A really insightful discussion piece from Phil Ferhst at HfS (@pfersht) about the truth behind the lack of RPA cases. Phil is saying things that we totally agree with but which sound self-serving when we say them ourselves. Phil is right on point when he talks about client reticence to broadcast their automation initiatives and when he says this will change. It WILL change because there is real shareholder value to be gained from full scale automation programmes. Many of the projects we are working on today will be truly transformative and it is highly likely that these will become the killer use-cases Phil was asked about.
We particularly liked the honesty about the murky world of RPA. It IS murky and, for many on the band-wagon this is both deliberate and a good thing as they can shine the mirrors and thicken the smoke and claim their place in a market in a market they do not yet fully understand.
We started in the RPA business long before it became over-hyped and we have learned much since. Others will have to go through the same learning curve but they will struggle to do so without the “battle weary operations leaders, the change management experts, the highly skilled RPA engineers and the Robo-governance competence” Phil described. Ten rebadged RPA resources with six months of experience is not the same as one person with five years of solid experience. It’s like night and day.
This is why we believe the “pure-play” RPA specialists will thrive as many of the bigger players continue to work things out as they go along.
Hats off to HfS for continuing to lead the market in the right direction – the RPA cognoscenti are starting to grow.
At Virtual Operations we get the sense that in company meeting rooms across the world there is a conversation that starts like this:
“This robotic process automation thing seems to be taking off. Do you think we should get someone in, maybe pilot with an easy process, and see what comes of it? We wouldn’t want to get left behind in all this.”
In theory this is a reasonable approach, but it is not the most effective starting point if a company is going to realise the true potential of process automation; far from it, on two counts.
Firstly, the subject raised in the meeting is robotic process automation (RPA). This immediately limits the scope of what the company might want or be able to do because RPA is just a subset of a range of advanced process automation tools. As well as the RPA tools there are other tools such as cognitive or AI technologies, desktop automation, document management and analytics that need to be factored in. We prefer our clients to think of Intelligent Process Automation (IPA) where the right mix of tools are deployed to meet well defined strategic objectives.
And herein lies the second problem with our example of how a company might approach process automation. To realise the optimum potential of process automation it is essential to initiate an automation program based on a strategic objective, not to undertake it as an ad hoc piece of work around one or two processes.
“To realise the optimum potential of process automation it is essential to initiate an automation program based on a strategic objective, not to undertake it as an ad hoc piece of work around one or two processes.”
Our experience shows that there is more likelihood of achieving substantial automation benefits if a company can identify and determine the specific reasons for exploring and implementing an enterprise strategy for intelligent process automation. The company will avoid hitting the process automation glass ceiling ( http://virtual-operations.com/rpa-and-the-glass-ceiling/ ) and be on the road to optimising automation benefits.
Our experience also tells us that there are essentially two primary drivers for strategic IPA adoption: technology and workforce.
A wide range of technology challenges are impacting organisations everywhere. Legacy systems that are cumbersome to adapt for new services or rapid organic growth; a lack of agility for systems to support new products or markets; the challenges of integrating systems following M&A activity; the requirement to collate more and more data for operational, market and regulatory reasons; or the ability to participate in the “internet of things”.
Large organisations typically have core platforms with many smaller departmental or function-specific applications. Some of the data is shared, some processing exchanges data between systems, and in many cases, a “swivel-chair” integration is performed by people with spreadsheets, report writers, macros and so on; many unsupported and many dependent on the originating user. The CIO wants to create more resilience and less complexity, the Compliance Officer wants better audit data, the Marketing team want more analysis of customer interaction, and the CFO wants to reduce the annual IT spend.
To resolve these often conflicting objectives with a new enterprise platform will take a long time, it will have a long payback period, and there will still be a long tail of unrequited requirements.
IPA can be introduced into the IT architecture as the glue that can lightly integrate systems that were not originally designed to work together. Under the practiced governance and management of IT, but run by the business users, IPA supports a strategic technology direction that can release many of the constraints inherent in systems that were designed and implemented before the new wave of agility tools. IPA can be used as an enabler for rapid adoption and exploitation of such things as the internet of things, mobile devices, tech-savvy users, widely available wifi, open source development and so on.
The most tangible opportunity is in changing the way that people will work and achieving the twofold benefit of IPA – freeing up costly resources from automatable tasks, and harnessing the new capacity to focus on products, service and customers.
There are many ways in which an organisation can deploy its workforce, according to its requirements for control, cost, quality and service. Some organisations use local teams, some consolidate. Shared services, often in a lower cost location, is a prevalent component of service delivery. BPO has been an option since the 1990’s; and offshoring to either BPO providers or through a captive facility became more prevalent in the 2000’s. It is not unusual for large organisations to combine some element of all these service delivery options.
The advent of intelligent process automation adds another service delivery option.
With increasing pressures on cost and efficiency, and on addressing more rapid market developments, organisations are looking for ways to reduce, refocus or reskill their workforce. By identifying workforce rationalisation as a key driver for a process automation strategy, the end goal comes into sharper focus and is more likely to be realised, especially if automation is used as a means to transform the way work is actually performed.
The most frequent strategic requirement is the need to contain costs, either through redeploying or replacing people, or augmenting existing headcount so that more can be done without expensive recruiting and training. This often entails a redesign of the operational team structure, something that must not be taken lightly, and should be managed sensitively. The payback period might be a little longer but the total cost benefits will be more significant.
Another prevailing objective is to use IPA as a capacity management tool dealing with recurring peaks of activity, often linked to an inability to craft a sufficient business case for a permanent technology solution. IT resources are usually constrained by the number of change requests received annually, that fill up their book of work, but leave a number of business requirements unfulfilled. However, the business case might be achievable with IPA, deployed quickly, relatively cheaply and often through the business and not IT.
There are many other drivers for adopting process automation, but few are as strategic as the need to address major technology or workforce problems. Such other drivers might include a need for faster access to data, higher levels of regulatory compliance or improving process efficiency. These other drivers are not sufficient in themselves to drive towards a fully digital enterprise but the inclusion of IPA within the digital enterprise platform will, in addition to the strategic benefits, deliver the further direct and indirect benefits required of the more tactical drivers.
McKinsey, in their November 2015 report on the fundamentals of workplace automation, state:
“… leaders from the C-suite to the front line will need to redefine jobs and processes so that their organisations can take advantage of the automation potential that is distributed across them. And the opportunities extend far beyond labour savings. When we modelled the potential of automation to transform business processes across several industries, we found that the benefits (ranging from increased output to higher quality and improved reliability, as well as the potential to perform tasks to superhuman levels) typically are between three and ten times the cost. The magnitude of these benefits suggest that the ability to staff, manage, and lead increasingly automated organisations will become an important competitive differentiator.”
….and enable an organisation to realise the true potential of intelligent process automation.
Contact us on +44 2035 891 549 to find out more, or email firstname.lastname@example.org
Robotic Process Automation – just part of the story
The acceleration in the adoption of robotic process automation (RPA) is very welcome development in this new and rapidly emerging area of service delivery. But while it’s clear that RPA can serve as a powerful enabler – driving change, lowering service costs, increasing revenue, and valuable management information – surprisingly few organisations have truly mastered the art of capturing the maximum benefit.
So where’s the problem?
Achieving maximum benefit from RPA
The real success of RPA deployment in any organisation depends on how RPA can be used as a significant enabler for radically rethinking an organisation’s whole process landscape. There is no doubt that efficiencies can be gained from deploying RPA in discrete, tactical projects, releasing 10 or 20 FTE’s here or there, but this approach can be slow, expensive and most importantly, not transformational.
The massive increase in demand for RPA has, in the vast majority of cases, focused primarily on these tactical changes, which will ultimately realise only minor efficiency gains. A more strategic and ambitious approach is required. By encouraging an holistic approach and a fast pace, end-users are much more likely to obtain the maximum benefit of RPA.
The reality is, if RPA is used correctly, it has the potential to enable sustainable business transformation and real shareholder value. However, the idea that it could be used to patch up more fundamental processes such as badly integrated software systems, poor process design or legacy organisational structures is a common misconception.
“the idea that it (RPA) could be used to patch up more fundamental processes such as badly integrated software systems, poor process design or legacy organisational structures is a common misconception.”
Tactical, process-by-process RPA, can lead to merely automating existing inefficiencies, whereas end-to-end models that encompass operational change will no doubt lead to increased productivity across the whole organisation.
How to get started
True transformation can be achieved on a much greater scale with commensurate improvements in cost, quality, and competitive positioning. By ensuring and considering a more comprehensive operational approach, the longevity of transformational change will ensure a higher return on time invested. It is important to remember that carefully managed enterprise wide automation programmes will become self funding within 9-12 months.
Much of the groundwork should be spent gaining internal stakeholder buy in to ensure technology, data security, and financial concerns are addressed; and, externally, to engage customers and suppliers in potentially far-reaching and beneficial process changes. This requires the adoption of a holistic view of the organisation’s process landscape and how those processes interact with each other.
The most successful programme plans are built on strong foundations realised through a detailed process of stakeholder engagement and education. Persuading process owners to engage is a key challenge but by ensuring those strong foundations through engagement and, by putting together a detailed deployment plan, clients can ensure the scope for success is big and bold.
The next challenge is identifying and mapping the processes and the value to be derived from the automation of those processes and prioritising them from an effort to value perspective. What’s more, choosing the automation technologies and services that are available and most appropriate becomes a critical decision point. With so many options and RPA ‘experts’ emerging, choosing the right advice and determining what is best for your business can be one of the most difficult decisions.
Once an assessment of individual and aggregate automation value has been analysed, a comprehensive transformational roadmap, with automation at its heart, becomes the foundation for success. Automation itself is relatively straightforward but the ability to seen and apply it as an overall operational enabler is where the true expertise in RPA comes in to play. The practical reality means analysing software systems, infrastructure, security protocols, change management, governance and methodology. Project, change and stakeholder management skills and experience are fundamental to the overall transformational success. Through plotting a detailed roadmap, continually monitoring progress, adjusting, prioritisation and scaling resources as required, sustainable momentum will be achieved.
Typically, the impetus of the programme will be generated from getting the processes automated as soon as possible. While going some way to achieving the defined business benefits, those benefits will not be sustained if there is no parallel activity to establish an automation capability and infrastructure to support the transformation: this should include new support roles, process version control, platform configuration, recoverability and so on.
Much of the automation advice on the market takes a different attitude and adopts a tactical ‘get it started and take if from there approach’. However, successful RPA is dependent on a true end-to-end process solution. This thorough, and all encompassing, implementation approach allows RPA to be used deployed most effectively, as one of a portfolio of transformation tools.
Tenets for success
1. Adopt an holistic approach
2. Understand (map) your operational landscape
3. Identify and manage key stakeholders (internal and external)
a. Generate excitement, alignment and involvement
b. Address concerns such as security and resource ‘ownership’
4. Develop a communications programme
5. Build an enterprise wide business case
6. Launch quick-win automations immediately to minimise time to value (they can be brought into the foundation and governance for the programme later)
7. Design and build the RPA Target Operating model that best suits your organisation
In this blog Nick Andrews explores the inhibitors to the take up of robotic process automation and the choices faced by CIO’s, together with the potential for a new role in the boardroom – look out for the Chief Automation Office (CAO).
Eight years ago there were just a few pioneering companies adopting true process automation on an enterprise-wide scale. These organisations were not just early adopters, they helped shape the products that today are being investigated and implemented to deliver massive transformational benefits world-wide. The process automation market (often referred to as ‘robotics process automation’) is estimated to be >$25bn within the next 5 years.
There are many growth factors. The need is great, the automation process itself is rapid, inexpensive, very low-risk, low maintenance and truly transformational. In addition, adopters are finding that the indirect benefits typically exceed the direct cost benefits (examples include: improved audit trail, quality management information, releasing creative resources, reducing churn, increasing bandwidth, without headcount increase, and managing seasonal peaks).
Given all of the above, it is surprising that the number of case studies remains relatively low. From our work with the leading BPO companies, automation technology providers and end-users we can see the inhibitory factors which have slowed the growth, for the time being at least.
- The BPO community has been slow to adopt ‘robotics’. It doesn’t fit neatly with their commercial models, which are often FTE-based, and in many cases has been seen more as a threat than an opportunity.
- Incumbent suppliers are threatened by the simplicity, speed-to-value and demonstrable efficacy of process automation. They are adopting defensive tactics to prevent the introduction of RPA or claiming their products can achieve the same outcome.
- End-user adopters see RPA as providing a competitive advantage. Many are reluctant to publish outcomes or even to be cited as references.
- There are innumerable end-users who have progressed only as far as the proof of concept stage. These are invariably successful but this may be as far as the initiative goes without endorsement from the buyer’s IT department. Fears and perceptions prevail such as: ‘not invented here’, RPA is grey IT, presents an enterprise security risk or that similar capability already exists within the department.
- Lack of available skills – the technology providers themselves do not wish to become large-scale service suppliers. There are currently only a handful of specialist service providers in this area and only one of these is fully operational outside of the UK.
Our experience is that the inhibitors are now being outweighed by the growth factors. We expect a number of new case studies to be presented in Q2 2015 (we are confident of this just by looking at our own client portfolio). The BPO lag will change with organisations like HP and Cognizant having placed it high on their strategic agenda. Incumbent suppliers are failing to deliver and the smoke is clearing on their claims. Organisations are becoming more receptive to publishing the results of their process automation programmes.
The number of relevant technology practitioners has doubled in the past year. Virtual Operations runs a global Academy which enables students to get to practitioner level within two weeks. Demand for places has quadrupled in the past 3 months. Together with the short (albeit steep) learning curve this will facilitate growth massively as trainees become trainers in as little as nine months.
CIO’s have a choice. They can either be process automation ‘blockers’ or process automation ‘quarterbacks’. The move from blocker to quarterback has to accelerate as demand increases, perceptions are shown to be invalid and their peers increasingly adopt and endorse the technology. Our view is that CIO’s should be the initiators and orchestrators rather than the gate-keepers and a key part of their remit should be managing the enterprise-wide adoption of process automation within an optimal environment (Governance, Security and Framework).
It has been suggested by industry watchers that CIO’s will need to have large scale process automation experience on their CV’s and further that a new role of CAO (Chief Automation Officer) may emerge. Watch this space.
Virtual Operations Establishes LinkedIn’s First RPA Group
We are pleased to announce Virtual Operations has launched the first and only Robotic Process Automation group on LinkedIn and I would personally like to invite you to join!
Regardless your perspective on the outsourcing industry – advisor, analyst, provider or media – you’re no doubt hearing more and more about Robotic Process Automation (#RPA) and it’s anticipated impact on BPOs, shared services and back office teams. At an outsourcing conference keynote last year one analyst predicted RPA will have an even bigger impact on outsourcing than cloud because of it’s tremendous potential for driving innovation, change and transformation.
We look forward to RPA on LinkedIn becoming a truly OPEN FORUM for participants across all perspectives of the process automation ecosystem – including providers, practitioners, technologies, advisors, media and others. Of course we also encourage you to invite any of your colleagues and associates you think will be interested in participating. Our members are welcome to share any news, links, blogs, research or other content they feel will be valuable to the discussion and we look forward to educating both our group and the market along the way.
Welcome again to the group, we hope you join soon!
How Much and How Fast is Outsourcing Changing?
The International Association of Outsourcing Professionals®, (IAOP®), recently concluded it’s annual Outsourcing World Summit. IAOP said it was their largest Summit ever, with more than 850 delegates attending on behalf of buyer, provider and advisor companies from around the world.
Outsourcing as a profession, a function and an industry is certainly well represented at many other conferences but it’s hard to envision one global event that brings together so many practitioners, end customers, advisors and service providers at one time – all solely focused on outsourcing. This year in fact the provider community seemed particularly well represented, with 83 unique companies and associations exhibiting in this year’s Global Services Mall and many others in attendance as delegates, speakers or panelists.
Because the Outsourcing World Summit draws so many unique disciplines, specialties and geographies it also feels very referential for the industry as a whole. What I took away from this year’s Summit, in terms of both hard facts and anecdotal observations, is that the industry is very much alive and well, yet is extremely self-conscious of it’s need to redefine it’s future value. Some attendees said it more outright than others, but in general the consensus seemed to be that if outsourcing’s value proposition over the next five years remains labor arbitrage, off-shoring and ‘lift and shift’ then a huge opportunity has been missed for all the industry’s constituents.
How Different Will Outsourcing Look in the (Near) Future?
A great place to look for that answer is the survey IAOP released at the Summit. IAOP, in collaboration with Accenture, surveyed its members and affiliates worldwide in 2012 and 2013 to monitor the evolution of outsourcing and identify developments. Some of the report’s key findings include:
- Outsourcing is in growth mode and its influence is now felt across increasing numbers of business processes and functions.
- As customers and providers alike become more experienced they are targeting more strategic business outcomes—supporting plans for growth, increasing flexibility and accessing specialized skills and talent.
- To support those strategic goals, more customers are looking for higher-order, knowledge-based skills rather than operational skills alone.
- The importance of innovation as part of outsourcing contracts continues to be an interesting development. Although customers rarely cite innovation as a primary reason for outsourcing, they overwhelmingly expect innovation as an additional value derived from the outsourcing relationship, and are likely to see innovation as a collaborative endeavor with their provider.
Another revealing possibility for outsourcing’s future direction was revealed in the titles of many of the presentations and panels at this year’s Outsourcing World Summit. Take a look and you’ll see much more than the traditional fare of governance, quality, locations and vendor selection. Here are a few that stood out:
- 5 Steps for a Successful Transition to Managed Services
- Talking SMAC – Contracting for Social, Mobile, Analytics and Computing
- Cyber Warfare
- Is it the Dawn or Death of Outsourcing
- When Outsourcing Can Lead to Jail Time
- Insource to Outsource to Crowdsource… What’s Really Next?
- Doomsday Predictions for Outsourcing vs. The New Normal
Not everyone at this year’s Summit is embracing a big transformation of outsourcing’s core value proposition. Look no further than Robotic Process Automation – predicted by many to be one of the most disruptive technologies to hit the industry since Cloud computing. For every early-adopter that has already made digital labor part of their back office delivery model there are 3 to 5 providers who simply can’t recognize how much impact this technology can have (to be fair, that number was double just three months ago…). Adding this kind of technology driven change on top of everything else that was discussed at this year’s IAOP Summit and I was left concluding the outsourcing industry really is poised, ready and capable of a major, self-imposed make over.
How much of this change will happen by the time the 2015 Outsourcing World Summit rolls around? I’m predicting far more than many expect!
Share your predictions, thoughts and comments with us or join the conversation on Twitter at #2014OWS / #IAOP. We’d love to know what you think about the future of outsourcing.
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