Navigating the Automation Roadmap Blog Series
Are the expected benefits of process automation too high?
Are the expected benefits of process automation too high?
If you follow the RPA market, you will know advisory firms have provided guidance for Robotic Process Automation (RPA) service providers to shift from RPA into more product-based, “Hyperautomation”, to accelerate intelligent process automation deployment. While this shift is expected to push outcomes, more than the journey of RPA, I cannot help asking if either approach is really achieving the desired benefits. Otherwise asked, are the expected benefits of process automation too high?
Why the need for automation arises?
Before addressing the desired benefits, please allow me to set the context for why the need for automation arises (generally speaking). When a company implements an enterprise application, the intent is to provide support for the business transaction. Inherent to the software is automation to create an efficient and effective processing of the business transaction. The result is that process teams can focus on higher value tasks because the lower value tasks are reduced because of the application.
Over time, the application’s ability to stay aligned with the business erodes, therefore business teams absorb the system deficiencies and support with manual work-arounds and stop-gaps. Before anyone realizes, the business teams are largely supporting the work-arounds and manual work, only leaving minimal time to support the higher value tasks. As the business continues to evolve, business leaders and IT engage in discussions to amend or add onto the enterprise system. Typically, enhancements usually have a 6 to 9 month development cycle and a price tag into the hundreds of thousands of dollars, which becomes difficult to justify compared to the labor expense (especially if work was moved off-shore). The result is that manual work becomes the status-quo and to be addressed in the future.
This is the segue where automation enters the picture, since automating the low-value, manual, repeatable tasks is the sweet spot for RPA, but more so, shifts the status quo back towards the business focusing on high value tasks.
Defining benefits
Every organization will have different approaches to tracking benefits, but savings often include: 1) Reduced Labor Costs, 2) Seasonal Coverage Costs, 3) Overtime Elimination, 4) Higher Value Time Replacement, 5) Improved Quality, Regulatory Compliance, 6) Employee Satisfaction, 7) Cost Avoidance – Future Salaries. Some of these benefits can more easily be measured and tracked over time than others, but these benefits are reasons why processes should (or should not) be automated. Assuming you can assign an annualized dollar amounts to these benefits, the cost savings calculation is simply: {Development Costs} + {Attributed Operating Expenses} – {Business Process Savings} = Cost Savings. Organizations will adjust this basic equation to suit their needs and ability to track, but it provides a basis for understanding the costs and benefits to automating a business process.
Clarity on your automation investment returns
Business leadership will typically make automation decisions based on the prospective ROI for an automation, based on the as-is state of the process. Unfortunately, we often see automation decisions are made without consideration for the high value work that was being rushed and diminished because of the manual, low-value work that has overwhelmed the team. Automating processes often just allows the staff to re-focus on the high-value work that lost focus over time, which is a significant benefit, but not necessarily the return on investment leadership was targeting.
My point is that we might not be placing enough value on restoring order to business processing for business teams to focus on high-impact priorities, while doing their jobs more comprehensively and completely, without sacrifice. We include #4, “Higher Value Time Replacement,” in our benefits calculation, so we enable business leaders to understand and capture the benefits of refocusing team members on the more important work they are currently distracted from. Without understanding of how work teams are refocused, business benefits can be over-estimated if only focused on the hours returned or the FTE cost savings. Rather than RPA not delivering benefits, maybe we need to start being honest with ourselves and a bit more realistic that RPA is not a magic pill that will eliminate jobs overnight, but it can be used to create business agility (and cost savings) if used correctly.
Vigilant’s understanding of value and technology not only uniquely positions us to help address restoring of order to a process, but also finding additional benefits trapped in the low and high value manual work.
Thank you for reading. Our future blog articles will focus on addressing the impact and root causes of bad data perpetuated by ineffective and inefficient business processing, and how solution architects can make or break your automation program.
Please reach out on automation@vigilant-inc.com for a spirited discussion on maximizing the benefits on RPA and how we have found the ‘secret sauce’ for achieving success with automating Oracle EBS Financials and accounting operations.
We look forward to your feedback.
Author:
Joshua Gotlieb
Intelligent Automation Practice Director, Vigilant Technologies