Automation is unquestionably the flavour of the month in business chatter today. Robotic process automation (RPA), and a storm of other smart automation approaches like Artificial Intelligence, are being pitched and perceived as the NEXT BIG THING, akin to the emergence of outsourcing some 30 years ago, and offshoring 15 years ago.
The traditional view of outsourcing has tended to see cost reduction as one of the primary drivers for any customer. The idea that the ‘total cost of ownership’ of a particular business function over the term of the outsourcing contract should be lower is very often part of the business case. Similarly, seeing outsourcing as a means of transforming a collection of assets on the balance sheet into a recurring service charge, and reducing (or at least apparently reducing) capital costs is another common refrain at the outset of deals.
The “invisible hand” of the market could be giving you a sharp slap more often than not, according to the Nobel laureates George A. Akerlof and Robert J. Shiller.
It wasn’t all too long ago that pricing models offered by information technology outsourcing (ITO) services and firms fell strictly into the “static” category. In fact, thinking of these agreements as anything but fixed or rigid in nature simply didn’t make much sense based on the layout of the outsourcing landscape. Customers requested a certain type of IT or software development and service providers fit this requisition into an inelastic pricing structure that had little room for change or adaptability.
Robots hit the headlines over many national and industry outlets this week. The clincher statistic, as reported by Bloomberg, The Times, and most of the international press, is that over five million jobs will be lost by 2020 as a result of developments in artificial intelligence, robotics and other technological change.
As we enter a new year, it’s always fun to gaze into our crystal balls and anticipate the key trends and forces that will shape our industry in the coming year. Granted, given the pace of change and disruption that has come to characterise the outsourcing space, the business of prognosticating is becoming an increasingly risky one. That said, here are some thoughts and observations – in no particular order – from Alsbridge regarding what to expect in the coming twelve months.
According to the Institute of Finance & Management, 61% of top global companies have implemented full Accounts Payable (AP) automation. This occurrence has had its challenges.
Primarily, the universal commonality of budget allocation is the obstacle to overcome. When a company’s CFO is prioritising expenditures, their eye remains on cash flow and compliance/risk mitigation. AP must factor into these objectives to achieve funding for automation (or for anything else; with decisions being made by priority).
Wandering around the Gartner Symposiums at the end of last year, listening to the keynote speakers and chatting with CIOs from some of the world’s leading brands, it is clear that the year’s theme was very apt. “Rise to the Challenge” reflects both the exciting opportunities and the daunting demands on IT departments. At a time when budgets continue to flat line, CEOs are looking to digital transformation as a crucial step to their future business success, and they expect their CIOs to pull out the proverbial IT rabbit to support this goal.
As it’s my first column of 2016, a belated “very happy new year!” to all Outsource’s readers around the world. I hope the old year ended wonderfully for everyone, and that 2016 has started superbly on all fronts. As many of you will now be aware, the turn of the year has seen some rather gigantic developments here at Outsource.