By Greg Russell. Published on 30 March 2017
Let me start off by saying that I am not a fan of technology for the sake of technology; I’m a seasoned transformation practitioner focused on deploying pragmatic solutions to my client’s problems. But I believe robotics provide one of the most exciting and pacey opportunities to drive sustainable transformation for many a year.
So, what’s the appeal of the latest technology craze, Robotics? Or Robotics Process Automation (RPA) to use the full title.
Well, it’s quick, relatively inexpensive, easy to understand and is a superb catalyst for change. Sometimes the answer will not be RPA, but the very act of scrutinising the processes for RPA will identify opportunities to eliminate some processes and improve others by making them leaner or more efficient. As with any technology the trick is to know when to use RPA and when to look at other solutions.
Of course, when we talk about robots in the business process context, we need to forget the old clichés of R2-D2, Wall-E or the Terminator. Or even the real-life robots used in manufacturing.
There are many definitions of RPA but the following should cover most bases:
RPA is the automation of rules-based processes with software that requires zero (or minimum) human interaction and applies it to Enterprise Resource Planning systems (ERPs), workflows, email systems and databases.
It’s this ability to interface between different systems and process work that makes RPA particularly appealing. And if you add to this compelling economics, relative ease of implementation and quick payback then RPA is a turbo-powered game changer in the hands of a seasoned Finance Transformation leader.
We are learning some new tricks, while practising some of the old favourites.
The economics of robotics
It helps to get a feel for the economics, as this crystallises the irresistible forces driving the changes.
Industry studies show that the number of companies adopting RPA will grow from one in ten today, to four out of ten by the turn of the decade. The spend on RPA is estimated to be increasing at a compound rate of 40% p.a.
This change momentum will be felt across most finance functions. In short, if you are not looking at RPA now, you soon will be.
Right now, it is a differentiator. In the medium term, it will be standard practice.
RPA is attractive when compared to ERP and similar technologies as it is relatively inexpensive and quick to implement. Costs are in the tens of thousands to low hundreds of thousands, depending on scale, while implementation time ranges from a few weeks to several months – significantly less than your typical ERP programmes.
Another attraction is the fact that the level of spend associated with RPA is often below the threshold that requires Board approval, unlike the budget of millions associated with many ERP projects. As such, RPA enjoys significantly reduced barriers to entry. For a few tens of thousands, you can set up a proof of concept trial to understand the risks and benefits in a relatively inexpensive way.
Robots are also an attractive alternative to offshore resource – typically a third of the cost and they don’t have the high attrition levels common in such locations.
For the Business Process Outsourcing (BPO) industry which has traditionally relied on labour arbitrage and scale to win business, RPA poses a huge challenge by providing a realistic sourcing strategy. The option to make rather than buy becomes far more compelling.
I’m aware of at least one UK organisation insourcing work from its Indian-based BPO to robots that it has designed, built and is now running on its own premises.
Will this be the first of many such reverse transitions?
Case study: How one organisation is using robotics as part of finance transformation
An organisation had many sources of customer data, including legacy batch systems, containing thousands of customer records, and emails systems that hold new customer details.
- assurance that the billing system is updated with the new data
- assurance that the data transfer is completeness and accurate (i.e. data integrity)
- a feedback loop so that any missing data can be highlighted and addressed
- positive confirmation of billing.
RPA systems were developed to replace the offshore employee who had been performing the work. A robot extracted data from the legacy and email systems and updated the billing system, emailing individuals where data was missing or invalid for follow up action. It logged all actions, exceptions and reported agreed KPIs.
Due to the volume of actions several robots were built and a Robot Operator (an employee) was appointed to oversee and interact with the robots where necessary. This was a more value-added role than that performed by the original offshore employee, as it required the application of judgement and decision-making rather than data input.
The robot cost a third of the offshore employee’s total cost of employment.
The organisation experienced step change improvement in the quality and cost of customer billing. Customer complaints, and the cost impact in customer service, were reduced. The clincher is that it took just several weeks from proof of concept to an operational model for these benefits to be realised.
One sector where RPA has an immediate appeal is Private Equity, where a return on investment (ROI) is often expected within the financial year. The ROI of RPA is typically quick – often less than a year – and the benefits tend to be clear and tangible.
So, is this the end for existing models of business efficiency?
Personally, I doubt it.
There will always be a place for ERP programmes in driving large scale transformation. Here, RPA would take a complementary role to ERP, automating certain tasks (e.g. ERP workarounds or connecting ERP to other systems) and eliminating errors. In this way RPA can accelerate and maximise the benefits from investment in ERP.
Nor will RPAs undermine the case for Shared Service Centres (SSCs). As SSCs are at the back end of core business processes, such as Procure-to-Pay or Order-to-Cash, then as RPA is applied to the processes the logical next step is to look further up the process chain for opportunities to improve the end-to-end process. This leads to greater integration and cross-functional working with Procurement, Supply Chain and Customer Service colleagues collaborating on the deployment of a broader RPA strategy.
The impact of ever-greater automation drives the skills agenda for Finance and moves the function up the value chain. As basic business processes are automated, we can focus on hiring top quality employees and training and developing them throughout their careers.
And what of the old skills? Well, many are as relevant as ever, including:
- Ensuring processes are reviewed for inefficiencies first rather than blindly moving to RPA
- Prioritising and screening of RPA options based on ROI criteria
- Scoping, staffing and managing projects and business outcomes identified and realised
- Understanding and mitigating risk
There are many more areas where what the experienced transformation leader does as second nature is beyond the capability of robots. At least for the time being.
The growth of RPA is but one aspect of the relentless digitisation of the workplace. I believe that as the impact of this information revolution is better understood and applied there will be greater opportunities for the Finance Transformation practitioner to learn new tricks, while demonstrating the value of experience…
We’ll be back!
Greg Russell, Transformation Specialist