Why Hasn’t Automation Made Much Progress in Services? | Sherpas in Blue Shirts

I hear people in the services industry asking why automation hasn’t taken off yet. Actually, as long as I’ve been in the industry since the 1980s, we’ve been working on automation. Back in 1983 we were talking about automating business processes and the elimination of most of the people in the services value chain. So why hasn’t it made an impact yet?

I think there are three primary reasons for this phenomenon.

First of all, we actually have made incremental steady progress in automation. It’s just that the number of processes turned over to third-party providers has grown exponentially at the same time. In this much larger set of services, it’s easy to miss the progress made in automation.

Second, when labor arbitrage came into the market, it was so much simpler and quicker to get a payback using that strategy. So it delayed progress in automation.

Third, the automation journey is really hard work because we’ve moved to a point where pockets of labor are connective tissue. And process components continually change (such as IT infrastructure or the F&A process). This rate of change overwhelms automated models. These changes require rethinking automation.

Moreover, the cost of automation is high.

The good news is we’re entering a new phase of automation that I believe will make significant progress. So what’s different now that will enable automation to move forward?

First, the time is right. The labor arbitrage model is mature and the industry is turning to new sources of value. So we’re going back to automation as a source of value.

Second, today’s tools are much easier to use and quicker to implement. Thus, the cost of automation is dropping very precipitously.

Finally, providers are starting to merge services with integrated platforms and put artificial intelligence into automated or robotic tools. This enables adapting to change much more rapidly and facilitates machines learning in a similar way as employees learn.

The net result? Although we are early in this next phase of automation, I believe we have hope of going further than before. The desire is strong, tools are better, and companies’ ability to adapt to change is much stronger than it was. This should allow us to dramatically raise the level of automation that services clients value.

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