Robotic Process Automation
Historic evolution
As a form of automation, the
same concept has been around for a long time in the form of screen scraping but RPA is considered to be a
significant technological evolution of this technique in the sense that new
software platforms are emerging which are sufficiently mature, resilient,
scalable and reliable to make this approach viable for use in large enterprises (who would otherwise be reluctant due
to perceived risks to quality and reputation).
By way of illustration of how
far the technology has developed since its early form in screen scraping, it is
useful to consider the example cited in one academic study. Users of one
platform at Xchanging - a UK-based global company which
provides business processing, technology and procurement services across the
globe - anthropomorphized their robot into a co-worker named "Poppy"
and even invited "her" to the Christmas party. Such an illustration
perhaps serves to demonstrate the level of intuition, engagement and ease of
use of modern RPA technology platforms, that leads their users (or
"trainers") to relate to them as beings rather than abstract software
services. The "code free" nature of RPA (described below) is just one
of a number of significant differentiating features of RPA vs. screen scraping.
RPA vs traditional automation
Software robots interpret the
user interface of third party applications and are configured to execute steps
identically to a human user. They are configured (or "trained") using
demonstrative steps, rather than being programmed using code-based
instructions.
This is an important concept in the RPA market because the
intention is not to provide another "coding" platform for IT users
(who already have the benefit of mature and tested software development and middleware platforms). Rather, the intention is
to provide an agile and configurable capability to non-technical
"business" users in operational departments. The paradigm, in
summary, is that a software robot should be a virtual worker who can be rapidly
"trained" (or configured) by a business user in an intuitive manner
which is akin to how an operational user would train a human colleague.
The benefit of this approach is
twofold. Firstly it enables operations departments to self serve. Secondly, it
frees up the limited and valuable skills of IT professionals to concentrate on
more strategic IT implementations such asERP and BPMS rollouts.
Such programs are often upheld as being transformational in nature, delivering
huge returns in the medium to long term, whereas RPA is typically focused on
immediate operational effectiveness, quality and cost efficiency. RPA is
classically seen therefore as complementary to existing automation initiatives.
Impact of RPA on employment
According to Harvard Business
Review, most operations groups adopting RPA have promised their employees that
automation would not result in layoffs. Instead, workers have been redeployed
to do more interesting work. One academic study highlighted that knowledge
workers did not feel threatened by automation: they embraced it and viewed the
robots as team-mates. The same study highlighted that, rather than resulting in
a lower "headcount", the technology was deployed in such a way as to
achieve more work and greater productivity with the same number of people.
Conversely however, some
analysts proffer that RPA represents a threat to the Business Process
Outsourcing (BPO) industry. The thesis behind this notion is that RPA will
enable enterprises to "repatriate" processes from offshore locations
into local data centers, with the benefit of this new technology. The effect,
if true, will be to create high value jobs for skilled process designers in
onshore locations (and within the associated supply chain of IT hardware, data
center management, etc.) but to decrease the available opportunity to low
skilled workers offshore. On the other hand, this discussion appears to be healthy
ground for debate as another academic study was at pains to counter the
so-called "myth" that RPA will bring back many jobs from offshore.
The future of RPA
The future of RPA is subject to much speculation, as the
early majority adopt the technology and discover new uses and new synergies.
Possible future trends may include:
A convergence of BPM and RPA tools, much in the way that the
distinction between BPM and workflow tools is now blurred
Greater incorporation of artificial intelligence (AI) for advanced
decision making and inferencing.
Impact on Society
Academic studies project that RPA, among other technological
trends, is expected to drive a new wave of productivity and efficiency gains in
the global labor market. Although not directly attributable to RPA alone,
Oxford University conjectures that up to 35% of all jobs may have been
automated by 2035.
In a TEDx talk [hosted by UCL in London, entrepreneur David
Moss explains that digital labor in the form of RPA is not only likely to revolutionize
the cost model of the services industry by driving the price of products and
services down, but that it is likely to drive up service levels, quality of
outcomes and create increased opportunity for the personalization of services.
Meanwhile, Professor Willcocks, author of the LSE paper
cited above, speaks of increased job satisfaction and intellectual stimulation,
characterizing the technology as having the ability to "take the robot out
of the human",a reference to the notion that robots will take over the
mundane and repetitive portions of people's daily workload, leaving them to be
redeployed into more interpersonal roles or to concentrate on the remaining,
more meaningful, portions of their day.
Business process outsourcing
When outsourcing any kind of service you need, the main
thing is finding the right partner.
As we said, outsourcing has no limits. The world Is an
inexhaustible source of knowledge and skills. In any kind of business you are, you
should not have the obstacle for partnership or cooperation. The thing is, you
have to find what suits your demands. Also, the market is growing all the time.
Innovations followed by the demands of costumers is clearly giving you the
direction of improving your product/service. It is guiding you to have the
right respond for any request.
The BPO way of working is accelerating. It is a subset of
outsourcing that involves the contracting of the operations and
responsibilities of a specific business process to a third-party service
provider. Originally, outsourcing was associated with manufacturing firms.
So, every company that is in the outsourcing market has
tricks to promote its business and attract partners/clients.
After all they are there to help you so that your
product/service can be concurrent on the market. On many levels, with the
price, quality, speed of delivering/development, and satisfied clients.
In basic that is what counts the most. Your end-users must
be satisfied. Every consumer of your product/service has different criteria of
good product/service. But you have to manage to give them all in one package.
It takes a lot of practice to get ultimate customer satisfaction, but when you
do, it will have only positive effect on your budget.
It is clear that the advantage of BPO is to save money that
gets followed by increasing time to focus on your core business. But, isn’t it the
gold of everyone’s business?
About outsourcing
“Do what you do best and outsource the rest” has become an
internationally recognized business sentence for a simple internal business
functions that needs to be transferred.
Simply put: contracting of the operations and
responsibilities of a specific business process to a third-party service
provider. That would mean that the two organizations can enter into a
contractual agreement involving an exchange of services and payments.
For enterprises,
it becomes the handiest thing to do because outsourcing gives you the
possibility to free your company from overall payment. Basically, you are
paying only the service that you need and when you need them. And your human
resources, of course. They are relieved of tasks for which they are not highly
specialized. It gives you space to
master your strengths by outsourcing your “weaknesses”.
Thinking about it, with outsourcing some parts of your business,
your budget will not become poorer. It will actually make it richer. It saves
your money on so many levels. The important thing is that there are no
limitations. If you need some service that can be done and done online, over
email, internet. There is no clear reason why you should not “hire” some
company that is an ocean away from yours. If it is cheaper and better at what
they do.
Just to be clear on some parts of this what we said here.
Nobody is telling that you, as a successful company,
shouldn’t invest in your people. As a matter of fact, you exist and are
successful because you provide them the possibility to learn and progress in
the sphere that is their core business in daily basis. Outsourcing some of their daily/monthly
activities is not costing you double.
Simple, the “outsourced job” is cheaper, done faster and accurately in
specialized company and your employee has the time for his daily/monthly tasks.
“Train your people well enough so they can leave, treat them
well enough so they don't want to” once said by Richard Branson.
It gives you some
thought to your head doesn’t it?
Outsourcing strategy
But this highly partisan passion is not helpful. There are no absolute rights and wrongs when it comes to how to source IT.
“Sourcing is not a strategy in itself – it has to be the business
strategy that drives the sourcing decision,” says Bob Carlson, former
group head of IT and telecommunications at HSBC, with 25 years
experience at the bank – a major user of outsourced IT.
"Business strategies can vary hugely – and therefore so will IT
sourcing strategies. For example, a key part of HSBC’s business strategy
is to acquire other companies, and integrate their customer base, which
in turn requires integrated IT systems, whether those systems are
sourced in-house or out, onshore or offshore,” says Carlson. “Contrast
this with GE, whose business strategy is buying and selling businesses
which they therefore do not want to integrate.”
Any sourcing strategy has therefore to take into account two such
divergent views on integration. Business strategy can also change
totally, and sometimes very swiftly indeed, as radically new competitors
arrive in a market to transform it.
“Kodak used to be in the photographic film business,” says Carlson.
“They got overtaken by Nokia – a telephone company they assumed had
nothing to do with them but which were now selling mobile phones that
could take digital photos.”
IT sourcing strategy must, therefore, map to business strategy and be
flexible enough to allow the business to make radical changes to adapt
to changing market contours. One key advantage of outsourcing, for
example, points out Carlson, is to support a business strategy of rapid
expansion without time-consuming scaling up of internal IT and the up
front costs that requires.
“Outsourcing can give you the opportunity to play on a global scale,” he says.
However, even when the business strategy does make outsourcing a
compelling sourcing strategy, such as when accelerating globalisation,
it is essential, says Carlson, to appreciate the risks as well as the
opportunities.
“Outsourcing is not a panacea. The worst option is to do with great efficiency what should not be done at all,” he says.
Some things should not be outsourced. “Do not outsource your own core
competences,” warns Carlson. Moreover, “Never outsource a problem –
often, the quickest way to get a big problem is to outsource a small
one.”
Sort problems out first, internally. "Since IT automates processes,
always look at the processes first,” says Carlson. “Look at the
end-to-end flows of information and follow the transactions all the way
along, find where value is added – often half of all the stages in a
process can be totally unnecessary.
Process re-engineering can cut stages, time and cost, says Carlson,
“Ford, for example, used to have a huge building in Michigan that just
did accounts payable and receivable and purchase orders all day. Then
someone realised that since Ford built cars, and cars were easy to
count, if a thousand cars were shipped then the company simply needed to
pay for four thousand tyres, without tracking every purchase order. It
saved them a fortune, counting cars instead of tyres.”
Any process re-engineering required should be done in house, says Carlson.
“Compared with programming, which is a piece of cake, process change is hard to outsource, “ he says.
Where processes and systems impact corporate governance, says Carlson, even greater caution must be exercised.
“Sarbanes Oxley makes it illegal to outsource risk,” he says. That
means that for any such outsourced systems and processes, he says,
“Sufficient in-house competence is needed to recognise that the
outsourcer is competent to meet your corporate risk requirements.”
Assessing outsourcer competence is essential when it comes to issues of corporate risk, but it is also essential from a commercial consideration as well.
“Outsourcing fails where there is poor governance and the wrong expectations of it,” says Carlson.
One very popular expectation is that outsourcing will cut IT costs.
“The outsourcer has to make a profit, and to pay tax – and what if
the law changes and outsourcing becomes liable to value added tax, which
can of course be applied retroactively? So the outsourcer has to be
highly efficient at running your IT if they are to pay their costs and
cut yours as well,” he says.
Moreover, even if the outsourcer does reduce their clients’ IT and
process costs it may not be the user that benefits. Carlson says, “IT
costs savings always devolve to the customers.”
This is because if any company in a market sector can cut its costs,
then so can all the others. Those savings are then passed on to all the
company’s customers in order to win their custom. The commercial
advantage of any savings in IT costs that an outsourcer can bring,
therefore, are only ever temporary.
Users all too often have expectations that they will remain the
valued customer they were at the contract bidding stage. The outsourcer
has to grow his business, and get new customers – so will he lose
interest in your work?
Another potential dangerous expectation is that outsourcers will see
the world the same way as their users. That may not be so, especially if
there is a difference in nationality and culture..
“Offshore outsourcing is very different from onshore,” says Carlson.
“The issue of cultural fit is critical – you must have shared business
values, not just between the outsourcer and the user, but with the
user’s own customers. Moreover, never underestimate the amount of
coordination that will be required – everything always takes longer with
distance. The more distant the offshorer, the more management effort it
will take.”
Whether the outsourcer is on or offshore, emphasises Carlson,
managing the relationship with him is not only vital, but inevitably it
is another cost to consider.
“Relationship management is critical and must be well defined,” he
says. “Flexibility and goodwill are far, far more important than service
level agreements and price, which are not important issues in
comparison because everything about the contract will inevitably change
over time, often rapidly, making renegotiation necessary.”
But, critical though relationship management is to ensure outsourcing
is successful, it is not the first thing that should be addressed when
outsourcing.
Carlson is blunt about the first priority any outsourcing contract
must engage with. “The first clause of the contract you write is the
exit clause,” he says. "It’s imperative to agree how the contract will
terminate while the supplier is still selling and negotiating with you.
If you can’t get the exit conditions at that point, you're doomed.”
A key aspect of any exit clause, irrespective of the financial implications, is what happens to your IT.
“It’s critical you have a way to recover your intellectual property,
your data and your systems. Remember too, that if your supplier is in
trouble, you are in trouble. Law courts simply pick over the bones of
both. The judge won’t have a clue about IT, neither will the jury. You
might as well roll the dice in Las Vegas as go to court for a
resolution,” says Carlson.
Nor is it an option to avoid thinking about the end of the contract. “All contracts terminate at some point,” says Carlson.
This reminder should be borne in mind especially if those who
sign the contract at the user end do not intend to be there when it
concludes, leaving a messy termination for others to sort out.
The second clause to set out, says Carlson, is the one dealing with the governance, principles and relationship management.
“The relationship should be equal,” he says. “It will be a case of
‘we have a problem’. There has to be a clear escalation process to take
the heat out of any problem, early on, and to find solutions.”
Nor is there any point assuming that won’t be necessary. “You have to
go into outsourcing with the idea that there will be problems, or you
will get meltdown,” says Carlson.
The other assumption you must accept as a de facto part of
outsourcing is that the contract cannot be static. “You must include
change management clauses because everything will change during the
outsourcing term,” he says.
Not only will IT requirements inevitably change to track business
changes, but also there will be personnel turnover on both sides.
“The people will change,” he says. “In a year, the guys who set up
the contract won’t have anything to do with it any more. You’ll hit
problems that are not covered by the contract and those who devised it
will have moved on.”
It is imperative, therefore, to have mechanisms and management
structures in place that will last for the duration, and that these
processes are adequately staffed and resourced.
Only, says Carlson, when the issues of termination and relationship
and contract management have been dealt with, should issues about what
the outsourcer will actually do, and to what standard, be discussed.
“The last thing to talk about is the work, the price and the service levels,” he says. “Those are the easy parts.”
Essentially, because outsourcing is such a key decision, running part
of the organisation that is critical to daily operations and future
survivability of the business by enabling business change, the key to
successful outsourcing, says Carlson, is the relationship.
“If you’re building a relationship, keep the purchasing people away,”
he says. “They add value by checking that the contract covers
everything, and that is very good in a purchasing relationship, but not
in a partnership relationship.
"Far better to bring in your own company’s marketing people because
not only will they get on with the outsourcer’s marketing people that
you are dealing with during contract set up, but also, most importantly,
they will have the skills to recognise the outsourcer’s own marketing
ploys that you may not.”
“Be in no doubt,” says Carlson, “that the decision to outsource is a
major one, carrying significant risks as well as potential benefits, and
should never be undertaken without due cognisance.”
“When you outsource IT it's still your business. It’s not a transaction, it's a commitment,” he says.
But it's a commitment that must be reciprocated. “Outsourcing is a
joint venture whether you like it or not – you both have skin in the
game.”
Outsourcing checklist
• Business strategy is the key driver in the outsourcing decision
• Don’t outsource a problem – re-engineer your processes before outsourcing them and the IT that runs them
• Don’t seek to outsource risk – corporate governance regulations disallow it
• Don’t allow outsourcing to dangerously deskill your company in vital competencies
• Outsourcing risk increases with the distance of the outsourcer
• Costs must factor in the outsourcer’s marketing costs and profit margins
• Any cost savings will eventually be passed on to customers thanks to competition
• Business and requirements will change, so build in flexibility and renegotiability
• Detailing work, service levels and price are less important than
setting out partnership, relationship and problem resolution terms
• The contract and the relationship must be designed to be independent of those that initiate them, because people will move on
• Engage your own marketing people in contract negotiation – they will be able to spot the supplier’s ploys
• All contracts will terminate – write your exit clause before you
agree any other clause, when you still have power to negotiate strongly
• All outsourcing is a joint venture – insist on both sides having skin in the game.
What is outsourcing?
Outsourcing is an arrangement in which one company provides services for another company that could also be or usually have been provided in-house. Outsourcing is a trend that is becoming more common in information technology and other industries for services that have usually been regarded as intrinsic to managing a business. In some cases, the entire information management of a company is outsourced, including planning and business analysis as well as the installation, management, and servicing of the network and workstations. Outsourcing can range from the large contract in which a company like IBM manages IT services for a company like Xerox to the practice of hiring contractors and temporary office workers on an individual basis.
Outsourcing is a practice used by different companies to reduce costs
by transferring portions of work to outside suppliers rather than
completing it internally.
Outsourcing is an effective cost-saving
strategy when used properly. It is sometimes more affordable to purchase
a good from companies with than it is to produce the good internally.
BREAKING DOWN 'Outsourcing'
An example of a manufacturing company outsourcing is Dell
buying some of its computer components from another manufacturer to save
on production costs.
Alternatively, businesses may decide to outsource bookkeeping duties to
independent accounting firms, as it may be cheaper than retaining an
in-house accountant.
In
addition to cost savings, companies can employ an outsourcing strategy
to focus on core aspects of a business. Outsourcing noncore activities
can improve efficiency, streamlining and productivity because another
entity performs these smaller tasks better than the firm itself. This
strategy may also lead to faster turnaround times, increased
competitiveness within an industry and the cutting of overall
operational costs. Businesses can reduce labor costs significantly by
outsourcing certain tasks, while companies may simultaneously have
access to technology without investing large amounts of money to own the
technology.
Many businesses find outsourcing the functions of
human resources, such as payroll and health insurance, saves enormous
amounts of time, effort and energy. HR is one of the noncore functions
of a firm; other companies may have experts to help with this aspect of
human capital. As many as 16% of companies outsource some kind of task
that deals directly with human resources.
Disadvantages
Outsourcing
also has several disadvantages. Signing contracts with other companies
may take time and extra effort from a firm's legal team. Security
threats occur if another party has access to a company's confidential
information and then the party suffers a data breach. A lack of
communication between the company and the outsourced provider may occur,
which could delay the completion of projects.
Statistics and Surveys
Companies
typically save around 15% due to cost reductions brought about from
outsourcing. A 2014 study from Datamark, Inc. claims one client saved
31% over one year when outsourcing one aspect of its business process.
Over three years, the cost savings rose to 33%.
Deloitte's 2014
global outsourcing survey interviewed respondents from over 22 industry
sectors and 30 countries. The consulting firm found 69% of companies
surveyed were more likely to outsource in some way due to cloud
computing technology. As much as 66% of companies wanted to outsource
certain business processes as a service. Up to 53% of survey respondents
outsourced their IT functions in 2014, while 26% of firms that did not
outsource anything at the time planned to do so sometime in the future.
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