Strategic HR

Automation is Increasing Productivity, Not Job Losses

Business process automation is enabling companies to realize significant productivity gains in such areas as finance, accounting, and HR, but it is not yet leading to broad job losses, according to a new study from Information Services Group (ISG), a technology research and advisory firm.automation

Beyond automation’s impact on enterprises, the latest ISG Automation Index report also shows that IT service providers are quickly introducing automation into their offerings, leading to dramatic improvements in productivity and service levels. This accelerated pace of change is prompting the vast majority of IT and business leaders to say that IT will be the business function most impacted by automation in the next 2 years.

“Talk of automation is everywhere, but what is often missing from the conversation are details about what is actually happening today,” said Stanton Jones, director and principal analyst, ISG Research, and coauthor of the report. “The ISG Automation Index fills that gap with a data-driven analysis of how automation is changing the landscape of IT and business services–based on real-world information from ISG-advised IT sourcing transactions and RPA assessments.”

The report finds the application of Robotic Process Automation (RPA) is enabling enterprises to execute business processes 5 to 10 times faster, with an average of 37% fewer resources. Such productivity gains, the report said, are not resulting in job losses, but are enabling companies to redeploy employees to handle higher-value tasks and a greater volume of work.

ISG data show the average full-time equivalent (FTE) reduction from RPA ranges from 43% for order-to-cash processes (billing, cash application, credit, collections, and pricing) to 32% for hire-to-retire HR processes (benefits, payroll, recruiting and talent management, and vendor management systems).

Yet, Jones pointed out, “In nearly every scenario we analyzed, increased productivity through task automation stands out as the most important change–not job loss. Humans are working alongside software robots, be they virtual agents or engineers, to increase their ability to take more customer calls, resolve more service desk tickets, and process more invoices. This improved productivity is seeing important downstream effects: increasing operational speed and scalability, improving compliance and avoiding future costs. Our data indicate these benefits apply to both enterprises and service providers.”

By 2019, the report said, 72% of enterprises will be leveraging RPA–either in full production mode or in pilot testing–to reduce costs, improve productivity and quality, increase compliance, and compress transaction times. RPA currently is favored by enterprises because it offers a rapid, low-cost way to automate basic, rules-based business processes without needing to reengineer them.

IT Automation Driving Productivity Up, Prices Down

Beyond automating business processes with RPA, the broad automation of IT operations through autonomics is fast-emerging as the next big wave in automation. According to the results of an ISG survey cited in the ISG Automation Index report, 43% of IT leaders indicate that automation of operations will have the biggest impact on their IT spending through 2019. Additionally, 68% of IT and business leaders feel IT will be the support function most impacted by automation by 2019.

IT service providers are quickly integrating automation into their delivery models, and as a result, their productivity is surging.

“Nearly every IT outsourcing vendor is introducing some form of auto­mation into its services,” Jones said. “Vendors are doing this most commonly with autonomics software, which automates standard operating procedures and correlates data to improve these procedures over time. Whereas, in the past, enterprise clients could expect a five to ten percent productivity improvement in their outsourcing contracts after two years, we now see examples in which enterprises are realizing 40 to 140 percent improvement over the same time period.”

Productivity improvements vary by service tower, ranging from 24% for user support to 143% for network voice devices, according to the report. As productivity improves, costs are declining–with fewer people needed to manage a service, especially in areas where software is replacing hardware.

Evaluated against ISG industry benchmarks, double-digit cost reductions are being seen across all major service towers, with network and e-mail management services showing the sharpest cost reductions, at 64% and 71%, respectively.

Although the ISG report did not specifically examine incidence of job loss at service providers, Jones expects automation will eventually lead to workforce reductions among both enterprises and providers. “We are not there yet, because the impact of automation is still very much task-oriented. However, over time, as entire roles become automated, we do expect some job losses, but we also expect automation will create jobs, as market opportunities are addressed more quickly and the cost of production is lowered.”

Cognitive Computing Still Nascent

The report also touched on the future impact of cognitive computing, including machine-learning algorithms that have the ability to identify patterns, trends, and probabilities.

“The use of cognitive technology is still nascent in most enterprise support functions, but it is only a matter of time before it hits the mainstream,” said Mark Davison, partner and global leader of ISG Robotic Process Automation Services. “Once it does, companies will realize even greater levels of productivity as they build out their digital workforces. This new way of working, which creates a partnership between employees and robots, will become a source of competitive advantage for firms over the next decade.”

To download the full report, click here.

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