Don't cheat yourself with your automation business case | NTT DATA

Thu, 16 July 2020

Don't cheat yourself with your automation business case

Last month I was chatting with a colleague of mine. In the conversation, he shared with me some thoughts about the current project where he's now working in. In September 2019, a big insurer wanted to reduce costs by automating some processes where they spent a lot of time and effort every month.

To do so, the company identified the processes to be automated, they made the business cases for all of them, and finally, they got approval for the budget to go ahead with the automation project. The business cases showed that they would get a good return of investment (ROI) in a few months by automating the most costly tasks done by operators. Everything was planned and done. At the beginning of the year, the pandemic came, and during the first months, they coped quite well balancing the cost as they needed fewer resources to do the same amount of work for this specific task as planned. The scenario seemed promising.On account of the pandemic, some key operations in the area increased more than expected. The response times to the clients increased (as well as the client complaints), the operators couldn't cope with the demand by escalating the service, and the company stopped hiring. The KPIs and SLAs levels for the department plummeted. Unfortunately, these key operations were deprioritized or ruled out for automation as these activities were less costly than the chosen ones for the programme.

Nobody has a crystal ball to be able to predict future risks, but everybody can approach the way the drivers were chosen for the business case.It was a perfect storm and not the best months for the company - as many others. All the savings made with the automation were lost in a few weeks. They came back to the starting point from a cost point of view. Definitely the business case made for the whole area failed and now the expected ROI can't be met. If that wasn't enough, it caused an additional problem as the executive board now has a lack of confidence in the automation approach - when the issue has nothing to do with the technology involved.

Nobody has a crystal ball to be able to predict the future risks, but what happened here is not a problem related to the risks but to approach in the way the drivers were chosen for the business case.

Traditional approach: with the cost and revenue in mind

Pointing out that the companies have to be profitable by creating revenue sounds pretty obvious. Also, companies have to make sure the investment and the initial cost will bring some benefits, and this implies a risk they might assess and protect themselves from. Therefore it sounds reasonable to include the costs and revenue, as one of the main drivers in the business case. There is no harm in doing it, and that is the traditional approach to deliver a business case, but it might bring some surprises if that's the only driver you're including. That's what happened to my colleague's client.

Safety first: the business continuity

It's proven that financial variables can't be the only driver for your business case if you want to succeed in your plan. There are other reasons to assess and to consider, but without any doubt keeping the continuity plan in mind must be key for you. The business continuity is a wide concept, and many things could be said here - thousands of books have been written about it-, but I would like to simplify it by saying that the business continuity is about your core services and how to protect them.The continuity plan is especially important in commoditized industries, where the exit barriers are almost non-existent.

If your company provides certain services you're setting some expectations that your customers will want to be met, whatever the context is, no matter how hard the situation or your business context. You have to be prepared to deal with that. This is especially important in commoditized industries, where the exit barriers are almost non-existent, which makes it even easier for your customer to change the service provider and therefore lose your clients.In the approach that the insurance company took, they didn't prioritize their core services of the company. It was not a driver for them and when special circumstances happened, such as the pandemic, they had to cope with that by using a traditional approach based on human workforce and manual procedures. Operating your core service solely with people is too risky and not scalable. Conversely running your operations with a joint workforce between bots (virtual workers) and operators (human workers) will make the situation much easier. While the operators can take the urgent and key decisions regarding your operations, the bots can cope with the incoming demand assuring a minimum level of service to your clients. In the event of demand increasing, you can escalate your service cloning the bots in minutes. This is the efficiency approach we should work towards.

Create value: Enhance your business and customer services

The automation strategy could be as simple as automating what we do just by looking to do the same operations as they stand now, but more efficiently, or creating value over the current operations by extending the services. Automation can go further.Understanding the advantages of the new automation paradigm is key to creating new competitive advantages.

Automation is a new paradigm for our companies: It's a different way to run our operations.

Understanding the benefits of this new paradigm will bring you some new opportunities, and new competitive advantages that in some cases can turn out to be new killer services to boost your business.

Going back to the insurance area, let's compare a traditional insurance company where they are receiving quotes by email on a daily basis, and a second insurance company that is doing the same using an automation approach:

The first one operates from Monday to Friday, as the salespersons needs to check the email, extract the attachments, verify the information in the system, and accept and send the offer to the client. In 3 working days, the client will hear from the company with their offer.

The second one uses an automation approach and they are able to operate 24h. The process will open the mailbox extracting the attachments. The bot will interact with the insurance system to compare the information in the attachment and the system and will follow some rules created by the company to provide an offer to the client. The process will create a PDF with the offer and it will be sent back to the customer. The client will receive the offer in 15 minutes (or even less) after they requested it, weekends included. 5% of the requests received can't be treated by the robot and the salespersons will take care of them.

Understanding the advantages of the new automation paradigm is key to creating new competitive advantages. The companies which include the value added by the automation in their business cases invest in creating value, in increasing their competitive advantages, and therefore there will have a better position and offering in an increasingly competitive market.

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