EPISODE #74: Why You’re Picking The Wrong Objectives To Measure Automation Success
Whether undertaken by individuals, departments, or entire organizations, the automation journey is virtually certain to include a hearty mix of progress and pitfalls. Ambitious objectives often go unrealized, but unexpected benefits frequently emerge as well. These mixed results prompt some to pull the plug on their automation pursuits, while compelling others to double down in their quest for digital transformation. Uncovering the causes driving these varied outcomes is one of the subjects explored by EY Partner Sandeep Parikh in his recent book “Automation Conundrum”.
As EY’s Leader for Intelligent Automation, Sandeep has assiduously examined why automation & AI work well for some, but less so for others. We do a deep dive with Sandeep about his observations, and along the way learn what it takes to create a culture of automation within an organization; why the biggest automation & AI challenge facing the technology sector has nothing to do with technology; and why FTE reduction shouldn’t be the metric used to judge automation’s success.
Guy Nadivi: Welcome everyone. My name is Guy Nadivi, and I’m the host of Intelligent Automation Radio. Our guest on today’s episode is Sandeep Parikh, a Partner and Leader for Intelligent Automation at EY, formerly Ernst & Young, a multinational professional services firm with over 300,000 employees worldwide. Prior to EY, Sandeep held senior positions with Microsoft and Genpact. Sandeep originally caught our attention with an article he published a couple years back provocatively titled, “Long live RPA or RPA is dead?” where he made the startling assertion that “Traditional RPA has matured and is moving towards dead”. Since then, Sandeep has expanded a bit on that theme and written a book called “Automation Conundrum”, which does a great job of talking about intelligent automation for the enterprise. So we thought it would be well worth having him on the show to share some of his insights with us and elaborate on where he thinks automation is going from here. Sandeep, welcome to Intelligent Automation Radio.
Sandeep Parikh: Right. Thank you very much for having me on the show today, evening, or morning wherever in the world you’re listening from.
Guy Nadivi: Sandeep, please tell us a bit about how your career path led you to get started in automation, eventually rising to Partner at EY.
Sandeep Parikh: Well, a great question to start off with, and probably embarrass me a bit as well, but let me share. So I’ve been now working for 27 years and, like most of us by the grace of God, I’ve learned a lot along the journey. I’m actually an Electronics Engineer and a Management Graduate. Technology was my passion. And that’s why I kind of became an Electronics Engineer. And my core objective when I started on was I wanted to leave a tech legacy behind. Now, when I started my career, I started my career with big, behemoth, and aspirational organizations, Unilever and ICI or Imperial Chemical Industries. Back then my superiors actually taught me one very important lesson. They said that if you cannot create value for your stakeholder and your shareholder, you’ll never be relevant for your organization. I really kind of liked what they said and it made a lot of sense to me.
However, they also said that for this, I needed to be strong at what I was passionate about, which is technology, of course, and at the same time needed to understand how business really operates, what are the challenges facing our business, but most importantly, they also said that you need to have the ability to apply this knowledge, to actually solve business challenges and generate that shareholder, stakeholder value. I’ve actually remembered this all along and I’ve kind of tied it up within me till date, and I try to apply it wherever I’ve kind of been, be it with impregnating cattle with RFID chips to calculate their milk yield and arrive at the quantity of milk powder the organization would need to stock or GPS-based transport management systems. Bear in mind, I’m talking about times when mobiles were really not popular to actually help reduce fraud and wastage and as well leveraging technology to really reduce working capital requirement.
So along the journey, I was really fortunate to have worked with Microsoft, where my love for innovative technology really multiplied. That’s when Genpact happened and they wanted me to help them demystify a technology area called Process Robotics. I just wanted to remind the listeners that back then, and I’m talking about nearly a decade ago, there were very few true process automation companies, one like Fusion in Bangalore. It was here that I actually rolled my sleeves up, completely got hands on with technology and actually understood, how to apply it to solve simple and complex business challenges that clients threw at us. And I keep using this phrase, about applying the knowledge and I’ll kind of come back to it hopefully later in the show as to why this is important. Coincidentally, HFS ranked us as the number one service provider.
It was this ability to really understand technology, understand business and apply the collective knowledge to actually solve real world problems that landed me the job at EY, where I helped scale the automation practice. Again, coincidently, two years post my joining EY and very cheekily again, HFS ranked us as the number one RPA Service Provider. That really was my journey to partnership at EY. Simultaneously, I did decide to pen my experiences, in my book called “Automation Conundrum”, where I demystify the automation space, basically take out marketing jargons, help fellow practitioners of how to apply this in the real world. And more importantly, influence Boards and CEOs to view automation as a strategic lever rather than a tactical one. And also, I take the opportunity to impress upon governments around the world, the need to urgently arrive at common regulations for emerging technologies as we begin to scale them.
Guy Nadivi: You mentioned scaling just now and you also write in your book that scaling beyond the first 50 to 100 automations is a challenge that’s normal for most clients. You then go on to prescribe your recommendations for overcoming this challenge. One of which is adopting a culture of automation. Sandeep, how can an enterprise adopt a culture of automation and especially when corporate immune systems often create resistance to change within an organization?
Sandeep Parikh: Fantastic question. And I’m glad actually, you asked this. See, what happens is most organizations grow to a 50 or a 100 automation mark. And once they’ve kind of bought that scale, which is not really a very large scale, it is small to mid. Then what happens is that they are excited about the many digital workers or bots, as many people call them, and lose sight of their core objective of why they started actually doing this in the first place. Some of the reasons for those, are looking at automation as a tactical initiative rather than a strategic one as well. People view it as point solution, not really end to end. They don’t consider the upstream/downstream processes, lack of ownership, and not really considering technologies beyond RPA as well.
I would therefore say that organizations, once they have a very clear objective or a goal post example, really improving revenue or improving quality of profits or earnings per share is going to be crucial to help them overcome that challenge and drive culture of innovation. The second is, to really have a top-down approach led by an executive sponsor and finally ensure effective change management and the right mindset for people. Without this, having an effective culture of automation across the organization is going to be very tough.
Guy Nadivi: Sandeep, you did a great job in your book of articulating specific value propositions and use cases by industry. For the technology industry, you wrote the following in your book, “One of the biggest challenges facing the technology sector is our mindset. We believe we understand intelligent automation and artificial intelligence too well without even having applied it consistently and widely”. I thought that was very interesting. Can you please elaborate a bit on what you mean by that.
Sandeep Parikh: Guy, that’s a great catch actually. I thought I’d kind of fly under the radar on that one, but in reality, I’ve worked for technology corporations and large ones at that. I can tell you one of the biggest challenges facing the tech sector, is really our mindset. If you think about why this is so, it is very simple. The tech folks or the employees of tech companies are actually at the leading curve of the technology revolution, right? They get information, they get knowledge the fastest before anybody else. And once they’ve got the knowledge, they tend to believe that they know it really all, right? However, you’ll appreciate that just knowing a technology is not enough to deliver a successful outcome. And when I say outcome, I mean tangible business value. You need to actually have done it several times over.
You need to know the pitfall to really actually be a guru, right? But sadly and often the emphasis on hands on experience really gets missed out. And that’s why I actually say what I say in the book. Coincidentally, it’s actually playing out during this phase of the pandemic, think about the current generation. The people who are in their twenties today, that’s Gen Z’s, as we call them. They want to climb the ladder of prosperity and success without really even working hard and long for it. You would notice the kind of attritions we’ve got these days and particularly in the space of automation and data analytics, right? And particularly the Gen Z’s are the ones who are attriting the most.
To put it very, very lame, anybody who can spell the three letters, R-P-A are actually demanding fancy designations and high salaries. And the best part is, there is someone willing to offer them the job because they believe that they understand it all and they’ve not really seen the execution on the ground, right? So therefore, I kind of say what I say in the book, which is, we believe, we understand intelligent automation and artificial intelligence too well, without even having applied it consistently and widely to generate tangible business value, make sense?
Guy Nadivi: Absolutely. Sandeep, can you share with us an example or two of projects you worked on at EY where RPA started off with lofty expectations then ran into obstacles that prevented those expectations from being fulfilled?
Sandeep Parikh: Right. So, I’ll not kind of say that, this is specific to EY because I don’t want to talk about clients from EY, but I’ll definitely share my experience. I’ve been around for too long and have supported a lot of clients. So, there was this large CPG company, and while we were not really involved at the very start of the engagement, we were brought in once things gotten completely out of hand. So this organization thought that intelligent automation was really, this fancy, shiny toy, which was a silver bullet that could solve all problems to the extent they were like so blindsided, they thought they could solve world hunger, but we all know what the reality is. Now because they were so blindsided and they didn’t go in with a clear objective, they set out a first year target of reducing 10% of the workforce. Mind you, this is a very, very large corporation with a few hundred thousand workers, right? So 10% is a massive, massive number.
In my view, this was the worst end of the benefits realizations take that they could really hold, right? And as it pans out at the end of the 12 month period, they were not even able to take out half a percentage of the workforce. Now, the biggest challenge here was that they thought that they knew it all and they refused to have a clear, realistic objective followed by smart execution of the project. Also, one of the biggest mistakes they made was that they announced that they were going to use digital workers to replace human workers. This caused so much angst in the system that their revenue numbers and the employee morale, saw a dip completely and was impacted in a massive way.
It was a complete disaster. Anyhow, then they brought in our team, it was an uphill task you can well imagine to turn it around, but we were able to successfully do so. We actually started by first pacifying the employees and really creating an awareness and acceptability for this technology. We started by positioning this program, and I’ve kind of mentioned this in my book as well, “Automation Conundrum”, where we said that, “Hey, this is about a man with machine rather than a man versus machine”. And I’m not trying to be gender insensitive over here. It’s just a quote. So, it’s man or woman with machine rather than man or woman versus machine program, right? Something that would really help the human workers complement them and actually help them achieve their annual goals and targets, right? Second, we went in and created clear objectives, KPIs, that were very realistic, which were aligned to the core business imperatives of the group.
For example, improvement in revenue by an X percentage point or improvement in earnings per share by Y percentage point and the support that the technology would provide for research in the new product development area. And then we had an executive sponsor also kind of talked this to the street. Now, when that happened, automatically people who got confidence that, these guys are not here to take jobs away. They’re actually bringing in technology to compliment us and got them in a very, very comfortable position. And I’d probably say they got comfortable in the presence of the bot army or the digital workers. And once we changed their mindset, adoption was really not an issue. Needless to add, that I’m kind of articulating this in a very simplistic fashion, due to paucity of time, but there are several activities that we had to undertake to really achieve success.
Guy Nadivi: What about projects where results exceeded expectations? Do you have an example or two of those you can share?
Sandeep Parikh: Absolutely. Now once again, I’ll probably give an example from the CPG space. Again, this is a fairly large client, of course, it’s not that we don’t have examples from other sectors. We’ve got tons, but this one it’s really, really interesting. It’s a very large CPG company. They actually believed in the brick and mortar more than the online or the e-commerce direct-to-consumer space. They had limited presence therefore. Now, because they had a large reliance on their offline stores when the pandemic struck, their work, their organization virtually found itself literally out of business, for a short period of time. But they quickly regrouped and to their credit put in a very smart, direct to consumer solution. Now, as a part of this, what they did was they leveraged the e-commerce sites and platforms in addition to their own e-commerce program.
And our role was to really help create a smart solution where we leveraged hyper automation, which are technologies beyond intelligent automation with an objective to ensure that their product presence was always at the top of the stack. So let’s say if someone or a potential client typed in a generic requirement, let’s say somebody wanted to buy a soap, right? And the moment they typed in “soap”, the first product that should be seen by the consumers was the product from this client, right? So that was the solution we actually put in. The intent there was that, we wanted to help them, one — ensure that their presence on the direct-to-consumer platforms was really, really high and highly visible. They also wanted to improve sales, but this solution actually helped them improve sales by three times, so 3X. That was something they were not expecting and it blew their minds completely. And today they are so convinced about the technology, that intelligent automation is a part of their core business strategy. So it’s a strategic lever to help them improve revenue and not a tactical one.
Guy Nadivi: Now I want to complicate things a bit by introducing another variable into the discussion. Many of the supply chain tasks that RPA is applied to, actually lend themselves very well to being digitally transformed with blockchain. If a supply chain is standardized on a blockchain-based distributed ledger, wouldn’t all transactions be digitized and streamlined to the point that RPA, at least for accounting type of work, would be rendered completely unnecessary.
Sandeep Parikh: Fantastic question Guy. To be very honest, blockchain is a fantastic technology, but at this point in time, the way things stand is that, it is more theoretically superior. It is possible to digitally execute any process end to end using block chain, right? Theoretically, I mean. But this is yet to be consistently done. And it’s not really been truly proven at scale barring a few examples in banking or, public e-Services like property registration and so forth. The reason is that you need an entire ecosystem onboarded. Now think about large organizations or even small organizations, because small organizations would have a few hundred suppliers or vendor partners and large organizations would have a few hundred thousand suppliers or vendor partners. Now imagine having to kind of onboard that entire ecosystem into the blockchain, right?
And the best part is, this is just half of the org, right? You also have consumers and customers at the other end. So it’s just something that hasn’t been done at scale. It’s a huge task. Now, by your logic and the question you asked, if you actually technically extrapolate that argument, one could turn around and say, actually blockchain could replace ERPs too, but it’s not really going to happen. So I think the big challenge is that the ecosystem is nonexistent at this point in time. Wherever the ecosystem is present, blockchain definitely can play a role.
But RPA and intelligent automation on the other hand really are one mature, two proven. They’re already delivering solid results consistently across organizations. They don’t really have this requirement of creating a huge ecosystem and so forth. And by the way, they’re fairly inexpensive to deploy as well, right? And one more thing which is they are very, very agile or quick to deploy as well, unlike a blockchain, right? So hence at this time I would actually still give RPA and more so the intelligent cousin of RPA, which is intelligent automation, much longer lease of life and is very unlikely to be overtaken by blockchain anytime soon.
Guy Nadivi: Sandeep, is there a particular metric you like above all others that best captures the effectiveness of automation to an enterprise?
Sandeep Parikh: Oh, absolutely. Much to the despise or anguish of several business leaders, I don’t think FTE or full-time employees is a good metric to chase. When I say FTE, I mean releasing or replacing FTE with automation. Now, we are actually deploying automation and fundamentally one needs to understand that we are deploying automation to really improve the performance and effectiveness of a process, right? Leading to, for example, a newer end consumer experience or a newer product, therefore leading to a higher revenue or earnings per share. So I would really urge that the CIOs, CTOs, et cetera, actually look at metricses that are interim milestones for achieving higher revenues or improved earnings per share. Of course, it would actually differ, from process to process and differ from a metric that is enterprise wide. However, I would really urge them to align to metrics that are actually relevant for the business and something that the business really cares about or needs this technology to be leveraged to resolve.
Guy Nadivi: There’s a lot of excitement about automation for young people entering the workforce. And even for more established professionals thinking about a career change. What kinds of skills does EY covet the most when hiring talent for RPA or any automation?
Sandeep Parikh: Once again, I wouldn’t want to talk about how EY does it or what EY covets in terms of skill sets, but let me give you a generic perspective from the industry. Now, first and foremost, I think we need to understand that intelligent automation really offers several career choices, right? Example, you could be an IA or an intelligent automation developer, or a IA Business Analyst or a IA Solution Architect to name a few. Now when it comes to experienced folks, they first need to decide which track they would like to pick up. Whether they want to pick up the tech track or the process-oriented track, right? So that means that they need to pivot them around one of those two areas. Now, if they pick up the tech track, then of course coding skills are a fundamental requirement, but a good understanding of how business operates and the ability to understand business challenges is equally important.
Likewise, if one were to pivot around the process aspect, then a deep understanding of the process, essentially, around their core area of strength, it could be finance, it could be HR, it could be manufacturing, supply chain, IT, whatever is essential and they also need to have a reasonable understanding of what technology is available, what kind of solutions are there. Now, this is something that is unique to the two areas, so if you’re taking the tech track or the process track, but apart from this, what is common to both the tracks is the ability to apply this knowledge, to solve real world problems. It’s super important. And, I kind of said this, even when I was answering my journey to partnership at EY, it is this ability to apply this knowledge around technology, around process, around understanding the challenges facing a business and bringing all of this together, mashing it up and really applying to solve those problems or challenges is very, very critical.
Now, I don’t need to add this, but I still will, which is emphasis of applying, this ability needs to be coupled with a mindset that has a very, very creative bent of mind or a mindset that is a focused around problem solving with innovative solutions. I think that’s good. Let me just quickly summarize. A good understanding of technology or process, understanding how businesses operate and their challenges and ability to apply this knowledge creatively coupled with right attitude approach is really essential to solve business challenges and create tangible values, particularly for experienced or established professionals.
Now for the student community who are actually now walking into a new world of work that they’ve never really experienced before. And when I say new world of work, I really mean a new world, which is a hybrid between digital and human workers working alongside, it is important for them to really have a good understanding about intelligent automation and how it’s actually being applied across the industry to generate tangible business value. There are several books actually written by professionals who are absolutely hands on and solidly experienced, right? So they could refer to those or my book “Automation Conundrum” can also be referred or referenced as one of the target audience I’ve tried to reach out to is the student community.
Guy Nadivi: The pace of innovation for digitally transforming technologies has been moving very fast. Sandeep, what do you envision will be some of the biggest disruptions we’ll see in the next one to three years with respect to automation in the enterprise.
Sandeep Parikh: Great question, actually. I don’t really have a crystal ball to actually look forward, but, based on experience and how things are going at this point, so far organizations have really kind of been pushing RPA, which is a business tool software, as we know for automating their processes, but these are primarily mundane, routine, error prone manual processes, right? We are actually already seeing a transition towards the intelligent automation, which is an RPA coupled with technology such as machine learning, natural language processing, generation, et cetera. This intelligent automation is going to get even more intelligent and start automating several processes that require subjective knowledge as well, not just objective knowledge or rules-driven knowledge. So that is one thing that’s going to happen.
But more importantly, what I’m also seeing is that, or what I also would like to see and I’m pretty confident it should happen by the grace of God is, CEOs and Boards would start demanding far more qualitative work from their digital workforce, which would eventually translate or mean that the Chief Digital Officers will need to really start making sure that intelligent automation in whichever form and even more intelligent needs to kind of become a strategic lever for the organization.
So that’s something that I’m kind of seeing. And the focus would be less about taking human workforce out. It would be more about, generating a true stakeholder shareholder value. In addition to this, the focus around data and particularly data management is going to increase. And we are seeing that in many, many countries around the world, as we speak. Classic example is this whole Neom city project in Saudi Arabia, right? By the way, I kind of laid it out in detail, not the Neom city project, but the importance of data in my book, “Automation Conundrum” as well. I’ll just sum it up in one simple quote from my book, which is “Data is going to be the new oil”.
Guy Nadivi: Sandeep for the CIOs, CTOs and other IT Executives listening in, what is the one big, must have piece of advice you’d like them to take away from our discussion with regards to deploying intelligent automation at their organizations?
Sandeep Parikh: Great, thanks for actually asking this question. It’s a very important one. And before I kind of answer it, I do want the listeners to understand and completely internalize this, that intelligent automation is a fantastic stack of technologies, right? But individually or collectively, it is not really a silver bullet to solve world hunger. First and foremost, it’s very important that we understand this. Now, if we are to kind of do or deploy or generate value in a very effective fashion, the most important thing in my view is that we need to be fairly clear on why we want to embark on this journey and what is that end objective we want to achieve? So objective is going to be very, very crucial and this objective cannot be that I want to deploy 20 automations, or I want to take out 50 FTE.
This objective has to be aligned to the uber organization or group objectives of improving revenue. I’ve said this before many times, improving quality of profits, improving earnings per share, ability to create new experiences for end consumers, ability to create new products and services and so forth. So that’s the kind of objective we need. So therefore I would like towards CEOs, CXOs, the Board and the CIOs, Chief Digital Officers as well to think about leveraging intelligent automation as a strategic lever, rather than a tactical one to actually deliver tangible business value, for their respective organizations and stakeholders.
Guy Nadivi: All right, well, it looks like that’s all the time we have for on this episode of Intelligent Automation Radio. Sandeep, I think your book “Automation Conundrum”, offers a good answer to one of the most common questions many people have with automation, which is simply, where should I start? You’ve distilled and poured quite a bit of your expertise into this publication, and I’m sure many will find it helpful. Thank you very much for coming onto the show.
Sandeep Parikh: Yeah. Thanks very, very much for having me on the show, and this is actually a great show. I must compliment you for putting it together.
Guy Nadivi: Thank you very much. Sandeep Parikh, a Partner and Leader for Intelligent Automation at EY. Thank you for listening everyone, and remember don’t hesitate. Automate.
Partner and Leader for Intelligent Automation at EY
Sandeep Parikh is currently Partner and Leader of the Intelligent Automation and Artificial Intelligence practice at EY. He has over 27 years of experience working across organizations such as EY, Unilever, ICI, Microsoft, Genpact. He is an innovative, hands-on executive, who has a record of leveraging technologies to help create economic value for organizations and stakeholders across industry sectors. Sandeep is an Electronics Engineer and a postgraduate in Sales and Marketing Management. He is also the author of “Automation Conundrum”. +
Sandeep can be reached at:
Sandeep’s personal site: https://www.sandeepparikh.in/
Twitter handle: @parikhsandeep
Koo handle: @parikhsandeep
Purchase Sandeep’s book: Automation Conundrum