STAMFORD, Conn., May 3, 2017 /PRNewswire/ -- Business process automation is enabling companies to realize significant productivity gains in such areas as finance, accounting and HR, but it is not yet leading to broad job losses, according to a new study from Information Services Group (ISG) (NASDAQ: III), a leading global technology research and advisory firm.
Beyond automation's impact on enterprises, the latest ISG Automation Index™ report also shows that IT service providers are quickly introducing automation into their offerings, leading to dramatic improvements in productivity and service levels. This accelerated pace of change is prompting the vast majority of IT and business leaders to say that IT will be the business function most impacted by automation in the next two years.
"Talk of automation is everywhere, but what is often missing from the conversation are details about what is actually happening today," said Stanton Jones, director and principal analyst, ISG Research, and co-author of the report. "The ISG Automation Index™ fills that gap with a data-driven analysis of how automation is changing the landscape of IT and business services – based on real-world information from ISG-advised IT sourcing transactions and RPA assessments."
The report finds the application of Robotic Process Automation (RPA) is enabling enterprises to execute business processes five to ten times faster, with an average of 37 percent fewer resources. Such productivity gains, the report said, are not resulting in job losses, but are enabling companies to redeploy employees to handle higher-value tasks and a greater volume of work.
ISG data show the average full-time equivalent (FTE) reduction from RPA ranges from 43 percent for order-to-cash processes (billing, cash application, credit, collections and pricing) to 32 percent for hire-to-retire HR processes (benefits, payroll, recruiting and talent management, and vendor management systems).
Yet, Jones pointed out, "In nearly every scenario we analyzed, increased productivity through task automation stands out as the most important change – not job loss. Humans are working alongside software robots, be they virtual agents or engineers, to increase their ability to take more customer calls, resolve more service desk tickets and process more invoices. This improved productivity is seeing important downstream effects: increasing operational speed and scalability, improving compliance and avoiding future costs. Our data indicate these benefits apply to both enterprises and service providers."
By 2019, the report said, 72 percent of enterprises will be leveraging RPA – either in full production mode or in pilot testing – to reduce costs, improve productivity and quality, increase compliance and compress transaction times. RPA currently is favored by enterprises because it offers a rapid, low-cost way to automate basic, rules-based business processes without needing to reengineer them.
IT Automation Driving Productivity Up, Prices Down
Beyond automating business processes with RPA, the broad automation of IT operations through autonomics is fast-emerging as the next big wave in automation. According to the results of an ISG survey cited in the ISG Automation Index™ report, 43 percent of IT leaders indicate that automation of operations will have the biggest impact on their IT spending through 2019. Additionally, 68 percent of IT and business leaders feel IT will be the support function most impacted by automation by 2019.
IT service providers are quickly integrating automation into their delivery models, and as a result, their productivity is surging.
"Nearly every IT outsourcing vendor is introducing some form of automation into its services," Jones said. "Vendors are doing this most commonly with autonomics software, which automates standard operating procedures and correlates data to improve these procedures over time. Whereas, in the past, enterprise clients could expect a five to ten percent productivity improvement in their outsourcing contracts after two years, we now see examples in which enterprises are realizing 40 to 140 percent improvement over the same time period."
Productivity improvements vary by service tower, ranging from 24 percent for user support to 143 percent for network voice devices, according to the report. As productivity improves, costs are declining – with fewer people needed to manage a service, especially in areas where software is replacing hardware.
Evaluated against ISG industry benchmarks, double-digit cost reductions are being seen across all major service towers, with network and email management services showing the sharpest cost reductions, at 64 and 71 percent, respectively.
Although the ISG report did not specifically examine incidence of job loss at service providers, Jones expects automation will eventually lead to workforce reductions among both enterprises and providers. "We are not there yet, because the impact of automation is still very much task-oriented. However, over time, as entire roles become automated, we do expect some job losses, but we also expect automation will create jobs, as market opportunities are addressed more quickly and the cost of production is lowered."
Cognitive Computing Still Nascent
The report also touched on the future impact of cognitive computing, including machine-learning algorithms that have the ability to identify patterns, trends and probabilities.
"The use of cognitive technology is still nascent in most enterprise support functions, but it is only a matter of time before it hits the mainstream," said Mark Davison, partner and global leader of ISG Robotic Process Automation Services. "Once it does, companies will realize even greater levels of productivity as they build out their digital workforces. This new way of working, which creates a partnership between employees and robots, will become a source of competitive advantage for firms over the next decade."
To download the full report, click here.
About the ISG Automation Index™
The ISG Automation Index™ is a research and advisory service that quantifies for the first time the cost savings and productivity gains from automating information technology and business services. The findings of the latest ISG Automation Index™ report were derived from an analysis of ISG-advised IT outsourcing contracts with annual contract value (ACV) of more than $5 million that included a significant automation component as part of the solution; ISG-advised RPA assessments in Finance, Accounting and Human Resources, and interviews with enterprise buyers, service providers and ISG advisors.
About ISG
ISG (Information Services Group) (NASDAQ: III) is a leading global technology research and advisory firm. A trusted business partner to more than 700 clients, including 75 of the top 100 enterprises in the world, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,300 professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry's most comprehensive marketplace data. For more information, visit www.isg-one.com.
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SOURCE Information Services Group, Inc.
