Beyond off-shoring: Robotic Process Automation (RPA)

Charles Crick explains why RPA is the next frontier, now that BP outsourcing has reached the limit of its efficiency.

©iStock.com/3DMAVR

©iStock.com/3DMAVR

In recent years, Business Process Outsourcing (BPO) and Robotic Process Automation (RPA) are often discussed in the same forums.

BPO and off-shoring have been widely used by businesses trying to reduce back office and operational costs by the use of low cost labour markets.

RPA is acting as a fundamental disruptor to the conventional wisdom of labour arbitrage.

Now RPA is being seen as the next way to continue the drive for business process efficiency and cost reduction. At the same time, RPA is acting as a fundamental disruptor to the conventional wisdom of labour arbitrage.

So what exactly is RPA?

Forget the idea of walking into an office and seeing humans replaced by rows of androids; the ‘robots’ of RPA are invisible. They sit inside your systems, moving between different applications, inputting, checking, updating and processing far faster than any human could.

Sometimes they’re only ‘hired’ to work an hour a day, or overnight, by a particular business unit – so a single robot could be shared with another department or even organisation.

Like workflow-building applications, RPA software can lead to an immediate increase in process efficiency, accuracy, compliance and speed of completion – while removing manual errors and increasing customer satisfaction.

Actual results will vary for each organisation and for different processes, but RPA programs typically deliver cost savings of 25 to 45%. Pay-back periods are often measured in weeks, instead of the months and years required for software development projects.

In the context of BPO, RPA can enable the business to bring the processes back onshore for the same or less cost, with the advantage of gaining increased control over those processes. Instead of the vanilla, one-size-fits-all of BPO, the business can tweak the processes according to local imperatives.

Which processes suit RPA?

All the usual suspects can benefit from RPA: mundane, repetitive, frequent, high volume tasks; rule-based vs judgement-based decisions; manually intensive and error-prone processes.

However, because it’s so quick and easy to make changes, RPA is also highly suited to processes that regularly change and adapt – especially those that are too costly or complex to re-engineer the traditional way within the short term

However, because it’s so quick and easy to make changes, RPA is also highly suited to processes that regularly change and adapt – especially those that are too costly or complex to re-engineer the traditional way within the short term.

Good candidates for RPA are processes which intake structured data and transfer it across multiple systems – as well as time-consuming, low-volume activities that require frequent ‘system hopping’ – for example, HR onboarding.

Why RPA?

Apart from the availability and emerging value of RPA technology, there are some strong business drivers for adoption.

Backshore to reduce total costs

Over the last couple of decades, many enterprises have exhausted their options for achieving back-office cost efficiencies through global labour arbitrage and lower telecommunication costs.

It’s often overlooked that big outsourcing contracts demand constant management and legal oversight. This additional overhead is borne by the client and rarely factored into the true cost of an outsourcing deal. 

We’re starting to hear the terms ‘on-shoring’ and ‘back-shoring’ used more often… and RPA can be the enabler. Because robots cost around a third of an off-shore worker and can work around the clock, even tasks which have been relatively cheaply outsourced can be brought back under control again, for less cost.

Bypass the IT project backlog

It’s not feasible for IT departments to deliver on the ‘long-tail’ of minor change requests from the business – while also continuing to deliver on medium- to long-term technology programs and new, cutting-edge innovation.

Priorities are set, and sometimes it takes simply too long for seemingly simple amendments – which means the business can’t respond to market change or customer demands fast enough to remain competitive.

Many change requests – whilst critical to process improvement – are not cost-efficient to deliver through traditional system enhancement and system-integration solutions. Some lead to knock-on effects on existing system functionality.

RPA focusses on what the people do in a business process and leaves the existing IT systems alone. As such it is essentially a tactical ‘non-IT’ solution that can be built and deployed quickly for immediate benefits. 

Let process experts take control

RPA technology works on top of existing IT architecture at the presentation layer of business applications. Developers build robots through point-and-click functionality, using a graphical interface similar to MS Visio.

People with no specific knowledge of software programming language – but who have process expertise and an analytical bent – can be trained within a few weeks to automate processes using an RPA tool.

How to start with RPA

It’s fine to jump straight into an RPA pilot without an over-arching strategy. However, while discreet pilots may deliver local wins to individual departments, it could leave you with potentially broken or sub-optimal end-to-end processes. Additionally, the wider organisational implications of having robots in production may be overlooked.

Design the RPA Operating Model

To truly transform your organisation through the use of robotics, you’ll need to be clear on your overall RPA strategy.

Establish an enterprise-level RPA operating model that covers the breadth of organisational, process and technology components needed to establish RPA as a sustainable capability within an organisation.

Manage the Demand

Your return on RPA investment will vary according to the processes you choose to automate.

Pick the pilots and initial projects you automate carefully, so the entire organisation can see the potential benefits and start thinking about which processes to automate next. 

If you don’t apply enough due diligence upfront to identify the best processes for RPA, and build in the necessary automated error-handing rules, the results may disappoint. This can result in reduced interest in the business for future RPA initiatives – with subsequent lost opportunities for more efficient, resilient and faster processes.

Get the right support

Without a good understanding of how RPA fits within your existing IT architecture, project management, software development and process improvement methodologies, it may not get the necessary executive support to spread through the right levels within the organisation.

While IT departments will be glad to shed responsibility for application updates, they will need to be reassured that RPA won’t ‘break things’ – as well as the security aspects of linking multiple applications along your ‘robot process line’.

Concluding Recommendation

RPA is not the end of the workplace as we know it. The winners in the digital world will develop an effective ‘digital pairing’ strategy – where robots perform the mundane tasks while humans manage exceptions and orchestrate the robots to interact with each other through end-to-end digital, process orchestration.

The winners in the digital world will develop an effective ‘digital pairing’ strategy – where robots perform the mundane tasks while humans manage exceptions and orchestrate the robots to interact with each other through end-to-end digital, process orchestration.

Start small on your RPA journey. Spend time to conduct technology proof-of-concepts on a few different processes, so you’ll understand the nature of processes which are most suitable for RPA.

Once you’re convinced of the technology and its benefits, leave the technology behind and start developing an enterprise-wide strategy to use robotics throughout your operations.

It is then time to look at your business process portfolio and how the introduction of robotics can change the rationale for insource vs outsource or the onshore vs offshoring of these processes.

You can choose to go on the robotics journey alone or bring in an experienced partner.

While looking for partners, don’t just focus on the technology itself. In the longer-term, you’ll need a partner who can provide advice on strategy and organisational change as well as technology implementation. An independent partner can also help you understand the trade-offs involved in making the right robot ‘own vs consume’ decisions along your digital transformation journey.

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About the Author

Charles Crick is a Principal Consultant at CSC Consulting, specialising in business architecture and IT strategy. His career in IT of more the 30 years spans roles in systems development, project management and consulting. He is completing a PhD at the University of Technology, Sydney where he has developed a theoretical framework to understand the role of business-IT alignment in organisational agility.