Services in the world of bots: Thoughts from an enterprise transformation leader

By now, we’re probably all familiar with chatbots, or conversational bots, in our experience as consumers. We encounter virtual agents on retail websites, in customer service and perhaps as employees working with our company’s HR or help desk. Chatbots seem to be everywhere in the world of services, helping users solve problems without the manual intervention of a customer service representative. It’s obvious why companies would use them: they can be available around the clock, reduce costs and empower customers to complete more self-service tasks.

The pandemic has accelerated digital transformation for many organizations, and technology—specifically artificial intelligence (AI)—is making it possible for companies to enhance many types of services they provide using bots. Back in 2016, Gartner predicted that “By 2020, the average person will have more conversations with bots than with their spouse.” I don’t know if that prediction came true, but I wanted to learn more, so I reached out to an expert on the subject—my colleague Kunal Mitra.

Kunal Mitra is a highly experienced technology evangelist with an investment of more than 19 years in advisory and digital transformation using enterprise applications. Kunal’s experience is diversified across multiple industries within Asia-Pacific. Presently, he’s leading the Oracle practice in IBM Consulting? for one of our highest growth markets, India and South Asia. ?

I recently spoke with Kunal about how bots are changing the world of services and what bots in the services sector might look like in the future. We had a great conversation that inspired me to think more about how businesses can apply bot technology to address their needs and priorities.

Rob: To start off, let’s define terms. What is a bot, and how are bots relevant in services?

Kunal: We’ve all come across the term bot. Typically, a bot means an intelligent operation, a piece of code that’s automated to simplify regular or repetitive work. Bots have been evolving ever since Alan Turing pioneered the concept of machine intelligence in 1950 with the Turing test. Since then, we’ve seen the evolution of intelligent technologies in many forms, from ELIZA to Alexa, IBM Watson? and many other intelligent bots we see today.

For this discussion, I want to focus specifically on chatbots. A chatbot is distinguished from other bots by being conversational, bringing a human touch to an interaction. This human element is essential in a consumer-centric economy since personalized interactions are what customers want and businesses need to deliver.

Let’s also define services in this context. Services, at their most basic, are transactions between humans. As we all know, services have become the need of the hour. Manufacturing went through its industrialization phase long ago, but services have undergone an industrialization more recently through the evolution of technology in the last few decades. As new technologies arise, the services sector incorporates them. Today, chatbots are being used in services in many contexts: travel, retail, healthcare, human resources and many more.

Rob: What is the market size for chatbots? And is this market growing? ?

Kunal: Technological advancement, along with growing customer demand for self-service operations, has led to market growth for chatbots. Today, the global market size for chatbots is estimated to be worth several billions of dollars—and it’s increasing as we speak. Research firms expect a compound annual growth rate (CAGR) of around 24% for chatbots in the next 5 years.* This is enormous, and pretty fast, growth.

Rob: Now that’s significant growth. How do you see changes in the philosophy of services in a consumer-driven economy?

Kunal: We know that the concept of services has always been about people-centric delivery—people delivering work to other people. In this philosophy, human connection has always been important, but what that looks like has changed over time. Traditionally, services focused on near-shore delivery, but industrialization and globalization resulted in leveraging economies of scale, and services became a mix of near-shore and offshore delivery. But still, human touch remains important everywhere.

The next drastic change happened when services began to incorporate automation to cater to more people in a shorter delivery time. And then came the incorporation of AI or machine learning. Today’s conversational bots take advantage of AI to make services more efficient, consistent and intelligent.

All kinds of service providers now incorporate chatbots into their work—for customer experience, employee experience and interdepartmental operations. For example, when finance needs information from procurement, or procurement needs information from manufacturing, the recent premise is that different departments communicate through enterprise resource planning (ERP) solutions, which can improve drastically through the incorporation of chatbots. Everyone has started adopting this principle now.

Next, I’m expecting the use of bots for services to evolve with 5G networks and related technologies. In India, we’re very actively working to incorporate more 5G networks, and when we package it with other technologies, such as AI, to improve services and make them more consumer-centric, we’ll continue to see drastic change in the coming years in the philosophy of services.

Rob: That’s very interesting. So, how do clients start the journey of transformation using chatbot technology? What advice do you have??

Kunal: Clients are all in different phases in their transformation journey, but most have started embracing digital transformation. With COVID-19, they know they need to speed up their digital transformation. In IBM Consulting, we often see that when organizations are looking to use bot technology in their business transformation, we have to understand what journey those clients are on. What is their need? What aspect of their business outcomes do they want to address with chatbot technology? This is the starting place—identifying the business need and the clients’ goals. In doing so, we can help them evaluate where a chatbot might help them further their goals.

In highly interactive back-and-forth transactions, chatbots can offer significant benefits to clients—and we can help them figure it out.?

?Rob: In terms of the services IBM Consulting can provide to clients, how can we help them?

Kunal: Our cognitive enterprise offerings are helping businesses think about developing intelligent workflows that help any consumer of data to consume it effectively. So, again, we look closely at the problems clients are trying to solve and focus on helping them solve them using the best technology for the job.

You and I are part of IBM Consulting for Oracle, and we know that Oracle has been thinking for a long time about helping clients build intelligent enterprises. When we work with clients, we recognize that enterprise environments can be complex, and the target solution will be used by numerous people. Therefore, we want to make sure our solutions—chatbots or otherwise—will be easy to use. If we’re building a chatbot solution, we know that bots require training in natural language processing (NLP) and machine learning. We must build in the right amount of time to properly train a chatbot so it’s ready to meet the client’s need. Until recently, the focus was on how effective a self-services platform can be for the enterprise, and now it’s on how seamless and easy it is to retrieve the answer to business queries through bot technologies.

Rob: Perfect. Thank you. So, what is the client’s immediate call to action? If you could gaze into your crystal ball, what do you believe the next 3 to 5 years will look like in this space?

Kunal: For clients, solutions like chatbots require specific use cases. It may be true that organizations need to modernize their technology generally, but I always recommend they start with a well-defined business problem they’re trying to solve and then see what technology can help address it. Once the business need is clear, we can help clients determine what journey will lead them toward it. A consultant or service provider like IBM Consulting can help guide them in figuring it out.

Regarding the future of this space, I think we’ll see more pay-as-you-go models for services. We already have software as a service, consultants as a service, and it looks like we’re moving toward everything as a service. If everything remains as a service, the only constant will be the client’s own problem statement and the interpretation of that problem statement to help them achieve their goals.

Rob: Thanks. Are there any final thoughts you want to share?

Kunal: As a final point, I want to share what I see as 3 key benefits of adopting chatbots for services: The first is that chatbot technology is a relatively low cost for businesses, with high efficiency. The second is that chatbots offer anytime, anywhere availability. Simple chatbots in services can work 24x7x365, whereas manual human intervention is usually too costly to provide around the clock, which makes chatbots a significant advantage for clients. The third benefit is that chatbots can help deliver a superior experience by enhancing what’s possible in person-to-person services. Chatbot technology has improved to the point that often people can’t tell the difference between a chatbot and a human.

Rob: Great. This has been a really interesting discussion. Thank you, Kunal.

Given the forecasted growth of chatbots in the next several years, we’ll no doubt be seeing more of them. As with other technologies, they’ll likely become more sophisticated as they mature. I think it will be very interesting to see how organizations across industries take advantage of bots in the near future.

If you’re interested in learning how cognitive solutions like chatbots can help address your business needs, visit IBM Consulting for Oracle.

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* “The global Chatbot market size to grow from USD 2.9 billion in 2020 to USD 10.5 billion by 2026, at a Compound Annual Growth Rate (CAGR) of 23.5% during the forecast period.” Chatbot Market … Global Forecast to 2026, MarketsandMarkets, March 2021.?