Business

Fan of automation? Consider these before pushing the ‘go’​ button

By July 30, 2020 No Comments
By Gary Hewamadduma ACMA, CPA, CGMA, MBA, B.Sc.(Hons) in Computer Engineering

 

Let me start by saying, I am all for automation. All entities in our portfolio are geared for automation. Anytime we have a chance to use a piece of software to take care of things, we make use of that. In a wider spectrum, we also think of ways to improve ourselves in the long run by adopting the latest technologies. Along the way, we have probably made a few mistakes too and we have seen many others make costly mistakes and learned at their expense. While these may seem like ‘no-brainers’, I have seen very smart people committing some unforgivable business sins, so it is not really about how smart you are but how well ‘tech’ has been adopted in everyday business.

Consumer sophistication: 

Consider where your customers stand in terms of their ability to understand and use what you are adopting. Let’s take a simple example like automated Accounts Receivable. Each passing generation adopts ‘online bill pay’ more than the previous one. However, if your customers are predominantly people over 60 years of age, you are still looking at about 40% of them wanting to mail you a check. So, if you are a geriatrics healthcare provider, for example, you may want to think twice before installing a one-click payment wizard! On the other hand, if you are a closet installer for college students, you need to adopt a one-click payment app as 20-year-olds don’t carry checkbooks anymore.

To note a different case, ‘Amazon Go’, the grocery shop with no checkout (about 30 locations so far) are in locations with demographics ready to welcome the offer. I don’t think we will see a store in Florida anytime soon (With all due respect to Floridians).

Employee know-how:

Employee skill level has a major role in tech usage success. Sure, you can replace some, but is it that easy? Training needs, tech-savviness, learning pace, are all factors that would play a role. To take the same example of Accounts Receivable at the business end, if A/R is not synced properly into the accounting system and employees are not capable of handling special situations, it can result in constant time-consuming fixes and reconciliations. Ultimately, the benefits of automation are wiped out with the negatives that are brought in with it.

Tech and People balance:

The human role in business is fast changing and the winning businesses are the ones that figure the right balance and right place for humans. For example, in the finance world, most data analytics can be done by a machine. However, the information interpretation and business course correction has to be done by a human who has the wisdom to do it. Finding the right balance and placing and assigning your team into the right places is the difference between success and failure. Just last month, we heard of a massive failure of a company that raised $100 million with the promise of automating back-office accounting. After many costly mistakes, they shut the doors for good. On the other hand (and in a different context), Uber, has found (at least so far) the right balance in delivering their services, both in the food delivery and rideshare.

Overall usage coordination:

You can have the best tech AND best people, but without a seamless overall coordination, it will have very little results. It will be like a sports team full of stars trying to play their own game rather than winning the game. Overall information flow from start to finish with actionable results is the key and every stakeholder along the way needs to understand and play their role. As the old saying goes, a chain is only as strong as its weakest link.

Costs and ROI:

All the above are concerns only if you have the cash flow to support the automation. Automation where possible is a ‘must-do’ for business growth, but timing and resource planning is essential for short term survival. Opportunity costs, hidden costs, non-financial concerns, impact on brand image, and loyal employee concerns must play a huge role in the planning process prior to such automation decisions. A careful assessment of ‘return’, both financial and non-financial, needs to be in place.

Speaking of non-financial (which will indirectly influence financial), in the hospitality industry, automation in a fast-food restaurant will be much welcomed by the customers, however, no one walks into a high-end romantic fine-diner to be served by an i-pad!

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