The real cost of business automation? Not implementing it

22 November 2022 Consultancy.com.au 5 min. read
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As the maturity of technology grows, the cost of not embracing automation is on the rise, writes Rajith Haththotuwegama, a Manager for Data Analytics & Automation at Tecala.

There’s long been acceptance that automation technology has substantial value. Five years ago, McKinsey & Company reported that a review of 16 case studies uncovered a return-on-investment range of “between 30 and as much as 200 percent in the first years” for automation technology.

Financial savings were just the tip: organisations that adopted automation also typically saw customer and employee experience improvements that multiplied the overall value they received from implementing automation.

Rajith Haththotuwegama, Manager, Tecala

For observers, these automation projects looked incredibly valuable, but at that time, they could also be quite costly to run. The upfront cost of the software was high, and customers needed to then fully configure the software to perform tasks in an automated fashion. The skills needed to do this in-house were not widely available, and were therefore also expensive. These barriers undoubtedly curbed automation’s potential reach and benefits.

In the five years since, much has changed. Automation software can now be consumed as-a-service, and access to skilled people has greatly improved. The cost of automation projects is dramatically reduced, and is now even within the reach of mid-market organisations, not just large ones.

As more organisations adopt automation and realise benefits and cost savings, the FOMO – fear of missing out – grows.

Costing inaction

With the cost of implementing automation no longer the key issue that adopters face, attention has shifted to another set of ‘costs’ – the cost of not implementing automation. These costs can be substantial, and should not be underestimated. They could rob organisations of happy and talented staff, of future growth opportunities, and of their competitive edge.

In my mind, the costs of not implementing automation fall into two broad categories: people and growth. Both are inextricably linked.

First, organisations that don’t automate are going to find it challenging to keep their workforces happy and engaged. People want to be doing meaningful work. They want to spend their time focused on the most important, valuable and higher order aspects of their role.

Repetitive, time-consuming or otherwise boring aspects of their role are ripe for automation, and people increasingly know and want this automated assistance. This could come in the form of a virtual co-worker that can be drafted in to handle tasks like necessary - but mundane - preparation of end-of-month reports.

People stuck doing automatable tasks may also feel they have limited career progression opportunities. They may not have time to learn new skills or brush up on existing ones. If some of their workload was automated, however, it would free up valuable time that they could reinvest in growing their skills or ideating and pursuing new, high-value projects for their employer.

The cost to enterprises of keeping people doing automatable work is increasingly disenfranchisement. The employee disengages, or worse – they see other employers that are more forward-thinking in embracing automation and tools and technologies that improve the employee experience, and they vote with their feet.

This opens the first organisation up to substantial recruitment and retraining costs. It can take a year or more for a new hire to get up to speed. This cost and effort is best avoided in the current recruitment market, and can be avoided by enabling employees to do their best work more (or ideally, all) of the time.

Further reading: How digital tools can enhance the recruitment process.

When process execution is overly dependent on the presence of a single person or certain people being present, it leads to key person dependency. Such dependencies can limit the ability of the person to take leave, either for leisure or illness. It makes sense to automate out key person dependencies, such that there is a systematised fallback option available to the organisation, in case of need.

In summary, some of the people-related costs of not automating include: process breakage, too many key person dependencies, the real possibility of unhappy staff and churn, and incurring substantial recruitment costs. But what are the growth-related costs of not automating?

When organisations grow, they typically add more people, and the relationship between those things is fairly linear. But automation can help an organisation scale. Specifically, when automation is used to handle repetitive transaction processing or grunt work, it frees up staff to do the things that machines are not yet good at, like customer service and managing customer relationships.

Moreover, organisations may find it possible to do a lot more with the same sized team. A team of people, supported by a team of virtual co-workers, is becoming increasingly commonplace, allowing the organisation to scale and onboard more customers, without having to make a huge amount of new hires.

The cost of not automating, however, is that growth is too costly. Organisations can break that cycle, and foster a new growth mindset, by using automation to power their targets and ambitions.

To avoid incurring the costs of not implementing automation, organisations that have not yet considered automation, or that have experimented but parked their initiatives, should seek to urgently restart them as a matter of course.

Underpinned by intelligent automation as-a-service, and supported by deep domain skills, mid-market organisations and their larger cousins now have a strong chance to succeed with automation initiatives.