Digital Transformation » Making the business case for automation

Workforce automation has hit the mainstream over the past year, as organisations look to tackle the widespread productivity issues which are threatening their future growth.

Intelligent automation (IA) is now enabling businesses to automate a far wider range of workplace processes, in a fast, effective and accurate way. And the benefits are clear: reduced costs, increased productivity, improved customer experiences, regulatory compliance, enhanced capacity and more fulfilling work for existing staff.

The challenge of building a business case

However, while easy to talk at a macro level about the benefits of IA and a productive, cost-effective and engaged workforce, it’s not always that simple to plan and implement an automation programme at the granular level. As with any new technology, it can seem a daunting prospect for those responsible for driving its planning and execution.

Questions such as where to start when you’re completely new to automation and how to understand the costs associated with deploying IA are tough to answer, especially for business leaders with little or no experience of workforce automation projects. However, it’s vitally important they are addressed to ensure success further down the line. Indeed, according to The Global Intelligent Automation Market Report published by the Shared Services Outsourcing Network and EY, it is a lack of robust business case that is undermining the broader adoption of IA.

We recently developed a white paper addressing many of the key considerations that businesses need to include when building a business case for automation, covering technological, operational, financial and HR factors.

Getting the right team together

It’s crucial to get the right people involved in building the business case for any IA initiative. That usually means senior management from within finance, operations, IT, customer service and HR. Depending on the first process(es) that you are looking to automate, it could also involve marketing, sales or another business function. The key point is that all stakeholders are brought into the discussions to ensure the right information is gathered, and that leadership from across the organisation feels part of the journey.

IA initiatives are increasingly being led by the finance director who are generally experienced and skilled in building business cases, with a strong commercial focus. On the other hand, they’re often far removed from the operational processes being considered for automation. Those stakeholders in business departments that are excited by the potential benefits of IA, often have no experience of developing business cases for operational transformation projects and can find it a daunting challenge.

The project sponsor (whether an FD, CIO or COO) needs to be comfortable building a business case, willing to take input from other departments and to spend the time to fully understand processes at a granular level.

Business case fundamentals

The concept behind an IA business case is simple: current operating costs, minus potential future operating costs of the automated system, equals savings that could be made. That’s easy enough to grasp but the question is how it should like and be represented.

Fortunately, there are some standard practices to follow. For example:

  • A business case should be formatted in a profit and loss (P&L) view so that costs are listed against the relevant month the cost is incurred. This will allow for P&L owners to easily align it to their forecasts and budgets
  • Be robust – it can be easy to miss costs that make up the current or to-be processes
  • Split costs into upfront, monthly fixed and monthly variable.

Look to build a business case that can support the inclusion of many processes. This enables an easy comparison of the before and after costs and helps to identity those processes offering the largest savings and, hence, supports prioritisation.

Understanding different current and future cost functions

Understanding costs relevant to IA up front will help to fine tune the business case and build trust.

Staff costs are typically the largest cost and it’s important to look beyond standard wage and salary costs, to factor in annual leave, sick leave and training days as well as the loaded salary, including pension and national insurance contributions, healthcare and the like.

When looking at future staff costs, it’s important to remember that not all processes will be 100% automated. Some require human effort to perform certain tasks – normally the value-added tasks require subjectivity and human intelligence.

The business case also needs to include costs for the new automation team, responsible for looking after the virtual workers, managing utilisation and service levels, and scoping and delivering new processes for automation.

Facilities costs are often a major business expense but do not change a great deal as a result of IA. If there is no plan to downsize on building space following automation, the business is unlikely to see a cut in the facilities charge. However, some companies allocate facilities cost per person – which will result in a cut if headcount reduction is planned.

IT infrastructure costs are more likely to change. Most IA (certainly the leading platforms) uses software to interact with an organisation’s existing applications so there is no need to change existing systems, processes or applications. It’s frictionless, which means there is no cost change here.

However, the IA product itself has a cost and this can have very significant implications for the business case. The very best platforms are now cloud-based, so organisations just pay a monthly charge and avoid the ’traditional’ IT infrastructure costs, such as initial and ongoing capital investment, resilience and security, and licensing. Increasingly, businesses are turning to these SaaS solutions, which can be up and running almost immediately, and are fully scalable, resilient and secure.

Picking your processes – start small to scale up

The best way to get up and running with IA is to start with the easy wins. That means selecting a small number of non-business critical processes that can easily be automated and focusing on successfully automating those. This allows all stakeholders to learn and develop their skills in a low risk environment, and it also enables the team to prove the value of IA from the outset. Once the organisation has successfully automated its first processes and shown cost savings and/or improvements in productivity, it can then look at automating more processes.

The human side of automation

It’s easy to get caught up focusing on the commercial rationale for IA, as well as the technology and the processes. However, the success of IA depends in large part on the willingness of operational staff to embrace automation and recognise the benefits it can deliver, not just to the business but to them as individuals.

The business case should present a robust plan to ensure that the introduction of automation is communicated to the wider business in the right way. Every organisation has different drivers for implementing IA but, in my experience, cutting jobs is rarely a major objective. Robotics can release employees from the more tedious aspects of day to day activity, the repetitive and mundane tasks, and enable them to focus on the value-added work.

The business case should also ensure that the right skills an understanding of automation are fostered across the business. That means ensuring people within each department have the right level of knowledge so that they can build a pipeline of processes to feed into the business case evaluation.

The start of an IA journey

IA opens the door to an incredible array of potential benefits, from hard ROI to soft improvements in customer service, quality and compliance. The key for any business in realising these benefits is to build confidence from day one, and then look to generate momentum. By creating a robust, and reliable business case for IA, organisations will set themselves up to enjoy a sustainable and successful journey into automation.