How Robots Can Automate Your Most Labor-Intensive Financial Processes
Blog: Kofax - Smart Process automation
According to the Q1 2017 Forrester Wave report on robotic process automation (RPA), enterprises are under immense pressure to digitize operations, and most see RPA as a part of their automation strategy. Forrester notes that RPA boosts productivity with minimal process change, brings an easy-to-calculate ROI, and is a fresh alternative to the “big spend” of typical business process management programs.
In the context of financial process automation (FPA), organizations have an incredible opportunity to leverage RPA and reap those benefits Forrester notes above. We sat down with Wesley Keller, Director of the FPA Product Marketing Team at Kofax, to chat about the the state of RPA in FPA.
What is robotic process automation?
WK: Very simply, robotic process automation is taking something a human does on a computer and having a software robot do it by mimicking what a user would perform in an application. The market often talks of RPA as desktop automation, but at Kofax, we think of it more systematically as team of smart software robots deployed on a centralized server that can automate any manual task performed in an any application or data source, including legacy mainframe systems and external web sites and portals. This centralized server robot model distinction is increasingly important in large-scale enterprise robot deployments, given it scales infinitely better and is much easier to manage than trying to run software robots on a physical desktop.
Why is RPA getting so much attention?
WK: Forrester notes that RPA is poised to become a $2.9B market by 2021, and a large part of its appeal is how quick and easy it is to deploy. A macro-trend in enterprise technology is the democratization of the information technology role. The heritage structure of IT has been “command and control” where IT chose, implemented and supported technology for business users. Now, we’re seeing business units such as the accounting department choosing, deploying and managing their own technology. RPA is an ideal candidate for that.
How is RPA utilized in FPA?
WK: In a typical financial process automation scenario, we can hit about 80 to 90 percent automation levels between capture and workflow automation for mature solutions like AP Automation, and we’re starting to approach those levels in other areas of FPA where we’re already well above 50 percent. RPA can do two things for that leftover percentage that has been so difficult to automate.
One, every business has unique aspects to their workflow that traditional enterprise software doesn’t automate, such as customizations or integration with unsupported third-party applications. RPA can cover those gaps.
Two, RPA can automate processes no one has touched with an enterprise solution because there wasn’t sufficient volume or scale. For example, RPA can automate a GL account setup or run an allocation journal entry in your system. On the AP side, companies often have to pull from or send invoices to a portal for AP and AR. You may only have 100 invoices a month, so you pay someone to do it because it would be costly and time-consuming for IT to build an integration. RPA can automate that process very quickly and affordably.
A recent report by The Hackett Group notes several other use cases in the financial close and consolidation process, such as automating repetitive rule-based accounting tasks like account reconciliations. [Download the full Hackett Group report, “What Source-to-Pay Leaders Need to Know About Robotic Process Automation.”]
What is the biggest problem or problems that RPA solves in FPA?
WK: I’d put it two ways. One is with targeted use cases. RPA can quickly set up an integration layer that’s far more stable and scalable and supportable than anything you’d get through professional services or custom IT work. Two is a broad application of the RPA platform across accounting and finance, which is made up of tens of hundreds of thousands of tasks that need to be performed over and over in the same order and that are interdependent on one another. You can have a tremendous impact if you build a robot to do that work.
We see a lot of applications in AP integration, sales order management and financial close. RPA also adapts to control processes very well. These are traditionally difficult to automate because they’re internal and therefore not standard across the industry. A good example is Sarbanes-Oxley: individual companies decide their own thresholds, so there’s no one software that can fully automate those controls. RPA is perfect for this use case.
What drives the value of RPA in financial processes?
WK: Labor savings. Robots are the new “digital workforce” that can emulate tasks traditionally done by humans. We call these “swivel chair” operations —those tasks that involve transferring data from one screen or application to another.
Besides the easily-quantifiable labor savings, there’s a lot of intrinsic value to RPA as well. Robots are fast and reliable. They make few, if any, mistakes. And they don’t take vacation. The business case is always built around headcount, but these additional qualities point to value beyond dollar savings.
What trends are you seeing in the marketplace?
WK: We’re seeing our customers ask for or at least express interest in RPA. The Hackett report indicates that RPA adoption in purchase-to-pay is an emerging technology, but is poised to have one of the greatest impacts on the way work gets done in purchase-to-pay organizations in the next decade.
Where have you seen success using RPA in financial processes?
WK: We’ve seen several examples of robotic process automation in action in the financial context. Arrow Electronics deployed robotic process automation to request and process quotes and invoices, regardless of format or location. Another customer of ours, a large multinational corporation, uses robotic process automation to automate account reconciliations during the financial close process. A third-party logistics provider uses RPA to close out loads, which can be difficult when there’s a payment dispute.
Where do you expect the adoption of RPA to grow in FPA and why?
WK: The market is ready for RPA, but a lot of talk is about the hype and promise of robots. We’re marrying it to reality at companies like Arrow Electronics. It takes comprehensive, integrated knowledge of both robotics and financial processes to identify the specific use cases and deliver ROI. Because we provide both financial process automation and robotic process automation solutions for accounting and finance, we bring the right process expertise to the table along with key capabilities and end-to-end solutions.
What competitive edge will early adopters of RPA have?
WK: We talk about how digital transformation in finance enables organizational agility and cost savings, but the larger story is in the ability to serve your customers better. Automation enables your organization to move workers from routine data entry into higher-value analyst and strategic roles. This goes for procure to pay automation in the back office as well as order to cash automation in the front office. The clear operational benefits ladder down into the more compelling benefit of being able to better serve customers with faster, better, and more valuable information.
Customer service is an intrinsic benefit that’s not always easy to measure, but any company interested in digital transformation isn’t trying to transform IT and process infrastructure just for the sake of it. It’s about transforming the way you do business so you can better serve customers.
Kofax is hosting Inspire, the annual customer and partner conference in Nashville this April 23-26. What will attendees learn at Inspire about RPA for FPA?
WK: The robotic process automation session for finance and accounting will be educational, with a foundation of what robotics is, what robots can and can’t do, and examples of how robotics can be deployed in finance. Robotics is a technology, but this session will give the technology context in and around business processes.
The financial process automation track will give attendees the ability to interact with their peer groups for these applications and understand how they’re being used and deployed in other companies. They’ll also learn about the roadmap and upcoming features for the financial process automation product line and will have an opportunity to interact with product management to understand and influence those requirements.
Interested in learning more about robotic process automation in the context of financial processes? Don’t wait; register for Inspire today.