BPO/ITO expert: Robotic process automation offers 'tremendous value proposition'

Andy Wasser of Carnegie Mellon says robotic process automation is not a big-bang technology, but its implications for BPO/ITO are huge.

Robotic process automation (RPA) is poised to shake up business process outsourcing and IT outsourcing (BPO/ITO),...

according to Andy Wasser, associate dean of Heinz College's School of Information Systems and Management at Carnegie Mellon. Wasser, who is speaking at the World BPO/ITO Forum in New York City, June 16-17, explains why the "automation of automation" must be part of a CIO's BPO/ITO game plan.

Robotic process automation is sometimes described as the automation of automation. How is RPA different from the sort of business process automation that companies and CIOs have been doing for years?

Andy Wasser: We're only talking software here. What I think is distinguishing this from traditional automation is going the next step with the ability to integrate multiple systems and [enable them] to adapt to changing circumstances. So, it could be that you're taking your ERP system and your CRM system and there was somebody who was going in between those two, or you were going to one of your systems that was reporting potential breaches into your network, and then you were going to another system to do further examination. I've heard robotic process automation being used as sort of the replacement for the swivel chair. Going from one system to another is what RPA does.

What do you mean?

Andy WasserAndy Wasser

Wasser: Let me give you an example. Let's say there was an accounting system, and the accounting system would kick out exceptions. And then you'd have Maria, the wonderful person who would deal with all the exceptions. Well, someone would sit down with Maria and say, 'What do you do?' And she'd say, 'Oh, when it comes in and it's missing a bank identification number, I do this, this and this. And when it comes in and these three numbers don't add up, I do this, and so on.' When you list it all out, it turns out that Maria is dealing with maybe 14 types of common exceptions. Those 14 exceptions can be turned into a process, just like the original accounting system was turned into an automated process. She was doing things that were exceptions, but there was a routine to her exception handling. That routine may have required her to look something up in an ancillary system or make a phone call or do a calculation, so with RPA you're starting to go that next level, in terms of complication.

Has technology changed suddenly in order for this to happen?

Nothing that these devices are doing today puts human IT outsourcing at risk. But I wonder if it is just a matter of time.
Andy Wasserassociate dean, Carnegie Mellon

Wasser: I think it is incremental. Things are getting more and more automated with time, and so you're seeing the results. Think of an ATM. It used to just dispense cash. Now, you can take a picture of your check with your cell phone and deposit it. So, I think it's not a big-bang type of issue. It's more that things are just happening faster and faster, and as things are definable and repeatable and rules-based, they're great candidates for this type of technology. I don't think there is any incredible silver bullet that's happening, except the fast pace of expert systems and artificial intelligence.

You make a good point. Technology is much more pervasive now, and as everything we do becomes more digitalized, there is more opportunity to automate jobs.

Wasser: That's right where we are. As things get more and more digitized, there is just more opportunity for RPA.

RPA is presumably expensive to implement?

Wasser: While it's fairly costly right now to consider this level of technology, one thing we know about technology is that those costs keep going down over time. And the one thing we know about people is that our people costs tend to keep going up. And so the value proposition here is just enormous. The place where it is most likely to start out is with those repeatable, definable practices, and that is pretty much what we call BPO, business process outsourcing. And there is a function of what we call IT process outsourcing that very much falls under this same banner today. That is the glass house -- the data center, the help desk, the network support. Today, we may be thinking software engineering is pretty damn complicated and requires so much judgment, and nothing that these devices are doing today puts human IT outsourcing at risk. But I wonder if it is just a matter of time.

When you really think of this, this has happened time and time again. A couple of hundred years ago, 75% of the world's population was involved with farming and agriculture. In the 1950s, it got down to about 30%; now in the U.S., it is 2%. People say, 'Oh yeah, but you still need somebody to operate that combine.' Yes, but that somebody is doing the work of what 50 pickers used to do. If you've recently seen a mining operation, it's incredible -- there's just one guy behind a console driving all this equipment.

What should CIOs be thinking about in terms of their BPO/ITO contracts?

Wasser: When you're looking at your options now, you should be saying, 'I want to keep this in-house, and I want to onshore or nearshore this to Syracuse, N.Y., or North Carolina, or Bogota, Columbia, and I want to offshore this to Chennai and, hey, this is ripe for making that phone call to [RPA software vendor] Blue Prism to see what they can do for me.' RPA should be part of the set of options open to you.

Email Linda Tucci, executive editor, or find her on Twitter @ltucci.

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