Getting to the Heart of Digital Transformation

This is part of a series of posts about operational performance, customer success, and decision-making, as well as more general topics about work and life. Some of these are published earlier elsewhere, and the newsletter #zenofbusiness is designed to bring these together for you.

This article was written a few months ago and published on the COPC blog with edits. Here is the version straight from my writing desk, warts and all, sharing for a larger reach. With my limited knowledge and visibility, the outlook of the future is "cautiously optimistic" and there are still things to do, plans to be made, actions to be taken, to realize that future. Hope you will find the musings and the framework in the post useful.

#AI #digital #digitaltransformation #strategy

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As CX professionals, what keeps you awake at night? ... Globally, brands continue to focus on enhancing revenues through superior customer experience, improving staff engagement, driving down costs, and improving overall performance of their products and services. All of these have received a new, digital, ‘shot in the arm’, with the recent upgrades in commercially available tech, especially in the field of artificial intelligence (#AI).

But not all of it is related to AI. And not all of it is new. A lot of this has been in the making for over two decades. We are witnessing something new, a second digital transformation of sorts. And what we do and how we use these new technologies, not just as toys but as real, value-adding tools, will shape the future of work.

Groundswell of Digital Innovation

Take the example of Contact Centre industry worldwide. Technology use cases in this can be broadly classified, as is done in some of the COPC research reports, into three main applications:

(a) Customer Facing Technologies (CFT), e.g., AI-powered customer sentiment analysis, Generative AI-based chatbots, and Service Journey mapping tools;

(b) Agent Assist Technologies (AAT), e.g., apps for candidate experience during recruitment and hiring, visual guides in place of traditional Knowledgebases, digital assistants, and tools for virtual employee activities; and

(c) Operational Efficiency Technologies (OET), e.g., digital gamification in training, use of apps for real time analytics and prompts, and AI-powered insights and reports.

We have seen these applications for several years. However, what is new is the focus and comfort with which executives are deploying new digital approaches, and the speed with which the digital ecosystem is expanding. There is a groundswell of digital innovation, with several technologies crossing the chasm from being tinkered with by the early adopters to being used by majority of industry players. In a recent study conducted by COPC specifically for AI-driven tools, we found that there are about 16 AI-driven technologies that are coming into prominence. The three most common applications among these are chatbots, agent assist tools, and sentiment analysis tools. Supporting technologies have seen less adoption but that adoption is growing rapidly, too.

Take the example of how just one process in Contact Centres, which is the training of new hires, has undergone a tremendous change in the last couple of years. 79% of survey respondents in our benchmarking studies said that they make active use of digital gamification during training, using tools like “Kahoot!”. 58% said that they use digital avatars to train in the self-guided, ongoing trainings. One out of 5 companies we spoke with said that they have bot-based training, especially for centres providing web chat customer support. Why is this significant? Because only a few years ago, there were none.

Applications such as these not only change the face of the training process in the organization, but also bring about long-term changes to the industry in the way people get hire, trained, deployed on job, and perform their work.

AI at the heart of the Digital Transformation

Use of AI-powered tools and technologies are leading this digital transformation currently. The two main applications for AI in Contact Centres, as expected, are to improve customer experience and reduce costs, which were mentioned by 9 out of 10 respondents in our study. A large part of this is providing digital empowerment to some of the self-service channels of customer service. Our studies indicate that about 30% of customer interactions have the capability to get fully digitized, with GenAI. This is in line with other industry studies, e.g., one by McKinsey [1].

As the AI tools get more commercially viable, this number is only going to grow. Out of the people using AI tools for customer facing applications, 60% of respondents said that they were planning to refresh or upgrade their AI applications in the next 18 months. Examples of focus areas of these changes include interaction analytics, like speech to text conversion. Incidentally, THIS VERY POST is partially typed in Microsoft Word using their dictate and transcribe function, that is now infused with AI [2].

This demonstrates the speed with which things are changing in the AI world and requires great agility and fluidity. This is not always easy or even possible for organizations. The anxiety is redoubled by the speed with which customers are adapting the new AI-powered channels compared to the traditional channels, especially in banking, consumer electronics, retail, education, and healthcare.

How “Intelligent” is the Artificial Intelligence?

The key question at this stage is how good the technology is in resolving customer issues. We find that the perceived resolution is lower in AI-based tools than traditional channels, and there is about a 20-point difference between the perceived resolution by AI-based tools and traditional channels. Yet, AI-powered service-dominant logic is moving to radical, transformative customer experience, with higher levels of resolution than what was possible even before.

We have found that the effectiveness of the AI-powered system depends on the application that can be viewed as a framework across two dimensions: (a) the domain of customer queries, whether this is open or closed, and (b) the length of interaction between the tool and the customer, whether it is long or short.

As long as the domain of customer queries remain closed, or specific, and the length of interaction remains short, simple rule-based bots and cleverly designed UI/UX serves the needs of customers well. In most cases and industries, this seems to be sufficient.

If the length of interaction increases, you need Generative AI-based tools, like the ones powered by GPT-4, Longnet, or Gemini. Companies have started deploying these, with exciting early results, and we should be hearing more from this general direction.

If the length of interaction is short but the domain of customer queries is open and vast, one needs to deploy bots with Deep Learning capabilities and a vast Knowledgebase.

Lastly, where the domain is open and length of interaction is long, we get into the Artificial General Intelligence (AGI) based bots or other applications. These last two applications are less common and more complex.

AI-powered digital transformation: CX, EX, and VX

All in all, we are witnessing a three-fold digital transformation powered by AI. There are applications for Customer Success (CX), with AI-powered chatbots, virtual agents (VA), conversational IVRs, and enhanced Natural Language Processing (NLP) tools. Then, we see a great many applications for Employee Success (EX), with predictive analytics, AI-powered CRMs, interaction speech and text mining, and real time guides. And finally, we see applications for Value Excellence (VX), with applications such as service journey analytics, quality and contact centre performance analytics, AI-powered RPA, and video / speech and image processing.

The perceived ROI for AI-based tools is still to be seen and not universal yet, but one of the patterns we see in our recent study is that when the technology has been in place for more than a year, there is a higher proportion of respondents who state that the tech has generated a positive financial ROI.

In summary, the industry is generally positive about the AI-driven digital transformation in contact centres, with 3 out of 4 companies in our study being positive or very positive. There are exciting advances in the digital tools in recent times. These digital technologies are yet to show perceived ROI, but the evidence for ROI grows the longer the technology is in place, especially over a year.??

For more information, look out for COPC research reports.

#COPC #Research #technology #consulting #contactcenters #contactcentres

[1] https://www.mckinsey.com/mgi/our-research/generative-ai-how-will-it-affect-future-jobs-and-workflows

[2] https://www.microsoft.com/en-us/microsoft-365/blog/2020/08/25/microsoft-365-transcription-voice-commands-word/