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Last Modified 11/24/2014 10:20 PM Eastern Standard Time

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November 20, 2014

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Cognitive Computing –

implications for GBS

organizations

Global Business Services Senior Leaders Forum

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McKinsey & Company | 1

Intelligent software that performs knowledge work

involving unstructured commands and subtle

judgments have significant impact potential

GBS have been investing in automation to enable

global delivery and scale, but few can claim full

automation capabilities

Emerging trends in autonomic and cognitive

computing show that continuously learning robots

can drive significant impact on performance, cost

and quality

There are 5 key emerging use cases for GBS

organizations to drive value from cognitive

computing

Key messages

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McKinsey & Company | 2

Twelve potentially economically disruptive technologies

SOURCE: McKinsey Global Institute analysis

The Internet of

Things

Automation of

knowledge work

Cloud technology

Mobile Internet

Advanced

robotics

Autonomous and

near-autonomous

vehicles

3D printing

Energy storage

Advanced

materials

Next-generation

genomics

Advanced oil and

gas exploration

and recovery

Renewable

energy

Area of focus

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McKinsey & Company | 3 SOURCE: McKinsey Global Institute analysis

Estimated potential economic impact of technologies from

sized applications in 2025, including consumer surplus $ trillion, annual

0.2–0.3 Renewable energy

Advanced oil and gas

exploration and recovery 0.1–0.5

Advanced materials 0.2–0.5

3D printing 0.2–0.6

Energy storage 0.1–0.6

Next-generation

genomics 0.7–1.6

Autonomous and near-

autonomous vehicles 0.2–1.9

Advanced robotics 1.7–4.5

Cloud technology 1.7–6.2

Internet of Things 2.7–6.2

Automation of

knowledge work 5.2–6.7

Mobile Internet 3.7–10.8

Range of sized

potential eco-

nomic impacts

Impact from

other potential

applications

(not sized)

Low High

X–Y

Automation of knowledge work

▪ Intelligent software systems that

perform knowledge work

involving unstructured

commands and judgments

▪ 400+ million increase in number

of users of intelligent digital

assistants in last 5 years

▪ 230+ million knowledge workers,

9% of global workforce

▪ 1.1 billion smartphone users,

with potential to use automated

digital assistance

▪ $9+ trillion knowledge worker

employment costs,

27% of global employment costs

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McKinsey & Company | 4

GBS and shared services have been investing in automation to enable

global delivery and scale, but few can claim full automation capabilities

SOURCE: McKinsey Corporate and Business Functions Practice

ILLUSTRATIVE

NOT EXHAUSTIVE Complex problem

solving

Effectiveness

Efficiency

▪ Continuous

improvement

▪ Straight through

processing

▪ Business visibility

and control

Objectives

▪ ‘Self-learning systems’

▪ Big data insights

Examples

▪ OCR/ ICR

▪ CRM-service and

BPM workflow

▪ Predictive analytics

▪ ERP / SCM / CRM

▪ Business

intelligence

▪ Virtual assistants (‘Siri’

for business)

▪ Complex problem

solving (e.g. cancer

diagnosis)

Discussed

further

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McKinsey & Company | 5

Defining cognitive computing

SOURCE: Wikipedia, IBM, techtarget.com

▪ Cognitive computing is the

simulation

of human thought processes

in a computerized model

▪ A cognitive

computer combines artificial

intelligence and machine-

learning algorithms, in an

approach which attempts to

reproduce the behavior of

the human brain

▪ Systems that learn and interact

naturally with people

▪ Extend what either humans or

machine could do on their own

▪ They help human experts make

better decisions by penetrating

the complexity of Big Data

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McKinsey & Company | 6

Emerging trends in autonomic and cognitive computing show that virtual,

continuously learning knowledge robots can drive significant impact on

performance, cost and quality of GBS

SOURCE: Gartner, press research

Description Examples

Performance

▪ Virtual call center assistants and chat bots

(e.g., Verizon, Ikea, ANZ Grindlays, Royal

Bank of Canada, DBS Bank)

▪ 50-60% IT incidents resolved without

human intervention

▪ Continuous processing

▪ On-demand scalability

Cost

▪ Elec. Medical records – data integration

(Cerner Health)

▪ Real-time Customer master data

synchronization (Rogers Communication)

▪ 60% less than offshore cost

▪ Step jump in productivity

Quality

▪ Apps that answer cancer diagnosis and

treatment questions from doctors,

researchers, and insurance companies

(Wellpoint, Cleveland Clinic and New

York’s Memorial Sloan-Kettering

Cancer Center)

▪ 50-60% reduction in mean

time to resolution

▪ Automated self-learning and

improvement over time

▪ Real-time Big Data insights

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McKinsey & Company | 7 7

New York

Stockholm

London

Amsterdam

Frankfurt

Oslo

Chicago

Bangalore

Austin

San

Francisc

o

Tokyo

Sydney

Singapore

Technology Innovator

We have a long-term commitment to

innovation, investing 70c of every dollar in

R&D to secure long term success

Specialists: Automating and managing IT and business

processes

Proven and Trusted: 15 years, 2,000+ staff, 550+ clients

Global: Offices in ten countries, clients on four continents

Value: Lower labor costs, improved quality, lower risk

Tailored: On client site, IPsoft hosted, managed service, or

part of ITO

About IPSoft: Introducing disruptive technology capabilities

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McKinsey & Company | 8 8

About IPSoft: Solutions to transform your business

The Future: Amelia

IT Managed Services

Autonomic Technology Platform

▪ Licensing IPcenter as a service, including its entire knowledge base

▪ Automates entire functional areas, e.g., end to end incident remediation

▪ Pattern recognition / Learning engine

▪ Automates 56% of incident remediation on average

▪ Made available to sell 3-4 years ago, and growing rapidly as a business

▪ Using cognitive science for Business Process automation

▪ Driving the next wave of labor automation efficiency

▪ Natural language programming

▪ Real Understanding

▪ Remote Infrastructure and Application Management

▪ Delivered using a unique autonomic technology platform

▪ Uses home grown ITSM IPcenter software

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McKinsey & Company | 9

A integrated implementation process ensures the organization transforms

alongside introduction of Amelia’s capabilities

SOURCE: Team analysis

Building the business

case

Implementing Amelia

Opportunities to

broaden impact

Execution phase Where McKinsey can help

▪ Identifying cost levers

▪ Focus on optimal deployment location for Amelia

▪ Evaluate strategic options for task execution and

escalation

▪ Assess commercial and organizational readiness of

business unit for implementation

▪ Standardize the implementation approach for

maximum efficiency across business units

▪ Develop implementation playbook, work planning

▪ Determine communication plan across organization

and functional roles

▪ Understand data requirements and capabilities

▪ Identify opportunities to implement automation across

organization

– Across functional groups e.g. from Customer

service center to higher value added interactions

– Roll out to regional centers

– Add ancillary value added functions e.g. internal

knowledge helpdesk

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McKinsey & Company | 10

There are 5 key emerging use cases for GBS organizations

to drive value from cognitive computing

SOURCE: McKinsey Global Institute analysis

ILLUSTRATIVE

Description

Key sectors

impacted

▪ Finance

▪ Education

▪ Health care

▪ Media and

communications

▪ Government and

social sectors

▪ Infrastructure

and utilities

▪ Transportation

▪ Retail

Knowledge

services

▪ Increasing consistency of tasks such as

searching and analyzing information (e.g.,

marketing analytics, supply chain allocations)

Content creation

and analysis

▪ Automatic content creation and synthesis (e.g.,

operational and financial reporting)

▪ Automated data consolidation and translation

Natural language

interfaces to

systems

▪ Access to advanced IT tools and other

information systems through language

interfaces (HR benefits eligibility, product /

service technical support)

Professional

services

▪ Professional judgment with machine-learning –

spot connections humans would miss (legal,

insurance eligibility check, etc.)

Contact center

▪ Automating tasks – answering customer calls

or dispatching assistance (e.g., IT, HR,

Purchasing, Finance)