July 2018: RPA Success: Keep It Simple

I remember a conversation I had with a capital markets CEO back in 2002 where we discussed the carnage that unfolded during the bursting of the dot-com bubble. While it would be unfair to generalize and describe the large numbers of firms that went to the wall from the late 1990s to 2001 as possessing questionable business models cloaked in a thin veneer of credibility by way of eye-catching websites, what isn’t up for debate is the fact that for the first time in history the automation of business processes made possible by the advent of the internet meant that firms were, if anything, more vulnerable than ever before. The upshot was that the automation of bad business processes simply meant that they went out of business faster than they might have in the past. 

To a Lean evangelist, that scenario would be welcomed and filed under the “fail fast” mantra, although it’s unlikely that anyone who lost their business or their job during that time would be quite so sanguine and philosophical. 

The bursting of the dot-com bubble didn’t bring to an end firms looking to automate certain parts of the business by way of the internet. In fact, that was pretty much the starting point in what has turned out to be an incremental, inexorable push. But it continues to serve as a reminder of what can go wrong—and especially how quickly things can go wrong—if the fundamentals of the business aren’t sound. 

Which brings me to Hamad Ali’s robotic process automation (RPA) feature in this month’s issue of Waters. There is little doubt that RPA holds the key to automating large numbers of business processes across the capital markets, the primary benefits being the two measurables that all firms look to manage: saving time and cutting costs. But when it comes to the practicalities of RPA, the old adage “junk in, junk out” is especially pertinent. As with the dot-com fiasco, automating bad processes, no matter how sophisticated the automating technology might be, will almost certainly lead to failure. 

The key to successfully applying RPA to enhance existing parts of the business is simplicity. Processes need to be well defined, intimately understood and relatively simple to automate. That said, there are still some in the industry underwhelmed by their RPA experiences to date. Matthew Davey, a managing director at Societe Generale Securities Services, is one such dissenting voice. “We’ve been a bit disillusioned with that experience,” he said, referring to the bank’s use of RPA technology, speaking at last year’s Sibos conference held in October 2017 in Toronto. According to Davey, SocGen uses RPA to underpin its reconciliation and report-generation processes, which he says are relatively simple functions, and therefore well-suited to the application of RPA technology. “If you try and apply it to a complex process then that becomes very difficult,” he warns.