RPA is officially the shiny new silver bullet: 53% of the Global 2000 are planning significant RPA investments to slash costs in 2018

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While we were discussing the confusing realities of the RPA hype at the HfS FORA Summit, we got a sneak preview of the interim data from the 2018 State of Operations and Outsourcing Study, conducted in conjunction with KPMG, where 250 interviews with Global 2000 operations leaders have now been completed. 

We asked them where their investment priorities were currently lying when it comes to 2018 cost reduction:

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So it’s abundantly clear all the hype about rampant adoption has been warranted, and we can hang our hats on our recent enterprise robotics software and services forecast, which now appears conservative, increasing with 47% growth to $1.46bn this year (click here for full forecast):

The Bottom-line: RPA has succeeded in being positioned as the “easiest silver bullet to target that next wave of cost take-out”.  Now let the real fun and games begin…

We have discussed, argued and deliberated the true value, impact and effective ways to run RPA software for many, many hours here on HfS… for over five and a half years.  And you only need to read our recent work to conclude that “RPA often starts out like a teenage romance, with a lot of enthusiastic fumbling around that ends quickly, frequently leading to disappointment“.  And you can also read the RPA Bible, which preaches best and worst RPA practices to such an extent, you’ll need to visit your local RPA Rabbi, Bhikkhu, Priest or Mullah to find your soul again.

The real issue, here, is that the majority of enterprises are taking the plunge and investing the dollars, with 81% actually taking RPA seriously, and 53% very seriously.  So what’s going to happen in a few months when those ambitious CIOs and CFOs ask to see real, tangible demonstrations of the resultant cost takeout?  Can C-Suite leaders quickly learn to love metrics that are tied to growth, value and effectiveness, as opposed to a simple reduction in operating expenses to feel rewarded for those expensive bot licenses? Are operations leaders generally going to be ready to quantify the value effectively?  Can they really convince their superiors that there is true value impact beyond merely offering up headcount elimination? 

What’s more, what if headcount reductions were promised to offset investments, and adopters have failed to free up the workload that can enable them?  And can they reward the staff, who cooperated in the automation work, by getting them “retrained”?  Is there really a plan?  While the “one human to oversee every 10 bots” is becoming the latest robo-governance rule-of-thumb, how real is this?  Or are we just all bull*****g ourselves about the future, and merely circling the hype to stay relevant today?  Do we really care about our companies anymore, or are we more obsessed with adding big sexy initiatives to our CVs?  Is this really anything different to yesteryear, where you needed to have an SAP rollout on your CV to be a credible CIO, or oversaw a 1000 FTE outsourcing deal to prove you were worth that $1.2m/ year GBS salary (yes, that’s what some get…).  In this world of #fakenews, does anything really matter anymore, when we can spin our realities into whatever shiny new thing is out there?  

One thing is clear is that the back office needs to be submerged into the value end of the organization.  There is little more headcount elimination to be had for most companies – sure, there are still many areas that have too many people working on too few valuable tasks, and technologies like RPA are terrific tools for breathing new life into legacy systems and creating digital process flows, where before there was only spaghetti code, manual workarounds and swamps of data polluting the corporate underbelly.

One thing is clear, it’s very murky out there, and all we can really do is hatch a semi-realistic plan and try and stay on top of it as the future unravels in front of us…

Posted in : Robotic Process Automation

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  1. I guess RPA is easy to understand for the masses and they think it’s a magic bullet to cut cost. Surprise awaits

  2. @Paul – if expectations are correctly set from the outset then they can be met and surpassed. Sadly we are being bombarded with a small tranche of rose-tinted case stories from several RPA vendor clients eager to promote themselves; RPA advisors who have little clue what they are doing beyond negotiating a bot contract and selecting vendors and analysts who are PR machines for their paymasters. Plus, many service providers claiming they are willing to cannibalize revenues, but not doing much about that in reality.

    Also, a major proportion of the market is still at kindergarten stage with this stuff so a lot more painful lessons need to be learned.

    The good news is that majority of the earlier adopters are figuring this out and the later adopters can benefit from their experiences. We just need a good dose of realism being injected into the market, less grandstanding and more patience from all parties to get this right, because there is wonderful potential with these tools…

    PF

  3. @Neil:@ To add to my last comment, I think most customers with a modicum of common sense know this is going to be a potential nightmare, but need to tick their automation boxes to satisfy many of their peers and superiors (and their CVs).

    We live in a world where people have to combat reality, fantasy and try and find some sort of middle ground eventually… that’s just the way it is =)

    PF

  4. RPA is the way to go but we’re still missing good, well explained and representative examples eg for F&A. Can you share any Phil? In addition aftrer last few years of trying …actual implementation success rate in gbs / ssc is still low (based on sson analytics ~7% eg in central europe).

  5. Is it not restrictive to look at RPA only in terms of cost take out? Yes, that is the most appealing dimension but enterprises should warm up to looking at value. For example, handling compliance processes when automated result in lower cost but more importantly, done at zero error rates, they help avert potentially $Ms of punitive damages (think GDPR for instance). @Phil – would you agree? Is the “value over cost” mantra more lip-service?

  6. This is quite interesting projection. Towards the end of Q3 2017, the common consent emerged from the market that the RPA deployment scalability will be the pattern across industries post POC experimentation. Here we are at the end of Q1 2018 – Is it really happening. There is a big “?”

  7. Is it not restrictive to look at RPA only in terms of cost take out? Yes, that is the most appealing dimension but enterprises should warm up to looking at value. For example, handling compliance processes when automated result in lower cost but more importantly, done at zero error rates, they help avert potentially $Ms of punitive damages (think GDPR for instance). @Phil – would you agree? Is the "value over cost" mantra more lip-service?

  8. I work with companies who wants to drive Business Results by leveraging Common sense, RPA, AI & other Digital Tech

    We successfully went live with 3 Procurement processes for a fortune 50 company. Now we are working towards USECASE n BUSINESS CASE for RPA + Machine learning + Chatbots possibilities . As with any paradigm shift we believe, We have better chance if we follow common sense principles with good stakeholder mgt (believe me it’s far less Tech challenge than most of us think)and a combined execution team.

  9. Hi Phil Fersht, do you think there could be a mix of these? I mean RPA using Analytics/AI/ML/Cognitive for Drones/Driverless Vehicles/ and similar examples. these technologies these days are becoming interconnected or integrated and yes ofcourse add cloud to it…

  10. @Anand – lending these technologies is where this is eventually heading… already seeing process flows where RPA and RDA is used to scrape data from customer portals and feed it into analytics engines and developing AI models…

    PF

  11. It seems all of the new “silver bullets” are, by themselves, just an incremental improvement over the last “silver bullet”, leading to risk of being desensitized by over-exposed hype and underwhelming results of today’s latest trend. With so much noise from so many, we run the risk that the truly impactful discoveries may obscured or overlooked

  12. @John – Yup – RPA drives a polarized view of robotizing human work and eventual labor elimination. Crude, but very effective with organizations eager to find their next cost savings silver bullet after exhausting offshoring of work… That’s the reality am afraid.

  13. Phil,

    Your bottom line focuses exactly where we are as an industry. This sums it all up for me:

    Can C-Suite leaders quickly learn to love metrics that are tied to growth, value and effectiveness, as opposed to a simple reduction in operating expenses to feel rewarded for those expensive bot licenses? Are operations leaders generally going to be ready to quantify the value effectively? Can they really convince their superiors that there is true value impact beyond merely offering up headcount elimination?

    Thanks for the great piece,

    David

  14. Phil- interesting data point as always and the ensuing discussion was good reading. I would like to offer a couple of tidbits for anyone interested to mentally chew on. 1) C Suite Executives are skeptics of technology having been burnt by the promise of this or that. RPA/RDA or AI or IA or the other alphabetic scrabble out there was no different. But, at least they are buying now and they need to be educated. Not just about these tools but about the data, process, technology and people elements driving the need for non-STP work and higher cost, risks, client dissatisfaction. Understanding these things takes you to my second and last bit. 2) Automation strategy or lack there of. In an on-going, informal 10 month study, started while I was at BNY Mellon we have asking the banks clients; “ How many of you have an Automation Strategy…?” Less than 20% of 500+ respondents say their firms do. So whether an exec wants to improve cost, risk, client experience or sales, what real chance do they have without a strategy to get them there. Eventually they will run out of the easy wins and you are left with a landscape of scatter promises. Then what?

  15. Very good questions – they get right to the heart of whether we can move from ‘experimentation to transformation’ and capture the very real benefits RPA can achieve.

  16. Hi. We need to really see the ROI once we invest on RAP tools and see how much of efforts we are going to save. Effort savings (hrs) is what driving your head count and we need to decide where we need to position them in your organization to apply their expertise on business improvement initiatives.

    If this road map is clear for the folks you are planning to replace with RAP, cost reduction is already achieved. Good luck.

    One other thing is, business folks need to be very cooperative while implementing RPA as they are no longer going to perform those activities which is completely taken over by a RPA robot. In a summary, it’s a cultural change within the organizational work force to adopt new technologies which enable them to invent themselves into taking up other challenging initiatives within their LOB. Hope it helps

  17. @Stan – not sure what your question is – the respondents are merely responding to the category "RPA" here…

  18. It would be interesting to get the sentiment on those large projects that large organisations tried to roll out in 2017. From what we hear in the market, we’d estimate that one in every three large implementations needs a large fix-up project involving kicking the incumbent RPA implementation partner out and refocussing.

    This stuff can be magic but there is such a thing as too much. From what we’re hearing, we expect more success from the RPA implementations that start small (and can then scale fast).

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