Finance Transformation

Automation? It Depends!

I get asked all of the time by various clients … Is RPA worth investing in?

One of the VP’s of Order-to-Cash for a pharmaceutical company mentioned they were concerned that the latest upgrade to a cloud ERP did not improve all of their effectiveness metrics. Will I have the same challenges with process automation or intelligent automation? The answer at the end of the day is “IT DEPENDS” – The blank answer my accounting professor in college taught me to always say when interpreting the application of GAAP.

“How fast will automation solve my challenges and/or provide positive NPV?” IT DEPENDS.

Whether it is how you chose to implement various capabilities to meet the latest Lease Standards or the approach to your company’s real-estate portfolio, or automating bank account reconciliations, you need to define your “purpose” first.

Therefore, when looking at opportunities for RPA within your organization, the first thing that needs to be prioritized is how does the purpose fit into your function’s vision and strategy. From an automation perspective, there are several considerations in documenting your purpose.

One of the first executives always look at is (1) Cost Reduction. It is important to note that cost savings will generally come from reductions in FTE’s. It is important to examine specific discreet activities within a process that can be completely automated to free-up time. Areas that are people intensive and manually intensive can be a priority, but only if cost savings is the critical driver or purpose. Additionally, total cost of ownership needs to be considered in developing an appropriate business case. Software licensing, future upgrades, maintenance/redevelopment, tech support or CoE personnel need to be factored in to your cost reduction/ROI.

Another consideration is improved (2) Effectiveness and Accuracy. Improving consistency within a process will lead to enhanced cycle times and depending on the process, tightening the accuracy can optimize expenses. Complex, high impact processes where increased accuracy leads to less rework and/or more revenue. Warranty claims, rebates, expense reimbursement errors can lead to rework or monetary leakage. A true benefit of automation is a tightly standardized process that creates a more clear audit trail.

In a relatively tight labor market, associates are always looking for rewarding work with career development opportunities. (3) Organizational Satisfaction is another distinct purpose for evaluating process automation. Focus on eliminating any non-value add activities of the high performers in your organization so they can focus on decision support and advanced analytics focused on the future.

Organizations in a high growth mode may need to look at their ability to continue to grow revenue without adding cost, or perhaps a product-line or region is experiencing high growth. (4) Functional Scalability continues to be a key factor in employing bots within specific functions. Focus on areas where more scale is critical and there may be a lack of capacity. Automation can enhance productivity and help “avoid” adding additional cost as the organization matures and grows.

Transactional leaders that have outsourced tasks should also understand the model that the provider is currently using. Many service providers have passed robotics savings on to themselves while the contracted rates or fees may continue to rise. (5) Organizational Agility is another potential purpose to review and employ RPA. It is important to do a full review of tasks that are outsourced or being performed in a service center that could be brought back more cost effectively through deployment of bots.

Determining your priorities is the first step in establishing a vision for automation. While there is a significant amount of work that goes into evaluating discreet processes and activities it is critical to understanding the purpose. So, It Depends on how you address the purpose as to how quick you can meet your automation goals!

In our next article on automation, Bryant Griffith will explore how spreadsheets are a sign of a major problem in your organization!

John PhilipsJohn Philips is a Solution Manager – Finance Transformation for Thought Logic Consulting. He brings more than 20 years of experience in finance management consulting. He has advised companies on finance performance improvement, enterprise cost optimization, risk and controls, technology and service placement. John began his career in the media and entertainment industry where he helped digitize operations for Tribune and Freedom Communications.

Prior to joining Thought Logic, John gained significant experience in biotechnology and pharmaceuticals with Deloitte. At EY, he advised finance leaders on improving the effectiveness and efficiency of the finance function by evaluating people, process and technology levers. He has lead a significant amount of transformation work including chart of accounts redesign, financial close process, working capital studies, global business services and process automation business cases. John’s focus is on building unique and customized solutions for its clients around the office of the CFO and continuing to develop Thought Logic’s people and delivery capabilities.