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The imperatives for automation success

New survey findings show that organizations that successfully automate business processes follow a few common practices.

At a time when companies are increasingly embracing technologies such as robotic process automation, natural language processing, and artificial intelligence, and as companies’ automation efforts mature, findings from our second McKinsey Global Survey on the topic show that the imperatives for automation success are shifting. 1 Two years ago our survey found that making business-process automation a strategic priority was conducive to success beyond the piloting stage. 2 This year’s findings show that prioritizing automation has become even more important to enable success. They also suggest that successful organizations continue to focus on employees as much as technology—and that they have instituted new ways of doing so in which employees work alongside the new technologies. Finally, rethinking operating models, including how different functions work together, has emerged as a new imperative.

The survey, conducted just before the COVID-19 pan­demic, suggests that while more companies are pursuing automation, there hasn’t been a significant change in the share achieving success over the past two years. Just 61 percent of respondents say their companies have met their automation targets. 3 This makes it even more important to understand the factors that enable success.

The use of automation is growing

The findings suggest that more companies are pursuing automation now than two years ago. Two-thirds of respondents say their organizations are at least piloting the automation of business processes in one or more business units or functions, compared with 57 percent who said so in the previous survey (Exhibit 1). Most of that change comes from an increase in the percentage of respondents reporting pilot projects; the share of organizations that respondents say are moving beyond the piloting phase hasn’t grown significantly since 2018. Of those who report that their organizations have not begun to automate, nearly half say there are plans to do so within the next year.

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The most commonly deployed technologies, according to respondents, are business-process-management platforms and robotic process automation (Exhibit 2). These are followed by image-recognition technologies, such as optical character recognition (OCR), and by machine-learning algorithms and automated process-mining, -discovery, and -documentation tools. We also see evidence of adoption of conversation-automation technologies such as voice assistants and chatbots.

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The evolving factors in successful automation

Looking at respondents from larger companies (with $1 billion or more in annual revenues) that are meeting their automation targets, 4 we found three distinguishing factors: they make automation a strategic priority, focus on people as much as technology, and develop an operating model that enables scaling.

Looking at respondents from larger companies that are meeting their automation targets, we found three distinguishing factors: they make automation a strategic priority, focus on people as much as technology, and develop an operating model that enables scaling.

1. Make automation a strategic priority

In 2018, respondents from organizations with success­ful automation efforts were nearly twice as likely as others to say their organizations designated automation as a strategic priority, align­ing the automation strategy with the overall business strategy and placing automation high on the C-suite agenda. The 2020 findings reinforce this imperative. When we asked respondents the primary reasons their companies are pursuing automation, 38 percent of those reporting success say their companies defined automation as a priority during their strategic planning process—nearly four times the share from other companies (Exhibit 3). What’s more, among respondents reporting success, 72 percent credit making auto­mation a strategic priority with being one of the most important factors in their companies’ achieve­ments with automation. Respondents from companies that haven’t succeeded with automation most commonly say their companies are pursuing automation programs for long-term cost savings, to keep pace with competitors, or to address concerns about the effectiveness of their business processes.

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We also see successful companies scaling automation across the organization. Respondents from organizations with successful efforts are nearly five times more likely than others to say the scope of their automation efforts covers the entire organization.

2. Focus on people as much as technology

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While the 2018 findings showed that organizations with successful automation efforts were focused on skill gaps and talent acquisition, this year’s research finds that successful organizations now consider the human elements of these efforts in three ways. First, they consider and build the automation-related capabilities of their personnel. Respondents from these organizations are more likely than others to say their organizations make addressing potential automation-related skill gaps a top five priority (Exhibit 4). These respondents are also more than twice as likely as others to identify employee training and capability building as one of the primary reasons for their organization’s automation success.

Second, successful organizations also gather individuals’ expertise and embed it in the design of automation solutions. Respondents reporting success are much more likely than others to say their companies scale up their automation programs by using “human in the loop” solutions—that is, training automation platforms with people’s input over time (Exhibit 5).

Finally, successful organizations prioritize communication across the organization while implementing automation-related changes. Respondents from com­panies with successful efforts are seven times more likely than others to say they formally involve the communications function while implementing automation efforts, and they are more than twice as likely to say the HR function is involved.

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3. Develop an operating model that enables scaling

The responses show that large companies have automated at least one business process in an average of four functions, such as finance, IT, and customer service. As automation programs expand and grow more complex, silos within the organization can hinder performance if business areas do not coordinate closely with one another. 5 The findings suggest that successful companies’ operating models—their structures for coordinating activities across the organization—allow their automation programs to properly manage the complexity of deploying automation technologies, which makes it easier for those programs to scale.

Indeed, respondents at successful companies are more likely than others to say that coordination across business units or functions is one of the elements that will have the greatest influence on automation efforts’ outcomes in the coming years (Exhibit 6).

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As operating models become more complex, the findings suggest it’s also important for leaders to have a full view of the costs of automation programs that may span across the organization. Forty-six percent of respondents who report automation success at larger companies say their leaders understand very well or completely the total cost of ownership for their automation efforts. Just 10 percent of respondents at other companies say the same.

What success looks like at smaller companies

The findings indicate that smaller companies are less likely than large companies to have automated any of their processes, 6 but those that have done so are seeing a higher success rate than larger organizations. Sixty-five percent of respondents at smaller companies report success with automation, compared with 55 percent at large organizations. While the smaller companies meeting their automa­tion targets exhibit several of the same success factors as successful large organizations, one addi­tional factor appears to be a marker of success for smaller organizations.

As with large companies, respondents at smaller organizations are much more likely than others to consider the entire organization under the scope of automation efforts. Leaders’ understanding of automation programs’ costs also distinguishes smaller successful companies. Just over half of respondents at these companies say their leaders clearly understand the total costs, compared with one in five at other relatively small companies.

But at smaller companies, unlike large ones, another factor—taking a tactical approach and setting tangible objectives for automation initiatives—is also significant. Fifty-five percent of respondents at successful smaller companies say their organizations have established key perfor­mance indicators to track the impact of automation efforts, compared with 37 percent of respondents at other smaller companies.

Looking ahead

The three imperatives for successful automation shouldn’t be looked at separately but rather as parts of the same automation mandate. As we look ahead, leaders can take the following steps to capitalize on the potential of automation.

Identify and focus on the most critical business processes. As organizations think about incorporating automation, they should identify the processes that, if automated, will best support their strategy. For example, in healthcare services, crucial processes can be found in customer journeys such as patient access and claims pro­cessing. Organizations can benefit from looking at these critical processes and taking a systematic approach to automating them, rather than focusing on solutions to specific pain points.

Companies should view automation as a way to enhance human productivity, rather than a way to replace manual labor.

Invest in people and new ways of working. Companies should view automation as a way to enhance human productivity, rather than a way to replace manual labor. For example, using bots in contact centers allows employees to trigger automated data retrieval from different systems, thereby allowing them to focus on building relationships with customers. But before employees can work effectively with automation technologies, they must be taught how to do so. Companies should promote a culture of continuous learning while incorporating new technologies and should deter­mine what skills people will need to help the organization meet its automation goals. Implementing automation programs typically requires creation of new roles as well as modification of existing ones. That calls for a well-engineered talent-management and reskilling program.

Encourage cross-functional collaboration. Automating a process can require expertise in customer experience, digitization, analytics, and organizational design. These capabilities often exist in different parts of the organization, such as IT, finance, and analytics. Companies can therefore benefit from adopting an operating model that brings together capabilities from across the organization—in collaboration with third-party service providers and vendors, as needed—to reinvent critical processes with automation. Talent rotations, cross-functional automation labs, and other mechanisms can support such an operating model and thereby help organizations realize their goals for using automation technologies.

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