A case for strategic automation
By Lance Hattendorf
Harpyja Business Change Executive
Several years ago, I found myself working as a programme manager leading a team of developers building software using robotic process automation (RPA) on artificial intelligence (AI) as a foundation. This was my first time working with either of these technologies and took for granted the team’s grasp on automation. We were quite laissez faire with our use of RPA and most of our time was spent incorporating the solutions from our AI lab to solve our clients’ problems.
As a part of my work it was imperative that our clients had an automation strategy and that our solutions were aligned with that strategy. It was then that I understood how few companies have automaton strategies, even as they are in the midst of digital transformations. I have since realised every organisation needs to have an Enterprise Automation Strategy, whether they plan on starting an automation journey or not. This series is intended as a starting point for an Enterprise Strategy. In this post we will look at why every organisation should consider automation as a part of their digital strategy. The next post will focus on a proposed Enterprise Strategy outline, then we’ll look at the strategy elements in more detail.
Before I get too far ahead, though, let’s understand that technology, including automation, should not be implemented for the sake of it. When we look at business processes, automation must be considered to solve specific problems and needs to be considered with multiple possible solutions (scalability). Many times, for single changes to basic processes, what a user wants can be done via several different methods, automation may not necessarily be the best choice. Like any other transformation change programme, a problem statement must be defined and articulated.
Why should your Enterprise consider an Enterprise Automation Strategy? In answer, Boston Consulting Group (BCG) notes a global business trend in that the probability that the market share leader will also be the profitability leader has shrunk from 25% in 1960 to just 7% in 2019. Think about that for a moment…this indicates a fundamental change in strategic advantage: Positional advantage is no longer sustainable.
BCG notes that the reason for this shift is due to global markets being more unpredictable and malleable caused by the breaking up of the historic vertically integrated supply chain (whereby an enterprise sought to own and control their supply chain from end to end), to a “stacking” of disparate providers to make up the entire supply chain.
Shifting to this new archetype has been driven by customer demand by allowing specialist firms, organisations that have a narrow focus on a specific function, to take over specific layers of the supply chain stack. With this replacement of supply chain layers comes opportunity for businesses to outsource elements of their supply chain to specialists who can do it better and/or cheaper, and it offers an opportunity for specialist vendors to serve multiple clients (often competitors) and create new revenue streams. This shift has been exponentially exacerbated by digital transformation initiatives, as evidenced by the growth of technological advances, that far outpaces business capabilities to keep up. This gap is known as the technology value gap, as coined by Omar Abbosh, Larry Downes and Paul Nunes in their great book, Pivot To The Future (2019). Whether by you or a competitor, the value caused by the technology value gap will be realised.
Going after the value in the technology value gap is a great case for making automation a part of your organisation’s current digital transformation programme or even a dedicated automation programme. It should be acknowledged, however, that the introduction of automation will happen with or without a dedicated programme. It will naturally evolve within integration layers as applications, with inbuilt workflows, take hold as a part of enterprise architecture. Most cloud-based enterprise applications are now being developed with autonomous process functionality or with automation in-scope for specific modules.
Now is the time to dig out your SWOT because we know that to be of value, technology must have the ability to either remediate internal weaknesses or meet external opportunities, or both. When considering an organisation’s weaknesses or opportunities, automation should essentially focus on one of two critical areas, enhancing the customer experience or increasing operational excellence. What digital automation should not be is strictly a cost saving exercise; many organisations are willing to trade capex for a return of opex, however, for the sake of organisational culture, your digital transformation and automation strategy must be benefits based.
With so many transformative technologies on the market, it can be difficult to identify and understand the value they bring, and, because there is no single practical approach, digital automation is no different. As we focus in on greater detail of the value of an automation strategy, we can ensure our strategy is benefits based by understanding the output of the re-engineered processes and aligning those with our original problem statement. For digital automation, the outputs will be one or more of the following areas: more working hours back to the business, scaled capabilities, increased speed, higher quality, and new technological capabilities (reducing the technology value gap).
In summary, automation can arrive by being embedded in applications or through dedicated change programmes. Whether you are thinking automaton now, or if it not the right time for automation, your organisation needs to be able to articulate the current automation strategy. To find the value automation can bring, first analyse at the Enterprise SWOT quadrants of weaknesses and opportunities for the elements having to do with enhancing the customer experience or increasing operational excellence.
Within the customer experience and operational excellence categories, look for the elements having to do with: more working hours back to the business, scaled capabilities, increased speed, higher quality, and new technological capabilities (reducing the technology value gap) as targets for automation.
So we’ve started on our automation transformation journey, considered why we may need an Enterprise Automation Strategy, gone through the different layers of value to define the specific benefits to align to the problem statement. In the next post I’ll show a proposed outline for the Enterprise Automation Strategy whether developing as a part of a dedicated change programme or incorporating with at digital transformation.