PE firm considering cost take-out has a big opportunity in Robotic Process Automation (RPA). Executives are quite exposed to first generation automation of activities, more commonly referred to as Process Automation. While there may not be much left to take-out with the first generation automation, enterprise-wide robotic process automation open doors for huge costs savings.
Who is a candidate for RPA? Any repetitive task(s), routine that fill up a good portion of people’s activities directly qualify. RPA will do repetitive tasks accurately, efficiently than humans and can run monotonous for days without a break.
Process automation in accounts payable is quite standard these days. These tools have the ability to recognize text, templates and make intelligent routing. They can read scanned images, emails and documents and make routing decisions based on scanned information and availability of processing clerks. In the past decade process automation tools have been at the forefront of transformation Global Business Services aka Shared Services.
Advancements in these tools have helped companies move from IT centric solution to business friendly operations floor managers can run on-demand to suite the load demands. Learn-and-adopt abilities in process automations have also further helped the managers deal with the business logic rather can deal with underlying system or data simplification. Non-standard templates and content
Build knowledge in the system and let RPA work on the task. RPA and general process automation should never been considered as a short-term financial transformation tool, particularly labor cost savings.
Instead, think of transforming core processes first. Short-term mindset leads to replacing human being with technology and results will not stick for long.
Without compromising internal controls and KPIs, processes can be completely transformed, reconnected to get greater. For instance, when a new employee offer letter is accepted, process steps to tie his pay check, allocated office space, computer assets can directly come from a single process thread. Instead, companies often have separate process, manual handoffs between HR, Payroll, IT and reporting manager. When an employee gives his or her notice, last date of employment can propagate to IT for locking the computer, securing the assets, last paycheck and settlement. Here again, companies often have series of manual processes and paper trails.
RPA can help PE companies realize significant cost take-out through consolidating of business activities, and SG&A process improvements. Maintaining process benchmark across the portfolio and cross learning opportunities to reduce operating cost are desirable outcomes.
The real winners have been in regulated areas of business. In insurance, health-care, financial services rigid processes and procedures drive day-to-day business activities. A substantial portion of the workforce directly participates in data entry, scanning, reviewing completed forms, processing transactions. Automating these environments is inexpensive and often returns on investments are quite impressive.
PE companies intending to improve SG&A must consider RPA as a part of the overall transformation strategy. Work with the controllers to get monthly metrics – volume processed per month, core vendors, and invoice templates, processing rules, headcount and time to process every stage of Procure-to-Pay process. Identify cost take-out opportunities in workshop. Transforming core processes often come with surprises. Give room for capturing exceptions and deviations. Prototype revised processes with RPA tools to determine if cost take-out justifies the investment. Integrate Internal Controls and compliance requirements as a part of robotic processing. Automate in process groups (procure-to-pay, order-to-cash, hire-to-retire). As a final step agree on a continuous improvement plan to improve metrics on periodic basis (at a minimum monthly).
Process automation software and tools have been in existence in excess of decades. Non-human robotic process in transaction processing is also fairly mature. With the introduction of Artificial Intelligence embedded, companies will see monumental cost take-out opportunity.
Author is seasoned advisors to C-suite executives with their business transformation efforts.
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