Robotic Process Automation

Robotic process automation (RPA) has the potential to save CFOs administrative costs and free up their finance staff's time to handle higher-value tasks, but the adoption rate of the technology has been slow. 

Gartner found 19% of controllers and 17% of company tax chiefs are using RPA in some form, and far more plan to use it in the future, according to a recent survey. The survey found 75% of controllers and 76% of tax chiefs want to use RPA at some point. Dennis Gannon, vice president of advisory at Gartner, said he believes more CFOs would adopt the technology sooner if they had a clearer picture of what that adoption entails.

There appears to be two misconceptions in talking with CFOs, Gannon said.

The first is that adoption means turning over a complete process, such as expense reporting, to RPA. But that’s not the way to do it. It’s better to start with sub-processes and build out from there.

"You can use an RPA script to, say, flag a type of overage in your expense reporting that you’re encountering a lot of, or to manage the validation process for your expense reports," he says. "Put the scripts in place, see how they’re working, iterate, and then find the next thing that you might automate. If it’s taking you weeks to go through this process, you picked something too big. It should just take days."

The second — and biggest — misconception, Gannon says, is that your data has to be completely cleaned up and standardized before you can start. But that’s not necessary.

"There’s a lingering perception among finance executives that in advance of bringing in RPA to work in my, say,  accounts receivable processes, I need to standardize that globally and have everyone doing it the same way. But, actually, you don't need to," Gannon said. "You can actually use RPA in one site on one function with a specific set of rules and give a different set of rules on a different site if they do it differently. And the great thing is — and this is the thing most finance executives miss — you can then standardize your process by just changing the code on your RPA scripts instead of having to convince 30 regional purchasing managers to do things differently.

"You have people doing work right now that’s very labor intensive and rules driven that can be done by RPA," he adds, "and you can redeploy those folks to higher-value activities pretty quickly without having to do that standardization work first and you can actually make that standardization work a lot easier.” 

Gannon says he worked with the finance team at a media organization that put in significant process automation and was able to create efficiencies in about two dozen rules-driven use cases.

"It freed up literally hundreds of hours a week of their finance team," he says. "They've reorganized their organizational structure now, so they have more judgment-driven accountants who now focus on interpreting rules and standards for the organization, finding new use cases, and coding those new use cases. That’s given all their staff more focused and more fulfilling roles, and made them part of a cost-saving process. It’s been transformative in the true sense of the word in just a two-year period." 

Finance is the ideal place to integrate robotic process automation (RPA) into your company's processes and free up staff for higher-value work. But IT should be part of the integration from the start, RPA experts said. 

The lion's share of RPA integrations today — about 85% — are led by the finance team — the appropriate place to start because discrete parts of a company's accounting and finance functions are ideal for automation, said Justin Gillespie, principal of digital technology services and solutions at the Hackett Group.

Gillespie discussed RPA adoption in a CFO webinar released last week. About 10% of RPA integrations are led by other financial areas in a company — HR or supply chain, typically — and about 5% are led by IT. 

It's best to have finance lead the integration because no other function area has more opportunity to test automation on repetitive, manual tasks, said Gillespie and Hector Barletta, senior director of strategy and business transformation at Hackett. Finance is also best positioned to understand how to integrate automation in a way that works across divisions, they said.

"You need someone watching the house," said Barletta, referring to the need to create a finance-led team that can ensure automated processes don't cause problems in other areas of the company.

Although finance should lead the effort, it should only do so with other teams as part of a Center of Excellence (COE) or other type of integration group, and IT must be part of the team to ensure it works with security protocols and other technology the company uses. "It often starts with finance, but it might not end up in finance [after it scales]," Barletta said.

Integration starts with scans

The integration experts suggest finance chiefs scan their operations and identify distinct areas that can be automated as pilot programs and then expand robotic processing over time to more areas, eventually crossing over into HR and other areas.

Gillespie recommends CFOs look at five dimensions when deciding where to start adding automation:

• Process frequency. How often is a task undertaken? Hourly? Daily? Weekly?
• Type of input. Is the information digital? Can it be made digital?
• Rules-based. Can the operation be reduced to a set of rules?
• Process stability. How long has the process been in place? Has it proved workable, or is it subject to change?
• Volume. How much data is being processed?

The perfect test case for adding RPA is manual journal entries, Barletta said. If you have staff typing data into a template and loading it into an enterprise resource planning system — what Barletta calls a "swivel chair process" because employees swivel back and forth between material on their desk and templates on their computer — you have a process that can serve as an early test for automation. "You can point the software to read the data where it needs to read it from, even if it's in an email, and enters it into as template, then emails it to a person for review, and upon approval, it can load that journal entry," Barletta said.

Early testing can be done in days and weeks rather than months and years, Gillespie said. Once you prove the concept and start seeing the time savings, you can add RPA to more function areas. Then you start to identify more areas where automation can work, and it balloons from there, he said.

As more processes become automated and finance personnel are freed up from repetitive tasks, they can spend more time on higher-level analytics. "Finance professionals didn't get into that function because they want to cut and paste data," Barletta said.

Once employees see how much time RPA saves them, they'll see its adoption isn't about replacing them but allowing them to make better use of their time, Gillespie said.

"There's a fear around automation that it will take someone's job, but it only takes pieces of a person's time, and by freeing those people to do other things, they can focus more on analytics," he said.

Finance staff are well-positioned to look for more ways to apply automation from there. "Automation begets automation," Barletta said. "It can really snowball within the organization."

What's more, widespread RPA adoption works as a gateway to adopting other value-adding automated processes, including artificial intelligence and machine learning, to extract more value out of your data and processes, Gillespie said.

The additions are relatively seamless because RPA is structured to work with "cognitive" AI and machine learning software, Barletta said.

Sponsored content

By Emburse

There will be many enduring memories of the coronavirus pandemic. One which will probably be somewhat overlooked in comparison, is that it will likely represent a coming-of-age moment for the virtual office. With increasing numbers of organizations extending work-from-home policies for their teams, the need for cloud-based, automated solutions has increased significantly.

One function which may be less prepared for an extended work-from-home policy is the finance operation, which often remains far more dependent on paper-based processes than other functions. Some organizations still mail invoices and employee expenses to the finance department, where they need to be manually reviewed and approved, often by multiple employees, and then entered into the accounting system for processing. Not only does it require the process to be physically centralized, but it takes up time and resources that could be better spent on higher-value tasks or more rewarding work.

When employees are required to work from home, it can make it difficult for vendors to get paid, card statements to be reconciled, and employees to get reimbursed. Should the disruption continue beyond a week or two, it could start to have a significant impact on employees, vendor relationships, and cash flow. Many organizations and individuals are already feeling the financial impact of coronavirus through potential lost wages and revenues, so anything that can be done to minimize this impact will help.

Moving functions such as expense, vendor invoice, and card program management away from highly manual, paper-based processes makes them far more streamlined. It also makes approval and reconciliation far more efficient for the finance team. Expense owners and vendors simply upload a receipt image or forward a purchase email to the system, which will automatically scan and parse out transaction data. Expense policy rules are already configured into the software, so there's no need for employees to verify budgets, spend policies, or approval chains.

Once submitted, managers receive an email notification that they have an expense report to approve. In their inbox or in the expense app, they can view receipt images and transaction details, and easily see if an expense is in compliance with an on-screen notification. The system routes and processes expenses according to the organization's unique business rules. Upon final approval, the data can be automatically exported and coded in the GL, and the expense can be reimbursed with an ACH (or BACS, SEPA, EFT, Direct Entry, etc.) payment.

Video: How GrayRobinson Drives AP Efficiencies with Chrome River

The situation for invoice approval workflows can be similarly streamlined to support distributed finance teams, by implementing an AP automation solution. With the vast majority of invoices now received electronically (either via PDFs, eInvoices or EDI), invoice recipients across the organization can simply send them to an email intake address, where they can be automatically uploaded into the system.

The AP solution will automatically extract purchase data (items, quantity, cost, order date, purchase order number, etc.) from the scanned invoice and map it to the appropriate fields. Each invoice is automatically routed for approval, based on factors such as billing code and authorization limits. To further reduce the need for manual intervention, paper checks can be replaced by electronic payment methods such as physical/virtual corporate cards or ACH.

While moving these two spend functions from centralized, paper-based processes to virtual, cloud-based processes can help during times where office access isn't feasible, they can also drive significant long-term financial and operational benefits. These range from reduced processing costs and fewer mistakes, to more effective cost control and deeper, analytics-based insight into corporate spend, which can drive long-term strategic improvements.

Report: Harvard Business Review - Transforming Finance into a Value Center

An additional benefit of automating these previously manual processes is the human impact on employees. Your colleagues no longer need to spend hours compiling expense reports, so they can spend more time on productive work as well as with their families. Vendors and contractors don't need to wait weeks to be paid. Approvers don't need to keep referring back to employee handbooks to see what is and isn't within policy. And for the finance team, instead of having to manually check and enter data line-by-line into the accounting system and setting up check runs, they can focus their time on activities such as data analysis and optimizing cash flow. Plus, with these tools in place, they can do it from anywhere, on any device.

When State Auto Insurance thought about making back-office functions more efficient, it turned to robotic process automation (RPA).

"HR and claims and underwriting and product for our personal and commercialized divisions, finance and accounting — all of them had processes that had potential to be automated, things that were either mundane or high-volume tasks," Holly Uhl, director of State Auto's operational excellence and robotics, told CIO Dive.

The Columbus, Ohio-based company is on the forefront of using RPA to make operations more efficient.

If a task is repetitive, "there's a chance that a bot can do the same thing," Josh Ensign, consultant with Point B Management told CIO Dive in an interview.

And while RPA carries the worry of "robots are taking our jobs," companies say what is more likely is robots taking tasks humans don't want to do, which frees up time to engage with coworkers and customers and drive business forward.

The issue is of growing importance to CFOs. Although finance chiefs have been interested in RPA as it applies to automating aspects of the accounting function, they have a role to play in advising on what operations throughout the enterprise are good candidates for applying RPA.  

RPA is growing

According to Deloitte's 2018 Global RPA Survey, 53% of the 400 respondents already began their RPA journey. Deloitte expects this will increase to 72% in the next two years and, if growth remains constant, hit 100% within five years. 

Organizations that have adopted RPA found success in improved compliance (92%), improved quality/accuracy (90%), improved productivity (86%) and cost reduction (59%).

They also found 78% of those who had already implemented RPA expect to increase investment over the next three years.

Ensign said the fastest uptake has been in financial services, and RPAs have also gained traction in "any industry where you have a large number of people doing highly manual tasks." 

Start with simple processes

When State Auto looked at where RPA might work, it landed on five operations functions:

• Two in claims related to entering a new claim and sending documents to vehicle owners
• Two in Accounting/Finance to create reports
• One in customer service to update a data mismatch

"We had one specific task in our commercialized division that was done 25,000 times a year," Uhl said, a task that involved just two yes or no questions. 

State Auto was able to automate that task in a day, she said. "The team [responsible for it] was excited not to do that work because who wants to press a key 25,000 times a year between seven people?" 

Starting with simple tasks, even if it's a small part of a larger process the company hopes to one day automate, is a "quick win," said Ensign. 

Small successes can show employees what a company hopes to do with RPA, and how it will make their jobs easier, not necessarily take their jobs away. Picking something that "is easy to apply just to show that it works can help people get a grasp" of the technology, he said. 

Trying to automate too much too fast, or trying to automate one process with many steps at once, can spell disaster, said Ensign.

"They try to automate end to end, which is a bad idea," he said. "If it's this global process that has 50 steps maybe you start with one step." 

When State Auto decided to move forward, they worked with UiPath, which was named a leader by Gartner in its Magic Quadrant for RPA Software, along with Blue Prism and Automation Anywhere. 

Think resource allocation, not cost cutting

State Auto's first bot with UiPath went into effect in March 27. Since then, the organization has automated 63 processes across the company, and have capacity gain of just under 86,000 hours, Uhl said. 

That gain has allowed the company to grow using the workforce it already had in place and reduce menial tasks.

One of those bots was used when the company moved to a new human resources and accounting system. That required moving 1.2 million data records. 

Instead of assigning human employees to do occasional spot checking, State Auto used a bot to validate that every record was correct. As a result, they had 100% accuracy from moving the old system to the new.

Keep expectations in check

RPA doesn't scale the way some might expect, said Ensign, especially after seeing quick wins from automating simple tasks. The Deloitte RPA survey found only 3% of respondents have scaled their digital workforce.

It's easy to see some savings from automating simple processes and think it can expand exponentially. Ensign has talked down clients who mentally scale RPA up to the point that executives think it's going to save tens of millions of dollars and see 2,000% ROI.

"While the point you start from is true and accurate, it doesn't scale the way that people think about," he said. 

Instead, organizations should start small and automate processes over time. He also said organizations should see RPA as another, better way to do something already done in the organization.

"RPA is a tool. It's a hammer. It's a really cool hammer. You use it to do things your company should be doing anyway," he said.

Proper use of robotic process automation (RPA) can save finance departments 25,000 hours of avoidable work per year, a study from Gartner revealed. That's 625 workweeks. The average amount of avoidable rework can take up to 30% of a full-time employee's overall time, equating to $878,000 in savings for a company with a 40-person, full-time finance team.

The 25,000-hour figure is thought to stem mainly from human error, the research firm said. Less than one-third of finance departments with RPA have used their financial reporting capabilities to the fullest, leaving "major efficiency gains on the table," Gartner said.

Despite the benefits of companywide RPA usage, only 29% of RPA adopters have implemented the technology for financial reporting, the study found.

Gartner found three key speed bumps hindering broader RPA adoption in the financial reporting process, according to interviews with more than 150 corporate controllers, chief accounting officers (CAOs) and chief accounting leaders. They are "a hesitancy to remove human judgment from the process, perception of low [return on investment], and process standardization delays before implementation." 

Most CAOs and corporate controllers are forced to prioritize RPA activities "based on a lack of resources and their role in managing a cost center, where they are consistently asked to do more with less," Gartner found. "Using a typical, cost-centric ROI formula focused on full-time employee time savings tends to deprioritize RPA opportunities within financial reporting for other business opportunities."

Most employees would rather avoid rework in favor of the more strategic activities only a human can do, said Dennis Gannon, vice president in the Gartner Finance practice. "[CFOs] who fully embrace RPA [see it] as a boost to their employee value proposition," he said.

"The biggest reason [for the resistance to RPA implementation is] belief that successfully using RPA requires a level of process standardization and cleanup within the workflow," Gannon told CFO Dive. "But RPA's a lot more modular than traditional technology, and it can lend itself to standardization in the wake of automation, instead of in front of automation.

"We certainly see a lot of success with an incremental approach [to RPA] adoption," Gannon said. "By training the staff on what RPA is, what it can do, and why it can help ... we can start to solicit some of the best ideas for a pilot process and proof of concepts, and [iterate] on those as we go.”

CFOs specifically should consider the ROI of RPA "more broadly than traditional cost-saving efficiency games and cost displacement," Gannon said. "Particularly, look at it through the lens of the engagement you can get with your team by making workflow more rewarding. You, as a CFO, don't want to be last in line for organizational talent, when other areas are using cutting-edge technology."

Data entry, the manual input of information into computers, is the world's most hated task, according to a survey of 10,000 office workers in 11 countries commissioned by robotic process automation company, Automation Anywhere. 

The findings are consistent with changes in the finance and accounting organizations, where the repetitive input and reconciliation of data is increasingly being handled by software, freeing up time for staff to focus on data analyses and other high-value activities.   

Deloitte, in research it conducted last year, found that 77% of CFOs plan to retrain staff to use technology and redesign job functions to better use human skills. At the same time, CFOs plan to reduce staff. About 20% plan to reduce headcount and 17% are prepared to manage people, robots and AI working side by side.

In the Automation Anywhere survey, almost two-thirds (63%) of U.S. respondents say humans shouldn't be doing repetitive digital admin tasks at work if those tasks can be automated. Another 85% said they were open to automating administrative tasks that aren't core to their job.

Also in the survey, more than half (52%) of millennial respondents said fewer administrative tasks would increase their productivity.

For talent constrained businesses, workplace satisfaction is critical. If staff are unhappy with daily workloads, attrition levels can rise.

Worker's conflict with administrative work isn't constrained to data entry, according to the survey. Managing email traffic and filing digital documents in correct folders follow closely in the list of most-hated tasks. 

In the survey, 73% of U.S. workers said they'd be happier at work if automation took non-core functions off their desks. 

For context, vendors such as Automation Anywhere target tasks that are a fit for automation. The entire RPA market hopes to capitalize on the need for increased efficiency as the workforce warms up to automation.

Gartner projected the size of the RPA market at $1.3 billion in 2019. The market expanded 63% year-over-year in 2018, a growth spurt driven by increased interest in modernization from enterprise customers.

At French multinational Schneider Electric, an RPA strategy was able to automate the workload of up to 150 full-time equivalents in 2019. Three-quarters of leaders expect a boost in employee satisfaction once automation is part of the daily workflow, according to PwC.

Compared to manufacturing, which embraced automation in the 1960s to eliminate repetitive tasks, the finance and accounting function has been a laggard. But Darren Heffernan, president of mid-market at financial software company Trintech, thinks CFOs are poised to change that by stepping up to lead their organization's digital transformation.  

CFOs are "practically co-running the company with the CEO," and their ability to view the business across all functions provides strong support to leadership, said Heffernan, an eight-year veteran CFO at Trintech before assuming his current role.

In an interview with CFO Dive, Heffernan said there is an immediate advantage to embracing digital transformation:  closing your books faster. "Numbers are lagging indicators," he said. "It’s all about KPIs that let you predict the future with more certainty than the past. Close the books, shorten the sale cycle. The quicker you get that out of the way, the better, for any company."

RPA adoption continues to lag in finance

Yet finance teams have been unusually slow to robotic process automation (RPA) and other types of digital transformation. RPA is a software program that fits into an organization's accounting function to manage the repetitive recording and reconciliation of specific types of transactions.     

"If you look at the manufacturing industry," he said, "they figured out many decades ago that automation was the way to go. We haven’t done that in finance, and it’s only now we’re starting to find the tools." As a result, he said, finance departments have struggled to close their books on time, retain talent, and do away with repetitive, mundane tasks.

When Heffernan started in finance 20 years ago, it was expected he'd to have to work weekends and holidays. "When you’re closing the books, that’s what you have to do," he said. But Generation Z doesn’t accept that premise.

"If you want to attract talent, that’s not the way to do it," he said. "So, modern finance, teams must focus on automating to sustain and grow business, and do what’s being asked of us as finance professionals. We’ve got to make it more interesting for the new talent."

Heffernan thinks CFOs are well-positioned to spearhead digital transformation because of their unique vantage point of the whole enterprise. "By the definition of the role, the CFO is dispersed across the whole organization. They know what has to happen. We live in such a fantastic era of digitalization where everything is possible. And the CFO just has that unique view and visibility into why that should be." 

Automation stands to benefit finance teams enormously, Heffernan said. "Most [finance teams] that haven’t adopted tech use Excel in ways it was not designed to be used.  Excel is not a system of record or controls, but that’s how many companies are [using it]."

Looking to the future

Heffernan offered two major predictions for new tech trends in 2020.

The first is continued demand for cloud services. "Very rarely now do we come across companies that don’t embrace the cloud," he said. "The cloud will be embraced by many more companies, especially in the mid-market space that may not have known there are tools like ours available to help them."

Second, Heffernan said companies offering enterprise resource planning​ (ERP) solutions would have greater influence. Those ERP vendors will be "substantially" expanding their offerings, Heffernan said, and finance leaders will look more at consolidation when viewing financial planning and analysis and close tools together.​