Rise of the machine: Robotics and the finance function

“THE Robots Are Coming” claims a report by the Association of Chartered Certified Accountants (ACCA), and this prospect is being driven by finance leaders’ obsession with the transformation levers such as people, process and technology.

In essence, these robots aren’t C3P0 or R2D2 from Star Wars, and you aren’t going to see any droids sitting at someone’s desk in the near future. The rise of robots is driven by machine learning in order to automate repetitive and mundane finance and accounting processes such as accounts payable, data entry, order processing, e-invoicing, cost accounting and purchase orders.

The very nature of robotic process automation raises questions about whether the robots are also coming for your job in finance and accounting. It is clear that some jobs may be lost. Deloitte’s London Futures Agiletown: The Relentless March of Technology and London’s Response report says that nearly one in three jobs in the capital is at risk of being made redundant by technology in the next ten to 20 years.
“Lower-paid jobs are most at risk, with jobs paying £30,000 or less being eight times more susceptible to replacement by technology [than jobs] that pay £100,000 or more,” claims the report’s summary.

No ‘job-ocalypse’

Conversely, the headline of Tim Harford’s article for the Financial Times on 19 August 2015, ‘The Economic Myth of Robotics and the Robot Job-ocalypse’, suggests that robotic process automation may not actually lead to job losses. “In an age peppered with economic disappointments, the worst has been the stubborn failure of robots to take our jobs … it has been a tough decade, economically speaking, and it is easy to blame robots for woes that should have been laid at the doors of others, such as bankers, austerity enthusiasts and eurozone politicians,” he writes.

Harford nevertheless cites robotics expert Gill Pratt, who claimed in the Journal of Economic Perspectives that people’s jobs may be lost to robots in the future. Yet they have done little to cause mass unemployment in the recent past. David Wright, director of shared services and GBS robotics at Deloitte, concurs that jobs will inevitably be lost: “I estimate that a third of current transactional roles in shared service centres are at risk of automation.” However, he adds that this doesn’t mean that they are likely to cut this proportion of roles. What this means is that many of those losing their jobs to robots will be moved up the value chain to fulfil more skilled roles.

“As the rules-based routine roles get automated, shared service organisations will be able to offer additional value-added services to businesses, and some of these services will be within the process domains,” Wright explains. In other words there will be a move from transactional finance services to the delivery of higher-value finance services such as budgeting and planning cycles. These will require more “human” skills and knowledge in order to analyse data capture in a shared service operation in order to, for example, provide insight to the business.

Build capability

“These higher-value services will require more skilled and experienced staff, which will provide a career path for those working in the more mature shared service organisations, and so shared service centre leaders should also be proactively looking to build capability in these areas through training and people development activities,” he explains. Interestingly, he claims that most of the transactional roles are based offshore and that robotics could stop other jobs from moving as well. To prevent such a move, he thinks that shared services organisations must invest their staff in other areas.

Jeff Wallack, global director of real estate service and vice-president of client services at IT vendor Xchanging, agrees that one of the benefits of robotic process automation is that people can move on to better jobs, better pay and more interesting roles. He believes that only 3-5% of jobs are at risk at present, but he says that – by the end of 2016 – about 20% of jobs will be affected due to a predicted growth in robotic process automation software sales. Most of the staff are retained in another function, but that could change because some organisations are having to cope with a range of financial challenges. They are therefore acting more aggressively and making their staff redundant.

Increase accuracy

Wallack points out that, from a finance and accounting operational perspective, robots tend to offer 100% accuracy, which can’t always be achieved by humans. Robots aren’t likely to leave the company either, and they won’t go absent.
In contrast, people are likely to be less accurate, move on to find employment elsewhere, and go off sick. But even with robots exceptions can occur, and so humans are still needed to ensure that accuracy is maintained. In essence, organisations should invest both in robotic process automation and in their skilled, knowledgeable, experienced and talented employees.

“We have to train the robot in what to do, but many of the processes aren’t perfect and so you still need a human element to look at the exceptions,” he says before adding that there is typically one robot per software licence to three to four full-time employees.

His company has its own shared service centre in London where a combination of people and automation are involved in the processing. Based on this experience he believes that the technology will keep “improving over time to do more and more, and so if anyone wants to transform and streamline their processes, they should consider robotic process automation”. Organisations nevertheless need to determine what they need to automate.

Cloud automation

Jamie Lyon, head of corporate sector at ACCA, says that automation has so far been a shared services success story. Cloud computing is playing its role too. “I think that cloud computing has gained much more interest from finance directors as they continue to familiarise themselves with what is in the marketplace,” he explains, adding that shared service centres have focused on automation for some time now. So CFOs’ interest in cloud technologies should allow robotics to come into play because shared service centres are always trying to improve automation.

“At the moment we are seeing that 36% of shared service organisations will use cloud computing over the next 12 months, based on a sample of 180 shared service leaders from around the world from our Deloitte Shared Service Survey 2015,” says senior manager of finance insight at Deloitte, Richard Horton.

He adds that 13% of them are going to increase automation to implement robotic process automation over the next 12 months. More starkly, however, he warns that shared services leaders who don’t consider robotics process automation over the next year will be left behind.

Adoption challenges

At the moment, many shared service centres aren’t clued up about robotics process automation. This is the main challenge preventing the technology’s widespread adoption. Lyon explains why: “People are unsure of the returns available from robotics process automation; they aren’t clear about the hard benefits of it. They are probably sceptical too because many software vendors either have the wrong value proposition or they don’t fully understand its application in the finance function.”

There is also the possibility that CFOs don’t see robotics process automation as a priority and they might also believe that it isn’t worth prioritising in spite of its cost benefits.

Wright also believes that the low penetration of robotics is due to “the historic dominance of enterprise resource planning (ERP), the success and track record of labour arbitrage-based off-shoring and outsourcing, the evolution of some of the tools, and the lack of awareness and education about robotic process automation”.

He adds that it is nevertheless clear that the tools now have “the resilience, maturity and track record to demonstrate their applicability in finance and that the robotic marketing message is broadcasting loud and clear to those working in the finance function”.

Can a CFO ever trust a robot?

The challenge therefore asks this question: Can a CFO ever trust a robot? “I think – with some warming up and understanding – they will, because it’s initially a security risk concern,” says Wallack. Looking at it from this perspective, chief financial officers needn’t worry because the robots have a user name and password just like their human counterparts. He also explains that the robots can’t move the data out of the system because it resides within that system.

He concludes: “When CFOs understand and see that robotics process automation is more secure and cheaper, trust will develop over time.” So yes, the robots are coming, but they seem to represent more of an opportunity than a threat to finance shared service centres. ?