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As the price of software robots drops, HR's interest rises

Software robots can deliver ROI by reducing head count. But they can also improve job satisfaction by taking over dull, tedious tasks. HR and finance are growing users.

Software robots can take over relatively simple and repetitive tasks. This can lead to job reductions but also improve job satisfaction by taking over mind-numbing work. The cost of implementation can be relatively small, and the interest in software robots, especially in HR and finance, is on the rise.

Software robots are scripted systems programmed to take over jobs that may be tedious for employees, such as some payroll processes. These systems will increasingly get smarter with algorithms that handle more complex processes.

The adoption of robotic process automation (RPA), as the application of software robots is more formally called, is still in the early days, analysts say. Gartner, in a report in August, put the worldwide market for RPA tools at $1.5 billion and growing at 50% a year.

And a recent survey by consulting and outsourcing group Auxis found that firms are still in the initial phase of RPA adoption. Auxis surveyed 100 firms of all sizes about their use of software robots. The survey found that 71% of organizations have "at least started to evaluate RPA," and only 33% of respondents have gone beyond the piloting phase.

Initially, RPA was only accessible to large firms, said Eric Liebross, who heads the back-office optimization practice at Auxis. The cost of implementation was high, and the ROI was difficult to achieve "unless you were eliminating a lot of jobs," he said.

Software robot costs are declining

But there are now more vendors providing RPA products, and it's driving down costs, Liebross said. A project that once might have cost millions of dollars to deploy can now be done for tens of thousands of dollars, making the ROI easier to achieve, he said.

The cost of software robot deployment can be relatively inexpensive, said Craig Le Clair, a Forrester Research analyst who recently co-authored a report on RPA. A software robot, or bot, might cost $30,000 to build and have $15,000 in recurring costs, including infrastructure support and licensing. The bot might offset the work of two to four people, taking out 4,000 to 8,000 hours in annual labor costs, he said.

It's worthwhile implementing [robotic process automation] even if you're not going to reduce head count, just so you can be more efficient, more scalable.
Eric LiebrossHead of back-office optimization practice, Auxis

But software robots are limited in what they can do, Le Clair said. They typically work best on processes that require fewer than five decisions by a human and need fewer than five applications to complete a task. There is also a limit on the number of clicks, he said.

Software robots will improve as they gain AI-type capabilities that make it possible for them to handle exceptions in processes, Le Clair said. In time, they will be able to, for instance, sort and respond to unstructured data, such as emails.

"It's worthwhile implementing [RPA] even if you're not going to reduce head count, just so you can be more efficient, more scalable," Liebross said. The main push was initially in finance and accounting, but HR is now getting a lot of interest, he said.

Head count is obvious robot target

Le Clair believes that software robots have potential to reduce the number of HR employees. As many as 20% of HR employees are still doing transactional activities that software robotics can do better, he said.

In HR, software robots can be used for payroll processing and time and attendance reporting; in finance, their application may include bank reconciliation, among other processes.

An advantage to RPA systems is how they work with legacy systems, such as a payroll system, said Lisa Chai, senior research analyst at ROBO Global, an index, advisory and research firm focused on robotics, automation and AI. RPA provides "a good compelling use case for enterprises that really don't want to change anything in a drastic way," she said.

While software robots can displace employees, Chai doesn't believe that they have eliminated a lot of jobs. Instead, "I think the quality of work is increasing," she said.

This was last published in August 2018

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