By Leslie Willcocks
Let’s face it, most RPA deployments are still tactical and opportunistic. Our recent review of over 200 cases tells us so (see new paper on website by Willcocks, Hindle, Lacity and Knowledge Capital Partners). If you want to optimize business value from your RPA investments, you need to replace seven of your actions, with a quite different philosophy. Here’s what the effective, smart companies do…
The real limitation so far in RPA assessment has been in establishing benefits.
Hello Strategy. Leading companies observe a fundamental rule: business strategy drives RPA investments. Moving from a tactical focus on costs to multi-faceted strategic impacts often follows a typical pattern. Phase 1 sees a focus on limited ROI. Phase 2 sees a focus primarily on cost savings. Phase 3 moves to a focus on a triple win of shareholder, customer and employee value. Phase 4 sees the mind-set shift to integrating RPA with other digital innovations. Companies with Phase 3/4 thinking gain unexpected returns, for example discovering much better regulatory compliance, products quicker to market, enhanced customer journeys and increased employee skills and recognition.
Culturally Imbedded. The longstanding finding on executive support for IT investments generally is reinforced by our RPA research – automation as transformative 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. It is not possible to scale and gain the really significant strategic benefits from RPA without top-down management and senior executive support.
Planning. One senior executive responsible for transformation told us: “Begin with the end in mind". During 2017/18, most have defined the end-point as establishing an RPA Center of Excellence, focused on applying several technologies such as RPA, cognitive, and analytics. In practice, you need to also treat RPA as part of a larger automation or larger digital business strategy. Aim for high return on investment (ROI) – our research found evidence of 30-200% first year ROIs, depending on process. But also look explicitly for ‘triple wins’, including typically improved service speed; consistency and quality; faster deployment of new services; cost savings; improved regulatory compliance; more efficient processes; differentiating customer experiences; and more flexible, satisfied workforces. By now you should also be increasingly enhancing RPA usage by adopting complementary cognitive technologies.
Governance. A common mistake has been to treat RPA as just another piece of software. This leads on to limited governance arrangements, at best adopting standard project management techniques, and seeing scaling as just buying more software to spread across more processes, with little IT engagement. See RPA as potentially more transformational. Formulate the constitution (‘rules of the game’) for Automation Day One, and cover decision-making and responsibilities for technology, process, data, business and resources. In practice you need three types of governance covered, not one. Write the rules for technical, project, and broader long-term, program delivery.
Platform or Tool? The requirement for such governance comes from seeing RPA as a platform, rather than just another automation ‘tool’. The ‘tool’ view sees RPA being sidelined and overtaken by more advanced cognitive automation tools for image recognition, natural language processing, machine learning, and algorithmic reasoning, driven by huge advances in computing power and storage. But we found that, in the leading companies, RPA is utilized as part of a continuum of complementary automation and digital technologies supporting digital transformation of the enterprise.
Change Management. Used opportunistically, RPA tools can gain quick wins, but too often they have been deployed as a sticking plaster on pain points in the organisation. This has the advantage of not having to deal with change management issues, but the serious disadvantage of turning down the transformation potential of automation, and consequent strategic benefits. But most organisations are surprisingly heavily siloed, not just in terms of structure, but just about everything else. Particularly important is getting 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 that strategic alignment, new competencies, and changes are institutionalised and imbedded in work practices.
Measurement. Here is a new one for you. 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 organisations 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 organisational costs. Typically, we found that organisations using traditional 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’.
The real limitation so far in RPA assessment has been in establishing benefits. This inhibits behavior and to gaining strategic value from RPA, or treating RPA as strategic. This occurred in earlier attempts to account for the more strategic and softer benefits from IT investments. There we saw the introduction of frameworks such as Information Economics, a balanced Business Scorecard for IT, and Real Options. These counter the tendency of more traditional ROI analyses to lead to under-investment, the lack of a long-term horizon, and failure to invest in strategic options and imperatives. In research we are now undertaking we are developing a better measure: we call it Total Value of Ownership (TVO). With this concept, the objective is to ensure that business cases for service automation are driven by (1) total costs, (2) multiple expected business benefits and (3) the strategic returns from future business and technical options made possible by RPA. Watch this space!
Meanwhile, download, from Free Downloads section of this website, the Knowledge Capital Partners research paper showing how smart companies have been applying a mix of these seven attributes to drive serious business value from their RPA investments.
You can read more about deployments of RPA and CA, the results gained and how these are secured in our latest book – Robotic Process and Cognitive Automation: The Next Phase – available from www.sbpublishing.org.