Robotics and Automation: The Fourth Industrial Revolution Begins

Published by
Anthony Caterino

Anthony Caterino

Robotic process automation (RPA) is among the hottest topics in today’s enterprise. RPA simplifies business processes by mimicking human actions and automating repetitive tasks without altering existing infrastructure and systems. Nearly every day, we hear stories of organizations streamlining operations and optimizing costs with RPA.

Why is this technology gaining such attention? Because it has the potential to make enterprise-wide business transformation a reality.

As directors continue to rethink and address their organization’s strategy, RPA should be considered as one component of an array of emerging technologies that are changing the game. These solutions include artificial intelligence, cognitive computing, and machine learning. Many call this the Fourth Industrial Revolution, and for good reason. Nearly half (47%) of US jobs could be impacted by computerization, according to a 2016 report authored by Oxford University and Citibank.

Sitting on the sidelines is no longer an option. Robotics technology has moved beyond proof of concept, and the business benefits are increasingly clear and attainable. In a recent example, EY worked with the Robotics Center of Excellence for a major U.S. bank to scale robotics on a global level. Results included a significant reduction in full-time employees (FTEs) across back- and middle-office business processes and decreased runtimes for automated processes. Leading organizations will focus on the long game, planning for scale, speed and pace of adoption on the automation journey.

Boards will play an important role in helping organizations seize automation’s full advantages—reduced redundancies, improved accuracy, speed to market, and the ability to free human staff for high-value work. Vigilant corporate governance will help promote the establishment of a robust operating model and provide oversight of controls and risk management. From the highest levels, the enterprise must successfully manage changes in technology, processes, and people to seize opportunity while enhancing risk management.

The Need for Strategic Vision

Boards looking to enhance oversight of corporate strategy in response to these disruptive forces can learn from the industry’s early successes and failures.

Despite industry promises of rapid, low-cost success, automation is not a one-size-fits-all journey. The board must guide leadership to make certain that a robust operating model exists for leveraging the best-fit technologies to meet the organization’s needs.

The operating model must adapt to support a hyper-agile implementation approach. EY recently worked with the C-suite of a leading financial services corporation to design a centralized automation strategy. This strategy established a common framework to support its federated environment. Ensuring that the company has adopted the right operating model is key to accelerating technology adoption and streamlining change management to succeed in an environment that is continually evolving.

The automation journey should also be results-driven, with an emphasis on return on investment. For one global insurer, EY developed a proof-of-value to explore opportunities to automate labor-intensive back-office processes. The results helped management make an informed decision based on tangible outputs. When implemented, robotics cut the cost to deliver high-frequency tasks in half. If properly designed, the automation journey can be self-funding using a laddered process, with the cost savings realized on initial programs used to fund successive initiatives. This contrasts with the enterprise-wide implementation model common with many legacy solutions.

A robust operating model can also help mitigate risk. For example, because many automation solutions are engineered to work with current enterprise software, the operating model must account for changes in an organization’s software layer. If changes are made without considering the automation tools, they can quickly crash important processes.

The Human Equation

Along with planning for the technology changes, boards must foresee the human elements of transformation and embrace the workforce of the future.

It is not uncommon for today’s powerful RPA technology to reduce the number of humans needed on a data-intensive process from 50 people to five. A robot costs approximately one-third the price of an offshore FTE and as little as one-fifth the price of an onshore FTE, according to the Institute for Robotic Process Automation. Boards must think strategically about a company’s entire workforce mix—from where people are located to who (or what) performs specific roles.

Yes, the opportunity for cost optimization exists. But forward-thinking companies will seize the advantages of reallocating and retraining people currently in rote functions to higher-value tasks that generate business insight. The board should set clear expectations for managing human capital beyond layoffs—to leverage people to gain a competitive advantage.

The bottom line is that workforce transformation enabled by automation is coming quickly. In fact, it’s already happening. The boards that realize this soonest and come prepared to lead management on a journey that optimizes both technology and people will position their organizations to win in the long run.


Anthony Caterino is vice chair and regional managing partner of the Financial Services Organization at EY. Steve Klemash is a leader in the EY Center for Board Matters in the Americas.

2 Comments

  • Alexandra Lajoux says:

    Thanks for the interesting article and thought-provoking comment. We can take comfort from the authors’ prediction that “forward-thinking companies will seize the advantages of reallocating and retraining people currently in rote functions to higher-value tasks” thus “managing human capital beyond layoffs—to leverage people to gain a competitive advantage.” Timely and important.

  • Victor Fabry says:

    The use of Artificial Intelligence, Robotics and Mobile technology will offer enormous opportunities to reduce costs, improve service, increase quality of our products and services. The converse side of this technological revolution will be the potential loss of thousands of entry level and semi-skilled jobs for this nation’s workers.

    What do you think will be the long term impact on our society from the social, economic, educational and employment perspective? Just as important, what will be the political impact of these changes?

    Many studies have predicted the catastrophic changes that automation will bring about to all fields of human activity. In the near future, planning for the impact of job losses by automation will be the focus of governments, industry leaders and politicians. The possible scenarios being projected may look like science fiction. But the trends which are seen now and their fast pace indicate that there may be more reality than imagination in these accounts.

    Automation in this context means the use of robotics, artificial intelligence, machine learning and big data manipulation to improve productivity and efficiency. It is set to bring about a revolution in the economy, mainly with respect to employment.

    • Stephen Hawking says that “we are at the most dangerous moment in the development of humanity” and that the “rise of artificial intelligence is likely to extend job destruction deep into the middle classes, with only the most caring, creative, or supervisory roles remaining.”

    • Leading consulting firm McKinsey has said that 50% of the existing jobs in the world will disappear by 2035. It says there are 800 categories of jobs in the world out of which 30% can at present be done by machines. Most routine jobs may be done by robots in the next two years in some places.

    • A report presented at the recent World Economic Forum meet at Davos also pointed to these impending changes. For example, it said that 90% of vehicles will be self-driving electric vehicles by 2035, which will make drivers’ jobs mostly redundant.

    • Since 1979, UAW membership has dropped from a high of 1,500,000 workers, which produced about 8 million vehicles to less than 400,000 workers in 2016 which produced over 16 million cars and trucks. In the past 35 years, though automation, 25% of the peak UAW workforce now produces twice the number of vehicles.

    • Almost all occupations will be affected and only those jobs that need extraordinary skills, intelligence and creativity will be done by human beings. Even if these projections are taken with a pinch of salt, there is a need for the world to be prepared to face the prospect of massive joblessness in the coming decades.

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