The strategic imperatives for automation success

At a time when companies are increasingly embracing technologies such as robotic process automation, natural language processing, and artificial intelligence, and as companies’ automation efforts mature, findings from the second McKinsey Global Survey on the topic show that the imperatives for automation success are shifting. A survey taken two years ago found that making business-process automation a strategic priority was conducive to success beyond the piloting stage. This year’s findings show that prioritizing automation has become even more important to enable success. They also suggest that successful organizations continue to focus on employees as much as technology—and that they have instituted new ways of doing so in which employees work alongside the new technologies. Finally, rethinking operating models, including how different functions work together, has emerged as a new imperative.

The survey, conducted just before the COVID-19 pan­demic, suggests that while more companies are pursuing automation, there hasn’t been a significant change in the share achieving success over the past two years. Just 61 percent of respondents say their companies have met their automation targets. This makes it even more important to understand the factors that enable success.

Make automation a strategic priority

In 2018, respondents from organizations with success­ful automation efforts were nearly twice as likely as others to say their organizations designated automation as a strategic priority, aligning the automation strategy with the overall business strategy and placing automation high on the C-suite agenda. The 2020 findings reinforce this imperative.

When asked about the primary reasons their companies are pursuing automation, 38 percent of respondents reporting success say their companies defined automation as a priority during their strategic planning process—nearly four times the share from other companies. What’s more, among respondents reporting success, 72 percent credit making auto­mation a strategic priority with being one of the most important factors in their companies’ achieve­ments with automation. Respondents from companies that haven’t succeeded with automation most commonly say their companies are pursuing automation programs for long-term cost savings, to keep pace with competitors, or to address concerns about the effectiveness of their business processes.

Focus on people as much as technology

While the 2018 findings showed that organizations with successful automation efforts were focused on skill gaps and talent acquisition, this year’s research finds that successful organizations now consider the human elements of these efforts in three ways. First, they consider and build the automation-related capabilities of their personnel.

Second, successful organizations also gather individuals’ expertise and embed it in the design of automation solutions. Finally, successful organizations prioritize communication across the organization while implementing automation-related changes.

Develop an operating model that enables scaling

The responses show that large companies have automated at least one business process in an average of four functions, such as finance, IT, and customer service. As automation programs expand and grow more complex, silos within the organization can hinder performance if business areas do not coordinate closely with one another. The findings suggest that successful companies’ operating models—their structures for coordinating activities across the organization—allow their automation programs to properly manage the complexity of deploying automation technologies, which makes it easier for those programs to scale.

As operating models become more complex, the findings suggest it’s also important for leaders to have a full view of the costs of automation programs that may span across the organization. Forty-six percent of respondents who report automation success at larger companies say their leaders understand very well or completely the total cost of ownership for their automation efforts. Just 10 percent of respondents at other companies say the same.

This story is an excerpt of the findings published on McKinsey’s website, which can be read in full here.

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

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