Robots are no longer just speeding up processes on assembly lines; they are making inroads into offices across the world. This intelligent software is set to supplant a number of white-collar jobs, which is a cause for both excitement and apprehension. Frank Casale, founder and chairman emeritus of the Institute for Robot Processing Automation (RPA), explains how the impacts are likely to be felt in finance departments and beyond.
Ten years ago, if someone asked whether robots would disrupt the white-collar workforce, they’d be considered a fringe thinker with a penchant for sci-fi and scaremongering. Increasingly, however, the question is not only being asked – it is also being answered in the affirmative.
In December last year, billionaire Jeff Greene, founder of the Greene Institute, warned that many traditional office jobs would shortly be handed over to robots.
“What globalisation did to the blue-collar worker in manufacturing over 30 or 40 years, artificial intelligence, machine learning, big data, robotics I believe will do to the white-collar economy – and at a much, much faster pace,” he said ahead of his two-day conference entitled ‘Closing the Gap’.
Likewise, a 2015 report by the Lords’ Select Committee suggested that over a third UK jobs were at risk of being automated within two decades. It advised that, with the composition of the workforce due to change so drastically, the UK needs to funnel far more investment into digital skills. Just as physical robots are used to speed up processes in manufacturing plants – with a knock-on effect for workforces – so too might intelligent robots replace human labour in many administrative and clerical roles.
In fact, with these changes already in motion (it is estimated that over half of the UK’s secretarial jobs have vanished in the last ten years) the real question now is not so much ‘will this happen’ as ‘what will it mean for businesses and for the people they employ’?
For Frank Casale, founder and chairman of the Institute of Robot Processing Automation (IRPA), the impact looks set to be nothing short of seismic.
“I won’t say it’s like the reinvention of the wheel but it’s something significant,” he says. “We’re seeing shifts from automation software that assists the white-collar workers, to extremely intelligent software that actually can replace the white-collar workers. Think of the impact of recent advances in artificial intelligence and machine learning – you have very advanced software which is allowing, if not forcing, companies to really revolutionise how work gets done. I see this as a digital labour play.”
Casale has a long track record in spotting emerging technology trends. Before founding the IRPA in 2013, he launched The Outsourcing Institute, a global network of outsourcing professionals, along with Casale Management Services, a recruiting firm for those working in complex technological applications such as big data, cybersecurity or the cloud.
Bigger than previousr trends
Robot process automation (also known as intelligent process automation or autonomics), is something different. He makes short shrift of the idea that RPA is simply the latest iteration of finance or accounting automation software that has been in use for a while.
“It’s bigger than any of the previous trends I’ve been involved in,” he says. “Think of any work process that’s definable, repeatable and rules based, and it’s a candidate for intelligent automation. Because there are many of these processes in an organisation, you can think of this as a horizontal rather than a vertical. It’s a general purpose technology, like the internet – if you sat down with someone in 1995 and they said, what can the internet do for me, you’d say, well it depends on what you do for a living, what business are you in?”
Within the financial wing of an organisation, the answer to that question may be especially far-reaching. A 2015 article in the Wall Street Journal suggested that ‘the new bookkeeper is a robot’, citing a number of companies that have recently cut headcounts in their accounting departments. It mentioned research by Hackett Group, which found the median number of full-time employees in the finance department at big companies had declined by 40% since 2004.
For companies eager to save money on their back-office operations, the opportunities are clear, with roles ranging from accounts payable clerk to inventory control analysts now being surrendered to software. It is likely that truly robotic software – which can quickly automate disparate applications, without needing to invest in full system integration – will expedite this change.
According to research by Source, robotic software automation could present significant opportunities across cross-system manual processing, data gathering and reporting, monthly account closure, bulk data updates and ERP IT processes among others.
But while the potential job losses have proven the subject of much handwringing, the advantages – in terms of accuracy, scalability, compliance and speed – have perhaps been underexplored. Casale feels it’s time to change perceptions.
“You have intelligent software that learns, that’s self-correcting, that’s better, that’s faster, that’s cheaper, analytics like they’ve never had before,” he says. “On the labour front, you can envision a time when senior executives walk to the head of HR and say I need 500 people to do X. And if the head of HR is fluent in digital labour they may say well let’s sit down and revisit this, maybe you don’t need 500 people, maybe you need 150 people and some good software.”
While this may sound like it spells bad news for the other 350 people, Casale thinks this fear should be reframed.
“Companies have an opportunity to rethink how they get work done, and how they deploy limited talent and scarce resources,” he says. “If think about the war for talent as it applies in many specialised areas, where there are more job openings than people, this’ll be where they really close these gaps.”
Reluctance from community
He says that this is a clear chance to save money, amounting to a 25-40% reduction in labour costs. There are also implications for risk mitigation. Because finance is such a highly regulated industry, an increasing number of compliance officers are exploring the ways that RPA might make their job more straightforward. This is not to mention the diminished odds that mistakes will occur.
That said, while these benefits may seem to speak for themselves, the business community in general is still somewhat hesitant to get on board. Casale feels there are two main stumbling blocks in the way – the first being a lack of understanding, the second being the fact that this is essentially a disruptive technology that cannot help but shake up the status quo.
“You know, the world as it is is risky and challenging enough without some new-fangled technology coming in and flipping everything upside down,” he explains. “So it’s always challenging in any scenario where you have a disruptive technology, no matter how wonderful it may be, to get the organisation to embrace it and cooperate. It’s more mindset than toolset – the toolset we have works.”
For the time being, most of the companies who have proven willing to embrace robot process automation have been those that are already in the market for a change.
“There are risks to being an early adopter, but what I’m finding here is pretty much textbook – the majority of them are ones who really need a solution now, they cannot wait a year or two for the technology be a little more mature,” says Casale. “There’s an old saying that change occurs when the pain of doing nothing exceeds the pain of doing something, so I have found that the majority of the companies that are embracing intelligent automation now are the ones who have significant cost-related issues and have tried everything else.”
Not even these companies are jumping in at the deep end – typically, they are choosing to adopt a more incremental, nuanced approach. However, even while exercising caution, they are starting to see cost-savings that outsourcing or management consultants could not provide.
Casale feels that, as these companies grow in number and as the benefits become more widely acknowledged, we will reach a tipping point where robot process automation stops seeming risky, and starts seeming like the only viable business choice.
“Hemingway supposedly once described how people go broke – he said at first very slowly and then very quickly,” he explains. “That is my prediction of how this plays out in the marketplace. I refer to this year as the ‘year of the robot’, not because everybody does it this year, but because this is the year that it begins to become accepted and understood by the advisors, by the service providers, by the analysts, by all the people who were very cynical about this two years ago.”
He envisages that over the next 24 months, the technology will take off in a big way, significantly altering the way the typical finance department is run. If an organisation’s first port of call is on-site labour, and its second choice is outsourcing or offshore labour, robot process automation will provide a third choice in the form of digital labour. And this, says Casale, looks set to be a game changer.
“My advice to executives reading this piece is that if you’re looking for a silver bullet in terms of cost saving and efficiency, and you’ve tried all the textbook approaches, you really should investigate and research intelligent automation. It will be your favourite new thing,” he says.
This article appears in the Summer 2016 edition of Finance Director Europe