The birth of "bot-shoring"
Speaking with a UK multinational bank this week, it was clear that the traditional models of shared services and outsourcing are now competing with a new delivery approach. Looking at how the organisation's back-office functions could deliver more, we introduced the concept of bot-shoring.
In lots of ways, the model is similar to offshoring except that processes are assessed and considered for automation rather than relocation. Repetitive, manual, rules-based work is removed, saving cost and freeing up time for valuable resources to focus on more value-adding activities.
Historically, the bank had identified this type of activity as a candidate for migration to their shared service centre in India. This was successful in achieving cost advantages based on a wage arbitrage model. It also provided timing advantages as, for example, the India team would process the transactions prior to the UK team starting their working day.
Implemented correctly, Robotic Process Automation (RPA) offers even more benefits than a traditional offshoring model. Firstly, there are the significant cost and time savings that you might expect. A robot typically operates at around one-third of the cost of an equivalent offshore resource. Bots are not only faster than a human counterpart, but they can also operate at any time 24/7. Bots can also greatly improve accuracy and remove the risk of communication errors.
There is no escaping the fact that RPA technology is opening new possibilities. Looking at the industry, I have no doubt that there will be a growing wave of activity as organisations reconsider their delivery models and look to bot-shoring.
Traditionally the choice was “lift and shift” or “transform and shift” when considering whether to move a process to another location. Now that the technology is available (and moving forward all the time), that choice must now include bot-shoring to create a strategy that delivers the biggest competitive advantage.
It should also be expected that bot-shoring and offshoring models will become complementary partners rather than distinct alternatives. Depending on the nature of activities, not all processes can be automated end-to-end. Bot-shoring will eliminate tasks using technology where possible; the human interactions that remain will be relocated.
For any new delivery model to be successful, a number of key elements need to be in place – not least to step into the relatively new world of bot-shoring:
1. Vision and strategy– the strategy for the bot-shoring must be clear along with a strong case for change that delivers a return on investment. Why should bots be introduced at an organisational level? What do you want to achieve and how does this fit with your current position and future direction?
2. Vendor selection – the software you will use for automation is a key decision. You will need to decide whether to focus on one RPA provider or a combination. Each vendor should be leveraged to play to their strengths and complement your overall strategy.
3. Operating model – the model for setting up bot infrastructure will depend on the structure of your organisation. There are important considerations for technical environments and ongoing support, as well as human resources. You will need to consider whether to do this in-house, as a hybrid or fully outsourced. It is important to consider not just the development aspect of the bots but also what happens in the post-production environment.
4. Governance and standards – new structures will need to govern implementation to ensure that investment and deployment decisions are made appropriately. The operating standards will need to be set out, including documentation such as process flows, design documents, technical architecture, checklists, support structure and infrastructure model. A gated model for decision-making should be set up to ensure clarity and completeness.
5. Change Management– frequently underinvested in, managing the impact of the change is absolutely critical for a smooth and successful implementation. The need to engage, communicate with, train and support colleagues is augmented by the fears that (rightly or wrongly) surround robotics and what it will mean for the human workforce.