15 Dec RPA – bank the core benefits but strive for strategic advantage
A banking client of ours asked, ‘with everyone implementing RPA, how should we differentiate?’ It was a great question and not so easy to answer, because the bots offer the potential for strategic advantage from so many perspectives.
What is a given, is that a Robotic Process Automation (RPA) implementation will deliver ‘faster and better’:
- Faster, because the bots process activities much faster than human workers, maybe five times faster, or more. So fast, you’ll see a blur on the screen as data is captured and crunched, documents pop up, are filled in and reports sent. So fast, that any activities referred by exception to humans may hold up the queue.
- Better, because the bots don’t get tired or sloppy. In fact they don’t make mistakes at all, because they never deviate from the business rules configured into the software. That means no rework required. Plus, Blue Prism tracks and documents all of the activities that it automates, which provides full oversight and non-repudiation. This improves risk, fraud and compliance reporting and provides sound data for continuous improvement.
If all that RPA did was to orchestrate and conduct tasks faster and better, that alone might be compelling. But the benefit that most organisations seek from RPA is ‘cheaper’ and, unlike traditional IT investments, RPA offers a massive return on investment that is delivered in months rather than years. To use a South African example, a Blue Prism license costs approx. R140, 000 per year (depending on the exchange rate) and does the work, say, of five human FTE, each of whose cost to company is around R300, 000. The cost benefits are even greater when fully loaded: the bots don’t need desk space, laptops, individual software licenses, a parking space, training, smoke breaks, leave etc. They need less support from internal support functions and risk and compliance effort is reduced. And the bots work 24/7 without the need of shifts, so the saving can be much greater yet. The cost avoidance can be significant too, because you don’t need to increase human capacity to meet new demand.
While bots augment human workers, they can replace them too. The extent to which an organisation seeks to realise the full potential of cost savings is at its discretion, but can be huge. Some choose to work within the constraint of natural attrition and may freeze recruitment, while others may lay people off. Whichever approach, fast or slow, the fact is that it will become increasingly difficult to protect current jobs from technological advancement, though new jobs will emerge.
So RPA will deliver ‘faster and better’ and will deliver ‘cheaper’ too, but our question was, ‘and how should we differentiate?’ It is the organisation’s executive team that must answer that question, by defining a vision of the future (digital) operating model and setting strategic direction. In deciding where to focus the power of RPA they have many options, which include:
- Speed of Innovation. RPA enables rapid response and innovation enablement through the fast automation of processes and the speedy integration of front-end digital technologies with back office legacy environments. Faced with the threat of disruptors, this can give the competitive edge back to incumbents.
- Increased operational agility. The bots can scale up and down and switch their tasks according to planned and unpredicted demand, immediately, from anywhere, without having to recruit and train extra people. Processes can be automated and deployed in just weeks, without need of heavyweight IT support.
- Improved customer experience. The bots enable faster and better service and 24-hour coverage. Staff can be released to customer-facing roles, savings can be invested into customer initiatives and, with lower-cost operations, pricing can be more competitive.
- Improved compliance. RPA improves control by providing consistent adherence to set rules. With Blue Prism, all tasks are tracked and monitored to aid compliance evidencing and audit trails. Transaction risk is reduced, while companies can spot potentially illegal activity much more easily. RPA can also ease the burden of handling new regulations, avoiding the need to ramp up human capital and change systems while freeing up the Compliance function to provide strategic advice and to oversight roles that require human judgment.
- Operating model innovation. When conceived with ambition, and delivered as a transformation, enterprise-scale multi-purpose digital workforces have the potential to deliver ultra low-cost, high performance operations with tremendous operational agility. Such a digital workforce should have a material impact on the cost-to-income ratio, while still enabling growth.
Once an organisation has started on the journey to automation, the demand usually grows exponentially. Strategy is about focus and trade-offs. Faced with such demand the best approach, we recommend, is to set strategic priorities. Instead of implementing RPA on a thin and wide ‘coverage’ basis, picking off easy-to-implement automations and avoiding process reengineering, rather go for maximum value and alignment to strategic objectives. We recommend that you build a portfolio with three ‘buckets’ of automations: one for innovation and to enable strategic themes (above); a big bucket of business case driven candidate processes that are highly suitable for automation, the sum of which delivers the financial target set by the executive team and; a bucket of automations that ease the burden of running the business (reconciliations and remediations, say). The executive / steering group defines the vision, sets strategic direction, business objectives and financial targets, ‘shapes’ the portfolio and sets the pace and trajectory for change. The CoE manages demand, identifies opportunities, fills the buckets with suitable automations and plans and coordinates the deployments, engaging with business owners and SMEs to get their commitment, to understand requirements and to begin the process of change management and getting the business operationally ready to receive the automations.
Most RPA implementations follow a pattern. First, a POC ‘wows’ business stakeholders, then the POC process is taken into production and tactical deployments follow, which win credibility. At the same time the CoE is created to standardise the use of the Robotic Operating Model method, to build skills, manage the demand pipeline, review designs and build the objects library etc. We call this stage ‘industrialisation’ and it helps to scale automation, deliver early value and create a platform for success. But it is not the end state. Real success, we believe, comes with the creation of an enterprise-level multi-purpose digital workforce within a transformed human/digital operating model, and by achieving strategic advantage. Such success lies in seeing beyond the benefits of ‘cheaper, faster and better’, which are substantial nonetheless, to create a vision for how to unlock the full potential of software robotics.