Robotic Process Automation: Analyst Perspective

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1 A Blue Prism Business Partner Robotic Process Automation: Analyst Perspective Condensed From Blue Prism Product Overview, September All Rights Reserved; Blue Prism / Virtual Operations Contact Virtual Operations us.com or at conact.us@virtualoperations- us.com

2 HfS Research October 2012 ROBOTIC AUTOMATION EMERGES AS A THREAT TO TRADITIONAL LOW- COST OUTSOURCING Cheap, easy- to- develop software robots will eventually supplant many offshore FTEs Executive Summary Why outsource when you can automate? For most organizations, the answer is IT bureaucracy. Budget bottlenecks and IT s ability to convolute any process improvement with massive waterfall technology implementations, even when the need is immediate, make automation a challenge. Yet automation looms as the right solution for the majority of rules- driven processes that are being outsourced today. HfS Research has spent some time examining a new technology called robotic automation, pioneered by UK- based vendor Blue Prism, that enables non- engineers to automate certain business processes quickly and cheaply. The technology appears best suited for processes that are highly rules driven, and the requirement for which is too tactical or short- lived to justify development by IT organizations that favor service- oriented architecture (SOA) and tools like business process management (BPM) suites. Beyond breaking through the IT development bottleneck, the use of software robots to handle routine business processes has another attraction: it allows enterprises to reduce their reliance on offshore outsourcing. The economics are eye- popping: while an onshore FTE costing $80K can be replaced by an offshore FTE for $30K, a robot developed with the Blue Prism toolkit can perform the same function for $15K or less without the drawbacks of managing and training offshore labor. The Rise of Robotic Automation Business units are constantly finding new ways to improve business processes, and so generate many requests to IT for corresponding custom applications or modifications to existing applications. But such requests often hit a wall of cost and priority: IT- based software development is driven by a fairly cumbersome (albeit admittedly valuable) set of standards and tools, and focuses first on long- term projects with high strategic impact to the organization. When IT cannot address these requests, business units typically create their own manual workarounds, often with the help of desktop tools like spreadsheets and unstructured databases. These workarounds allow these units to implement the desired process modifications, but the result is not integrated into the enterprise s larger IT framework, and can be brittle, error- prone, and vulnerable in terms of security. To help lower process execution costs particularly in response to an unanticipated increase in workload business units often turn to outsourcers, hiring relatively inexpensive offshore FTEs to do the work manually. But as HfS Research readers well know, outsourcing entails its own problems, including the political unpopularity of sending jobs offshore, the hidden costs of overseeing remote operations, and the complexities of managing differences in business cultures. Blue Prism s novel idea is to give business units a tool to automate these ad hoc processes on their own, addressing their custom requirements without relying on an expensive, lengthy IT development process, or hiring Contact Virtual Operations us.com or at conact.us@virtualoperations- us.com 1

3 costly onshore workers for which they have no budget, or shipping the work offshore. It calls this concept robotic automation, and refers to the custom applications produced by its software and methodology as robots. These terms appropriately convey the notion of a technological replacement for a human worker in this case, implemented as fast, cheap software that runs as a web service, a scheduled task on a virtual machine infrastructure (including environments like cloud services), or a dynamic trigger- based process using existing BPM, workflow, or messaging systems. The economics are eyepopping: while an onshore FTE costing $80K can be replaced by an offshore FTE for $30K, a robot developed with the Blue Prism toolkit can perform the same function for $15K or less. What Robots Do Well In essence, Blue Prism has created a toolkit that enterprises can use to quickly and cheaply develop custom robots to automate business processes. It is optimized for automating business processes that are: Highly rules- driven Typically a rote, repetitive back- office process that does not require human judgment or sophisticated exception handling. Examples include data entry, account review and maintenance, creation of online access credentials (user IDs and passwords) for new employees and customers, issuing of purchase orders based on material requirements planning system outputs, and general ledger account maintenance. The economics are eye- popping: while an onshore FTE costing $80K can be replaced by an offshore FTE for $30K, a robot developed with the Blue Prism toolkit can perform the same function for $15K or less. Good examples are a project with a fast- approaching start date and/or limited duration, such as a seasonal promotional program; a back- office application modification to support a new product launch; a new business process that requires swivel- chair access to multiple existing systems; or a required response to a one- time regulatory action such as a privacy breach that can incur compliance sanctions if not met within a 90- day window. Problematic to send offshore Robotic automation can serve as a substitute for the offshore labor that the current political, business, and regulatory climate has made increasingly unpalatable. As robots can run in pretty much any location the organization desires, they can also be helpful in scenarios where regulatory restrictions make moving work offshore problematic for security and compliance reasons. Cheap Robots: A Threat to Outsourcers, and an Opportunity For buyers, robotic automation has obvious appeal. It lets them quickly and cheaply automate business processes that don t reach IT s strategic development threshold without having to send jobs offshore. Empowering business units to knock down their own tactical requirements reduces pressure on IT, letting it focus its expensive development resources on major software projects with high strategic value. Reducing the use of offshore FTEs frees up budget for more onshore hiring. HfS Research believes that these early adopters represent a fair and realistic sample of what can be achieved with robotic automation. From there, it does not take a great leap of imagination to envision this technology having profound ramifications for the outsourcing industry. In short, giving non- engineers the ability to quickly automate a rules- driven business process with a robot that Contact Virtual Operations us.com or at conact.us@virtualoperations- us.com 2

4 costs less than half of an offshore FTE is a significant threat to every outsourcing firm whose value proposition rests on low human labor costs. BPO Service Providers: Keep Your Friends Close, But Your Robots Closer For low- cost outsourcers, robotic automation represents a significant threat, giving buyers a very cheap alternative to offshore FTEs with none of the political disadvantages. Develop your own robotic automation product in a hurry and start planning for a strategic change that relies less on your ability to marshal vast number of human FTEs and more on your ability to source selectively between humans and robots. Partner with an early market entrant like Blue Prism to jump into the robotic automation fray now, avoiding the likely two- to three- year development cycle it will take you to catch up with your own product and all the associated opportunity costs. Start acting on HfS s longstanding advice to refocus your business on helping buyers achieve real business process innovation, not just lower labor costs. Look at robotic automation the way buyers do: as a tool for optimizing the use of expensive human FTEs. Recommendations For Providers Recognize that you ve had a good run of 20- plus years in the offshore labor arbitrage game with little competition, but that robotic automation is about to undercut a big chunk of your business. Choose a robotic automation strategy build, buy, or partner fast. Early movers will enjoy a great advantage both in harvesting the low- hanging fruit and establishing the advantages of incumbency that serving up a mix of human and robotic FTEs affords. Get past the idea of robots as a cataclysmic threat, and start looking at them the way that enterprise early adopters have: as a clever way to make more effective use of human FTEs. Then start thinking about the new ways you might exploit the technology to create innovative service offerings to automate processes beyond the obvious early market opportunities we ve outlined here. Recommendations For Buyers Start looking for business processes that fit the suitability requirements for robotic automation outlined above, including processes that you may have moved to offshore labor already. Consider tools like Blue Prism as a means to replacing human FTEs with robots to handle these processes. If you re not comfortable test- driving such a product, ask one of your outsourcing providers to do so on your behalf; if it is reluctant to do so, find one that isn t. Start thinking about what you will do with the onshore resources you will be able to protect or rehire once you have realized the costs savings of moving routine, rules- driving business processes from in- house or offshore FTEs to robots. Contact Virtual Operations us.com or at conact.us@virtualoperations- us.com 3

5 Gartner 2013 Cool Vendors in Business Process Services, 2013 The business process service market is open to innovation, and Gartner sees Blue Prism, Interactive Media and MyBiz as innovative emerging players that are helping to frame the future landscape. These providers can decrease overall costs for data handling business processes. Key Findings Blue Prism uses a data entry robot that can be trained to process rule- based activity in an organization's information processes, improving accuracy and efficiency. Recommendations Directors of BPO or of shared- service centers should consider Blue Prism if they want to improve rule- based data- entry- intensive processes or reduce their workforce. What You Need to Know Business process services are rapidly evolving with increasing deployment and development of technologies, such as automation and advanced analytics, enabling providers to offer new ways of delivering business process services to clients. Reducing delivery costs, improving the accuracy of first- time processing and mitigating increasing labor costs in locations such as India are drivers that have spurred these business process service providers to create new products. In this Cool Vendors report, Gartner highlights three innovative examples framing the future landscape of business process services: Blue Prism, Interactive Media and MyBiz. These providers exemplify a variety of trends impacting the current and future posture of established business process service providers. Blue Prism Why Cool: Blue Prism authors and sells automation software that can be thought of as a "virtual workforce." It can help organizations remove both manual- and rule- based data entry tasks by using "software robots." This not only reduces process costs but also improves task accuracy and efficiency. This can be particularly useful to BPO providers that execute large volumes of business process transactions, which require accurate and efficient rule- based data- entry- oriented processes. Taking the original concepts of macros and screen scraping (in which data is pulled from one application and pushed through a preprogrammed set of steps automatically, common in tools such as Excel and Web- based tools), Blue Prism has developed "robots" that can be trained to retrieve and enter rule- based data entry into any type of system. This is "cool," because a business user can create the process design without the need for a customer project to achieve this interaction and change. Tech entrepreneur Jason Kingdon, who previously built Searchspace, a class- defining artificial intelligence (AI) anti- money- laundering software company, chairs Blue Prism. Blue Prism is cool for a number of reasons: BPO providers are highly cost- focused. Blue Prism's commercial model is based on replacing a worker with an automated 24/7 solution, with pricing roughly one- third the cost of an employee. This is highly desirable in a market with tight margins and aiming for high efficiency. Contact Virtual Operations us.com or at conact.us@virtualoperations- us.com 4

6 It has delivered double- digit reductions in error rates for customer onboarding processes for several large utilities and telecommunications companies, including RWE npower, Telefónica and U.K. NHS hospital trusts, and for several BPO providers. Users without IT expertise can train the robots to work with any rule- based data entry system whether the data is using custom- made systems, off- the- shelf software or the Internet or with customer data held in Excel, Access or Word formats. (that is, rekeying) and can reduce the cost of data entry processes by 70%. The solutions are designed to work at scale and are deployed using existing data center technologies and infrastructures to form part of an organization's technology asset base. The robots are trained very quickly to automate rule- based data entry by orchestrating existing enterprise applications without the need for an IT integration project. Blue Prism's solutions use rule- based data entry capabilities that reduce the need for manual entry and "swivel chair" processes Who Should Care: End- user organizations and vendors that need to improve the quality and efficiency of rule- based back- office processes should be interested in Blue Prism: Directors of business process shared- service centers who want to standardize and improve data- entry- intensive processes and reduce staffing and costs. BPO providers that want to improve rule- based data- entry- intensive processes, as well as those that support document- centric processes and want to provide clients with better control over the use of documents and information. Contact Virtual Operations us.com or at us.com 5

7 Forrester Consulting, July, 2011 The Role Of IT In Business- Driven Process Automation Extend The Reach Of Process Automation Allow The Business To Self- Serve Executive Summary In today s rapidly evolving business climate, IT specialists are drowning in application improvement requests from their business colleagues. Every system ever developed needs tweaking in some way or another. The problem is that competition marches on, new regulations emerge, new products are needed to satisfy customers, users spot a useful extension to an existing application, or the business just figures out a better way of getting their stuff done. All of these requests go into a triage discussion where decisions are made to balance business benefit, costs associated with the change, available resources, and time frame. Forrester conducted in- depth interviews with 15 major organizations from a variety of industries, including healthcare, financial services, banking, telecommunications, and utilities. In all cases, these companies were able to deal with significantly more process automation requests than those using traditional IT or BPM approaches. They do this by allowing business users to self- serve, reusing their existing applications through desktop level integration rather than requiring the development and testing of lower- level integration components. Key Findings Forrester s study yielded three key findings: 1. Opportunities for business process automation are often missed. Given the scarcity of technology skills, business functions can struggle to lower their operating costs, often resorting to outsourced or offshore resources combined with lightweight tracking solutions based on products such as Microsoft Excel, Microsoft Access, or even pen and paper. As a result of the manual handovers, work falls through the gaps and customer outcomes are affected. Moreover, these arrangements never fully deliver the efficiencies sought. 2. Most large firms use thousands of spreadsheets and Access databases to track and coordinate work. Coordinating work across roles implies process support and the manipulation of information. Comprehensive suites of tools empower businesspeople to accurately model their processes and build electronic forms for data capture, but because they generally lack suitably accessible integration methods to link with existing systems of record, they force businesspeople to implement manual workarounds. 3. With appropriate technology, the IT organizations can facilitate business self- service. Rather than adding further integration complexity as business users attempt to adopt cloud- based solutions or continuing with the current laissez faire policy of Excel chaos, a combination of lightweight BPM technology and desktop- level application integration tooling enables businesspeople to deal with the bulk of their simple change requests. Contact Virtual Operations us.com or at conact.us@virtualoperations- us.com 6

8 KEY RECOMMENDATIONS The economics of self- service are too compelling to ignore. Enabling business functions to self- serve through the presentation layer provides the fastest and most secure means for an organization to quickly develop a new business capability. Within a governance structure set up by IT, this approach offers a new dimension to the way in which business functions and IT can work together with a clear means of supporting each other. In responding to business change requests, IT execs should: Undertake an analysis of the long tail. Many organizations simply don t know how much improvement opportunity they re missing. Traditionally, firms have focused on the big rocks in the garden while ignoring all the weeds that choke growth. Survey the organization to assess the numbers of desktop artifacts used to coordinate work. These represent the biggest source of these improvement opportunities. Assess the methods and technology required for business self- service. Seek to empower the business users to help themselves by building a culture of IT and business collaboration. IT will continue to provide governance, reliability, and availability of services while the business side concentrates on the market and their needs. First consider the presentation layer as the integration mechanism of choice. With the primary goal of enabling maximum business configurability with the minimum IT involvement, this approach will help avoid breaking existing systems. In the end, this all leads to lowering the bar on the long tail of change more change requests get handled with fewer resources. Contact Virtual Operations us.com or at conact.us@virtualoperations- us.com 7

9 Robotic automation: driving next- generation BPO? The world of outsourcing and offshoring in particular is being challenged. The days when organisations would shift large operational capacity offshore to destinations around the globe could be numbered and a new model, based on robotic technology, could be set to take its place Raconteur on The Times Robotic automation refers to a style of automation where a machine, or computer, mimics a human s action in completing a task. In office administration, clerical robotic automation refers to automation where a computer drives application software in the same way that a user does. This is different from the standard IT approach, in that the robot is not programmed, nor does it need large IT engineering to install. In fact, the robot is trained by a business user in a similar way that a new employee may be shown how to complete a task. The flexibility of this, coupled with its inherent scalability, means the days of routine process management, bread- and- butter to most offshore business process outsourcing (BPO) propositions, may be numbered. The BPO market is changing and next- generation BPO will need to go beyond simple labour arbitrage, says Richard Jones, chairman of procurement, outsourcing provider Proxima Group. Automation has traditionally been hard for outsourcers; they often face highly bespoke, as well as complex IT estates, across multiple clients and multiple technologies. In contrast, robots use and drive applications in the same way humans do, so automation not only becomes possible, but also offers flexibility, scalability and affordability. The advantage of robotic automation is that it allows companies to repatriate processes, as the economics of performing routine and rules- based tasks on machines makes location less relevant. It is particularly appealing to those with back- office tasks that cross a number of disciplines, such as banks, utility companies and telecommunications businesses, says Mr Jones, adding that BPOs, which fail to adapt to this emerging reality, risk seeing customers start to take back processes in- house at the end of contracts. Ultimately, robotic automation is aimed as being a genuine source of competitive advantage for organisations. If you combine robotic automation with your sexy new application running on Oracle or SAP, it s like having a workforce of highly disciplined and dedicated people who work 24 hours a day, says Mr. Jones. If you have that, you might start creating products or services for your business which can shift your competitive edge. You could actually change your marketplace because you can offer products that nobody else can. Contact Virtual Operations us.com or at conact.us@virtualoperations- us.com 8

10 Summary Blue Prism s Robotic Automation software enables business operations to be agile and cost effective through rapid automation of manual, rules based, back office administrative processes, reducing cost and improving accuracy by creating a "virtual workforce" to deliver dynamic and rapidly scalable workload capacity. The virtual workforce is built by the operational teams themselves using the "self- service" robotic automation technology from Blue Prism to rapidly build and deploy their own process automations through leveraging the presentation layer of existing enterprise applications. Critically, the automations are built by the business but are fully managed within an IT governed framework. Blue Prism's proven technology plays a key role in enabling organisations to rapidly respond to business change through agile back office operations. Forrester Research has recently identified the "mega trend" of "Empowered Business Technology" and Blue Prism is one of the first examples of EBT in action. Based in the UK, with offices in London and Manchester, Blue Prism was formed by a group of process automation experts in The company currently operates in the Financial Services, Energy, Telco, BPO and Healthcare sectors. About Virtual Operations Virtual Operations, a Blue Prism Business Partner, provides Robotic Automation Services to companies, BPO providers and public sector departments. With offices in the US and UK, Virtual Operations provides the resources, consulting and support for organizations ready to benefit from Blue Prism s Robotic Automation Software. Virtual Operations will help you select, implement and optimize Robotic Automation solutions to create your organization s Virtual Back Office. We enable our clients to understand how best to exploit this new technology, how it works alongside their existing systems & processes and how it dovetails with other business process transformation initiatives. Each of our Managing Partners have been working in outsourcing, shared services and off- shoring for over 20 years and are the first to understand and implement this fourth value wave Robotic Automation. Our expanded resources team includes experts in the following critical areas of robotic automation technologies, including Blue Prism Robotic Automation Software: Consulting Design Implementation Performance Optimization Training On- Going Support For more information please visit us at Contact Virtual Operations us.com or at conact.us@virtualoperations- us.com 9