Webinar Notes: A Primer on Robotic Process Automation

“The bigger you are, the more likely you are to fail because of the change required in aggregate.” – Thomas Young, Founder and Managing Partner of RUMJog Enterprises

“This is real.” - Frank Casale, Founder of the Institute for Robotic Process Automation and the Outsourcing Institute

These webinar notes are from a May 28^th event run by the Institute for Robotic Process Automation (IRPA), which was founded by the Outsourcing Institute’s Frank Casale. Casale was joined in the event by a panel of Robotic Process Automation (RPA) experts: Raheem Hasan (CMO, IRPA), Pat Geary (CMO, Blue Prism), and Thomas Young (Founder and Managing Partner, RUMJog Enterprises).

I attended this event precisely because I did not know much (if anything) about RPA, and while I have a much better idea now, I’m early on my learning journey. This is something that procurement professionals will need to know about going forward – especially anyone with services procurement responsibilities – so it’s better to be proactive. I recommend downloading the free primer ebook put together by IRPA, available here after a brief, free registration. I’m planning to review the ebook later this month.

RPA is a form of outsourcing that replaces employees with ‘robots’. I put robots in quotations because these are not robots like Amazon’s warehouse bots or Rosie from the Jetsons. Those are physical robots. RPA uses software robots to complete repetitive, manual tasks that are currently being handled by humans. Some of the examples given in the event includes data entry or new hire on-boarding.

While we could list out many more (ATM/tellers, phone networks/operators) RPA as an approach to completing work represents more of a mindset shift than just straightforward automation. The best example given in the event to explain the shift RPA represents was the changes we have seen in written communication channels. You can still send a letter with a stamp through the mail if you want, but it is slower, more costly, and more likely to be lost/misplaced than an email sent instantly and for free via email.

Any task that can be codified can be handled by RPA. In many cases, the capabilities have been developed to the point that robots can handle basic decision-making and function as learning systems to improve their decision making over time. The robots can only do things that humans can do, but they are better governed and measured. In cases where governance/compliance are particularly important, robots even track other robots in their tasks.

The virtual nature of RPA radically changes the cost structure of completing these tasks. It is possible that companies can see savings in the range of 40-50%. Beyond savings, efficiency and lower error rates prevent the downstream costs of mistakes. Companies that are considering RPA are often looking for one of two kinds of benefits:

1. Labor cost reductions: when offshoring has already been attempted or completed, and the benefits are leveling off
2. Process/operational redesign: when human constraints (such as the g-force that can be withstood by fighter pilots) hold back the development of mechanics or technology

As you might expect, once RPA starts to catch on more than it has already, the impact on the service provider community will be disruptive. According to the panelists, pricing will no longer be the main issue, but client retention will be more difficult. Some companies will embrace RPA faster than others (IT service providers are a prime target). Service providers will have to face the difficult choice of refusing to automate so they can preserve their current model or competing with themselves by starting up RPA divisions while maintaining conventional services as well.

So why do procurement professionals need to educate themselves about RPA? We work with more forms of outsourcing today than we realize. Many of the categories of spend that used to be straight equipment purchases are being handled in service-like models. If we will potentially need to put RPA contracts in place, we should know something about how it works. We should also be prepared to set up requirements and SLAs for RPA-based agreements. If you happen to need another reason to understand robotic process automation early, try this: do you want to let IT swoop in and steal those categories from procurement?