How Robots Can Automate Your Most Labor-Intensive Financial Processes
In a recent video interview, Forrester’s Craig Le Clair, VP and Principal Analyst for Robotic Process Automation (RPA), noted that the majority of investment he sees going into robotic process automation is in the area of shared operations like finance and accounting.
Forrester’s 2017 RPA Wave report says enterprises are under immense pressure to digitize operations, and most see RPA as part of their automation strategy to boost productivity with minimal process change, bring an easy-to-calculate ROI, and serve as a fresh alternative to the “big spend” of typical business process management programs.
Within financial processes across purchase-to-pay, order-to-cash and record-to-report, organizations have an incredible opportunity to leverage RPA and reap those benefits Forrester notes above. We sat down with Art Sarno, Product Marketing Director for financial process automation solutions at Kofax, to chat about the state of RPA in financial process automation (FPA).
What is robotic process automation?
Robotic process automation is the deployment of software robots to mimic specific actions humans would take, such as logging into a supplier portal to gather information, or copying and entering data from one application to another. The market often talks of RPA as desktop automation, but at Kofax, we think of it more systematically as team of smart software robots deployed on a centralized server that can automate any manual task performed in any application or data source, including legacy mainframe systems, external web sites and portals. This centralized server robot model distinction is increasingly important in large-scale enterprise robot deployments, given it scales infinitely better and is much easier to manage than trying to run software robots on a physical desktop.
Why is RPA getting so much attention?
In Predictions 2018: Automation Alters the Global Workforce, Forrester calls automation “one of the most profound and disruptive forces in human history” and predicts rapid acceleration in 2018 as firms look to squeeze performance and insights out of previously commodity operations.
Forrester also notes that RPA is poised to become a $2.9B market by 2021, and a large part of its appeal is how quick and easy it is to deploy. A macro-trend in enterprise technology is the democratization of the information technology role. The heritage structure of IT has been “command and control” where IT chose, implemented and supported technology for business users. Now, we’re seeing business units such as accounting and finance that are choosing, deploying and managing their own technology. RPA is an ideal candidate for that.
How is RPA utilized in FPA?
In a typical financial process automation scenario, we can attain about 80 to 90 percent automation levels between capture and workflow for mature solutions like accounts payable, and we’re starting to approach those levels in other areas of FPA such as sales order processing, where we’re already well above 50 percent.
In the case of those remaining tasks that have historically been difficult to automate, RPA can provide two key benefits:
- Covering automation gaps. Every business has unique aspects to their workflow that traditional enterprise software doesn’t automate, such as customizations or integration with unsupported third-party applications.
- Automating unaddressed manual processes that may not have sufficient volume or scale. Two examples are automating GL account setup or posting an allocation journal entry. On the AP side, companies often have to pull from or send invoices to a portal for AP and AR. You may have to extract only a few hundred invoices a month, so the process remains manual since it would be costly and time-consuming for IT to build an integration. RPA can automate that process very quickly and affordably.
A recent report by The Hackett Group notes several other use cases in the financial close and consolidation process, such as automating repetitive rule-based accounting tasks like account reconciliations. [Download the full Hackett Group report, “What Source-to-Pay Leaders Need to Know About Robotic Process Automation.”]
What are the biggest challenges that RPA solves in FPA?
One area is fast problem-solving for targeted use cases. RPA can quickly set up an integration layer that’s far more flexible, fast and supportable than custom IT work.
We see a lot of application in AP integration, sales order management and financial close.
RPA also adapts to control processes very well—those processes that are unique to a company with internally-set standards. These are traditionally difficult to automate because they’re not standard across the industry. A good example is Sarbanes-Oxley: Individual companies decide their own thresholds, so there’s no out-of-the-box software that can fully automate those controls. RPA is perfect for this use case.
There is potential for RPA across the entire accounting and finance spectrum, which is made up of tens or hundreds of thousands of interdependent tasks that need to be performed repeatedly in the same order. RPA has a tremendous impact in this area.
What drives the value of RPA in financial processes?
Labor savings. Robots are the new “digital workforce” that can emulate tasks traditionally done by humans. One example is so-called “swivel chair” operations —those tasks that involve transferring data from one screen or application to another.
Besides the easily-quantifiable labor savings, there’s a lot of intrinsic value to RPA as well. Robots are fast and reliable. They make few, if any, mistakes. And they are available 24/7. The business case in finance and accounting is usually built around headcount, but these additional qualities point to value beyond dollar savings.
What trends are you seeing in the marketplace?
In our 2018 forecast, Kofax VP of Product and Solutions Marketing Russ Gould noted that we’ve seen an explosion of interest in a “digital workforce.” As companies and industries begin to understand the power of RPA, especially combined with document capture, classification and data extraction and business process management (BPM), RPA will rise to the top of corporate technology initiatives in 2018.
With interest in RPA technology at an all-time high, Kofax has declared 2018 the Year of the Robot.
Where have you seen success using RPA in financial processes?
We’ve seen several examples of robotic process automation in action in the financial context. Arrow Electronics deployed robotic process automation to request and process quotes and invoices, regardless of format or location. Another customer of ours, a large American telecommunications corporation, uses robotic process automation to automate the collection and processing of more than 36,000 invoices each month. A third-party logistics provider uses RPA to close out loads, which can be difficult when there’s a payment dispute.
Where do you expect the adoption of RPA to grow in FPA and why?
The market is ready for RPA, but there still remains a lot of hype about the promise of this technology. We are validating the value of RPA at companies like Arrow Electronics and others. It takes comprehensive, integrated knowledge to identify the specific use cases and deliver ROI. Because we provide both financial process automation and robotic process automation solutions for accounting and finance, we bring the right balance of process expertise along with key capabilities and end-to-end solutions.
What competitive edge will adopters of RPA have?
We have talked about how digital transformation in finance enables organizational agility and cost savings, but the larger story is improved customer service. Automation enables your organization to move workers from routine data entry into higher-value analyst and strategic roles. This applies to procure-to-pay automation in the back office as well as order-to-cash automation in the front office. The clear operational benefits are drivers for providing the compelling benefit of being able to better serve customers with faster, better and more valuable information, resulting in true business transformation.
How will RPA transform your finance and accounting operations across purchase-to-pay, order-to-cash and record-to-report? Discover the possibilities in Mind the Gap: Bridge These 12 Financial Process Gaps with Robotic Process Automation
Editor’s note: This post was originally published in February 2017 and has been updated for trends, accuracy and comprehensiveness.