If your RPA program is not making money then it has failed.

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If your RPA program is not making money then it has failed.

Whilst better quality data, reduced risk, higher employee and customer NPS all matter, it is the ringing of cash tills that is the only true sign of a healthy Robotic Process Automation (RPA) program. If your program is not making money, the kind that a CFO will validate, then it has failed.

“If savings are not being achieved in terms of monetary measurements, efficiencies, or a better customer experience, then what is the benefit of automation?”

Dermot Carroll – Technical Lead, Virtual-Operations

Several years ago it was estimated that 50% of Robotic Process Automation (RPA) programs failed. If we consider all those organisations that don’t make or save real money, as reflected in figures hitting their P&L, then real world evidence suggests this figure is a lot higher. If firms are not able to realise real cash benefits from their RPA program then their programs have failed in financial terms.

Thankfully, there are a number of ways firms can generate real cash or real cash savings from their investment in RPA. These are outlined below:

Only automate processes that drive profit (measured as net cash income on the P&L)Firms often start by automating tasks or processes that are easy to automate. Once a plethora of tasks or processes are automated, then teams often claim success. Only later does the business realise that the cost of the robotic process automation program far outweigh the tangible benefits it the RPA program was meant to drive.

“Rather than simply automating a random range of easily automatable tasks, firms should only implement robots to drive services where profit ensues (e.g. a bank that onboards a new customer in minutes, not days, should result in more customers coming toward that bank; creating a facility to allow customers to renew car insurance 24/7 should increase retention over time).”

Kieran Gilmurray, Global Automation Lead

Make money while you sleep (measured as net cash income on the P&L)The holy grail is to build an entirely automated business i.e. a business that that runs completely in software, with no humans ‘in the loop’. Finding such opportunities isn’t easy, but more and more circumstances are arising where this is entirely possible (e.g. online marketplaces with automated drop shipping).

Firms can substitute full-time employees (FTEs) with work performed by robots. For example, insurance brokers can introduce automated car insurance sales or renewals 24/7 to drive higher sale and retention figures; debt collection agencies can send an automated sequence of email or SMS chasers with a link to an online payment form or automated IVR payment system to collect payment; customer sales retargeting emails or drop basket SMS text messages can all be automated using bots to drive revenue.

“The biggest money making bots in existence today are the algorithms that power trading activity at hedge funds. Bots dominate the financial markets to such an extent that a recent estimate holds high frequency trading algorithms responsible for 70% of all completed transactions, and for 99.9% of all quotations on financial exchanges.”

Matt Barrie, CEO of Freelancer Limited.

Focus on headcount reduction (FTE hire, wages and emoluments savings)Many RPA programs have aimed to reduce headcount and failed. Often this down to the simple fact that firms do not actually eliminate the roles that have been automated.

If firms want to eliminate roles then they can do so. Roles can be removed as quickly as a process is automated or over time using an attrition model. If you have team members checking files then you can free that headcount too as, unlike people, RPA does what it is told every time.

“The average cost of a robot is one-third of the cost per person (Full Time Equivalent or FTE). By automating these tasks, headcount can be saved and that includes a reduced number of audit or checking roles which are no longer needed with robots completing tasks exactly as programmed. But firms must take action to remove headcount to gain real savings. When a process is automated someone should leave the business otherwise firms will never realise savings from RPA.”

Kieran Gilmurray, Global Automation Lead

Cut overtime costs (over time | wage bill reduced)Firms can use automation to cut overtime bills. If a firm has a high overtime bill, driven by high month end or seasonal activity, they can cut costs by employing robots at peak times.

Reduce costs by insourcing (RBPO) (cost saving by stopping cash outflow): Firms can use RPA | IA to insource what was previously outsourced to cut real cost from their P&L. Often firms outsource routine, mundane tasks that are low value to third party firms. Those tasks are usually perfect candidates for robotic process automation.

By implementing a Robotic Business Processing Outsource Centre (R-BPO) an organisation can insource what it has outsourced and gain greater staff flexibility and organisational agility in the process.

“Bringing process back to on-premise automated process will levels of control to the business. In many cases internal SLAs are much lower then those with cost efficient outsourcing. Lines of communication are also much shorter, which should lead to agile and very efficient deliveries” 

Dermot Carroll – Technical Lead, Virtual-Operations

Reduce hiring costs (tangible recruiter, supervision, audit, training, time and people savings – not cost avoidance): It is not difficult to calculate the cost of employee turnover. If you can have software tools take care of your routine tasks, you don’t need to hire such a large workforce.

“When employees are doing more meaningful work instead of being stuck processing boring, repetitive tasks, they are happier and more productive. Firms that drive employee NPS that prevents turnover can see a real reduction in hiring, training, managing, rework, checking work, coaching and developing new staff were staff retention is a real issue.”

Harrison Goode, Intelligent Automation Recruitment Expert

Employing robots to remove mundane, repetitive tasks from workers is a great first start toward creating a work environment where workers get to work on the things that excite and delight them.

“In a large Irish bank, automation was initially viewed with scepticism but when the tedious, monotonous humdrum was removed, the same people were much more enthusiastic. The people I am thinking of were the folks who thought they were about to be replaced.  In addition, security, risk and compliance were happy with the strict governance of the automation processes.”

Dermot Carroll – Technical Lead, Virtual-Operations

Whilst driving income is key; it is incumbent upon organisations to also focus on driving out cost. Organisations should focus on minimising; licence, run the business, control room software, wage expense etc. in every way possible.

What other ways can you suggest to firms to realise tangible P&L results or to cut out cost?

If you like this article then you may find these articles of use too.

  1. How to build a business case for Intelligent Automation and Robotic Process Automation
  2. 30 ways to build a pipeline of processes suitable for Robotic Process Automation (RPA) and Intelligent Automation (IA)
  3. I’ve met 100+ RPA developers but these are the 15 signs of an ‘exceptional’ RPA developer!
  4. 8 questions to ask to ensure you select the ‘right’ processes to automate using RPA | IA.
  5. 14 rules for Robotic Process Automation (RPA) and Intelligent Automation (AI) success
  6. The A-Z of Robotic Process Automation, Intelligent Automation and Digital Transformation
  7. The biggest lie told to RPA customers – 50 robots equals success
  8. 40 essential selection criteria to choose an RPA platform

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Note: The views expressed above are our views and not those of my employer or the employers of the contributing experts.

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