Automating work: What it means and why it matters.
Authored by Tony Doyle based on an original piece by Brian Safron and Cheryl Wilson from IBM.
This blog series released in bite-size chunks will help you understand what automation means and why it matters. Future instalments will look at where you can successfully apply automation, what success looks like and where to start.
At any time, you can reach out to Insight 2 Value to organise a Business Automation Readiness Workshop to help you accelerate your journey and plan your next steps.
Automating work means the ability to offer a better experience at speed and scale. It means looking at the big picture: the multi-stage, multi-task processes that when done manually are slow, costly, and frustrating for your business and customers.
If you bought a house 10 or 20 years ago, applying for a mortgage probably took around a month. The process required you to complete stacks of paper forms and field a few dozen calls and left you wondering when you’d be approved and what your rate would be. Today, you have other options.
Next-generation mortgage companies offer applications with slick interfaces that you can use from virtually anywhere—built on a foundation that automates the heavily regulated process from start to finish.
Not surprisingly, customers often choose these apps for the convenience, immediacy and transparency made possible by automation—alerts programmed into the system, connections to data from credit-monitoring companies and lenders, workflows designed to eliminate unnecessary steps and more.
Before and after automation
The old mortgage process
– Complete stacks of paper forms
– Field dozens of phone calls
– Wait weeks for approval, final rates and signing
Mortgages today with apps
– Get options for loan amounts, interest rates and payoff periods within minutes
– Receive progress updates of the loan as needed
– Save time with communication – only speak with a person in exceptional circumstances
A customer story
In 2017, a motor manufacturer still used a 100% manual, paper-based system to process quality assurance documents. From creating form templates to completing the Quality Assurance check on the production of each vehicle, the process required at least one human action at each step. Whilst the car plant was automated with robots taking many manual roles of the factory floor workers, the QA process had missed the automation revolution.
By moving to a digitised process, the feedback they gave us at the project close was that they now had a quality system to help them make quality cars.
Should you care?
Businesses can stick with the same manual operations that started 20 or 30 years ago despite advances in automation technologies and operate at a “good enough” level.
You can decide that moving your ‘legacy’ content and workflow applications is just too hard not realising there are easier ways to move to a modern world while your competitors and start-ups leapfrog your business.
Whether you should care depends on whether your company can thrive in a world where automation enables competitors to be easier and faster to work with than you.
The business value of automation: Efficiency versus business transformation
There are plenty of automation case studies that show how companies have improved processing times from weeks to a single day. But that isn’t always enough to justify a purchase or gain buy-in for new products. In the past, a lot of arguments for automation came down to simple ROI calculations, largely targeting cost savings—if our firm invests $1 million to automate this slice of our operations and we save $1.5 million, then it’s a good value for the business. Simple.
However, calculating ROI is more challenging for larger-scale automation projects—the transformational ones targeting growth as opposed to cost savings.
While automation can be one of the best ways to drive revenue growth by improving speed, scale and customer experience, changing how a business operates involves tangible and intangible elements whose results can’t always be measured independently. This makes it harder to quantify the amount of growth that can be attributed to automation versus other aspects of the transformation.
But it can be done. You can build a business case for automation that lays out expected quantifiable and unquantifiable benefits.
“Eliminating manual loan review for 80% of all loan applications adds up to hundreds of thousands of hours saved each year, for an estimated productivity benefit of nearly $8.3 million.”
The Total Economic Impact™ Of The IBM Automation Platform For Digital Business, a commissioned study conducted by Forrester Consulting, March 2019
Even though some benefits aren’t a simple calculation, the following questions can help focus your investment and align measurable key performance indicators (KPIs).
- Will automation make it easier for customers to do business with me? Customers won’t choose or stick with a difficult and time-consuming process if an easier, faster process is available.
- Will automation drive growth? A key benefit of automation is the ability to easily scale. If you can attract and retain new customers, then your automation investment will achieve higher returns for you.
- Will automation reduce costs? This question gets closest to easily quantifiable ROI. Cost reduction is often achieved through automation. But remember that you may get even more value from a better, more modern system that increases revenue for an overall net benefit.
- Will automation help reduce errors and improve consistency? Errors are expensive but you can’t always compute their costs. Greater consistency and reduced errors have significant value, even if your number isn’t exact.
- Will automation make compliance easier? You must comply with regulations, so if automation can reduce the resources you need for compliance, then you have a business win.
An Example of tangible and intangible benefits from automation
A large retail banking organisation manages most of its consumer lending processes through automation software. As a result, only 20 percent of loans processed by the bank need to be reviewed by the staff. This measurable increase in efficiency is just part of the automation ROI story. For the bank, it was an opportunity to:
1. Manage growth – After acquiring many branches from another bank, the bank used automation to handle the augmented workload without increasing employees.
2. Remove a layer of implicit human bias – The bank used automation to help increase compliance with non-discrimination regulations and improve the customer experience overall.
Seven realities of automating work
- Automation success depends on the ability to focus on the right business drivers. The importance and impact of automation is less about the technology you use, whether it’s robotic process automation (RPA), automated decision management or artificial intelligence (AI). It’s more about how and why you run your business. If you don’t have the right focus, it’s unlikely that automation will make the difference you want.
- You can automate a lot more than you think you can. You may find that once you’ve automated one process, three or four different processes that connect to the first will be automation targets. It’s like learning a foundational skill that allows you to learn related skills more easily.
- Automation is never all or nothing. Every business has some automation, and no business is fully automated. You’ll decide how much automation you need now and later to meet business objectives.
- Automation can enable you to offer customers more choices than you did before. This variety is often an order of magnitude higher than on a less automated system, without stressing the system. Think about ride-sharing apps. They’re worldwide, and they offer different levels of service for different price points. And it’s all built on the same digital automated system. You can add as many choices as you need— just keep adding it to the automation.
- Automation is one of the best ways to achieve scale. Like choice, if you want to achieve significant reach, then you need automation. The large retail banking organization, mentioned earlier, is a good example of scalability – serving more customers without hiring more employees.
- It’ll be hard to avoid automation if you want your business to grow. It’s not a fad. For some companies and industries, it’s essential. The things you do often, and the ones that noticeably improve customer or employee experience, are the primary candidates for driving growth with automation.
- Automation isn’t the big launch, it’s incremental development. Sometimes companies treat big software developments like the opening of a new building. A big announcement and ceremony happens, everyone gets invited to use the offerings, and then people get back to business.
Automation developments don’t work that way. You’ll find that the first deployment is frequently a learning experience. And while you’re getting the first piece right, you’ll start developing the next, growing and improving your system as you learn what works.
Is your Business Ready for Business Automation?
A Business Automation planning workshop.
Insight 2 Value is offering a no-obligation free-of-charge business automation planning workshop. We’ll sit down with you to understand your current cost models and work through the potential to eliminate your sunk ECM costs and build a Return on Investment model to accelerate your move to a consumption-based cloud platform. We’ll also help you navigate the technical steps you’ll need to take to minimise business disruption and explain the different options available to you in adding Business Automation into your overall Cloud Strategy.