Thursday, April 7, 2016

Beware: Robots on the Cow Paths

There’s a growing volume of chatter in the outsourcing industry circles about the breakthrough potential of Robotic Process Automation, or RPA.  I’ve recently seen RPA in action for a few major corporations and I’ve developed a concern over this trend.  It’s a concern based on successful adoption.

For those who haven’t had the pleasure of a first-hand exposure to RPA in action, I can tell you that it’s quite impressive.  Software-based “robots” (personally, I am not a fan of the term, but it’s increasingly being used) run on servers and essentially perform the identical tasks that humans otherwise would perform.  They login to various systems, review lists of tasks, lookup and correlate information from varied sources, and execute well-defined procedures.

The benefits include 24x7 operations (no coffee breaks or absenteeism), predictable quality of performance, speed of execution, and … obviously … lower labor costs.  Other benefits include the ability to audit and measure the performance of tasks that might not otherwise lend themselves to 100% verification.

These virtues have great appeal to companies that use people today to execute rather standardized processes.  Lower cost, higher quality, assured outcomes.  Sounds great, right?

Many observers are worried that the rise of robots to perform transactional business processes, such as accounts payable reconciliations, invoice verification, account change processing, and the like, has the potential to displace thousands of “knowledge workers”, leading to a greater level of social issues around employment rates.

Some of the more prominent corporate advocates among the outsourcing industry, many of which operate with thousands of employees domiciled in lower-cost delivery locations, are the most prominent adopters.  They argue that today’s labor arbitrage outsourcing models need the ability to drive greater sources of benefits to their customers.  The ability pull the lever of lower labor cost is diminished, so we must shift to automation from these delivery centers as the next wave of benefits for outsourcing.

Well, what I’ve seen of RPA in practice introduces, to me, a concern that dwarfs that of displacing workers.

I am old enough to recall the rise of Business Process Reengineering in the early 1990s.  BPR was the brainchild, arguably, of two consulting luminaries, James Champy and Michael Hammer. 

The central thesis of BPR was that “the usual methods for boosting corporate performance—process rationalization and automation—haven’t yielded the dramatic improvements companies need. In particular, heavy investments in information technology have delivered disappointing results—largely because companies tend to use technology to mechanize old ways of doing business. They leave the existing processes intact and use computers simply to speed them up.”  That was twenty-five years ago!

Back then, the BPR advocates argued that speeding up those processes does address fundamental performance deficiencies. “Many of our job designs, work flows, control mechanisms, and organizational structures came of age in a different competitive environment and before the advent of the computer. They are geared toward efficiency and control. Yet the watchwords of the new decade are innovation and speed, service and quality.”  Those are the words of Michael Hammer printed in a prominent 1990 HBR article.

Many of the RPA examples I’ve seen are simply a repaving of the cow paths defined by current systems, processes, and policies.  The RPA robots memorialize the existing procedures in ways that mimic today’s human-based operations.

While today’s RPA initiatives are designed, largely, to be proof-of-concept and pilot in nature, I think that great care should be taken to define the innovation roadmap for the underlying business processes prior to shedding the people who are the most knowledgeable about the processes being robot-enabled.  We need to know that we can redesign, replace, or retire those existing systems and processes – not be held hostage to a robot’s execution of legacy procedures.

Perhaps this assignment is a worthy repurposing of the displaced knowledge workers?
I’ll never argue against automation and the use of technology to drive efficiency, accuracy, and cost effectiveness.  Those are sacred principles in an “As A Service” economy.  Yet, we need to be sure that we don’t lock ourselves into legacy ways of running businesses as the ultimate price for near-term efficiencies.

The robots will execute; they will not redesign.  Not yet.

Peter Allen applies many years of operating experience as a top executive and strategic advisor for companies of all shapes and sizes, with focus on technology-enabled business services. He is now Chief Evangelist at Peter Allen & Partners and Senior Advisor for Alvarez & Marsal.

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