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Automation Part 1: The Robots Are Coming
Is it hyperbole about the coming automation revolution? Are robots about to take our jobs? In this first feature, we bring some much-needed sanity to the debate. Which sectors are likely to be most affected? Should these people start looking for new jobs? And from the business side, what is the reality of automation? Will it massively cut costs and increase productivity?
* This story was originally published on Silicon UK by David Howell
Businesses will accelerate their use of automation yet, are largely ignoring the impact these changes could have on their workforces. The attraction of automation is definite: A company can see mechanisms to reduce costs and improve efficiency – often the core drivers for change. However, as ADP reported, nearly 50% of workers are not being prepared for what could be profound changes to their working lives. Jeff Phipps, managing director at ADP UK, said: “Automation may seem like an issue for future generations, but our findings show that machines could replace thousands of employees in as few as five years. More robots in the workplace won’t mean all humans become obsolete, as new and maybe better jobs will be created, while other roles will change considerably,” Phipps continued. “By starting to upskill and retrain workers now, employers can ensure they and their employees are as ready as possible to work side-by-side with the machines. That’s why it is so important for companies to look to provide greater clarity on what their workplace will look like with more automation, highlighting the opportunities that will arise.” Dr Leslie Willcocks, professor of work, technology, and globalisation at the London School of Economics’ Department of Management, told Silicon UK: “I have a forthcoming article in the Journal of Information Technology June 2020 called ‘Robo-Apocalypse Cancelled? Reframing the Automation and Future of Work Debate.’ Based on our own London School of Economics’ Department of Management research and the most recent independent studies, the article finds that the ‘automation as job killer’ theme is much overstated and that the likely net job loss globally by 2030 could be as low as one per cent. The radical shift will be in skills needed as a result of job and work process restructuring to accommodate and take advantage of more technology.” A level of automation has always existed across the business landscape. Just as workers could not perform their duties without digital technologies, automation has offered assistance in areas such as CRM and HR. The difference today is automation now offers advanced applications using Machine Learning. Indeed, it’s predicted some tasks will be performed by machine in the not too distant future. Automation, though, needs to be placed into context and, the negative hyperbole it has attracted from the press also replaced with reality. Worker anxiety about their jobs isn’t misplaced but, should be mitigated with a program of education that ensures the changes that will take place, are gradual and thoroughly explained. Keeping workers in the dark is not an option if businesses want to make a seamless and efficient transition to using more automated systems. Says PwC: “In the short term, the largest impacts could be on sectors like financial services where algorithms can lead to faster and more efficient analysis and assessments. In the longer term, however, the development of autonomous driverless vehicles could mean that the largest impacts are seen in the transport sector. “In contrast, while no sector will be unaffected by these technologies, areas like health may be relatively less affected due to a greater reliance on social skills and the human touch. AI and robots will have an important role in health care in future, but more working alongside human doctors and nurses than replacing them. The same would be true in the education sector based on our analysis.” Partner or replacement How businesses and their workers view, automation can be very different. According to research from Hays, nearly 40% of respondents state they feel automation will bring a higher ‘human value’ to their businesses. Further, more than four in five (86%) of respondents are embracing automation in the workplace, and almost all (93%) believe that it is changing their working lives for the better. Nearly as many believe the same for their everyday lives (92%). Simon Winfield, Managing Director of Hays UK & Ireland, said: “Our findings show that professionals are more enthusiastic about using digital technology at work than in their personal lives. They are also of the opinion that automation within the workplace should be embraced – it certainly isn’t a case that workers are worried about robots taking over their jobs. “Encouragingly, workers believe that automation allows them to contribute more value to an organisation and agree with their employers that successful implementation requires a positive attitude and openness to change. While employers recognise the importance of having an open culture where people can adapt to change, adequate training and better clarity on the benefits of automation will ensure employees stay optimistic about increasing automation in the workplace.” Using automation to free workers from repetitive tasks that can make up a high percentage of their daily routine, is a core driver behind the adoption of more automated systems. HR and customer services are making strides to enhance the skills of their workforces in these areas. The use of bots and automating some aspects of the onboarding process for new staff members are rapidly evolving. Speaking to Silicon UK, Brendan Dykes, Senior Director Solution and Product Marketing at Genesys, explained: “A common mistake businesses often make is to call automated technology a bot or a robot. This typically causes confusion and unnecessary anxiety among employees. When these bots are not personified employees can feel that the technology is going to steal their job. However, by personifying the bots and showing how they automate trivial and mundane tasks, staff will gain a better appreciation for the technology and an understanding of how it can assist them daily.” Dykes concluded: “Businesses that want to deploy automation should focus on simple tasks first and start building from there. Rote tasks are ideal for automation as often based off structured data and have defined boundaries. For tasks that require human judgement, businesses should seek to use augmented approach where automation technologies work seamlessly with human employees to deliver the best results.” “Computers don’t get tired, need a break, or take a holiday. AI will deliver specific tasks at a fraction of the cost of a human worker,” said with Greg Orme, who is a lecturer and programme director at London Business School. “Of course, AI will cut costs in customer service, marketing, sales, supply chain management, HR, finance and risk management in all industries. However, it will also create opportunities for products and services humans could never deliver. AI will soon fabricate targeted drugs tailored to individual people. AI-enabled bots are being tested to clear hazardous nuclear waste dumps. Humans simply can’t deliver these services. AI can.” Automation matters All businesses will continue to embrace new technology. Much of this will be to automate some of their systems and processes. The key is to implement these changes alongside the existing workforce. In their report, Capita says: “Despite many people already operating alongside automated processes in their roles, there are still strong preconceptions about automation, often driven by negative public debate and media stories about the potential future impact of AI and automation. The prevalence of these ‘automation myths’ and the idea that ‘robots are stealing our jobs’ has led to defensiveness over current roles and exacerbated fears around the threat of future job losses. With the emerging reality that rather than replacing jobs, automation is instead both changing many existing parts and creating new, different positions, there is a clear need to re-balance this conversation and bust many ‘automation myths.’” Speaking to Silicon UK, Terence Tse, Associate Professor of Finance, and leader of the Master in Digital Transformation Management and Leadership programme, ESCP Business School also said: “One of the biggest challenges in deploying automation is system integration.” Tse continued: “Take machine learning as an example. There is absolutely no shortage of vendors in the market that can build and offer the most sophisticated AI models for companies. Yet, many of these buyers got as far as the proof of concept (POC) stage and the magic stops there. Why? Because AI vendors who can supply the models are rarely equipped with the right skills and experience to embed the models into the existing production environment of the clients. AI/data scientists are often unable to do system development work. This is the reason why the so-called “ML ops” will become more and more relevant in the years to come as more and more POC are conducted by ever more companies.” The age of automation is here. CTOs tasked with using technology to reduce costs and improve income, as digitisation continues, will increasingly turn to automated systems to deliver their needs. The wholesale replacement of workers by robot counterparts is overstated. Yes, some specific sectors will see substantial reductions in human input, but this will free these people to enhance their businesses in other ways. Automation isn’t a replacement technology, but an enhancing cooperative space all companies can benefit from.
Silicon in Focus
Chris Huff, Chief Strategy Officer at Intelligent Automation company, Kofax.
Is it hyperbole about the coming automation revolution? Are robots about to take our jobs?
Robotic Process Automation (RPA) robots are entering the workforce at a rapid pace, but in most instances, they’re not taking over entire jobs. Instead, RPA is automating individual tasks, and since a job consists of many tasks, most automation is simply augmenting people. However, arbitrage enough tasks and you’ll reduce labour costs by consolidating jobs.
The World Economic Forum (WEF) released a study in 2019, stating automation will impact a total of 133 million jobs globally by 2022. Seventy-five million jobs will be lost, but the net is that 58 million new jobs will emerge.
Couple this statistic with the fact that RPA is the fastest growing software solution within the enterprise software segment, growing at 60% year-over-year, and it’s easy to see that automation is only going to continue to be embraced. RPA’s rise can be attributed to the fact that it offers benefits to business and IT leaders while also empowering employees.
Business leaders benefit in the form of capacity that can be used to create new revenue streams, optimise productivity among existing business areas and improve compliance and regulatory gaps through automated controls.
IT leaders benefit by using RPA to extend the life of existing legacy systems that may not have the budget to be replaced. End-users and employees are embracing RPA due to the way RPA augments human work by performing the lower-level rules-based tasks while freeing up the human to focus on higher-value work.
Which sectors are likely to be most affected by automation?
All sectors have a degree of rules-based repetitive work that can be handled by RPA, so every sector is susceptible to the impact of automation. The primary driver of adoption is the degree of competition and the willingness to adopt automation.
For example, the legal industry largely generates revenue by billing based on hours worked on a client case. If the legal vertical were to implement RPA wide scale, they’d potentially bill fewer hours, which works against their profit motive.
Financial Services, Insurance and Banking (FSIB), on the other hand, is an extremely competitive environment where there are a high number of rules-based transactions that need to move at lightning speed. They also tend to have slimmer margins due to their competitive nature and higher labour costs. For this reason, FSIB is the faster adopter among the verticals.
From a business perspective, how should CIO/CTOs approach automation across their enterprises?
CIOs and CTOs are savvy enough to know that proven solution that scale is not all that common, so the first thing they typically look for is companies that have existing customers at scale. Second, they should look for a company that has a platform and ecosystem of technology alliances that extends automation with Artificial Intelligence and Analytics.
Extending automation with AI and analytics enables the automation program to grow into higher complex use-cases to drive greater value. And, with advances in technology occurring at an accelerated pace, a ‘just good enough’ vendor today can very quickly be a procurement regret within a few years.
Third, CIO/CTOs should collaboratively work with their line-of-business colleagues to scale the automation program. Most of the use cases are going to be identified and designed by business leaders who know their business. Lastly, the only value in automation is if it’s sustainable, so creating a sustainment model such as a Centre of Excellence that has executive support is critical for long-term viability.
Can automation really massively cut costs and increase productivity?
Kofax has over 25,000 customers in all regions of the world. Our customers have quantifiable business cases that they routinely share as we co-present at conferences throughout the year. The improvements are impressive and come in the form of cost-cutting and revenue lift.
On the cost-cutting side, it’s common to see 40 – 90% cost take-out, increased compliance of up to 99.9% and improved processing times of 30 – 90%. On the revenue-lift side, it’s common to see capacity increases of 4-6 times, which can be used to perform work for an otherwise unfunded program, establish a new business process outsourcing (BPO) business and account for surge activity to avoid the need to hire a seasonal workforce.
Is a more useful approach to automation to see it as supporting technologies and not replacement technologies?
Automation comes in the form of rules-based automation (AKA RPA), and AI-powered automation such as data ingest and transformation algorithms. At Kofax, our customers benefit from an Intelligent Automation platform that possesses RPA and AI-powered technologies that work seamlessly together to automate complex use-cases while accounting for ‘human in the loop’ operations.
This configuration leverages automation as a ‘connective tissue’ application that pulls data from disparate systems to potentially replace ETL tools, which also works alongside to support existing technologies – such as ERP, CRM and other core applications that the organisation may need to perform its work and meet its mission.
The use of AI and Machine Learning are the first technologies to offer automation, what other automation technologies do you think will impact businesses and their workforces?
Natural Language Processing (NLP) has made a big push in the last few years. NLP is helping mine all the social media and unstructured data that otherwise would have required humans to sift through, determine sentiment and draw insights. Another technology impacting businesses is conversational AI.
Think of this as really smart chatbots that interact with customers and employees to help them with an inquiry or need. They have semantic learning and deep neural networks, so each interaction draws on lessons learned from past interactions, which enables it to become better over time. This technology is freeing up call centre agents to deal with escalation issues instead of answering first-line calls.
How are businesses fitting automation into their strategic development?
Most businesses have an Enterprise Digital Transformation strategy to remain relevant and competitive. Automation’s typically one of the pillars of their digital transformation strategy.
Funding is typically pulled from other budgeted operations, such as Business Process Outsourcing (BPO), IT Modernisation and Transformation.
Due to some ‘quick wins’ that can be achieved with automation, this program typically becomes self-funded within a year or two. Some of our global customers have established BPO businesses using automation to shift the automation program from being viewed as a cost centre to a revenue-generation business.
To do this, the enterprise will typically establish a centralised Centre of Excellence (CoE). Most CoEs reside on the business side in a line of business, such as the CFO or an operations office, such as a shared service centre.
Approximately 25% of the time, it will reside within the CIOs office, but in most instances, the CIO simply provides a liaison to the business-led automation CoE. This setup ensures that the CIO’s focused on higher-value IT concerns such as network, security and infrastructure and isn’t responsible for funding and performing day-to-day operations around performance measurement, training, organisational change management, etc.