Global economic downturn is a driver for Business Process Automation

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During the peak of the global economic downturn caused by the coronavirus last summer, Ravin Jesuthasan of the World Economic Forum said[1]:

“We know from history, every time we’ve had a recession, we’ve come out of it with more automation”

And he’s right, but why?

The reason there is a strong correlation between economic downturns and automation is simple:

  •       During downturns, businesses need to operate more efficiently
  •       Automation, when applied strategically, breeds efficiency

From a macroeconomic perspective, the implication is that businesses that adopt automation within their internal processes are more likely to survive recessions. As a result, post-recession we’re left with a world with more automation. Today, with the social and economic challenges of the coronavirus pandemic and the continued rise of Artificial Intelligence (AI), Machine Learning (ML), and RPA (Robotic Process Automation) we can expect the trend towards automation to be even more pronounced than in previous downturns.

Of course, on the microeconomic level, every business has a unique set of circumstances and understanding how your business can use automation effectively requires strategic planning. Here we’ll take a look at why Business Process Automation is so important during economic downturns and how you can jumpstart your own automation efforts.

Using humans for repetitive tasks is often inefficient

A prerequisite to the effective use of automation, in particular RPA, is understanding what processes are better left to “robots”. Even today in the era of digitalization and Industry 4.0, many businesses have plenty of repetitive (and boring) tasks being completed by humans (i.e. basic data entry workflows). In many cases, these tasks are exactly the sort of processes RPA is ideal for.

When there is a threat of economic downturn, the negative impact of continuing to use human labor for workflows better suited for automation becomes magnified. It’s no wonder then that the United States National Bureau of Economic Research has found that most jobs lost after recessions are in “routine occupations”[2]. Those occupations overlap almost directly with the tasks the technology of the time is best suited to replace.

The benefits of automation during economic downturns: real world examples

Business Process Automation is clearly a powerful tool. However, as with any tool, businesses need to take a strategic approach to process automation to truly achieve the benefits. Doing so requires understanding the context your business operates in and identifying areas where automation can add value.

There have been plenty of examples of organisations large and small leveraging automation during recessions. For example, during the Great Recession of the late 2000s Keane, a mid-sized software outsourcer, used internal automation to streamline its delivery of their software tools by reusing code and scripts[3]. While they still needed humans to handle complex work, they made their processes more efficient by applying automation where it made business sense.

More recently, to adjust to the challenges of the coronavirus pandemic the global information technology consulting firm Wipro used RPA and virtual health assistant chatbots to remain productive and support a rapid transition of an almost 200,000 employee workforce to work from home arrangements. Again, the key here was recognizing where automation made sense, and using it to enable business goals.

Locally here in Australia, Enviro Infrastructure have used automation to assist in the high volumes of invoice processing they do across their countless vendors. It has enabled them to free up valuable time spent keying invoices manually into their ERP system so staff can be moved to higher value roles within the business. The effect has not only brought efficiency, but also improved the nature of people’s job descriptions within the business.

How you can benefit from automation

Understanding automation is a powerful tool is one thing, knowing how to get started is another. So, what can you do to jumpstart your adoption of automation?  Here are a few key steps you can take:

  •       Identify internal workflows where automation is ideal – If you are new to automation, focus on identifying existing workflows that are prime candidates for automation to handle. Low-hanging fruit workflows are those which are simple, repetitive, and rule-based. For a primer on what to look for, check out the 7 criteria to identifying processes fit for RPA.
  •       Optimize your processes – Chances are, if humans are carrying out the above workflows today, they’re not yet optimized for BPA. Before you automate, you’ll want to ensure the end-to-end workflow is already optimized (i.e. no unnecessary or redundant steps).
  •       Implement high-impact solutions – There is plenty you can do with automation, but it makes sense to take the 80/20 approach early on. Identify high-impact areas and implement automation there first. Over time, racking up wins and making adjustments as you go will prove more beneficial than trying to make broad complex changes out of the gate.
  •       Learn, iterate, and repeat – Once you implement automation, you’re likely to see some positive impacts. You’re also likely to realize what you could have done better and where else automation can help. Your organizational mindset will also begin to shift towards a more efficient approach to process design. Lean into an automation culture and iterate and improve as you go.

Automation isn’t about replacing people, it’s about enabling them

The elephant in the room whenever the topic of automation comes up is how it will impact human workers. For example, the World Economic Forum’s 2020 Future of Jobs report found that automation may displace 85 million jobs by 2025. Data that seems to support concerns about automation’s impact on the workforce. However, the same report also suggests that 97 million new roles will emerge because of the shift towards automation[4]. Those new jobs will be adapted to the new division of labor between humans and automation.

The key, both at the macroeconomic level and within your own business, is understanding that automation is about enabling humans. By taking care of simple, boring, and repetitive tasks, Automation enables humans to focus on the more complex, creative, and engaging work that drives innovation and maximizes profit per employee. Simply put, when used correctly, automation is a good thing for our workforce.

Final thoughts

Automation is a major part of the new normal, and it’s not going away. In fact, automation is so popular that “RPA Developer” is now the 2nd most sought after role in LinkedIn in the US, and 4th in Australia. Businesses that adopt automation early and make process optimization part of their strategy will be better positioned to survive current – and future – economic challenges.

Want to learn more about Intelligent Process Automation? Check out our Insights page

 

[1] https://www.cnbc.com/2020/06/06/how-companies-plan-to-hire-robots-after-coronavirus-layoffs.html

[2] https://www.nber.org/system/files/working_papers/w18334/w18334.pdf | https://www.brookings.edu/blog/the-avenue/2020/03/24/the-robots-are-ready-as-the-covid-19-recession-spreads/

[3] https://www.informationweek.com/it-strategy/informationweek-500-business-services-firms-use-automation-to-fight-recession/d/d-id/1082968

[4] https://www.weforum.org/reports/the-future-of-jobs-report-2020/digest

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