RIDING A WAVE OF BUSINESS PROCESS AUTOMATION

In 2020, we find ourselves at the revolutionary convergence of myriad diverse trends creating once-in-a-lifetime threats and opportunities that few people fully appreciate. Whether we are talking about

• deglobalization,
• a looming Sino-American Cold War,
• the North American Energy Revolution,
• restrictions on immigration,
• the rise of new business models,
• pervasively low-interest rates,
• or a range of other factors
the competitive challenges facing business are evolving rapidly.  At the same time, the advance of
• Moore’s Law,
• photonics,
• Artificial Intelligence,
• quantum computing,
• robotics,
• biotech, and
• nanotech

have made solutions possible that few could have imagined until recently.  And if this was not difficult enough, this extraordinary moment in history has suddenly been impacted by the "black swan" of COVID19.

As a result, businesses are being forced to deliver unprecedented solutions in a world where supply chains, sources of talent, costs of capital, and incentive systems have suddenly been scrambled.  As a result, it’s the perfect time for pioneers to create new business processes optimized for the information revolution.

At Trends, it’s long been our position that advanced technology, deglobalization and a restricted pool of domestic labor could create a quality of life revolution for American workers, consumers, investors, and entrepreneurs, without unduly harming our allies.  And, rather than taking years to “ramp up,” this revolution has been suddenly galvanized by the COVID19 shock that gives businesses the impetus to tear-down and rebuilds existing processes.

Consider a few examples.

In April, Takeda, a pharmaceutical company, began recruiting patients for a clinical trial of a promising Covid-19 treatment involving antibodies drawn from the blood of recovered patients.  It normally takes several weeks to collect people’s information, determine who may be suitable for the trial, and get the paperwork in order.

With the coronavirus still spreading, Takeda sped things up using a quick and simple trick.  They used software to record tasks like opening files, selecting input fields and cutting-and-pasting text. Those tasks could then be repeated for each prospective patient. As a result, the paperwork got done in days instead of weeks.

Using software from a company called UiPath Takeda had started testing this approach, known as robotic process automation, or RPA, several months before the pandemic began, Kyle Cousin, head of Takeda’s digital services was the person in charge of the effort.  He says, “We’d been proving that there was value to this.  Then, for COVID19, we said OK, we can accelerate drug discovery and get patients through the cycle faster.”

Inspired by the success, Takeda is now stepping up its use of RPA with a plan to train thousands of staff to build and use software bots. The company recently ran a successful pilot with 22 employees. And based on this study it estimates that the RPA could automate 4.6 million hours of office work per year across the company—the equivalent of roughly 2,000 full-time workers. But right now, Takeda doesn’t see the technology displacing anyone. Cousin says the goal is to boost performance, and hiring has actually increased as the software bots have been rolled out.

What does Takeda’s experience tell us?  For all the hype around artificial intelligence and machine learning, the quickest and easiest way for companies to automate office work is often through simple and decidedly unintelligent software automation.  Takeda’s approach demonstrates a way for machines to take over routine and repetitive tasks without investing in a big software project or worrying about legacy systems.  This approach is hardly elegant or robust, but as long as you can point and click, you can automate.

The broader impact of office automation is less clear. Some research suggests that large amounts of office work are ripe for automation that will have a broad impact on jobs, but so far RPA tends to replace only the most repetitive and mundane work, frequently affecting outsourcing but not the company’s own workers.

More advanced forms of software automation, involving more complex decision making, may increase the likelihood that people will be replaced. Historically, recessions tend to prompt employers to deploy more automation, with some economic research suggesting the phenomenon has become more pronounced during the most recent downturns.

Right now, plenty of companies appear to have cobbled together processes to cope with disruptions caused by the coronavirus.   UiPath says it added 836 new customers in the first quarter of 2020, doubling its customer base year-over-year. Its clients include an insurer that uses RPA software to deal with the spike in claims related to COVID19 and several delivery companies that used it to accelerate their hiring processes.

It’s quite possible that the economic crisis caused by the pandemic may exacerbate this trend, as companies look for ways to become leaner and more competitive.

 Maureen Fleming, an analyst at IDC who tracks software robots say, “I haven't talked to anyone who's not doing automation as a way to become more competitive, and more resilient,"  as the economy recovers, she expects some companies to revert to old ways of doing things, but most will either maintain or increase their use of automation as the job market tightens and demand increases.

Notably, the shift toward remote work provides an opportunity to rethink operations and look at automating tasks.  Max Mancini, an executive vice president at Automation Anywhere, another leading RPA company, says one airline customer, used bots to deal with a huge spike in refund requests by automating data entry that had been done manually. Having many people working from home emphasized the need to automate the process.  “There’s a material shift in workloads,” he says.   “How do you report on your financials when you don’t know how many cancellations you have? Bots were used in order to accelerate that process.”  And provided the answers in a timely manner.

Last month, consultants at Forrester Research predicted how disruptions due to Covid19 would accelerate office automation.   As one example, the report points to the need for more flexible supply-chains.

The process has already begun.  When many exporters in China effectively shut down operations earlier this year, the consulting and outsourcing company Accenture, rushed to develop a tool to automatically identify alternatives for its customers.  It scrapes the web and uses natural language processing algorithms to find suppliers that might be able to step in with missing materials or components. With further supply-chain disruptions possible due to reshoring and deglobalization, this tool will have long-term value.

Notably, these anecdotes serve as a reality check for the Artificial Intelligence industry.  After years of hype around the commercial potential of bleeding-edge machine learning research, COVID19 has caused several hard-hit companies to rein in blue-sky investments.  For example, Uber recently said it would wind down its AI research lab as part of broader cost-cutting measures.   At the same time, as companies face pressure to do more with less (including fewer employees), interest in simple-yet-effective automation is growing.

According to Alan Priestley, an analyst at Gartner, “Anywhere today that you have repetitive operations in place, those are prime targets you could potentially automate to reduce your costs and become more efficient and more responsible.”   As a result, Gartner expects some changes in how businesses work to outlast the current crisis.   As Priestly puts it, “If you have to do it now, you’re not going to stop doing it when the market recovers.”

And that’s especially true for companies who are increasing automation to take advantage of windfalls created by the crisis.  A year ago, Genpak, which makes take-out food packaging, had several people processing orders by hand. Then the company started using technology from a company called Conexiom to automatically convert unstructured data from sales orders or into digital records.

As Darlene Bardin, director of a customer service at the company explains, “Our business went crazy, because of the take-out and delivery boom related to COVID19.   If we were back a year ago where we had to hand-enter all of these orders, we would be stumbling all over ourselves.”

Furthermore, Bardin says that the new automation has meant that workers who left the company did not need to be replaced.  “We didn't go into the project with the intention of reducing people in the face of exploding demand, but that’s what happened.”

Given this trend, we offer the following forecasts for your consideration.

First, by 2027, Robotic Process Automation software, or RPA, will grow to an $11 billion industry.   

It has been possible to automate simple user actions using “macros” in word processing and spreadsheet programs for decades.  More general-purpose software automation for business processes began taking off early in the last decade.  Now the industry is on an impressive trajectory.  In a February 2020 report, Grand View Research estimated sales of RPA software totaled $1.1 billion in 2019 and would grow by over 33 percent annually between 2020 and 2027.  And,

Second, as pioneers reap benefits from this wave of business automation, other firms will be forced to emulate them or perish.

As we’ve seen over and over since the first industrial revolution, the early adopters will gain a short-lived competitive advantage.   Then, the rest of the industry will implement similar solutions in order to compete.  The long-term winners will be those that discover ways for new cost-competitive processes to enable new and better business models.

References
1. com. June 12, 2020.  Will Knight.    The Pandemic Is Propelling a New Wave of Automation.

https://www.wired.com/story/pandemic-propelling-new-wave-automation/

2. World. June 20, 2020.  Garima Mishra.  20 Best RPA (Robotics Process Automation) Tools in 2020.

https://rpabotsworld.com/top-20-rpa-tools/

3. Oxford Martin School Working Papers. September 13, 2013.  Carl Benedikt Frey and Michael A. Osborne.  THE FUTURE OF EMPLOYMENT: HOW SUSCEPTIBLE ARE JOBS TO COMPUTERISATION?

https://www.oxfordmartin.ox.ac.uk/downloads/academic/future-of-employment.pdf

4. NBER WORKING PAPER SERIES. November 2018. Nir Jaimovich & Henry E. Siu. JOB POLARIZATION AND JOBLESS RECOVERIES. 

https://www.nber.org/papers/w18334.pdf

5. Forrester Research. May 5, 2020.  Leslie Joseph.  The COVID-19 Crisis Will Accelerate Enterprise Automation Plans. 

https://www.forrester.com/report/The+COVID19+Crisis+Will+Accelerate+Enterprise+Automation+Plans/-/E-RES160598

6. Grand View Research. February 2020. Grand View Research.  Robotic Process Automation Market Size, Share & Trends Analysis Report: 2020 - 2027. 

https://www.grandviewresearch.com/industry-analysis/robotic-process-automation-rpa-market/request/rs1