The Keys to Maximizing Value from Robotics Process Automation · RPA Benefits • RPA capable of...

The Keys to Maximizing Value

from Robotics Process

Automation

NelsonHall

John WillmottCEO

www.sig.org/eval

john.willmott@nelson-hall.com

John Willmott, NelsonHallSIG, Huntington BeachOctober 28, 2015

Maximizing Value from Robotic Process Automation

NelsonHall – The Leading Source of BPO Information

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In addition, with its “Speed-to-Source” initiatives, NelsonHall is taking the lead in making access to BPO and ITO research much easier than ever before.

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• All analysis by onshore analysts (U.S. & Europe)

• All research interviews carried out by analysts – no online surveys, no vendor form-filling

• Process domain experts with global remit

• 16-years experience in BPO market and vendor analysis

• Independence & objectivity – not amplifying the hype

With analyst access to ask the difficult questions

http://research.nelson-hall.com

Topics

NelsonHall-Proprietary – Not for distribution without permission 4

1. Application of RPA

2. Benefits and RoI Achieved Via RPA

3. Commercial Implications of RPA for Outsourcing Contracts

4. What’s Next for RPA?

5. Conclusions

Filling the Gap between Macros and Platforms

Application of RPA

BPO Market Developments in Q1 2014: Global and Landscape

Seven Disruptive Forces Impacting BPO

1. Robotics

6. Internet of Things

5. BPO “software components”

4. Labor arbitrage on Labor arbitrage

3. Digital

2. Analytics

7. Global Business Services

The Robots are Coming: Is this the End of BPO?

General lack of knowledge (organizations; advisors) as to how RPA/AI might apply to particular business processes …..

• Presentation-layer automation software that sits on top of the client’s existing Systems of Record to access and enter data and make simple calculations

• RPA can be used to mimic the steps of a specified business rules-based process to automate specified standardized tasks where human judgement is not required, e.g. data entry

• 1 robot can process, on average, the number of transactions as 1.5 to 2 FTEs (though some service providers say more)

• Useful for business processes that require “swivel-chair” access to access data from several existing systems

• Robots can easily scale up or down to meet demand

• RPA can be used for specific tasks in activities in BPO areas such as F&A, procurement, SCM, accounting, customer service

In BPO, RPA generally is often initially introduced by clients to handle backlogs or spikes in demand (e.g. seasonal peaks in utilities billing exceptions, big spike in volumes in cash applications in F&A).

Hurdles to BPO client adoption of RPA include:

• Giving BPO vendors access to their IT systems (going behind the client firewall)

• Concerns re security (data collected by the robot)

The Robots are Coming: Is this the End of BPO?

Where is RPA Currently Being Deployed

Implications for vendors:

• Getting to client first – competitive weapon for cost take out

• Rapidity of change - short cycle-time for implementation

• Maintaining revenues and margin

• Maintaining deep understanding of standard operating procedures

• Make or buy?

BPO ActivityProportion of RPA

Activity (%)

Data extraction & enrichment/ validation

Performance analysis & reporting 25

Self-help query resolution 15

Multi-screen integration for users <10

Compliance <10

A quick hit to reduce levels of rule-based processing…..

Benefits and RoI Achieved via RPA

RPA Benefits

• RPA capable of delivering 20%-50% cost take-out on applicable sub-processes

• Cost take-out in RPA largely a function of proportion of process addressable

• Within finance & accounting, RPA most applicable to procure-to-pay• P2P: supplier management & catalog management, 3-way

matching, reconciliations

• O2C: customer data management, cash application, reconciliation

• R2R: reporting, inter-company accounting, reconciliations

• Examples• Vendor master creation: 35% FTE saving

• Invoice processing (3-way matching & posting): 35%

• Invoice data capture & data entry: 20%-25% productivity

• Vendor queries: 20%-25% FTE savings

• Remediating errors in billing data: 25% cost reduction

Requirements for successful application of RPA

• Process improvement expertise

• Strong standard operating procedures

• Standardized processes

• Agent change management

• RPA governance

• Involve in-house IT

• Principal focus on data extraction, data enrichment, data validation, & data entry

• Don’t run before you can walk

…..provided the commercials can be agreed

Commercial Implications of RPA for Outsourcing Contracts

How are vendors approaching RPA?

• Typically partnering with third-party RPA software companies such as “automation anywhere”, Blue Prism, UiPath

• Others developing own RPA and AI software to protect process IP in short-term and develop competitive advantage in emerging forms of AI

• Developing libraries of RPA applications as their value-add

• RPA libraries are typically cross-functional e.g.

ROBOextractor

ROBOformater

ROBOuniter

ROBOimpresario

• Though often packaged by function e.g.

AccountSetupBOT

CashAppsBOT

What about the commercials?

• RPA pricing currently a challenge• Returns largely unknown before project undertaken

• Vendor has no desire to remain on FTE-based pricing

• Possibilities include:

• Move to fixed price or transactional pricing plus ongoing productivity target and allow vendor to use robotics to hit productivity goal

• If still FTE-based, then run each RPA project as a separate gainshare

• Arguably rule-based RPA lends itself to transaction-based pricing or fixed price and judgment-based RPA lends itself to outcome-based

• Who pays for RPA licenses?• Price per robot typically quoted as 1/3 of the price of an FTE

RPA is dead ….long live AI

What’s Next for RPA

Where Next?

• Execution of repeatable, rule based tasks which require little or no cognition or human expertise or human intervention by machine or computer by mimicking human action.

• Machine operates enterprise software and applications through existing user interfaces based on pre-defined rules and inputs

• Start with high volume data entry and move to simple rule-based then complex rule-based

• Judgment-based tasks starting to be supported with cognitive platforms

• Execution of those tasks by machine which require human expertise or human judgment

• Cognitive : Adaptive Learning, Speech Recognition, Natural Language Processing, Pattern identification algorithms

A key tool for making continuous improvement realizable

Conclusions

• Current forms of RPA short-lived in the way that labor arbitrage is short-lived, with 20% one-off benefit for rule-based processes achieved over 3-year period

• Requires same process-centricity & strong “standard operating procedures” as other forms of BPO

• Currently around data extraction, enrichment, & posting and rule-based processes

• Much quicker and lower transition cost than new platform implementation

• Cognitive/self-learning platforms beginning to emerge, with high initial focus on customer service

• Requires change in commercials to reset productivity or gainshare targets

• Makes continuous improvement realizable rather than a major hurdle

@John_NH

John Willmott, NelsonHallSIG, Huntington BeachOctober 28, 2015

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The Keys to Maximizing Value from Robotics Process Automation

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