Taking F&A business process services to the next level

Transcription

1 Taking F&A business process services to the next level Robotic process automation underpins HP s repositioning of its BPO portfolio Business Process Services

2 Written by: Tom Reuner Published July 2014 Ovum INTRODUCTION OVUM VIEW Business process services (BPS) are maturing and increasingly becoming part of strategic sourcing decisions taken by C-suite executives. The key driver on this journey is consistent global service delivery that is underpinned by greater automation. While process automation is an intricate interplay of a plethora of approaches, innovations around the notion of robotic process automation (RPA) are set to significantly enhance the level of automation in delivering BPS. Within that context, the elimination of jobs required to manage processes that thus far couldn t be automated is not necessarily the key driver. Undoubtedly cost savings are a critical consideration, but the direction is not one that RPA would ring the death knell for offshoring as some commentators were suggesting. The key driver for BPS providers is rather higher levels of robust industrialized service delivery that is critically enhancing customer satisfaction levels. Thus, in many cases, the deployment of RPA is a conduit for leveraging savings for other projects that allow providers both to deepen the relationship with its customers as well as providing the basis for up- and cross-selling. HP stands out with a holistic approach not only to RPA but to the wider implications of process automation. Its emphasis on RPA aims to shift the perception from dependable trustee for complex (if unexciting) back-office services to one of a disruptor in the BPS provider landscape. By leveraging open source and proprietary tools in a structured and comprehensive way, HP adds a distinctive note to the overhyped discourse around RPA. KEY MESSAGES HP is underpinning the repositioning of its BPS business by blending aspects of its global business services (GBS) group, which provides shared services to HP for BPS capabilities, with its capabilities around process automation. The emphasis on RPA aims to shift the perception from dependable trustee for complex (if unexciting) back-office services to one of a disruptor in the BPS provider landscape. HP s holistic approach to process automation is aligned with Ovum s advice to see the various approaches to process automation as part of a sourcing tool box, rather than viewing one particular approach as a panacea. By combining open source tools with both proprietary software as well as innovative propositions such as Blue Prism, HP offers a structured approach to embed RPA into its operations process improvement culture. HP suggests their approach has led to cost savings in excess of 20% [HP to advice] THE EVOLUTION OF BUSINESS PROCESS OUTSOURCING MOVING BEYOND LABOR ARBITRAGE The focus of business process owners is shifting from a mere life & shift, cost-centric approach, largely predicated on leveraging labor arbitrage in low cost locations, toward defining business processes as part of a strategic vision. As such, discussions regarding BPO deployments become increasingly part of the over- Ovum. Page 2

3 arching sourcing strategy and C-level executives have a higher level of involvement in these discussions. The levers driving this shift include: BPO is becoming part of transformational journey that requires both a more consultative approach to selling as well as C-level involvement and sponsorship; BPO is morphing into business process services (BPS), which encompasses traditional BPO and platform approaches, as well as point-solutions such business-process-as-a-service (BPaaS); BPO governance is maturing and will become increasingly incorporated within clients GBS organizations; Finance and accounting (F&A) offerings are becoming progressively more verticalized, predominantly through accelerators but also BPaaS point-solutions Higher levels of automation through a variety of approaches including platforms and RPA will accelerate the journey toward business outcomes We will touch upon each of these levers throughout the course of this report. BPO is morphing into BPS The reference points for the evolution of BPO are many fold. However, two events relating not only to the evolution of BPO but to the terminology used in the marketing of process services stand out: first, the rebranding of BPO as business process management (BPM) by the Indian IT trade body Nasscom; and second, a slightly less headline grabbing move by most BPO providers to replace the reference to outsourcing with a wider notion of BPS encompassing traditional BPO and platform approaches as well as point-solutions such BPaaS. In Nasscom's view, the Indian BPO sector had moved up the value chain, and the continuing use of a term that had connotations of labor arbitrage and traditional call center activities was misrepresenting the abilities of its members to perform complex transformations and act as central business partners for their clients. While the Indian BPO sector has undoubtedly matured over the last decade, Ovum believes that rebranding is a futile attempt to mitigate the challenges that the sector is facing. Simply suggesting a new acronym, let alone one that is already used for a different and well-established concept, is unlikely to help the sector overcome major challenges such as its unfavorable perception in the US, the slowdown in growth of the Indian majors, the lack of domestic demand, and the appreciation of wages and the rupee. Conversely, while the more subtle shift towards using BPS instead of BPO is a sensible approach, there is a certain amount of blurriness and thus confusion about the differences between BPS, platform BPO and BPaaS. Fundamentally, not only do buyers of process services not care about terminology, in most cases they don t care about technology either. The more BPO moves up the value chain, the more the discussion with buyers is shifting towards business cases, the efficiency of the process, and mitigation of risk. The key point here is that process buyers now have much more choice when considering optimizing or even outsourcing parts or entire business processes. As we will outline later in the document, automation, and thus higher degrees of efficiency, are at the heart of the strategic shift toward higher-value BPS engagements. HP IS REPOSITIONING ITS BPO SERVICES In line with the evolution of the market for BPS, HP has adapted and fine-tuned its positioning. Thus HP is increasingly referencing its GBS capabilities for global clients predominantly in F&A and, to a lesser extent, in human resources (HR) BPO to differentiate itself from the likes of Accenture and pure-play BPO providers. It requires significant investments to deliver complex services consistently on a global scale, and currently only IBM can match HP in regard to delivering complex services consistently on a global scale. Customers such Ovum. Page 3

4 as a large software firm have referenced these capabilities as being decisive criteria when signing up with HP. Similarly HP is developing a narrative around what it calls the "new style of IT." This "new style" comprises cloud (in particular HP s converged cloud), analytics, and mobile, and to a lesser degree social technologies. An example of this is HP s Autoflow system, which enables clients to automate core business processes and integrate with any enterprise resource planning (ERP) platform hosted in a cloud environment. Similarly, HP s acquired assets such as Autonomy and Vertica support BPS tools such as the BPS Business Performance Analytics Tool, a dashboard providing clients with reporting on its process environment. ROBOTIC PROCESS AUTOMATION WILL ACCELERATE INDUSTRIALIZATION THE CONTEXT FOR THE DISCUSSION ON ROBOTIC PROCESS AUTOMATION Process automation is at the heart of organizations journey toward higher levels of standardization and industrialization. As such, the various approaches to process automation need to be assessed on a continuum ranging from more traditional propositions, such as data center automation tools, to innovative and comprehensive approaches such as RPA. RPA in this context refers to process automations where software drives existing enterprise applications in the same way as a user would. Unlike traditional application software, RPA is a tool that operates and orchestrates other application software through the existing application s user interface. Target areas are typically rules-based, predictable, or replicable processes as well as high volume processes that can be processed at scale. This understanding underlines that these approaches are at a significantly higher level than data centre automation tools. However, when evaluating these technologies the questions regarding the overall IT strategy typically include: How can new concepts such as robotics and autonomics be integrated with legacy environments and what is the business case for advocating investments in these technologies? Can these technologies be implemented without having to reconceptualise the major design and architectural principles of business processes? How can these technologies overcome or address the issue of "judgment" in the process flow? While the marketing of RPA technologies tends to focus on specific use cases, the scope of due diligence by process owners invariably needs to address a much broader set of contingencies that might impact the quality and efficiency of process flows. A CONTINUUM OF AUTOMATION PROPOSITIONS NECESSITATES HOLISTIC APPROACH The journey toward industrialization provides a multitude of contingencies when assessing process automation. Even within the narrower context of process automation, there is multitude of different approaches that often overlap. Thus, Figure 1 calls out both the continuum as well as the evolution of process automation. RPA builds upon and extends continuing efforts around data center automation, but also more low level approaches such as desktop automation or scraping. While innovations such as RPA will undoubtedly enhance process efficiencies and thus achieve cost savings, fundamentally they need to be discussed within the context of broader transformation projects. These include not only SOA and cloud, but also projects focused around BPM and work flow. Ovum. Page 4

5 Whilst we see some providers aiming to differentiate through the deployment of RPA, a holistic approach combing proprietary software, open source and RPA (such as that advocated by HP) appears to be a prudent step on the journey toward industrialization. Figure 1: Continuum and evolution of process automation Source: Ovum Figure 1 is also meant to highlight that, currently, RPA is largely deployed for very specific use case as well as for specific accounts. Over time Ovum expects that, because it is underpinned by artificial intelligence platforms, RPA will evolve towards general deployment as part of a global delivery model. In the end the direction is one toward fully automated IT processes or, to put it another way, proper industrialization. HP TAKES A HOLISTIC APPROACH TO ROBOTIC PROCESS AUTOMATION HP IS EMPHASIZING ITS HERITAGE IN PROCESS AUTOMATION Similar to its emphasis on GBS, by accentuating RPA HP hopes to shift the way it is perceived in the market, from being seen as a dependable trustee for complex (if unexciting) back-office services to being known as an innovator in the BPO provider landscape. By leveraging open source and proprietary tools in a structured and comprehensive way, HP adds a distinctive note to the overhyped discourse around RPA. This approach is aligned with the notion of a continuum of process automation tools that we have outlined above. Figure 2 illustrates HP s view of the evolution of RPA. In alignment with Ovum s perspective on the evolution of the concept, back-office functions as well as job roles in service delivery centers will evolve from mainly administrating business processes and managing exceptions that, thus far, could not be automated by traditional means of process automation towards a more comprehensive notion of knowledge workers. Fundamentally these new job roles will focus on value creation activities while automation will increasingly diminish the demand for admin roles. Ovum. Page 5

6 Figure 2: Evolution of robotic process automation Source: HP This assumption is critical for the discourse on RPA as the value proposition is not just about eliminating FTEs but about fundamentally transforming the requirements. HP S APPROACH TO ROBOTIC PROCESS AUTOMATION Within that context HP is focusing on three major segments that automation tools fall into. First, automation tools that are often point solutions, typically deployed with a single ERP system. Beyond more generic macro style tools from Microsoft, HP is using Auto Hot Key, Winshuttle, ezloader and LoadRunner, among others. Second, the emerging category of RPA platform tools that allows automation of activities that currently require manual intervention. HP is concentrating on Blue Prism, where it is working with its integration partner Virtual Operations on a number of areas and proofs of concept for current BPS clients and also its own internal GBS organisation. The differentiator for a tool like Blue Prism is that it can orchestrate more than one technology and help to promote reuse of scripts with a comprehensive repository that enable sharing of often used routines, such as accessing . Furthermore, it provides a far more robust framework to develop, support and maintain your automation scripts and procedures. Third, workflow and integration automation tools, where the underlying technologies are touched using application programming interfaces. Within its GBS organization, HP is using Tibco s ActiveMatrix to drive automation, as it feels that this product enables connections between SAP, Salesforce, and WorkDay. Ovum. Page 6

7 SPECIFIC USE CASES ARE CRITICAL As has been pointed out, RPA is not the panacea that will enable users to move to a Nirvana of process efficiency. Instead, it should be evaluated within specific and clear use cases. HP has identified a whole raft of process candidates that could be leveraged for RPA, among them: Data reading, data entry, import/export information between systems; SAP transactions, data reading, image downloading, data entry, mass changes; Improving/implementing process workflows, lists, trackers, file storage; Surveys, automating communication between teams, approvals, data validation. However, the efficiencies are not just derived by deploying RPA tools, but by embedding them into the overarching approach to optimizing business processes. Thus HP uses Lean Six Sigma to identify areas for improvement and then look at its full suite of automation tools to determine the best fit. The company has created a robotics centre of excellence with staff from its Polish and Indian delivery centres. These teams support Lean Six Sigma assessments to validate opportunities and then deal with the implementation and ongoing support. Much of this work to date has been done with limited input from the IT teams to ensure the robotic scripts are properly documented and can be maintained should change occur with the underlying application as well as HP s methodologies and governance approaches. BENEFITS OF ROBOTIC PROCESS AUTOMATION RPA is still in a nascent state and therefore, robust reference cases are still sparse. Thus HP s internal findings on material outcomes are valuable reference points and at the same time underline our view that the impact of RPA will be significant. Having conducted a major review of all its process automation projects, HP concluded that, last year, more than 50% of productivity savings came from these deployments, which have enabled their staff to spend more time performing value-adding activities. While it needs to be borne in mind that these savings are not confined to a narrow notion of RPA, RPA is a critical lever for achieving process optimization and efficiency gains. The benefits HP has seen include: reduced manual effort and associated cost; greater accuracy resulting in less rework and faster throughput; reduced fraud; increased controls; increased on-time payments; minimised discount loss; and more accurate invoice processing. CRITICAL NEXT STEPS FOR THE EVOLUTION OF ROBOTIC PROCESS AUTOMATION As we have outlined BPS is moving up the value chain and increasingly becoming part of strategic sourcing decisions. As such, the stakeholders influencing decisions on deploying RPA are not just IT operations executives but instead encompass all aspects of an IT organization. Therefore the key aspects that need to be discussed with service providers include: Do governance strategies need to be adapted?; Ovum. Page 7

8 What is the impact of quality assurance?; What is the mid to long-term impact on pricing?; What is the impact on acquiring talent?; and How do trainers have to be retrained? Of these issues, governance is the most critical one. While all stakeholders in the RPA community emphasize that deployment is unintrusive, so far little attention has been paid to issues around governance. In many organizations, IT and business process support functions are not yet mature enough to deal with some of the issues that we have raised. Similarly aspects of quality assurance have so far scarcely featured in our discussions with stakeholders from the RPA community. These aspects flip back to the discussion on the evolution of job roles for back-office functions as well as for IT support. Organizations need to adapt to these changing requirements and IT services providers such as HP are best placed to advise on these issues as they have built out their internal GBS organization. They can therefore leverage internal knowledge and not just talk in aspirational terms. Robust knowledge and case studies are critical aspects on moving RPA to the next level of adoption. SUMMARY BPS is maturing and increasingly becoming part of strategic sourcing decisions. Optimised global delivery capabilities are a key driver for this shift. HP s build out of its GBS organization, which will underpin the delivery of its horizontal BPS offering, is a reference point for this journey. Innovation around process automation will be a critical component to accelerate this shift. Within that context RPA is a critical lever as it allows for the automation specific process steps that could not be automated through any other means and thus require manual intervention. HP is approaching RPA from a holistic view and integrates RPA both into its GBS model as well as into a comprehensive approach to process automation that combines proprietary, open source and RPA tools. This holistic view means HP uses methodologies such as Lean Six Sigma to identify areas for improvement and then look at a comprehensive suite of automation tools to determine the best fit. While HP has used Blue Prism as its main RPA tool so far, the company is continuously evaluating the evolving landscape of technology providers. As such HP continues to evolve its positioning around BPS from the notion of safe pair of hands toward adding innovation on top of operational excellence. APPENDIX AUTHOR Thomas Reuner, Principal Analyst thomas.reuner@ovum.com OVUM CONSULTING We hope that this analysis will help you make informed and imaginative business decisions. If you have further requirements, Ovum s consulting team may be able to help you. For more information about Ovum s consulting capabilities, please contact us directly at consulting@ovum.com. DISCLAIMER All Rights Reserved. Ovum. Page 8

9 No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publisher, Ovum (an Informa business). The facts of this report are believed to be correct at the time of publication but cannot be guaranteed. Please note that the findings, conclusions, and recommendations that Ovum delivers will be based on information gathered in good faith from both primary and secondary sources, whose accuracy we are not always in a position to guarantee. As such Ovum can accept no liability whatever for actions taken based on any information that may subsequently prove to be incorrect. Ovum. Page 9