This article first appeared in Utility Dive.
The term Bots often times elicits an intense reaction of fear that robots will rise up and achieve world domination – as depicted in the Terminator movies – but the sensationalist threat of a cyborg assassin like Arnold Schwarzenegger, while wildly entertaining, is not realistic. What is realistic, however, is the subtle movement towards Robotics Process Automation (RPA) Bots, which mimic how a user would interact with an application utilizing the same User Interface (UI) as a human. These Bots are able to execute high volumes of standardized, rules-based, repetitive tasks.
RPA Bots are probably the most mature segment of the broader emerging Artificial Intelligence (AI) and Automation market. This is where most organizations take the first step towards automation, using software robots that act on top of existing interfaces to speed up routine processes that consist of repetitive and fairly simple tasks. These automation solutions are marketed as easy to implement, with very limited need for integration to the rest of the IT architecture.
Such RPA Bots have dramatically changed the manufacturing industry and a similar transformation is now underway in the utilities industry, starting with administrative-heavy and repetitive back-office processes. There are a variety of benefits including improved quality, scalability, increased productivity/speed, agility, cost efficiency, enhanced employee experience, streamlined processes, and employee health and safety, which can all ultimately lead to a reduction in Opex. For utilities, opportunity lies in refocusing the workforce toward more skilled work and leaving the repetitive and human error-prone business processes in the hands of Bots.
Opportunity for applications in the utility sector
For now, in the utilities sector there are a range of applications for RPA Bots, which are currently suitable including rates and tariff, finance and accounting, human resources, audit, and administrative support for operations, with the exception of developing and monitoring strategy and policies, as these processes are difficult to automate due to the cognitive and creative nature of that work.
- In finance and accounting, major business process areas ripe for RPA Bots include invoice processing, payment processing, travel and expenses, accounting, reporting, asset accounting, process receipts, and customer maintenance. This is one of the most commonly tapped departments for RPA, as processes for functions such as unbilled revenue tend to meet automation suitability characteristics.
- In human resources, automation can support recruitment requisition, new hire and induction, training and development, change of circumstances, information and systems, leave, payroll, and benefits.
- There is also an opportunity in procurement surrounding order & delivery processing, strategic sourcing, sourcing, supplier and contract management.
The first wave of automation at utilities is underway and there are already a number of early movers taking the lead on RPA Bots, with many also building data science teams, developing digital strategies, and automating processes, as part of a broader digital utility transformation.
- In finance and accounting, a U.S. investor-owned utility recently implemented RPA Bots to manage billing for a major commercial & industrial customer, which required 17 new employees to manage. This endeavor was successful in reducing the total number to two full-time employees – a considerable cost savings.
- In operational processes, an investor-owned water utility implemented a workflow automation system for customer information system (CIS) updates related to customer service orders, which resulted in an increase in the percentage of service orders from 6% to 50%, equating to between three and five full-time employees.
- In the audit function, a U.S. utility developed an employee data protection audit bot to evaluate the controls governing employee data and ensure Personally Identifiable Information and Protected Health Information are protected from compromise. The bot helped the utility to comply with various utility policies and procedures and industry regulations such as HIPPA, US Privacy Act, Identity Theft Prevention Act, as well as other regulations. The first target was 3,000 instances of Personally Identifiable Information containing social security numbers within files – they now have a fully functional bot running against numerous file type (e.g. excel, word) and file structures. Instead of a procurement process for a similar solution that would have taken months, a data scientist from the utility’s newly established Digital Analytics group built the bot in four weeks, as an existing service to the organization and no external sourcing cost.
Assessing business process suitability for automation
The risk in the industry is that automating existing inefficient processes and tasks might reinforce them, rather than tackling the problems at the core. Therefore, it is critical to put a rigorous process in place to assess automation suitability before evaluating RPA opportunities and performing value assessments. With the right processes in place, a value assessment can be used to evaluate an RPA opportunity in terms of both business process suitability and potential benefits necessary to feed the business case for RPA investment, which should be directly driven by business benefits. Value assessments should target areas of the business with high transaction volume, where processes can be standardized and future volumes are relatively certain.
At a high level, processes that are ideal for automation have the following characteristics:
- High-volume transactions or activity and prone to human error, which are important for ROI (Ex. Payroll: salary payment based on time reporting data, material inventory balancing transactions)
- Process involves searching, collating, or updating information (Ex. Human Resources: employee and payment information to maintain staff data)
- Repetitive and rules-based (Ex. Finance unbilled revenue allocation. For work management, work order balancing/closing)
- Accesses structured data (Ex. Finance billing exception handling)
- Interaction with Windows or web-based platforms (Ex. IT exchange & sharepoint management)
- Repeatable process is standardized and workflow-enabled (Ex. IT security operations, backup / restore services)
- Three or more staff perform the process (Ex. Procurement order and delivery processing - direct purchases and supply chain)
- Data entry/input intensive (Ex. Finance: invoice processing/data extraction from invoices)
The “Human” element
Although Bots are designed to fill traditional labor functions, it is important for utilities to develop new sets of capabilities to build and manage them. Automation in the organization will require managing this transition with the existing workforce and planning for the future workforce. It will require establishing a specialized team with deep utility business and operational expertise to explore the impact of automation on the business, a focus on staff development and training, and how to derive the maximum value from the human qualities, skills, and discretion of employees.
In many cases, utilities will need a different talent mix as job functions evolve. To this point, according to a Forrester research report, by 2025, automation will cannibalize 22.7 million, or 16%, of jobs within construction, production, office & administrative support, and sales administration roles. In parallel, automation will also create 13.6 million new jobs by 2025 in software, engineering, design, maintenance, support, training, or other specialized job area.
The human element will always be a critical asset for utilities. The kinds of skills that machines cannot acquire are those which are not easy to standardize or codify into an algorithm. These characteristics include creativity, leadership, motivation, intuition, empathy, abstract reasoning and lateral thinking, as well as skills associated with craft.
Making the case for RPA
A RPA Bots strategy, as with any strategic effort, begins with a clear vision and objectives. Developing a RPA strategy must be based on the organization’s business, existing IT strategy, and a high level RPA process analysis in order to validate a comprehensive list of processes and develop the business case to support investment.
A robust process analysis will inventory candidate business processes, which can be scored against two evaluation perspectives: ease of implementation and return on investment (ROI). These two measures will be used to build a utility’s initial cost/benefit analysis and feed the business case for investment.
Early in this assessment process, ease of implementation can be determined by evaluating both cultural aspects of automation such as resistance to change, and process characteristics such as level of repeatable tasks in the process. ROI can be evaluated in numerous ways including expected cost savings, quality improvement/productivity, and revenue generation due to automation of existing processes. ROI is initially directional and can be assessed as multipliers (e.g. 1X to 10X) or net present value (NPV) estimates.
It is essential to note that as RPA applications are selected and moved to the design and requirements stage, these ROI and ease of implementation estimates must be validated and refined later in the application development process. These will be critical inputs for benefits tracking as part of the governance process. Automation value assessment is the first step in the RPA journey, which end-to-end includes the following:
- RPA Strategy (value assessment and road mapping)
- Solutions (design, requirements and vendor selection)
- RPA Implementation (program management) and;
- Post-RPA Implementation (governance, Key Performance Indictors, and benefits tracking)
Where are Bots headed?
For the right business functions, RPA can provide a solid business case for removing mundane tasks, particularly in back office and support processes. Forward-looking, more advanced combinations of RPA and AI solutions will enhance each other, which will potentially provide much deeper value and impact on core business processes.
Some organizations are experiencing decision paralysis, while others are seizing first mover advantage. Regardless of where an organization stands, AI and Automation will change or disrupt business models, and thus, understanding the implications will be a fundamental task for leadership over the coming years.
While the utilities sector is still at an early stage with Bots, it is safe to say that there will not be any kind of dramatic robot apocalypse as seen in the Terminator, but rather, automation will gradually transform every organization and every job over time.
Like the Terminator, Bots cannot be disconnected, they are here to stay.
Marley Urdanick is an energy & utilities expert at PA Consulting Group