September 16, 2019
Interviewed by: David Snow
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Measuring the ROI in Robotics

Robotic Process Automation is strongly associated with reducing costs in businesses, but if executed properly it can allow employees to be more efficient and focus on higher-value tasks. A group of experts from General Atlantic, RSM and Automation Anywhere shares expert views. Part 3 of a series.

Robotic Process Automation is strongly associated with reducing costs in businesses, but if executed properly it can allow employees to be more efficient and focus on higher-value tasks. A group of experts from General Atlantic, RSM and Automation Anywhere shares expert views. Part 3 of a series.

PRIVCAP TRANSCRIPT Measuring the ROI in Robotics Privcap: Today we’re joined by Cory Eaves of General Atlantic, Tamas Hevizi of Automation Anywhere, and Dave Noonan of RSM. Gentlemen, welcome to Privcap today. Thanks for being here. How do you measure ROI? Is it different than any other improvement to a company? Tamas Hevizi, Automation Anywhere: the economics of automation is actually fairly straight forward, because your primary ROI metric is the number of headcount you can free up, because you normally have to perform those jobs manually. You can automate them. So that’s a big part of it. And then in certain industries, cost compliance becomes a big part of a case, like healthcare or any regulated industry. And error rates depends on the business, service levels can become part of the case. But at the end of the day it’s freeing of FTEs. Cory Eaves, General Atlantic: Yeah, I would agree. We have another business that does some employment screening, preemployment screening. They have a very large operations department, a number employees of which basically cut and paste from websites. So if they’re looking for an individual, they’re running a background check, they have to deal with databases all across the country, sometimes around the world. Each one has a different user interface, different website. And they literally have employees who log on to each one of those websites, and search for background cases essentially on those people. They’ve written 10 simple robots that automate certain pieces of that process, and those 10 robots have taken out almost 23% of the labor in their case. So really straightforward case. In their case incidentally the business was growing fast enough that those people were actually absorbed into other parts of the business. There was no reduction per se in the number of people total in the business. They were just applied to growth areas of the business, as opposed to doing some of this manual processing in the back end. Hevizi: So talking to a firm that does a lot of carve outs, they actually look at automation as a way not to reincur the cost of the seller infrastructure. So basically saying, no, if we carve out an entity, we could build up digital first. Meaning I’m going to start deploying bots before I start deploying humans. So this way I don’t inherit this seller’s cost structure and org structure in the new entity. If we can take a stance of digital or bots first, when we requisition headcount, let’s do that first. That may help the business grow their margin better than if the cost line goes as fast as your revenue line. One interesting thing we had our own experiment in the company. So we have 3000 employees and 10% of them are bots, which is interesting to think about. Not because it’s 10% of the workforce. That 10% of bots can actually do 20, 30% of the workforce whose work, because they work 24 hours a day, they don’t take breaks. So, sometimes when you look at the economics of creating a mixed workforce with these bots, you can actually gain significant advantage over headcounts. Privcap: This might be a naive question, but are companies really looking at bots and considering them employees? And they’re sort of part of the headcount? Hevizi: It’s interesting, there’s a new dialogue, which is this concept of digital workforces. So if we think about AI, obviously a lot of people think big AI. One day the business will have AI that’s going to be able to set its own goals and execute thing here, and learn from its mistakes. And even may be emote, that’s far away. We’re solving the small AI problem. But at the end of the day, if you take Bob, accounts payable clerk, the human, and Bob performs 10 tasks a day. And those same tasks tomorrow will be performed by Bob the bot. Then they are basically different kinds of workforce entities. So, the conversation has started that way. Privcap: At some point in the future, an emoting bot will be annoyed with Bob, the accounts receivable bot. That’ll be a real breakthrough moment. You must also get a question from clients, CEOs, which is, how fast am I going to see this return on investment? It sounds like pretty fast. What’s the range? Dave Noonan, RSM: I mean I think, to Corey’s point, it really is a very quick turnaround. You can be up and running with a significant bot running a function of the business in three, four months, at the outside. And that’s through iterations of AI learning and machine learning. Then the returns are almost immediate. Hevizi: Yeah it’s interesting, as soon as you automate a function Bob the human can be redeployed in different roles, so that the return typically most returns we see under a year. Noonan: And I think one thing I wanted to say with regard to the ROI piece, and I think there is your traditional definition, but just you’re operating more efficiently, you’re operating with less people and spending less money. Maybe gratuitously, but I like to take that conversation to the next level, especially with my private equity clients to say, if I’ve created a million dollars worth of performance here, that’s worth eight or $10 million of enterprise or exit value to that asset, it could have, depending on what function you’ve automated, could also help enhance the salability of the asset, it might help you turn it over faster.

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