By Julia Senior, Partner, M/C Partners
What started as the Great Resignation in 2021, a wave of employee “musical chairs,” has morphed into a persistently tight labor market. In January 2022, initial jobless claims, a proxy for layoffs, remained near the lowest levels seen since 1969. For every two unemployed workers, there are roughly three jobs available. While some of the pressure on the labor market may be short term, many employers are waking up to the reality that some changes — such as early retirement during COVID-19, lower net immigration and psychological changes — are structural and will have long-lasting impacts on the employment paradigm in the United States.
Facing a challenging hiring environment and rising wage costs, some enterprises are turning to a potential silver bullet: automation. While robots automate physical tasks, hyperautomation encompasses business-process automation on the behalf of knowledge workers. In other words, hyperautomation uses bots to do highly repetitive tasks historically done by office workers, such as claims processing, employee onboarding and basic customer service.
The $19Bn hyperautomation services market is growing at 19% CAGR, with some parts growing much faster, and promises to lower costs, increase productivity and improve accuracy. Indeed, hyperautomation software providers have been attracting large amounts of funding over the last year. One of the market-leading robotic process automation (“RPA”) businesses, UiPath, went public in April 2021 with $880M of run-revenue growing 50% YoY. Meanwhile, its closest competitors, BluePrism (acquired by SS&C Technologies for $1.65Bn in December 2021) and Automation Anywhere (potential IPO in 2022), are also receiving significant investor attention.
UiPath, BluePrism and Automation Anywhere all provide tools for enterprises to automate a wide range of business processes, but they aren’t the only ones going after the automation market. Other companies are taking a more targeted approach to building digital workers. One emerging player, Olive, which raised $400M at a $3.6Bn valuation in July 2021, is focused on automating back-office functions within healthcare, such as Revenue Cycle Management. Similarly, WorkFusion, which raised $220M at a $600M valuation in March 2021, is building a digital workforce for the financial services industry.
With all of this newfound enthusiasm for automation tools, we think it’s worth asking: Is automation really, truly going to fill the employee gap? After all, automation may be attracting fresh capital, but it’s not a new idea. Gmail has been finishing my sentences for years, but it hasn’t eliminated the need for me to write my own emails. I’ve had “conversations” with plenty of customer-service bots that fail to answer my questions and uselessly respond to my escalating frustration with the same, “Thank you for chatting today, did I answer your question?” Is this technology really the answer employers are looking for?
We think the answer is Yes… but it won’t happen, well, automatically.
Automation software is becoming much more robust. Aided by the evolution of complementary technology like cloud computing and AI, hyperautomation tools are getting meaningfully “smarter” than they used to be. Chat bots that used to get stuck in a useless feedback loop are now being trained on millions of past conversations so they can learn more nuanced responses. Document-processing tools that previously might have been tricked by variances in handwriting are being trained to decipher even the sloppiest script. And, like any good worker, digital workers are also learning to ask a human for help when they get stuck.
We believe the software is advancing rapidly and will be able to perform a growing number of repetitive tasks and do them even better than human workers. The challenge for enterprises then is going to be figuring out how to implement and optimize these tools.
This is where service providers come in.
As we’ve seen with other ecosystems, ranging from very focused enterprise applications like Salesforce to broad infrastructure platforms like AWS, expert advisors play a critical role in helping businesses adopt new technology.
We see hyperautomation services partners as having three distinct functions.
· Work with a business to build a unique automation strategy and roadmap that takes into account the company’s specific business objectives, organization, systems and core processes
· Advise on vendor selection
· Develop and train bots to perform identified tasks. Service providers will differentiate with proprietary development playbooks and pre-built automations that can help accelerate time-to- deployment
· Perform quality control and testing
· Stand up (and in some cases, run) a Center of Excellence to evangelize automation and manage ongoing automation initiatives. Projects that occur in isolation and without broad organizational support are less likely to succeed over time
· Train employees to use, maintain and improve solutions, including training IT and citizen users
· Support enterprises with ongoing bot monitoring, management, maintenance and process optimization
· Provide help desk to enterprise users
· Assist with performance reporting and benchmarking analysis to measure the impact of automation
According to Gartner, hyperautomation is irreversible and inevitable. Everything that can be automated will be automated. Competitive pressures for efficiency, efficacy and business agility are forcing organizations to address back-, middle-and front-office operations. We agree with the view that automation software has vast potential to transform enterprise business process with the caveat that, ironically, it’s going to take human experts to help businesses to realize this potential.
About the Author
Julia Senior is a Partner at M/C Partners, where she leads origination, deal diligence, and portfolio company support for investments in a variety of communications and technology services segments. She currently serves on the Board of Carbon60, DAS42, SoniqWave and provides portfolio coverage for Omega Wireless and Canopy Spectrum. Julia previously served as a Board Observer for Involta. Prior to joining M/C Partners in 2016, Julia was an equity research analyst on the Telecommunications team at Bank of America Merrill Lynch where she covered companies in the wireline, wireless, data center, and tower industries. Julia is a CFA charterholder and received a B.A. in Economics from Harvard College and an MBA from Harvard Business School.
ORIGINIAL SOURCE: https://medium.com/@MCPartnersPE/automation-is-the-future-but-it-needs-people-to-get-there-e086a309507d