Automation versus Transformation: Understanding the Difference

Increasingly, organizations are partnering with an outsourcing provider to automate business processes in order to streamline operational efficiency, contain costs, reduce risk and achieve other goals. One of the key challenges within this scenario is to ensure that your outsourcing partner studies the business closely enough to identify which processes can be streamlined and precisely how and where money can be saved.

Automation is obviously a key tool in realizing such gains, but does it provide a foundation for true business transformation? Part of the answer lies in considering the difference between automation and transformation.

Automation: Streamlining Current Processes

Let’s start with automation. One definition of business process automation (BPA) is the act of streamlining current business processes by utilizing software to automate routine functions, essentially making them easier, faster and less costly to manage.

BPA generally has a goal of improving control over systems, resources or processes. Such an initiative may comprise a single department. An example is digitizing accounts payable invoices within the finance department and then using an electronic workflow to route the invoices to specific individuals. However, a BPA initiative can also reach beyond a single department to encompass a larger, enterprise-wide business process management strategy. Either way, if the BPA process is working, you should see an immediate improvement in output, costs, efficiency and accuracy.

Transformation: Looking at Long-Term Goals

Transformation, on the other hand, often means looking at your company’s long-term goals and identifying how you can eradicate unnecessary steps within processes in order to drive future growth. One example of transformation would be to motivate your vendors, clients or members to submit requests, applications or invoices directly online. Reducing paper in lieu of “digitally born” documents and content can be a major step toward transforming the way your company manages business transactions.

Can you implement both automation and transformation? In short, yes. Companies can and often do both. Automation can yield quick, short term wins that help reduce costs and drive efficiency with current business process. A transformation undertaking can work in parallel to automation initiatives, possibly starting as an incubator project such as testing a new technology platform to ensure it is going to align with your company’s long-term goals. Once the company is comfortable with the new platform, for example, then most likely a larger change management effort will be required to slowly and carefully rollout the new system. The time and effort such a transition requires can be significant.

There are caveats to keep in mind with relation to both automation and transformation. One is that automation will not necessarily “future proof” your company. While it may offer a positive short- or mid-term solution, automation doesn’t automatically set up your enterprise for future growth.

With regard to transformation, the caution is that it involves more effort compared to automation because it relates to a company’s larger vision. Most likely a transformation initiative will cost more and require extensive effort since business processes have to be completely re-engineered. The upside, however, is that transformation enables future growth and helps keep the company competitive.

In my next post, The Benefits and Pitfalls of Automation, I’ll examine the different ways that automation and transformation can add value to an enterprise. In the meantime, feel free to visit the Business Process Outsourcing page of our website for additional insights including survey reports, white papers, case histories and more.