R&CA: Workforce replacement or Workforce evolution Automation Anywhere, Blue Prism, UiPath Potential Applications: • Data reconciliation ... R&CA: Workforce replacement or Workforce

R&CA: Workforce replacement or Workforce evolution Core human capital considerations for your R&CA strategy November 17, 2016

R&CA: Workforce replacement or Workforce evolution Copyright © 2016 Deloitte Development LLC. All rights reserved. 2

Since there is a perception that R&CA leads to workforce reduction, organizations often face workforce resistance; planning for the human impacts of R&CA is critical to a successful strategy

R&CA brings human capital issues to the forefront

1 Where are the most likely job impacts of R&CA?

2 What are the benefits for the organization?

3 How should my organization prepare and support our workers to be successful?

Copyright © 2016 Deloitte Development LLC. All rights reserved. 3 R&CA: Workforce replacement or Workforce evolution

Where are the most likely job impacts of R&CA?


Source: “The Robots Are Coming”, Deloitte Financial Services White Paper (2015) Deloitte analysis based on Frey and Osborne’s “As machines take on more human work, what’s left for us?” Oxford study (2014)

Size of bubble represents # of employees

Finance Processes

Almost half the roles in Back Office functions can be automated and yield significant savings

There is high potential for automation to augment workflows

0

0.2

0.4

0.6

0.8

1Low Probability of

Automation, 40.33% Medium Probability of Automation, 3.59%

High Probability of Automation, 56.08%

Level of education (

Bachelo

rs o

r m

ore

)

0.3 0.7 1.0

Business & Financial project management professional

Financial senior leaders

Purchasing managers and directors

Payroll managers

Financial administrator

Credit controller

Weighted probability of automation

Financial & Acc, technician

Finance account manager

Finance manager


Realm of Process Robotics (RPA) Realm of cognitive automation

Jobs may slowly evolve with roles being automated starting with rules-based tasks and then cognitive capabilities replacing judgement-based tasks

Traditional knowledge work will be interrupted

“Mimics Human Actions”

RPA Realm: • Rules-based tasks

Sample Technology Firms: • Automation Anywhere, Blue Prism, UiPath

Potential Applications: • Data reconciliation • Claims processing • Returns management

Structured Data Deterministic Outcomes

Un-structured Data Variable Outcomes

“Augments Human Intelligence”

Cognitive Realm: • Judgement-based decision-making

Sample Technology Firms: • Cognitive Scale, Kira, IPSoft, IBM Watson

Potential Applications: • Inventory Management predictive analytics • Hedge Fund Algorithmic Trading • Computer vision systems for inspection & QA

RPA is intended to improve the efficiency of humans through

performing repetitive tasks, not replace human judgement

Cognitive is intended to replicate human judgement

through machine learning, natural language processing,

advanced analytics, etc. but is still maturing


Humans 1. Report Extraction 2. Formatting/ Stacking 3. “Eyeball” variances

1. Investigate variances on final reconciliation report

1. Provide oversight and facilitate knowledge transfer within firm to enrich human learning and improve automation

Robots N/A 1. Report Extraction 2. Rules-based variance flagging 3. Create/Send final reconciliation

report

Report extraction and generation same as RPA

1. Pattern-based recognition of variances using historical data

2. Root cause analysis 3. Resolution communication

Potential Results

• Cumbersome • Resource intensive • Lengthy processing

• Reduced processing • Increased frequency • Improved quality

• Minimal resources • Fastest processing • Almost zero manual intervention for

variances

Standard Process Robotic Process Automation Cognitive Automation

Intercompany Reconciliation Automation Impact Example

Roles will evolve based on type of automation R&CA can enable humans to focus on analysis while also driving accuracy and efficiency


What are the potential benefits for the organization?


Revenue and profit generated becomes less dependent on the ability to scale labor; automation enhances

the abilities of current resources

Decouple

Profits & Labor

Re-engineer core processes while

automating the function

Transformative

Change

Ability to rapidly scale up or down depending on the

nature of the business issue

Flexibility

Process owners elevated to process transformation leaders

and robot designers as production becomes more automated

New

Competencies

15 – 90% cost reduction opportunity depending upon the characteristics of the functions

selected for automation

Cost

Reduction

Characteristic Outcomes of Robotics and Cognitive Automation

R&CA can provide benefits that extend beyond pure labor cost savings

Organizations have the ability to focus on value creation in addition to cost reduction


A typical process requires a worker to spend time performing redundant tasks There is significant human time spent on rules-based, operational tasks

Example for nurse recruiters

Current dynamics

1. High turnover of nurses

2. Capacity constrained function (Recruiters are busy and in high-demand)

3. Opportunity for automation of application processing and credential validation

Receive Application Validate Credentials Engage Candidates Engage Business

Department Managers Communicate

decision to candidate

Human interaction Automated process

Workflow


R&CA can allow employees to re-allocate their time to value accretive tasks

Humans are able to focus on engaging other humans and improving the process

Example for nurse recruiters

Current dynamics

1. High turnover of nurses

2. Capacity constrained function

3. Opportunity for automation

Potential future state

1. Capacity created through automation, freeing up FTE’s

2. Additional capacity allocated towards human-only tasks of engagement with candidate and department

3. Recruiters can improve job specs and get to know candidates better to reduce turnover

Receive Application Validate Credentials Engage Candidates Engage Business

Department Managers Communicate

decision to candidate

Human interaction Automated process

Workflow


• Think differently for how to use the workforce • Brainstorm what is uniquely human that can provide value with additional capacity

Concepts to Consider

Group Discussion Organizations will capitalize on new capacity differently to optimize or expand the business

Think about a process

you might automate

Imagine the

implications of freeing

up 20% FTE capacity

from that process

Describe the

impact created by

capacity in the function


How should my organization prepare and support our workers to be successful?


Identify Areas of Resistance and Areas of Support to tailor messaging and proactively assuage concerns

Don’t forget to consider organizational dynamics!

Creating a Climate for

Change

8. Make it Stick

7. Don’t Let Up

6. Create Short-term Wins

5. Empower Action

4. Communicate for Buy-in

3. Get the Right Vision

2. Build the Guiding Team

1. Increase Urgency

Implementing and Sustaining Change

Engaging and Enabling the Whole Organization

• Skeptical of automation success

• Scared of automation once they see the results and potential

• Quick to give up once automation breaks

• Resistant to change and performs role status quo without invoking robot

Focus: Elimination of primarily mundane work leads to increased job satisfaction and engagement for workers

Drive Transformation Common Employee Concerns

You may encounter employee resistance so transparency, consistency of messaging on benefits, and leadership support is important for success

Communicate firm-wide commitment via consistent, multi-level messaging


Formal changes to job expectations can cause a natural evolution to the workforce, resulting in higher efficiency from some, a need to train for others

Humans will adjust to new job roles after automation

1

Categories of workers Post-R&CA

2

3

Well-adapted Humans easily adjust and are well-suited for the new job role

Training needed High worker engagement but humans need additional training to excel in new role

Mis-aligned Strengths of the humans are mismatched with the new job role, resulting in natural attrition


Moving Beyond


Highly efficient autonomous car

Can only drive 600 miles without human intervention

Computer routinely beats human in game

Lost one round due to basic error that is avoidable in human bot collaboration

RPA is focused on process efficiency while still developing cognitive capabilities will replicate human decision—making and eventually unlock new insights enabling change

The role of humans will continue to evolve as cognitive technologies mature


Learn more

Follow @Deloitte #robotics

Gina Schaefer

Managing Director, Deloitte Consulting LLP [email protected]

Please reach out to continue the conversation or discuss opportunities specific to your organization

About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting. Copyright © 2016 Deloitte Development LLC. All rights reserved. 36 USC 220506

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R&CA: Workforce replacement or Workforce evolution Automation Anywhere, Blue Prism, UiPath Potential Applications: • Data reconciliation ... R&CA: Workforce replacement or Workforce