The NOA Symposium is the industry’s annual get-together of the great and the good to discuss and debate the state of the outsourcing nation. It is meant to cover a wide range of topics that are impacting the sector, but it was clear from the very start that one subject was going to dominate: robotic process automation. In fact, one of the audience questions that was displayed on the screens at the front said “Should the National Outsourcing Association be renamed the National Automation Association?”. Now, whilst there may have been a little irony in that question, it is obvious from the level of debate throughout the day that this subject has people in the outsourcing industry both excited and worried in equal measure.
And Symphony Ventures was right at the heart of the debate as I was there to give one of the breakout talks on how Robotic Process Automation (RPA) and Artificial Intelligence (AI) is impacting the industry. For me, there are four key things that people need to think about when considering RPA.
The first is education. There is still a large proportion of buyers and sellers of outsourcing services that do not know what RPA and AI are. That is perfectly natural – it’s a relatively new technology and, although there are some big companies exploiting it, they are not shouting about it (because they don’t want to give away the significant competitive advantage it gives them). Luckily that’s easy to fix; in an outsourcing context, if there are processes that can be sent offshore (i.e. they are rules-based, repeatable, high volume) then they can be automated using RPA software. The ‘robotic’ nomenclature comes from the fact that the technology is replacing the role that the human being has traditionally been doing. As well as the inherent value created from full audibility and 100% compliance, the cost to automate them will be significantly lower (about a third of the cost, as a rule of thumb) than engaging an outsourcing provider.
And that brings me on to my second point: the BPO providers. Many of them know about RPA, many have agreed ‘partnerships’ with RPA software vendors, but few actually know what to do with it. And that is largely down to the ‘denial’ from the BPO providers that automation will have a profound impact on their business model. Think about it: if you have a team of, say, a hundred people doing ‘stuff’ (finance, applications, billing, etc) then traditionally they would be outsourced and the company would save money. If you can automate a large percentage of that team (say 60-70%) then the bits that are left are very likely going to be too small to outsource. The economies of scale that the outsourcing business model are based on are suddenly eroded away. That’s the real threat that RPA has on BPO.
The sexy younger sibling to RPA is Artificial Intelligence. And whilst the technology is currently less mature, it has the potential to make an even bigger impact on outsourcing than RPA. This is where we move from ‘dumb’ robots that do exactly what you tell them to machines that can learn for themselves. That capability has many benefits; it means it can take in unstructured data (such as customer emails), ‘understand’ them and then route them to the best person (or robot) to deal with them; and it can read through large volumes of semi-structured information (such as contracts), extract the relevant information and provide useful data such as the aggregated risk exposure or how effective the contracts were (and then use that information to make sure the business does a better job in the future). Right now, AI and RPA play really well together; AI gives RPA the structured inputs it needs – it gives brains to the braun.
Finally, it must be said that implementing RPA isn’t that easy. And that’s not down to the IT in any way (the technical bit of implementing RPA is actually quite straight-forward). Just like with outsourcing, the biggest challenge is change management. Whilst you can automate a single process ‘as is’ and save some money, the real benefits will come with scale and with having a transformational mind-set. Think of RPA as just one part of an overall organisational solution: imagine a company where the bulk of the processes are carried out by software robots, supported by artificial intelligence systems and perhaps some outsourced or, more likely, crowd-sourced people, managed by a few employees, all working on optimised processes in a transformed organisation. If you want to know what the future of work is like (and by association the future of the outsourcing industry), then keep that picture in your mind.
The NOA is absolutely right to focus on RPA as a disruptive force. Giving it the exposure it needs so that the sector can best prepare for the changes that will undoubtedly come is definitely a good thing for an industry body to be doing. Whether it decides to change its name to the NAA remains to be seen.[This article first appeared on the Symphony Ventures website here].