Two Hot Trends Driving Enterprise Automation
Welcome to another episode in our Appian blog series—Twelve Days of Digital Transformation—where we consider all things digital that will be driving the trends and events of 2018. In this installment, we cover two of the disruptive forces and emerging technologies that will drive automation everywhere.
OMG! A crime-fighting robot plunged into a water fountain, while patrolling for criminal activity in a shopping mall. (Yes, seriously!)
Social media freaked out. And the tabloids went nuts with speculation that the security bot’s watery demise was a case of hashtag “roboticide.”
“…They promised us flying cars,” said one eye witness. “Instead we get suicidal robots.”
But you should take the mall bot jokes with a big pinch of salt.
The truth is, commercial automation is trending hotter than ever.
Time magazine recently reported that CVS has installed self-checkouts in over 400 locations. McDonald’s and Wendy’s have added kiosks in some restaurants, enabling customers to place orders on a touchscreen.
And Amazon? they’ve launched a new concept store called Amazon Go, where the payment process is automated through smartphones, so you don’t have to wait in line for a cashier.
Something else to consider…
By 2018, 45% of the 200 leading global eCommerce companies will deploy robotic systems in their order fulfillment warehousing and delivery operations, according to IDC.
Likewise, companies are also adopting software robots to perform routine business processes. The experts at Deloitte say that robotic process automation (RPA) is gaining traction and poised to become a $5 billion market globally by 2020, with a growth rate of over 60 percent.
On top of that, as many as a third of global enterprises are actively using bots within their IT and finance and accounting processes, with about a quarter adopting RPA within procurement and HR processes, according to Deloitte.
The question is, are we on the cusp of a digital transformation that is like nothing we’ve seen before?
Or, the question might be: are organizations moving from a mobile-first world, to one that will ultimately be automation-first?
Driving Digital Transformation
The big thinkers expect automation—in the form of RPA and artificial intelligence (AI)—to shape tomorrow’s workforce, and generate completely new sources of economic growth.
“Let me put it in context,” said IDC researcher Dr. Jing Bing Zhang, a recognized expert on commercial robotics and automation trends. “Our 2016 forecast covered commercial robotics and the adoption of automation across industry sectors, like manufacturing, healthcare, retail, and construction,” said Zhang.
“Overall, we’re seeing a strong uptick in interest in physical robots and RPA.”
Zhang said that in the manufacturing sector, the number one driver of automation is concern about improving production services offered to clients. In healthcare, companies are prioritizing automation to improve the patient experience. In retail, the focus is on improving the customer experience.
“So, service quality and time to service—how fast you deliver service to customers—these are major drivers of automation,” said Zhang.
“But in addition to quality and cost benefits,” said Zhang, “organizations are also looking at the value that automation offers customers—from the time they search for a product, to placing the order, to using it.”
Customer expectations are changing faster than anyone ever imagined. The race to automate, to keep pace with these expectations? That race is just beginning.
Commercial automation will evolve as computer power continues to grow at an exponential rate, algorithms and AI models grow more sophisticated–and as the Internet of Things (IoT) grows at a rate that will generate unbelievable amounts of data to fuel the next wave of intelligent process automation.
The numbers associated with this growth are enormous.
Billions of gigabytes of data are being generated every day, by a numerous applications and devices connected by the IoT. By 2021, global IoT spending is expected to total nearly $1.4 trillion as organizations ramp up their investment in the hardware, software, services, and connectivity that enable the IoT.
7 Reasons Commercial Automation Is Poised to Explode
- Approximately 38% of enterprises are already using AI, and AI usage will grow to 62% by 2018 (Forbes).
- AI investment will increase by more than 300% in 2017 compared with 2016 (Forrester).
- The AI market will grow from $8 billion in 2016 to more than $47 billion in 2020 (IDC).
- By 2021, there will be over 4 million robots doing office and administrative and sales and related tasks (Forrester).
- Robotic process automation software market will grow by 41% year over year to 2020 (Gartner).
- By 2018, 30% of all new robotic deployments will be smart collaborative robots that operate three times faster than today’s robots and are safe for work around humans (IDC).
- By 2019, 35% of leading organizations in logistics, health, utilities, and resources will explore the use of robots to automate operations(IDC).
In the meantime, there’s still a lot of reasons for traditional organizations to pivot to RPA.
Not to mention that the 25 to 40% cost savings of RPA beats the pants off the 5 to 10% cost save of traditional outsourcing business models, according to the Institute for RPA and AI (IRPAAI)
“Think about it,” says Frank Casale, founder and CEO of the Institute for Robotic Process Automation and Artificial Intelligence (IRPAAI). “After 50 years of software being used to help knowledge workers get their work done, suddenly, we have software that replaces the knowledge worker. This is digital labor.”
All you have to do is look around to see that we’ve reached the tipping point of automation in a variety of industries. And, there’s no turning back.
We’re on the backside of a pivot from people to software, from high-volume, highly transactional manual processes, to the emerging digital workforce—a fast moving pivot.
Why is this pivot such a big deal? Because traditional approaches to process automation are becoming less and less relevant each day.
Reinventing How Work Gets Done
If you Google RPA, you’ll see lots of commentary about the emerging 24x7x365 digital workforce, and how it can instantly scale at a fraction of the cost of traditional outsourcing and offshoring business models.
And, yet, many business leaders still don’t know what RPA is. Or, why they should care about it.
The research shows that 40% of executives worry that their organizations don’t understand the strategic value of digital transformation and the supporting role that automation technologies like RPA can play in the transformation journey.
The worry is that senior leaders just aren’t responding to digital trends with a sense of urgency, according to the Global Center for Digital Business Transformation.
“As companies transition to robotic process automation,” says Casale. “They will aggressively re-engineer themselves with smart systems to reduce the need for remote labor pools, and execute business processes with faster, more accurate and more scalability than ever before.”
Today, the RPA market is on fire.
The market grew over 60% to $200 million in 2016. And, Forrester is forecasting that RPA spending will skyrocket to $2.9 billion in 2021.
Think Big, Start Small
This is how smart early adopters explored the potential of RPA and AI, and put them to the test.
And 30% of digital leaders—companies identified in a recent McKinsey survey—are now using AI at scale, or in their core processes, to boost revenue and expand their product and service offering.
It’s also worth noting that these companies are over three times more likely to expect profit margin growth that’s up to five points over their industry peers.
On the flip side, there’s a GINORMOUS gap between digital leaders—companies that have adopted AI and RPA—and the rest of the pack.
Here’s the math. Approximately 85% of business leaders believe AI will allow their companies to compete and win in the digital economy, according to researchers at MIT Sloan.
The bad news? Only about one in five companies has incorporated AI in their offerings or processes.
Yes, the notion of enterprise automation has been around long before RPA and AI were hashtags.
But, man, has it changed—evolving from a mostly transactional focus on back-office efficiency and process improvement, to a more transformational goal of totally rethinking business models and re-imagining the customer experience.
Back in the day, the crowd assumed that the explosion of mobile was all about making phone calls anywhere, when in fact it was about putting the Web in our pockets.
Unfortunately, many companies have prioritized AI and RPA just to make incremental improvements, justify a new initiative, or to fix an urgent back-office challenge.
But don’t be fooled. The capabilities of AI and RPA are more transformative than that.
“What we’ve found over and over again,” says George Westerman, Principal Research Scientist with the MIT Sloan Initiative on the Digital Economy, “is that digital transformation is not a digital challenge.”
“…The technology enables change, says Westerman. And, by the way, changing processes is more than writing code and drawing charts. It means getting people to work differently than they did before. And working across silos the way they didn’t do before. And that’s where the real value, and the hard part of digital transformation comes into the picture.”
“It should make you move faster, be more agile, get closer to your customers,” says Westerman. “It should give you wings so you can fly. Unfortunately, too many companies are talking about digital, and investing in digital. But they’re just thinking about being a fast caterpillar, not a butterfly.”
We published an eBook on RPA. You can find it here. A must read, it will help you see the world of enterprise automation differently.
Rewind to the Crime-Fighting Bot
Remember the #security bot mentioned at the beginning of this piece?
It turns out the bot’s manufacturer has inked deals for their crime-fighting Roombas to patrol malls across 16 cities.
Just another reminder that the future of automation is coming a lot faster than you think.