Robotic Process Automation Can Reduce Operating Costs by 90%

February 10, 20168:10 am1227 views

Robotic Process Automation (RPA) is the automation of back and front office processes that are largely rules based, structured and repetitive. The automation replaces or augments humans normally performing the task with “robotic” equivalents. These are software robots and not physical ones.

Process automation has recently achieved a level of maturity and is building momentum in the business world. This has been driven by the release of multiple sophisticated software solutions not previously available and also by the growing demand for organisations to optimise operating costs and to increase quality of services.

Kinetic Consulting Services, the leading management consulting company for business transformation, has released its latest findings on Robotic Process Automation (RPA). The report outlines the business case for the introduction of RPA into an organisation.

Cost savings of approximately 90% can be achieved when a business process performed by a full-time equivalent human is replaced by a software robot. Unlike their human counterpart software robots make less mistakes, don’t complain and work 24×7 if required.

“There are a number of commercial and strategic considerations that need to be made when considering an RPA implementation. Not every organisation will be ready to introduce a digital workforce just yet. However, our report clearly concludes that RPA has to be on the corporate agenda for 2016 and should be given serious consideration.”

“RPA has been cited as an example of what economists are calling, the ‘Fourth Industrial Revolution’. The need to take action is further reinforced because of the increasing economic pressures inflicted on organisations from digital disruption,” added Joe Tawfik, CEO and author of the report.

The traditional model of outsourcing low-value processes to reduce operating costs is no longer the only option available. RPA offers organisations an alternative to outsourcing to a low-cost base country to gain a labour arbitrage advantage.

There is also the advantage of keeping a process onshore, maintaining greater control, and at the same time saving more than if the process is sent to a low cost base country such as India or the Philippines.

The list of processes that can be automated does not always require high volume of work to justify the business case. Software based robots can be multi-skilled and can be shared in a department to undertake multiple low-value, but essential processes.

See: Will the Coming Age of Robotics Spell the End of Many Job Roles?

The utilisation of a shared robotic resource can enable a department or a Global Shared Services centre to focus their time on higher value tasks that are more strategic in nature and able to commercially benefit the organisation.

For example, a Finance department could have a large team of accountants spending a large portion of their time undertaking manual data entry into multiple systems. The introduction of RPA would free up these resources to perform more knowledge based functions, such as analysis of financial records, and would benefit the organisation more than the data entry work they performed.

Offshoring back office processes to low cost countries such as India and the Philippines, to benefit from labour arbitrage, have been on the agenda for any company seeking to optimise its operations and yield a greater result for their shareholders.

Over time this strategy has uncovered some risks which have led organisations to reconsider their offshoring model. RPA offers organisations the opportunity to take these processes back inhouse at a lower cost than currently offered by their outsourced vendors.

The cost of a back-office worker, in three similar markets (US/UK/Aus.), reveals that an onshore agent would cost approximately 90% more than an RPA licence. At the same time the RPA solution is approximately 50% cheaper than a Philippines based agent and 34% cheaper than an Indian offshore worker.

If implemented correctly, RPA can offer wide-reaching benefits to the organisation beyond the obvious cost-saving in human headcount. On the surface it may appear that RPA is about further cost optimisation in the operations of the business.

These findings, does question if human resources and the need for skilled talent for smooth business functioning will soon become obsolete in the robotic age?

Also read: How Robotics is Revolutionising Workforce and Driving up Efficiencies?

Image credit: LinkedIn