These notes are based on attending an October 13th webinar hosted by HfS Research. The event can be viewed on demand here.
The panel included two HfS team members (Phil Fersht and Charles Sutherland) and two executives from Cognizant: Robert Hoyle Brown and Matt Smith. I listened to the event end to end twice – once live and once on demand. The topic of automation is fascinating and it was well covered and discussed in this webinar. My challenge was to figure out what this growing trend means for procurement.
If you look at robotic process automation (RPA) as a means to reduce cost, procurement naturally comes to mind as generating savings is considered our bread and butter. This particular panel seemed to feel that savings was not a reason to automate, instead finding that quality, consistency, and speed are better guiding objectives. Although this contradicts some of the more savings-forward coverage of RPA I have seen elsewhere, I’m inclined to agree with this panel. Of course, if they are right, maybe it isn’t a procurement relevant topic. But let’s not give up yet…
Procurement did come up directly on one slide – the one where survey results about where RPA is being effectively applied today. Procurement came in second only to ‘IT including service desk.’ Yikes. That’s certainly not what I had in mind, realistic though it may be.
No, if procurement has an active role to play in an automated future, I think it has more to do with our role in outsourcing going forward.
Until now, procurement has addressed outsourcing spend as the purchase of third party services. We were replacing tasks or operations that had previously been handled internally (hence the outsourcing title). It is important to note that outsourcing does not necessarily mean offshoring; outsourcing work could be contracted to a firm right down the street. Some of these services are strategic or knowledge-based, but I would non-scientifically venture that most of them are more tactical in nature, and the decision to outsource was based on cost.
Looking at the maturity progression shared by HfS in this webinar, RPA will likely expand from replacement (of in house tasks) to augmentation, meaning that as automation becomes cognitive computing and artificial intelligence (AI) it will open doors to new capabilities not previously done by anyone at the company – inside or out – and therefore not part of procurement’s purview. In fact, RPA mostly ends up looking like an IT led function: their gain would be our loss.
But there is still time to change that trajectory. These are very early days for RPA, and functional leadership/ownership of it is still up for grabs in most companies. I firmly believe that procurement needs to get in on the ground floor of this exciting new model – and we should show our experience/expertise with analytics as our ticket to ride.
As one of the panelists stated, RPA is not about ‘the robot’ but about how people are getting smarter and working better with the robot. The robots create an immense amount of data that can be used to improve the processes in place and the organizational objectives they were designed to support. Procurement has pre-existing analytics knowledge that can be leveraged for the improvement of any enterprise process, not just the spend management related ones.
The time to learn about RPA is now, while it is in its infancy, and before anyone else recognizes the potential impact – and influence – that will come with its eventual roll out.