Post by : Deepak Sharma
What is RPA?
From the RPA Primer published by “Institute of Robotic Process Automation” (IRPA) in 2015–
“Robotic process automation (RPA) is the application of technology that allows employees in a company to configure computer software or a “robot” to capture and interpret existing applications for processing a transaction, manipulating data, triggering responses and communicating with other digital systems.”
“Robotic process automation (RPA) applies specific technologies to automate routine, standardized tasks in support of an enterprise’s knowledge workers.”
What kind of Technology innovation is RPA?
Innovation can be defined as adoption of “new knowledge to offer a new product or service” (Afuah, 2003) where the term adoption refers to the “process that includes generation, development and implementation” (Damanpour, 1996) and the new knowledge “can be technological or market related” (Afuah, 2003).
We could apply this definition of innovation on RPA as the adoption of new technological knowledge that allows to carry out business processes as automated with the use of software robots. So, what kind of technological innovation RPA is? In attempt to answer this question let’s take a deep dive using a comprehensive set of measures to assess the type, degree and characteristics of RPA as a technology innovation.
Let’s first look at the type of technology innovation which can be classified as either a product innovation or a process innovation. Product innovation is concerned with the development of new products or services while process innovation relates to the ways of undertaking production or service operations. For corporate businesses adopting RPA, it is a clearly a case of process innovation as RPA allows for optimizing how business processes are carried out.
When looking at the degree of technical innovation, innovative activities can be categorized as either radical or incremental. Radical innovation is a “fundamental change” (Dewar and Dutton, 1986) while incremental innovation is an add-on to a previous innovation without changing its essential concept (Dewar and Dutton, 1986). There are two ways to look at this. Is RPA causing an upward movement along an existing technological trajectory (Geroski, 2003) or is it leading towards beginning of a new technological trajectory? From IRPA’s RPA primer – “Many technologies, including artificial intelligence (AI), expert systems, and other methods of process automation have served as predecessors to RPA. That being said, RPA takes artificial intelligence and expert systems to an elevated level.” – this indicates that RPA is an incremental innovation built upon a host other technologies amongst which many are intrinsically radical.
Looking at the characteristics of technology innovation that RPA represents, is it competence enhancing or competence destroying? Or in other words whether existing competencies, skills and knowledge are reinforced or are they replaced with new ones (Tushman and Anderson, 1986) ? From IRPA’s RPA primer – “In the last couple of decades, offshoring and outsourcing have become popular business tactics for decreasing operating costs. Labor in the United States is much more expensive than labor in the Philippines or India, for example. From 2000 to 2010, it was reported that U.S. multinational firms hired nearly 2.4 million offshore employees and cut 2.9 million jobs in the United States. Offshore has its costs, but the costs are not nearly as high as payroll within the United States. Remarkably, RPA technology has proven to cut the cost of an offshore full-time employee (FTE) in half”
From IRPA’s RPA primer- “$100k/yr traditional onshore labor-> $38k/yr with offshoring-> $13k/yr with RPA”
The impact of innovation on competence could be different for the customers, suppliers and complementary innovators from that of the innovator (Afuah and Bahram, 1993). In the specific case of RPA, given these cost reduction numbers and the fact that software robots could replace majority of the routine tasks in carrying out business processes, it is competence enhancing for customers but competence destroying for the outsourced service providers. What about RPA producers? Many existing RPA producers have pivoted from their previous solution offerings in other similar technology markets, such as test automation, and re-introduced their products in the RPA industry space. They have further enhanced their products to suit RPA industry requirements and have introduced new capabilities to align with further stages in the journey of intelligent automation (Clair, 2015) – it is surely competence enhancing for producers.
Looking at other characteristics when considering RPA as a technology innovation, let’s determine whether RPA is a disruptive technology? Does RPA display the two essential characteristics to qualify as a disruptive technology (Bower and Christensen, 1995)? i.e. Firstly, does RPA carries a different set of performance attributes, that are not initially valued by established customers, when compared to existing technologies? And secondly, whether these attributes are improving rapidly with technological advancements to become more valuable for established customers and replace existing technologies?
RPA offers a different set of performance attributes from just rule based structured information processing, to complex semi-digital information processing, to highly unstructured cognitive processing (Gimelberg, 2016). Certainly, the recent technological advancements such as AI, machine learning, natural language processing, and other cognitive computing technologies have allowed to move RPA capabilities from just doing to learning, thinking and adapting (Smith, 2016) when carrying out business processes. Given this, RPA does seem to fulfil the criteria of being a disruptive technology, but whom does it impact? An existing technology or the existing full time employees, working directly for businesses or through outsourced service providers, who carry out the more mundane business process tasks? Or would the disruption be much broader impacting the existing business models leading to a “transformation of Operations into a Nuclear Powerhouse!” (Slagboom, 2017) ? How would the employees and businesses cope with such disruption? A recent research report, by the Center of the Future of Work at Cognizant, states that the future employee “need to be a better human (by atleast 15%) to beat the bots” (Roehrig and Pring, 2016, Pg. 20), and that the businesses that don’t transform in a timely manner would be “paying a large annual laggard penalty” (Roehrig and Pring, 2016, Pg. 14)
Let us put the analysis together in the form of a “Technology Innovation map for RPA” as below-
Technology Innovation Map for RPA
Afuah, A. (2003) Models of Innovation, chapter 2 in Innovation Management: Strategies, Implementation and Profits, Oxford: Oxford University Press.
Afuah, A. and Bahram, N. (1993) The Hypercube of Innovation, Elsevier Science, Research Policy 24: 51-76.
Bower, J.L. and Christensen, C.M. (1995) Disruptive Technologies: Catching the Wave, Harvard Business Review, 73(1): 43-53.
Clair, L. C. (2015) RPA Will Advance Through Three Stages To Emulate Human Action, Page 4, The State of Robotic Process Automation, Forrester, http://www.nice.com/optimizing-customer-engagements/Lists/WhitePapers/The_State_of_RPA_-_Forrester.pdf
Damanpour, F. (1996) Organizational Complexity and Innovation: Developing and Testing Multiple Contingency Models, Management Science, 42(5): 693-716.
Dewar, R.D., Dutton, J.E. (1986) The adoption of radical and incremental innovations: an empirical analysis, Management Science, 32, 1422–143.
Geroski, P.A. (2003) The Evolution of New Markets, Oxford: Oxford University Press
Gimelberg, P. (2016) 90 minutes workshop, https://www.linkedin.com/pulse/90-minutes-workshop-pavel-gimelberg?trk=prof-post.
Institute of Robotic Process Automation in association with Carnegie Mellon University, 2015, Introduction to Robotic Process Automation a Primer, http://www.irpanetwork.com/ebook-primer/.
Roehrig, P. and Pring, B. (2016) The Work Ahead, https://www.cognizant.com/whitepapers/the-work-ahead-mastering-the-digital-economy-codex2115.pdf
Slagboom, J. (2017) The Great Equalizer!!!, https://www.linkedin.com/pulse/great-equalizer-john-slagboom?trk=pulse_spock-articles
Smith, M. (2016) Intelligent Automation: Exploring Enterprise Opportunities for Systems That Do, Think and Learn, Cognizant, http://www.slideshare.net/mattat3forward/intelligent-automation-exploring-enterprise-opportunities-for-systems-that-do-think-and-learn-cognizant.
Tushman, L.M. and Anderson, P. (1986) Technological Discontinuities and Organizational Environments, Administrative Science Quarterly, 31: 439-465.