Chris HuffOrganizations across industries are adopting automation to handle use cases including repetitive transactions to complex knowledge-based business processes. Focus is shifting from creating only operational efficiencies to revenue generation. Kofax, a new entrant in the crowded intelligent automation solutions category, claims that it’s solution is designed from the ground up to help organizations enable intelligent automation holistically and exploit its potential fully. What evidence does Kofax have to prove this claim? What set’s Kofax apart from the others in the landscape? Can Kofax deliver on its intelligent automation promise?
Contributor
Transcript
Sanjog Aul [00:00:00]:
Welcome listeners. This is Sanjog Aul, your host and the topic for our conversation is Can Kofax Deliver On Its Intelligent Automation Promise? So many organizations are jumping on the automation bandwagon for use cases ranging from repetitive transactions to complex knowledge based business processes. Kofax claims that its technology solution enables intelligent automation holistically and thus helps the organizations exploit its potential fully but what evidence does Kofax have to support this claim? We have invited Chris Huff, the Chief Strategy Officer at Kofax, to learn what sets Kofax apart from the other competing solution providers and to dig a little deeper to determine if Kofax can genuinely deliver on its intelligent automation promise. So here with me is Chris. Hey, hello Chris, how are you? Thank you for joining us.
Chris Huff [00:00:57]:
I’m doing well. Thanks for having me.
Sanjog Aul [00:01:00]:
So Chris, here’s my first question. What is Colfax’s view on the business value of AI, which is the very fundamental building block of intelligent automation?
Chris Huff [00:01:11]:
Great question. And right out of the gate I can tell there are going to be no softball questions here. So I’m excited to share some thoughts on the market and the value that Kofax customers are realizing. To start fillbanks is an enterprise intelligent automation soft company. We help our customers modernize their business models by automating how work gets done across the enterprise, all while augmenting their human workers. So our view on the business value of AI is that as with any good solution, it starts by first understanding the problem that we’re trying to solve for and in this instance, why is AI valuable and how does intelligent automation enable the value to be realized? I always like to start with macro trends and I use them as gillware to help find the right answers and solutions. So I think if you look out at the macro trends right now, you’ll see there’s an aging demographic challenge, there’s an aging population, there’s an availability skill set availability challenge, the lack of available workers. Generationally we have low unemployment in many countries throughout the world.
Chris Huff [00:02:11]:
And third, there’s a purpose challenge. The newer generation of workers simply seek greater purpose than what they do than previous generations. They’re not willing to do some of the mundane repetitive work that maybe earlier generations were willing to do. So I think as we look at that, we can start to supply and what intelligent automation is in a specific form, which is that AI technology that mimics and augments human actions and judgment such as visual perception, speech recognition, decision making. Now if we can get artificial intelligence to an acceptable form of true human augmentation and I think we found our solution for the aging, availability and the purpose challenges that we just discussed. For these reasons, I think organizations in all regions of the world are really seeking capacity without seeking artificial intelligence or intelligent automation. They’re seeking capacity the means by which they will be able to develop that capacity because they need to deal with the aging, availability and focus challenges. Intelligent automation really provides organizations a very realistic and economical way to add capacity and build the bridge to greater use or consumption of artificial intelligence.
Chris Huff [00:03:19]:
So at Fullpack, we focus on the tactical application of artificial intelligence and automation through our platform to solve issues such as handling unstructured data, removing friction between the collaboration of person and machine and orchestrating the movement of data across the enterprise. And in that period, our intelligent automation platform really brings together AI and automation to create the capacity that allows organizations to work like tomorrow today, truly digitizing operations and workforce across the enterprise. So I would say that is the primary value of artificial intelligence is to add capacity to organizations while empowering person.
Sanjog Aul [00:04:02]:
So Chris, there are many players now in the integrated or intelligent automation solutions category. How are they delivering on the promise and what’s new or different about the Kofax intelligent automation offering?
Chris Huff [00:04:17]:
Yeah, you’re absolutely right. There are several players and seemingly new ones coming in on a daily basis. And I think that’s just thanks to globalization. The barriers to entry are very low, especially in the software realm because you can scale software very quickly if you have a hit on your hand. Well, I think the vendors in this space have done a terrific job with bringing automation to the masses. The leap to artificial intelligence is significant. The new business analyst focused drag and drop automation software is really connecting with a business group that is one had the need for the capacity, two the budget to buy it and three simply the desire, the ability to adopt it to it happening. So we’re slowly making automation, our robotics process automation smarter as we move closer to artificial intelligence.
Chris Huff [00:05:08]:
So the possible technologies of making RPA are what I would encourage called dumb automation smarter and intelligent automation. So intelligent automation is building the bridge from fate automation tool AI. So I think intelligent automation will become more robust over time by choosing more artificial intelligence into the AI. So as you get closer, we’re using more AI in the intelligent automation as people become comfortable with it. For instance, we’re seeing batch adoption of conversational artificial intelligence and natural language processing in 2020, but we’re not quite being adopted at math in 2020. Are things like AI predictive model and from my perspective it’s just that the technology isn’t ready? It absolutely is. It’s simply the willingness to adopt due to the uncertainty of the governance of the technology.
Chris Huff [00:06:00]:
So yeah, I think vendors are delivering on the promise, but I think they’re delivering on a big way. I think the greatest vital benefit of this automation first era is the global upskilling that’s taking place across the workforce. I think we have the business analysts that are becoming much more comfortable talking about things like automation. Machine learning, natural language processing and other technologies show how intuitive and business user friendly they are. This is not something you saw on a business analyst resume five, 10 years ago, you’re seeing it today. So there is this global upskilling that’s taking place. Individuals now have on their resume, their CV, they AI and the intelligent automation making them much more marketable. The mobility and the upward promotions are evident in 2020.
Chris Huff [00:06:45]:
I expect anything to happen as we move forward. As it relates to toastmags, I would say the one thing that makes us unique is that we don’t get overly flashy or we don’t hype off a market that isn’t there. We simply engage our customers, we ask them what our product roadmap should look like in order to best serve their need. We hire the world’s best developers and we simply deliver. I think that’s why Kofax will do over 600 million in revenue this year and are by far the most profitable of the 18 intelligent automation companies that Gartner assessed in their latest critical capabilities from Ford. So we believe that automation for drive significant value must scale the enterprise and it must be intelligent. A lot of the intelligence within the Kofax’s Intelligent Automation Platform is focused on ingesting or bringing in that unstructured data and then handling it in a way where we can transform unstructured data into structured format because unfortunately about 80% of an organization’s data starts in unstructured format.
Chris Huff [00:07:46]:
So unless you address that 80%, you’re likely not going to scale automation. The complex will continue to carve out our safe intelligent automation market by investing in our patented AI technologies focused on handling unstructured data, transforming it that will then allow us to deliver a much more holistic intelligent automation platform. That platform consists of the capabilities to ingest pumps data, transform unstructured structure, perform process orchestration, so moving data across the business, across all things within the business, also bringing purpose built applications that really focus on accelerating time to value. So for those use cases such as accounts behavior fraud detection, we have out of the box focus build applications ready to go. So you don’t need to build it from the ground up, then you can buy it in order to get started. So we’ll continue to deploy our low code intelligent automation platform using a cloud choice strategy meaning we provide on premise hosted in fast models. I think by bringing all these technologies together and providing a variety of delivery models, we allow our customers to achieve one Gartner called Hyper automation which is the scaled use of a range of artificial intelligence and automation technologies to drive true enterprise value.
Sanjog Aul [00:09:07]:
So can there be a one size fit all solution that works across industries and use cases? And how close if that’s the case, how close does the Kofax intelligent automation solution get to such an ideal state? If there are gaps, what are they?
Chris Huff [00:09:26]:
One size fits all. Well the obvious answer to this is no, it should never stay. It should rarely say if there’s a one size fits all solution. And I think that holds true here. And so something that most may not know but I sort of a history deep into relate to enterprise software not exactly something throw out there but I am so an interesting fact on this whole one size fits the whole concept. If you look at the current trend and what’s working and what isn’t working, what is working today? Platforms and ecosystem if you look at the top 10 most valuable companies like 2008, one out of 10 of those top 10 most valuable five market capitalization, market cap were a platform and ecosystem company. 1 out of 10. If you look at that today, 7 out of 10 are platform and ecosystem companies significant and it should tell you something, especially if you’re on the advice side.
Chris Huff [00:10:17]:
If you’re looking to consume enterprise software, you probably want a trusted software company that is a platform and ecosystem company and it can bring power of both to you. If you’re not just going to bring a point solution abstraction of the adjacent complementary technologies that you likely need to call your complex business problem. This whole accelerated rate of change. The world’s living so much faster today than it did in 1980. This accelerated rate of change is making it impossible for one company to assess market need, invest in rad has to deploy and scale. By the time they do all of that, the market has simply moved on and investors likely lost. The most successful companies are those that can drive ecosystem that keeps them relevant and competitive and delivers to their customers. We agree that one company cannot bring everything.
Chris Huff [00:11:09]:
Then how does a company become a strategic vendor of choice? The way that Kofax established our number two of 18 ranking in that Gartner Automation critical Capabilities report was largely through a few focus areas, one of which was a strong ecosystem of adjacent intelligent automation players whereby we bring the best of grade to our customers to extend our core platform. We don’t attempt to elbow out any perceived competitors, we embrace them because our customers have largely shifted to a multi vendor environment because it makes sense for them. That’s the primary design principle that we have at Kofax that I believe allows to not say we have a one size fits all solution. However, Kofax is a critical component of that solution and a more critical component because of our openly architected platform that allows our customers to easily expand through very friendly user interfaces and hooks into other technologies that they’re already using. So I think that we bring the best of Kofax to our customers. So our intelligent automation portfolio brings AI powered automation and analytics in our platform. Can we also augment that by allowing our customers to extend and in most cases we build the adapters and connectors to be able to help our customers leverage AI investments that they’ve already made.
Sanjog Aul [00:12:30]:
Let’s take a quick break listeners. We’ll be right back after these messages and discuss the scenario where what if an organization has already implemented a non Kofax RPA tool and is happy with it? Would there still be value in bringing in the Kofax solution? Please stay tuned. We’ll be right back.
Sanjog Aul [00:13:53]:
Welcome back. So Chris, what if an organization had already implemented a non Kofax RPA tool and is feeling good and happy with it? What do you think would be the value in bringing the Kofax solution?
Chris Huff [00:14:09]:
Yeah, another great question because frankly Kofax, while we have our own RPGA tool, it is simply a component of a much larger intelligent automation platform that really allows the end just of data, primarily unstructured data, the transformation, the orchestration and then the analytic I2 and the reporting out of that data. So we have a really bug end to end platform that can be consumed in a pre modular fashion. Meaning that if a customer already has a non Kofax RPG solution and they’re happy with it, then you don’t need to use the Covax RPHA solution, you can use everything around it and we’ll talk about in a minute why that is valuable. But if you think about what happened last year, two to three years, there has been over $2 billion in venture capital funding that has been primarily consumed by two RPA vendors, UI Path and Automation Anywhere. And so there is obviously a lot of UI Path Automation license heading out the world right now. Most estimates that you look at though pay the average RPA project at less than 50 robots in production and of those robots that are in production, only 65% utilization, meaning that a license has 24 hours of availability, 24 hours in the day of availability, only 65% of that availability being consumed. So there’s a lot of extra capacity that exists in the current market and that is likely going to lead to some buyers remorse in 2020 and 21.
Chris Huff [00:15:46]:
So Kofax is attempting to come in and help those customers out that have already made a non Kofax RPGA buy and maybe they’re not realizing full utilization or scaling as much as they would like to. So at Kofax we hypothesized that the root cause of this excess capacity is the inability to ingest enough data to keep the robots busy because again, 80% of an enterprise’s data is in unstructured formats and the starting point for RFGA is structured and standardized data. Secondly, RPG robots depend on rules that do not change for them to operate consistently operate. Most enterprises though have many systems that undergo changes frequently. So governance and management of the RPG digital workers becomes a threatening. So you could imagine what if you could think the business side, which is typically where the RPG center of Excellence reside with the CIO size upward development lifecycle. Imagine if you could identify the RPCA robots to cloud a break, then you could repair them and release them along with the updated system from CIO. So this is where you can synchronize RPC CIO, SVLC, the software development lifecycle.
Chris Huff [00:17:04]:
You can now make changes to enterprise systems and retrain the robots based on those changes to the system and release them both at the same time. That would minimize a lot of its operational disruption and oh by the way, it would add confidence pushing the RPGA robot away from the back office and closer to mission critical front office processes. So Codebacks is focused on a capability called digital workforce management that actually synchronizes the RPA center. Back for the image CIO side SDLC and this has been a core design principle like we talked about earlier, that FOFAX is openly architected and so we’re vendor neutral. We can serve it that digital workforce management governance over an armchair project that may be UiPath, maybe Automation Anywhere, Blue Prism or Fusion you call it, but we can sit over top of it especially and provide a digital workforce management capability that connects the IT and the vivier side and minimizes the operational disruption by these RPA robots. Break me down. So if you could imagine Kofax plus, fill in the blank any other RPA vendor capability and we have large financial service organizations out there right now, customers that are using Kofax plus and other vendors such as Automation Anywhere, whereby on the pun in Kofax is ingesting all the unstructured data, we’re transforming unstructured data, we’re feeding it to the Automation Anywhere RPA Robot that they have already made an investment in but we’re a little frustrated that they weren’t being able to get enough data to the Automation Anywhere Robots
Chris Huff [00:18:45]:
but using Kofax from the front end, giving it to the Automation Anywhere Robot, that robot is doing task automation, which is what RTA is really good at. The sort of struggle for true process with automation which is really focused on the human and the collaboration. How can you put humans as a high embodied judgment based work and a process and not on the rules based path? And so when that automation robot then encounters a complex decision point that requires a human and a loop o facts then become that orchestration component that will take the work from the robot, you give it to the person and bring it back to the automation Aware robot. The carbon values of Kofax coming in to a non complex RPG project and serving as a digital workforce management through governance and enhanced auditability, which is critical. As you have GDPR in Europe and in the Americas now you’re starting the GDPR manifest itself like California. So the California Consumer Privacy act as of January 1 went into play. You’re going to see this sort of perpetuating itself throughout I think the world as we move forward. So I think the auditability is going to be critical and that’s what we help with.
Chris Huff [00:19:58]:
It converges IT facts and basically bridges the AI to automation. An example of how Kofax is working with our ecosystem to really deliver an ideal stage is with MUFG or Bank of Tokyo globally, one of the largest bank. And as bank of Tokyo scales their intelligent automation across the globe, their center of excellence is out of Tokyo and it just frankly also happens to be the largest RPA transaction in the history of RPA and we’re very humbled to own that. But we’re not the only solution in there and that’s key. So it’s the largest RPA deal lever, but we’re not delivering it alone and so we’re working with our ecosystem partners within MUFG and primarily we’re working with IBM, Antega and Kofax. So those three together have really delivered for bank of Tokyo and UFC their intelligent automation global solution.
Chris Huff [00:20:55]:
And so their digital workforce is focused on as you can imagine for financial services company, a lot of non standard and unstructured data that needs to be ingested and then needs to be fed into their RPGA robot and their Kopax RPG robots then need to work with various systems and there also needs to be a process discovery component to there and so we work with our alliance partners because Bank of Tokyo and UFC already had IBM in their IT stack if we wanted to help them leverage and get the most ROI out of their existing investment. To Kofax works very nicely with IBM Spoork Live in order to establish digital workforce around Kofax RPA. So you’re going to continue to see greater ecosystem and platform play. Kofax is driving this with companies like Microsoft around Azure Cloud, Google around their open source AI, Koopa around their business spend management, Cyber Arc with digital security, Sailpoint with digital worker identity verification. But the list goes on and on because even the company that our customers pulled out that they are either already working with and therefore would need to hire system integrators to integrate these solutions with Kofax. Kofax is taking on this on our own essentially build these adapters and connectors in advance of releasing our software which hopefully takes the burden off of our customers around the services that they would have to put around Kofax to make us work SDL.
Sanjog Aul [00:22:31]:
What are some of the prerequisites before organizations can fully exploit intelligent automation using Kofax solution and what pitfalls and issues should they expect in the journey and how to best address them?
Chris Huff [00:22:50]:
Your four questions all in one there. Okay, we’re going to take it top to the bottom. I think it’s the full value of Kofax intelligent automation or any automation investment or program. I would suggest three things. Typically I do think threes. So three things. One is do your homework, two is get executive alignment buy in and three is have clear ownership and your teacher payment model in mind before starting with any pilots or flu accounting stuff. So let’s go back to do your homework.
Chris Huff [00:23:21]:
Doing the homework is actually easier today than I think ever been thanks to Internet, thanks to mobile devices. But doing the homework is very easy today. So part of doing your homework I would say is to make sure you understand the problem you’re solving or clearly articulate the problem and make sure that intelligent automation is likely going to be the right answer before you spend time there. In some instances I’ve seen where organizations simply aren’t ready to automate, they need to go through an optimization plan before they automate. So you don’t want to just automate a broken business model or a broken operational processes. Probably want to optimize them first. But do your homework to make sure that you understand the problem that you’re solving for that automation is likely the answer second when doing your homework is just the research around Gartner reports that we alluded to earlier forced your way and they’re readily available. And frankly they didn’t just release their Gartner anyway, just released their automation critical capabilities report number.
Chris Huff [00:24:22]:
I think we would be happy to make it available to everyone here if we could hang that out for somehow or shoot it out to the distro but another piece of doing your homework would be simply to talk to other customers that are maybe just a few steps ahead of you to figure out why they started down this path and some of the challenges they had. Something you did at Kofax is we set up a strategic advisory board of our customers in all three regions of the world, the APAC, EMEA and the Americas. That was primarily intended to get our customers together so that way they can network and talk and oh by the way become cofactor ambassadors at our Kofax events so that way they can talk to the customer. We’re very proud of our technology and stand behind it. So we do want our current customers to talk to our customer. Then I would say the second thing around getting the executive alignment and volume, whether this is at the board level or the C suite level or lower, they just need to understand that if there is a lack of governance and change management within the program that basically is the chief staff. The difference that’s of any dream of scaling automation is to lacking governance and change management.
Chris Huff [00:25:31]:
Change management both on the technical side and on the human side, there’s a human element to change management which is shifting culture and mindset how people work. I would say buy in is best when you’re able to plaintively address the what benefit for me through a very clear business case and I always do a four pillar business case. The first is strategic alignment with making sure that your automation initiatives align with a larger strategic alignment which could be we’re going to digitally transform our enterprise, we’re going to better service our customers. So how does automation align to that larger strategic effort? Second is operational impact to be able to preemptively address what are the increased compliance, reduce cost time, improve customer response time, reduce transaction costs. How are those operational impacts that you likely are going to see down in line with the Vista? The third is financial impact. What is the true investment? What is the outlay? What are the anticipated savings and net benefit? Then fourth, what is the impact on the workforce? Nobody wants to address the impact on the workforce because of automation and this dark cloud of labor arbitrage where maybe automation is taking over job. That isn’t what we’re seeing as we deploy this.
Chris Huff [00:26:46]:
What we’re seeing is that if these our people it’s shifting people from lower value transactional work to higher and value judgment based work creating that extra capacity. So I think being honest to help contradicting workforce impact as part of the tenant stage is absolutely imperative to get a executive alignment buy in. The last one was around having a clear ownership and a future state sustainment model in mind before starting pilot or Koopa concept. If you do not bend on foster and try to go cheap on services some recipes for disaster and so services typically have that class framework around sustainment models. So performing diagnostic to a strategic practice while forking it to appropriate solution and then being able to have the tools and the innovative technologies as you move forward and so I think clear ownership is something that is sometimes lacked because this will start with a line of fisb. You will attempt to an organization will attempt to radiate it out to other lines of business
Chris Huff [00:27:53]:
but without clear ownership everything’s going to fold out your sustainment. It becomes very challenging.
Sanjog Aul [00:28:00]:
So how are we pricing the intelligent automation solutions today and how are we expecting it to evolve? I would further ask how is Kofax going to ensure that it always delivers the highest value through its intelligent automation solution and that too at the most competitive price.
Chris Huff [00:28:22]:
Yeah, and this is really interesting because Microsoft came out with their RPA and while it’s a capability, it is RPA and Microsoft is already in almost every enterprise in the world. So it now takes out that barrier of bio approving a new RPG tool. I think Microsoft what they’ve done is they’ve almost driven RPG the price of RPA to 0 to 3. Somebody truly just wants RPG and they’re not hyped up on a particular logo, they’re likely going to go with Microsoft RPA. It’s already there and so I think if you’re looking at just RPG, which part of our conversation today has been focused on, I think the pricing to that model was driven to the bottom very quickly and Microsoft basically drew a lion stand and said and so I think to put a premium on RPA is very challenging at this point. Which is why Kofax doesn’t hang everything on RPA. Kofak hangs it on RPG being a component of a much larger platform that’s required to truly innovatively transform an organization to digitize business.
Chris Huff [00:29:32]:
So if I were a buyer, I’d honestly be confused with the pricing because there is a lack of pricing standardization across the industry. Food no one really knows if they are one, buying the right amount of capacity, two, getting a fair price to the capacity that they have for it and but all markets go through this, right? All markets go through doing price by state lifos transaction, whatever the unit is. I do believe that as the market consolidates further. So Pega bought openspan, SAP bought two Textures. Appian just bought Jidoka. As these consolidations continue to accelerate, we’ll see greater standardization. So right now, as it said, there are two primary models and that’s perpetual pricing.
Chris Huff [00:30:14]:
Buy it more. You pay an annual maintenance fee, typically 20% of what you want it for, but you own it. Perpetual pricing and then there’s subscription pricing. So monthly or annual recurring, you’re basically leasing the software. Those are the two most common perpetual subscription. What I would say is some people can play as a service with subscription. So as you start to hear about RPG as a service, yes, there’s a subscription pricing model tied to it, but they’re not the same as a service.
Chris Huff [00:30:46]:
You would think about it. You go to a URL and you use a solution. It’s hard for you to go out there and configure that if it’s really locked down to a great extent. And so with subscription, companies largely are on prem solution. So you’re buying it and you’re implementing it on premise in your network so you can configure it. You’re just paying a subscription, a monthly fee to it. Kofax takes a lot of pride in listening to our customers and when our customers told us was that they value the flexibility of both perpetual they buy it and they own it and a subscription, they pay a monthly fee and they can stop paying at any particular time. So they value both of those because our customers have different budget and fiscal needs.
Chris Huff [00:31:32]:
A down capex, which is largely perpetual, and OPEX of capital expenditures and operational expenditures and the operating expenditure is largely a lot of subscriptions. They pay as they go, if you will. While most companies are trying to push for Perpetual Description to pave out your predictability and customer stickiness, Kofax is going to remain committed to supporting both models because our 25,000 global customers are split between opex they have extending. Basically, we’re not going to improve our Kofax business model at the expense of forcing our customers into a particular model. Our business model at Kofax is going to improve because our customers are simply doing better between giving them more options that suit their needs.
Sanjog Aul [00:32:15]:
Once again, thank you Chris for sharing your thoughts and insights on this Solution Spotlight segment.
Chris Huff [00:32:28]:
Thanks for having me
Sanjog Aul [00:32:28]:
And listeners. I invite you to find related conversations on our website@ciotalknetwork.com.
Download Podcast
Apple Podcast, Google Podcast, Spotify, Pandora, iHeartRadio, SoundCloud, TuneIn, and Stitcher. Find other syndication channels here or search CIO Talk Network podcast on any other app.
Explore More
