What Proservartner's Automation Index Tells Us About Industry Sector Uptake

1. Introduction
2. Trends driving automation
3. Current levels of automation - by area of business
4. Current levels of automation - by industry sector
5. Building a vision of automation
6. Conclusion

The Proservartner Automation Index represents a multi-industry report onthe uptake of automation. It finds that:

• 88% of UK firms have automated some aspect of their business in the last six months
• IT (33%), customer services (28%), data management (26%) and finance (24%) processes are the most likely to be replaced by robots or computer programmes
  
  • Brexit will speed up automation for 26% of business
  • 50% think this is because there will be a shortfall in workers
  • 35% think this is because of economic uncertainty
  • 42% see Brexit as a driver for more tech innovation
• Businesses think that automation brings significant benefits
  • 69% think automation gives then more control
  • 79% think productivity is a benefit of automation
  • 79% say cost savings are a benefit
• The industries which have been most affected by automation in the last six months are financial services (100% have automated an aspect of their business in the last six months), marketing and communications (96%) legal services (94%), and accountancy firms (90%)

1. Introduction

‘Increasingly, businesses need to automate to stay competitive – and in the process, make their workers more efficient, and enable them to focus on higher value tasks that drive the business forward.”

Automation is enabling organisations to either make money or save money.

As customers become more demanding, the need to deliver consistency, speed and at lower costs is increasingly important. Research from Gartner predicts that there will be a 25% drop in customer retention in 2019 for those companies that fail to automate.

For the companies themselves, automation will improve customer experiences will resulting in increased longevity and value of the relationship; improved employee satisfaction through the removal of mundane transactional activities (and likely reduced rates of staff turnover); and improved productivity and the need for eliminating the need for rework.

Ultimately, the benefits of automation are broad, and the savings for companies that embark on technology transformation are more than just about cost reduction. Those that do not embrace technology will lose a competitive edge, and risk being left behind.

While there is plenty of current research on the impact into automation on jobs in the UK in the long term, what is missing is a clear view of how automation is impacting UK companies today.

The Proservartner Automation Index provides a clear view into the impact of automation today, its likely impact in the near term and on each industry sector. This enables readers to understand the current market trends on automation in the UK, and what is really happening to business and IT roles. The index reviews the attitudes of businesses towards automation, including where they see opportunities and what is driving them to automate - or not automate - particular processes.

2. Trends driving an upswing in automation

The index finds one in four (26%) business leaders say that Brexit will increase their use of automation.

Among this group, half (50%) believe a shortage of workers will drive automation, while a similar number (49%) think that changes to employment regulations after leaving the EU will act as a boon to things such as Robotic Automation and Artificial Intelligence. While four in ten (42%) feel greater innovation will increase their use of automation in a post-Brexit world, others believe more pessimistic economic circumstances will lead to greater use of automation, with over a third believing an economic downturn (36%) and uncertainty (35%) could lead to greater automation.

The UK vote to leave the European Union on June 23 2016, surprised many people across Europe and the rest of the world. Immediately after the vote, stock prices fell significantly at the London Stock Exchange, and there has been impact on the exchange rate of the pound sterling against the euro.

However, the impact of decreasing immigration following Brexit will likely cause a shortage of migrant workers to fill the low-skilled jobs, namely transactional or manual tasks. These activities are those that are most suitable for automation.

It is not unreasonable therefore, to conclude that through the necessity to carry out these activities and the shortage of labour, the impact of Brexit will be to increase levels of automation across the UK.

This trend will likely be seen across all industries, but will most impact those sectors which are reliant on manual labour carrying out low skilled tasks. We see the heaviest impact on financial services, marketing, legal and accountancy companies.

The UK also needs to embrace automation to shorten the productivity gap between Britain and the rest of the G7 countries. In the wake of heightened global competition in a post Brexit Europe, it will be even more essential that UK productivity levels (measured by the value of goods and services produced for each hour worked) are improved, and our index demonstrates business leaders believe that automation will be a method of improving staff productivity.

3. Current levels of automation – by area of business

When reviewing the functions where automation was leveraged, we found that in the current UK market:

• One in three (33%) businesses have automated within their IT function
• More than a quarter have seen some levels of automation in their customer services (28%)
• 28% of businesses have automated data management system, and 26% have automated in sales order processing
• Just less than a quarter (24%) of businesses have automated some components of their finance function

Within organisations, the highest uptake of automation is found in the IT department, demonstrating IT leaders understand the value of technology in their own processes and are quick to automate activities. Typical examples of automation in IT include internal chatbot tools that automate activities performed by the IT helpdesk, robotic process automation or APIs to replace manual effort moving data from one system to another system, and workflow tools that replace email back and forth on responding to requests.

The scope of IT automation ranges from single actions to discrete sequences and, ultimately, to an autonomous IT deployment that takes actions based on user behaviour and other event triggers.

Customer services is another area where there is a high degree of automation. There are many examples of companies using robotic software to complement jobs, working alongside humans. This software automates repeatable tasks such as obtaining information from other systems, rekeying in information, and copy and pasting from one screen to another.

Sophisticated Artificial Intelligence tools can also replace conversational interactions (instant chat) between the customer services department and the end consumer.

Data management was a third area with a high degree of automation, with business leaders using technology to ensure that data quality is high, and that data analytics can be performed in a timely basis, with high accuracy, and low cost.

4. Current levels of automation – by industry sector

The index also took a closer look at some of the UK’s most prominent industries, to determine how and when they were embracing automation.

a. Legal

Industry overview:

In the legal profession, where trust and 'good judgement' have been watchwords – the idea of automated services 'replacing' lawyers is controversial.

But while robots aren’t taking over just yet, there are many areas where automation has the potential to allow legal firms to deliver better legal services, more quickly, more efficiently and sometimes more cheaply.

For example, natural language processing has already been introduced by some firms, and has been proven helpful in scanning and predicting which documents will be relevant to a certain case. That means less administrative work for people working in the legal industry, allowing staff to focus on more nuanced analysis.

And, at a very basic level, software has already significantly streamlined the document review processes - as well as data storage, analysis and management.

How the legal profession will continue to use technology is uncertain. There are a huge number of variables at play - market forces, generational dynamics and a more technically literate public. But one thing is certain: disruption in the legal industry will continue.

Findings:

The legal sector’s reputation as an industry slow to get on board with technology has been somewhat borne out by our research, with legal businesses only being more likely than average to automate in two areas, sales order processing (15%) and, unsurprisingly, legal services (48%).

The 48% statistic is notable however, as legal was found to be the area that was least likely to have been automated by sectors in general, with only 11% of businesses having done so in the last 6 months. From this we can infer that only the legal sector is confident in its ability to automate these processes without losing value.

b. Marketing and communications

Industry overview:

Advances in automation technology have significantly impacted the marketing industry. Marketing automation is already proven to help better manage customer relationships by automating actions such as email sends, social media posts and lifecycle stage changes.

A good marketing automation strategy is focused on user needs, helping them to move through a sales funnel in a natural way. By collecting data from the interactions users have with a brand across multiple channels marketeers are able to deliver the right content at the right time. A successful approach will use this data to better understand consumers’ intentions and buying habits to influence their decision making.

Findings:

Our Index shows that the marketing industry has been relatively quick off the mark when it comes to automation, finding that it was more likely than average to have automated processes in 7 of the 11 areas we surveyed, including sales order processing and supply chain.

As well as automating their core business functions (66%), marketing firms were also most likely than any of the other sectors to have automated their purchasing systems (28%), and were second most likely to have automated their sales order processing (44%),

Interestingly only 24% of those we spoke to said they had automated data processing, which could suggest that in a sector where gaining insight into how customers think is vital, leaders are still leaning on the human touch.

Overall they were also one of the least likely to have not automated at all in the past 6 months, with 96% of marketing industry leaders saying they had done so.

c. Manufacturing

Industry overview:

Manufacturing automation has been common since the 1970s. Advances in technology, including robotics, big data, machine learning, artificial intelligence, and the Internet of Things have improved factory production since then.

Today, the pressure is on for manufacturers, particularly industrial manufacturers who have had to diversify significantly over the last five years. Customers, suppliers and partners force greater agility, speed, and scale into every aspect of production operations - and so it’s no surprise that automation and digitalisation is increasing exponentially in the sector.

When we look at how automation is used in manufacturing, it touches upon almosts every element of a business. At the back end, many manufacturers have flirted with predictive analytics in recent years and will likely continue to see a large uptick in analytic capacity as manufacturers capitalize on advanced data capture and algorithms for analytics.

And at the front-end, collaborative robots — also called cobots — are now sweeping across the industry. Rather than take over for labourers completely, cobots can work alongside humans to improve efficiency and reduce hazards.

Findings:

Despite - or perhaps as a result of - the early adoption of automation by the manufacturing industry, our findings show that manufacturers were less likely than average to have automated in the last 6 months. It was only in the manufacturing process itself (51%) and supply chain (25%), that the industry was more likely than average to have automated in that time period.

Of all the areas we asked about, the manufacturing industry was least likely to have automated their legal processes, with only 2% of respondents having done so, followed by HR at 8%. These are both areas that, unlike supply chain, don’t have a direct impact on the day-to-day business of most manufacturing companies, so may be further down the line in terms of prioritisation for automation.

d. Retail

Industry overview:

Retailers need to reduce costs and increase efficiency in a challenging market where consumer spending is unpredictable, costs are rising and finding staff with the right experience can be difficult.

It has become increasingly clear that most retailers can no longer survive using their current business models. Tactics that worked for them in the past, such as discounts and promotions, are no longer drawing people into stores - and internet shopping is swiftly putting traditional retailers out of business. And so, in order for retailers to thrive in this new world, significant reinvention is needed. They need to incorporate automation and artificial intelligence into their customer touch points in order to improve the customer journey.

There are many ways that retailers can harness automation technology. For example, they might decide to integrate an AI algorithm into their shopping apps so that they are more responsive to the needs or shopping patterns of an individual consumer. Or they may introduce chatbot functionality on sites in order to improve customer interaction. Or, they might decide to introduce robots and other forms of automation into stores, thereby improving and streamlining people’s shopping experiences.

Either way, the evolution and future success of the retail industry is highly dependent on how retailers choose to implement new technologies into their strategies.

Findings:

As expected, of all the areas that we asked about the retail sector were most likely to have automated sales order processing (40%), which could be in an effort to streamline the shopping experience for their customers and push back against the decline of the high street. IT (38%) was the second most likely point of automation, again adding weight to the argument that in the absence of traditional in-store sales retailers are turning to the internet to pick up the slack.

Interestingly, this was the least likely of all the sectors surveyed to have automated the finance area of their business, with just 14% of respondents saying they’d done so. It was also the least likely of all the sectors surveyed to have automated legal areas of their business - with just 2% saying that was something they’d done in the last 6 months.

From this we can infer that although automation is on the agenda for this sector it is focused more on solving immediate challenges, rather than taking a holistic approach to their technological advancement.

e. Financial services

Industry overview:

The financial services industry is using a combination of robotics process automation (RPA), and artificial intelligence (AI) to bolster global revenues and increase customer satisfaction. According to a CapGemini report intelligent automation could cause the financial services industry to see a $512 billion increase in global revenues by 2020 .

Automation is affecting many business functions in the financial services. On the customer side we have seen maturity in chatbot and online customer services, while behind the scenes HR processes are being transformed by automating payroll, record keeping and data capture.

This industry, above all others, is taking advantage of automation technology - and will likely continue to do so. We see other industries looking to financial services firms as automation trailblazers.

Findings:

The Financial Services industry stands out in our findings as having no respondents saying they hadn’t automated in the last 6 months - 100% of those surveyed said their organisation had automated at least some part of their business.

Of these areas, the highest rate of automation in this sector was in finance (58%), followed by IT (36%), customer services (34%) and data management (30%). Automation in these areas of business correspond with the challenges faced by this sector, particularly the need to cut costs and boost revenues.

The Financial Services sector was least likely to have automated HR (4%) and legal (6%) services.

5. Building the vision for automation

Key factors driving UK business leaders to automate:

• A significant majority (81%) believe that automation will drive cost efficiency in their companies
• Four out of five business leaders believe that automation will help improve team productivity
• 71% are automating to take away mundane activities and make the lives of employees better

A key driver of automation for many companies, is to reduce costs within their businesses, in particular the cost of low-skilled staff performing manual activities. Automation is clearly reducing the need for rework and is replacing the processing from low-skilled workers. This is having a direct impact on the savings which companies can achieve.

80% of business leaders are automating to improve team productivity and achieve more output with the same level of inputs. Given that the average French worker produces more by the end of Thursday than their UK counterpart can in a full week, there are plenty of opportunities to improve productivity through automation, and it is pleasing to see that UK business leaders have identified this.

With the wave of millenials and now Z entering the workplace, many companies are looking for new ways to retain staff and keep work interesting. Automation is a mechanism leveraged to replace mundane repeatable activities so that the workforce can focus on the more interesting elements of their work. For many companies, automation is making the lives of employees more interesting and are using it to help reduce staff turnover.

6. Conclusion

It’s easy to see why the current political and economic climate is likely to be a big driver of automation over the next six months. Fears about foreign workers departing the UK, together with an unpredictable economic climate, mean that the promises of cost and labour savings that come with automation is appealing.

But this research, which takes a holistic view of the way businesses are using automation, also demonstrates that immediate cost savings aren’t the only driver of automation. Businesses agree that automating core business functions is crucial to long term success. When it comes to benefits, businesses have told us that automating business processes can achieve digital transformation, increase service quality, improve service delivery or contain costs. Indeed while 81% of businesses surveyed recognised the cost saving implications of automation a huge 80% believe that automation will lead to more productivity in the longer term.

Ultimately, for those that want to remain competitive, automation is not a choice, it’s an unavoidable business reality. Clearly, Brexit is accelerating the adoption and in the long term, that could prove to be a positive thing for the UK as businesses reap extensive rewards.

Note: Methodology

The Proservartner Automation Index questions business decision makers across all sectors of the UK economy about technologies that replace, replicate or enhance tasks that were previously carried out by humans. The research for this index was conducted in October and November 2018 by Censuswide and surveyed more than 600 businesses.

Censuswide’s online research is conducted according to Market Research Society guidelines, and is nationally representative.