Investments in Robotic Process Automation Deliver ROI - But Barriers Remain
[Drawn from The Strategic Impact of RPA Solutions on Procurement Workflows]
Various sectors of business have discovered new applications for robotic process automation (RPA) in recent years.
From a theoretical standpoint, RPA is a type of business automation that is based on artificial intelligence and takes the form of a digital worker. It allows businesses to configure their software to interact with machines the same way a human might.
The Procurement department has also been adopting RPA and has seen significant benefits. However, many Procurement RPA solutions are still relatively young in their deployment, and some organizations have yet to realize a full spectrum of applications for the solution.
Here, we'll explore the current state of RPA in the Procurement function and what lies just over the horizon for this capability.
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Applications for RPA in Procurement
In practice, RPA looks like the digital automation that many professionals have grown accustomed to. It depends on computing systems to work, so it isn't often apparent that an RPA process is active unless you understand its inner mechanics.
For example, a Procurement team's software system might receive an invoice from a supplier. With RPA in place, that invoice might be opened electronically and printed. This is a convenient and completely automated process, but not altogether groundbreaking.
However, the RPA solution might also create a work item in the department's legacy software system, scan the invoice to ensure the supplier information is correct, match the invoice with a purchase order, and even message the supplier if there is an error.
In this way, RPA can span software systems and platforms, completing many of the tasks that typically required a human. Instead of a human transferring the invoice from the invoicing system to the legacy software solution manually, the RPA does this automatically.
Potentially, there are almost limitless applications for RPA in Procurement. And most organizations are only beginning to scratch the surface.
RPA Delivers a Significant ROI for Adopters
There is ample evidence that RPA delivers results for the business. Because of this, the adoption of RPA solutions has increased significantly.
According to a recent WBR Insights report entitled The Strategic Impact of RPA Solutions on Procurement Workflows, Procurement organizations have about 55% of their processes automated on average, including 70% of organizations that are automating 50% or more of their processes.
Furthermore, almost three-fourths of the respondents to the study said they have seen ROI from the investments their organizations made into RPA. It has enabled them to reallocate the time their staff would normally spend completing tasks, Instead, they can prioritize strategic planning and other business-critical assignments, producing more value per work hour for the organization.
Still, there is room for improvement. The study also revealed that more than one-third of the respondents had not been able to free up time for strategic planning thanks to RPA. There are also significant barriers to adoption and investment into RPA, especially after the COVID-19 pandemic caused many organizations to resort to cost-cutting and risk containment.
For many organizations, RPA is a foundational deployment of artificial intelligence and machine learning, making it a crucial stepping-stone to fully leveraging these types of technologies. Adoption is often the first step towards AI-enhanced insights and automated decision-making, so pursing it is crucial.
RPA Adoption Can Face Reluctance from the C-Suite
The WBR Insights study also found that the most significant challenge facing Procurement's ability to adopt RPA was a reluctance to invest in the rapidly developing technology, particularly from the C-suite. This wouldn't be the first time Procurement has faced this hurdle. But securing these investments may be more challenging due to the transformative nature of RPA.
"CEOs face the difficult challenge of knowing how to set the right expectations at board level in terms of targets for savings for the year; a significant RPA programme can affect the share price of a company," said Danilo McGarry, Global Head of Automation and AI at Alter Domus, in an article in Raconteur. "They also have to make aggressive enough decisions in terms of providing big enough budgets for RPA programmes while also being cautious that it is a relatively new type of programme; getting the balance of risk versus reward is crucial."
Other leaders in the organization may struggle with other aspects of RPA. For example, CFOs may expect proof of concept before agreeing to an investment in RPA, and they may want to see ROI immediately. Meanwhile, even CTOs may resist adoption if they are used to operating a series of legacy systems or if they believe implementing RPA won't be worth the difficulty and cost.
Incorporate Leadership into the Planning Stage of RPA
Rather than attempting to convince each section of business leadership separately that RPA is a worthwhile investment, the best strategy may be to incorporate them all into the planning stages of implementation.
A little evangelism can't hurt either, especially when RPA is presented as an ideal solution to a problem.
"Starting with the problem - instead of the solution - prevents the need to convince your audience to believe what you're speaking about. They will likely have encountered these issues throughout their workdays," says Chris Huff, Chief Strategy Officer at Kofax, in an article published at the Enterprisers Project. "Beginning with the problem gets your audience saying 'yes, you understand me.' At this point, you can baby-step into how RPA has been used in similar situations to address exactly these issues, but focus on the outcomes and impact, not on RPA [itself]."
Some Procurement departments may be making baby steps towards a mature level of RPA. But for those organizations that prevail, they'll be well-situated to harness the power of AI for other applications and improve their ROI further still.