Why RPA's Wins Are Based on ERP's Gaps

Barbara Hodge interviews Adrian Li, Finance Transformation, Redwood Software

For companies that have spent millions on ERP systems, the frustrating reality is that it often throws up as many problems as it resolves. Even SAP®, after a lengthy finance transformation, found itself still handling more than 20,000 manual tasks in the Record to Report process each month end. The true value proposition around Robotic Process Automation (RPA), therefore, is its ability to automate all those pieces of the process that otherwise require manual intervention to deliver expected or mandated service-levels.

While SSON’s 2016 State of the Shared Services Industry Survey shows that practitioners are still hesitant about adopting robotics (the vast majority also don’t really understand RPA), on the plus side the field of RPA vendors is growing exponentially, which means there is plenty of choice and opportunity to ‘compare and contrast’. What’s critical, however, is to carefully vet any potential partner on the basis of their references, expertise, and on-going support.

Adrian Li heads the Finance Transformation team within Redwood Software, where he focuses on driving value through Record to Report (R2R), Order to Cash (O2C), and Procure to Pay (P2P) by using robotics as a replacement for Full Time Employees (FTEs) performing slow manual tasks to release capacity back into the business. "Robotics enables us to close the gaps in user intervention required and provides seamless automation across the entire process," he says, "but this capability is based on automations that have already been at work for decades."

While Adrian sees Process Centric RPA as a significant game changer – targeting 90% automation rates for some processes – he is also quick to point out that automation has been the basis of Redwood’s solutions since the company opened its doors in 1993. In the two decades since, Redwood has worked with over 3,000 multinational corporations across highly complex IT landscapes, business processes, and organizational structures. "As a result, we are very familiar with the complexity of multiple ERP and sub-systems," explains Adrian, "and are well-placed to help our clients improve their processes end-to-end across the enterprise by employing a ‘process centric’ approach rather than a flawed ‘user centric’ one."

What’s significant in this respect is the strong integration capability that Redwood has built up, particularly around SAP and Oracle, and the fact that it is used to dealing with "enormous volumes and millions of business transactions across multiple time zones," as Adrian describes it. Today’s focus is on driving enterprise-wide robotics through Finance, Supply Chain, Production, Logistics, and Human Capital Management, and Redwood has established more than 200 unique robotic process benchmarks across different industries. "What we’ve seen is that a large number of processes are fairly uniform across industries, so that our out-of-the-box robotic solutions can be adopted pretty easily," Adrian explains.

Too Good to be True

"Despite an overwhelmingly positive business case, practitioners still find it frustratingly difficult to commit to process robotics as a next step," Adrian says. "What we face most commonly is the ‘it’s too good to be true’ scenario, where a business simply won't believe that just because we can do it for one business, we can also do it for them! The solution is really just to run a pilot project.

"The other challenge we face is the protectionism inherent in Finance, where functional leads are afraid of losing control, so they push back against any attempt to introduce change. But by showing them that robotics actually helps them gain improved standardization, greater visibility and gives them more control than they had before, we’re really starting to win them over."

Robotics in the Engine Room

Redwood designed its automation solutions around the ERP headaches that it had witnessed at client companies over decades.

"We are very familiar with SAP functionality and capability, and have built our RPA processes specifically to integrate with these ERP systems," explains Adrian. "The processes we support – allocations or inter-company postings, for example – are specifically designed to integrate seamlessly with existing ERP tasks. We integrate into core SAP standard transactions directly at the server level – so we are effectively working at the engine room level of ERP as we build our robotic capability. What this means is that the RPA processes we deliver are highly scalable."

"In addition, as clients upgrade their ERP, their investment in our robotic solutions are protected because we know they will carry on working both during and after the upgrade," Adrian points out. "Again, this is because the core transactions our robots integrate with remain untouched. We also know the right sequence of processes and dependencies between different areas, so there's an entire inherent intelligence in how our robots work and interact which removes latency and human error."

For those who do want to take it further, a value assessment helps identify which processes should be selected in scope, how many entities should take part, and how the company’s processes map against Redwood’s Process Assessment Model. This ability to benchmark against real-world achievements is an important proof point for businesses that are uncertain as to whether they want to commit or not.

"The biggest problem for customers is how to make sensible scope decisions," says Adrian. "You can only really do this by comparing their current processes to what's doable based on our previous experience." Choosing the right process areas are key, he says, to moving successfully from the current ‘as is’ to the future ‘to be’ scenario. The advantage Redwood wields is that it has packaged its robotic solutions into off-the-shelf offerings with inherent knowledge of how to perform activities in the processes themselves, and which easily plug into clients’ ERP systems.

"What we find is that the financial benefits of cost and FTE capacity release, as well as the non-financial benefits around standardization, speed and transparency, are inordinately persuasive," says Adrian. "It’s that first assessment that really drives the message home."

Case in Point: SAP

If there’s one company that needs its ERP to work successfully, it’s SAP. But after a lengthy Finance transformation, the company still found itself fielding thousands of manual touch points each month. Redwood worked, initially, with 18 of SAP’s 110 legal entities across a broad range of processes to replace manual interventions with Enterprise Process Robotics. Within seven months, it had extended the pilot to the remaining global entities. "As an example, what we found specifically within the Record to Report process was that most of their entities were having to run revenue recognition processes up to 10 times a month, impacting 55 FTEs and at a cost of 2,400 ‘man-days’," says Adrian. "We've been able to automate 100% of the process – and the impact has obviously been enormous, improving both the quality and timeliness in reporting business critical information at zero human cost."

DSM Hits 89% Automation in R2R

The key metric for robotic process deployment is the percentage that a given process can be automated – or more specifically, where unnecessary manual intervention in a process can be replaced by robotics. Adrian lists R2R as a prime candidate. For the Dutch company Royal DSM, Redwood took on a project scope that included 485,000 manual activities per month and 25 business processes. "From mobilizing to ‘go live’ we had just five months – and achieved 89% automation across R2R in that time period," Adrian says. "So what previously took 10 FTEs to complete the process is accomplished today using just one."

Within O2C, Adrian cites potential automation rates of 80%, and even higher in areas like the processing of incoming payments. However, the eventual gains a business reaps depends on how the company is structured. "For example, take financial close. You may find that automating financial close impacts just 20% of one employee’s job. The impact on cost and FTEs is therefore not so easy to calculate," he explains.

For those who think these kinds of rates are too good to be true, Redwood offers a guarantee. "If after analyzing a process we say we can achieve a certain percentage of automation for a client we guarantee that. To date, we have always met or exceeded client expectations," Adrian says.

The biggest gains are made when companies are open to transformation. For example, when clients are open to having their processes redefined, the gains are that much greater. On the other hand, a highly acquisitive company or group may find it hard to commit to a standardized set of processes. "In that case they give us their rules and requirements and we use our process know-how to build in variation within their processes. The reality is that businesses do need tailored automation, and we deliver that," he says.

IT Resource Requirements

A common hurdle that needs to be overcome is the perception that implementing RPA requires a lot of IT support. With IT perpetually operating at ‘zero bandwidth’ the challenge is then to identify a project that RPA could replace. Robotics providers like Redwood, however, make the case that theirs is a ‘plug and play’ capability. As Adrian explains it, "We don't need IT support for the majority of the implementation tasks as we deal with the business people and process experts directly. We do need IT’s involvement up front, to address infrastructure, security and policy issues; and at the end, for management and governance. But the implementation itself can progress very well without distracting IT from its existing workload."

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