GETTING IT RIGHT
In recent times, there has been surging interest in the application of robotic process automation (RPA) to business. Globally, the growth and adoption of RPA looks to expand exponentially across the globe. Transparency Market Research estimates that the IT robotic automation market will expand at a CAGR of 47.1% between 2016 and 2024.
These are certainly attention-grabbing statistics, but RPA is seizing the attention of businesses for another reason – its potential ability to disrupt entire business functions across all companies and sectors.
Where humans were once the sole resource to perform functions such as customer service, transactional activities and generating insights, RPA technology has advanced to a level where robots can perform these same tasks, with even greater efficiency and accuracy. Today’s RPA technology uses software robots to offer improved business efficiency, data security and effectiveness by mimicking human actions and automating repetitive tasks across multiple business applications without altering existing infrastructure and systems.
This means there is a huge opportunity for existing finance and accounting functions, which generates a lot of transactional repetitive activities, to optimise their processes through RPA. In fact, according to an EY survey of 769 CFOs and finance leaders, 65% of respondents worldwide said that “standardising and automating processes and building agility and quality into processes” is a significant priority for the finance function.
While there is certainly interest in RPA, implementing RPA projects isn’t always challenge-free. Companies that get the following right will have a higher chance of success with their RPA projects.
SET CLEAR GOALS AND OBJECTIVES
A successful RPA is firstly grounded in a strong business case for change. The business case should clearly state the objectives and expectations of the RPA project, and include both the qualitative and quantitative benefits that are aligned with overall business and management strategy.
Improving cost efficiency is the most common business objective for implementing RPA in the finance function. Faced with the task of processing high volumes of data under pressing timelines, these processes are manpower-intensive and highly susceptible to human error. Automating manual-intensive finance and accounting processes can help save costs and reduce the number of errors to produce higher quality outcomes for the many consumers and users of financial reports.
Relieving employees of highly-repetitive tasks can also increase employee satisfaction, by giving them the opportunity to acquire knowledge and move on to higher value-adding tasks. For example, EY has deployed “digital employees” to help its auditors go through large volumes of audit-relevant data more efficiently. The EY auditors, in turn, are being trained and provided with tools to enable them to provide the insights that its clients value.
In recent years, high-profile investigations into fraud and ethical behaviors have also increased the pressure on companies to improve their governance of financial transactions and respond to tighter regulatory scrutiny in this area. As RPA systems can provide fully maintained logs, this can help improve the audit trail and risk monitoring.
Clearly, RPA can create value for the customer and stakeholders, which are still perennial challenges for businesses, even in a digital world.
Automating manual-intensive finance and accounting processes can help save costs and reduce the number of errors to produce higher quality outcomes for the many consumers and users of financial reports.
It is easy to assume RPA is an IT project. This is a misconception. As companies think about the initial automation project, they need to remember that ultimately, RPA will deliver a virtual workforce to join the finance team. Just as how IT would not be in charge of managing the current agent workforce, it would not manage a virtual one.
Once management is convinced of the project’s value, the roll-out of RPA should be positioned as a business-led programme, championed by the CFO, with strong partnership from IT, cyber, security, risk, HR and other enterprise functions. It is fundamental to set up a business-led Centre of Excellence (CoE).
A business-led CoE allows the business to prioritise the processes to automate and determine what the virtual workforce does. IT still has a crucial role in delivering infrastructure and software support, and providing robots with user access rights to legacy systems.
Yet, a business-led CoE does not simply spring into existence. It is all too easy to underestimate what happens after automation, so it is highly critical for companies to agree on the CoE processes and IT governance, and have staff trained to not only operate the robots but also continue to enhance the processes.
NOT JUST A SERIES OF AUTOMATIONS
Companies should see RPA beyond just a series of automation exercises to an end-to-end programme. By performing an opportunity assessment, companies can then develop a portfolio of savings, service improvements and transformation processes – each of which needs to be measured and the benefits delivered so that ongoing investment continues.
Companies should also be mindful that RPA is a journey, not a destination. The strategic dimension of the business transformation should prevail. It needs to be part of a broader journey towards digital operations. A silo approach to RPA implementation could allow new risks to go undetected. While RPA can reduce human error, it can raise digital risk. Stronger IT governance is needed to manage the limitations and associated risks of this new technology. Hence, it is important to create a digital CoE whose role is to promote, govern and infuse RPA and other digital initiatives into the company.
GET THE LEVELS OF AUTOMATION RIGHT
Businesses should also be mindful of the importance of a proper opportunity assessment to find the optimum portfolio of processes for automation. Low- or medium-complexity processes or sub-processes are the best initial target for RPA.
Ultimately, companies should look for processes with the largest benefits, and simplest delivery. Targeting RPA at a highly-complex process can result in significant automation costs, when that effort could have been better spent automating multiple other simpler processes.
Some examples of critical finance operations where RPA could be effectively utilised include operational accounting (that is, billing and collections, accounts receivable); general accounting (that is, allocations and adjustments, journal entry processing, reconciliations, intercompany transactions and financial close); financial and external reporting; planning, budgeting and forecasting, and treasury processes.
REVIEW EXISTING PROCESSES
We often see no effort to change existing processes to allow RPA to work across as much of a process as possible. This raises the risk that all existing inefficiencies, inconsistencies and duplications in the process will be repeated by RPA, limiting the potential benefits of its application.
That is why we work with clients to make sure that their internal operating model, governance and capabilities are able to take advantage of this new technology. For finance processes in particular, the critical paths may need to be reassessed. Automation of some tasks with RPA can result in a “bottleneck” on tasks, which were not on the critical path before.
Reviewing processes for the implementation of an unfamiliar technology is no easy task. Finance teams often struggle to find solutions that are able to deliver timely and accurate financial information without the costly maintenance of on-premises solutions. Rather than try to puzzle things out on their own, companies could work with partners/vendors which have the expertise and resources, such as RPA tools, traditional enterprise resource planning systems and cloud platform capabilities, to help them in their finance transformation.
Another common mistake is to totally eliminate the human input in a process, which ends up in a significant automation effort, additional cost and little additional benefit. The best way to view RPA initially is as the ultimate “helper,” carrying out the basic work in a process and enabling humans to do more. Automating 70% of a process that is of the lowest value, and leaving the high-value 30% to humans is a relevant initial target. It is always possible to go back and optimise the process later.
Furthermore, while a robot can handle transactional, rules-based decisions, any issues that fall outside this boundary will need to be managed by a human employee. Robots are also not able to emotionally relate to the customer, and would therefore need to work hand-in-hand with humans to create a valuable customer experience.
ACHIEVING A GREAT ROI
While current RPA tools can automate large parts of a process, they often cannot do it all – frequently because the process starts with a call or on paper, or requires a number of customer interactions. Hence, companies often end up automating many sub-processes, but miss the opportunities to augment RPA with digital capabilities, and automate the whole process.
The cost arbitrage of RPA is significant. In countries with high labour costs such as Singapore or Hong Kong, a robot can be 10% to 20% of the cost of a human agent. But more often than not, a robot only works on sub-processes and therefore limits the savings achievable. But if we extend RPA into digital self-service, for example, we will see that the benefits can be up to two to three times that of RPA alone.
In order to gain buy-in from senior stakeholders, companies should develop an RPA portfolio that balances cost reduction with other value drivers such as service improvement, transformative services, improved regulatory response and growth.
While delivering cost savings is important, service improvements or showing entirely new and innovative digital services or products will make the senior stakeholders even more interested in making RPA happen. And to deliver RPA projects with success, proper planning will make all the difference.
Cheang Wai Keat is Singapore Head of Advisory, Ernst & Young Advisory Pte Ltd.