How to Win at Enterprise Automation: Think Big, Start Small, Validate and Move On (Part 2 of 2)
Blog: Appian Insight
This is the final installment of a two-part series on the relentless rise of enterprise automation and how best to take advantage of it. Last week, Robotics expert Jing Bing Zhang debunked the myth of a job busting “Robocalypse” but confirmed the urgency of re-skilling our workforce to get the most out of the automation trend. In this episode, Zhang breaks down why the most challenging conundrum business leaders should be thinking about may be figuring out where to start first with robotic process automation. Zhang advises us to focus on the low hanging fruit. Have a strategic plan, he says. Think big, start small, validate, and move on. (Read part 1 here.)
Hope you enjoy the conversation:
Appian: You’ve said that people will need to be re-skilled to work with robots, and that there will be less demand for routine human labor that requires production and assembly-related skills.”So, net-net, will we see an overall job creation benefit from automation?
Yes. But workers will need to be re-skilled for the jobs of the future.
Our #1 top trending topic of 2017: #Automation and the #futureofwork. Up to 14% of workers may need to switch occupations because of automation by 2030. https://t.co/dpshKvWAPk pic.twitter.com/DR4GyDXjNZ
— McKinsey Global Inst (@McKinsey_MGI) January 4, 2018
Appian: So, what’s the takeaway for business leaders…what should they be doing to prepare for this labor force disruption you’re talking about?
Zhang: Some business leaders are already recognizing the need to prepare for these mega trends, moving forward. They know that they need automation to increase the total life cycle of their products and services, and improve the total experience of consumers using their products.
“The Industry leaders are going a step further. They’re actively using technology to respond to changes in customer demand. But some companies are still in a “wait-and-see” mode. Others will miss the trends altogether. But the early adopters? They will gain an advantage on their competitors.”
Appian: As you look into the future, how do you see automation changing traditional business and industry?
Organizations will no longer be able to compete based on cost or quality alone. You’ll need to look at your total offering—your product is just a part of that.
Appian: What about companies that want to take advantage of automation but don’t know where to begin. Where should they start?
Zhang: If you’re not sure where or how big to start with automation, do a prototype to validate a concept. Then, learn from that and move forward. Think big and start small—you just can’t afford to do nothing.
Appian: By 2020, IDC predicts that 60% of all robots will depend on cloud-based software solutions. Which sounds like the cloud is playing a big role in the adoption of automation.
Zhang: So, what we’re seeing is that some companies are not buying robots, but leasing them—like the way you’d lease a car. The technology in these machines is evolving at a very fast pace. So, it’s better for users to lease the robots, so that the vendors can constantly upgrade their capabilities, monitor usage, and schedule service via the cloud.
Appian: So, companies are bench-marking the cost of leasing robots against the hourly rate of human labor?
Zhang: Yes. Also, if you think about it, the resources and upfront capital investment required to purchase a robot is beyond the reach of many small and mid-sized companies. Then, there’s the challenge of maintaining robots and upgrading them. Most small companies just don’t have the resources or skills to do that.
This makes the concept of “Robot as a Service” a viable business model to extend the benefits of robotics to small and mid-sized companies.
Appian: Strategically, how should business and IT leaders be thinking about the challenges of taking advantage of physical and software robots? Also, which industries have the greatest risk exposure to the automation trend?
Zhang: I think that RPA and physical robots are not really that different. One focuses on physical work, the other on brain work. There are many categories of companies that will be disrupted by these technologies. I think the companies that have the most to worry about are outsourcing companies—Business Process Outsourcers (BPOs). In the past, these companies profited from cheap offshore labor, for things like data entry, where you relied on people to key information into systems, retrieve data, compare it, and make a decision. Moving forward, companies will use robotic process automation to do this kind of work.
Appian: So, when you have rule-based, standardized, workflows and simple, repetitive, high-volume tasks, RPA can do that 24 x 7 x 65.
Zhang: That’s right. There’s no benefit to outsourcing that kind of work to Malaysia, India, or China, as companies did 10, 20, or 30 years ago. The playing field is leveling out now for most countries, in terms of using RPA. Of course, the BPOs are at risk—they can no longer rely on armies of cheap overseas labor. Nor, can cheap labor match the speed, scalability, accuracy and ability of RPA to keep up with changes in regulations and compliance. So BPOs will also need to leverage RPA.
But back to your question about what strategic challenges business leaders should be thinking about…
The most important challenge with adopting RPA is figuring out where to start first. My advice is to focus on the low hanging fruit. Have a strategic plan, think big, start small, validate, and move forward.
Appian: In wrapping up, what are your top 3 predictions for RPA in 2018 and beyond?
Zhang: I think we’ll see exponential growth( in the years ahead). And that growth will be across industries, but especially in banking, financial services and insurance companies. Second, I think healthcare and logistics companies will be next to benefit from RPA, because they have lots of data to process. And data fuels automation. Third, there will be consolidation—M&A activity— inside and outside industries, based on RPA (in the next decade).
Appian: What about the convergence of RPA and AI? Do you expect to see more of that happening in the near term?
Zhang: Yes. Companies are already talking about how to build artificial intelligence into RPA. My perspective is that this will not happen so fast. Yes, combining AI with stock market investments, that’s already happening. Maybe 3-5 years down the road, we’ll have an intelligent version of RPA. But right now, I think there’s still a lot of work companies can do with traditional RPA.