News24: Automation as we know it is over

By Johan Steyn, 23 October 2022

Published by News24: https://www.news24.com/fin24/opinion/johan-steyn-automation-as-we-know-it-is-over-20221023

We have entered a world where smart technologies like artificial intelligence (AI) are revolutionising business process automation. Robotic Process Automation platforms are fast becoming redundant, the automation centre of excellence is outdated, and true citizen-led automation is the future of cognitive automation.

Automation is not a novel concept. Around 1946, the term "automation" was coined in the automobile industry to refer to the increased usage of automatic devices and controls in mechanised production lines. Automation pervades our daily lives these days, from the appliances we use at home to the applications on our smartphones, the way we manufacture goods and how we create and deliver services.

The pre-Keynesian Russian economist, Nikolai Kondratiev, is famous for identifying 50- to 60-year economic supercycles in capitalist economies. Joseph Schumpeter (known for his economic views on "creative destruction") eventually nicknamed Kondratyev's long-wave cycle hypothesis "Kondratyev waves" or "K-waves." Water power and mechanisation were the initial waves of invention, followed by steam engines and the rail sector. Electricity enabled the electronics era, which culminated in the development of digital networks and the Internet.

We are currently in what Kondratiev would have identified as the sixth wave, in which digitalisation, smart gadgets, hyper-automation, robotics, AI and machine learning (ML) all have an impact on our daily lives. We know this as the Fourth Industrial Revolution, a term coined by Charles Schwab from the World Economic Forum.

The algorithmic or cognitive automation era has ushered in a new epoch for business process automation, fuelled by record processing speeds, cloud computing, and technology platforms, such as Robotic Process Automation (RPA).

Business organisations are at different stages in their process automation journeys. Many have embarked on RPA initiatives, most with limited success. The majority have not realised the anticipated returns on cost reduction, insights, efficiency or effectiveness gains.

Those who have reached higher levels of returns are looking to the next stage on their automation journeys, utilising cognitive technologies for insights and greater levels of value chain optimisation.

Many large enterprise organisations have partnered with vendors whose business model is the sale and implementation of automation platforms. Their motivation and financial model are focused on the sales of platform licences. However, these providers are rarely invested in outcomes: they hesitate to contract based on guaranteed cost savings and efficiency gains.

The automation ecosystem should include process mining, RPA, and cognitive technologies such as AI. Businesses should aim for insights customised for timely smart decision-making. It is one thing to automate tasks, but AI-led models enable valuable information about the current and target future state of the process in an end-to-end business value chain.

Traditionally, the model of process automation in a business is led by the automation centre of excellence (CoE). These teams typically reside in the technology department. They control the licensing costs and automation initiatives across the enterprise. The automation CoE is usually in isolation, focusing on the technology only, with little reach across the various organisational divisions. They normally lack business acumen and rarely contract with other stakeholders based on business outcomes.

My experience is that in many business organisations automation initiatives are driven by the various divisional leadership teams, with little incentive to contract with the CoE. Business leaders understand their areas best and aim for relevant automation returns such as speed to market, better customer service and understanding, risk management and compliance.

It is my argument that the traditional automation CoE has reached its limit. More and more automation initiatives will be driven by the various departments outside of their reach or influence. Another trend we observe globally is that automation initiatives are best matured by the divisional teams themselves. In the future staff members need to be empowered to easily create and run their initiatives, in what we can term citizen-led automation.

In this, the sixth K-wave, automation technologies will grow to become autonomous, with little or no human interaction. We will see the rise of the truly autonomous enterprise. The pace of innovation and automation will increase rapidly in an ever-increasing competitive and globalised world.