Introducing and Evaluating Transformation Technologies for mid-sized Companies Part 1 - Robotic Process Automation (RPA)

As part of our digital transformation projects at medium-sized companies, sooner or later the question arises which disruptive technologies can be used to achieve the goals. In short, digital technologies form the basis for digital transformation. A variety of skills are required to develop digital technologies. In our series “Introducing and Evaluating Transformation Technologies for mid-sized Companies” we would like to present the key technologies that we consider current and discuss their practical relevance in the context of digital transformation projects. In our first article, we look at Robotic Process Automation (RPA).

What is Robotic Process Automation (RPA)?

RPA is the automated processing of structured business processes by digital software robots. This innovative technology enables the automation of repetitive and rule-based processes and tasks that are performed by people. In this robot-controlled process automation, the software robots (so-called bots) take on the roles and tasks of users and interact with other software systems.

Contrary to an initial reflex assumption, software robots are not physically existing machines as are known from the manufacturing industry. Rather, they are software applications that mimic human interaction with user interfaces of software systems.

What are the Differences in traditional Process Automation?

RPA takes a different approach than traditional process automation. RPA processes rule-based, structured data via the user interface of the process-supporting robot software. Examples of this are repeated data entry functions or downloads and uploads in the area of enterprise resource planning (ERP). The technology aims to automate processes without changing, replacing existing applications and reducing costs. The software robots operate similarly within the applications as the actual users (including the corresponding roles and authorizations).

What Processes is RPA suitable for?

Since RPA works based on rules, the field of application is structured processes that follow recurring rules and clear instructions. The software robots follow the established process and make decisions based on the established rules. To do their job, they often mimic repetitive routine tasks and replicate them as often as they want. To do this, the software robots automatically record a wide variety of user interactions via existing software and user interfaces, extract them and carry them out themselves. As an employee, RPA uses all necessary applications via the frontend to enter, copy, save data and much more. Once processes have been defined, they can be flexibly adapted at any time to the rapidly changing requirements and needs.

What are the functional Application Areas of RPA?

The areas of application for RPA are as diverse as the processes themselves. RPA can be used wherever repeatable, predictable interactions with IT applications take place. At the functional level, these include, for example, filling out forms, copying, pasting and moving data, reading and processing information from multiple systems and structured documents, performing calculations, executing "if / then" commands Accessing websites, processing data from the Internet, accessing social media, opening emails and processing attachments.

What are the Benefits of RPA?

The advantages of using RPA are obvious: A software robot works day and night, 365 days a year. He doesn't take breaks and is never sick. He does not make careless mistakes and does not forget any tasks or steps. And he makes no calculation mistakes, no matter how many calculations are necessary. Process automation can reduce errors in customer-oriented processes and increase customer satisfaction. He also documents every step he takes.

RPA builds on existing systems. It uses and interprets existing IT applications and enables transaction and data processing and communication across multiple IT systems. But that's not the only reason that there is no way around RPA. Because RPA also delivers direct profitability due to the lower license costs compared to personnel costs. A robot itself costs only a third of a full-time employee. Besides, there is pure working time, which is approximately five times that of a full-time employee. At the same time, process automation helps improve accuracy and operational flexibility.

Typically, the introduction of RPA is not initiated by IT departments, but by specialist departments. The reason for this is the simplicity of use. You don't have to be an IT expert with special programming skills to use a software robot. On the other hand, RPA does not require expensive investments in new platforms. By mimicking user input via the user interface of an application, the time-consuming programming of an application interface (API) is eliminated. Backend integration with the associated effort is therefore no longer necessary. Experience has shown that processes can be automated in two to six weeks, from planning to commissioning. Once installed, the software robots operate the applications required for a process just like an employee. They communicate with all the necessary systems, collect information and change the relevant data.

Even isolated successes in rationalization have not changed the fact that in large parts of a medium-sized company monotonous, standardized volume processes tie up qualified human resources. Processes, in particular, require a lot of manual input in several systems, offer great potential for the use of RPA. In addition to realizing pure cost advantages, RPA can increase data and process quality as well as processing speed.

With RPA, completely new possibilities open up to automate everyday routine activities such as the maintenance of master data, the creation of invoices or the processing of cancellations. Because RPA can do repetitive things faster, more accurately and more tirelessly than people. This frees RPA up to other tasks that require human strengths, such as emotional intelligence, reasoning, judgment. Relieved of annoying routine work, the employees can concentrate fully on the customers or other challenges in the company.

When deciding to use RPA based solely on the purely cost aspect, the performance of process automation does not do justice. Because there are many advantages:

• Employee motivation and work ethic increase because hated tasks are now done by the robot
• Released from routine work, employees can concentrate on activities with higher added value, respond to special customer requests and thus further expand the company's service area
• Workflows are streamlined, reducing response times to specific requirements
• RPA accelerates the transaction volume and increases the accuracy of work, especially in critical industries such as banking & finance, insurance, and healthcare
• Management gains better insight into ongoing business development through the automated, continuous collection of data
• Governance and compliance can be improved because the requirements can be specified in the automation rules
• Additional software robots can be deployed quickly and at minimal cost, depending on workflow and season

Can RPA also be integrated into existing Software Architecture?

The background to this question frequently asked by our customers is the sometimes very heterogeneous and complex software architecture. The company IT, which has grown over many years, places increasing demands on security, scalability, revision security and change management of the entire software architecture as the company grows.

The worry that RPA could not meet the requirements is completely unfounded. The central control components of Enterprise RPA technology have long had the necessary functions that companies expect and know from software used across the enterprise. RPA technology thus meets the highest requirements for security, compliance, scaling, and reliability of business software.

One example is role-based access control, which can differentiate between different levels of RPA system access between authorized users and separate automation-related tasks based on an employee's role and position within the organization.

The granting of authorizations can be limited via the user access management to the people, teams or departments who need access. Using lists, companies can use all RPA solutions to identify all users who access the RPA software. The encrypted credentials used by the software robots for their work are stored in an authorization database. Strategies for assigning and updating passwords can be integrated and monitored. This ensures compliance with business or regulatory requirements for RPA deployments.

Robot productivity can be optimized using intelligent scheduling systems according to need and priority. Queue and scheduling show all jobs that have been run, those that are still running, and those that have been placed in a pending state. It doesn't matter whether they were started manually or via a schedule.

Audit security is an important factor for every company. A central function of the Enterprise RPA technology is, therefore, the possibility to log every action of every user, every action performed and every audit trail in detail. In this way, you can always see which employee made which changes to which robot and when. The central control component of the Enterprise RPA technology also logs changes to the permissions of each user and other security-relevant data.

Comprehensive audit logs provide company managers and the works council with a detailed overview of storing passwords for logins in the software to be automated, creating, editing, deleting roles and users, assigning licenses, logging users on and off Creation, activation, deactivation of automation as well as the complete schedule of the bot. In this way, errors can be identified just as easily as fraudulent attempts to undermine the work of a robot. Last but not least, the audit log for each software robot is used by the data protection officer to inform himself at any time and without any doubt about which employee or developer/admin is responsible for which function and action.

The RPA technology naturally also offers development and test environment as well as an execution/production environment. In the development/test environment, the automation team can put the functionality of the software robots through their paces before they do their work in the production environment.

What are the Disadvantages of RPA?

RPA is undeniably a great technology. It is rightly celebrated as a transformation technology that changes the way processes are carried out. But RPA also has its weak points.

RPA alone and by itself does not transform a company. Process automation mostly only affects the result. RPA is about standardizing tasks that are subject to a limited or at least a finite number of rules. Business and IT processes are much more complicated and cannot be mapped using simple workflows or rules.

Also, software robots quickly stumble when e.g. even a part of the process is not mapped correctly because the process analysis and recording were inadequate and exceptions were not correctly recorded and taken into account. Since software robots work based on rules and do not make complex decisions, the processes must receive structured data as input.

Any document that has ambiguities is likely to confuse the robot. And when decisions need to be made based on different criteria that are not linearly related, RPA is no longer the technology to automate the decision-making process.

On a purely technical level, there is constant criticism that the required flexibility cannot be configured if the platforms on which the software robots interact frequently change.

What are the Pitfalls in introducing RPA?

Despite all the euphoria about the possible advantages of an RPA solution, the pitfalls that can slow or slow down any hopeful RPA implementation are overlooked too often.

At the organizational level, it is the lack of commitment from management or the team that leads to costly delays. RPA projects are no exception.

At the procedural level, it is the selection of complex or insignificant processes that ultimately leads to the effects of RPA being limited. Without a clean process analysis and process recording, RPA projects are doomed to fail from the start. Here, the clerks play a crucial role in process analysis. On a technical level, it is the choice of RPA software. A difficult to use RPA software can extremely slow down the development effort.

The failure of RPA projects is mostly not due to the technology itself, because there are numerous examples of success. Nonetheless, there are always mistakes that prevent companies from using RPA profitably. Lack of governance is one of the most common reasons for this. From a technical point of view, however, this is easy to achieve if RPA tools contain management functions as well as monitoring functions. But to deploy RPA across the enterprise and scalably, organizations should first define policies and rules. Besides, performance and scalability are the main reasons why companies struggle with RPA, followed by the management of rules for the behavior of software robots and the control and operation of RPA.

What are the key aspects of a successful RPA implementation?

To maximize the benefits of RPA, chief operating officers (COOs) and chief information officers (CIOs) should work together to lay the governance foundation for the interactions, access, and distribution of data and content through RPA robots. But how does this work if companies frequently use RPA robots in a decentralized manner?

A good practice is to establish an orientation framework. Although the operative will take the lead in developing such a model, it has to work closely with IT when developing strategic initiatives to avoid double the effort involved in process automation. It is recommended to set up three teams:

• A team of RPA business experts to review how and to what extent RPA can be used in the company. It is important to set goals for the efficiency of software robots and to check results.
• Also, a departmental advisory board is recommended, which announces the priorities regarding the automation of individual business processes.
• Besides, a technical team of RPA experts - also known as the Center of Excellence (CoE) - that helps to create robots but also supports the specialist departments so that they can design their software robots.

In particular, to set up the third team, the governance team needs certain tools integrated into the RPA platform - including robot analysis, performance tools, version control, and security. A platform that uses Robot Lifecycle Management helps teams manage thousands of RPA robots across the enterprise. This makes it easier for employees to track or investigate problems or changes in RPA processes, or to compare files and show differences with just a few clicks. Robot Lifecycle Management also makes it easier to save backup files, so that companies can easily revert to an earlier version if necessary.

The technical team of experts plays a central role as it acts as a "single source of truth" and aligns the company with long-term goals. It consists of a group of core resources and people who manage all aspects related to automation, including monitoring and maintaining standards across the organization. This includes training, managing vendors, introducing best practices, etc. The team members come from across the company. IT is a core component, and stakeholders bring in their expertise from every business unit. With this concentrated knowledge, the team is ideally equipped not only to make the decisions regarding the right RPA tool but also about which processes are the best candidates for automation.

There is a flexible scope for how companies can approach such a project from a responsibility perspective. Three different models are possible, each differing in the distribution of responsibilities within the company:

• Centralized operating model: a single team is responsible for implementing and controlling all aspects of the RPA program.
• Decentralized operating model: The responsibilities are distributed across individual business units of the company.
• Hybrid operating model: Some aspects of the automation program are carried out by a single, centralized team, while others are taken over by other business units.

There is no right or wrong answer in this regard. Companies should start with the model that best suits them and their needs are given their corporate culture and their current status in the digitization process.

By introducing a competence center and sophisticated tools such as robot lifecycle management, companies can put RPA at the center of their business activities. They go far beyond the simple automation of processes. A strong governance program is essential for successful RPA scaling. If companies distribute RPA responsibilities over several teams and use the right tools, they can control their robots much better and thus increase the likelihood that their digital colleagues will do their job reliably.

Outlook and linkage with other disruptive technologies

Despite all the criticism, RPA solutions score above all in that they are easily scalable, process-independent and applicable in all industries and company areas. Financial service providers and banks, utilities and telecommunications, retail and business, as well as healthcare and insurance, will be the drivers of rapid development through the use of RPA.

On the other hand, RPA provides artificial intelligence (AI) with the necessary data to provide people with reliable decision-making aids based on the best practices model. In some cases, RPA and its data form the basis for AI to automatically make decisions based on specified criteria. 

Remarks

Kai-Oliver Rittner is a digital solutions entrepreneur and investor, who has more than 20 years of experience in top-tier management consulting. As Founder and CEO of PEERSPECTIVE, he supports startups, mid-sized companies, and corporates in the agile development and implementation of sustainable digital business models. Before that, Kai was working for leading organizations like PwC as an executive. He holds an Executive MBA and completed successfully several executive strategy programs at INSEAD. Kai is acting as a Mentor within Founder's Institute and Next Commerce Accelerator and is certified as a Scaled Professional Scrum / Nexus, Professional Scrum Master and Professional Product Owner. You can contact him via Linkedin.