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.
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Process automation has become a worldwide phenomenon, with practically every large corporation now having it on its agenda. Peter Clarke of Virtual Operations and Sabi Sabev of PwC recently put their thoughts together for Professional Outsourcing Magazine – here.
As automation services and technologies become ever more sophisticated so the clamour increases for where this is taking us. The answer, in the near to mid-term, is digital enterprise. There are no perfect examples of digital enterprise yet, but there is huge demand and drive to get there. Digital enterprise is still a buzz phrase and the vision is still not entirely clear; what is clear to many is that those who fall behind in this area will be unable to provide customers and employees with the wealth of data they demand when they require and in the media they choose. The result could be irrecoverable competitive disadvantage.
While our hypothesis is that process automation is a fundamental step towards creating the digital enterprise, this only holds if the process automation programme is part of a total rethink of what an organisation is doing in digital terms. Just removing FTEs through automation or digitisation, as part of an efficiency drive, will not take you off the path to extinction. The combination of the internet of everything, new methods of communication and the collaborative, information-hungry economy will move the market away so fast that the digital dinosaurs will be increasingly unable to catch up.
Mojgan Lefebvre, CIO of Liberty Mutual Global Specialty, was quoted in CIO Magazine as saying: “Consumers wielding tablets and smartphones have shifted the balance of power. The one thing that comes in and absolutely disrupts industries is giving the end-user customer the ability to do anything and everything they want on their mobile device.” It’s not just consumers; employees, suppliers and corporate clients will all demand instant and mobile access to all data and analytics from whatever devices they choose.
State Street Bank CIO Chris Paretta was also quoted in CIO Magazine. In reference to one of the bank’s four key strategic goals being digital enterprise, he stated: “The digital enterprise revolves around making information mobile. Workers will use mobile devices, smartphones or tablets. They’ll connect, via the cloud, not just to company data but to data from customers, suppliers and relevant outside sources, including social media and internet-connected objects. They’ll apply fancy analytics techniques to make better business decisions.”
In our experience, automating processes, even at scale, without a clear digital roadmap is fool’s gold. While many of the earliest adopters are now capitalising on the information released, this indirect benefit is a welcome side effect rather than part of a cohesive plan at the outset. As such it has taken far longer to get to value and the aggregate benefit is greatly reduced. Despite the increased awareness of the digital revolution, the vast majority of automation conducted today is aimed at a single, or group of related processes within one business function. Our advice is to aim first at the “operational layer” where process automation will be deployed across teams where data, systems and tasks require integration. This will require analysis of seat densities, locations, transaction types and FTEs. The effort may be greater but the scale and benefits will be considerably increased.
The next target will be to automate at the service level, where the aim is to go beyond operational efficiency towards service excellence both internal and external, deploying the technologies to address specific client service objectives, competitive differentiation or even to integrate with client/supplier processes.
We particularly like the insightful piece by Robert Brown of AVP Cognizant, in which he states: “The data generated by these increasingly astute technologies of process automation and digitisation is the real prize, for businesses and workers alike. With advances in machine learning, artificial intelligence, and big data, companies can predict rather than react to rapidly changing demands and expectations.”
We agree with Brown that merely automating an existing process or conducting analytics falls short and that a full digital rethink is crucial to transforming core processes. Harnessing the power of emerging technologies, such as social, mobile, analytics and cloud, companies can completely reimagine customer, supplier and partner interactions.
So, if the vision is digital nirvana through fully exploiting social, mobile, analytics and cloud for employees and customers alike, how does “intelligent” process automation provide the platform for realising this goal?
“Companies that don’t apply automation technologies strategically will not survive the digital business era.”
Sue Watts – COO, Xerox Services Global Capabilities”
Step 0 is to determine the domain within which your automation programme will begin. This may be enterprise-wide or, for a large multinational, it may be as narrow as one functional area within one country.
Step 1 is to abandon the adoption of automation and analytics for the sake of it and instead think about how your organisation could gain competitive advantage through technology. For example, how can you enable your employees with more accurate, more timely and more powerful information? How can you use these tools to get to market faster, enable your sales teams, empower customers, increase regulator confidence and create new offerings? This is not a trivial undertaking and requires planning, organisation, imagination, insightful thinking and, in most cases, the acquisition of talent in this area. Xerox recently appointed Sue Watts as COO of services. Together with chief innovation officer, RG Conlee, they form an axis which is rapidly taking Xerox into the new digital era. They would be the first to agree that the old mindsets no longer apply and there is a need to rethink the whole philosophy of how work gets done.
Step 2 is to exploit the power of modern automation tools to link new technology with your legacy systems. This is not simply to free up FTEs (although that is a welcome benefit) but more to facilitate faster, more accurate, real-time information, communication, feedback and analytics. This is the precursor step to creation of the automation centre of excellence (CoE). By connecting new technology seamlessly with old, automation will bring your legacy systems into the digital era.
Step 3 Creation of an automation CoE involves far more than developing an assembly line for RPA. This would be akin to building a car factory (with only one tool supplier) before the cars were designed or the target market identified.
Firstly, all applicable technologies, including AI, RPA, OCR, desktop automation, analytics tools, cloud and social need, to be factored in. Secondly, the CoE needs to be designed with the end in mind: who is it going to serve? What is the target operating model within which it operates? Where will strategy and governance reside? What resources are needed to stay ahead of the market? As Chris Peretta says, it’s about creating “a technology ecosystem that takes the company’s information and makes it both secure and, for those with the right access, easy to find and share”.
“The end destination may not be fully defined as yet, but we have a number of way-points that will provide the ideal staging posts”
Step 4 involves reorganising work (and re-engineering processes) with modern technology at the core and the digital era in mind.
The existing paradigm for shared services takes a current disparate and unleveraged work estate and centralises it for maximum efficiency. This is no longer a viable model as it has people at the core and does little to take full advantage of the automation (and analytical) technologies available. Instead, work needs to be organised and categorised such that all processes and sub-processes, other than the truly judgemental, can be automated and then all automated processes can be mined for information.
Step 5 is to innovate – to measure, monitor, research, compare and continually improve.
The digital business era has arrived. Those organisations that have a clear vision of how best to exploit it in their particular industry will survive and thrive. Those who do not will be unable to provide the instant (secure) access to the wealth of data that their customers and employees demand, nor in the form they require, and they will fail. The end destination may not be fully defined as yet, but we have a number of way-points that will provide the ideal staging posts. In our view, a crucial step is the creation of an enterprise-wide CoE for automation. Simply enabling legacy systems to interact seamlessly with new technologies (through automation) is a massive step on this journey.
However, a change in thinking and an appetite to change the way work is done is required so that the new delivery model has been developed with technology (automation) at its core and, crucially, so that the automation programs themselves have been designed to provide a launchpad for the digital enterprise.
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Applying RPA to Law Firms
There is undoubted consensus that the legal industry is undergoing a great transformation – accelerated by the impact of the Legal Services Act (in the UK) coming into force, but originating with a number of other factors that require law firms to adopt a more commercial approach to doing business.
These factors are well-documented elsewhere – the credit crunch and subsequent recession reduced the size of market in many practice areas; new market entrants emerging under the ABS cloak; more sophisticated legal services buyers forcing downward pricing; increased regulatory requirements; and mergers and acquisitions distracting from day-to-day service provision.
Also well-documented are a range of strategic and tactical remedies available to law firms – an assortment of practice management technologies, better marketing, hiring experienced business developers, adopting different pricing mechanisms, mergers, legal process outsourcing, creating teams of transactional paralegals, mapping processes and so on.
Despite the considerable strengths that top law firms enjoy, such as existing relationships, reputation, and high quality work from high quality people these might not be sufficient to defend against more nimble, technology-savvy and process-focused competitors from within and new to the legal sector.
One intervention that has not yet reached the legal sector is Robotic Process Automation (RPA), a recent technology getting more and more traction, particularly in financial services and business process outsourcing. This paper explores how process automation can contribute returns not only to address the factors commented on in the pwc report, but in support of a range of other benefits.
Introduction to Robotic Process Automation
In the delivery of legal services there are elements of predictable, repeatable work that can be undertaken whatever the matter type or practice area. Even in highly specialist practice areas there will be elements of matter management (e.g. file opening, interim and final billing, client reporting) and legal process (e.g. due diligence, searches, e-disclosure) that can be delivered more routinely and are therefore candidates for Robotic Process Automation.
To date, the deployment of Robotic Process Automation has been most successful where one or more of the following applies:
Tasks that are:
- Structured, rules-based, repeatable, and computer-based.
- Access one or more systems, across organisations, to complete a process.
- Perform decisions or undertake checkpoints before a subsequent decision is made.
Situations that are:
- Highly regulated.
- Irregular workloads and volumes.
The implementation of Robotic Process Automation has the added advantage of being relatively quick to effect and achieve payback. The automation is delivered through virtual FTE’s (many users of this technology describe them as robots) performing the defined tasks.
Initial deployment of existing processes can be within weeks with no additional applications or databases required. Typically, the processes are defined and iteratively deployed by the function that owns the process and not IT, thus overcoming typical roadblocks of quick scalability, data confidentiality and audit, and IT backlogs.
Legal Services Potential for Robotic Process Automation
Taking some typical activities from the management of a matter, there are some high level activities that can be performed through Robotic Process Automation:
- Automatically receive and review new instructions; access disparate systems and populate them with the necessary data.
- Assess the parameters of a case and estimate the number of hours to complete.
- Offload repetitive and routine matter management tasks.
- Auto-populate MOJ forms ensuring accuracy and consistency throughout the life of a case.
- Provide alerts about upcoming case deadlines, WIP thresholds and fixed fee breaches.
- Provide operational agility by managing variations in demand without the need to recruit or release people.
- Evenly spread client billing over the month and year by responding to clients terms of business, and undertake billing activity based on programmable triggers.
Legal Services Benefits of RPA
The challenge for law firms in a market of declining profits will be to create an operating model with an appropriate cost base that still meets the client demands of quality, value and outcome. Much of the pressure on the cost base will be directed at the support areas. A PwC analysis of declining law firm profitability highlighted 3 principle factors affecting margins: pricing, the activity of fee earners, and the cost base. The PwC survey highlights this, with firms recognising the need to do a number of things, as illustrated below.
With payback typically within 6-12 months, Robotic Process Automation can support the top 2 change priorities for law firms, while directly addressing the third priority.
Improve the use of technology:
- While process automation itself is a technology solution, its implementation can lead to a reduced requirement for expensive integration of software and data. With the robots “integrating” data at the presentation layer there is no need for complex or expensive IT integration projects. It will interact routinely with, and across case management and practice management systems.
- No coding or scripting is required, it is configured by the people undertaking the work on a day-to-day basis and the discrete process objects (tasks) created for one process are re-usable for any others.
Standardise business processes and ways of working:
- This is the very essence of process automation – a tool designed to mimic a human and to interact with disparate systems in-house, with suppliers and even with clients.
- An improved in matter management can positively impact lock-up and improve cash flow – prompt billing, reduced write-downs, and enhanced collections.
- Improved client satisfaction through timeliness, consistency, quality, accuracy and auditability.
- Improved operational data to track cases and monitor fee earner performance, and for providing better analytical insights.
Existing users of process automation in other business sectors have built their process automation business case on direct cost saving assumptions, but have found that the resulting indirect benefits are just as marked. In a law firm these benefits are likely to be:
- Enhanced capability and better responsiveness to new opportunities will lead to competitive differentiation, particularly for early adopters.
- Improved compliance in highly regulated industry, for SRA related compliance, and also for any other audits such as ISO accreditation.
- Revised behaviour and observance of internal policies: for example, reduce the prevalent behaviour of fee earners across the sector to bill in the final week of the month and in the final month of the year. This will reduce the workload pressures that typically delay receipt of cash.
- Upgraded operational data to track cases and monitor fee earner performance, and for providing better analytical insights into all areas of the business.
In an unrelenting buyers’ market and with increased downward pricing pressure there will be continued prominence given to commoditising as much legal and support work as possible. The legal sector is at a stage that other industries have found themselves in over recent years, with technology and external events shaping major transformations in pharmaceuticals, entertainment, and travel for example.
Ray Kurzweil, now Google’s Director of Engineering, is a technologist and inventor (flat-bed scanner, text-to-speech synthesizer to name but two of his inventions) who spoke at the LawTech Futures conference in London in 2013. He pointed out that while human intuition is linear, technology progresses exponentially – exemplified by the transformation of the pharmaceutical industry into a “knowledge industry”, and by the extraordinary growth of mobile telephones as the technology device of choice in Africa.
His belief is that the legal industry is on the verge of becoming a true knowledge industry, predicting more automation of routine tasks, but more significantly, the development of complex algorithms to process the ever-increasing intricacy of legal issues. Robotic Process Automation is a step further than has been seen before in law firms, and not far behind the first generation of robots described in this paper are technologies that can already understand the semantic context and content of language.
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