A History of Process Automation
Back in 1819, Charles Babbage built a mechanical device with storage to automate math processes.
In 1890, Herman Hollerich helped the U.S. government build a machine capable of automating math functions associated with the census.
If process automation was important then, it’s even more important now.
Advances in technology have fueled a multi-century expansion of automation. Process automation has revolutionized industries and rapid adopters have been able to reduce cost, streamline processes, and improve quality.
Most everyone else is out of business.
Why? Lack of automation is often cited as a primary reason for why 88% of the Fortune 500 firms that existed in 1955 are gone.
Process Automation Today
Today, we at System Soft Technologies (SSTech) see that automation most often means robotic process automation (RPA). But this phase of automation evolution is just beginning.
Deloitte’s most recent survey of RPA adoption projects that 53% of companies are in the “beginning stages” of adoption, yet 78% plan to increase investment in the future. We hear similar things from clients whose initial RPA project successes are driving desire to expand use cases. Furthermore, Deloitte says “near-universal adoption” is expected in the next five years.
In summary, many companies are just starting, and plan to do more.
Scaling is an issue too, as that survey showed only 3% have implemented 50 bots or more, but most want to.
Technology Hype or Business Weapon?
We know some believe RPA is ethereal, over-hyped and too much on the bleeding edge to be worth looking at.
Sounds like virtualization in the 2000s or cloud in the 2010s, right? Look what happened with them.
Here’s why the naysayers are wrong.
1. RPA is not really a new technology, but an aggregation of capabilities that greatly expands automation’s use cases, scope and value proposition.
SSTech has seen that robust RPA tools can bring together machine learning, natural language processing, screen scraping, and optical character recognition into one platform.
How can this be used? Let’s look at a mortgage example.
An RPA bot uses machine learning to ascertain what documentation a specific borrower must provide to originate a loan.
Natural language processing allows lender non-IT employees to update the requirements for loan documentation when FHA or VA lending requirements change (as they often do).
The bot then accesses different systems and websites with appropriate credentials to scrape screens to validate documentation and borrower information. And to cap it all off, the bot can read submitted documentation and use OCR to transition hard copy information into digital formats.
The bottom line? RPA enabled a mortgage company to promote over 12 loan documentation employees from administrative functions to sales. It was a win/win.
2. With low unemployment and high attrition rates, new RPA platforms help redeploy expensive knowledge workers from relatively menial to more strategic, higher-value tasks.
Note, we often witness that many organizations are NOT using RPA to cut employees but are using its productivity gains to offset the impact of attrition.
Let’s look at another real-life example.
A global pharmaceutical company has two problems: 1) high attrition, and 2) high financial process costs.
Attrition in North America is running at 15% and in Asia at 25%. Add to that, financial compliance requirements often require more people to handle basic accounting functions.
Here’s a real-life example. A certain company procures $4.5 billion of raw materials and supplies a year. A large, global team handles the admin tasks of matching of purchase orders, invoices and receiving documents.
Here comes RPA to review, approve and set up payment for those situations where the purchase order, invoice and receiving information all match. Exceptions are sent to a queue to be handled by a human.
The net impact of this process automation is that over 50 resources were able to be reallocated to strategic supply chain planning. That effort improved manufacturing efficiency, order fulfillment rates and lowered pricing across consolidated vendor contracts. Again, this is a win/win.
Isn’t RPA just another complicated and expensive technology that lacks tangible ROI?
Enterprise resource planning (ERP) has automated a lot of financial management for companies large and small.
Customer relationship management (CRM) brought powerful automation to manage sales processes and customer service.
Yet for both, customers have had to endure multi-million-dollar implementation costs and >2-year timelines from selection to go-live. Given the significant investments of time and money, the ROI can vary greatly and be difficult to document.
But, RPA is different.
First, some leading RPA platforms enable business users to play a major role in the design and construction of the bots that will automate processes. SSTech sees that making it easy to produce and maintain the bots eliminates the need for massive IT resources for design, build and integration.
Second, RPA usually mimics employee access to existing systems, web sites and data sources. Despite the need to build, design, integrate, and test the bots, project scope and duration is much simpler than typical ERP or CRM implementations.
Bot projects can be completed in as little as four to six weeks. Time-to-value can be compressed and users can see positive results quickly, enabling the rapid promotion of employees from low-value to higher-value work in the near term.
A recent Accenture research report emphasizes that the revenues of companies that resort to automation are expected to rise by 32% by 2022, but, more importantly, employment will also increase by 9%.
PwC mentions a reduction in workforce costs of up to $2 trillion as a result of automating almost half the work activities in companies across the globe. The gains are tangible and impactful to the top AND bottom line.
Ok, so it’s manageable to get started. But I’m over budget and over-committed on projects.
This is worth your time. RPA is serving as a significant lever to drive many organizations’ digital transformation strategy.
Quite often, the biggest challenge with organizations that introduce bots to the business community is to manage the imbalance between demand for more automation and the capacity to deploy it.
Rate, scale, and scope of RPA adoption will be a metric that separates winners from losers; especially in hyper-competitive industries. Will you drive change or get trampled by it?
Gartner IT predictions for 2020 project that RPA will drive a 30% reduction in operational costs for most organizations. That’s a huge number. What you do with RPA can make or break a career at all levels of an organization.
How can you gauge where you stand with RPA in your market segment? Check out your competitors. It’s not as hard as you may think.
- Talk to vendors – while RPA software and integration consultants are typically under NDAs, they usually can give “directional” guidance, such as advising on what use cases are typical and how pervasive RPA adoption is in your industry. They do this to try to sell you their products but it can help you regardless.
- Check job listings: Are competitors hiring around RPA? If so, they are implementing and/or maintaining a portfolio of bots.
- Check job listings again: Learn what specific processes your competitors may be automating.
For example, large health systems employ massive amounts of resources to handle health information management (HIM). HIM teams keep patient records complete, update electronic medical record (EMR) systems and submit documentation for meet patient and legal requests. Many health systems are now employing bots to handle many of these typical HIM functions.
How are you doing? A quick check of the job boards may reveal that your competitor is hiring far fewer or no resources at all compared to you.
- Check financial statements: This works for public competitors. Understand their income statement. Are their costs lower and margins higher? Since RPA can reduce operating costs by up to 30%, RPA deployment by competitors can produce tangible and substantial benefits on the income statement.
Tying it all together
Although there are a multitude of “urgent” IT initiatives that are in play today, some stand out with concrete benefits and fast time-to-implementation. RPA is a strong contender in that category. But it can be overwhelming to consider.
The best first step is to think about where automation can play a useful role in your organization. Then consider if reallocation of employees away from those functions will help meet multiple organizational goals.
If it looks promising (which I’m confident it will), do your homework. Network to find best practices and potholes to avoid. See what competitors are doing. Talk to vendors for feedback on your specific situation to gauge benefits, costs, and effort.
Most importantly understand the potential impact on your organization and put together a detailed plan on implementation.
Getting ahead of (or at least staying with) the adoption curve has become table stakes. Don’t be shut out of the game.