The Cost of Failed Automation - It's not just money Lost

LatentBridge, a global intelligent automation company, participated in a panel discussion of experts in intelligent automation to share their views on the impact of failed automation.

The panel was hosted by Hema Gandhi, CEO of LatentBridge, with panellists

• Rob Scott, MD Head of Custody, Collateral, and Clearing, Commerzbank
• James Maxfield, Managing Director, Ascendant Strategy
• Russell Dinnage, Head of the Capital Markets Intelligence Practice, London, Greyspark Partners

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When automation fails, apart from the money lost, companies also lose precious time that could help gain a lead over competitors, redesign a process, or improve employee morale. Getting automation right the first time is extremely valuable.

A recent study by Deloitte suggested that about 37% of respondents are piloting (1–10 automations), 23% are implementing (11–50 automations), 13% are scaling (51+ automations), and 27% haven’t done any automation.

In 2019, only 8% were scaling, showing that the pace of scaling is slow, with a key barrier being failed automation.

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Some of the key questions answered during the enlightening discussion are:

How well do you think firms know their TCO?
‍There are three distinct challenges to calculating the total cost of ownership for automation projects.

• Businesses don’t know exactly what people do, their process flow, or their costs.
• Most calculations include the cost of people, which could be 25–30%. Other costs like infrastructure, technology, management, and support are often ignored and perhaps very hard to quantify.
• Most companies are organised by function and not process, and often these individual functions have different and disconnected agendas.

Most organisations believe the cost of failed automation is equal to the cost of the project that didn’t go live or didn’t meet the expected outcomes.

‍What should be the criteria for undertaking proof of concepts (POCs)?
‍Businesses conduct POCs to check if a technology works, but the success of a POC depends more on the data and inputs than the technology itself. The purpose of a PoC is to encourage experimentation and understanding, but they are often used more like a discovery than an evaluation.

PoCs are very good if you can work in a very agile manner, learn from failures, and move on quickly. This should help retrain the business case to prioritise what comes at the top and what falls away.

‍Do organisations drive change holistically, or do they work in silos?
‍Businesses are organised by functions and units, each with their own purpose and goals. They adopt automation to overcome their unique challenges and, in the process, create automation silos.

To implement a more holistic approach, leadership needs to view automation as a single workflow, with processes starting with the customer and ending with the customer. The focus should be less on the middle, front, or back office and more on a COO, CEO, CFO, or CDO with functional owners behind the change to lead to a better customer outcome with optimised costs.