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The Time Is NOW - Become Strategic With Automation

15 November 2019 |
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The Time Is NOW - Become Strategic With Automation

Strategy seeks to answer three fundamental questions for the organization: where are we now? Where do we want to be/must we be? And how do we get there? Enter robotic process automation (RPA). To become strategic, RPA needs to be significant in its impact on process improvement/change and business value, but also part of a larger automation and digital transformation plan tied to strategic business goals. Strategic behaviour focuses on the relatively few  technologies and applications that produce disproportionate business value, by critically underpinning strategic direction and gaining competitive advantage.

In researching our new book ‘Becoming Strategic With Robotic Process Automation’, we  identified seven RPA strategic performer attributes. Six are well supported by the evidence. The seventh – focusing on total value of ownership (TVO) -  is the subject of  on-going research.  

Strategy vs. Operational Quick Wins

Leading companies observe a fundamental rule: business strategy drives RPA investments.  RPA historically has been seen as a tactical, quick-win tool to achieve business benefits and bypass the  IT work queue. Many RPA tools, set up with precisely this aim in mind, inherit design limitations when clients attempt to scale to achieve bigger business goals.  Moving from a tactical cost focus to multi-faceted strategic impacts follows a typical pattern (Figure 1). Many RPA users move, sometimes painfully, through Phases 1 and 2, to get to Phase 3.

Picture 1

Figure 2: Becoming Strategic With RPA

Source:  Willcocks, Hindle and Lacity (2019)

 Client experiences and our knowledge built up over the last four years now allows companies like Bank of New York Mellon, beginning their journey in early 2016, to accelerate their learning and kick-start at Phase 3. Even by mid-2017 BNY Mellon had over 200 robots in production and had automated more than 100 processes.

Where does business strategy come in? We found Phase 3 clients going for a triple win of shareholder, customer and employee value. Clients aimed for and were getting multiple business benefits but were producing also unexpected returns, for example discovering much better regulatory compliance, products quicker to market, enhanced customer journeys and increased employee skills and recognition. Two examples. Mars found that structuring an Enterprise Digital Transformation strategy, with a component of that strategy being automation, enabled much greater benefits to accrue to the organization. In 2016 Ericsson  developed a thorough digital transformation strategy aiming to become a customer-centric, data-driven digital business.  Following classic management practice, they gave themselves actionable, specific stretch goals. service quality, streamlining delivery, and raising front office effectiveness.

Culturally Imbedded vs. ‘IT As Usual’

To be transformative, automation must have cultural adoption by the C-suite. They sponsor and project champion service automation. They see RPA as a strategic business project and provide the requisite financial and human resources. They communicate clearly on automation, and ensure that governance and project structure are in place. They protect developments when they run into difficulties. A prime example in our case studies has been Xchanging (now DXC technologies) where, in 2014, CEO Ken Lever promoted ‘putting technology at our core’ as an annual report message. By June 2015, Xchanging had automated 14 core processes with a range of significant business benefits.

Our most recent data on leading clients finds 73% drive automation from a centralized Center of Excellence, or top-down through a senior executive responsible for multiple business units. In practice, clients point out, it is difficult to scale and gain the really significant strategic benefits from RPA without top-down management and senior executive support. 

Planning vs. Opportunism

Jon Theuerkauf, in June 2016 managing director and group head of performance excellence at BNY Mellon, stated as one of his principles: ‘begin with the end in mind’. More precisely, BNY Mellon planned for the mid-term and long-term end-points, and recognized that the ‘end-point’ would be continually redefined. We have found this typical of clients with a strategic mind-set.  

During 2017, most leading users  characterised the end-point as establishing an RPA Center of Excellence (CofE), then an automation CofE focused on applying several technologies such as RPA, cognitive, and analytics. Reporting in March 2019, HFS research found only 11% of all companies leveraging integrated solutions that combine the power of  automation, analytics and AI.   Leading companies like American Express, IBM, BNY Mellon, ING, Nordea, and Siemens planned to start slow, then scale fast. They looked for a rich business value proposition. Such clients aim for high return on investment (ROI) but also look explicitly for, and get,  ‘triple wins’, in terms of shareholder,  customer and employee value. Clients were increasingly enhancing RPA usage by adopting complementary cognitive technologies, Such companies, typically, also plan carefully across the automation life-cycle – from strategy to maturity -  to mitigate the 41 material risks we identify likely to be encountered in any major automation program.

Program Governance vs. Project Delivery

A common mistake has been to treat RPA as just another piece of software. This leads on to limited governance arrangements, and tends to repeat the mistakes when ERP systems were first introduced, except that in the 1990s and 2000s the implementation tended to be abandoned to the IT department, as opposed to business operations. During 2018/2019, many clients found this inhibited both scaling and deploying RPA as a foundation for further service automation and digital transformation.

Our case research shows that leading RPA users across sectors take a different route. Like Siemens, innogy SE and BNY Mellon, for example, they see RPA as potentially more transformational. The constitution (‘rules of the game’) for automation is formulated Day One, and covers decision-making and responsibilities for technology, process, data, business and resources. Some vendor companies  set out detailed operating frameworks that stipulate many enabling and policing rules. Some vendors also detail the vital role of the IT department in governance and making RPA function optimally. These governance features help, we think, to explain why leading clients are so positive about the scalability, adaptability, security, ease of learning, and speed to deployment of their vendors’ technical platforms.

Platform vs. Tool

The requirement for governance comes from seeing RPA as a platform, rather than just another automation ‘tool’. Amongst leaders, RPA is utilized as part of a continuum of complementary automation and digital technologies supporting enterprise digital transformation. We found leading clients also stressing the advantages of enterprise platform capabilities.

The NHS  East Sussex and North Essex Foundation Trust (ESNEFT) is a good example and brings together several points. Within an NHS trust like ESNEFT automation is required to eliminate time spent on repetitive tasks, reduce costs, and streamline processes. The objective then is  to re-direct more investment into life-saving and critical patient care. An immediate  insight is that this clarity of goals, and the urgency required – the ‘burning platform’ idea -  explains both why RPA is adopted, and also  why it is likely to be successful in value terms, as at ESNEFT.

At ESNEFT there were obvious pain points that  RPA could  help  reduce.  However, ESNEFT did not have the experience and in-depth capability to deploy RPA as fast as the Trust  required. Therefore  partnering with Thoughtonomy was definitely a way of accelerating  automation, as we found RPA leaders doing.  Interesting here is, firstly,  the choice of a vendor that already had a set of connected RPA/cognitive technologies indicating a more long term view of where automation was likely to lead. But even more interesting is the more radical decision to go for a robust flexible SaaS platform.  ESNEFT embarked on innovation  from the outset – with a senior executive pointing to a major success factor being: ‘a real determination to do things differently, to test new ideas and to adopt an innovative mindset.’ This translated into developing a dynamic approach, identifying that the real payoffs would come from  using the platform, adding technologies, in order to   innovate and continuously improve.

As in every ‘leader’ case we have looked at, ESNEFT built a strong, relatively centralised team backed by strong governance,  able to build best practices  supported by close monitoring, but also  built a high level of engagement amongst user  staff which gradually  grew into a supportive culture for further automation. 

By early 2019, the technology providers had already become more sophisticated about moving from selling automation tools to providing integrated automation platforms.  Throughout 2019 this remained very much work-in-progress but it has proceeded at a fast pace. Understanding and participating in how this plays  out will demand a much more strategic client approach to RPA and automation

Change Management vs. Silo Tolerance

Used opportunistically, RPA tools can gain quick wins, but too often they have been deployed as a sticking plaster on pain points in the organization. But most organizations are surprisingly heavily siloed. The slow pace of RPA and cognitive automation in many organizations  correlates with multiple siloes, including structure, functions (e.g HR, procurement, finance), process, data,  technology, skills, culture, and management mind-sets. From mid-2018 into 2019, as RPA adopters increasingly scaled to reap more benefits, we found them encountering major challenges on change management.

Amongst leading clients, senior executives tend to recognise early the transformation potential of RPA,  and explicitly manage the change implications for data, technology, people, processes, and structures. Leading clients have found it  particularly important to get early stakeholder buy-in – from business operations managers, IT, employees and senior executives. This, we find, involves fully resourcing change management capability, messaging the purpose and value of RPA to staff, and ensuring strategic alignment, new competencies, and changes are institutionalised and imbedded in work practices. 

Measurement:  ROI v. TCO v. TVO

The evaluation of IT investments has always been problematic. At the same time, getting the right measurement system has been a major key to driving business value. In the past organizations have tended not to fully investigate risk and potential costs,  understated knock-on cost of operations and maintenance, and not properly accounted for rising human and organizational costs. Typically, we found that organizations using traditional return on investment (ROI) cost/benefit analysis understated real costs, which frequently exceeded technical costs by 300-400%.Our evidence is that many RPA users are committing the same mistakes.

One remedy has been to refocus on Total Cost of Ownership (TCO), defined as the total technical, project, human and organizational acquisition and operating costs as well costs related to replacement or upgrades at the end of the life cycle. However, the real limitation so far in RPA assessment has been in establishing benefits.  We, with Knowledge Capital Partners,  have invented a new measure called Total Value of Ownership (TVO) to ensure the  business cases for service automation is driven by (1) total costs, (2) multiple expected business benefits and (3) the strategic returns from future business and technical options made possible by automation. The benefits side consists of  three ‘E’s – efficiency, effectiveness and enablement. We document the  TVO measure in our new book, and several articles.

In summary, the seven practices when combined add up to becoming strategic with RPA - the key, most influential single management practice of leading  clients with superior business outcomes.

*Leslie Willcocks, John Hindle and Mary Lacity are co-authors of  Becoming Strategic With Robotic Process Automation, published by SB Publishing  in October 2019,  and available from www.sbpublishing.org. Chapter 8 includes  includes the full ESNEFT -Thoughtonomy case study.

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