which harness the combination of innovative talent, diverse data and applied intelligence will be in the best position to overcome digital disruption and utilize data-driven insights to drive superior business outcomes and enhance the customer experience.
The move to Intelligent Operations is fast becoming a make-or-break proposition for organizations, with 80 percent surveyed saying they are concerned with disruption and competitive threats, especially from new digitally savvy entrants.
The report reveals that most organizations are currently unable to make data-driven decisions due to a paucity of skills and technology to process data: in nearly 80 percent of respondent organizations, 50 percent to 90 percent of data is reported as unstructured and largely inaccessible.
Half of the organizations surveyed also say their back office is not keeping pace with front office requirements to support digital capabilities and meet evolving customer expectations.
“To win in today’s market and ensure future viability, it is essential that organizations capture value quickly, change direction at pace, and shape and deliver new products and services. Organizations also need to maximize the use of ‘always on’ intelligence to sense, predict and act on changing customer and market developments,” said Debbie. Polishook, group chief executive, Accenture Operations.
“Our research suggests technology alone is not a magic bullet. To successfully transform their operations, organizations must take a holistic approach that integrates business process and industry expertise, human ingenuity, and intelligent technologies,”
“This enables the agility, flexibility, and responsiveness needed to drive superior decision-making, business outcomes, and customer experiences. It’s about responding swiftly to change and how to steer a new course with confidence,” Polishook added.
When it comes to digital disruption, 42 percent of executives report that they see more opportunities than threats now compared with two years ago. A robust customer experience strategy is identified as the most significant driver of operational agility.
“Breaking down the silos between the front and back office is now essential to delivering a modern customer experience. More than half of survey respondents state that it takes months or even years for their business functions to make changes to evolving business needs”, said Phil Fersht, CEO and chief analyst at HfS Research. “The market leaders of the future will be businesses that operate on a OneOffice™ model: an intelligent, single office characterized by seamless processes and digital capabilities centered on creating, enabling and supporting the customer experience.”
The research suggests the future belongs to organizations with Intelligent Operations that enable them to have a 360-degree view of their operations enabling quicker, insight-led decision making.
5 Essential Components of Intelligent Operations Identified by the Research:
- Innovative talent. The talent of the future will need to bring creative problem-solving in addition to digital expertise. Organizations will need a more agile human resources function and a recruiting approach that heavily leverages an open talent marketplace.
- Data-driven backbone. Organizations need to capitalize on the explosion of structured and unstructured data from multiple sources to gain new insights for the innovative talent to use in order to achieve stronger outcomes.
- Applied intelligence. Using integrated automation, analytics, and AI-based solutions, organizations need innovative talent who can understand the business problem and then apply the right combination of tools to find the answer.
- Leveraging the power of the cloud. The cloud will enable the plug-and-play digital services with better integration of diverse data, can scale up and down, and help organizations move toward an as-a-service environment.
- Smart partnership ecosystem. Organizations of the future will develop symbiotic relationships with start-ups, academia, technology providers and platform players to achieve their goals.
Objectives and Study Scope
This study has assimilated knowledge and insight from business and subject-matter experts, and from a broad spectrum of market initiatives. Building on this research, the objectives of this market research report is to provide actionable intelligence on opportunities alongside the market size of various segments, as well as fact-based information on key factors influencing the market- growth drivers, industry-specific challenges and other critical issues in terms of detailed analysis and impact.
The report in its entirety provides a comprehensive overview of the current global condition, as well as notable opportunities and challenges.
The analysis reflects market size, latest trends, growth drivers, threats, opportunities, as well as key market segments. The study addresses market dynamics in several geographic segments along with market analysis for the current market environment and future scenario over the forecast period.
The report also segments the market into various categories based on the product, end user, application, type, and region.
The report also studies various growth drivers and restraints impacting the market, plus a comprehensive market and vendor landscape in addition to a SWOT analysis of the key players. This analysis also examines the competitive landscape within each market. Market factors are assessed by examining barriers to entry and market opportunities. Strategies adopted by key players including recent developments, new product launches, merger and acquisitions, and other insightful updates are provided.
Research Process & Methodology
We leverage extensive primary research, our contact database, knowledge of companies and industry relationships, patent and academic journal searches, and Institutes and University associate links to frame a strong visibility in the markets and technologies we cover.
We draw on available data sources and methods to profile developments. We use computerised data mining methods and analytical techniques, including cluster and regression modelling, to identify patterns from publicly available online information on enterprise web sites.
Historical, qualitative and quantitative information is obtained principally from confidential and proprietary sources, professional network, annual reports, investor relationship presentations, and expert interviews, about key factors, such as recent trends in industry performance and identify factors underlying those trends - drivers, restraints, opportunities, and challenges influencing the growth of the market, for both, the supply and demand sides.
In addition to our own desk research, various secondary sources, such as Hoovers, Dun & Bradstreet, Bloomberg BusinessWeek, Statista, are referred to identify key players in the industry, supply chain and market size, percentage shares, splits, and breakdowns into segments and subsegments with respect to individual growth trends, prospects, and contribution to the total market.
Research Portfolio Sources:
Global Business Reviews, Research Papers, Commentary & Strategy Reports
M&A and Risk Management | Regulation
The future outlook “forecast” is based on a set of statistical methods such as regression analysis, industry specific drivers as well as analyst evaluations, as well as analysis of the trends that influence economic outcomes and business decision making.
The Global Economic Model is covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure. We aim update our market forecast to include the latest market developments and trends.
Review of independent forecasts for the main macroeconomic variables by the following organizations provide a holistic overview of the range of alternative opinions:
As a result, the reported forecasts derive from different forecasters and may not represent the view of any one forecaster over the whole of the forecast period. These projections provide an indication of what is, in our view most likely to happen, not what it will definitely happen.
Short- and medium-term forecasts are based on a “demand-side” forecasting framework, under the assumption that supply adjusts to meet demand either directly through changes in output or through the depletion of inventories.
Long-term projections rely on a supply-side framework, in which output is determined by the availability of labour and capital equipment and the growth in productivity.
Long-term growth prospects, are impacted by factors including the workforce capabilities, the openness of the economy to trade, the legal framework, fiscal policy, the degree of government regulation.
Direct contribution to GDP
The method for calculating the direct contribution of an industry to GDP, is to measure its ‘gross value added’ (GVA); that is, to calculate the difference between the industry’s total pretax revenue and its total boughtin costs (costs excluding wages and salaries).
Forecasts of GDP growth: GDP = CN+IN+GS+NEX
GDP growth estimates take into account:
All relevant markets are quantified utilizing revenue figures for the forecast period. The Compound Annual Growth Rate (CAGR) within each segment is used to measure growth and to extrapolate data when figures are not publicly available.
Our market segments reflect major categories and subcategories of the global market, followed by an analysis of statistical data covering national spending and international trade relations and patterns. Market values reflect revenues paid by the final customer / end user to vendors and service providers either directly or through distribution channels, excluding VAT. Local currencies are converted to USD using the yearly average exchange rates of local currencies to the USD for the respective year as provided by the IMF World Economic Outlook Database.
Industry Life Cycle Market Phase
Market phase is determined using factors in the Industry Life Cycle model. The adapted market phase definitions are as follows:
The Global Economic Model
The Global Economic Model brings together macroeconomic and sectoral forecasts for quantifying the key relationships.
The model is a hybrid statistical model that uses macroeconomic variables and inter-industry linkages to forecast sectoral output. The model is used to forecast not just output, but prices, wages, employment and investment. The principal variables driving the industry model are the components of final demand, which directly or indirectly determine the demand facing each industry. However, other macroeconomic assumptions — in particular exchange rates, as well as world commodity prices — also enter into the equation, as well as other industry specific factors that have been or are expected to impact.
Forecasts of GDP growth per capita based on these factors can then be combined with demographic projections to give forecasts for overall GDP growth.
Wherever possible, publicly available data from ofﬁcial sources are used for the latest available year. Qualitative indicators are normalised (on the basis of: Normalised x = (x - Min(x)) / (Max(x) - Min(x)) where Min(x) and Max(x) are, the lowest and highest values for any given indicator respectively) and then aggregated across categories to enable an overall comparison. The normalised value is then transformed into a positive number on a scale of 0 to 100. The weighting assigned to each indicator can be changed to reﬂect different assumptions about their relative importance.
The principal explanatory variable in each industry’s output equation is the Total Demand variable, encompassing exogenous macroeconomic assumptions, consumer spending and investment, and intermediate demand for goods and services by sectors of the economy for use as inputs in the production of their own goods and services.
Elasticity measures the response of one economic variable to a change in another economic variable, whether the good or service is demanded as an input into a final product or whether it is the final product, and provides insight into the proportional impact of different economic actions and policy decisions.
Demand elasticities measure the change in the quantity demanded of a particular good or service as a result of changes to other economic variables, such as its own price, the price of competing or complementary goods and services, income levels, taxes.
Demand elasticities can be influenced by several factors. Each of these factors, along with the specific characteristics of the product, will interact to determine its overall responsiveness of demand to changes in prices and incomes.
The individual characteristics of a good or service will have an impact, but there are also a number of general factors that will typically affect the sensitivity of demand, such as the availability of substitutes, whereby the elasticity is typically higher the greater the number of available substitutes, as consumers can easily switch between different products.
The degree of necessity. Luxury products and habit forming ones, typically have a higher elasticity.
Proportion of the budget consumed by the item. Products that consume a large portion of the consumer’s budget tend to have greater elasticity.
Elasticities tend to be greater over the long run because consumers have more time to adjust their behaviour.
Finally, if the product or service is an input into a final product then the price elasticity will depend on the price elasticity of the final product, its cost share in the production costs, and the availability of substitutes for that good or service.
Prices are also forecast using an input-output framework. Input costs have two components; labour costs are driven by wages, while intermediate costs are computed as an input-output weighted aggregate of input sectors’ prices. Employment is a function of output and real sectoral wages, that are forecast as a function of whole economy growth in wages. Investment is forecast as a function of output and aggregate level business investment.