Guy Nadivi: Welcome everyone. My name is Guy Nadivi and I’m the host of Intelligent Automation Radio. Our guest on today’s episode is Danilo McGarry, Global Head of Automation for Alter Domus, a global financial services firm based out of Luxembourg with $750 billion under its administration. Danilo is also a member of the European AI Alliance as well as a thought leader and keynote speaker on automation and artificial intelligence, and as someone leading efforts in those realms for a large worldwide organization, he has a unique perspective on automation and AI’s transformational power. That’s very relevant to other enterprises moving forward with their own initiatives.
Guy Nadivi: So we’ve asked Danilo to join us today to share his insights and perhaps inspire our audience with some ideas on how to leverage automation and AI to drive competitive advantage for their own organizations. Danilo, welcome to Intelligent Automation Radio.
Danilo McGarry: Thank you Guy. I’m really looking forward to our session.
Guy Nadivi: Danilo, you’ve run some very big automation programs and started some AI programs from scratch. Can you share some details about some of these with our audience, especially the ones you’ve been involved with, which had particularly impactful results?
Danilo McGarry: Sure. I’ve been in automation now for about 15 years. It has been a heck of a ride, a roller coaster. In the past couple of years, I have been one of the leaders in running the automation program at United Health Group. For those that don’t know United Health Group is the world’s biggest healthcare company. Its aim is to have roughly 500,000 employees by 2023. It makes over $200 billion in revenues per year.
Danilo McGarry: It was UIPath’s biggest client with over 1,000 robots, which was under my team. So that was… That is until today, the biggest automation program that I’m aware of. So it was a very interesting program to be part of, had a significant infrastructure in place, a significant budget as well. It was really making a significant stride in terms of transforming healthcare to the way we know it today. It’s going to really impact the world.
Danilo McGarry: One of the other programs that I used to run as well is I used to be head of AI & Machine Learning at Citi Group. Then, again for those who don’t know, Citi Group is the 13th largest financial institution in the world with around 150,000 employees. Just an interesting fact, it’s responsible for roughly 70% of America’s FX transactions on a daily basis. So should Citi Group ever go down, it would really make a huge dent in the US economy.
Danilo McGarry: That program was particularly interesting as well. I was asked to start the artificial intelligence program from scratch with a team of two or three people in the beginning, and that scaled to become one of the, if not the most successful, artificial intelligence programs in the financial services world. Won many prizes. A lot of the advisory houses named it as #1 AI program in the financial industry. It was a great honor to be part of that. That was a really interesting journey.
Danilo McGarry: Just as a kind of stat in my lifetime doing bots in the last 10 years, I’ve overseen over 1,200 robots in the making that went to production. I keep tabs on how they’re doing still with my ex-colleagues, and a total savings that those bots have made until today is roughly $250 million. These are big numbers and I think CIOs, CTOs, CEOs should really pay attention to those numbers because those numbers are coming from three or four institutions only. It’s very interesting.
Danilo McGarry: In terms of a particular case study, there are many out of that 1,200, but one that really hit home run for me, that really had a huge impact was one at one of the financial services companies I was in. In every bank, there is a payments and receivables team. They’re generally a middle- or back-office team. For those who are part of the financial services world, they’ve probably heard of the term “trioptima”, which is looking at offsetting payments and receivables for the same counterparties so that you don’t make… You make the least amount of transactions in order to net out payments.
Danilo McGarry: This team is very busy. If you go to Bulge Bracket Bank, one of the largest banks in the world, they’re making millions of payments a day to the tune of tens or hundreds of billions of dollars a day. It’s serious business. It’s very intense. It’s very stressful. The teams that were doing this, they were really in bad shape. They’d been under massive, massive stress for the last number of years. Turnover rates were extremely high. People would last roughly six months to a year maximum. There was no continuity, and it was very hard to retain staff, and it was very manual. People bringing up Excel sheets, receiving emails from counterparties demanding payments, and trying to offset and doing these reconciliations very manually using Excel.
Danilo McGarry: Now I was tasked with automating that process and I can say it was a very hard task, first because of getting everybody’s attention when everybody was very short for time, but we got around to it. We got the business analyst working away and understanding the process very well. We got the automation done for it in phases, but in the end, the bottom line of it was that we managed to save around $18 to $20 million in reserves that the bank kept setting up every day just in case it didn’t make the right payments. That unleashed roughly $18 to $20 million in reserves back to the bank that could be used for other activities, which as you know, can be a very lucrative thing instead of just holding up money in case you’ve got your processes wrong.
Danilo McGarry: The biggest part of this, which I thought was mostly impactful was the transformation in the teams itself. People were behaving in a very obscure way. They weren’t behaving like a team. They were very aggressive towards each other and after the automation was in place, they were getting some help and it was automating roughly 30%, 40% of the process in all. It was amazing the transformation that the teams went through. The retention times went up. People were staying for two years plus. People started having team events and they started behaving like humans again. That got people also talking to clients more. Rather than just talking through emails, they were having more phone calls. That really improved the relationship of that bank with its other counterparties that it would make and receive payments from.
Danilo McGarry: It really… In the end, if I could take away anything out of it, which was really impactful was that it really helped people become more human. It’s a bit of an oxymoron. How can automation, how can robots help humans become more human? But that’s really the result of it. I’ve always heard one of the founders of automation, Kai Fu Lee, who was the ex-head of Google for Asia, who’s now got his own venture capitalist firm investing in AI. He always said and predicted that automation would make people more human. I never quite understood it until that use case came about and I saw it in my own eyes.
Guy Nadivi: Interesting. It reminds me of the statement, I wish I could remember who quoted it, who coined it, but it’s something about automation can take the robot out of the human and it sounds like that’s what you’re referring to really.
Danilo McGarry: Exactly.
Guy Nadivi: Danilo, your title is Global Head of Automation, which is the type of title I think we’re likely to see at more and more companies as automation continues becoming more crucial to enterprise operations. Tell us why should organizations have a Global Head of Automation and what are the most important benefits one provides?
Danilo McGarry: I totally agree. I see other titles as well, similar to mine, Chief AI Officer, Chief Innovation Officer, and it’s really because of the size of the market. If you look at the World Economic Forum, which is one of the leading NGOs, they’ve coined AI and automation to be the fourth industrial revolution that we’re in right now. If you think of the words ‘industrial revolution’, that’s quite major. That’s quite transformational. There’s only been three others since the beginning of time. This is the fourth one and it is to do with AI and automation.
Danilo McGarry: That already gives you a good indication that this is important and that companies, governments should be really paying attention to this. If you look at stats from leading advisory companies like PWC, McKinsey, they’re all estimating that AI and automation is going to bring roughly anything between $9 to $15.7 trillion in terms of economic growth by 2030. These are huge numbers. We’re not talking billions, we’re talking trillions and it’s double digits.
Danilo McGarry: Given that there is so much out there for companies to grab, so many savings for them to make, new opportunities, new revenue streams that they could be generating. This has really brought the attention of CEOs, CTOs, CIOs, because they’ve had to create these positions in order to go after those market opportunities.
Danilo McGarry: Just in my career and some things I’ve achieved as well and I’ve seen others achieve, almost any company, roughly 30% of any company can be automated. That’s quite a huge chunk of a company. Let’s say a company has an operating expenditure of roughly a hundred million dollars a year. That’s a $30 million save every year. That’s very significant. Given all of that, given the tremendous opportunities in the market, the size of the market, and the fact that it really gives you a significant competitive advantage, most companies have had no choice but to take this seriously and create positions and create teams in order to grab a piece of that pie.
Guy Nadivi: Okay. Now just to follow up on taking it seriously, on a recent podcast, you stated that automation and AI have become, excuse me, top five objectives over the last two years among blue chip companies. So what do you think are the likely outcomes for enterprises that don’t prioritize automation and AI that highly and don’t take it seriously?
Danilo McGarry: It really boils down to what we mentioned earlier, which is allowing humans to be humans. Right? Since the beginning of industrial revolutions, when companies like Ford came out, Rockefeller was about, we’ve been trying to make humans into robots, produce faster, putting in conveyor belt situations, but really we’re not built for that. Biologically, physiologically it just doesn’t work.
Danilo McGarry: Let’s say you had a company who had 30% of its tasks being performed by robots and another company who didn’t have any robots. Who do you think is going to have a better competitive advantage? Yeah, obviously the one with the robots. Robot doesn’t sleep, doesn’t take coffee breaks, doesn’t smoke, doesn’t have maternity/paternity leave. It can work 24/7 tirelessly and without fail and the accuracy of robots, when the process has been automated correctly, is just so much higher than the human. There’s just no competition. Especially if the process is very high frequency and relatively low to medium complexity.
Danilo McGarry: It’s really just about being able to stay relevant in the market, being able to compete with your peers, bot versus human. That’s just plain and simple. The other thing as well, that’s why it’s come to light, especially now during this COVID-19 situation is companies that had robots during this BCP mode that everybody’s in, business continuity planning, they’re doing a lot better than companies that didn’t have robots. Companies who had to send their workers home to work from home, they’re all scavenging trying to get their RSA tokens working, trying to get the hardware working, trying to log in. Citrix isn’t working, but behind the scenes the robots are working fine because they’re installed in the service.
Danilo McGarry: That’s just another example of how bots can, for certain items, can give you a significant advantage. Especially now, the situation that we’re in and the difficulty people are having from working from home, that’s really driven home the bot versus human arguments. So all of that really gives a company a huge USP, a huge competitive advantage. It’s just not something of a surprise why it’s really gone to the top five objectives of most companies, especially blue chips.
Guy Nadivi: Okay. Now you just mentioned a bunch of processes and I’m curious, Danilo, when you evaluate a process to be automated, is there a minimum ROI you need to justify automating it?
Danilo McGarry: A lot of companies, a lot of automation leads, they look at ROI differently to people who are not experienced in automation. As a typical base level, I would really go after opportunities who have a 4x return on investment in year one and that’s really because of something called “dropouts”. So on day one when you receive your idea to automate, you have the SMEs, the subject matter experts, telling you about it, they’re super excited, they want to get it automated, but when you go through that journey and you start automating something, you come across barriers. You come across systems who are not easy to work with, legacy systems. You come across broken processes which aren’t ready to automate, or there are certain regulatory barriers in place, audit barriers in place.
Danilo McGarry: There are dropouts, there are things that you have to put aside. You don’t often get to automate something end to end. So if you have that cushion of 40% or 4x and some dropouts happen, then you might get 20% return on investment year one out of it. So it’s a good cushion to have.
Guy Nadivi: As a Global Head of Automation, I imagine you look at automation and AI projects just a little bit differently than others in particular when it comes to scaling up to an enterprise-wide basis, like for some of the very large organizations you’ve mentioned earlier. What have you found to be the biggest challenges in scaling up automation and AI projects?
Danilo McGarry: I often explain this and some people do get quite angry at me. So the issues that I’ve come across, none of them are technical. With the tremendous vendors and people that exist today, there’s almost nothing that you can’t automate and there’s so much to automate that there’s no point crying about the things that you can’t. It’s not a technical challenge, it’s more of a human challenge and there’s lots of them, but I’ll talk about one challenge in particular and it’s to do with the chicken and egg conundrum of buy-in.
Danilo McGarry: When an automation program is about to start in the company, everyone is scared to sponsor it from a senior level. That’s because they see it as high risk. They maybe don’t know too much about it, they hear some horror stories in the market, but as soon as you start having some success and your automation team starts returning some great ROI back to the company, then everybody is grappling on top of each other trying to be the sponsor of that program. It’s always very interesting to see, the lack of interest in the beginning and as you pick up pace, how many people you know want to be your new boss. That conundrum… That kind of politics, it happens in almost every company and it’s just very interesting to see and it can pose a real challenge. It can pose a lot of issues with clarity of direction, clarity of strategy. If it wasn’t the case, companies could really save a lot of time and money.
Guy Nadivi: Fear is one of the challenges with people and “robophobia” is the term that we use to describe people’s fear of automation, particularly as it pertains to the impact it might have on the nature of their job or even their employment. How have you addressed and overcome robophobia with some of the automation and AI projects you’ve been involved with?
Danilo McGarry: It really boils down to the approach. I’ve been in situations where I’ve seen companies trying to implement automation or AI in a very covert way, kind of Area 51 need-to-know basis and that’s really what puts people on edge. You can’t perform automation without the good advice and the good process of the people doing it. It has to be an inclusive program. There has to be open communication. People have to see that it’s one of the top objectives of the company, it’s the direction that the company’s going in and if that’s made clear, then people can prepare in advance. They can start educating themselves. They can start going on training courses. They can start re-skilling so they can stay relevant in the new working environment they’re in today.
Danilo McGarry: When you give people that opportunity and when you give them that backing and that support, it really puts people at ease. They buy into the idea a lot quicker. They help instead of trying to be a hindrance and especially if you go even a step further and you empower those people, you make them be an integral part of an automation program as a deliverer, as they help the automation team, bring them to light, bring those new skills that they’ve learned and apply it to the next automation project, give them something else to do, something that gives them a career development path choice. When you combine all these things together, it’s really a way of tackling robophobia. It really helps eliminate all of that and it turns the company all in the same direction and gets all your ducks lined in a row.
Guy Nadivi: Okay. Now, speaking of the new working environment, you published an article on Medium in the summer of 2019 outlining your prediction on organizational setup changes from the year 2030 onwards, and in that article you stated, “In general, working from home will become the absolute norm with flexible working as a given.”
Guy Nadivi: Well Danilo, your prediction may have been much more prescient than anyone realized given the massive numbers of people who’ve been encouraged or ordered to work from home due to the coronavirus epidemic, and many are speculating that the current quarantine many are under will drive exactly the shift that you predicted. I’m curious, how does automation and AI help make a work from home paradigm not only sustainable, but possibly something of a competitive advantage for organizations?
Danilo McGarry: Well, some people joke, they call me “Mystic Dan”. So good to see that prediction came to light, unfortunately for something that has hurt the economy. To be honest with you, I think with what’s happened with the coronavirus situation, the revenue projections of most companies for this year is going to go down and the pressure is going to be on EBITDA, is going to be on trying to stay profitable and when you do that, you’ve got to cut costs.
Danilo McGarry: When you look at one of the highest costs that any company has, it’s to do with physical working space, the square footage cost of having an employee in an office. If you look at expensive cities like Tokyo, London, New York, et cetera, that can be very, very high. So I think there might be a big push for working from home just simply because of the reason of trying to cut costs. I think having people working from home, having robots, working with humans, aiding and giving them some support to get through volumes and backlogs like it’s happening now during this BCP mode everybody’s in, it’s opened everybody’s eyes that bots and humans can work together if they’re in the office or not. Projects can be carried out whether people are in the office or not.
Danilo McGarry: Given the pressures to cut costs, given the enlightenment that companies have had, that working from home is almost as effective or even if not more effective than being in an office, I think all of that’s going to create a transformational change in the way that we work going forward, and I hope it sticks because given the way that our societies are built and the way companies are integrated into our personal lives, there really is no need to be in an office all the time. Let’s see what happens, but I think it’s really going to stick and I think the new norm is going to be working from home.
Guy Nadivi: Danilo, for the CIOs, CTOs and other IT executives listening in perhaps from their home office today, what is the one big must have piece of advice you’d like them to take away from our discussion with regards to implementing automation and AI at their enterprises?
Danilo McGarry: If I was to give CIOs, CTOs a big piece of advice in automation and AI, it would be to really integrate this into your company’s strategic roadmap from day one. A lot of companies go through POCs first and they try to understand it a little bit more, but look around you. Automation is prevalent. AI is in almost everything that you do in your daily lives. If you’re in transport, the way you ordered the cabs is using AI. You go into an airport, you go up escalators, even escalators are automated now. When you look around you, automation is happening. Proofs of concepts, in my opinion, unless it’s for something very, very tricky and very particular, it is a waste of time. It’s a waste of money. Don’t be scared to integrate this as one of your top objectives. Look at the size of the market. Look what everybody else is saying, what everybody else is doing. It’s the direction everybody should be going in.
Danilo McGarry: Really it’s to do with integrating it with your strategic roadmap. If you do that from day one and you involve people, you empower people to go after it with you, you are going to save so much time and so much money for your company that it’s going to make a huge difference to where you are in that league table in comparison to your competitors.
Guy Nadivi: Great advice from somebody with a significant track record of success in automation. All right. Looks like that’s all the time we have for on this episode of Intelligent Automation Radio. Danilo, it’s great having a Global Head of Automation on the show because I think it reflects the increasing importance that organizations are putting on automation, and given what you’ve shared with us about some of the work you’ve done, I think we’ll be seeing more and more that those in charge of their enterprise’s automation and AI efforts continue being elevated to more strategic roles within their organizations. Thank you very much for coming on the show today and sharing your insights with us.
Danilo McGarry: Thank you, Guy. It’s been a huge pleasure.
Guy Nadivi: Danilo McGarry, Global Head of Automation for Alter Domus, a global financial services firm based out of Luxembourg. Thank you for listening everyone and remember, don’t hesitate, automate.
