New Ambitions for Automation

It’s no longer just about saving money,

but about resilience.

By Michael Heric and Purna Doddapaneni

Michael Heric is a Bain & Company partner who leads the firm’s Corporate
Support solution and Automation capabilities. Purna Doddapaneni leads
Bain’s Automation Center of Excellence. They are based, respectively, in
New York and Dallas.

Copyright © 2020 Bain & Company, Inc. All rights reserved.

 New Ambitions for Automation

At a Glance

Covid-19 has raised the value of automation across industries to strengthen business
resilience, reduce risk and generate useful insights.

Companies that invested more in automation before the pandemic have reported higher
revenues than others, with fewer disruptions to productivity or the supply chain, a recent Bain
survey finds.

Leading companies in this field think big about how automation can deliver a competitive
edge, rather than one use case at a time.

They manage automation actively from the start and spend as much, if not more, time on what
comes after automation.

In a matter of weeks, automation went from a long-term goal to an urgent, critical need for many
executives. The business shock caused by the Covid-19 pandemic has brought home one crucial
realization: Automation is no longer primarily about lower costs, but rather about resilience.

Companies are increasingly deploying automation to strengthen business resilience, reduce risk and
generate useful business insights more easily, according to a recent automation survey conducted by
Bain & Company (see Figure 1). Those that invested more in automation before the pandemic have
weathered the crisis better than others. They’ve generated higher revenues and experienced fewer
disruptions to the supply chain, workforce productivity and demand, our survey found.

Even though most companies in the survey are accelerating their automation initiatives, today’s auto-
mation leaders (defined as companies that invested more than 20% of their IT budget in automation
within the past 12 months) have a significant head start. Before the coronavirus hit, most leaders
across industries planned to automate 30% or more of their manual processes—two to five times
more than companies with low automation-adoption rates (see Figure 2).

Over the next year, 38% of the leaders intend to invest significantly more in automation, compared
with just 22% of other companies. That’s partly due to the work-at-home exodus, which will endure
for many people. Companies in financial services, professional services, telecommunications, media
and technology have especially large shares of their workforce who will work remotely even after
work sites reopen. The leaders are pressing what they view as a competitive advantage, regardless of
when the pandemic abates or how long the downturn lasts. And when the next business shock hits, it
will likely put even more stress on companies that haven’t charted a bold automation agenda.

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 New Ambitions for Automation

Figure 1: Companies’ automation priorities now extend beyond saving money

Which automation goal was the most important prior to Covid-19 for your organization?
How has that changed?
Percentage of respondents
40%

30

20

10

0
Lower costs Enhanced Revenue Improved Improved business Increased Lower risk
performance growth customer continuity/business ease of
and quality experience resilience generating
business insights

Importance before Covid-19 Change in importance since Covid-19

Notes: Change in importance equals the number of respondents who find it more important minus the number of respondents who find it less important, divided by
the total number of respondents; other automation goals not included
Source: Bain Automation Survey 2020 (n=500)

Figure 2: Automation leaders planned to automate two to five times more work than laggards,
even before the pandemic
Before Covid-19, what percentage of your work did you plan to automate over the next two years?
Percentage of total work, by industry
51%

35% 34% 32% 30%

30% 28%
26%
25%
22% 22% 23% 22%
20% 21%
19%
15%
13%
10% 10% 10% 10% 10% 10%

All sectors Consumer Financial Healthcare Industrials, Professional Technology Utilities, energy
products/retail services manufacturing services and natural
and logistics resources

Automation laggards Automation leaders Industry average

Notes: Automation leaders defined as companies that invested more than 20% of their IT budget in automation within the last 12 months; automation laggards are
the bottom quartile of companies based on the amount of work respondents had planned before Covid-19 to automate over the next two years
Source: Bain Automation Survey 2020 (n=500)

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 New Ambitions for Automation

Spread automation across the business

Automation can make a difference across the whole organization. While back-office support and
customer service have traditionally had the highest potential, automation can also deliver benefits in
R&D, supply chain, operations, and sales and marketing. Many processes lend themselves to automa-
tion, from software testing to insurance claims management, fraud detection, cloud infrastructure
management, job applicant screening, loan processing and data entry for vaccine clinical trials.

Automation is helping accelerate product development; deliver professional services at a lower cost;
resolve customer issues faster, cheaper and more effectively; and increase selling time for field sales-
people and channel partners (see Figure 3).

Some of the most compelling developments in recent months reflect how automation has improved
the competitive position of companies in the midst of the pandemic.

Some of the most compelling developments in recent months reflect how

automation has improved the competitive position of companies in the
midst of the pandemic.

Covid-19 pushed one large technology company, a leader in deploying automation for years, to apply
it in new or less mature areas, such as sales and the order-to-cash process. If all goes as planned, the
new automation initiatives could help the company—which generates billions of dollars in annual
revenue—save hundreds of millions over the next two years.

The changes include making online selection and ordering easier; automating billing; switching to
targeted customer communications that require less oversight; and offering clients more self-service
tools for resolving issues. The company has also identified ways to streamline and automate back-office
sales support tasks and allow salespeople to spend more time on high-value, revenue-generating
activities.

These automation moves have a lot of upside beyond saving money. They’re expected to increase rev-
enue, worker productivity and customer loyalty.

Companies are also using automation to help solve specific problems such as moderating content on
social media platforms and in other digital forums. When the pandemic hit, some companies weren’t
prepared to transition their contractors to working from home, so their moderation operations were
running at reduced capacity. At the same time, traffic spiked on many of these platforms.

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 New Ambitions for Automation

Figure 3: Automation can benefit a company’s whole organization, but some functions and
processes have more potential
Automation potential for processes within business functions

Low Moderate High

Product
Product Portfolio strategy Life cycle management Pricing Portfolio planning
management Offering design and architecture Field and channel support

Development Ideation and design Market and customer analysis Testing

Development and engineering Launch

Operations (SaaS) Architecture Security Operations/hosting

Governance and compliance Disaster recovery

Services
Professional Advisory Education Managed services Deployment
services
Migration and upgrading

Customer success Product experience Installation and deployment

Retention and expansion Support

Sales and marketing

Sales Direct sales/field force management Customer segmentation and strategy Pipeline management/prospect monitoring
Digital commerce Channel/partner management Proposal development

Sales enablement Next-best-action planning Account planning

Sales compensation administration

Marketing
Front-end innovation Creative services Portfolio optimization and brand equity Email marketing
Marketing spending management Media monitoring and marketing Lead generation, qualification
and management
PR and communications
Licensor management Drip and nurture campaigns

Support
Order to cash Order fulfillment Configure/price/quote Order entry and order management
Credit Billing Collections Receivables

Finance and Decision support Budgeting and forecasting Internal audit Tax
procurement
Investor relations Treasury Entitlement Record to report
Procurement Accounts payable

Human resources Talent strategy Workforce planning Talent acquisition Payroll

Diversity and inclusion Performance management Talent onboarding and staffing
Labor relations Talent development/succession plan Time and attendance
Total rewards Learning delivery Learning scheduling

Internal IT Enterprise architecture Application development and management Provisioning

IT security Network configuration End user services IT service management
Infrastructure operations Service desk
Database development

Legal Intellectual property Risk management Litigation M&A Contract management/terms

Labor and employment Governance Regulatory compliance

Real estate and Brokerage services Document management Lease administration

facilities
Delivery of facilities management services Reconciliation and dispute management Utility billing processing
management
Compliance/FAS 13 reporting Utility consumption monitoring
Facilities management scheduling Space/occupancy data management
Workforce optimization
Security access management

Data management has moderate automation potential across all business functions
Reporting and analytics have high automation potential across all business functions
Source: Bain & Company

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 New Ambitions for Automation

In response, some digital forums are partially automating content moderation with artificial intelli-
gence (AI) technologies from developers such as Hive. The San Francisco-based company has added
dozens of clients since March, when many stay-at-home orders went into effect around the world.
The company now processes more than 1 billion posts a month that previously were reviewed by
humans or not at all.

Besides increased efficiency, Hive’s product has made content-moderation operations more effective.
A video chat platform that used to field thousands of user complaints weekly about inappropriate
content now reports fewer than one incident per week after integrating Hive’s AI models. Another
client, French social video-chatting app Yubo, which started using Hive’s services before the pandemic,
has been able to handle a 200% increase in the number of livestreams on its platform without needing
to hire more moderators.

Another sector, offshore business-process outsourcing, was among the hardest hit by Covid-19, because
few business-continuity plans anticipated a pandemic. India-based Tata Consultancy Services has
held up better than most and is poised to recover faster, thanks in part to automating critical processes
before the crisis. When the pandemic forced the company to shift the vast majority of its employees
to working from home, it continued to operate effectively and responded nimbly to urgent customer
needs. The company plans to have 75% of its employees permanently work from home by 2025; it
believes it can maintain or even improve productivity with a mostly distributed workforce, according
to news articles.

Remove the roadblocks

The good news for companies investing more in automation is that historical barriers are coming
down in the wake of the pandemic, our survey found (see Figure 4). Across industries, companies
report greater support from senior executives, better coordination of automation projects and support
from IT departments. These developments could speed up deployment of automation, improve its
performance and bring a larger return on investment.

It’s unclear whether the favorable conditions on the ground will change once companies recover
from the pandemic. What is clear: Businesses have an opening now to accelerate their automation
programs.

However, many say they aren’t ready for it. Only 10% of surveyed companies believe they’re highly
prepared to address the personnel and change management challenges that automation will create;
11% say they aren’t prepared at all to respond to those workforce issues.

Our analysis of the survey responses and the characteristics of successful automation programs suggests
that three principles underpin a successful automation program.

First, think big. Many companies deploy automation one use case at a time, with projects required to
quickly pay for themselves through cost savings or new revenue, often within the first year of deployment.

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 New Ambitions for Automation

Figure 4: Barriers to automation are coming down due to the pandemic

Before the pandemic, what were the barriers preventing your organization from investing
in automation? How have these changed?
Percentage of respondents

60%

40

20

0
Competing Insufficient Lack of Lack of IT department Executive Automation Automation
priorities and budget centralized automation not able to leadership not achieving tools not
business coordination capabilities support not supportive expected meeting
needs benefits needs
Was a barrier before Covid-19 Is still a barrier

Source: Bain Automation Survey 2020 (n=500)

Cautious testing and learning, followed by rapid scaling, works well during stable times. Testing and
learning still matters, but the Covid-19 crisis has created a rare opening for executives to think big
about what can be automated and the value it could bring. Leading firms are challenging their long-
held beliefs about why automation may or may not work in their organization. They’re automating
more complex activities than just back-office processes and customer service desks.

ICICI Lombard, a general insurer in India, uses AI-based bots to generate quotes and book policies
for corporate customers. It now automates issuance of about 90% of certain policies and products for
small businesses, with no manual intervention. Recently it partnered with Microsoft to develop India’s
first AI-enabled car inspection feature in its mobile app, to simplify making a repair claim.

In its medical business, ICICI Lombard moved from a traditional core system to more flexible, cloud-
based automation. It deploys AI-infused automation to process the cashless claims requested by hospitals.
The policy-related information, doctor’s diagnosis and recommended course of action are ingested in
the AI algorithm, which decides whether to admit a case. A machine-learning program then decides
on the optimal claim amount. This entire initial sanctioning process takes about 90 seconds, compared
with up to 4 hours when done manually. The company’s doctors thus get freed up to spend time inves-
tigating more complex cases.

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 New Ambitions for Automation

Second, manage actively from the start. The barriers to automation are falling, but that doesn’t mean
companies can cut corners in planning and executing their automation strategy. Success in automation
requires more than great technology. It starts with strong C-level sponsorship, so that automation
remains a priority and everyone is held accountable for achieving the company’s ambitious targets.

The most effective change programs engage the key stakeholders, including IT, in early, open and
direct communication. The senior team must demonstrate beforehand and in detail how automation
will change the experience of employees and customers for the better; otherwise, many employees
naturally will resist. Good communication, together with retraining programs, can help people start
moving toward new career paths, including those within the same company.

The most effective change programs engage the key stakeholders,

including IT, in early, open and direct communication.

The economic downturn will constrain budgets, so choosing the wrong funding model could stifle
adoption. Asking business units to fund their own investments works well when a company’s auto-
mation capabilities are mature, demand from the businesses is high, and accountability for the return
on investment is essential. Conversely, a centrally funded model might make more sense if a company
doesn’t have a proven track record or healthy demand for automation.

MetLife focuses on making the benefits and performance of automation transparent to all employees.
It has developed hundreds of demos on robotic process automation (RPA), installed widely accessible
dashboards and metrics, and created internal RPA training to help reskill employees affected by the
changes or seeking professional development. MetLife also set up a digital automation center of excel-
lence that helps the business units identify use cases that matter to them, then roll out and manage
their digital workforce. This approach has enabled broad adoption across geographies and functions
such as new business and underwriting, policy administration, claims and finance.

Third, prepare for what comes after automation. Beyond developing, testing, deploying and maintaining
the technology, what really matters is achieving the expected business outcomes from the automation.
In this respect, it’s similar to outsourcing. Beyond selecting the right partner, negotiating a competitive
contract and transitioning the work to the provider, the organization left behind must be sized correctly
and fit for purpose, or else the savings from outsourcing won’t materialize.

The risk is even higher for automation because much of the work automated consumes only a fraction
of each employee’s time. Companies have to redesign the jobs affected by automation, or they won’t
be able to achieve their goals.

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 New Ambitions for Automation

Amazon has pledged to spend $700 million over six years to retrain one-third of its US workforce as
automation upends the way many employees do their jobs. Hourly workers in fulfillment centers can
retrain for IT support roles, such as managing the machines that operate throughout the facilities.
Nontechnical corporate workers will have the chance to spend several years retraining as software
engineers without going back to college.

What comes next

After the events of this year, many executives see automation as a critical asset that can strengthen
their businesses and give them a strategic advantage.

After the events of this year, many executives see automation as a criti-
cal asset that can strengthen their businesses and give them a strategic
advantage.

Now comes the hard part. Before the pandemic, nearly half of automation projects failed to deliver the
expected savings, according to a 2019 Bain survey. Executives also face the challenge of compassionately
treating employees displaced by automation. Amazon’s reskilling program, for instance, mitigates
some of the pain of dislocation, and has the added benefit of helping to retain talented employees.

Although the situation on the ground has changed and traditional barriers to automation are crum-
bling, companies still have their work cut out to turn its promise into reality. It’s well worth the effort,
as the rewards could be substantial.

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Bold ideas. Bold teams. Extraordinary results.

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