The next acronym you need to know about: RPA (robotic process automation)

RPA is a promising new development in business automation that offers a potential ROI of 30–200 percent—in the first year. Employees may like it too.

Robotics are beginning to have a profound effect on business. In this interview, Xavier Lhuer, an associate principal in McKinsey’s London office, speaks with Leslie Willcocks, professor of technology, work, and globalization at the London School of Economics’ department of management, about his work on robotic process automation—its impact on work, and how companies can capture its strategic and financial benefits.1

Leslie Willcocks: RPA takes the robot out of the human. The average knowledge worker employed on a back-office process has a lot of repetitive, routine tasks that are dreary and uninteresting. RPA is a type of software that mimics the activity of a human being in carrying out a task within a process. It can do repetitive stuff more quickly, accurately, and tirelessly than humans, freeing them to do other tasks requiring human strengths such as emotional intelligence, reasoning, judgment, and interaction with the customer.

There are four streams of RPA. The first is a highly customized software that will work only with certain types of process in, say, accounting and finance. The more general streams I describe in terms of a three-lane motorway. The slow lane is what we call screen scraping or web scraping. A user might be collecting data, synthesizing it, and putting it into some sort of document on a desktop. You automate as much of that as possible. The second lane in terms of power is a self-development kit where a template is provided and specialist programmers design the robot. That’s usually customized for a specific organization. The fast lane is enterprise/enterprise-safe software that can be scaled and is reusable.

You can multiskill each piece of software. It’s lightweight in the sense that you don’t need a lot of IT involvement to get it up and running. Business-operations people can learn quite quickly how to configure and apply the robots. It’s lightweight also in that it only addresses the presentation layer of information systems. It doesn’t have to address the business logic of the underlying system or the data-access layer.

Leslie Willcocks: RPA deals with simpler types of task. It takes away mainly physical tasks that don’t need knowledge, understanding, or insight—the tasks that can be done by codifying rules and instructing the computer or the software to act. With cognitive automation, you impinge upon the knowledge base that a human being has and on other human attributes beyond the physical ability to do something. Cognitive automation can deal with natural language, reasoning, and judgment, with establishing context, possibly with establishing the meaning of things and providing insights. So there is a big difference between the two.

In addition, whereas RPA is pretty ripe as a technology, cognitive automation isn’t. I’ve not seen a wave of powerful, cognitive automation tools appear in the market or many companies using them yet.

Leslie Willcocks: The major benefit we found in the 16 case studies we undertook is a return on investment that varies between 30 and as much as 200 percent in the first year. But it’s wrong to look just at the short-term financial gains, particularly if those are simply a result of labor savings. That approach does not do justice to the power of the software, because there are multiple business benefits.

For example, companies in highly regulated industries such as insurance and banking are finding that automation is a cheap and fast way of applying superior capability to the problem of compliance. You also get better customer service because you’ve got more power in the process. A company that receives lots of customer inquiries, for example, can free staff to deal with the more complex questions.

There are benefits for employees, too. In every case we looked at, people welcomed the technology because they hated the tasks that the machines now do, and it relieved them of the rising pressure of work. Every organization we have studied reports that it is dealing with bigger workloads. I think there will be an exponential amount of work to match the exponential increase in data—50 percent more each year. There is also a massive increase in audit regulation and bureaucracy. We need automation just to relieve the stress that creates in organizations. One online retailer measures the success of RPA in terms of the number of hours given back to the business. So it’s not just the shareholders, the senior managers, and the customers who benefit, but also employees.

 

http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-next-acronym-you-need-to-know-about-rpa



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