future ready how to bring process automation to your enterprise
TRANSCRIPT
Helping Clients Leverage Global Services & Sourcing
Advisory | Supply Monitoring | Governance Support
www.NeoGroup.com | www.SupplyWisdom.com
www.NeoGroup.com | www.SupplyWisdom.com
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
FUTURE READY - HOW TO BRING PROCESS AUTOMATION TO YOUR ENTERPRISE
FUTURE READY - HOW TO BRING PROCESS AUTOMATION TO YOUR ENTERPRISE
Copyright © 2016 Neo Group, Inc. All Rights Reserved.
Outsourcing in the form of labor arbitrage using low
cost centers has delivered well over the years and
enterprises are now looking for various solutions that
are more than just cost savings to be future ready.
Now the question is “What Next?” The issue has
moved beyond SLA compliance and quality of service.
Labor arbitrage and mere cost savings is becoming a
thing of the past.
Enterprises who buy outsourcing services and
henceforth are referred to as buyers are looking for
innovation and transformation and automation is one
of the key approaches to bring about this
transformation.
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INTRODUCTION
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Some of the questions that always make their entry into our discussions with buyers are:
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THE WHAT?
1. What is automation all about?
THE WHY?
1. Why should we think about automation?
2. Is there a need to bring in automation?
THE HOW?
1. Should we outsource first & then automate OR automate & then outsource?
2. What is the process to go ahead with automation?
3. How to identify & assess automation opportunities?
4. Should we use a 3rd party automation tool or should we build our own?
5. How do we ensure that our automation program is successful? What should we watch out for?
6. Everybody is talking about automation. Where is automation headed?
7. Where will automation not work?
INTRODUCTION
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THE ADVANTAGES
What are the advantages of automation?
a) For the buyer
b) For the service providers
This paper will provide insights into the above questions and the key focus will be on how to go
about automation.
We will also talk about the advantages of automation and the impact of automation on the
contracts between the buyer and service provider.
INTRODUCTION
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What is
Automation?
Automation is about using technology to
transform processes and achieve greater
speed and accuracy. Robotic Process
Automation or RPA is the field of
automation that deals with mimicking the
actions of a human and is typically
technology agnostic. When we refer to
automation it includes RPA.
Why Automate?
Emerging and disruptive technologies are
changing the rules of the game, allowing the
businesses to automate many (if not all) of their
rules-based processes quickly and at a low
cost. The economies obtained by automation
are tremendous. They lead to cost reduction,
efficiency gains, increase in accuracy and high
level of compliance and security.
Outsource first or Automate first?
This is similar to the question that was being asked earlier- should we outsource first or
transform and then outsource? The answer really depends on what works best depending on the
circumstances and needs to be assessed on a case to case basis. Most buyers follow the path of
outsource first and include automation later, as part of the outsourcing roadmap. Buyers who
have already outsourced have started amending their contracts to include automation.
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Automation Process
We recommend the following automation process and the stages therein to be followed in the
automation program.
IDENTIFY •Potential Processes
PLAN•Plan Automation Roll Out
DEVELOP•Design & Development
IMPLEMENT •Move to Production
MANAGE •Support & Governance
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STAGES IN
AUTOMATION PROCESS
IDENTIFY
In the Identify stage, look at all the processes that
could potentially be automated. The section on
‘How to Identify & Assess Automation Opportunities’
will give you a good indication of where to look. As
the next step, prepare the business case and
identify the stakeholders and get their buy-in to
make this program successful, before proceeding to
the next stages.
Who are the stakeholders?
This would depend on the company but
typically it would include the CIO/CTO and
Business Owner. Similar to the success rate
of ERP implementation in the past, automation
success will also increase when the CEO is
one of the key stakeholders. More on this in
the section on ‘What makes an automation
program successful’.
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PLAN
Once identified, plan the roll out of the automation. This would differ from company to
company and would depend on various factors including the corporate & business strategy, the
business cycle, culture etc. Typically, enterprises prefer to run a pilot and then decide based
on the success of that pilot.
The enterprise could decide on a custom built automation or buy an off the shelf automation
product and configure that. In some cases, it could even be a combination of both.
In this stage, create a detailed plan and work out the various phases of the automation
program. Planning on a pilot could also be part of the overall plan.
STAGES IN AUTOMATION PROCESS
DEVELOP
This will involve design, solution architecture & development and/or product configuration
depending on the strategy adopted in the earlier phase on the buy vs. build decision. This also
includes the UAT (User Acceptance Testing) before the automation can go live.
This could start off with a pilot as the first phase and then enterprise-wide development in the
subsequent phases.
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STAGES IN AUTOMATION PROCESS
IMPLEMENT
Post development and completing of the
configuration, the next step is to implement the
solution which could be done in phases over either
shorter or longer periods of time, depending on the
enterprise’s culture and business cycle. This stage
ends when the software or tool is moved to
production.
MANAGE
Once implemented, there needs to be a well-
defined support & governance process to manage
not only business as usual but also any system,
technology and business upgrades. In addition,
continuous measurement of the value bought in by
the automation will be useful for future automation
projects.
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How to Identify & Assess Automation
Opportunities
One of the key questions is how to go about identifying the processes that can be automated.
Outlined in this table are process characteristics that make them candidates to be considered for
automation. Also go through the section on “Where automation will not work well” to understand what
types of processes are not candidates for automation.
Process Characteristics Elucidation
Manual Processes that are time-consuming and are currently done manually. Pay close attention to
processes that are repeatable.
Regulated Processes that have high compliance and statutory requirement.
High Quality Requirement Business needs for these processes dictate high level of quality requirement.
Issues Processes that have issues in terms of quality of deliverables, customer issues, employee issues
etc.
Rudimentary Optimized Process Processes where some kind of rudimentary and sub-optimal automation has been done like Excel
uploads, Excel macros etc.
Highly Rules Based Processes that are rules based and maybe have some level of decision making.
Highly Data Driven Processes that involves a lot of data including data gathering, data entry in multiple ERPs or other
systems, data sanitizing & analyzing.
High Employee attrition Processes that have high employee attrition, especially where the job becomes monotonous and
repetitive and employee motivation and engagement level drops.
Volume Fluctuation Process that have volume fluctuation and optimal staffing becomes difficult.
Seasonal Process that are seasonal in nature which makes it difficult to staff the process optimally.
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Build Vs. Buy
Which automation tool should I use or should I custom build it or do I need a combination
of both? This is perhaps one of the most important questions. While the answer to this
depends on several factors such as your goals (staff reduction, analytics, standardization),
the nature of your business (size, industry-type, regulation level, location) and the
important technology factors such as:
• Do you have a strong in-house technology team?
• Is technology core to your business?
• Does being a technology leader in disruption technology make you a leader
in your business?
There are several tools available in the market and this paper does not analyze those
tools. Choose a tool that fits your requirements after analyzing the various tools.
It’s always a better option to use a tool instead of building one, as this will ensure that you
are upgraded as technology gets upgraded.
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What makes an Automation Program
successful?
The following are the key parameters that makes an automation program successful.
I. Clarity of Objective
While cost saving is the obvious objective, it is important to keep the other objectives such
as seamless access to multiple systems (including ERPs), increasing regulatory
compliance, reducing offshore etc. in mind when defining your automation program.
II. Right Strategic Plan
Automation program should be aligned to the overall company’s objective at best; at the
very least it should look at a department or function level objective. The more aligned it is
to the strategy at the highest level, the more successful the program will be. If we end up
looking only at process level objective, the success will be limited.
III. Stakeholder buy-in
It is very critical that all the stakeholders including the CXO level, business owners,
technology departments and suppliers are not only involved but have also given their buy-
in. Otherwise there could be disruptions during the execution stage and that might lead to
the program not getting implemented well or not at all.
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IV. CXO Level Automation Leader
Create a Chief Automation Officer role - a person who has the vision and leadership skills. This
will give a clear message to the enterprise about the importance of this initiative.
The CAO, or equivalent, will look at the overall objective and also align automation activities to
the various business units of the corporation. This person will bring in the best practices and
ensure that the strategic objectives of the program as well as the corporate objectives are met.
V. Approved Budget
This is an obvious yet an important aspect to ensure success of the program. Ensure that a
proper ‘Cost Benefit Analysis’ is done and the budget is approved so that the program does not
get abandoned in between.
VI. Tactical Automation
While short and tactical automation projects may not be strategic in nature, their wins will
boost the entire automation program.
VII. Right Owner
We need a Global Process Owner and not a technical owner. In other words, the program must
be driven by business and not by the IT. It should not be a “cool” technical thing to have but
something that the business needs.
What makes an Automation Program successful?
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Future of Automation
While everybody is talking about Automation and is being future ready, it will be good to explore
where automation is headed. We believe that there will be an exponential adaptation of
technology in the next couple of years and there will be focus on best practices to be followed in
the area of automation. We envisage the following trends:
1. Move towards a Utility Model
The move towards a utility model is about using automation on an ‘As-Need’ basis.
Enterprises that use automation will not be making capital investment in the software tools
nor will they have dedicated tools and infrastructure to service their needs. They will
instead go more towards a pay as you use (which is ‘As-Need’) model and focus will be on
Capex reduction.
2. Increased focus on Cognitive and Artificial Intelligence
Automation has become common and there are already tools talking about Cognitive and
Artificial Intelligence. There will be increased focus on Cognitive and Artificial Intelligence.
Currently we do see cognitive tools being used for service desks etc. In the future more
and more business process outsourcing processes will leverage Cognitive and Artificial
Intelligence.
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3. Further institutionalization of Automation
Automation will move from a project level / contract level investment to a more centralized
business and technology investment.
4. Emergence of Knowledge plugins
Best practices will be incorporated into the automation tools. These tools will have
knowledge plugins, which are objects with process knowledge. This will enable people to
incorporate best practices within the tool at a much faster rate.
5. Focus on End to End Automation
The move will be from automation in silos to end to end automation and automation will be
able to get significant benefits because of the it’s holistic view of the business.
6. Emergence of an Engagement layer
We will see emergence of an engagement layer, which will integrate the different
components of disruptive technology, including RPA, mobility & cloud.
Future of Automation
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Where automation will not work well
It’s important to note that automation is the means and the end is effectiveness. To appreciate
the potential of automation it is best to align it with the enterprise’s strategic objective and not
make it an ad hoc process improvement project.
In such cases, automation will be less effective. However, there are instances where automation
does not make sense at all.
Some areas where automation will not work well are:
1. Processes that have small volumes
2. Processes that are constantly changing
3. Processes that have high level of exception and have judgment calls
4. Processes that have too many different forms of data and unstructured text
5. Processes that have high number of handwritten notes
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Advantages of Automation
Automation is not just a FTE reduction tool but a more strategic path followed. It capitalizes on the
knowledge gained through BI & Analysis and social media. We will touch upon the advantages to buyers
and service providers.
Advantages to the buyer
The advantages of Automation to the buyer in the various areas are:
.
1. Sourcing
Automation helps to avoid sourcing problems such
as cultural issues, political issues etc. and also
helps increase on-shoring.
2. Process
Automation helps in having better control of the
process and improves the efficiency, security,
compliance, speed and the quality of the process. It
makes the process more flexible and scalable, while
keeping costs low and provides for real time data
and business continuity
3. People
Automation makes the process less
dependent on people and reduces
supervision time and reduces
attrition.
4. Technology
Automation as part of technology
road map makes the buyer a leading player in his field
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Advantages for service providers
1. Non-Linear growth
With increasing cost pressures, the service
providers can leverage technology and
automation for non-linear growth.
2. Long Term Clients
Automation will tend to make a service
provider’s client contracts stickier.
3. Reskill employees
Service Providers can leverage
automation to reskill their workforce on
the disruptive technologies.
4. Leverage Automation Partnership
to add value
Service provides can use a particular
solution as-is or with slight modification
across verticals and across clients, thus
giving them better value for their
investment.
Service providers can bring better value
to their buyers through strategic
partnership with technology product
vendors.
Advantages of Automation
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How automation impacts the way we will see
contracts and working style
Contract Focus This will move from pure ”What needs to be done” to “What needs to be
achieved”
Performance Measurement This will move more towards “Outcome based” rather than “Activities
based”
Resources This will move from tradition process skill to resources with process skills,
automation skills, cloud skills etc.
Flexibility Buyer will want more flexible contract and would like to keep it open to
leverage more benefits of future technologies
Financial Move from cost reduction to value enhancement
Location Low cost location may be only a part of the consideration. Low cost location
because of lower labor costs will become irrelevant.
Innovation focus The contract will focus more on innovation rather than on pure costs.
Strategic procurement Buyers will look at procurement more strategically. Buyers will look at
vendors who can not only execute automation but also innovate and
vendors who are leaders in following latest value add trends in outsourcing
so that the buyer can become future ready.
Relationship Relationship will become more important as both the buyer and the supplier
will need to work in tandem to add high level of value to the engagements.
Collaboration The approach will be more collaborative as collaboration between the
parties will enhance value further
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Next Steps
Now the question is “Now that I know this, what
should the next step be?”.
Engaging an advisory company like Neo will help
you assess the health of the current engagement
and the right time to go with automation strategy and
Neo can add great value by
1. Providing critical insights to you and your
service providers
2. Helping determine automaton readiness through
assessments
3. Helping in the process of automation strategy
and help implement the automation roadmap
effectively
4. Helping weigh all the aspects before you make a
strategic procurement decision
5. Helping choose the right vendor based on their
automation capability by leveraging our
knowledge base of the key vendors and the
market trends
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Neo Group Can Help
The global sourcing landscape is constantly evolving. For a deeper discussion on planning and executing a successful
globalization strategy, contact one of our lead advisors.
Atul Vashistha Brad Pickar Hemant Puthli
CEO & Founder Partner & SVP Partner & SVP
[email protected] [email protected] [email protected]
Kevin English Pankaj Sharma Vikram Naaidu
Partner & SVP Partner & SVP Partner & SVP
[email protected] [email protected] [email protected]
About the Author
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Sudhakar Kuckian is a Sr. Director with Neo Group’s Advisory Services and has 22+ years of experience in all aspects of
sourcing advisory services in the IT and ITeS areas. He has worked extensively with customers across North America and
Europe. Sudhakar is on the Harvard Business Review Advisory council and is a McKinsey Quarterly Executive Panelist.
Sudhakar is an ardent enthusiast of disruptive technologies and strongly strongly believes that disruptive technologies can play
a much larger role in transforming businesses. He is a SMAC (Social, Mobile, Analytics & Cloud) certified professional, and has
led major technology implementations at Fortune 100 organizations. He has an engineering degree in Computer Science from
NIT, Allahabad and an MBA from Krannert School of Business and has completed his executive education on Strategy and
Leadership from Wharton School of Business..
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Copyright © 2016 Neo Group, Inc. All Rights Reserved.
About Neo Group
Founded in 1999, Neo Group helps organizations meet business objectives and address business
challenges by leveraging global services and sourcing. To learn more about Neo Group, please visit
www.NeoGroup.com.
About Supply WisdomSM
Supply WisdomSM is a unique cloud-based service that provides data and intelligence for sourcing risk
and opportunity monitoring of global countries, cities and suppliers. To learn more about Supply
WisdomSM, please visit www.SupplyWisdom.com.
No part of this report may be reprinted/reproduced without prior permission from Neo Group.
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