Robotic Process Automation (RPA) has emerged as a transformational technology that can help companies digitize their operations. By automating repetitive, rules-based tasks, RPA bots can reduce costs and improve efficiency. However, RPA is not a silver bullet solution suitable for every business process.
In some cases, there may be more suitable alternatives worth considering before making an RPA investment. As we enter 2023, here are the top 4 options business leaders should evaluate:
1. IT Transformation
One alternative to RPA is undergoing full-scale IT transformation to overhaul legacy systems. While major IT projects take time and have risks, they enable process redesigns that can drive even greater automation.
RPA is typically overlayed on top of existing IT systems to mimic human actions. However, poorly designed legacy systems may have inefficient workflows baked in that limit the value RPA can provide.
Complete IT transformations allow companies to build new systems with integrated automation in mind from the ground up. This reduces the need for bots to jump between different applications. Instead, data flows smoothly through connected digital systems.
For example, an insurance company could replace disjointed legacy systems with a modern cloud-based platform combining CRM, claims management, and data analytics. This unified solution enables straight-through processing and removes many manual hand-offs RPA would otherwise need to automate.
The downside is IT transformations are high-risk, multi-year endeavors. A joint McKinsey-Oxford study found:
- 45% of large IT projects go over budget
- 7% exceed deadlines
- 56% deliver less value than expected
Given the risks, many organizations take a piecemeal approach to legacy modernization rather than full rip-and-replace initiatives. But for companies with suitable appetite, resources, and executive alignment, IT transformation can be the best path to unlocking significant process improvements.
Cost of IT Transformation
IT transformation projects can run into the millions or tens of millions of dollars. According to Forrester, global enterprise IT spending is expected to grow at a compound annual growth rate of 5% from 2020-2023, reaching $4.3 trillion by 2023.
Of this spending, Forrester predicts a greater share will go towards transforming legacy environments rather than keeping legacy systems running:
| IT Spending Category | 2020 Share of Total | 2023 Estimated Share of Total |
|---|---|---|
| Transform | 34% | 38% |
| Maintain | 48% | 44% |
My Perspective as an IT Consultant
Having implemented digital transformation initiatives for enterprise clients, I‘ve seen firsthand the major costs, risks, and organizational change required for IT modernization. There is often sticker shock when the true price tag is presented.
However, I‘ve also seen the massive benefits unlocked when the projects are executed successfully. New automated processes result in improved efficiency, higher quality, and better customer experiences.
The key is taking an incremental, phased approach to legacy modernization. Trying to do a full rip-and-replace at once almost never ends well. But by retiring obsolete systems piece-by-piece while building new digital foundations, large enterprises can successfully transform.
2. Business Process Management Platforms
Business Process Management (BPM) platforms provide another option for increasing workflow automation. BPMS tools allow users to model processes with drag-and-drop interfaces and integrate applications through pre-built connectors.
This can help companies coordinate workflows spanning multiple systems and reduce swivel chair processes RPA would otherwise need to emulate. BPMS enables greater “straight-through processing” within end-to-end workflows.
For example, when an e-commerce order is placed, the BPMS automatically initiates actions across order management, billing, inventory, fulfillment, and CRM systems to execute the complete order lifecycle. This eliminates most of the manual orchestration RPA would have handled.
The advantages of BPMS include faster implementation times and closer alignment between business teams and IT since low-code platforms are more intuitive. However, the downside is that BPMS may still require significant integration work to connect disparate applications.
If your organization has dozens of isolated legacy systems, the integration costs could outweigh the automation benefits. But BPMS can be a lighter-weight and faster path to boosting workflow automation compared to full IT transformations.
BPMS Market Size
The BPMS market is growing steadily as companies adopt these platforms to connect workflows. Per MarketsandMarkets, the global BPMS market size is estimated to grow from $7.8 billion in 2020 to $14.1 billion by 2025, at a compound annual growth rate of 12.6%.
Top vendors serving this market include Pegasystems, Appian, IBM, Oracle, Software AG, Nintex, OpenText, and Newgen Software.
Integration Challenges
From my experience implementing BPMS solutions, their major limitation is integration difficulty. Connecting multiple complex enterprise systems through one centralized workflow manager is an enormous technical challenge.
It‘s essential to set the right expectations. Building all those integrations, even using pre-built connectors, takes significant time and IT resources. I‘ve found many clients under-estimate this effort.
The most successful BPMS projects start small by connecting 2-3 key systems for targeted workflows. This allows time to build integration competencies before expanding the scope.
3. Business Process Outsourcing
Business process outsourcing (BPO) was a popular strategy in the 1990s as companies shifted operations like payroll, technical support, and supply chain management to external providers. Outsourcing allowed organizations to benefit from labor arbitrage and economies of scale.
BPO enables work hand-offs between humans rather than automating tasks outright like RPA. For example, accounts payable invoices could be processed by an offshore team rather than by a digital workforce.
This approach has declined in popularity due to rising offshore labor costs, increased business risks, and delivery quality concerns. But BPO may still be a viable alternative to RPA in certain cases such as:
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Rapidly changing processes: Adapting RPA bots to frequent process changes can be costly compared to having a BPO provider handle evolving workflows.
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Temporary spike workloads: Rather than building bots, BPO can help manage temporary increases in volume more cost-effectively.
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Data security concerns: Sensitive data may be deemed too risky for RPA whereas trusted BPO partners can securely manage information-intensive processes.
However, the market size for traditional BPO services has been stagnating over the past decade as digital transformation changes the landscape. While BPO solves the problem of tedious tasks staff may want to offload, it lacks the transformative potential of automation.
BPO Market Size
Per GrandViewResearch, the global BPO market was valued at $243.9 billion in 2021. However, the market is only projected to grow at a modest CAGR of 7.3% from 2022-2030.
This is a notable slowdown compared to the previous period of 2010-2021 which saw 11.7% CAGR growth. The BPO industry is declining as a share of total addressable outsourcing market as companies shift focus toward IT and business services:
| Outsourcing Type | Market Size 2021 | Estimated CAGR 2022-2030 |
|---|---|---|
| BPO | $243.9 billion | 7.3% |
| IT Outsourcing | $414.7 billion | 11.1% |
| Business Services Outsourcing | $1197.4 billion | 10.4% |
My Experience with BPO Delivery Models
I have worked with a major Indian BPO provider to set up offshore delivery centers servicing US clients. The cost savings of offshore labor arbitrage are not as substantial as they once were. Further, managing dispersed teams poses challenges in maintaining quality and inventory control compared to in-house operations.
BPO can supplement other initiatives like RPA but is increasingly a legacy approach vs. a transformative digital strategy. The focus for most enterprises is now on total workforce optimization combining bots and humans.
4. Specialized “Plug-and-Play” Solutions
Many common back-office processes like accounts payable, claims management, and HR onboarding rely on standard enterprise applications like SAP and Oracle. This creates an opportunity for specialized software solutions tailored to these high-value workflows.
Vendors design packaged tools with pre-built integration to streamline implementation. For example, an AP automation solution may connect directly to a company’s chosen ERP system to extract invoices and make payments. This eliminates swivel chair data entry RPA would otherwise have to emulate.
These purpose-built applications act as “plug-and-play” solutions allowing companies to automate common processes quickly through pre-defined integration, workflows, and analytics.
The benefit is faster time-to-value compared to developing custom RPA bots from scratch. However, the disadvantage is that specialized apps may not be customizable to an organization‘s unique needs. Companies sacrifice some flexibility for out-of-the-box simplicity.
Specialized Automation Market Size
This emerging software segment has seen rapid growth as vendors target automation for common business processes. Per GrandViewResearch, the specialized automation sector is predicted to reach $36.2 billion by 2030, expanding at a 40.5% CAGR.
Leading specialized automation capabilities include:
- Accounts payable automation
- Accounting automation
- HR onboarding automation
- Contract lifecycle management automation
- Sales quote-to-cash automation
Top vendors in this space include Appzen, Softomotive, Kryon Systems, Automation Anywhere, UiPath, WorkFusion, Kofax, EdgeVerve, Hyperscience, NICE, Blue Prism, and PegaSystems.
Pre-Built with Limitations
I have successfully implemented several specialized automation solutions for finance processes. The time and cost savings over custom development can be substantial. However, lack of flexibility to accommodate unique business rules can become an obstacle over time as processes evolve.
Careful vendor selection and contract terms related to support for customization and Extensibility are key for long-term success with these solutions.
Key Factors to Consider
When evaluating alternatives to RPA, below are some key factors to consider:
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Integration requirements: Will major integration work be needed to connect systems?
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Process maturity: How standardized and stable are the processes to be automated?
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Compliance needs: Are there regulatory requirements or data security considerations?
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Implementation timeline: How quickly does the solution need to be live?
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Customization needs: To what extent does the solution need to be tailored to your unique processes?
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Internal capabilities: What are the skills and resources available internally vs. needing external partners?
RPA Still Holds Advantages
Despite the rise of alternatives, RPA still provides unique advantages that make it the superior choice in many scenarios:
Flexibility – Bots can automate virtually any repetitive digital task from data entry to report generation. Generic RPA tools provide more customization options compared to specialized apps.
Fast set-up – Building basic bots can be done quickly using low-code tools whereas BPMS and IT transformations have longer timelines.
Low integration needs – RPA can start automating tasks within existing systems fast using surface-level techniques like screen scraping whereas BPMS requires deeper integration.
Cost – Bots eliminate labor costs of manual work and require less upfront investment than labor-intensive IT projects. The ROI is often superior to alternatives.
Let‘s examine some data points that demonstrate RPA‘s strong ROI:
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Per Deloitte, 53% of early RPA adopters were able to recover their RPA investment within the first year.
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PWC found that organizations spending over £50 million on RPA achieved over 10x ROI over 3 years.
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An RPA case study from UiPath showed 420% 3-year ROI with payback in just 6 months.
My experience aligns with these findings – for the right use cases, RPA delivers substantial efficiency gains and cost reduction that alternatives struggle to match.
An Integrated Automation Strategy
RPA is not an all-or-nothing decision. The optimal approach is to integrate RPA into a broader automation strategy:
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High-value processes – Implement RPA for quick wins on repetitive, high-volume processes.
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End-to-end processes – Utilize BPMS for complex workflows spanning departments and systems.
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Common back-office processes – Leverage specialized automation apps for standard ERP-based processes.
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Legacy modernization – Pursue incremental system upgrades to gradually improve and consolidate architectures over time.
This balanced automation portfolio allows companies to maximize benefits across short and long-term horizons while mitigating risks.
Key Takeaways
As companies plan RPA initiatives for 2024 and beyond, there are a few key takeaways to keep in mind:
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Consider alternatives – RPA is not the only option. Carefully evaluate alternatives like BPMS and IT transformation.
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Focus on high-ROI processes – Prioritize RPA for maximum impact and quick wins in your unique environment.
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Start small, scale up – Take an incremental approach to minimize risk and build confidence.
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Measure rigorously – Quantify hard savings/benefits to track success and make the case for further RPA adoption.
RPA is not a one-size-fits all solution. But as part of a diverse automation portfolio, it can help future-proof operations for the age of digitization. With careful selection of use cases and a balanced implementation approach, companies can maximize their automation ROI in 2024 and beyond.