Smart tech boosts IT productivity: The Hackett Group

MIAMI & LONDON — Smart automation technologies such as robotic process automation, conversational interfaces, and cognitive automation can enable typical IT organizations to improve productivity by up to 23 per cent while helping them reduce costs, improve effectiveness and enhance customer experience, according to new world-class IT research from The Hackett Group, Inc.

Smart automation also serves as a valuable milestone for IT organizations as they continue their digital transformations, enabling them to achieve staffing levels below those seen by world-class IT organizations as they continue to drive towards the broader benefits that come with total technology optimization.

For world-class IT organizations, which already operate with 13 per cent fewer staff and at 21 per cent lower cost, the benefits of smart automation are also significant, the research found. World-class IT organizations can reduce staff hour requirements by an additional 32 per cent, and cut costs by an additional 6 per cent, enabling a greater focus on value-added activities.

The research also detailed The Hackett Group’s new “Digital World Class” advantage analysis, an estimate of the additional benefits that world-class IT organizations can achieve through the combination of operating model changes, full technology landscape optimization, and the successful adoption of digital technologies. By achieving world-class status in IT and also fully optimizing their technology infrastructure, IT organizations can operate with dramatically fewer staff hours, and at nearly a third lower cost than typical IT organizations. This ‘breakthrough’ can free up resources enabling world-class IT organizations to pursue additional digital transformation initiatives, or other optimization efforts.

The research includes a look at the changes required to IT’s service delivery model to fully realize the benefits of digital transformation. The Hackett Group’s IT service delivery model for the digital era incorporates six interconnected capabilities: technology, service design, analytics and information management, organization and governance, service partnering and human capital.

“With smart automation, IT organizations have a perfect opportunity to not only increase their productivity and reduce costs, but to demonstrate the potential of these powerful AI tools to their business stakeholders,” said The Hackett Group senior director Rick Pastore. “Every aspect of the IT organization is in play, in part because economic, competitive, and customer expectation pressures are higher than ever. For the first time, this year’s world-class performance research quantifies the impact of digital transformation, and details how companies can use smart automation to generate value quickly and demonstrate their commitment to the larger and more complex task of full technology optimization.”

Effectiveness is another key element of world-class IT performance, and in the digital age, IT’s efficiency metrics should align with and reflect the metrics stakeholders use to assess their own performance, the research explained. Using this approach, the extent of enterprise-wide process automation is a fundamental indicator of how well and how effectively IT applies its services to improve finance, HR, procurement and other functions’ processes. World-class IT organizations automate 28% more process transactions than typical IT organizations, and show dramatically higher automation rates for a wide array of transactional activities across the enterprise, including receipt of orders, customer invoicing, and purchase orders, the research found. One key to improving effectiveness is a focus on standardization of end-to-end processes.

“The aggressive approach that world-class IT organizations have taken to enabling self service is particularly important,” said Pastore. “It empowers users, improves agility, and frees up staff in other functional areas to provide more value-added services.”

For 2019, The Hackett Group for the first time has broken out customer experience as a separate area of analysis, measurement, and transformation focus, rather than embedding it in effectiveness measures as it has done in the past. Many key IT performance metrics are migrating toward assessment of customer experience and value, the research found. One such metric is stakeholder perception of IT’s primary role: Top IT performers are over 3x more likely to be perceived as partners, capable of solving business problems and capitalizing on opportunities, the research found.

Leading IT organizations are also tracking different metrics than they have historically in order to reflect customer experience. For example, instead of only tracking degree of transactional process automation, IT can be assessing the level of automation of customer and employee touch points, as well as satisfaction with the tools they provide. A similar shift can be seen across an array of metrics categories, including project delivery, data asset utilization, and innovation rates.

“World-class IT groups are also clearly more focused on digital innovation, investing 21% of their technology spend on emerging technologies, twice as much as the peer group,” said The Hackett Group Principal Michael Spires. “In addition they have driven down complexity, which improves agility and frees up funds that can be used to discover, test, and introduce emerging technologies that enable innovation.”

“But more importantly, the best IT organizations are clearly shifting their mindset and culture from a legacy emphasis on technology to a sharp focus on business outcomes,” said Spires. “They understand the value of digital transformation and see smart automation as an exceptional accelerator on the road to optimal performance. They are learning how to articulate transformation in the context of business value. This is critical, because from a business perspective it’s not about RPA or cognitive, or measuring uptime or error rates. It’s about streamlining and simplifying processes to drive better outcomes. It’s about measuring what matters, and having an impact on time-to-market, time-to-service, cost-to-serve, revenue, and truly, their company’s bottom line.

World-class IT organizations are those that achieve top quartile performance in both efficiency and effectiveness across an array of weighted metrics in The Hackett Group’s comprehensive finance benchmark. Digital world class is The Hackett Group’s estimate of the additional benefit that world-class IT organizations can derive from full technology enablement of execution of IT work and optimization of the IT technology landscape. The Hackett Group’s world-class IT research is based on an analysis of results from recent benchmarks, performance studies, and advisory and transformation engagements at hundreds of global companies.