Is your small or medium sized business ready for automation

That automation is expensive and is only feasible at scale, is a myth. All businesses, large and small, have potential for automation that is only increasing at an exponential rate as predicted by Moore’s Law.

According to this McKinsey report, among respondents at large companies, 40 percent say theirs are using automation across the organization or have fully automated processes in at least one function or business unit. At smaller organizations, just 25 percent say the same.

There’s a range of automation technologies to choose from and ready to be deployed towards amplifying your small business. These include document management systems, SaaS tools and platforms like CRM and ERP, machine learning algorithms, voice assistants, chatbots, natural language processing, cognitive agents, and robotic process automation.

IS YOUR SMALL OR MEDIUM SIZED BUSINESS READY FOR AUTOMATION?

Short answer is probably yes. However, you should ask yourself a few questions first.

1)  WHY AUTOMATE WHAT ISN’T BROKEN?

Contrary to popularly held beliefs, cost savings from labor substitution isn’t the greatest benefit of automation. In fact, less than 5% of all occupations have the potential for full-automation, i.e. where labour can be substituted with technology demonstrable today. However, almost every occupation has scope for partial automation. A McKinsey report suggests that 45% of all work activities (not jobs) can be automated.

Cost savings realized from partial automation of existing employee roles certainly do pad the bottomline. However, there are greater benefits to automation. Automation frees up your labor to undertake higher value tasks. This is as true for the janitor and the shop-floor welder as it is for the CEO. Higher productivity at the level of the individual compounds over the value hierarchy and results in exponentially greater business outcomes. These include higher throughput, better product or service quality, greater safety, better customer service, optimized marketing function, optimized supply-chains, and increased sales.

Since all the data in an automated system can be captured and analyzed, it allows you to control the levers of your business in real-time, enable better decision making and reduce waste. Thereby freeing your human capital to engage in innovation and creativity beyond the frontiers of machine capability.

WHERE DOES THE AUTOMATION POTENTIAL LIE?

Tag all your business assets. Develop a comprehensive map of all activities within each of your business processes and identify the ones that will benefit the most from applying automation technology. Not just in terms of labor cost savings, but also increase in throughput, speed, quality, customer service or any such vital KPIs. Structured repeatable activities with a predictable set of action patterns are ideal candidates for automation. These generally tend to be data gathering and processing or repeatable physical activities such as document approvals. This comprehensive review could help you figure where your low hanging fruits with automation potential lie. A simple cost benefit analysis should underline the value of making a switch to automation on these fronts.

2)  WHAT ASPECTS OF MY BUSINESS NEED AN AUTOMATION TECH OVERHAUL?

Extracting the maximum value out of automation often requires a thorough process redesign of specific business components. It could be anything from workflows and shop floor design, to personnel hierarchies. This part tends to be a more painful transition requiring a greater investment of time and effort apart from the cost of the automation technology itself. However the rewards in terms of value unearthed would be multiple times greater when compared to the low hanging fruits.

Switching from a paper-based documentation system to a completely digital document management system is an example of such a process overhaul and is often the first step of a digital transformation. Initially there’s the effort of digitizing the entire physical library of paper records, information from filing cabinets and archives. But that’s not all. Re-imagining existing documentation protocols and workflows, as well as additional staff training will be required to utilize the system to its fullest potential. However the eventual benefits far outweigh the costs. Additionally a document management system becomes the foundational technology layer upon which greater automation capabilities like CRM, ERP, and even chatbots can be stacked.

3)  CAN OTHER PLAYERS IN THE MARKET UPEND MY BUSINESS MODEL USING AUTOMATION?

This might take some imagination and insight. However to project the health of your business into the future with automation, you must account for the behavior of other players in the market. Can your competitor outpace you in scaling up his/her business through automation and thereby capturing your market? Can your supplier or vendor outgrow you through automation and capture your position in the value chain? Is there an innovator out of left field primed to disrupt your market?

If the answer to any of these questions is a yes, your business must buttress its value into the future against such threats. Automation not only helps you build scale rapidly, but also provides you with invaluable insights from the data you would generate. Use the analytics of today to solve for tomorrow.

4) THAT SAID, EXPECT CHALLENGES.

The transition from legacy systems and processes to newly automated ones can be tricky. Employees and resources that have been developed over time to operate a legacy business effectively can sometimes be found wanting while adapting to automation. Operating automation tools that augment productivity eventually, may require a set of skills in addition to that which your employees already possess. Businesses often find themselves having to manage the consequent skill-gap. Additionally, automation could expose you to greater security risks than you were previously used to.

However all of these challenges can be mitigated by defining automation as a strategic priority. Build your automation capability over time without major disruptions while remaining agile and responsive to the market. Adopt as you adapt. However, a long term strategic vision for automation wouldn’t hurt.

So, is your business ready?