Financial & Accounting Robotic Process Automation – Big News or Old News?
The Wall Street Journal recently ran an article (The New Bookkeeper is a Robot, May 5th, 2015) which gave the clear impression that robotic process automation (RPA) in finance & accounting (F&A) is a new and threatening technology: “Robots are taking over corporate finance departments, performing work that often required whole teams of people. “ But a more careful reading suggests much of F&A automation is tied to well-known technology: e.g. SAP, Oracle. So what is F&A automation – big news or old news?
The answer lies in the distinction between ERP functionality and robotic process automation. ERP systems have modules to manage back-office activities and tasks including F&A applications. ERP systems also utilize APIs (application programing interfaces) and SOAP (Simple Object Access Protocol) to facilitate integration with other internal and external software applications. It’s apparent that approach has paid dividend of efficiencies for over eleven years – well before any widespread use of robotic software, as the article cites the Hackett Group , “Since 2004, the median number of full-time employees in the finance department at big companies has declined 40% to about 71 people for every $1 billion of revenue, down from 119.”
While financial & accounting automation may be old news (if eleven years means “old” – and in technology terms it does), robotic software is very big news. It’s big news because it extends automated functionality to processes, systems and data beyond the practical reach of APIs and SOAP. The article provides a hint of this when is says, “Software has helped Verizon, which had $127.1 billion in 2014 revenue, cut the manual entries its workers punch into Excel spreadsheets annually by a quarter—to 10,500 from 14,000. It aims to cut another 1,400 manual entries by the end of this year for an overall reduction of 35%.”
As anyone who’s worked in a large corporation can attest, there are astonishingly large numbers of inefficient processes based on outdated or outgrown systems – none of which are individually large enough to justify an investment in upgrades, replacement or system integration projects. In the aggregate however, the drag they place on people and processes represent real opportunities for the efficiencies of automated processes.
Software robots are big news because they can automate internal and external applications on several layers: database, file system, API, business logic and user interface – without the time and expense of full system integration. Linking automated systems takes hours or days using RPA instead of weeks and months. At UiPath, our goal is to make using third-party application layers as natural and simple as a developer using his own layers.
Add in the fact there’s no impact on security, compliance, or governance because robotic software operate within all existing security controls and access restrictions and it’s clear RPA’s contribution to automated financial and accounting processes is a very big deal.
Finance & Accounting is an attractive target for RPA utilization because these processes have attributes that lend themselves to the technology. For example:
Accuracy: Robotic software is extremely accurate: data entry errors are not made; process steps are not overlooked; numbers aren’t transposed and “bad days” don’t happen.
Elevated Service Levels: RPA is capable of executing high volume, complex tasks within transaction times impossible for human staff.
Fraud Control: Whereas any process, run by people, that touches multiple banking systems must sacrifice efficiency for role limitations and controls, robotic software imposes no such penalty. It will invariably execute a process as configured – without deviations or risk of fraudulent actions or inappropriate data use.
Compliance-Friendly: As the software robot completes workflow processes it creates audit trails and logs as needed for regulatory compliance.
Scalable: Software robots can be cloned and deployed within minutes– or removed – as needed. This highly flexible scalability allows for easy accommodation of work peaks and valleys (e.g. end of month, quarter and year activity levels).
Higher Staff Retention: Few financial accounting employees enjoy the tedium of repetitious work, all of which can be done by software.
Rapid Data Extraction Aggregation: Software robots are quickly configured to gain rapid access to data across multiple application and databases – then configured to consolidate and manipulate the data. This capability is often very useful for quick, customized and accurate consolidation data for month end and quarter end financial reporting.
Regulatory Compliance Validations: Software robots can be configured to report regulatory compliance or variances across multiple systems by accessing those systems and monitoring actual outcomes against required outcomes.