What Is RPA?

RPA can be a slippery term. A main reason for this is that it was coined in 2012, when the category was still evolving. At the time, the chief evangelist for Blue Prism, Pat Geary, came up with the term RPA.

But when you look at each word, it’s understandable why RPA can be a bit confusing. For example, the word “robotic” does not refer to a physical robot – instead, it is about a software-based robot (or bot) that can automate human actions in the workplace (generally for white collar applications in clerical and administrative functions). A bot can be delivered via the cloud or through downloadable software. However, the use of robotic does look like a savvy marketing move (hey, aren’t robots pretty cool?).

Even the word “process” is not particularly descriptive either. A better alternative would be “tasks,” which are individual action items that are a part of a process.

Such things may sound kind of mundane, boring, and simplistic. But that’s the point. RPA is focused on those tasks that are really a waste of efforts for workers. Shouldn’t they be doing more important activities?

I think so.

Now, interestingly enough, the use of the word “automation” in RPA is actually spot-on. It’s really at the core of RPA functionality.

To get a better sense of all this, I think it’s a good idea to look at how various RPA software companies view the concept. Here’s a look:

UiPath : “Robotic Process Automation is the technology that allows anyone today to configure computer software, or a ‘robot’ to emulate and integrate the actions of a human interacting within digital systems to execute a business process. RPA robots utilize the user interface to capture data and manipulate applications just like humans do. They interpret, trigger responses and communicate with other systems in order to perform on a vast variety of repetitive tasks. Only substantially better: an RPA software robot never sleeps, makes zero mistakes and costs a lot less than an employee.”⁴

Automation Anywhere: “RPA is really as simple – and powerful – as it sounds. Robotic Process Automation enables you with tools to create your own software robots to automate any business process. Your ‘bots’ are configurable software set up to perform the tasks you assign and control.

“Think of them as your Digital Workforce. Show your bots what to do, then let them do the work. They can interact with any system or application the same way you do. Bots can learn. They can also be cloned. See how they are working and adjust and scale as you see fit. It’s code-free, non-disruptive, non-invasive, and easy.”⁵

PEGA: “Robotic process automation (RPA) can be a fast, low-risk starting point for automating processes that rely on outdated legacy systems. Bots can pull data from manual systems without APIs into digital processes, ensuring faster and more efficient outcomes.

“Now, let’s be honest about what RPA doesn’t do. It doesn’t transform your organization all by itself, and it’s not a fix for enterprise-wide broken processes and systems. For that, you’ll need end-to-end intelligent automation.”⁶

Kryon Systems : “Robotic Process Automation enables enterprises to create true virtual workforces that drive business agility and efficiency. A virtual workforce, comprised of software robots that can execute business tasks on enterprise applications, becomes an integral part of an enterprise’s greater workforce. It is managed just as any other team in the organization and can interact with people just as other employees would interact with one another. Virtual workers (robots) complete business processes, just as a person would, but in less time, with greater accuracy and at a fraction of the cost. RPA stands out for its ability to impact business outcomes, resulting in significant ROI.”⁷

These all provide a fairly good view of RPA, showing the broad applications and benefits. These definitions also highlight that the vendors in the industry have their unique twists and approaches on the technology (in this book, we’ll take a deeper look at the different solutions). In some cases, the differences can be quite stark.

But boiling things down, I think the best way to think of RPA is to use the visual for Automation Anywhere: a digital worker. It’s about how automation technologies – like screen scraping and workflows – can essentially copy what employees do on a daily basis.

But what is the difference with RPA vs. other forms of automation? Isn’t the technology just like an Excel macro?

Not really. First of all, a macro is only for a particular application. But with RPA, the system can be used for just about anything, whether on a PC or even a mainframe. Next, RPA can record a person’s actions to help create the automation. Some systems will even use sophisticated technologies like AI (Artificial Intelligence) to help with this. Finally, an RPA platform will become a valuable repository of knowledge about how work is done in an organization. This can provide insights on how to improve workflows and processes, which could drive even further efficiency.

Flavors of RPA

There are different types of RPA approaches. Part of this is due to the fact that the technology is continuing to evolve. Vendors are also looking at ways to redefine RPA so as to help them stand out in the marketplace.

It’s important to understand these variations because some RPA systems may specialize in a particular approach. Besides, when looking at your own needs for automation, it’s a good idea to see what types may work the best.

History of RPA

No doubt, the concept of automation is far from new. Did you know that the first mention of the concept was from Homer’s The Iliad? In the poem, he described how Hephaestus (the Greek god of blacksmiths) used automatons (or machines) to build weapons for the gods of Mount Olympus.

Yet it would not be centuries later until notable real-world examples of automation would emerge. After all, it’s only been during the past 70 or so years that computers have been a major catalyst for this trend.

But the automation technologies – while powerful – still had their drawbacks. They could easily result in complex IT environments, which required expensive and time-consuming integrations and custom coding. Because of this, an employee may have to use multiple applications in their daily activities that could involve wasteful tasks like moving data from one to the other. The irony was that the technology could make employees less productive!

From this emerged the key elements for RPA, which came about in the early 2000s. A big part of this was screen scraping, which is the automation of moving data among applications, which turned out to provide a nice boost to efficiency and effectiveness.

But the nascent RPA market got scant attention. It was mostly perceived as low-tech and a commodity. Instead, investors and entrepreneurs in Silicon Valley focused their attention on the rapidly growing cloud market that was disrupting traditional IT systems.

“The evolution of the RPA market is like any major technology trend,” said Mihir Shukla, who is the CEO and cofounder of Automation Anywhere. “There was a gradual progress, which involved periodic breakthroughs. A prime example is the iPhone. Before this, there was a long period of incremental innovation.”⁸

Fast forward to today, RPA is the fastest growing part of the software industry. According to Gartner, the spending on this technology jumped by 63% to $850 million in 2018 and is forecasted to reach $1.3 billion by 2019.⁹

Or consider the findings from Transparency Market Research. The firm projects that the global market for RPA will soar to $5 billion by 2020.¹⁰

The Benefits of RPA

When it comes to RPA, the most talked about benefit is the ROI. Compared to just about any other enterprise software technology, the metrics are standout. Take the Computer Economics Technology Trends 2019 report, which is a survey of 250 companies (the study covered many industries that had revenues from $20 million to billions). Among them, about 12% implemented RPA within their organizations and half of them said there was a positive ROI within 18 months (the remaining was mostly at breakeven).¹⁶ “We expect RPA to grow rapidly, because of the success of early adopters,” said David Wagner, who is the vice president for research at Computer Economics.¹⁷

Here’s another perspective from consulting firm, A.T. Kearney: “On average, a software robot costs one-third as much as an offshore employee and one-fifth as much as onshore staff. Several prominent service industry firms have seen cost reduction and process improvement from the use of robots. Barclays Bank attributes savings worth the equivalent of roughly 120 full-time employees and an annual reduction in bad debt provisions of $250 million. Telefónica O2, which uses more than 160 robots to automate 15 core processes and nearly 500,000 transactions per month, says that its return on investment in robotic process automation has exceeded 650 percent.”¹⁸

But when looking at RPA, the benefits are far more than just about the impact on the bottom line. The technology can transform a company.

So let’s take a look:

The Impact of Small Improvements: On the surface, an employee who saves 10 to 20 seconds on a task – even something as simple as a series of cut-and-paste actions – may seem trivial. But it’s not. When scaled across thousands of employees across a global organization, the impact can certainly be significant. For example, some companies will keep track of the metric of how many hours are saved by using RPA, which becomes a part of the overall ROI calculation.

Relative Ease of Implementation: Unlike traditional business applications like a CRM or ERP, RPA generally does not involve an onerous implementation and integration. Why? Note that the software sits on top of existing IT systems. RPA is also relatively easy for a person to use since there is no requirement for understanding complex coding. As a result, there is not as much reliance on the IT department for support, which is certainly a win–win, or a need for heavy training. The bottom line: The people implementing RPA will get to their objectives quicker and the IT department will have more time to devote to higher priority items. This is important as there remains a trend of less investment in IT.

Compliance: Just one violation of a government regulation can have a serious adverse impact on a company. It could even be a threat to its very existence, as we have seen with examples like Enron or Theranos.

While employees are usually diligent and trustworthy, they do make mistakes or they may not understand some of the regulations. Yet this is not an issue with RPA. You can easily configure a bot to make sure the actions are compliant with regulatory requirements. Many RPA vendors also have built in their own compliance systems, handling such laws as the Sarbanes–Oxley Act, General Data Protection Regulation (GDPR), and HIPAA (Health Insurance Portability and Accountability Act of 1996).

Another compliance benefit is that there will be less intervention with the data from people, which lessens the possibility of fraud. What’s more, RPA provides a strong audit trail to allow for better tracking and monitoring.

Customer Service: Nowadays, people want quick and accurate responses from their companies. But this is difficult to provide, especially when a company is overwhelmed from incoming contacts.

But this is where RPA can make a big difference. The bots are programmed to make sure that all the necessary steps are taken – at scale. The result is often an increase in customer satisfaction metrics, like the Net Promoter Score (NPS).

“RPA can take the processing of a mortgage application from 15 days to 7 minutes,” said Shukla. “It’s something like this that can go a long way with the customer experience.”²¹

Employee Satisfaction: Yes, your team should also enjoy the benefits of RPA. After all, it means that they do not have to spend their valuable time on tedious activities. The result may be less turnover and higher productivity.

Wide Application: It’s common for an enterprise application to focus on a certain part of a company’s departments or functions. But RPA is wide. It can be used for virtually any part of a company, such as legal, finance, HR, marketing, sales and so on.

Data Quality: It should be greatly improved as there will be less chance of human error. In fact, there will probably be much more data because of the scalability of the automation. In other words, the datasets for analytics and AI will be more robust and useful.

Digital Transformation: This is a major priority for CEOs. But many companies have legacy systems that would be expensive to replace or integrate. However, RPA is an approach that can help with this process, which is often quicker and less costly.

Scalability: If there is a sudden jump in demand, it can be extremely difficult to hire new employees. But RPA can be a solution. It is much cheaper and faster to ramp up new bots to meet the demand.

The Downsides of RPA

RPA is definitely not a cure-all. The software has its inherent limitations and complexities.

RPA Compared to BPO, BPM, and BPA

In the discussion about RPA, you may hear terms like business process management (BPM), business process outsourcing (BPO), and business process automation (BPA). They can get kind of confusing but they have key distinctions.

Here’s a look:

BPM: With the intense competition from Japan during the 1970s and 1980s, US companies were desperately seeking new and innovative approaches to improve their efficiency and competitiveness. Part of this meant adopting different management approaches, such as Six Sigma (this includes a combination of project management and statistical techniques), lean production (which is based on the manufacturing principles of Toyota), and total quality management or TQM (a blend of Six Sigma and lean production). There was also a greater focus on computer technologies. For example, FileNet introduced a digital workflow management system to help better handle documents (the company would eventually be purchased by IBM). Then there would come onto the scene ERP vendors, such as PeopleSoft.

All of this would converge into a major wave called BPM . For the most part, the focus was on having a comprehensive improvement on business processes. This would encompass both optimizing systems for employees but also IT assets.

There were also various business process management software (BPMS) solutions to help implement BPM. One was Laserfiche. Nien-Ling Wacker founded the company in 1987, when she saw the opportunity to use OCR (optical character recognition) technology to allow users to search huge volumes of text.

So then how is BPM different from RPA? With BPM, it requires much more time and effort with the implementation because it is about changing extensive processes, not tasks. There also needs to be detailed documentation and training. Because of this rigorous approach, BPM is often attractive to industries that are heavily regulated, such as financial services and healthcare. However, the risk is that there may be too much structure, which can stifle innovation and agility.

On the other hand, RPA can be complementary to BPM. That is, you can first undergo a BPM implementation to greatly improve core processes. Then you can look to RPA to fill in the gaps.

Here’s how a blog from UiPath describes things: “Consider this analogy to self-driving cars: a BPM approach would require us to rip up all paved roads and install infrastructure for the new cars to move about on their own, while an RPA approach seeks to operate a pre-existing car just as a human would. Google has come at the problem from an RPA angle, because replacing all roads (especially in the U.S.) is just unfathomable. That’s not to say that RPA is always the better option – not at all. The key is knowing the difference and using both tactics to their best advantage.”²⁵

BPO : This is when a company outsources a business service function like payroll, customer support, procurement, and HR. The market is massive, with revenues forecasted to reach $343.2 billion by 2025 (according to Grand View Research).²⁶ Some of the top players in the industry include ADP, Accenture, Infosys, IBM, TCS, and Cognizant.

As should be no surprise, one of the big attractions of BPO is the benefit of lower wage rates in other countries (this is often referred to as “labor arbitrage”). The employee bases will also often be educated and multilingual.

But there are certainly other major advantages. For example, a company does not have to waste its attention on noncore functions. In fact, by outsourcing various areas of a company, there is the benefit of having a specialist provide the service, which should mean getting better results.

But as with anything, there are drawbacks with a BPO . Perhaps the most notable one is the quality issue (you know the situation when you call a company and get an agent you can barely understand!).

Now as for RPA, what is the connection then with BPO? There is an interesting one. RPA is automating BPO-type activities. Based on studies from firms like Everest Group, KPMG, and Deloitte, the cost advantages of RPA over outsourcing can be as much as 70%.²⁷ This may mean there will be less outsourcing in the coming years. Yet BPO companies have been adapting to this . Keep in mind that these firms are generally heavy users of RPA technology.

BPA : This is the use of technology to automate a complete process. One common use case is onboarding. For example, bringing on a new employee involves many steps, which are repeatable and entail lots of paperwork. For a large organization, the process can be time-consuming and expensive. But BPA can streamline everything, allowing for the onboarding at scale.

OK, this kind of sounds like RPA, right? Yes, this is true. But there is a difference in degree. RPA is really about automating a part of the process, whereas BPA will take on all the steps.

Consumer Willingness for Automation

The automation of consumer-facing activities , such as with chatbots on a smartphone or web site, are becoming more ubiquitous. But this begs the question: Does this technology really provide a good experience? Might it be doing more harm than good?

These are very good questions to ask as many automation technologies are far from perfect, especially those that deal with complex environments.

Consider a report from Helpshift, an AI-based digital customer service platform automating 80% of customer support issues for huge D2C (direct-to-consumer) brands including companies like Flipboard, Microsoft, Tradesy, and 60 others. Its report is based on the analysis of 75 million customer service tickets and 71 million bot-sent messages.

Granted, there is much progress to be made. Chatbot technology is still in the early phases and can be glitchy, if not downright annoying in certain circumstances. But in the years to come, this form of automation will likely become more important – and also a part of the RPA roadmap.

According to the CEO of Helpshift, Linda Crawford: “Seeing as the vast majority of Americans dread contacting customer support, there’s a huge opportunity here for chatbots to fill the void and improve the customer support experience for consumers—and agents.”²⁸

The Workforce of the Future

The modern concept of work goes back to Henry Ford. To scale his operations to create the automotive industry, he realized he had to be competitive with wages so as to attract the best employees. He made the remarkable move of doubling them $5 a day, which actually had the consequence of greatly expanding the middle class! But he also introduced other policies, such as the 40-hour workweek, with weekends off.

The interesting thing is that the fundamentals of work have not changed much since then. True, there has been the trend of the gig economy, in which people get paid for offering services through Uber and Lyft. Yet when it comes to office work, the structure has remained quite durable.

But the fact remains that many of the activities remain fairly tedious and uninteresting. According to research from the McKinsey Global Institute, white collar workers still spend 60% of their time on manual tasks, such as with answering e-mails, using spreadsheets, writing notes, and making calls.²⁹ Interestingly enough, a report from David White estimates that $575 billion is wasted in the United States because of inefficient processes.³⁰

In light of all this, RPA is likely to have a significant impact on the workplace because more and more of the repetitive processes will be automated away. One potential consequence is that there may be growing job losses. A survey from Forrester predicts that – as of 2025 – software automation will mean the loss of 9% of the world’s jobs or 230 million. Then again, the new technologies and approaches will open up many new opportunities. Yet this may not be enough to make up for the shortfall. The Forrester study, for example, forecasts that there will be replacement of 16% of US jobs and the creation of 9% of new ones.³¹

Or look at the research from McKinsey & Company. Its analysis shows that technologies like RPA could automate a whopping 45% of the activities of a company’s workforce.³²

Now when a company engages in an automation project, the CEO will usually not talk about job loss. It’s something that will frighten the workforce and generate awful headlines. Instead the messaging will be vague, focusing on the overall benefits of the transformation.

This may make it sound like not much is happening. But it does seem like a good bet that the reverberations will grow and grow, as RPA systems get increasingly robust. As we’ve seen in prior periods where technology resulted in job loss – such as in the Industrial Revolution – there are serious changes in politics and regulations. The upshot is that technology often becomes a target of scorn.

Companies really do try to avoid layoffs, since they are expensive and take a toll on the organization. But in the years ahead, managers will probably need to find ways to navigate the changes from automation, such as finding new roles or reskilling the workforce.

All in all, the rise of automation has the potential for leading for a much better society. Again, workers can focus on more interesting and engaging activities – not repetitive and mundane tasks. There will also be ongoing renewing of knowledge and understanding. But there must be proactive efforts, say from companies and governments, to provide for a smoother transition.

Conclusion

As you can see, RPA is really an exciting area of technology. The software has been shown to result in quick ROI and has helped companies – in many industries – to transform themselves. But there are other benefits like improved compliance, better customer service, and greater data quality.

On the other hand, RPA does have its challenges and issues. The technology can be tough to manage, say when there are a large number of bots. There are also potential complications with security and scalability across the enterprise.

Yet despite all this, RPA appears to be a core technology that will be around for the long haul.

Key Takeaways