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Robotic Process Automation - What does it Mean for Your Outsourcing Deal?

By Paul Morrison, Partner, Aecus

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Paul Morrison, Partner, Aecus

Unless you have been living in a cave for the last 18 months, you won’t have missed the growing interest across the outsourcing world in Robotic Process Automation (RPA). We are now entering a new phase, in which the initial promise (or hype) of RPA is being tested daily by potential buyers. Conversations are shifting from ‘what is RPA all about’ to ‘how do we buy it’. As a result, in the next few months we will get a much clearerpicture of what this all means for outsourcingdeals. Here are my thoughts on the big questions.

The basics

RPA is a new breed of software that acts like ‘virtual people’, operating existing applications in a way that ‘mimics’ human work. RPA tools are quickly configured to log into your systems, and manipulate information in line with user-defined rules. RPA can be set up in a matter of weeks, and thereby offer the prospect of digitising a wide range of tasks that were previously too expensive to automate.

It is true to say RPA is simply one of many automation tools open (think ERP, workflow, BPM, macros…). But it is also different. It doesn’t require deep integration like an ERP or workflow implementation; on the other hand, it can be orchestrated and industrialised way beyond what can be achieved with simple desktop macros. It fits in a new middle ground, offering rapid AND robust automation. It is ideally suited to address those poorly integrated ‘swivel chair’ tasks that are fiddly, error prone but ultimately transactional in nature – exactly the sort of tasks that typically form the bedrock of ITO and BPO deals, in areas such as IT service management, customer contact, finance, or industry-vertical processing.

The market

The fundamental point about RPA is that the market is very immature. Clear market segments and terminology are not yet established, (e.g. robotics v autonomics v smart automation). More importantly, the market is fragmented between pureplay automation specialists (like BluePrism, IPsoft, Automation Anywhere), outsourcing service providers (such as Sutherland or Wipro) who have developed their own RPA offerings, and finally outsourcing service providers who act as resellers of the pureplay offerings. At moment there is no alternative but to look closely at the offerings available, and how they fit with your current outsourcing needs. Eventually the dust will settle and the choices will become clearer, but at present the list of RPA entrants is still growing as software and services players pile into the market.

Commercials

There is no one engagement or commercial model for RPA. Even for a single RPA provider or outsourcer, there are multiple models. Whether you buy RPA via an outsourcer or direct from a solution provider will be a key determinant of the commercial package. Buying RPA from a pureplay may be priced per robot, per transaction, fixed fee or by gainshare; buying via an outsourcer could be all of these, but it could also be ‘baked in’ to the overall price.

Your choice of RPA partner may well be constrained by your contract – depending on the scope in question you may have no right to automate a given process without supplier consent (via the correct governance/change channels) – in which case the right commercial model will entail agreeing the right approach and toolset, and how investment costs and benefits are shared. Another scenario is where the supplier has the tools and right to implement RPA, but is not obliged to notify you the client – RPA by stealth. This may or may not be undesirable – in a fixed price contract you may have agreed that the outsourcer can do what it wants in the background, provided the outcomes are right. On the other hand, an outsourcer could implement RPA, remove a major chunk of its cost base, and accruemassive savings in a way that was never anticipated and undermines your partnership.

In all cases the key point is to bring RPA into your outsourcing discussion as soon as possible: what are the supplier’s views on what is possible? What are their capabilities or preferred tools? What do they see as the appropriate commercial approach for RPA? What are their specific recommendations for making it happen? What are their recommendations for managing the process of change? If your supplier has real expertise and is motivated to use it, you may already be seeing (or be about to see) concrete RPA proposals.  If not, make sure that you have good answers to the above questions, supported by worked examples and scenarios.

The longer term

In all cases, don’t make the mistake that buying RPA is just about buying software. RPA can result in significant FTE reductions, yet simultaneously you also need to build new expert capabilities – an RPA core team or centre of excellence. As well as retaining key knowledge, supporting the transition, and learning lessons, your organisation must coordinate the many RPA projects that will no doubt mushroom across corporations in the coming years.

The smart money in RPA agrees that the long term benefit of RPA is not really about head count savings. Instead it is that digitising manual tasks through RPA releases your best skills and generates new data and insights, informing powerful improvements in areas such as compliance, quality, product development and customer satisfaction. RPA is a both a route to unlocking your best skills and a major agent of digital change. When you implement RPA, with an outsourcer or not, make sure you have the right internal capabilities to manage this.