Interview with Jon Theuerkauf, Managing Director of Performance Excellence at BNY Mellon
As process professionals seek to gain ever more improvements in efficiency, effectiveness, and control, more and more companies are starting to look at Robotic Process Automation. This approach - a way of automating – through UI layer software - manual processes has been gaining traction as implementation timelines are short, IT involvement is minimal and costs are relatively low. Thus, a robotic solution to improve a process can be rolled out in a matter of days or weeks.
So is Robotics Process Automation the way forward? Jon Theuerkauf, Managing Director of Performance Excellence at BNY Mellon, certainly thinks so. He says that Robotic Process Automation is being adopted by financial services organizations for one simple reason: "it works."
Here’s how he sees Reengineering professionals must reimagine their toolkit for process excellence.
PEX Network: We don’t often think of robotics as part of process excellence. How do you see robots fitting into the program of the future?
Jon Theuerkauf: In the world of optimization and innovation we either innovate, evolve, or we’re left behind - both as practitioners and the tools that we use. In the early days of Six Sigma projects you could be looking at six- twelve months on a deliverable and that was perfectly acceptable. Now we’re seeing programs that are using blended approaches of more Lean and less Six Sigma; solutions are delivered in 12 and 16 weeks because the world is moving at a much faster pace.
If you look inside your toolbox, you’ll still find the tried and true tools that are well-worn, well-honed. No matter how much we continue to oil them up and use them over and over again, they’re pretty much the same thing. There are only so many ways you can do a fishbone diagram!
But if you think about what we do as professionals our job is to work with the businesses to make things better, faster, cheaper and less risky. One of the ways we do this is to eliminate repetitive manual tasks that get in the way of financial institutions delivering, , as much as possible, straight through processing of transactions and services for our clients.
The crux of the matter is that as professionals we can often fix and bring about 10 to 20 percent improvement in the processes and new environments without the use of technology; it's been proven over and over again. This is what can come from our trusty Lean and Lean Sigma toolkits. But by adding new tools to those tool-kits – you can develop Black Belts as robotics scripting engineers and Green Belts as robotic process architects. Instead of only being able to deliver 10 to 20 percent improvement, you could use a Rapid Improvement Process to eliminate waste from the work process and then use robotics tools to automate those areas where you can take away that mind-numbing manual work, delivering as much as 50 to 70 percent improvement. And, the reengineering teams can do all of it.
The robotics tools that are out there today – the scripting technology – aren’t "code heavy." So as organizations mature with their robotics ecosystem, we will be able to teach front-line people how to use the tools themselves. When they find the opportunities to actually automate and reduce manual, risky, non-controlled work, they can quickly and confidently make improvements.
PEX Network: Tell me more about Robotic Process Automation (RPA) – how is it different from traditional automation software?
Jon Theuerkauf: Traditional technology projects have tended to follow a linear approach: we go through and we develop our technology specs, we put them into the technology review process, we go out and get our financing approved, and then we submit it up to the technology decision makers to tell us when the application will be developed. So, operations, front office, etc., is going to be left knowing that there's a solution, it's been spec’d, funding has been approved, but now they have to wait until the project is approved.
The other direction we go is to create these things called UDTs, or User Developed Technologies, such as macros (excel-based) or access database tools. These then resolve a lot of the manual work that's being done. But the problem is that these introduce into the technology ecosystem a very fragile piece of architecture that can't be controlled and that has very little audit capability. This create risks for financial services companies in particular.
So what do we do? We as reengineering professionals have never really done a lot of the technology building; that's where we've always drawn the line. I'm sure there are exceptions and there are probably people reading this interview who will say, "Oh no, we've been developing macros, we've done this stuff, and that's always been in our toolkit." Yes, that's true, but then you have the downside of introducing that type of technology into your infrastructure. It is a slippery slope using fragile architecture like this.
RPA technology has been introduced in the last five to seven years to 50-100 of the largest financial institutions. You're seeing it growing at exponential rates. There's a reason for that: it works. And it works because it removes a lot of the concerns over User Interface Automation that we had, where we have user environments using macros, Excel, and other things to help bridge that technological gap for the operating people, for front-office people. It also brings real, practical solutions within weeks not months or years.
And it now provides us the capability to actually fix those manual processes and give us a very robust and controlled environment that satisfies our risk requirements. That’s a very, very positive thing.
The technology is built in a way that it can actually be given to front-line people. So when you work in an ecosystem where you involve robotics, it’s important to keep a balance between the reengineering and "programming the bots" and managing infrastructure and the production environment; making sure you leave the technology aspects to the technology professionals, like governance, control-change management and production release scheduling. The actual identification of RPA opportunities and the development of the robots can be done through the reengineering pros and business SMEs. Finally, we have the ability to arm non-technologist so they can deliver on the sixth and final bone of the fishbone diagram: technology-driven improvements- through SMART technology like Robotic Process Automation.
PEX Network: What do you see as the challenges?
Jon Theuerkauf: There are a lot of challenges around culture and adoption. I call one of them the "Hollywood Effect" - when people hear the term "robots" they ask me, "Oh Jon, how are you going to keep them from going rogue? I watched Terminator. I watched I, Robot; they almost killed Will Smith."
We have this natural fear, I think, or concern that robots are going to get into our system and somehow they are going to develop self-consciousness, free will and the ability to reason. Not with the technology we have today. Artificial intelligence is trying very hard to move into that direction, to be able to duplicate the way that a human being thinks, operates and feels. But they're not all the way there yet and robotics is not even close. Robotics can only do what you tell it to do. Whatever you write in its script, it does. Nothing more or less. It can never do anything else. So I think for us in the Improvement and Innovation profession, it's a natural tool to add into our toolkit.
PEX Network: I wonder if that's one of the misconceptions a lot of people have when they hear the term robot? They think of these R2D2-like creatures that are moving through physical space, talking like humans and carry on in a physical human world. The robots we’re talking about here aren’t physical – they’re software, right?
Jon Theuerkauf: Spot on! It is all software-driven; in our firm we have created a little plastic robot and we put a little disk on it and it dances around and on the disk that spins around on its chest it says "Hi, I'm NOT Alex", because our robotics program is named after our company’s founder, Alexander Hamilton. The reason we did that is because we want people to understand that we don't build physical robots. We don't build a vacuums that run around your apartment or your house to clean the floor. We don't build a robot that can actually be a butler for you; that's not what we do.
RPA has been and will be used for things like processing a credit card application or completing part of the process for transacting a trade. It starts by scripting out the tasks, taking the process maps, the standard operating procedures that we would create as reengineering professionals or our business colleagues will have done, and using objects language or other RPA "coding language." We describe the tasks in the process we want the robot to do.
This takes from an hour to a day to define the process, depending on a number of factors. Then you test and pass all of the internal technology, risk, compliance, etc., tollgates, and you are ready with the technology bit. You still need to have all your change management plans in place and your RPA control plans mapped out. Once you have all that in place, you can move into production. This is a new way forward. RPA is being adopted at an unbelievable rate within the financial services industry.
PEX Network: And why do you think that is? Why do you think financial services is adopting robots at such an incredible rate?
Jon Theuerkauf: Many of us in banking believe that our processes still contain too much manual work. We’re not talking about value-added work, we're not talking about things being done that actually add value to the process; we're having people do work because the process and the system architecture that we have today doesn't allow transactions or work to go straight through when they are supposed to - plain and simple.
Work that does not require judgment is perfect for robotics automation. This is really the dividing line between what a robotics automation tool or an application can do versus what a human can do. Humans can apply judgment, humans can apply reason. Robots are very manual, very rule-based; "If I see this, then I do that. When I finish this step, I go to that step, then I go to the next step, then I go to the final step. I might access ten different systems along the way and I put that data in each of those systems."
It’s just like teaching a person to do a job; it's absolutely no different. That's what a standard operating procedure does. The procedure and the process become the rule set that we use, giving it to our robotics engineers to then translate that into the language that the robots can then consume.
Robotics isn't here to actually solve all the problems. What robotics is doing, though, is applying technology to do work in a way that is more accurate, helps us reduce risk, is more efficient, and is more effective. We then can use our talent - for better purposes within our institutions. And I think that's a big plus for us going forward.
Note: BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may be used as a generic term to reference the corporation as a whole and/or its various subsidiaries generally. The views expressed within this article are those of the interviewee only and not necessarily those of BNY Mellon.