Robotic Process Automation Brings the Future to Your Workplace 1
Executive summary Robotic Process Automation (RPA), a style of automation where a computer or virtual worker mimics the execution of human users repetitive activities without needing intervention or assistance, is not a new concept, but its potential for disruption across a vast range of sectors is immense. DXC Technology commissioned independent research firm Telsyte to examine the state of RPA in the Australian and New Zealand (ANZ) marketplace. As part of that research, Telsyte interviewed more than 300 ICT decision-makers and the findings are enlightening. IT spending, for example, has shifted away from operations in recent years, and 57 per cent of IT budgets are now spent on transformation and innovation. This means businesses are realising the need to make big changes to the way they do things to compete in the digital era. These changes include forging connections and interactions across IT ecosystems to streamline their business processes so they exchange data quickly and accurately across their internal and external systems. Instead of implementing completely new and highly costly born digital systems to achieve this outcome, however, many organisations are looking seriously at RPA solutions for the first time to at least bridge the gap between their digital and legacy IT systems initially. The majority of organisations surveyed are in the very early stages of RPA adoption, yet more than 40 per cent of those with 500 or more employees already have defined RPA strategies in place and 38 per cent have RPA programs up and running, ranging from pilots to full production. RPA uses bots to capture and interpret existing applications, processes and systems, and to execute business processes. Typically, organisations today have people manually completing these highly repetitive, high-volume tasks. Once the bots are in place, they also lay the foundation for connection to newer systems, providing the ability to integrate next-generation technologies for end-to-end intelligent automation. As one way of illustrating the technology s potential, Telsyte estimates the ANZ RPA market will grow at a compound annual growth rate (CAGR) of 45 per cent from its current base, reaching $870 million by 2020. Telsyte also estimates that 75 per cent of that figure will be spent on RPA services. Some of the key findings from the research include: Nearly 40 per cent of larger organisations (with more than 500 employees) are already running RPA programs. The clear majority of early adopters are using RPA to reduce their overall IT systems spending, deriving the greatest returns in Manufacturing (39 per cent), IT Operations (35 per cent), Operations (33 per cent), and Fulfilment and Distribution (32 per cent). 2
For smaller organisations (fewer than 500 employees), RPA solutions are more cost-effective than ever and organisations are likely to experience the profound impact of RPA across their IT (now 59 per cent), Customer Support and Service (44 percent), Finance and Procurement (36 per cent), and HR (33 per cent) divisions. Nearly half of all organisations not currently using RPA expect to use the technology to optimise business processes and save on operational expenditure. Managed services may be the go-to procurement model of the moment, but a third of early RPA adopters are using DIY solutions, the research found. Given that building bots doesn t require deep software development skills, it is relatively easy for organisations to start their pilots themselves. However, if you re building a fully operational virtual workforce with bots operating many business processes across multiple internal and external systems, your IT infrastructure needs to be enterprise-grade and highly secure. To this end, DXC has been working with early adopters to address issues they are experiencing around: 1. Enterprise Architecture and Security 2. Operating Model & Governance 3. Demand Management DXC expects RPA specialists and managed services providers to be in far greater demand as adoption and implementation rates mature. Our recommendations are derived from a combination of analysis of the Telsyte findings, our own client engagements, and experience from our internal RPA program. Hence, our advice to clients is to: Start with small RPA pilot programs on easy-to-automate processes to learn how the business bots operate before progressing to an enterprise-wide strategy. Consult with an RPA partner to develop an enterprise strategy and an operating and governance model that includes trade-offs between owning versus consuming bots. Do due diligence on the processes to be automated by their complexity first, before committing to estimated value capture benefits. This should include considerations such as levels of structured and unstructured data, virtual and on-site access to systems, and the number of different ERP systems required. Treat RPA as neither a cost-cutting exercise nor an IT integration project. 3
RPA take-up is set to explode As organisations continue to reposition most of their IT budgets away from operations towards transformation and innovation, the ANZ market has reached a tipping point. This shift in priorities could not be more timely for RPA technology, as businesses look beyond the labour advantages offered by more traditional outsourcing models. Investing in RPA will not only benefit their bottom line, it will put them at the forefront of IT innovation. ANZ RPA Market sizing and forecast 2016-2020 ANZ RPA market 2016-2020 ($A millions), CAGR 45% (16-20) NZ 15% 870 680 Australia 85% 450 216 135 2016 2017 2018 2019 2020 The ANZ RPA market is still young RPA adoption in the ANZ market is still in its infancy 73 per cent of organisations have either never heard of RPA or are only investigating its uses, a number that jumps to 80 per cent of organisations with less than 500 employees. This means a lot of education is still required to make businesses fully aware of all of RPA s potential benefits. RPA maturity model: Most organisations use of RPA still basic 73% of organisations are at early stages of adoption of RPA 32% Not using 41% Basic Investigating the use of RPA 7% Initial strategy, but nothing operating 8% Test-Dev strategy and pilot programs running 6% Production strategy and production programs running 6% Mature Have established use of RPA in the organisation Telsyte ANZ Robotic Process Automation 2017 n=302 4
Having said that, the market for RPA or virtual workforce services has grown steadily in recent years. Telsyte estimates that the ANZ RPA market, which is currently valued at $216 million a year, will grow at a CAGR of 45 per cent, hitting $870 million by 2020, as more vendors support the growing demand for services such as optical character recognition and voice recognition. Organisations with fewer than 500 employees have less understanding of RPA and just over half (51 per cent) have investigated its uses at a basic level, while 29 per cent have never heard of it. However, once they understand that the costs of accessing these bots are within reach, we are likely to see accelerated demand for RPA from this segment. This, in turn, should vastly improve business functions across IT (59 per cent), Customer Support (44 per cent), Finance and Procurement (36 per cent), and HR (33 per cent), given the tasks involved in these roles are typically highly repetitive. Smaller organisations (<500 employees) less likely to have RPA strategies 29% Not using 51% Basic Investigating the use of RPA 9% Initial strategy, but nothing operating 6% Test-Dev strategy and pilot programs running 4% Production strategy and production programs running 2% Mature Have established use of RPA in the organisation Telsyte ANZ Robotic Process Automation 2017, n=145, base: organisations with less than 500 staff By contrast, larger organisations (with more than 500 employees) have a greater understanding of RPA, yet only 40 per cent already have defined RPA strategies in place and 38 per cent have RPA programs up and running, ranging from pilots to mature operations. Many of these early adopters are using RPA to significantly reduce their overall IT systems spending. 4 in 10 larger organisations (>500 employees) have RPA programs running 37% Not using 22% Basic Investigating the use of RPA 4% Initial strategy, but nothing operating 14% Test-Dev strategy and pilot programs running 11% Production strategy and production programs running 13% Mature Have established use of RPA in the organisation Telsyte ANZ Robotic Process Automation 2017, n=145, base: organisations with greater than 500 staff 5
RPA makes the virtual workforce a reality Organisations of all sizes require seamless data integration across their IT systems to thrive in the digital era. To this end, RPA has emerged as a technology that specifically answers that challenge by providing a digital or virtual workforce. Apart from the obvious benefits of cost savings, scalability and fast ROI, RPA operates through the existing application s user interface and, in this sense, is not integrated, meaning there s no need to make big changes to your IT system or infrastructure. This makes automation viable for many businesses that might previously have faced the time and cost constraints involved with having to reengineer their legacy systems, giving them the edge they need to compete with borndigital startup companies. Major RPA market drivers include: Reduced back-office costs: Organisations are looking for the next generation of labour arbitrage savings, and implementing a virtual workforce is a far more costeffective strategy than going offshore or outsourcing Ease of implementation: RPA technology works on top of existing systems so it doesn t trigger many of the stage gates and criteria typically required for IT projects to be approved Fast return on investment (ROI): Once RPA software is implemented, you should see immediate increases in process efficiency, accuracy, compliance and the speed in which projects are completed, while simultaneously removing manual errors Ease of use: RPA relies on an SME s knowledge of business processes and its ability to use a visual system to build the bots. What it doesn t require is the deep software programming skills usually associated with IT integration projects Business operations that will benefit most from RPA Finance and insurance are expected to benefit most from RPA adoption, given the high levels of manual repetitive work involved in their operations, according to Telsyte s survey. Furthermore, in the forecast period between 2016 20, there is a 75 per cent probability that RPA systems will be used to automate a larger range of business processes as confidence in the technology grows. Finance and Insurance operations expected to be most impacted by RPA Q. Which area of your organisation is likely to be impacted the most from moving manual human to robot interaction? (multiple response) % Total (n=302) Manufacturing (n=17) Retail trade (n=20) Information Media and Telecoms (n=30) Banking and finance (n=26) Insurance (n=16) Professional, Public Admin Scientific and and Safety Technical (Govt.) (n=15) Services (n=65) Health Care and Social Assistance (n=23) Other (n=90) IT 57 41 60 63 31 38 59 40 48 61 Customer Support & Services 34 29 35 30 27 25 31 33 26 37 Operations 34 65 15 43 65 56 48 13 26 29 Finance & Procurement HR / People & Culture 30 12 20 33 19 13 15 27 26 39 28 6 40 33 15-11 20 9 35 Sales & Marketing 12 12 30 30 12 6 5 27 26 9 Other 3 6 5 7 - - 3 7 4 2 6
The three business areas expected to benefit the most from RPA are IT Operations, Operations, and Customer Support and Services. When asked which areas are impacted the most when shifting from a human to a robotic workforce, IT rated very highly at 56 per cent, though interestingly, DXC suspects that some IT respondents may be confusing IT automation technology with business process automation technology, suggesting more education regarding the differences is needed in the early stages of adoption. IT expected to be most impacted by RPA Q. Which area of your organisation is likely to be impacted the most from moving manual human to robot interaction? (multiple response) IT 56% Operations 35% Customer Support & Services 35% Finance & Procurement 30% HR / People & Culture 27% Sales & Marketing 12% Other 3% RPA offers plenty of operational benefits RPA should lead to vast increases in productivity and efficiency because its virtual workforce can work 24/7, 365 days a year, at a fraction of the cost of employing staff to perform the same tasks. Additionally, in classic swivel chair processes, human errors occur, so automation should greatly improve accuracy and quality. However, it is important to point out that, while deploying bots will lead to a range of cost savings, they still work with humans. In fact, by augmenting the human workforce, staff can use their time to focus more on the humanistic elements of the process that require interaction, judgement and interpretation, while the bot processes the repetitive, rule-based elements. Another obvious benefit of RPA services is that it allows organisations to fully use a seasonal workforce, to scale up for peak periods and scale down without having to hire additional employees. 7
Managed services is the go-to procurement model for RPA Managed service providers are favoured among the majority of sectors to provide RPA solutions, and this was most evident in the healthcare (62 per cent) and retail (58 per cent) sectors. Other sectors such as banking and finance, insurance and manufacturing still placed managed services first as their preferred way to procure RPA solutions, though engaging with specialists and buying and managing RPA solutions in-house had a higher combined total. Specialists making in-roads with banking, finance, insurance and manufacturers Q. What is your organisation's preferred way to procure an RPA solution? 3 10 5 4 7 6 15 16 11 22 14 18 27 25 26 14 26 21 36 30 27 31 1 13 26 57 62 58 56 50 48 40 38 60 Total (n=269) Health care, Social Assist. (n=21) Retail trade (n=19) Professional, Scientific and Technical Services (n=57) Information Media and Telecomm. (n=28) Banking and finance (n=23) Insurance (n=15) Manufacturing (n=16) Engage with a IT managed service provider Buy products and manage them in-house Engage with RPA specialist Other TelsyteANZ Robotic Process Automation 2017, n=269, base: those organisations that would benefit from RPA Other (n=90) Interestingly, a third of early adopters are using DIY solutions, given the ease of setting up a proof of concept (POC). Beyond the POC and pilot phases, we expect to see increased use of specialists and managed services providers to enable enterprisegrade scale and security across multiple bots and processes. Managed services the go-to procurement model for RPA Q. What is your organisation's preferred way to procure an RPA solution? Other 2% Engage with RPA specialist 15% Buy products and manage them in-house 26% Engage with a IT managed service provider 57% TelsyteANZ Robotic Process Automation 2017, n=269, base: those organisations that see benefit in RPA 8
The DXC difference Most organisations want to be digitally enabled across every part of their operations including back-office, manufacturing, distribution, and customer sales and service, and have transformation and innovation projects underway to make this happen. RPA is a solution gaining wide traction in business areas that are not the immediate target of large-scale IT transformation investments. It is regarded, rather, as a way to automate manually intensive, highly repetitive processes and to get fast business results without the need for those large IT system integrations. Many early adopters have, however, struggled to achieve widespread process automation and ROI, and DXC is working with these organisations to ensure early wins and long-term success through three critical areas: 1. Enterprise Architecture and Security 2. Operating Model & Governance 3. Demand Management How to get the most out of RPA Start with small RPA pilot programs: A POC is important to first understand the nature of processes that can be best solved through RPA before progressing to an enterprise-wide strategy. It s also equally important to use pilot programs to understand your change management requirements for further rollouts. Consult an RPA partner: Partners can advise in developing an RPA strategy, plans for organisational change and technology implementation. They can also advise on the trade-offs involved in owning versus consuming bots. Do not treat RPA as solely a cost cutting exercise. Look for partners that understand your business problems, can improve your efficiencies and help you generate competitive advantages. Assess the processes you want automated by their complexity. Start by targeting the less complex processes as these provide faster returns and, more importantly, help to build up your centre of excellence capability. Target the extent to which the process needs to be automated: It might be possible for your business to completely automate a process, but automating only part of that process could be a better use of resources during the early stages of adoption. This helps you build confidence in operating a virtual workforce, and you can always come back later to fully automate and optimise the process. 9
Appendix 1: Telsyte RPA study methodology In preparing this report, Telsyte surveyed 302 ICT decision-makers across Australia and New Zealand organisations of more than 20 employees. The sampling was conducted on a size of spend weighting basis, where 61 per cent of respondents came from organisations with more than 200 employees. The respondent was required to have a strong understanding of their organisation s ICT purchasing and strategy, technologies such as RPA and software. The survey took 10 minutes to complete. Interviews were conducted via an online survey that respondents completed on computers, tablets and smartphones Respondent profile Q. About how many employees are there in your organisation in Australia? 2,000 or more, n=50, 16% 10 to 49, n=29, 10% 50 to 199, n=87, 29% 500 to 1999, n=95, 31% 200 to 499, n=41, 14% Respondent profile (contd.) Organisation type 10
About Telsyte Telsyte delivers emerging technology insights to its clients which include leading global technology vendors, service providers, government agencies, media companies and technology influencers across a wide range of industries. Telsyte is an independent business unit of DXC Technology. For more information, visit www.telsyte.com.au. About DXC Technology DXC Technology (DXC: NYSE) is the world s leading independent, end-to-end IT services company, helping clients harness the power of innovation to thrive on change. Created by the merger of CSC and the Enterprise Services business of Hewlett Packard Enterprise, DXC Technology serves nearly 6,000 private and public sector clients across 70 countries. The company s technology independence, global talent and extensive partner network combine to deliver powerful next-generation IT services and solutions. DXC Technology is recognised among the best corporate citizens globally. For more information, visit www.dxc.technology. 11
About DXC Technology DXC Technology (DXC: NYSE) is the world s leading independent, end-to-end IT services company, helping clients harness the power of innovation to thrive on change. Created by the merger of CSC and the Enterprise Services business of Hewlett Packard Enterprise, DXC Technology serves nearly 6,000 private and public sector clients across 70 countries. The company s technology independence, global talent and extensive partner network combine to deliver powerful next-generation IT services and solutions. DXC Technology is recognized among the best corporate citizens globally. For more information, visit www.dxc.technology. www.dxc.technology 2017 DXC Technology Company. All rights reserved. MD_6241a-18. May 2017