The following article appears in Pulse, the magazine of the International Association of Outsourcing Professionals (IAOP).
Since hitting the scene three years ago, Robotic Process Automation (RPA) has been branded as a change agent for back offices processes, shared services centers and indeed the entire outsourcing industry. “The economics were too compelling to ignore,” said Forrester in 2011. HfS a year later proclaimed RPA, “Has the potential to be a highly disruptive and transformative technology for both buyers and the outsourcing industry as a whole.” Most recently, Gartner in 2014 stated “We are now at a stage where machine intelligence will lead the optimal form of creative destruction in business and IT services,” and named a leading RPA provider as one of the catalyst technologies.
So what is it about RPA that has these firms and so many others in the outsourcing industry making such bold predictions? Looking closely at the range of RPA benefits reveals why it’s seen by so many as a leap forward from the current labor arbitrage paradigm and an enabler of true innovation (as compared to the non-innovative ‘lift and shift’ for example). In fact, both Outsourcers and Buyer organizations already deploying Robotic Process Automation find results such as the following are almost immediately achievable.
- A truly scalable workforce capable of being sized up or down within hours
- Near zero error rates
- Per ‘headcount’ pricing at up to 90% that of a traditional workforce
- Enablement for business intelligence and management information
- Detailed analytics for regulatory and audit compliance
So How Far Along Is RPA… Really?
Is all that disruption and innovation really happening? Are large back offices becoming silent factories of virtual headcount knocking out mountains of tasks at microprocessor speed? What about the outsourcer landscape, is a new order emerging as early adopters embrace RPA and the slow to respond fade into irrelevance? Before answering these questions let’s first reset around a definition of Robotic Process Automation.
Robotic Process Automation represents a category of business process software sharing the five following characteristics:
- RPA software works at the presentation layer – in other words it interacts with existing applications by replicating end-user, screen-based activities. It does not require custom coding and backend integration.
- RPA can operate any and all of the applications that human workers use today, including Windows, web, mainframe or custom applications. It can also work across Citrix, run in the cloud, be hosted from a datacenter or even sit on a desktop.
- RPA enables the virtual workforce, meaning once a given process is automated it can be deployed across as many RPA ‘software robots’ as necessary to complete the workload. This allows the near immediate deployment of hundreds, or even thousands, of virtual workers if desirable
- RPA is rapidly deployable. Most automation builds are measured in weeks or months compared to quarters (or even years) required to deploy complex workflow engines or ERP.
- RPA is a low-cost technology from a licensing, deployment and support perspective. RPA is nearly always significantly less expensive compared to either the TCO of automation technology alternatives (like many of the BPMS suites, ERP or custom applications) or compared to using traditional headcount to manually operate processes.
Another significant reason RPA is considered so ‘game changing’ has to do with where it can provide the most impact. Because RPA automates highly repetitive, rules- and screen-based tasks it is perfect for so many of those corporate functions that business process outsourcing organizations traditionally support, including ‘back office’ operations such as:
- Finance and Accounting
- Human Resources
- Procurement and Sourcing
- Supply Chain and Logistics
- Customer Service
- Legal Services
So that’s the promise of RPA: it is low cost, quickly scalable and impacts functions where operating expense, data accuracy, compliance and operational agility are important. So, is the outsourcing industry buying in?
The Calm Before the RPA Storm
It is probably fair to say that many industry observers expected to see RPA immediately redefine the customer/outsourcer delivery model as digital labor replaced offshore as the workforce of choice. The reality is a few things had to happen first, and as they do expect to see that much anticipate change. Here they are and why they matter.
- Outsourcers are reconstructing their contracting and financial models into transactional and outcome-based solutions. The reason is RPA destroys seat-based or FTE priced contracts and the outsourcers cannot afford to take the top line hit where they currently get paid on headcount.
- Contract renewal cycles will drive the rotation away from traditional FTE priced outsourcing agreements to the next generation of outcome-based managed services programs. Firms that track contract expiration dates forecast the upcoming year to be a heavy one.
- Service provider solution teams are ‘getting their heads around’ RPA and just now unlocking the power of the technology. What they are learning is it’s not a point solution like the screen scraping tools they have relied on in the past. RPA is actually the foundation layer of a development platform, and when used to direct many of the other fast emerging technologies, (such as artificial intelligence, speech to text, smart imaging, virtual assistants, and others) it can be fully unleashed as the transformational engine it’s capable of being.
- Analysts and advisors are still catching on to RPA. As more of them do that knowledge will impact how they structure deals and counsel their clients on future outsourcing engagements. The result will be an acceleration of awards favoring automation-enabled managed services solutions.
- Word of RPA successes will have a multiplier affect. Press releases, case studies and white papers, conference presentations, and award notices will become gas to the fire and suddenly RPA’s digital labor truly is the next generation outsourcing model.
What Organizations Should Do Now To Prepare for RPA
How you position your company for RPA, and business services automation overall has a lot to do with what type of firm you are.
- For outsourcers, it’s clear, embrace this next generation technology and as quickly as possible retool yourself for automation and outcome based managed services.
- For buyers, let your outsourcer know you expect process automation to be a primary component of their delivery model and that you fully intend to share in the benefits it will bring them.
- Analysts, advisors and media, learn as much as possible about the world of RPA so you can fairly represent it to your clients, continuants and the market overall.
Now let’s revisit that key question we asked at the top. Is all that disruption and innovation really happening? You bet it is; more quietly perhaps than had been predicted, but in no less a big way than predicted. Robotic Process Automation is transformational and will redefine the outsourcing world. Making RPA part of your plans really isn’t an option any longer.