Smart Business

Interview: John Gikopoulos about IoT, RPA and AI

Looking at IoT, RPA, AI, and the future of business with Infosys Global Head of AI and Automation, John Gikopoulos.

How would you characterize the outlook for RPA, IoT, and digital integration?

Throughout our journey, I will talk about RPA, IoT, and AI as one logical chain. All of this may not be clear to most enterprises. If you really looked at most of the practical solutions you have out there, this is a logical sequence of events starting from the opportunity side. For lack of a better term, this is the new industrial revolution.

First, having the ability to literally have every part of the supply chain, every part of an automated production line, every tool and component talk to us is unprecedented. Right now, technology will allow us to do that.

Second, in terms of process automation, the ability to eliminate the human touch from repetitive tasks creates huge advantages in cost optimization and efficiency and also reduces the need for rework. It creates a much more effective work space in manufacturing or retail industries where we see huge numbers of repetitive tasks.

John Gikopoulos IoT RAP and AI

John Gikopoulos had a lengthy career at McKinsey before he moved to Infosys, a global business consulting, information technology, and outsourcing services company that does approximately one quarter of its business in Europe

Thirdly, with respect to AI, within that area, the most important element – and I’m not talking about a cognitive revolution or machines taking over the world – this is right now. What we have is the ability to use machine learning and deep learning to understand the link between cause and effect and rectify those things on any industrial process in a fraction of the time it would once have taken. This is something that has real practical value. The possibilities are endless in reducing cost, reducing rework, improving the customer experience, cutting time to market, and making sure the whole enterprise is more effective in the end. This creates a huge value for organizations that are willing to embark on this transformation.

What are the primary challenges in taking this direction?

I think what a lot of companies forget is that, first, this needs to be end­-to-­end transformation. Companies need to have an end-­to­-end perspective. The only certain way to destroy shareholder value is to misunderstand that because otherwise, at some point in the process, the legacy process will create problems. So, it is a really big challenge; you have to understand how to reap the benefits, you need that end-­to-­end perspective.

Second, it is expensive. If you look at any business case, there are few situations where you could actually say the investment will pay for itself in one to six months. This needs to be a strategic decision. It can’t be a trial and error type situation and there needs to be senior stakeholders – a C­level commitment to make sure it works.

The third part is that there needs to be an operational or organizational change management program supporting the journey. There has been a lot of talk about the fear that IoT and automation brings to employment. In my experience, when you try to fnd actual examples, automation is not the problem that people claim. It is not evident that people are uninterested, they’re not so much afraid as simply interested in creating the next level of efficiency. Still, it is important to understand that there will be challenges within these processes with people, so any type of effort needs to be accompanied by serious HR mechanisms that help create additional value for people that are involved in more automated processes.

This is where the true multiplier exists in companies that embrace IoT and RPA. If you think of where most of the value is, in the studies I have run, depending on the industry, end­-to-­end, digital optimization can bring in benefits of 30 to 40 percent or even 60 percent. Beyond that, if you can redeploy people to higher value activity, the benefits can double or triple. But it is extremely important to make sure the change is supported by organizational change programs.

Should we be worried about cybersecurity?

Many companies tend to overlook this, especially when testing solutions. If you look at the most common solutions, they are mostly in the cloud. Now, this would automatically create risks that, for the average industrial players, are unfathomable. The fact that your machine tools and supply chain elements can talk to you means they could also talk to anyone else; so, this is something that companies need to take very seriously. It is not something that can be overlooked.

What about competition?

The final part is the fact that in today’s world, the barriers to entry for new products and new parts of the market and new industries, they’re just crumbling. And this creates a time impetus like we haven’t seen in the last 30 years in most industrial applications.

For example, I’m currently discussing these technologies with a Dutch supermarket chain that wants to embrace IoT and smart pricing. They would like to be able to have the prices change throughout the day and through the lifetime of the product. For this particular chain to just buy the sensors is a 400­m illion­euro commitment; it is huge. The problem is that one of their key new competitors is basically an online player who managed to raise in a second or third round of funding some 150 million euros. They will probably have no need for further investment because their entire supply chain is digital to begin with. So, these guys with zero “brick and mortar” investment and no brand value have managed to infiltrate key markets where my client makes most of their money and they have effectively destroyed a huge amount of value for that company. This is where new technology makes it important to make fast decisions. On the other hand, you can also imagine the level of threat that this technology enables.

What is the future for these technologies over the next few years?

I think although there are a lot of industry specific trends, in general, like with every other type of transformation and shift, you will see front­runners and stalwarts, but the trends are the same. Having said that, I do see three megatrends emerging.

For lack of a better term, this is the new Industrial Revolution

First, for these new players, the players that have no legacy, they will be entering the market much quicker and much more aggressively than any of us have been used to for the last 20 or 30 years. I think this is something we’ve already seen in digitalheavy industries like retail, travel, and logistics. For example, what we’ve seen with Booking.com is something that ten years ago would have been just a figment of the imagination – travel agents would have laughed. Now, it is a reality and the reality has been supported to a large extent by RPA and digital and AI­ enabled technology – though not so much IoT in this case.

Second is the race that established players will have to run to make sure that they catch up and they can keep their customer base away from the grasp of the big four or fve, by which I mean companies like Amazon, Google, and Microsoft. Right now, we see that gap widening even in industries that feel themselves to be relatively safe due to regulations such as banking and insurance. It wouldn’t take much for those big players to decide to dip into those industries and take over the entire client relationship that they now control to a large extent anyway by managing these interfaces. What I tell my banking and insurance clients is that if you ever lose the interface with the customers, once that happens, you’ve lost the customer, you become just another vendor or provider and someone else will make the profit off of the customer that you think is yours.

The third trend is that we will see an acceleration in terms of end-­to-­end digital solution options like IoT and RPA. The reason I say that is I think when you compare Europe versus the Americas, it might be a slightly different pace, but it is not really that different. Some people have said the US and North America are more advanced in some areas but I think at the end of the day, the pace is similar, though the culture of decision­making is a little different. You will see that the moment you start to have the first big players go into these solutions, the others will follow quickly. It’s a game of seeing who does it first and watching to see whether the investment they make pays for itself. So, the thinking is let someone else be the front­runner and take the risk, but I think everyone understands that if they don’t get on the bandwagon, the game is over.

Regarding your warning about the need to have a strategic point of view, RPA and IoT are often pursued by business units or departments. Is that a problem?

I think at the heart lies the fact that I do see all of these technologies being part of the same journey. You need common denominators within that effort or it can be a failure; you won’t get 100 percent of the benefit. Let me elaborate. A first key question for whatever I’m investing in is, what is the business value? Unless that discussion takes place takes place at a Clevel, you’ll never have a full answer. You will never have gotten it really right. It will be a country or business unit answer, not a company­ wide answer.

Eliminating the human touch from repetitive tasks creates huge advantages in cost optimization and efficiency

Second, let’s not forget that a lot of people think of the world we live in a world where everyone is friends. But it is not. Most organizations have been controlling huge units, which equals strength. People aren’t that forward­ looking when it comes to foregoing that strength, so what you see is that all these technologies are able to create huge amounts of value, but they aren’t based on huge armies of people. Who will be the first CIO or CEO who hands over their army of people and resources to undertake a solution that might or might not create value? It won’t happen in a day or two. It will take time, especially if they have revenue and profit from their current operation. That is why the world we live in is so prone to disruption. If I have no legacy, on the other hand, I can make that decision. A five­ year­ old company will decide to have an end-to­-end digital solution if they have nothing to lose.

At the end of the day, what we believe and what I believe is that we at Infosys need to play a role of translator. It is a word you’ll hear often from us; we need to translate between the business and technical and the HR requirements to make sure all the different organizations align themselves in view of the value that can be introduced by digital to various parts of their organization.

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