Shared services and outsourcing

Shared services and outsourcing

A robotic future?

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2 Shared services and outsourcing ? a robotic future?

There are many advantages to outsourcing, as well as complexities and risks, and now with disruptive technologies and robotic process automation on offer, there are even more considerations. KPMG explored the topic with Executives from multiple corporate functions at roundtables in Sydney and Melbourne in March 2018.

To uncover existing and emerging issues, as well as innovative ideas and solutions, KPMG conducted roundtable discussions in Melbourne and Sydney in March 2018, attended by Executives from multiple corporate functions from financial services, telecommunications, fast food, healthcare, energy and other key industries. Here is a summary of the topics explored. KPMG is preparing a series of roundtable events to discuss relevant shared services topics.

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Shared services and outsourcing ? a robotic future? 3

Robotic process automation

For many years, organisations have adopted outsourced arrangements or shared services on-shore or off-shore in a bid to reduce costs, increase efficiencies and bolster capability across various corporate functions. However, with robotic process automation (RPA) quickly evolving, core questions asked were ? Is outsourcing still the right approach? Is it time to engage the bots? Or is a combined approach the best?

All industries in attendance were contemplating the use of robotics, if they hadn't started already. Cost saving was a key reason but by no

means the only one ? some were saving as much as 25 percent by using RPA to complete activities previously undertaken by staff.

However, incorporating robotics was not about simply introducing new software in a plug and play approach. It required replicating exact human processes, a systematic change in thinking, implementing a rigorous approach to governance and controls, as well as pre-empting potential organisational culture and employee engagement challenges.

Managing the bots

Defining an RPA strategy early will help companies avoid pitfalls and reduce complexities.

As robotics are assigned increasing levels of functionality, it raises the issue of accountability and reporting lines. Who is in charge of the bots?

Forward-thinking companies are capturing bots within their existing organisational structure ? with transparency as to which robot is responsible for each task and who the robot reports to for each task

The next issue was to define how the bots are `programmed'. A possible structure discussed was that the business or department owns development of the business rules and process mapping; IT provides the infrastructure; and a programmer takes care of the coding. Structuring the team properly was identified as a key success factor.

However, robotics programs across the organisation can quickly get complex as they move beyond the pilot stage, especially when they span multiple corporate functions. A healthcare industry leader said companies were using multiple

providers for robotics, leading to coding, integration and IP ownership complexities.

It raised the question ? if an outsource provider creates an organisation's robotics code ? do they own the code ? or does the organisation? Determining who owns the code up front will save cost, time and effort at the back end of the contract should the receiving organisation choose to insource these activities.

Another topic raised was ? if you have an existing outsourcing relationship and the organisation offers bot capabilities, what would you do?

One shared services leader of a major energy provider said the key was to bring the outsource provider along on the journey ? to make co-production a significant part of the outsourcing relationship. An alternative approach would be to bring processes back on-shore before developing bots and managing them centrally from on-shore.

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

4 Shared services and outsourcing ? a robotic future?

Humans stil key

KPMG raised that while robotics can perform repetitive tasks quickly and ease employees of repetitious, time consuming processes, companies need to factor in long-standing issues involving governance, ownership, and management of systems before deciding whether to implement robotics.

A fast food industry shared services leader said the industry was heavily invested in adopting robotics, but questioned whether it was good for everyone. Would it always provide the best solution? Sometimes a person

was needed to solve problems, to fix outliers, or to use reasoning when information diverged. A critical success factor is to clearly document processes to understand how to best leverage bots vs. humans.

While leveraging bots frees up humans to perform more `value adding' tasks that can enhance the customer experience, KPMG raised that organisations should explore all of the technology options and productivity levers available to them, including bots, vs. defaulting to implementing bots in every situation.

Who is driving the bots?

In different organisations, the move to robotics was being driven by different departments. In the communications business it was driven by finance, however IT weren't 100 percent on board. A leading employment search agency was looking to create a robotics centre of excellence, drawing in representatives from different departments to map processes and learn coding.

A shared experience was that organisations wanted proof of concept before they would invest in robotics.

One communications industry shared services leader said starting small was the key to engaging the broader business. Their organisation had 42 test cases underway. Precise process mapping of every key stroke was vital to success.

The leader suggested that leveraging the built-in processes offered by software providers was a good approach ? rather than trying to code in every unique step. When building a business case, a key message for the C-Suite was not just cost reduction ? but improving the customer experience and relieving employee pain points.

When building a business case, a key message for the C-Suite was not just cost reduction ? but improving the customer experience and relieving employee pain points.

The emergence of `multi-function bots' was a key trend. For example, companies are thinking about how bots can be coded to work 24-7 and perform activities across multiple areas to ensure they are at capacity. This allows organisations to redirect the bot processing based on time of day or demand for a particular process (e.g. month end). Visual Management is also being used to provide transparency around activities the Bots are working on and to quickly draw attention to any potential issues.

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

Shared services and outsourcing ? a robotic future? 5

Governance and accountability

As technology changes the shared services model, the industry leaders are turning their attention to governance. A common reason why outsourcing can fail is a lack of clear accountability and governance ? and as one leader put it ? "you can't outsource accountability".

KPMG suggested the creation of a Head of Automation. The team cited the example of a leading European bank in which a robotic centre of excellence had been established to `house' all robots from across the organisation. Relevant staff were assigned to each robot, to monitor what each was performing. Leadership are encouraged to view their teams as a combination of humans and bots, and are accountable for the activities of every person/bot in that team.

A banking industry leader raised how third-party contractors and robots required risk and compliance management. Aligned to this was discussion of having too many layers of management in a disruptive world where firms need to be more agile.

An employment services leader said their business used RPA to redeploy staff to undertake more engaging work. They were keeping the headcount stable, but enabling people to do things more efficiently and creatively than before.

The impact of technology on employment

The adoption of technology across corporate functions and in shared services was causing shifts in the skills needed by humans, and the number of humans needed to perform tasks. This was not an issue the leaders were taking lightly.

One leader stated that because of the constant need for new skill sets, every year 1,000 jobs were cut, however, another 1,000 jobs were created in different departments. Reducing duplication of service was a key driver of decisions.

This produced a number of culture and engagement challenges. For example, employees in technology driven areas could foresee that they had a limited time in their roles. Organisations recognised the need to invest in people and to support re-training to enable employees to have a positive future amid bots and humans.

An employment services leader said their business used RPA to redeploy staff to undertake more engaging work. They were keeping the headcount stable, but enabling people to do things more efficiently and creatively than before.

? 2018 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation.

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