What is Robotic Process Automation?

In the 1990’s many companies were seeking cost reduction strategies in the form of labour arbitrage and as a result, many tasks were moved to low-cost countries in Asia, Eastern Europe and Latin America. Now that major companies from around the world have reaped the benefits of labour arbitrage, and system harmonization and process standardization has come to a reasonable level, automation of remaining tasks and processes is the new target. Companies take advantage of Robotic Process Automation in their back offices.

RPA enables companies to drastically improve cost effectiveness and quality improvements in their transactional processes. A key advantage of Robotic Process Automation is that unlike previous IT transformations such as Enterprise Resource Planning (ERP’s), RPA does not require a massive upfront investment or a significant change to the current IT systems and processes. In fact, RPA can be implemented relatively quickly when compared to previous digital transformations, as it requires minimal capital or infrastructure.

RPA can act as an additional employee that can work between the IT systems and with the back office processes in various functions. Similarly to humans, RPA can learn from people and copy their processes, eventually taking over the processes that humans once completed, at a much faster pace. Robotic Process Automation is going to continue to develop and work with increasingly complex processes and tasks.

Although Robotic Process Automation and Business Process Management have similarites, they are in fact fundamentally different. BPM works from the top down, standardizing all processes throughout its implementation. In comparison, Robotic Process Automation works from the bottom up, integrating itself with processes. While RPA automates processes, it does not standardize them, nor does it help to standardize processes. BPM standardizes processes, but does not automate them.

Even though RPA does not standardize processes, having standardized processes is hugely beneficial for RPA, as can be seen by the fact that the majority of processes that will see an increase in RPA usage in the near future are also the processes that are currently the most standardized. Robotic Process Automation is undoubtedly the next wave in digital transformation—RPA is a software application that can replicate processes humans would do to move information through and between different technology systems. Robotic automation uses software as a virtual FTE to manipulate existing application software (e.g. ERPs, CRMs, and claims applications) in the same way that a person completes a process.

What is particularly revolutionary about robotic automation software is that it does not necessarily require companies to make changes to their strategic processes or existing back office technologies. Even if companies are separated geographically or have various technological systems implemented, RPA is able to connect systems. Therefore, RPA may function as a quick win solution for process optimization.

While knowledge-based automation tools and cognitive artificial intelligence systems are entering the market, the majority of companies are currently focused on rules-based robotic  automation solutions, which means that RPA can work well with complex processes that have a specific set of repetitive rules.

Rules-based tasks would include tasks in back office  processes, such as completing an invoice. As RPA becomes more common, companies will begin to implement knowledge-based automation, enabling robotic automation to work with many more exceptions.

A typical example of knowledge-based automation would be in Customer Service functions, searching for information across systems and answering  customer emails. Finally, while RPA has not developed into the all-cognitive periphery, experts definitely see potential for RPA to eventually be able to think for itself, working alongside humans on value-adding initiatives that are important to the bottom line of the firm.

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