Many professionals have heard of Robotic Process Automation (RPA) and have asked: What is RPA and why should I care? This is a fair question because the term “RPA” is a bit misleading. Further, many articles do not adequately describe how this technology can benefit accounting and financial professionals. Therefore, in this article, let us define and describe RPA so that you understand the benefits this amazing technology offers.
RPA, In General
In simple terms, RPA is a technology that allows us to automate routine, repetitive tasks. RPA uses “bots” to capture and process data according to predefined rules. Examples of this technology in use today include the following.
- Bank feed processes incorporated into many accounting software applications and services.
- Extracting transactional details from scanned images of accounts payable bills.
- Automatically extracting data from one system and loading it into another.
- Automated approval of applications – such as credit requests – based on pre-defined criteria.
RPA is becoming increasingly popular because it minimizes the amount of time spent on simple, repetitive tasks. Therefore, it helps to reduce labor costs while simultaneously allowing team members to focus on value-added tasks.
The term “RPA” can be misleading because it implies the use of machine-based robots to perform tasks. To be clear, bots are not machine-based robots. Rather, bots are software-based applications that contain the rules, parameters, and procedures used in the effort.
Benefits Associated with RPA
Now that we have a fundamental understanding of RPA, let us turn our attention to the potential benefits associated with its use. Most experts in this field would agree that this technology can provide at least the following seven benefits.
Clearly, one of the technology’s biggest benefits is reduced costs. The use of bots helps to reduce the costs of expensive human labor which otherwise would be necessary to perform the same tasks. Equally important, this labor can be re-allocated to performing tasks requiring human analytical skills, helping to mitigate potential labor shortages.
By removing the opportunity for human error at the transactional level, we should expect near 100% accuracy in these processes. Of course, this assumes that the logic embedded in the bots is accurate. Therefore, great care must be taken during testing and deployment phases or coding mistakes could compromise accuracy.
Team Member Engagement
In RPA environments, team members are no longer performing rote tasks manually – tasks that some consider to be boring. Instead, bots are used for this function and team members can focus on tasks they consider the be more challenging. As a result, team members are often more engaged and stimulated to achieve peak performance.
Reduced Processing Times
Let’s face it – computers can often work faster than humans. This is almost certainly the case when considering the type of tasks that could benefit from RPA. Accordingly, implementing this tool can reduce the amount of time it takes to process transactions, tasks, and events in an organization.
Though “Robotic Process Automation” sounds somewhat complex and intimidating, oftentimes you can implement the technology in a matter of minutes. For example, bank feed processes associated with accounting applications and services rarely take more than five minutes to initiate. Likewise, you can implement many employee expense processing tools that use RPA in under thirty minutes. In both these cases – and many others – organizations can begin experiencing the benefits of RPA almost immediately.
Enhanced Internal Control
One of the understated benefits associated with RPA is consistency. Because we are relying on bots, tasks and transactions process the same way every time, without exception. In other words, bots cannot choose to make exceptions that would potentially violate an internal control policy or procedure. This helps to ensure that all transactions processed by the bot are processed in accordance with established internal control procedures.
Improved business analytics
In era of “Big Data,” it is important to note that RPA bots can collect and analyze data as they are performing their tasks. Of course, the insights provided by these analytics can, in turn, enhance the value of the RPA process. For example, when used to assist in processing employee expense reports, bots could provide insights into unusual spending by certain team members, potentially indicating expense report fraud.
Potential RPA Risks
Like all projects, RPA carries risks and failing to address these risks can lead to failed RPA efforts. Perhaps the most significant RPA risk is trying to apply RPA to overly complex situations. Keep in mind that RPA is designed to automate routine, repetitive tasks – tasks with very few exceptions. If you apply RPA to overly complex tasks, then the number of exceptions requiring human interaction will likely derail the project.
Another risk associated with RPA is devaluing human capital. While RPA should reduce the amount of human labor involved with many processes, let’s not allow it to displace team members who have a deep knowledge of a specific workflow. Instead, we should seek to keep that team member involved in the business process, using their knowledge to help with more sophisticated challenges.
Expecting too much of RPA is yet another risk that manifests today. RPA tools can process tremendous amounts of data every day. However, if we attempt to integrate them with legacy systems that are not capable of that same volume, then our results are going to be disappointing. Therefore, plan accordingly and “upsize” legacy systems to achieve maximum performance. By managing these – and others that might materialize – you will improve your chances for maximizing the ROI related to RPA.
Despite an intimidating name, RPA is a relatively simple technology that offers significant benefits to organizations of all sizes. Using software-based bots, RPA can help organizations automate routine tasks, and realize numerous benefits associated with doing so. However, to be successful with RPA, ensure that your business processes are conducive to its’ application and that your legacy systems can integrate with your RPA tools. This common-sense approach will help you and your team to maximize the benefits associated with Robotic Process Automation.