When is automation not the answer?

It may be heresy to take space out of the technology issue of a trade publication to suggest that automation is not necessarily the right approach for organizations hungry for cost reductions, but the fact remains that technology is not always the answer, particularly for lower-volume operations.

"If an organization's processing volumes are low, its operations functions are well-defined, and its corporate objectives are being met, I'm just not convinced that automating a manual process is always necessary," said Jim Bunn, business development manager for IBML, in Birmingham, Ala.

"The rule of thumb for deciding whether or not automation is right for your business is based on weighing your company's investment, in cost, time and resources, against the hard and soft benefits that result from using the technology," said Jim Thumma, vice president of sales and marketing for Optical Image Technology, a document automation solutions provider based in State College, Pa.

Thumma noted that the two most critical factors in whether to automate accounts payable or accounts receivable operations are data accessibility and the project's return on investment. "Since data drives automation and validation -- both of which provide the efficiency and accuracy operations require -- you have to have access to the necessary data, or you won't see the benefit," Thumma stated. "Secondly, if the benefits or payback returned are not greater than the cost of the investment, or the time of the eventual payback is not acceptable, then you should pass on the opportunity."

One risk, Bunn said, is taking automation to the extreme. "In low-volume operations, scanning documents and keying data from image -- both fairly straightforward functions -- can offer real value. But going to the next step, and automating data extraction, might be overkill," Bunn said.

Wally Vogel, founder and CEO of Toronto-based Creditron, said automation might also be a non-starter if an operation has "such a wide variety of work types and workflows that there is not enough commonality to even define the business rules for automation. Similarly, variations in document size and quality -- such as clipped or torn handwritten forms -- might also make automation problematic."

Vogel added that a lack of internal IT resources to support technology initiatives might also work against automation, as well as cases where legacy IT systems can't interface with the new solutions.

Another case where automation might not make sense is when an organization is locked in a wage contract that precludes the organization from taking advantage of efficiency gains, said Mark Stevens, president and CEO of OPEX, based in Moorestown, N.J. Additionally, automation likely doesn't make sense for organizations that are contemplating outsourcing in a year or two, he said.

The good news for organizations considering automation is that there are fewer and fewer cases where implementing technology doesn't make sense. "The gap between when it makes sense to automate and when it doesn't has been steadily closing for years," Thumma said. This trend is primarily the result of two factors: changing business conditions and the evolution of technology.

"Technology is enabling companies to accomplish more work with fewer people," Thumma said. "For instance, Web services and other technologies let businesses tie their disparate information systems together, and use the information stored within them much more efficiently and effectively."

Stevens added that compliance requirements may also trump a weak business case for technology.

Regardless, Vogel said the most frequent reason for not automating has remained unchanged for years: "An organization simply doesn't have enough money in the budget to give to a nice vendor."


By Mark Brousseau
Source: AP Matters Magazine (Jan./Feb. Issue)