Category Archives: Commentary-Business

Guess Who’s Looking At The HR Tech Market? Microsoft.

By Josh Bersin, Author | Published December 20, 2018 – Updated January 1, 2019
[From JOSH BERSIN, Insights on Corporate Talent, Learning, Leadership and HR Technology site]

Over the last few months, I’ve been spending time with Microsoft, and the company is doing some interesting things in the HR Tech space. In this article I’d like to give you some background, and share why I believe Microsoft is going to have a big impact on the market.

First point:  Microsoft is on fire right now, and your IT department knows this.

First, let me start by saying that Microsoft has entered one its company’s hottest product cycles in years.

In the latest quarter, Microsoft’s revenue increased by 19% to $29.1 billion, and operating income increased by 29% to $10 billion. This growth is based on many things, not the least of which is the tremendous change in company culture leading to one of the company’s most innovative product cycles in years.

Microsoft Financials in Context (CB Insights)

I’ve been following Microsoft since my days at IBM in the 1980s, and it has always been a powerhouse. Yes, it had rough periods over the last 40 years, but today it generates more than $8 billion in cloud revenue and products like Office 365, Microsoft Teams, LinkedIn and Dynamics are all growing at double-digit rates.

Microsoft Teams:  Messaging And More

Microsoft Teams, a product I believe could re-invent the way we work, is already in use by 87% of the Fortune 100 and is the fastest-growing app in the company’s history.  While products from Google and Slack are exciting to many, Microsoft still owns the enterprise, and the new Microsoft Modern Workplace is amazing to see.

Not only does Microsoft Teams provide messaging like Slack, it automatically transcribes and translates video and audio, it serves as a meeting platform, and it is going to be positioned as a replacement to Skype. I’m sure your IT department has plans to roll it out.

(More on this later, but if you really want to understand it, read this article – it describes how Microsoft Teams was built.)

Second point: Microsoft understands HR.

While Microsoft doesn’t specifically sell to HR today (its sales teams focus on technology, tools, and industries), the company really understands this space.

Satya Nadella’s book, “Hit Refresh,” is one of the most important books you can read about corporate culture, leadership, and learning. In many ways, it is a manifesto for the new world of work, and many of the principles are appearing in Microsoft products.

Just as Diane Gherson, the CHRO of IBM, has played a huge role in transforming the HR profession around topics like agile, AI, and careers, Kathleen Hogan, the CHRO of Microsoft, is doing the same in the areas of culture, leadership, and learning. The company recently hired Karen Kocher (ex-IBM and ex-Chief Talent Officer at Cigna) to lead an initiative for 21st Century Jobs, and many others in Microsoft are looking at ways to reinvent learning.

So the DNA of Microsoft is now focused on the empowerment, development, and inspiration of people.

Third point:  Microsoft is already in the business applications market with HR solutions today.

Microsoft Dynamics, which includes financials, ERP, CRM, manufacturing, and other applications for front-office workers, is over $1.3 billion and grew by 61% in Microsoft’s fiscal year 2018. Its new versions are AI-enabled are in use by companies like Chevron, H&M, and many large and mid-market companies around the world.

(Note: Workday’s revenues are around $2.1 billion and growing at 36% YTY, so Microsoft Dynamics is more than half the size of Workday with almost twice the growth rate.)

While Microsoft Dynamics 365 is not an end-to-end talent platform yet, the company is investing in this area. Microsoft recently introduced Microsoft Attract (ATS), Onboard (an innovative onboarding and onramp tool), and Core HR.  (Core HR is a very light employee record-keeping system today.) Dynamics is tightly integrated into the Microsoft 365 suite, Microsoft Teams, the Microsoft Graph (integrated directory and organizational networking), Workplace Analytics (the company’s leading product to analyze your daily interactions at work), and other Office tools are integrated.

There is a reason to believe Microsoft can thrive in HCM space. HR technology is moving away from the back office and getting closer to employees, moving “into the flow of work.” While SAP, Oracle, and Workday aspire to be a “system of productivity,” Microsoft is already there. So as Dynamics 365 for Talent matures, the product could be more integrated into your desktop than almost any competitor.

Think about the needs of front-office workers (retail, hospitality, service). They need the same types of HR and learning tools that office workers need, yet they often don’t have desks. Microsoft’s products can deliver applications to these workers through the wide array of Microsoft mobile and collaborative products.

And there are a lot of Dynamics customers. While the company does not disclose customer counts, my estimates are that there are more than 50,000 small and medium businesses using these products, so there are many HR departments Microsoft can reach. And most of these customers don’t have much HR technology to replace: most are primarily using payroll as their core system.

(By the way, Microsoft has invested very heavily in AI, building an entire business unit focused on this technology. Dynamics 365 AI is already enabled to provide intelligent alerts for sales, customer service problems, and market changes. Imagine how this technology could be applied in areas like employee retention, fraud, or engagement.)

Fourth point: Microsoft has an amazing sales and partner channel.

Over the last 30+ years, Microsoft has heavily invested in its sales, reseller, integrator, and educator channel around the world. While most large application vendors have a small number of dedicated resellers and consultants, Microsoft has thousands.

My office productivity software, for example, all comes from a large Microsoft reseller – and this particular company is one of the most service-oriented providers I have ever done business with. So as the company rolls out more products in HR, there are literally thousands of integrators to help make it work for customers.

Fifth point: Through LinkedIn, Microsoft has a very strong reach to HR buyers.

While Microsoft did not traditionally sell to HR, LinkedIn always has. LinkedIn, which is now over a $5 Billion business growing at 38% YTY, is rapidly expanding into almost every area of the HR technology landscape. LinkedIn Recruiter has become a standard tool for almost every talent acquisition professional. LinkedIn Learning has more than 14,000 corporate customers and is growing at double-digit rates. And the company’s recent acquisition of Glint gives LinkedIn (and Microsoft) a leading platform in the market for employee engagement, analytics, and performance management software.

Today LinkedIn is being run as a separate business, but I know the teams are talking. It’s only a matter of time before sales teams start cross-selling products and the Dynamics tools and LinkedIn tools start to come together. Already LinkedIn has announced deep integrations into Office for candidate scheduling and resume generation. More such integration is in the works.

Sixth point: Microsoft has some amazing core technology to take a lead.

Finally, I think Microsoft has moved to where the market is going.

First, as I’ve discussed frequently in the last few quarters, the HR technology market is exploding with innovation and quickly moving “into the flow of work.”

Consider the fact that today you can use Teams to author videos, share them, translate them, and intelligently recommend them to others. While this is not a full-fledged Learning Experience Platform, it’s awfully close. And companies like EdCast (micro-learning) and Disco (recognition and rewards) are already integrated into Teams, with more to come.

While companies like BetterWorks, Reflektiv, CultureAmp, and hundreds of others build better tools for feedback, goal setting, and surveys, they all have to reach your employees. Why not plug into Teams? I think this will happen faster than you may think.

Second, think about Microsoft’s potential solutions in core HR. Yes, there are lots of HR platforms in the market today, and most have taken years to mature. But none really integrate data from your organizational network (with the exception of ADP’s new Lifion) to really model, analyze, and improve your company like it really works. Most are built as hierarchical management systems, designed to manage people as “holders of jobs” in “hierarchies of job titles.”

Microsoft Graph Is Essentially A Graph Database

As most of you know, this is not the way companies work – we work on projects, teams, and programs. By leveraging the Microsoft Graph and Microsoft Teams, the company could build its core HR system into a true “system of record” of your network, storing data on network use, behavior, and real team activity. (I’m not saying Microsoft has announced this today, but I can see this coming over time.)

Third, think about Microsoft’s strengths in analytics, reporting, and AI. Tools like Excel (perhaps the most powerful user analytics tool ever invented), PowerBI (a similarly powerful analytics tool in the cloud), and Workplace Analytics (probably the leading tool for organizational network analytics) – all connected to your core HCM and business application system. Every interaction, survey, comment(feedback), or employee project can be analyzed and viewed by Microsoft tools. All the company has to do is add some application functionality, and believe me they’re thinking about it.

Microsoft Workplace Analytics:  ONA for Every Employee

I visited one of our largest insurance clients a few months ago and they told me they are using a Graph database (Neo4J) to model their customer service organization with more than 70,000 employees. By looking at interactions as well as talent data they have identified new drivers of customer service, retention, and productivity they had never seen before. And all this is based on capturing and analyzing “network and interaction data,” not just “talent transaction data.” Microsoft’s products store all this data, and they have the analytics to make sense of it.

HR In The Flow Of Work Is Here

While I’m not here to promote Microsoft in particular, I see the writing on the wall. As HR in the Flow of Work grows in importance and Microsoft Teams and Office 365 grow, it’s more important than ever that HR technology buyers look at what Microsoft is doing. We’ve had a series of CLO and CHRO meetings at Microsoft recently, and they’re seeing things they like.

The integration points between Microsoft and LinkedIn have barely even been explored, but just think about the possibilities.

Imagine a world where the tools you use to get work done are also coaching you on what you need to learn, giving you tips on your goals, providing nudges to be more engaged, and providing tips and guidance on your wellbeing and capabilities as a manager. And behind the scenes, all this data is being stored, analyzed, and intelligently used to make your work life better.

This is really the next big thing in HR technology, and Microsoft is in an amazing position to help. Let’s see what comes next.

Healthcare firms go for the hybrid cloud approach with compliance and connectivity key

Commentary by James Bourne, Editor-in-Chief, TechForge Media for Cloud Tech News
18 February 2019, 14:02 p.m.

 

It continues to be a hybrid cloud-dominated landscape – and according to new research one of the traditionally toughest industries in terms of cloud adoption is now seeing it as a priority.

A report from enterprise cloud provider Nutanix has found that in two years’ time, more than a third (37%) of healthcare organisations polled said they would deploy hybrid cloud. This represents a major increase from less than a fifth (19%) today.

The study, which polled more than 2,300 IT decision makers, including 345 global healthcare organisations, found more than a quarter (28%) of respondents saw security and compliance as the number one factor in choosing where to run workloads. It’s not entirely surprising. All data can be seen as equal, but healthcare is certainly an industry where the data which comes from it is more equal than others. Factor in compliance initiatives, particularly HIPAA, and it’s clear to see how vital the security message is.

Yet another key area is around IT spending. The survey found healthcare organisations were around 40% over budget when it came to public cloud spend, compared to a 35% average for other industries. Organisations polled who currently use public cloud spend around a quarter (26%) of their annual IT budget on it – a number which is expected to rise to 35% in two years.

Healthcare firms see ERP and CRM, analytics, containers and IoT – the latter being an evident one for connected medical devices – as important use cases for public cloud. The average penetration in healthcare is just above the global score. 88% of those polled said they see hybrid cloud to positively impact their businesses – yet skills are a major issue, behind only AI and machine learning as an area where healthcare firms are struggling for talent.

It is certainly an area where the largest vendors have been targeting in recent months. Amazon Web Services (AWS) announced in September a partnership with Accenture and Merck to build a cloud-based informatics research platform aiming to help life sciences organisations explore drug development. Google took the opportunity at healthcare conference HiMSS to launch a new cloud healthcare API, focusing on data types such as HL7, FHIR and DICOM.

Naturally, Nutanix is also in the business of helping healthcare organisations with their cloud migrations. Yet increased maturity across the industry will make for interesting reading. The healthcare IT stack of the future will require different workloads in different areas, with connectivity the key. More than half of those polled said ‘inter-cloud application mobility’ was essential going forward.

“Healthcare organisations especially need the flexibility, ease of management and security that the cloud delivers, and this need will only become more prominent as attacks on systems become more advanced, compliance regulations more stringent, and data storage needs more demanding,” said Chris Kozup, Nutanix SVP of global marketing. “As our findings predict, healthcare organisations are bullish on hybrid cloud growth for their core applications and will continue to see it as the ideal solution as we usher in the next era of healthcare.

“With the cloud giving way to new technologies and tools such as machine learning and automation, we expect to see positive changes leading to better healthcare solutions in the long run,” Kozup added.

Photo by Hush Naidoo on Unsplash
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What is the next evolution of Process Robotics?

The Feb 15, 2019
The By Simon Shah, Chief Marketing Officer, Redwood Software

The use of software-based robotics and automation to carry out common tasks that make up the plethora of business processes is what we’ve been doing in one form or another at Redwood for 25 years. But the nature of RPA is not one that is static, it’s one of continual evolution.

For RPA users, it means the way they assess the potential costs and benefits of deploying RPA has changed – it’s no longer good enough to simply be able to remove the human effort from a single process, or set of processes.

Newer RPA alternatives, however, has ushered in new capabilities that allow businesses to robotize as many or few back- and middle-office tasks as are required – whether that’s a focused function, or end-to-end automation. The key point is to provide that flexibility and to do so more easily than ever before. And without the need for unnecessary human input or significant resources.

To achieve this, robotics solutions need to encompass some core capabilities and characteristics:

  • They must be easily scalable in a linear way. Getting locked into a cycle of hardware upgrades and software licensing requirements isn’t going to help you bring down TCO or deliver against your automation targets.
  • They must use a transparent, predictable pricing model – not being able to accurately predict robotics and automation costs is bad for the industry’s reputation and bad for customers.
  • They must incorporate ready-to-use process components to allow the business to create automated processes while eliminate significant development and maintenance costs.

Crucially though, what sets RPA apart is the ability to truly augment – rather than simply replicate – the work of humans. The notion of a cobot – a collaborative robot – is technology that’s designed to enhance human capabilities, to enable us to do more, not to replace people entirely.

The definition of RPA 2.0 is likely to vary a little in the technical specifics. For example, does it need to involve artificial intelligence or machine learning? That depends who you ask. But what it should mean to businesses is scalable, predictable process automation without the need for third-party add-ons, sprawling technical development teams or the doubt caused by opaque pricing practices.

Where each nascent piece of technology fits into that picture – and how they can best be combined – is still being worked out. But with a focus on measurable outcomes, businesses can ensure they’re always getting the best out of their robotics solutions.

If RPA was replicating human effort, robotics is all about augmenting it.

Internet of things meets consumer packaged goods

By Josh Garrett, President, COO and Co-Founder of MOBI (at the time of his post on 06 Nov 2018)
[Josh is currently President – MMS at Tangoe]. Guest Contributor to TechTarget’s IoTAgenda.

While IoT is more popular than ever among enterprise technology teams, some industries have been slow to invest. Unlike MOBI’s consumer packaged goods (CPG) sector customers, companies without a mobility management partner are hesitant to sacrifice the large amount of time, money and labor required to deploy IoT. In fact, the CPG industry overall ranks second to last in terms of IoT spending versus total revenue. Less than three-tenths of one percent in revenue generated is invested into IoT, while globally the average industry invests more than four-tenths of one percent — or more than 25% in additional revenue than CPG.

Also, IoT endpoints have historically been used by retailers to better collect, analyze and interpret consumer behavior to improve the customer experience. Unlike retail, inexperienced CPG mobility programs are more likely to rely upon in-store audits and partner-shared insights to understand consumer behavior instead — making IoT feel more like a luxury than an absolute necessity where gaining market insight is concerned.

However, things are starting to change. CPG companies are uncovering new, valuable uses for today’s IoT technologies that weren’t possible a few years ago. Here are eight examples that show how IoT is benefitting businesses in this sector:

1. More personalization
IoT offers CPG companies tremendous advantages and new product personalization options. By creating new channels to collect and understand market data more deeply, industry players can use these technologies to increase customer interaction, satisfaction and loyalty with specially designed offerings.

Some organizations are even combining offline tactics with IoT to better enable customers and increase sales. Advanced systems can detect when someone is browsing an out-of-stock product online and automatically offer directions to a nearby store that has the item in stock along with a discount coupon to make up for any inconvenience.

2. Less delay
Sensors and other mobile endpoints can help CPG eliminate traditional manufacturing and supply chain gaps. Relevant stakeholders can now be alerted immediately if anything goes wrong with real-time data streams and statuses attached to individual product shipments.

Predictive maintenance tasks fueled by IoT systems also greatly reduce the likelihood of unplanned network errors and accelerate company response times should an issue arise.

3. Better collaboration
IoT fuels stronger, more meaningful CPG relationships with retailers by creating a chance to collaborate and co-invest in tech-driven initiatives. In doing so, both parties aim to eliminate out-of-stock scenarios and improve product availability, leading to long-term strategies and success.

4. Enhanced insights
An influx of new consumer data enables the CPG industry to identify behaviors, patterns and trends that companies couldn’t reveal otherwise. That means smarter spending and product development decisions that align with market demands.

Organizations with a digital sales presence will even be able to use IoT to suggest products, offer discounts and push notifications to online shoppers as they browse offerings, increasing the potential for add-on sales and enhancing the customer experience.

5. Real-time tracking
Moving and transporting goods also becomes more accurate and aware with IoT’s integration. Advanced sensors can help CPG enterprises monitor real-time fluctuations in temperature, product status and so forth to optimize operational processes and potentially create more effective, efficient workflows.

6. Smarter stocking
Smart shelves and inventory stocking systems use IoT to make continuous product updates that alert CPG organizations when item levels are low. This not only gives retailers the ability to avoid empty shelves and dissatisfied customers, but also helps CPG companies replenish products before a competitor has an opportunity to replace it.

7. AI-driven assistance
When combined with artificial intelligence, IoT systems give CPG enterprises the ability to scan products and streamline inventory management tasks. These enhanced technologies can even automatically recommend products to digital consumers in a way that maximizes sales and the impact of special promotions.

8. Global security
Through RFID and a GPS, IoT makes it possible to track products at more in-depth levels than ever before. CPG companies that use these systems ensure accurate and timely deliveries while simultaneously minimizing theft and loss incidents.

If these benefits sound too good to pass up, an IoT initiative may be in your organization’s not-too-distant future. If you’re considering an advanced device deployment for the first time, however, keep these three things in mind:

1. Employees
While there are impressive IoT technologies capable of vast functionality, ultimately the success of any enterprise deployment depends on the digital maturity of the people interacting with it. Even the most advanced systems fail if workers can’t figure out how to use them or aren’t willing to try.

Since IoT is expected to impact consumer behavior, employee productivity and HR management, CPG companies need to formulate strategies and carefully implement these new devices.

2. Alignment
Enterprise workflows will also be impacted by IoT’s workload. Some processes will need to be redesigned or combined with others to make these advanced technologies perform to a level that satisfies business needs.

Data that’s collected and processed by connected IoT endpoints empowers decision-makers and supply chain leaders with information to satisfy customers and strategically grow revenue.

3. Data
The speed and fluctuating types of data generated by IoT systems can be challenging for CPG organizations to manage and secure. Unless a business is willing to invest in internal data storage systems, be sure to research innovations like hype data technology, additional security layers and data storage facilities to have a plan in place before deployment starts.

As mobile technology grows more advanced and integrated within the CPG sector, IoT will help these companies drive innovation and productivity. While the business benefits can be tremendous, it takes careful planning and a strategic approach to make these initiatives impactful.

All IoT Agenda network contributors are responsible for the content and accuracy of their posts. Opinions are of the writers and do not necessarily convey the thoughts of IoT Agenda.

 

How to use AI in your business in 2019 — AI sweet spots

Step one in figuring out how to use AI in your business is to know what AI can and can’t do today. David Petersson lays out 2019’s AI sweet spots for enterprise decision-makers.

By David Petersson, Freelance Writer for TechTarget – Last published in January 2019

As we begin 2019, AI technologies are attaching themselves to more and more aspects of our lives. If you doubt this, just ask Alexa. The symbiosis makes sense. The tons of data we and our man-made machines generate today have proved to be a wonderful training tool, turning a class of technology we don’t understand all that well into crackerjack pattern-detecting systems. Today, AI can:

  • Recognize faces
  • Recognize objects
  • Recognize malicious behaviors
  • Recognize language patterns and be used in translation
  • Manipulate images

In the future, AI technologies will do many more deeds — good and bad — previously done by humans.

Still, for CIOs and business leaders immersed in how to use AI in your business, it is crucial to understand what AI can do and what it can’t. A lack of understanding will result in unrealistic expectations, wasted time and budget on ill-conceived goals, and missed opportunities to automate tasks that otherwise would require an enormous human workforce.

This column explores how to use AI in your business by reviewing areas where AI can help companies operate more efficiently and effectively; the analysis is supplemented with some examples of AI software targeted to solve or improve specific enterprise pain points.

AI in your business: Statistics

Machine learning grew out from big data and quickly carved out a role in analytics. We used classifying algorithms to, for instance, separate spam messages from legitimate ones. We did this by converting the words to numbers the computer could understand, and then measured which types of words were most relevant to spams and which ones appeared mostly in innocent messages. These classifying algorithms evolved into being able to classify people based on their choices and what they liked, a skill put to use in the infamous Cambridge Analytica case.

Soon, this data could be used also for “predictions,” i.e., once you have classified people into certain groups, you could also take action based on those classifications. For instance, CrystalKnows uses AI to classify people into 64 different personalities and then uses that data to assist marketers and sales people to better craft their messages to their leads.

But now, we have AI that helps us to understand statistics, turning numbers into narratives that non-data scientists can grasp, or that can highlight important information that should be given. For example:

  • Automated Insights Inc., founded by former Cisco engineer Robbie Allen, uses a process called natural language generation to turn big data and charts into human-sounding narratives, making them much easier and faster to comprehend. Gartner predicts that “by 2020, natural language generation and artificial intelligence will become a standard feature of 90% of modern BI and analytics platforms.”
  • Salesforce uses its Einstein AI technology, to surface actionable data to sales reps, allowing them to focus on the leads that have a higher chance of converting.
  • The Boston startup Laudio uses AI to analyze multiple data sources to improve staff retention; it can detect when a member should be praised for a job well done or when they need support.
AI in your business: Conversation

Remember the chatbot bubble? Chatbots were supposed to replace apps and human agents to a large degree, but many of them failed as they were not smart enough. The problem in any AI learning is that the system does not really know what it is dealing with. An AI bot can identify cats, yet it does not know what a cat is, or what an animal is in general. AI’s comprehension is very limited and “narrow,” while for full understanding, we would need “general AI.”

The right way to implement AI is to first drill down to the core use case you are wanting to optimize. [The wrong way to approach AI] is to think it will magically fix your organization. In fact, AI-enabling technologies shine a spotlight on inefficient processes and systems.

Anthony Macciola CIO, Abbyy

Initially, to let AI engage in a meaningful way in any conversation, the system would watch for specific keywords. Of course, this system is very limited due to the many ways we humans tend to express ourselves, and it is very difficult to predict all variations. In those instances, the system either has to throw an exception or refer to a human operator.

Still, this does not prevent AI from becoming an expert in its own specialized fields.

Unbabel, a Lisbon-headquartered startup, developed AI technology to remove the language barrier. Using Unbabel, companies have managed to serve clients all over the world in 28 different languages — in one instance, 15 staff members could take on tasks that would normally require hundreds of staff members.

So, even if AI still can’t completely replace human workers, its sweet spot lies in augmenting them. According to Kaitlyn Lloyd from Automated Insights, “The best way to implement a valuable AI strategy is in close partnership with humans, with the AI serving as augmentation to human intelligence.”

Lloyd’s argument for how to use AI in your business is that humans have the ability to relate on a personal level; we have strong emotional intelligence and communication skills. Artificial intelligence, without human teaching, can’t learn these soft skills — at least for now.

Use AI in your business for mundane tasks

It’s 2019 and we still don’t have autonomous AI-driven vehicles. The ones that are operating continue to be subject to errors and fatal incidents. It has become evident that relying solely on AI is not a short-term answer for self-driving cars, and companies have moved to using LiDAR or inter-vehicle communication systems to cope with the shortcomings. Billions of dollars have been devoted to this industry, which faces many bumps in the road ahead.

Thus, when you set off for investing in AI for your business, it is imperative to have a correct AI strategy. As Anthony Macciola, CIO at the text scanning and optical character recognition software company Abbyy, put it: “The right way to implement AI is to first drill down to the core use case you are wanting to optimize.”

The wrong way to approach AI? “It is to think it will magically fix your organization. In fact, AI-enabling technologies shine a spotlight on inefficient processes and systems,” Maccioloa said.

In other words, in plotting how to use AI in your business, it is best to start from the mundane tasks and inefficiencies you face and build up from there.

AI takes A/B testing to new level

As mentioned earlier, AI has the capability to automate many of your tasks. Ascend, software from Sentient Technologies, is a good example of how to use AI designed to address a specific pain point. Remember A/B testing? The logic there is to test two versions of your website (or email) and see which one works better, so eventually you can keep the one that’s performing better.

Ascend uses AI to take A/B testing to a new level, letting the system try many different combinations automatically over time and gradually find the best combination. It uses a technique called “adaptive evolutionary optimization,” which is based on Bayesian and traditional statistical techniques to predict the performance of the winning versions.

As seen from the previous example, not only addressing the correct pain point is vital for a successful AI strategy, but so is the type of AI approach taken by your provider.

Consider the approach taken by Endor, which sells predicative analytics software co-developed at the MIT Media Lab by co-founders Alex Pentland, the Toshiba Professor of Media Arts and Sciences, and Yaniv Altshuler, a former MIT postdoc. The company’s aim is to predict customer behavior, but in order to build its AI, Endor uses the Social Physics theory: the science for understanding human crowd behavior based on big data. This way, the company not only knows what data to train the machine learning algorithm on, but also what parts of that data is most important and how it should be used.

AI takeaway

And finally, as you build a strategy for how to use AI in your business, keep expectations realistic. Abbyy’s Macciola pointed to the mistaken notion some have that AI will completely replace knowledge workers. Echoing Lloyd’s argument that people have emotional intelligence that today is lacking in machines, he also underscored the fact that people have more advanced training and understand the company’s core values in conjunction to the technology processes better than machines at this point. “The skilled worker will always be vital to the success of the company,” he said.

AI is awesome. It’s doing things that previously would need plenty of man-hours and extra costs, and because it can automate so many things at a fraction of the costs, it is opening new opportunities for innovation and creativity.

But AI has its limits. We are still far from artificial superintelligence and, in many cases, AI still needs human assistance. It’s safe to say that AI’s sweet spot is in taking on the repetitive, mundane parts of your business and incenting humans to focus on what only they can do (for now): Be creative.

Disrupting the Outsourcing Model

Steve Maylish and Shannon White, Fusion Biotec – 01.31.19
Contributors to MPO Columns

The rise and relative success of companies dealing in cloud-based systems has revolutionized how we handle data. This is prompting a shift away from traditional software, hardware, and legacy systems, and enabling companies in new and unexpected ways. As cloud-based data systems rise to meet the needs of the modern world, will legacy systems eventually become obsolete? How will this change outsourcing?

In last June’s MPO 15-year anniversary issue, we looked at medical device outsourcing changes over the last 15 years. The industry changes cited were mostly based on OEM attitudes, improved quality and standards, increased competencies, and a growing willingness to outsource. Now we are in the midst of a new paradigm shift. Examples of this are everywhere: Netflix versus Blockbuster, Amazon versus retail, AirBnB versus hotels, and Uber versus taxis—just to name a few. Since the advent of cloud computing, disruption has accelerated. As traditional business models change, will medical device outsourcing experience disruption?

There are great advantages and disadvantages associated with cloud computing and software as a service (SaaS)—some of them more real than others. SaaS delivered via the cloud often doesn’t require users to load, maintain, update, migrate, partition, archive, audit, backup, or license software. It often costs less, reduces the need for IT services and hardware, and is easier to use. But what about the downside? Security, always-on availability, performance at scale, enterprise compliance, and data integrity are important for cloud services. These features are essential for the cloud business model.

First let me share a success story: Salesforce, which launched in 1999. It initially offered a simple, low-cost, cloud-based system to service small and medium-sized companies, but now have disrupted the customer relationship management (CRM) industry. Eventually, Saleforce’s CRM software outsold IBM, Oracle, SAP, and Microsoft. By building a cloud-based system and offering SaaS, users can collect, categorize, analyze, and distribute information on product sales, customer purchases, and sales staff performance. The information can be shared across sales departments, supply chain, management, and executive teams. It can be used on smartphones, tablets, laptops, and desktops. Cloud computing provides shared infrastructure and instant scalability. Salesforce provides continuous improvement for their services.

According to “disruptive innovation” theorist Clayton Christensen, “Disruption describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.” This is certainly true of companies like Netflix or Uber. In fact, a number of industries have been disrupted by SaaS and cloud computing: HR services, payroll services, booking systems, project management, IT, accounting, CRM, software, and eventually medical product outsourcing.

For a healthcare provider like Kaiser Permanente, big data can be complicated and an impediment to change. Sam Gambarin, director of the Cloud Services group at Kaiser Permanente, said, “We wanted to provide our [software] developers with a standardized central platform and shorter time to market. Also, we wanted to optimize our existing systems of records.” To achieve this, Kaiser uses a hybrid cloud solution: an internal data center and external cloud provider with IBM Cloud, plus multiple SaaS providers.

Providence St. Joseph’s Health system uses the cloud-based electronic health record from Epic because its interoperability enables them to practice better medicine, receive appropriate reimbursements, and improve patient experience. For decades, there were failed startups in the healthcare interoperability space. Migrating electronic medical record management to the cloud now provides a viable solution.

While cloud migration is happening at large healthcare providers, disruption is more likely to come from startup companies like Bright Health, Devoted Health, Clover Health, and Oscar Health—Alphabet’s $1B+ investment. These “payvidors” offer patient-centric care designed to support and monitor patients by using data science to cut costs and promote preventative care. Some work with prescription services. Others use genomic data, machine learning, and artificial intelligence to promote health. Some offer in-home primary care programs and house calls.

On the medical product outsourcing side, consider contract engineering. Before the cloud, engineers and hobbyists with small budgets couldn’t afford most professional engineering design software like SolidWorks or Cadence. Now, a number of SaaS companies like Onshape or CircuitMaker offer inexpensive or free software that allows designers to share their work and build on others’ work, decreasing time and reducing risk. The continuously growing database eliminates the need for footprint design for common parts. This open-source approach has helped the maker community flourish in recent years, building on the efforts of companies like Raspberry Pi and Arduino to make powerful hardware building blocks widely available.

For mechanical design, Onshape is a SaaS model created by former designers of Solidworks, a legacy software package. Unlike Solidworks though, Onshape updates itself silently every two weeks and is billed per engineer at a low monthly fee. It holds major advantages over its predecessor with its ability to be used in real time by an entire design team located anywhere with a network connection. Import and export capability allows Onshape to ease the transition from legacy systems.

Disruption will happen in the industry as free, open-source development software is introduced to hobbyists and later works its way through commercial businesses. With cloud and SaaS, multiple people can view a file at once, reducing the amount of time spent on editing. Users can share the document with a large number of people through their browsers, inviting them to view and edit the document in real-time. Furthermore, any edits to the documents are saved automatically as the author types, which prevents accidental loss of data.

Concerns about data integrity during the switch to cloud-based systems are natural and bound to arise. Questions regarding security, accessibility, and cost are among the most asked. Data safety is one of the most prevalent concerns and why most cloud service providers make security their top priority. Cloud infrastructure is constantly monitored, while controlled access to data and frequent auditing reduce the risk of human error and flaws in security protocols.

One company facilitating migration to the cloud is Corent, whose SurPaaS platform analyzes and migrates software applications to the cloud and can even rapidly transform the software application to a SaaS model. Scott Chate, vice president partner and market development at Corent Technology, predicts, “The ongoing global transition to the cloud-based SaaS model is going to affect every industry.”

In a few respects, however, cloud fails to meet the precedent set by its legacy predecessors. Cloud software is often not as refined as older legacy software. Due to this, experienced legacy users often balk at using the new software. Furthermore, cloud systems are often heavily dependent on network reliability and bandwidth. Any outage can leave companies stranded without access to data. Most drawbacks to cloud programs, however, are mitigated by their higher processing power (provided from running on a server) and ability to efficiently update.

It was easier for our company to start in the cloud and incorporate SaaS into the business model. The cloud offers us many advantages. We can securely work from anywhere, using any computer or mobile device. We can leverage previous design work. Reliability is extremely high because cloud providers can invest in infrastructure. Data is stored in a centralized facility with stronger security measures than we could provide on our own, and files can be downloaded when needed. It’s simple to add, remove, or change software and users. Total cost is lower because we require less physical infrastructure and support staff. Our customers’ experiences have changed the way we connect and collaborate, how we do business and, by default, how we innovate. Ultimately, we are more efficient.

Engineering service providers launching new companies today can begin in the cloud, requiring less physical infrastructure and support staff. However, the industry is just beginning to shift from legacy software to SaaS, which won’t be easy for established medical device companies. Eventually, it will transform contract engineering and contract manufacturing services as they migrate to smart manufacturing. Cloud computing is so disruptive because it pressures entrenched firms to modify their business model, often involving changes to business strategy, revenue models, sales channels, and technology.

Jeff Hawkins, president and CEO of Truvian Sciences, reveals, “When Truvian decided to leverage engineering partnerships, we didn’t want to outsource in a classic sense but rather find partners that could operate as an extension of our team. In order for that to be successful, you need a partner with the right company culture and the right tools to facilitate real time collaboration, regardless of where the teams are physically located. New technologies are allowing us to collaborate digitally with our partners on everything from engineering designs using Onshape, to project planning using Smartsheets and general project file sharing using tools like DropBox or Box. These tools make it possible for anyone without training to participate in the process from any location with the [use] of software viewers.”

Technology is evolving faster than ever and business models are changing. The cloud is more secure, cost-effective, and accessible than alternatives, and it’s getting more powerful every year. There are now millions of students using the cloud exclusively. This upcoming generation lives without many past computer constraints.

Like the education system and numerous other industries, the cloud is beginning to disrupt medical device outsourcing. Entrenched companies with legacy systems currently have the high ground, but the cloud is changing everything. With today’s services, remote teams can connect instantly. Cloud services allow for SaaS usability without downloads or installs. Cloud providers make instant scalability possible. Cloud computing and SaaS provide hosting, backup, and security running on various operating systems and mobile apps. If you’ve ever been frustrated with IT requests, firewalls, or internet controls, there’s good news—a solution is on its way!


Steve Maylish has been part of the medical device community for more than 30 years. He is currently chief commercial officer for Fusion Biotec, an Orange, Calif.-based contract engineering firm that brings together art, science, and engineering to create medical devices. Early in his career, Maylish held positions at Fortune 100 corporations such as Johnson & Johnson, Shiley, Sorin Group, Baxter Healthcare, and Edwards Lifesciences.

Shannon White is an engineering student, SaaS user, and intern at Fusion Biotec.

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