Automation: Build or buy?
Automation: Build or buy?
Insight

Automation: Build or buy?

Intelligent automation (IA) is a truly transformative technology. Using advanced software algorithms to mimic human behavior, IA is ideal for replacing repetitive, high-volume and labor-intensive tasks that tend to gum up non-core, yet critical, internal services.

Today, many business executives see implementing IA as a potential solution to an enduring operational challenge: lower-cost scaling of functional processes. A recent KPMG survey found that a large number of companies are making focused investments into IA with the specific purpose of improving how they deliver such services.

As your organization begins exploring automating service delivery, you’ll face a difficult choice: Should you do it on your own or have an outside company deliver automated services for you through an outsourcing arrangement?

While there is obviously no single approach that works best in every situation, I’d make the case for most companies to outsource IA-enabled service delivery. Here are some compelling reasons.

  • Go with what works: The “build or buy” question is common to all sorts of transformation, and generally, the answer is obvious: Why recreate the wheel—and distract yourself from your core focus—when a tried and tested solution already exists? It’s no different for a company looking to automate service delivery. And potential solutions abound. Today, technology-led service offerings from third party providers are seemingly everywhere. In fact, nearly all of the sourcing deals we see today include automation. With offerings in this area growing in both number and ability, automation is poised to be a key part of the future business process outsourcing market.
  • Share the cost: A core value proposition of traditional labor arbitrage-based outsourcing—cost reduction—holds true when talking about automating service delivery, too. When you invest in automated service delivery on your own, you take on all the costs—both up front and the ones that you will inevitably incur down the road as technology advances and business needs change. By contrast, leveraging a service provider’s automated process allows you to share the costs with others. If you contract for new standard (non-customized) innovation at the beginning of the outsourcing agreement, you’ll benefit from continued investment in future improvements to the service offering, too, allowing you to remain competitive amid disruption.
  • Gain higher-level automation capabilities: Most automation initiatives aim to replace transactional, standardized workflows using the most basic IA tools. Complex and customized activities are much harder to automate, often requiring higher forms of IA, including machine learning, artificial intelligence and cognitive computing. Unless you’re willing to invest in those technologies—plus the in the additional costs bringing the right skillsets in house to effectively leverage your investment—outsourcing is, again, the better choice. Many outsourcing service providers are now developing standardized service offerings that use higher level IA technologies to cost-effectively automate not only routine business services, but complex ones.
  • Access full industry solutions: Service providers understand that the nature of outsourcing is changing dramatically in the digital age. As such, they are seeking to deliver greater value to clients, beyond their traditional draw: low-cost labor. One way providers are reframing their offerings is by providing full, automation-based services to discreet industry verticals, rather than just supporting the underlying technology. Partnering with a service provider who offers such industry-specific know-how will help you more effectively apply IA technology to solve the unique problems facing your unique industry.

To build or buy is a personal choice, and there’s no definitive answer. However, in most cases I think outsourcing is the best model for service delivery with intelligent automation. Service providers have made the right investments to become leaders in delivering high-quality, low-cost, automated business services. And they’re already delivering results. In my experience, outsourcing firms generate far more return on IA investments than self-directed internal efforts to improve service delivery through automation.

What choice will you make?

Learn more about the complex interplay between intelligent automation and outsourcing by reading the 2Q 2018 KPMG Global Insights Pulse Survey Report.