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Can RPA Improve Agility?

By Pradeep Raju, CMA, and Rod Koch, CMA, CSCA, PMP, CSM
March 1, 2019
2 comments

Today’s agile organizations develop RPA solutions to reap the benefits of process improvements.

 

Today, lean and agile methodologies are often used within organizations to improve productivity, reduce market entry time for products, and even to increase employee engagement within the company. These methodologies have seen widespread acceptance within many business organizations, but, historically, finance teams have often lagged behind in the agile/lean adoption curve. Lately, more finance teams have been examining how these approaches can improve the operation of the finance function. One of the ways that finance departments can improve their agility is through the adoption of robotic process automation (RPA) tools and techniques.

 

WHAT RPA IS AND ISN’T

 

RPA doesn’t mean replacing a human being with a physical robot. It’s a software solution designed to emulate current processes that might have previously been implemented and overseen by human beings. RPA is a term used to define the entire automation life-cycle process and generally consists of:

 

  1. RPA robot—a single software component designed to execute a specific task.
  2. RPA management software—the software that manages and directs all the various RPA robots.
  3. RPA development tools—the integrated software components that an RPA developer utilizes to design, create, test, schedule, and execute RPA robots.

 

WHERE TO USE RPA IN FINANCE

 

Many financial transactions that are highly repetitive and time-consuming for humans, and where the human touch adds little value, can be automated by RPA.

 

For example, a controller at a manufacturing site may want to increase automation of month-end close. He or she currently might be responsible for many repetitive compliance activities, such as:

 

  • Ensuring all monthly process orders are expensed to the correct cost centers.
  • Ensuring all monthly process orders have correct overhead allocations.
  • Checking for any aging work-in-progress inventory.
  • Generating performance reports for the cost centers.

 

In the past, the controller would have generated software reports related to these transactions and checked them for any errors. If the controller is responsible for several manufacturing sites, he or she would have to perform these activities multiple times, further delaying the completion of month-end close.

 

By utilizing RPA, the finance team can mostly automate these monthly tasks and focus on reviewing any resulting exceptions from the automated process, as well as spending more time doing high-level analysis and building better business performance communication tools and enhanced storytelling.

 

BENEFITS OF RPA

 

To maximize the substantial benefits of RPA, organizations must think broadly and have enterprise-wide ambitions. Implementing RPA for a single finance unit, function, or site is a good test and may be enough to produce an acceptable return on investment (ROI), but the real value in RPA is being able to reuse the same set of robots across multiple finance units, functions, and/or sites.

 

Too many times, organizations fall into the trap of viewing RPA from only a cost-reduction standpoint. The many benefits of RPA beyond mere cost savings include:

 

  • Improved compliance. Through RPA, finance teams can ensure the accuracy of the data required for compliance and even be able to run additional compliance reports that could help auditors complete their audits more quickly.
  • Improved productivity. By having RPA complete the lower-value-added activities, finance teams can move to higher-value-added activities that are more meaningful to the business.
  • Improved scalability. Adding more automated work doesn’t require hiring additional resources; reducing work that is automated doesn’t require severing resources.
  • Improved quality. Robots are better at repetitive tasks than humans; they don’t get tired, become distracted, or otherwise lose their focus on a task.
  • Improved job satisfaction. When repetitive tasks are eliminated and humans are allowed to focus on more creative tasks, job satisfaction often increases as well.

 

RPA INVESTMENT

 

To calculate the ROI for RPA, we must understand the investment required as well as the potential return. Some organizations don’t achieve a positive ROI because their RPA implementations took too long to implement, or the RPA solution produced inaccurate results. The root cause of these issues can largely be attributed to either of the following situations:

 

  1. RPA emulates an existing process. If the underlying process itself is flawed, then those flaws will be carried into the RPA deployment, leading to inaccurate results. It’s important for organizations to analyze their processes and streamline them before porting them to RPA.
  2. RPA doesn’t replace existing IT systems or databases but, rather, interacts with them. When choosing an RPA software vendor, organizations should identify whether the particular RPA solution has the ability to interact with the company’s existing IT systems and software. This will greatly reduce delays in the implementation phase of RPA.

 

RPA RETURNS

 

Calculating the cost savings based on reduced human costs is relatively simple. Calculating dollar benefits for other benefits requires a more nuanced approach.

 

  1. Improved compliance: If your organization has ever had issues with compliance or audit teams, you can document what additional costs were incurred due to these challenges. Consider the costs of additional audit requirements, compliance cost increases, and so on. By utilizing RPA, these costs could be minimized, or the risk of incurring these costs could be reduced.
  2. Improved productivity: This will take more time and effort to calculate and might not be visible immediately upon implementation. By focusing on higher-value-added activities, the finance team can become more involved in business decision making and partner in other continuous improvement projects. If these decisions or projects yield positive results for the organization, these revenues or savings can be attributed to RPA project returns.

 

RPA solutions offer many opportunities to automate repetitive and manual departmental or enterprise-wide processes. When applied to these types of problems and scaled across multiple sites or groups, large cost savings and additional process improvement benefits can be achieved. These savings can help the finance team become more agile and focused on higher-value-added work, resulting in improved performance and job satisfaction.

 

Pradeep Raju, CMA, is a finance manager at Genentech and a member of IMA’s Portland Chapter. He can be reached at raju_pradeep@outlook.com.
Rod Koch, CMA, CSCA, PMP, CSM, is a member of IMA’s Technology Solutions and Practices Committee and the IMA Global Board of Directors. He can be reached at rodneykoch@cs.com.
2 + Show Comments

2 comments
    Pradeep March 8, 2019 AT 8:49 pm

    RPA is a step towards being a Lean Organization. But not the first step. For small companies the focus may be first on simplifying their financial processes and then determine whether the outcome still warrantes a RPA solution. For large companies with multiple sites/locations simplification of the process only gets them to a certain stage and one might see a number of repetitive tasks still remaining.

    Robert Band March 2, 2019 AT 11:43 am

    Is RPA only for large cap companies due to cost of software or can small businesses get started with RPA?

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