RPA: Robotic Process Automation

RPA: Robotic Process Automation

Movies have been feeding us physical robots for a long time. However the first AI bots that we will work with are software bots. This shouldn’t be surprising as hardware is hard while software is eating the world.

As you can see in the graph above, interest in RPA has grown ~10x in the past 1.5 years. This is no surprise since Fortune 500 CEOs can not stop talking about it. As John Cryan, CEO of Deutsche Bank said in September 2017:

In our banks we have people behaving like robots doing mechanical things, tomorrow we’re going to have robots behaving like people

With so much interest in the topic, consulting companies like BCG, McKinsey and Accenture have put together their RPA offerings. Here’s an Accenture video that outlines on a high level, how RPA works. It is a bit full of cliches but it is currently one of the most popular videos on the topic. Unfortunately B2B videos have a lot to catch up to when compared to B2C videos.

What is RPA and how can it help you?

According to Wikipedia:

Robotic process automation (RPA) is an emerging form of clerical process automation technology based on the notion of software robots or artificial intelligence (AI) workers.

While Wikipedia’s description is accurate, it could be more specific. RPA is a generic tool to create specialized agents which can automate clerical tasks.

Why is RPA relevant now?

There’s an app for everything today. Hosted in the cloud, integrated via APIs, CRM, ERP, productivity and other apps run today’s enterprises. So why do we need to build our specialized robots? Well, the problem is business processes. Business processes need input from different tools and we have been using an increasing number of tools every year:

  •  In 1990, Office 1.0 had 3 products: Word, Excel, Powerpoint.
  • Office 2016 has 9 products: Word, Excel, PowerPoint, OneNote, Outlook, Publisher, Access, Skype for Business, Visio Viewer.

With more tools, comes need for integration. Though every major tool has an API, developer company may not provide open access to the API. Without API access users are forced to export complex CSVs and resort to other complex but boring data janitor work. Who can blame the vendors? Every vendor wants to have a sticky product. Sadly. making integration and data migration difficult increases switching costs and creates frustrated but loyal customers. This also explains the rise of tools like Zapier and IFTTT (If this then that) that raised almost $40M.

Sometimes vendors aren’t the ones to blame. Most large companies still use some systems built with 2000s technology. And legacy systems are not supposed to be providing integration to modern tools. RPA provides a solution to these problems. Robots step up to bridge the gaps between systems. Additionally, some business logic involved in business processes are quite simple and bots also automate such reasoning.

How it works

As industrial robots transformed the factory floor, RPA bots transform back offices. RPA Bots replicate employee actions like opening files, inputting data, copy pasting fields in an automated way.  To set up an RPA bot, it isn’t required to know programming. There are 4 ways to setup RPA bots

  • Programming: As expected, the most powerful interfaces for programming bots is a programming language. However, using a programming language requires skill and patience so this method is relevant for technically inclined personnel. Programming instructions essentially tell the bot which programs to use and how to interact with those programs.
  • Graphical User Interfaces: Many vendors offering solutions to program RPA bots with drag&drop interfaces. Anyone in the company should be capable of setting up simple bots.
  • Recording macros: Just like macros in excel, bots can complete recorded actions. Recorded actions can involve numerous enterprise software such as taking data from Salesforce, merging it with a report from mailchimp in excel to identify which customers to target during the company’s routine customer activation SMS campaign.
  • Self-learning bots: These bots watch recorded employee activity to learn automatable tasks. They are the easiest to deploy bots. However, their learning is not always perfect since they rely on recognizing images in scraped screenshots. Especially during initial deployment, they could be making mistakes and their activity needs to be audited. Most of the time mistakes are avoided as bots understand when they see cases they don’t know how to complete. In such cases, they contact employees for guidance.

Once bots are setup, an orchestration module helps start/stop bots and analyze their activity.

Deloitte UK has a nice video on how RPA works on a simple example that shows the bot extracting and processing data from an email:

Possible activities of RPA bots

RPA bots can use the operating system applications like a human user. Bots are capable of

  • Launching and using various applications including
    • Opening emails and attachments
    • Logging into applications
    • Moving files and folders
  • Integrating with enterprise tools by
    • Connecting to system APIs
    • Reading and writing to databases
  • Augmenting your data by
    • Scraping data from the web including social media
  • Data processing
    • Following logical rules such as “if/then” rules
    • Making calculations
    • Extracting data from documents
    • Inputting data to forms
    • Extracting and reformatting data into reports or dashboards
    • Merging data from multiple sources
    • Copying and pasting data

Bots can do these functions on virtualization solutions like Citrix or on Windows environment. Most vendors do not support other OS environments like Mac OS or Linux. This is because most office work is conducted on PCs.

Types of RPA automation

There are 2 types of RPA automation that serves different needs:

Attended automation

These bots reside on the user’s machine and are invoked by the user. They are appropriate for tasks that are triggered at programmatically hard-to-detect points. For example, a customer service rep will understand the customer’s inquiry and need to complete a transaction in the system. Let’s assume that due to system limitations, customer service rep would normally need to work with 3 screens and complete 5 manual steps to complete this transaction. Instead of doing those, rep launches the attended automation code. RPA bot works like the rep, performs the necessary operations and asks for guidance from the rep if needed. RPA bot can actually work a lot better than the rep, perform regulatory and compliance checks and would never do manual mistakes due to fatigue or boredom.

Launcher for RPA can be setup in 3 main ways to facilitate employee’s access to the tool. Launcher can be

  • on an RPA client tool where the customer service rep select the bot to be launched
  • embedded on the personnel screen when certain conditions are met (e.g. when the rep is talking to a customer)
  • auto-run when certain conditions are met. For example if some KYC check needs to be performed on newly acquired customer phone numbers, bot can be launched as soon as the phone number field is filled. In this manner, RPA bots can be launched automatically with no intervention from the employee.

Attended automation is a good way to augment your employees that face customers but still need to complete manual work.

Unattended automation

Unattended bots are like batch processes on the cloud. They complete a data processing task in the background. They are ideal for reducing work of back-office employees.

There are a few options for launching unattended automation:

  • Data input in a specified location: Most unattended bots are triggered when data is input in the system. Whether it is new transactions or employees, additional data processing is generally required to serve regulatory or marketing-related needs.
  • Bot initiated: A bot can also launch another bot. This can be useful when a bot operation has various different outcomes. For example, a KYC inquiry may either require manual investigation or automated processing to complete the customer’s registration. Based on the outcome, bot can notify the investigation team or launch another bot to complete registration.
  • Orchestrator initiated: RPA administrators can use orchestrator software to stop or launch bots.
  • Specified intervals: Bots can be launched at specific times to batch process data.

Benefits

No wonder interest in RPA is growing so fast. Manual processes are inefficient, prone to errors and lead to employee dissatisfaction. With RPA companies can

  • increase speed of/reduce errors in customer-facing processes to increase customer satisfaction
  • allows employees to focus on higher value-added activities improving both business results and employee satisfaction
  • reduce manual data edits, increasing quality of data and reducing compliance risks

For a more comprehensive list, I recommend you to take a look at our comprehensive list of RPA benefits.

Alternatives/substitutes

Essentially RPA allows a higher degree of automation through software. Of course RPA are not the only means to achieve automating for processes that cut across numerous systems. Before RPA, companies relied on 3 approaches. These approaches are shown below in a typical consultant chart with axes and bubbles and lots of colors:

Courtesy of Deloitte
  1. IT transformation: New system architectures can be built to increase automation. However such structural changes will inevitably trigger changes in tools and take significant time and budget to complete. System upgrades especially those involving legacy systems require complex migrations and can take years. A Mckinsey and Oxford joint study on software project demonstrated that large IT projects run 45 percent over budget and 7 percent over time, while delivering 56 percent less value than predicted. Given such grim statistics, large companies have moved away from delivering comprehensive redesigns of their architectures to implementing quick fixes that solve their immediate problems.
  2. Business Process Management Platforms (BPMS): BPMSs integrate enterprise applications to increase the amount of “straight-through processing” possible within a process. BPMS can achieve similar results to IT transformations and can be achieved more rapidly. However, their benefits can be limited based on the variety of enterprise applications that are used in the process.
  3. Business Process Outsourcing: Popular in the 90s, many companies in the developed world outsourced their operations to the developing world. Companies benefited from outsourcing through labor arbitrage and economies of scale of outsourcing providers. However, with the increased convergence of developed and developing economies, labor arbitrage is decreasing in importance. And with most manual processes already outsourced, corporate leaders have seen that silos formed as a result of outsourcing have reduced innovation and created silos. More fundamental changes are required to improve processes today.

Compared to these alternatives, RPA provides a very good quick fix. In many cases, RPA can provide robust, automated solutions. However, it is not always the optimal choice. Any of the above 3 choices can be used to manage or eliminate manual processes. If the alternatives have better ROI than an RPA implementation, companies would be wise to follow that route. Visionary CxOs will make the correct investment trade-offs between different solutions. For example specialized tools and architectures would be better than generic tools like RPA bots for processes which are similar across organizations. Optimal choices will enable organizations to function effectively and out-compete their competitors both today and in the future.

Industries that are being transformed by RPA

If you ask the vendors, they will tell you that any industry is ripe for RPA automation, which is technically correct. However, RPA can have greater impact in some industries than others. RPA is a solution you should put at the top of your company’s agenda if you business fits any of these descriptions:

  • Uses legacy systems
  • A large portion of the workforce works in the backoffice in non-tech functions

Some industries that have companies that fit both of these points are listed below. Most of these are old companies that rely on legacy systems. RPA can achieve significant savings and customer satisfaction increase in branches, call centers and the backoffice.

Financial services including banking and insurance

According to McKinsey Global Institute’s 2017 report on automation 43% of these jobs are automatable. This is because data entry and processing is an important part of these businesses. Furthermore, these businesses are subject to constant changes in regulation such as KYC requirements. Bots can be taught regulatory changes quickly and in a centralized way. This helps companies avoid embarrassing compliance issues.

According to Accenture’s report on insurance process automation, some good activities to automate are:

  • Sales processes
    • Updating sales scorecards to agents
    • Conduct required regulatory and legal checks
    • Conduct credit checks
    • Account maintenance services not currently supported by straight-through processing
  • Underwriting
    • Data entry for clearance and registration processes
    • Update systems with client information
    • Generate a renewal premium
  • Policy servicing
    • Update to customer information including bank account details
    • Reject or cancel policies if payments are not received
    • Identify and reconcile policy premium discrepancies
  • Claims processing
    • Process claims payments for pre-approved amounts
    • Assign to claims handlers
    • Input First Notice of Loss (FNOL) submissions
    • Notify loss adjusters
  • Finance
    • Automate daily bank reconciliations
    • Process low-risk payments

Utilities like telecom and energy

According to previously mentioned McKinsey report, 44% of activities can be automatable. Since these are the oldest subscription businesses, they have frequent payment and customer service requirements which can be automated.

RPA use cases/application areas

Numerous business processes have been transformed thanks to RPA. Some examples that exists in almost all industries are are:

  • Application processing
  • Quote-to-cash
  • Procure-to-pay
  • Data migration and entry
  • Periodic report preparation and dissemination

If you want more ideas on how to apply RPA at your company, we listed RPA application areas in detail.

How to implement RPA at your company

In short, you need to select the best candidate processes for RPA, get management and team buy-in and implementation, run a pilot and go live. While the overall process is simple, devil is in the details.

Plan implementation – Our roadmap based on best practice implementations can help

Any complex process can be broken down to simple steps and an RPA implementation is no different. Though you may need to coordinate both company and vendor resources to achieve RPA automation, knowing the necessary steps makes implementation easy:

  1. Select impactful yet easy to automate processes
    •  To maximize impact of RPA, identify impactful processes. These processes tend to be
      • Impacting both cost and revenues
      • High volume
      • With low fault tolerance
      • Error prone
      • Speed-sensitive
      • Requiring irregular labor
      • Distributed processes that require coordinated efforts of multiple departments
    • Select processes that can be easily automated with RPA. Such processes tend to be
      • Rules based
      • Company-specific
      • Not on the roadmap for new systems
  2. Convince the organization: Even in automation, it’s really about the people.
    • Get management buy-in
    • Establish governance structure
    • Get team buy-in
  3. Implement the solution
    • Choose your partners. This includes the RPA technology provider but can also include a consulting or BPO company if your internal resources can not dedicate the time necessary to automate the process
    • Run a pilot:
      • Configure the RPA bot
      • Test RPA bot
      • Run a live pilot
      • Evaluate pilot results
    • Go live
      • Design the new, bot driven process
      • Clarify roles and responsibilities
      • Go live
      • Analyze results

While this is the high level process, you can also read all implementation related details on our blog.

Choose the right type of RPA tool

There are 3 major types of RPA tools:

  • Programmable RPA bots: Programmers need to understand and code a set of rules governing how the RPA bot will function
  • Self-learning solutions:  Using historical (when available) and current data, these tools monitor hours of employee activity to understand the tasks completed and to start completing them after they have reached enough confidence to complete the process
  • Cognitive/intelligent automation: Cognitive automation solutions (also called smart or intelligent automation) self learn and deal with both structured and unstructured data.

From the descriptions, it is obvious that cognitive/intelligent automation solutions are the most attractive ones. However, we have seen cases where programmable bots were recommended by RPA resellers rather than cognitive automation solutions.

One complication in the RPA landscape is that most companies purchase RPA solutions from re-sellers rather than the companies building the technology. Resellers allowed vendors like Blue Prism and WorkFusion to have quick access to a global customer base. Professional services companies like Deloitte, technology consultants like Accenture, Business Process Outsourcing (BPO) providers like Genpact have existing relationships with a large number of customers in various industries. They used these relationships to sell RPA solutions. And depending on the revenue model, resellers can be incentivized to increase their billable hours and recommend programmable solutions rather than cognitive automation.

You can learn more from our detailed overview of RPA tools.

Choose the right partners

As we discussed above, there are different types of RPA vendors:

  • Established tech providers
  • 1st wave RPA focused vendors
  • 2nd wave RPA focused vendors
  • Business Process Outsourcing (BPO) providers

You can use our comprehensive vendor list to compare vendors against objective criteria and create a shortlist. Once you have your shortlist ready, you need to compare vendors in a bit more detail, looking at these criteria:

  • Total cost of ownership including initial setup cost, ongoing vendor license fees, maintenance cost
  • Ease of use
  • Security
  • Features such as integrations, screen scraping capabilities, cognitive automation capabilities
  • Vendor experience
  • Support

For a lot more information on this, explore our guide on how to select the right RPA partners.

Decide whether to have an in-house or outsourced implementation team

Even after you choose the solution your company needs, you need to decide whether your team has the capacity to complete the automation. If they do not have the time to set up RPA bots, business service providers like Accenture and Infosys can help. They offer RPA setup support for enterprises who would like to work with a hands-on partner while rolling out their bots.

While working with a business service provider speeds up deployment, it is more expensive than an in-house deployment team. If you are working for a large enterprise that will use RPA to automate numerous processes, eventually your company will need to build its own RPA deployment capabilities. We are seeing companies set up centers of excellence for RPA and other automation technologies. For example, UBS in UK has an RPA center of excellence led by Richard Wiggs. This is definitely a worthwhile investment for large companies.

Pricing – Learn the costs

As you can see on our page on RPA vendors, there’s more than a dozen RPA vendors operating globally which should create some pressure on prices. Without data on market shares of vendors, it is difficult to understand market dynamics exactly however since WorkFusion rolled-out their free-as-in-beer RPA offering, they must have realized that prices are an important decision criteria for companies looking for RPA solutions.

If you aim to try RPA without taking significant financial risks, starting with WorkFusion‘s free offering could be a good option. Another option is UiPath Community Edition which is also free to use.

Upgrading from the limited free editions, your company will need a paid installations. Pricing generally depends on number of activities automated.

Avoid common pitfalls

We have seen 3 types of pitfalls in RPA implementations:

  • Organizational pitfalls: Lack of commitment either from management or the team itself can delay any project and RPA projects are no exception.
  • Process pitfalls: Choosing an overly complex or insignificant process will lead to limited impact. For example, implementing RPA to an area like expense auditing where specialized solutions exist, can lead to significant effort without satisfying results.
  • Technical pitfalls: Choosing a difficult-to-use RPA tool can slow down development efforts

Read our comprehensive list of RPA pitfalls for more info.

Post-implementation: Manage your RPA installation

Measure the impact of RPA

So what should you expect to get as a result of an RPA implementation? Vendors claim significant KPI improvements:

  • Blue Prism automated 14 processes of a BPO, achieving ~30% cost saving and improving service quality and accuracy. One can’t help but wonder if they passed those savings to their customers
  • Outsourced services provider Xchanging observed 11-30% cost reduction depending on processes automated. Company has seen dramatic increases in speed. Company was receiving unstructured data from its clients which were manually processed. Through automation, a process that took months, started to be completed in minutes.
  • Cognizant helped a medical insurer automate claim adjustment process leading to 44% cost saving.

As famous leader in management, Peter Drucker, is noted for saying: “If you can’t measure it, you can’t improve it”. This definitely applies to the impact of RPA. Measuring its impact helps elevate the role of the implementation team, builds appetite for further productivity improvements and encourages team to identify areas where they can improve. Though it is complicated to do a though A/B test with process automation, looking at output and size of related teams before and after the RPA implementation will give a good idea about the impact achieved with RPA.

Manage your technology in light of RPA

Long term IT investments can sometimes be planned in isolation of capabilities developed by non-tech teams. And RPA gives non-tech teams a strong tool to automate their tasks. Therefore it is important for tech and non-tech teams to collaborate and ensure that automations completed with RPA are not re-programmed in applications. Scarce technical resources would be better deployed in building changes to applications that can not be completed by RPA tools.

Consider launching an RPA center of excellence

Once you have proved the benefit and viability of RPA projects, you need to consider how you can launch new RPA projects effectively. Most large companies choose to have RPA centers of excellence that help teams launch, audit and improve RPA projects. The crucial thing here is ownership. The business units themselves must be responsible for RPA installations or else center of excellence teams will find themselves responsible for processes they do not completely understand. Center of excellence teams should focus on aggregating best practices and helping teams ramp up quickly.

Manage the impact on jobs

RPA will inevitably lead to predictable redundancies as bots take over more work from humans. The good thing is that you will know in advance which personnel will be redundant which gives managers time to identify new roles for the personnel and train them for the transition. However, this can not be a departmental effort. HR should coordinate the new assignments and managers across the organization should be motivated to take on employees that have become redundant.

As with any industrial revolution, post AI world also makes some formerly valuable skills redundant. Workers who are specialized in automatable tasks will inevitably be let go if they fail to improve themselves. Though hopefully such cases will remain rare, it is critical for management to handle those cases as swiftly and professionally as possible. People need support of their old managers to continue their professional lives in the best way possible.

We covered all major aspects of RPA here. If we missed anything, let us know in the comments!

Visit our comprehensive guide on RPA for more details including references. Our recommendation is to get your hands dirty ASAP, that’s the best way to learn more about any topic! If you are ready to contact RPA vendors who can help you get started, let us know so we can help you find the optimal RPA vendor for your business.

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