We are at the crossroads of a major transformation where we are automating processes. Whether you call it Industry 4.0 or not, it is difficult to remain unaffected by these new transformations. Although algorithms, data science, and automation have become boardroom topics now. It can indeed be overwhelming to make sense of these technologies for a manager.
In this article, we take a look at what is the automation of processes and how businesses can implement it to extract value. Here we primarily discuss cognitive automation, not industrial automation. You may check out our other article on industrial automation here.
Business Processes – as we know it
Business Processes are a set of tasks that are essential to delivering value to the customers. A process is a way to convert the input into the output. If we consider a simple business model of a barber. The input is the effort of the barber while the output is the restyled hair. In other words, trimming the hair is a process in this business model.
Adam Smith, 1778: the origin of business process analysis
Consequently, in a more nuanced business model, there would be several processes that come together to deliver value to the customer. Adam Smith was the pioneer who started analysis of business processes. He explains the step by step creation of a pin at a pin factory. Using this example he posited that production can be chunked into a set of processes.
Modern Take on Business Processes
Business Process Management software Kissflow lists down key attributes of a well-defined business process as:
| Attribute | Desciption |
|---|---|
| Finite | process should have a clear starting and ending point |
| Repeatable | the processes need to be run as many times as required |
| Create value | prime focus on the goal of creating business value |
| Flexibility | provision for customization and improvement |
Goals of Automating Processes in Business
Any business process primarily aims to create value for the customer. In this process, it also creates value for the businesses. In a survey, it was found that about 74% of the managers believe the primary objective of automation is to increase process quality. The objective of process management is listed below:
- Reduction in error rate – a reduction in error rate leads to higher quality control, higher reliability, and lower bottom line for the firms.
- Reduction in process time – another important objective towards process improvement is a reduction in the processing time.
- An increase in production output – an efficient process is one that can create higher output for the same input. This is possible through an increase in the efficiency of the process
- Process Flexibility – processes that can adapt faster can lead to smaller lead times. It can also lead to a faster time to market for new products.
- Reduction in cost – any reduction in input costs directly impacts the bottom line for the firm.
How business automation aims to solve these problems.
Firstly, automation holds the promise of reducing error rate. Humans are prone to errors. Especially, when we do menial and repititive tasks. Machines are the way to go to alleviate the painful work from humans.
Secondly, the benefit of automating processes is time saving. Automation also means that machines would take much less time than humans to do the same task. This is true for both physical as well as mental tasks.
Thirdly, it leads to increase in the productivity. Machines don’t replace humans, they also assist humans in doing work faster and safer.
Fourthly, automation allows to make the processes more flexible than ever.
Fifthly, it also allows a reduction in human labor costs. We are moving towards an era where machines would partially replace human labor. This reduced the process costs.
Automating Processes – The New Competitive Advantage
The most common imagery of automation involves a robot. Alternatively, we may think of automation in factories where chemical processes are automated. This kind of process automation is called industrial automation. Here we are specifically talking about cognitive automation.
A survey from Deloitte conducted in 2019 found out that 58% of the executives had initiated automation in their firms and the number of projects had almost doubled for most of the firms.
Automation Use Cases for a Firm
Automating processes is an essential step towards Industry 4.0. Let us discuss some key use case scenarios. The application of automation would be governed by the functional areas of management.
BPA Methodologies
Strategy and Innovation – incremental changes, redesigned business models, business process re-engineering, sustainable competitive advantage
Marketing– CRM 2.0, Contextualized marketing, personalized marketing, automatic campaign management, Customer support automation
HR : employee payroll management, automatic screen and hiring assistance, turnover prediction
Operations: process automation, robotic process automation, supply chain automation, higher control over the production
Finance: fraud analysis, automate4d auditing, bottom, and top-line monitoring, risk mitigation
Challenges of Implementation
- Exploitation over exploration
- Lack of motivation
- Executing failure
- The human problem, after all
- Fear of jobs
- getting everyone on board
- Stakeholder ownership
Examples of Business Process Automation
There are several use cases for BPA. Some of the prominent ones are discussed here.
Automating Processes in Operations Management
Automation can help in reducing costs for the firms. This requires higher commitment from the top management. The expenditure
The most noteworthy point is that it can lead to around 21% lower labor costs as per a survey by Hackett. The avenues where automation can be used in operations management are:
- e-procurement
- lifecycle management
- automated invoicing
- supplier relationship management
- enhancing digital engagement
There are several operating benefits of automating processes for Operations Management:
- They can enable data-driven insights. Automated systems offer a better perspective due to larger volumes and a higher quality of data.
- Enhanced accuracy
- Transparency
- Enables real-time data as data capturing, processing, and updating occurs much faster than manual processes.
- Increased compliance
- Reduced operations risk
Process Automation in Marketing
Companies are leaveraging automation in different areas of marketing. Some of the important processes that are automated are : lead management, customer service and CRM.
Facebook uses DeepText to analyze data. This helps it generate contextual meanings of words. Their algorithm sifts through the posts to extract the exact intention of the sentences, their sentiments, and labels for brands, people, and objects. A mathematical concept called ‘word embeddings’ is being used to converge similar words like ‘brother’ and ‘bro’. This has helped them to provide contextual advertisement delivery to potential customers.
The applications of automating processes in marketing are:
- Sales Funnel management – Services like Mailchimp, customer.io can streamline the lead generation, email management, and lead nurturing for the marketing team.
- Social Media Management – apps that are based on Twitter and Facebook APIs can like, post, and comment on your behalf. All without human interventions
- Automatic content delivery systems – Feedly and other content delivery tools can work in automatic content delivery systems. As a result, they can help automate tasks that earlier required human interventions in marketing.
Automating Processes: BPA vs RPA – What’s the difference?
- Above all, Business Process Automation and Robotic Process Automation are closely related terms, they can often be confused.
- RPA is automation where communication and streamlining work is done on behalf of humans by software.
- BPA is automation where repetitive work is done by software.
| Business Process Automation | Robotic Process Automation |
|---|---|
| Repititive tasks like generating reports or extracting data is handled by the BPA systems | Robots work with and communicate with business systems |
| Process oriented approach is taken to design and deploy BPA | Mimicing human reponse is the basis of designing an RPA system |
| Automated onboarding of an employee | An example is a chatbot |
| Works at process level replacing an individual or a team to handle specific process like creation of a report | Replaces a human being for doing a specific task like handling customer query |
| Strategic in approach | Tactical in approach |
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