As companies introduce robotics and automation into their operations, improvements to existing processes can easily take a back seat. But these enhancements are vital – especially when automation looms.
Once a notion that belonged largely in manufacturing and production facilities, automation is increasingly a buzzword within the service industry. New generation software ‘bots’ and algorithms are now able to manipulate complex software applications based on pre-defined rules. This fast expanding ability is opening new frontiers of process improvement to both enhance customer service and reduce operating costs.
According to research by McKinsey & Company, up to 45% of the activities completed by individuals can be automated to a degree. This insight spans several industries and occupations and, somewhat surprisingly, also applies to complex management positions. In our experience, professional and financial services are prime candidates for pursuing automation.
Within this new context, automation is often considered to be superior to traditional process improvements. But the two concepts are not mutually exclusive and should, ideally, be viewed as complementary objectives.
This is an important idea for decision makers to keep in mind. Too often, the pursuit of automation sees a company ceasing to drive process improvements, with costly results.
Automating a poor process magnifies the mistakes
A straight-forward process defined by clear, repeatable actions is the best candidate for automation. However, it cannot be a panacea for all inefficiencies within an existing process. Quite the opposite, in fact. When existing process inefficiencies are automated, the short-term results can be promising, but hidden issues could derail this success over the medium and long term.
To quote Bill Gates:
“The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”
Automating a process is most effective when strong, clear business rules govern the activity. Conversely, processes with high variability and frequent exceptions require the type of human intervention or interpretation that can render automation ineffective and expensive. In other words, the fewer straight paths there are in a process, the less likely it is to be a good candidate for automation.
“But our tech can do anything!”
Software vendors are quick to point out the flexibility of their solutions in handling complicated processes and adapting to different scenarios. In many instances, this capability is remarkable and provides great value. But a business doesn’t necessarily benefit when it stretches automation software to its limits.
Instead of expecting benefits in all automated circumstances, the business should seek to ensure its essential processes are as clear and efficient as possible before broaching automation.
Process improvements deliver their own clear benefits and can enhance overall savings beyond the scope of automation alone. In addition, a streamlined and optimized process lowers implementation costs when the time for automation comes. A carefully constructed process that is standardized and well documented is far easier and cheaper to automate than the messy, convoluted and undocumented processes found in many businesses. Dealing with poorly constructed processes requires complex algorithms programmed into the ‘bot’, which is then likely to consume important resources – such as server space and processing power – as it rises to the challenge.
Finally, there’s the ongoing – and strategically central – issue of maintenance costs (aka service revenue), which vendors love, for obvious reasons. From the organisation’s perspective, however, maintenance is not only expensive, it can also easily disrupt day-to-day operations and negatively impact service levels. As any computer user instinctively understands, upgrading an existing system can create unexpected issues that require further maintenance and / or reprogramming. This is doubly true when the existing system is flawed in key areas.
Simply put, the more inefficient the process is to begin with, the more likely automated systems are to “break”, demanding further work and expense.
Decision makers should view process improvements and automation as mutually reinforcing – not mutually exclusive – efforts.
Central to this approach is the understanding that there are significant benefits in targeting process improvements in the short and medium term. Such improvements deliver tangible benefits up to the time of automation, and create a crucial foundation. They ease implementation and make the applied automation tools more robust, allowing the business to secure steady, sustainable value from future enhancements.
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Adam W. Silver is the Managing Director of the Performance Acceleration practice at Farber. The Performance Acceleration practice helps executives and boards overcome operational and strategic challenges to uncover potential and unleash performance. Adam can be reached at 416.496.3734 and firstname.lastname@example.org.