Business Process Automation
Business Process Automation (BPA) is the use of advanced technologies to automate business processes beyond simple data entry, storage, and manipulation.
Automation is not really a new concept. In ancient Greece, automatons were used as toys, fountains, crossbows, gates, and even war machines. However, process automation evolved as a business tool in the twentieth century when companies began using computers to perform simple tasks and processes, ushering in an era of intelligent business management.
Today, Business Process Automation has moved beyond manufacturing and simple mundane tasks, and is gaining inroads into the various activities of the business world. The intelligent automation of data-driven enterprise tasks may have started in the 1960s with the introduction of enterprise resource planning systems and has now evolved to include AI, IDP and robotic process automation.
Table of Contents
- What is BPA
- Benefits of Business Process Automation
- Elements of BPA
- Types of BPA
- Areas of use for BPA within a business
- Setting up the BPA system
What is BPA
Business Process Automation involves automating the mission-critical, core processes of a business. The process may be as simple as capturing and automatically responding to emails and scheduling follow-ups, or may cover complex, multi-level organizational workflows. A survey by McKinsey shows that although few occupations are fully automatable (1%), 60 percent of all occupations can automate at least 34 percent of their tasks/activities.
Benefits of Business Process Automation
The automation of mundane recurring tasks can increase the speed, accuracy, and consistency of operations. These lead to the improved efficiency and profitability of the business.
The benefits of BPA to an organization are varied:
- Time savings and faster turnaround times: Manual business processes eat up a lot of time, irrespective of the department and nature of work. For example, low-level, automatable tasks have been reported to consume 30% of IT departments’ time, 47% of the AP department’s time, and 75% of the time of HR and Payroll department staff. This naturally leads to time delays and associated penalties that have a ripple effect on the productivity of the team and company. Automated business processes can help avoid such delays and bottlenecks in the daily operations of the company.
- Cost savings: Manual business processes require considerable human capital. McKinsey showed that 45% of current paid activities that cost an equivalent of $2 trillion in total annual wages, can potentially be automated. Furthermore, manual performance of redundant, potentially automatable tasks decreases the productivity of the company and low productivity can cost employers around USD 1.8 billion dollars annually. While it appears that the installation costs of process automation can be perceived as high, the operational savings more than make up for it.
- Error reduction: Manual tasks are associated with errors that arise from something as simple as exhaustion or carelessness, to more serious problems like ignorance or apathy. Even apparently simple tasks are associated with errors, when performed manually – for example, manually entering data into simple spreadsheets has been shown to be associated with human error of 18% - 40%. It is said that a human being is likely to make 10 errors in every 100 steps when performing redundant work.
- Increased focus on strategic tasks: A global study on automating processes found that an average worker spends more than 3 hours per day on mundane, repetitive tasks, which reduces focus on higher-value tasks that involve human strategizing and planning for the betterment of the organization. A CIO report says that productivity and satisfaction of employees increase when they spend time on interesting and rewarding aspects of their jobs, and this reduces employee turnover and enhances employee retention.
- Transparency: Manual tasks are hard to track. Process automation can centralize processes and enhance transparency across the board while also logically integrating the business functionalities spread out across the organization. Business process automation also sets up security measures and traceability of information, which ensures better compliance with relevant regulations.
- Audit-readiness: Automated business processes not only allow standardization of operations but also ensure maintenance of records of all stages of a business process, thereby creating an audit trail.
- Supports expansion: As the client base and operational portfolio expand, manual business management can become unwieldy and impossible. Process automation enables streamlining of all business processes, thereby allowing the business to scale.
Elements of Business Process Automation
There are three elements to BPA:
- Business rules: These are policies of the business that are followed in its operations through business logic and action steps. In BPA systems, business rules are the baseline upon which the automation system is built.
- Structured data. These are organized data that are meaningful to the company and its operations. It may include the employee roster, invoice and sales information and financial data that are frequently referenced for daily operations. BPA tools manage and organize the collection and integrate this data into useful and concise reports that can be effectively used for downstream processes.
- Unstructured data: These are data that do not follow a structured form but are nevertheless useful to the company. Such data may be product descriptions, web pages, reviews, social media, emails etc. and a good BPA manages and processes these data well so that they are of use to the company in terms of strategizing and planning.
A strong automation process seamlessly combines these three elements for smooth operation of the business.
Types of Business Automation Processes
There are four types of BPA that may be used depending on the needs of the company:
- Basic Automation involves the digitization and automation of simple jobs in an organization and organizes all data pertaining to these simple jobs for easy access. A messaging tool or work group comprising employees working on a specific project, is an example of basic automation.
- Process Automation manages tasks, processes, and projects. It also has built-in checkpoints, approvals and updates for seamless transit of the process/project from start to end. This also provides full transparency to all participants of the business process.
- Integration automation is more advanced in that it largely replaces human employees in certain repetitive tasks; the human participation only comes in for rule setting and monitoring, and the BPA takes care of the work as defined by clear workflows. Integration automation is often seen in customer support platforms in which customer comments/feedback are processed automatically and classified/annotated for further action.
- AI automation is the most advanced form of BPA in which computer software applications make human-like decisions. AI BPA systems deal with data and information in ways in which it has been trained, in order to mimic human action to a large extent.
Areas of use for Business Process Automation within a business
Business process automation can be used in almost all departments within an organization, with varying levels of human interventions. Some specific areas of use are:
Accounts Payable applications
The advantages of automating the financial aspects of a company’s operations are increasingly being recognized by businesses. This has necessitated the adoption of automation in financial workflow structures. This is particularly evident in the operations of the Accounts Payable Department that provides financial, administrative, and clerical support to the purchase process of a company. The operations of the AP department must seamlessly integrate the various functions of the procure-to-pay process that spans purchase order management, vendor communication, invoice management, product tracking, and payment. Automating AP operations, such as invoice management and purchase order management, can help organize the procurement process in companies
AI-based BPA tools like Nanonets can help with the automation of AP tasks such as invoice approval, to make it a hassle-free process.
Sourcing and Procurement
Technology and automation can facilitate seamless sourcing and procurement activities with their ability to collate data/facts/information/analytics and provide easy access to all stakeholders. Automation can ensure continuity in supplier relationships, support analytical decision making, provide access to data across the business and supplier base, and set strategies and conditions to maximize value for money. Automation can also ensure that strategic sourcing capabilities can be scaled up in order to prevent lags and delays in business outcomes.
The automation of the accounting process includes digital accounts reconciliation, maintenance of financial records, and creating financial statements with minimal human intervention. Some of the benefits associated with accounting automation are better data integrity, improved efficiency, auditability and record maintenance. A good accounting automation software offers a range of different functionalities that overlap with other departments such as purchasing, accounts payable, payroll management and tax/financial records processing.
Human Resources involves a lot of paperwork and time consuming processes that can be automated. HR BPA can include automation of employee onboarding administration, payroll, timekeeping, and benefits administration. HR automation systems can organize and store data such as employee profiles, schedules, attendance records and related information. Payroll automation can eliminate errors in payroll calculations and maintain payroll records for tax purposes. An automated evaluation system can help employees and employers assess performances and help in fostering performance improvement and collaboration.
Human involvement in customer support cannot be entirely eliminated. However, process automation can afford time and cost savings to the company and improve customer relationships. McKinsey reports that the use of automation to revamp customer experience can save up to 40% on service costs. Automation can enable 24x7 customer support; round-the clock customer support in manual operations requires recruiting more people for shift-based work. Further, customer service automation can help consolidate and organize customer concerns for product improvement and brand building. Automation of customer service can also cater to younger customers who prefer the digital channel for customer support.
Sales automation can reduce the cost of sales through better outreach to customers in the sales funnel. It can facilitate the sales process across sales teams, partners, distribution channels, and customers, and can ease tasks like updating contact information, managing calendars, and processing opportunities. Activities like call logging, filing, and handoffs can be automated for time savings. Indeed, McKinsey reports that a third of sales and sales operations tasks can be automated which makes sales one of the most promising functions in terms of automation potential. According to the report, sales automation could result in “an overall cost reduction of 10 to 15 percent and a reduction of order processing time—from confirmed order to confirmed delivery—from two or three days to one or two hours.”
Social Media Management
Process automation of the social media content of a company can optimize social interactions with an audience, thereby bringing in customers and retaining old ones. Social media automation can include scheduling social posts ahead of time or republishing popular articles periodically, for more traction and to build a brand. Automation of the social media management tasks can reallocate time and resources into other areas of marketing that require human participation, such as budgeting and strategizing.
Setting up the Business Process Automation system
Setting up a BPA system within an organization starts with an assessment of the business processes of the company and recognition of opportunities and areas for automation. The choice of the BPA tool depends on the following factors:
- The level of automation required:. Each company has its own requirements and styles when it comes to the purchase process. The ability of the software to incorporate the company’s practices and policies must be assessed. Some useful questions to ask to assess the need of the company are:
How will the BPM system align with the overall rules and logistics of your business?
What are the key roles in the chosen BPM and who will fill them?
Will the BPM fit into the overall culture of the organization?
- Budget: The amount of money to be invested in setting up a process automation system depends on the scale of the business, the bottom line and the investment potential of the company
- Ease of use: Even for advanced process automation systems, a certain amount of human intervention is required during setup and implementation. The skill level of the employees using the software will decide how user-friendly the front end of the software should be, and the level of tech support that will be required of the developer. The need for training and tech-support must also be addressed before choosing the right tool for the purpose.
- Extent of spread and collaboration: Most departments/teams/units in large companies are interconnected in their activities. The software tool used for the automation process must be able to provide access at various levels and allow easy collaboration among all participants. There also needs to be provision to include various levels of approvals in the process.
- Integration with the other systems used in the company: The BPA tool must integrate with the other systems such as accounting management tools used already in the company. Standalone process automation tools that do not integrate with the digital tools used in the company would lead to data mismanagement and time loss.
One of the main challenges in setting up BPM systems is in designing workflows for automation. Once the processes to be automated are identified, each step in the process must be clearly defined to be able to fully automate processes effectively. Furthermore, process automation must be implemented in phases so that it can be thoroughly tested before integration to the entire business. Constant monitoring is also essential – set-and-forget is not an option and lack of monitoring can result in obsoleting of functionalities.
Business Process Automation is fast becoming an important tool to help businesses manage their operations and grow. The benefits of automated processes such as greater transparency of processes, reduced costs, improved employee productivity, and customer satisfaction, make them ideal for adoption by companies that look to expand their business arena and bottom-line. BPA is no longer viewed as a threat to human employment but is considered a synergistic tool that allows human employees to concentrate on less mundane, higher-value tasks such as business development and other activities that contribute to enterprise value.