ShortCut: Intelligent Automation

SHORT CUT DEUS EX MACHINA? How intelligent automation drives competitive advantage In 2013, Carl Frey and Michael Osborne of Oxford University were among the first researchers to provide a scientific perspective on the impact of computerization on our working world and job situation. Their paper, though disputed, did not only set a societal discussion in motion, but also provided food for thought for how companies need to plan ahead for the future of their processes and employees. Following in the footsteps of the Oxford paper, many more studies have been published since that focus on the automation potential of the global economy as well as individual sectors and countries. But nearly all these only provide a long-term outlook. To determine the potential that companies can attain with automation right now, goetzpartners conducted an expert survey with many of the leading software companies that enable automation 1 through technologies such as Robotic Process Automation (RPA), Business Process Management (BPM) or Artificial Intelligence (AI). Apart from a certain level of optimistic bias regarding the results from the participating companies, the panel provided a broader horizon and deeper understanding of the topic than would usually be expected from managers responsible for implementing automation within a single organization alone. Therefore, the results provide a helpful additional perspective for business leaders who must decide on their companies’ digitalization and automation strategies. DANGEROUS HESITATION However, automation technologies should not be treated like a “Deus ex machina”- device. In an ever-changing business world, waiting for a magical solution to a seemingly unsolvable problem is seldom a promising strategy. The goetzpartners expert study provides concrete perspectives on how the intelligent use of machines can create a sustainable competitive advantage and how companies can get control over this development. While in most established European companies there are shattered proofs of concepts and even actual applications in several business functions, such as IT or Finance, only few pursue overarching, concerted programs to drive intelligent automation and make full use of technologies such as RPA or AI. There are three major threats that render a lack of an overarching automation strategy very dangerous: • Increasing international competition: Many other regions outside Europe – most notably China and the U.S. – take a much more strategic stance and invest heavily into intelligent automation. U.S.- based companies Amazon, Facebook, Alphabet, Microsoft and Apple together spent over $70 billion on research and development in 2018, a sum of which a large part is invested into AI 2 . China has already overtaken the U.S., with the government’s latest venture capital fund for AI investing more than $30 billion into state-owned firms 3 . This trend is reflected also in the business strategy of individual companies: While nearly 9 out of 10 Chinese companies are active AI players, in Germany the percentage is only 49% 4 . • False sense of security: Even companies with business models that appear to be safe from technological disruption will eventually face it. The average lifespan of large publicly traded companies has continuously decreased over the last decades and will continue to do so 5 . • Underestimated adoption time: People need their time to acquire new skills and change their mindset. This cultural change is also essential for successfully hiring and retaining the new talent every company requires. If the culture clash of existing employees and newly hired technology experts is too large, the organization will reject the targeted infusion of new skills. NEARLY 35% IS THE POTENTIAL CURRENTLY ATTAINABLE The goetzpartners study has found that today, companies could already automate up to 34.8% of the work conducted manually with a positive business case according to our expert panel. The lion’s share – 25.2% – is obtainable by means of basic automation and the computerization of simple, rule-based tasks though technologies such as RPA. An additional 9.6% can be achieved with advanced automation of more complex processes requiring cognitive capabilities provided by technologies from the realm of AI. CURRENTLY ATTAINABLE AUTOMATION POTENTIAL by core function [in %] 1 Ø R&D Sales Human Resource Marketing Legal Controlling Procurement [1] Numbers may not sum up due to rounding 40 40 40 40 40 35 35 35 35 33 30 28 5 15 8 10 10 10 10 10 23 8 15 8 8 30 25 20 23 23 25 25 28 30 30 20 15 Finance IT Customer Service LOW MEDIUM HIGH 5 35 Logistics Production Advanced Automation Basic Automation 1) Expert Circle consisted of 20 technology and software companies providing automation and AI tools 2) Statista, 2019: 3) The Conversation, 2019: 4) Forbes, 2018: 5) Innosight, 2018: