AI platforms will be at the core of true digital businesses: Cognizant

Malcolm Frank, executive VP for strategy and marketing at Cognizant

The combination of social, mobile, analytics and cloud computing, which Cognizant refers to as the SMAC stack, is the next big opportunity, and challenge, that IT services companies have been looking at over the last four to five years. That big change has now arrived, Malcolm Frank, executive VP for strategy and marketing at Cognizant, said in a recent phone interview with Forbes India.

Here are the edited excerpts, on the shifts Cognizant’s clients are faced with, and how the Teaneck, New Jersey-based IT services provider itself has been changing to meet these shifts. Cognizant reports its fiscal first-quarter earnings on Friday.
 
On the big trends that global businesses are reckoning with:
This is a transition that we’ve been looking at for the last four or five years and we saw it coming, and now it’s really here. It’s like a storm you see coming across the ocean some kilometres away and now it’s starting to hit the shores.

We see our clients dealing with two shifts at the same time: the first, for lack of a better term, their master technology architecture, the systems they use to run their companies are going through significant change.

Social, mobile analytics and cloud — those technologies are driving tremendous change within our clients’ organisations. At the same time, probably a bigger issue is that their master business architecture is also going through significant change and its being driven by the technology, and a lot of our customers are asking, ‘are we experiencing our Uber moment?’

What they are going through is, ‘do we have the right business model and the right technology model to compete in our industry going forward.’ That’s the context, the new context that we find ourselves in. As recently as five years ago, when we worked with banks or insurance companies or health care providers, they weren’t asking these big questions. Their questions were much more focused around ‘can you help me increase my customer satisfaction, find efficiencies in the back office.’ So it was about helping them to fine tune the business model that existed in 2010 or 2011.

What we’re finding today is that they are asking these very large questions. Do I have the right model to compete for the next 10 years.

On how technology can drastically overhaul business operations, and slash costs by an order of magnitude:
What they are thinking is, portions of their businesses are physical and industrial, while other portions do need to go virtual, do need to digital. That’s one starting point. A second could be that their cost structure could be completely wrong and so how do they take advantage of the new technologies to reduce their costs by huge amounts — not 5 percent but 50 percent.

When they go into a market, the new customer expectations in the digital world, how is it that in a Facebook world or an Amazon world, where these virtual organisations can build these very personalised curated experiences, and yet when I go to a bank or a hospital, I’m treated like an alien, like they’ve never seen me before.

The second point is, they can run core processes at a cost that is an order of magnitude lower. Take for example a retail bank branch, which is very very expensive in terms of real estate, staffing and so on and yet, the customer interface is very poor. Those are the questions that we are starting to see.

On what Cognizant has been doing to understand the shifts and tap the opportunities:
In terms of seeing the change coming, we created a Centre For Future Of Work about six years ago in Carnegie Mellon University. We also did projects at MIT, INSEAD, Oxford, we started to build out this ecosystem to understand what was exactly going on and that was very helpful.

We’ve built out a group called Digital Works that starts to bring in the new competencies that are needed. This would be helping clients with strategy, for instance. Think of this as a diamond, and there are four pieces that are needed. One, helping clients to think about what is the business model of the future and what is the technology model.

Two, design thinking has become quite popular thinking, when it comes to problems like redesigning a whole new customer experience. Third are the technologies — for instance, a manufacturer wants to instrument its machines and use the Internet-of-things technologies. We are finding that our clients want to do that but don’t know how. Very basic questions like ‘whom do I purchase this from, how much does it cost, how should it be architected, how do I make sure that it is secure.’

Digital works also looked at understanding skill sets, methodologies, price points and contracting models. “Collaboratories" were built to which customers were invited to brainstorm on new ideas and solutions — first in New York and then in London and Amsterdam.

On the growing role of artificial intelligence:
Another area of technology that is building is artificial intelligence. Clients are just starting to recognise that the core of a true digital business business is an artificial intelligence platform and they need help in making sense of the AI world and to apply it in their context.

AI is a significant double-edged sword: it will automate processes on the one hand (reducing the need for human intervention), but will also enhance the human effort in some areas. For instance, robotics process automation is finding use in automating some back-office process automation.

People are also using AI to create super sales people, for instance, by not replacing them, but by giving them all of the information they need, at their fingertips to become much more proficient.

The final piece of the puzzle is industry expertise. Highly regulated businesses such as pharmaceuticals or insurance for instance, require the technology services providers to possess very deep understanding of how they work, including the constraints placed by the regulations.

Those four pieces together — strategy, design, technology and industry expertise — you’ve to bring those four together.