Robotic Process Automation reduces IT costs but alleviates complexity

Robotic Process Automation (RPA) offers an effective solution for the CIOs to respond with speed to the rapidly changing processes and systems landscape. With RPA IT can support new and changing processes in a matter of weeks and therefore be a true business partner and prevent an uncontrolled shadow IT, says expert in Robotic Process Automation at Deloitte Denmark Abhijit Tuljapurkar.

Technological complexity is one of the biggest challenges inside large organizations. It’s difficult to manage. It drives up IT expenditures. It impedes organizations’ ability to scale. And it takes many forms, from patchworks of homegrown legacy systems to siloed databases and point-to-point integrations.

RPA’s software robots use the graphical user interfaces of existing applications, and solutions can be created without changing the existing IT environment. Even business processes based on Legacy systems, where large capital investments should be avoided, can be automated with RPA – without expensive and risky system modifications, Abhijit Tuljapurkar says:

"For low costs a single software robot can eliminate - or at least defer - the need for much more significant IT investments."

Traditional approaches to taming technological complexity typically involves large investments, high-risk implementation or transformation projects, and lengthy payback periods. Even when CIOs attempt to address complexity by making incremental improvements to systems, those investments may consume 20 percent or more of the total IT budget.

Many CIOs are employing a new approach. They are deploying robotic process automation tools to relieve employees of dull repetitive tasks, which can be time-consuming, and their interaction with complicated and complex IT systems. The “robots” in robotic process automation are software programs that mimic human-computer interactions and execute repetitive, rules-based tasks like gathering and comparing data from multiple systems, reading and writing to databases, or extracting and reformatting data into reports and dashboards.

The every present Technological advance
“CIOs are used to work with a mindset saying that their organization needs to build and implement systems to automate organizational processes. While automation is the right way to go, times are changing. New technologies like RPA, machine learning and advanced analytics makes automation possible at less cost with higher speed and greater efficiency,” says expert in Robotic Process Automation at Deloitte Denmark Abhijit Tuljapurkar.

We are in the midst of a market trend where we observe RPA being deployed across practically all industries – Financial, Shipping & Logistics, Energy, Pharma and more - generally starting with implementations in the back office/support functions. Consider how a financial services company might apply RPA to the process of assessing credit risk for a large commercial client. To get information about the credit products (e.g., loans and lines of credit) the client has with the bank, data analysts must manually pull data from dozens of separate legacy systems. The process, which takes days and involves multiple people, impairs the bank’s ability to effectively manage risk. If the CIO wanted to simplify the data environment, the traditional approach might involve implementing new data infrastructure and APIs - an effort that could easily exceed 60 million DKK.

With RPA, the CIO could install one software robot that could extract data faster and less affordable than two data analysts.

To the extent software robots take on activities employees have traditionally carried out, CIOs can significantly reduce - and potentially eliminate - the portion of their budgets they allocate to making usability enhancements to systems, thereby freeing up cash for innovation or other value-producing opportunities.

“Large RPA deployments aimed at reducing labor costs also offer a compelling ROI. A company that deploys 500 bots at a fully loaded cost of 140 million DKK (including software licenses, planning, process reengineering, programming, testing, and implementation) could potentially realize 700 million DKK in savings, assuming the bots replace 1,000 employees,” Abhijit suggests.

CIOs now have the option to be true business partners by addressing the long tail of IT changes by looking at all the deprioritised IT changes through the RPA lenses. Typically, the CIOs prioritize top 5 to 20 percent of the total new projects pipeline annually, depending on the budgets. Today, intelligent application of technologies can create an eco-system – where, the organisation can define which technology to apply and for what reasons within the hour. If executed in the right way, this can have an immediate and long-lasting impact.

Given the costs and benefits of RPA, some routine back-office functions that companies outsource, such as claims processing and certain data center operations, may now be more cost-effectively to keep in-house with bots. Companies with high levels of third-party risk have additional incentive to use bots instead of business process outsourcing providers. CIOs working with outsourcers already using RPA should see significant savings.

Currently, early adopters are leading the RPA charge, but research firms widely expect adoption to increase dramatically over the next several years as executives learn more about the technology. As far as technology goes, RPA is relatively easy to deploy because it does not depend on new platforms or infrastructure. However, it does require sound upfront design and detailed process knowledge to prevent configuration errors.

New governance
The need for a robust governance in regards to robots is the most critical and the biggest risk that needs to be managed: “What happens if the robot fails?” is the million-dollar question to be answered!

“In my opinion, Business and IT need to establish a joint governance to ensure business continuity,” says Abhijit Tuljapurkar.

In conclusion, RPA represents a pragmatic solution for addressing cost, growth, and performance objectives. In some cases, it can help companies defer major investments in IT modernization or new ERP suites, even as they reap the financial and operational benefits of automation. In other cases, CIOs can implement RPA in tandem with a larger transformation initiative, thereby allowing organizations to gain some immediate benefits. Software robots do not have to automate end-to-end processes to offer value. Even small investments in RPA can have a quick and significant payback.

In order to harvest continued automation benefits across an end-to-end business process, Abhijit Tuljapurkar recommends – to build a coherent Automation Strategy focusing on experimenting with new technologies leading to an incremental automation capability building – through technologies like RPA, Machine Learning and Cognitive Automation coming together to unlock exponential benefits.

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