Companies across industries are turning to semi-autonomous computers (better known as bots) to improve operational efficiency, reduce costs and increase margins. In this first installment of an ongoing series, we examine the overall promise of automation before exploring how it’s impacting the banking, insurance and healthcare industries. (Part 1 of a four-part series)
Quality, speed or price. Conventional wisdom suggests that sustainable businesses can only excel in two areas at the expense of the third. For example, if your product or service is high in quality and fast, it must also be high-priced. Or if it’s fast and affordable, it must also be low in quality.
This formula became especially fitting post the Industrial Revolution, throughout the 1800s. Back then, words such as “innovation,” “machines,” “factories” and “processes” were euphemisms for greater efficiency. The idea (and even some of the same words) has lived on ever since.
The Allure of Bots
Today, businesses are increasingly turning from hardware that automates menial and manual tasks to semi-autonomous software, or “bots,” that more quickly and accurately handle menial activities that augment and extend human capabilities. The allure of these new machines: they are more easily trained than humans; they aren’t easily bored with rote and routine tasks; they rarely call in sick (though they do require upkeep); and, importantly, they operate at a fraction of the cost of their human counterparts.
While cost containment is one important reason that banks, brokerage houses, insurers and healthcare payers are deploying bots, process automation is more about driving the best value, productivity and user (i.e., employee, customer or partner) experience than it is a race to the bottom. It’s a balance of quality improvement and efficiency as much as it is about cost savings.
But like the cotton gin and factories of yesteryear, the question isn’t “Should my organization adopt automation?” After all, the type of automation shouldn’t be a primary concern. The first question becomes, “Where and what can be automated?” and the second, “How much can we out task to a bot?”
To address this point, McKinsey & Company research found that upwards of 30% of all occupational tasks today could be automated with machines. Obviously, there will be casualties. Change and uncertainty will forever be a cause for human concern, especially for those directly affected by the change. But also like the early days of factory automation, the economic tide of the last two hundred years has benefited significantly more individuals than it has hurt.
That said, bots are emerging throughout the large back offices and call centers of banks, brokers, insurers and healthcare payers, taking on repetitive, low-judgement, high-error prone or compliance-needy tasks.
Reducing Processing Time and Increasing ROI
For example, one of our banking clients recently adopted an intelligent automation solution to review more than 40,000 statements and 200,000 pages of information to reduce manual (and monotonous) efforts by almost 95%. Another in the manufacturing industry implemented optical recognition technology to cut its processing time in half while maintaining 98% accuracy. Similar gains of 30% to 200% return on investment (ROI) have been achieved elsewhere, according to a recent study by Cognizant’s Global Technology Office.
Whereas cost savings were previously achieved by assembly lines, cheaper labor or employee-empowering software, today’s gains are coming from intelligent machines and algorithms that are capable of applying reams of big data regardless of format and making informed decisions on their own. And it’s not necessarily a zero sum or either-or game.
Early winners are finding ways to blend human and bot workers, complementing each other’s strengths and weaknesses. In other words, business leaders don’t care how a task gets completed (in this case either with bots or humans); they just want it done faster, with fewer errors and for less. There is no distinction.
As for the human cost of increased hiring of “bots,” most research suggests that workers will benefit overall from process automation. After all, much of the displaced work is low-skill, rote and largely unsatisfying. Many new human jobs will be created to maintain and “manage” new bot workers. And the rise of process automation will create new jobs.
As McKinsey reports, thousands of bots need care and attention — in the form of maintenance, upgrades and cybersecurity protocols. Installing all of those bots will undoubtedly create an additional layer of architecture, which requires more human governance and oversight by the IT organization.
Economic implications aside, intelligent process automation is really just the latest and greatest mechanism that companies can use to achieve continuous innovation. All the technology in the world isn't going to make a difference if it's underwritten by messy or complicated processes. Bot-enabled machine-powered process automation forces organizations to re-wire and redesign their outdated operations.