There’s nothing worst than being the “best kept secret” in an industry… sure, it sounds cute at first, but after a while it gets frustrating as people aren’t learning about you. And there’s nothing worse than being a best-kept robo secret in a market obsessed with propaganda, ignorance and bad analysts, many of whom have no clue what they are talking about.
So let’s change this for one solution vendor, Redwood Software, which has quietly gone about helping enterprises automate processes around SAP workflows. When we bemoan rigid, poorly integrated processes, it’s often borne out of legacy systems and ERP that have the effect of pouring concrete into a firm’s operations. So what better than to develop both robotic and digital automation capabilities around SAP’s R3 finance platform, helping financial leaders renovate more of that they have, without the costly and disruptive need to invest millions in expensive system upgrades that often only succeed in delivering a whole new suite of integration problems. Sounds like a simple way to make money? Well, it actually takes decades of practice and experience, so let’s hear a bit more from the firm’s CEO and Founder, Tijl Vuyk. and his Chief of Staff, Neil Kinson, about how they got here and where they are taking this very well-kept, soon-not-to-be so secret Redwood product…
Phil Fersht, CEO and Chief Analyst, HfS Research: Good morning Tijl and Neil – it’s great to have both of you talking to us today. Perhaps we can start with a little background on Redwood, where you have come from and what you do?
Tijl Vuyk, CEO and Founder, Redwood (pictured left): Thanks Phil. Well it’s been about 25 years since we were founded and we started in the application space where we were building Oracle applications. We saw the need for automating these applications because there were a considerable amount of manual activities running all kinds of processes within Oracle, and later on with SAP. When we started, we created a tool that would help customers build their own automated processes. In the last five to eight years we discovered that building these automations were a challenge for many of our customers. So we tried to productize the whole idea of automating these business processes and now we call this robotics – where we use the application’s functions to automate the processes normally undertaken by humans. I think that’s where we are. We came from a technology background where we built enterprise strength applications to automate primary business processes, and now we are trying to make this as easy and slick as possible to implement those processes without having customers spend too much money on services and maintenance. There is more to say about what we do, but these are the highlights.
Phil: Sure, so you’ve been around for 25 years, how did you end up in this automation space? Was it a deliberate move or was it something that evolved over time?
Tijl: I wouldn’t say a deliberate move but I love automation. If I do something twice, I ask myself, “can I do this easier and faster or not do it at all?” And that is the attitude we have towards automation. We automate everything we can. When you see customers struggling to get things done because there are so many manual tasks, you ask yourself “can we do this better?” And yes, we can. It’s a mentality thing – you want to find better solutions that help you achieve those goals.
Phil: We hear a lot about companies like Blue Prism and UiPath, Automation Anywhere, Kofax and a few others. But you seem to be doing a lot more than just RPA basics for clients. Why would you say Redwood is different?
Tijl: I think it’s our heritage that makes us different and our approach to automation. Our heritage is around enterprise systems automation where you cannot afford any timeout. If the process stops our companies no longer operate. That’s the kind of environment we come from – enterprise class software for customers that have enormous demands, where RPA vendors are screen scrapers and you can give them any name you want, but they work through the user interface which is not really a solid basis from which to build automation.
If you think of business critical processes where failure as ‘not an option’, then basic RPA is not a solution. Only instances where failure is ‘not a problem’ (i.e it is not mission critical) is this basic RPA capability applicable. But if you are looking to replace people with automation then something you should ask yourself is “what happens if the robot stops working? If I don’t have those people anymore to do the work manually?” The feedback I get from RPA customers is that the robots do fail, and you ask what they then do, and of course, they rely on humans to take over.
At Redwood we look at process automation differently and if we automate processes then we automate them one hundred percent or as close to that as we can get. And they always run. There is no issue with our technology, it is more stable than anything. I think our customers sometimes forget it is there because it’s so efficient. If you talk to our references, there is also little or no maintenance required on the robots. That’s the big difference. It is basically the lower cost of the ownership, elimination of the risks involved in running a robotized enterprise and our approach to these problems.
Phil: I think in the early days of this recent surge in automation when we started talking about the RPA concept, we talked a lot about the intelligent automation continuum, where enterprises could start with rudimentary RPA then gravitate to more mature automation. They could start automating the automation and evolve to a cognitive, then eventually an AI strategy. Do you think this is still a logical progression, or do you think clients can now experiment with all facets of the continuum at any time? How do you see this truly evolving in your experience?
Tijl: I think you are mixing up a couple of items. I think the role of AI, if it exists is maybe a step in the process. It is not ‘The process’. You will not have any AI that will do the accounting for you for example. AI is used in pattern recognition in some form. When the pattern is recognized it kicks off a process that can do whatever it wants. But all these processes are more or less set. AI will play a role in a step of the process. If you think “oh I am going to delve a little bit in automation” then you are destined to fail. What we see is that if automation is not put on the agenda at the executive level then it becomes just one project silo and then it stops. I think automation is a way of life, you need to give it constant attention because it is not over until everything is automated. But then business might change. So for me, it’s really about continuously automating and looking for the next thing to automate.
At the moment people run a project and they stop because the project is finished and they don’t continue with the next project or expand the current footprint. I think that is the biggest danger to the success of this idea of automation or robotization. If you start out with the wrong tool then basically you start out with the wrong foundation for future development. We have a more holistic view on the approach. We want to create an environment where people can automate at an enterprise level and don’t get dragged down by the cost of maintaining and keeping things running. It needs to be low cost, easy to get started, efficient automation.
Phil: Tijl, there’s been a lot of hype about job elimination in the industry. When we look at the operations business that I’ve come from – BPO outsourcing, shared services, captives etc. – we have essentially grown up on efficiency and cost reduction, and as much as we hate to admit it, that’s been the core of our industry for the last couple of decades. Do you think that the emerging concept of automation is going to move the conversation to more about business value, or do you think we are perennially stuck in a cost reduction job elimination scenario?
Tijl: I think that outsourcing is a mistake and automation is the way to fix that mistake. What happens when you outsource is that you lose control. You think you give the control to someone who does your menial jobs. But then people have the upper hand because you are dependent on them.
If you eliminate all your outsourcers, by automation, you gain full control of your processes and full flexibility whilst saving cost. For me, automation is a way to regain control of your primary business processes, whilst making them more efficient, more flexible and more supportive of the business instead of being dragged down by an outsourcer, and a long contract that is designed to make things difficult.
We have seen customers building these “hells” as they call them. They have created hell and now have to live with it. I think automation is a way to reverse the wrong decision of ten years ago and yes there is significant value beyond only cost reduction.
Phil: Looking into your crystal ball and thinking about where we have come from, the current state of the market and all the noise and conversation that we are hearing today – what do you honestly think we will be talking about, and where do you see the industry in three years time?
Tijl: This is where I like to introduce you to my crystal ball reader, Neil…
Neil Kinson, Chief of Staff, Redwood: Thanks Tijl – ‘Mystic Neil’ here…. we’ve talked a little bit about the dream of The Robotic Enterprise and if you think of a parallel in industries that are being disrupted effectively you see the notion of people doing repetitive mundane manual activities in a back office. This should be as unusual and as unthinkable as it is today to going into a shop to pick up a DVD or a video. My kids wouldn’t understand the idea that you actually drive somewhere, pick up a DVD, watch it, take it back – or take it back late and get a fine. You know that’s an industry that grew up and disappeared in 25-30 years. So is it three years? Probably not Phil. Probably longer than that. But you know that’s certainly the vision – we will see some organizations where that notion is frankly ridiculous and when you think about it in 2017, when you see hundreds and thousands of people doing activities that you can’t believe people still do today. Well that is something you see in the back offices of some of the world’s largest enterprises. So as we look into the crystal ball we see that changing and we see ourselves playing a big role in making that change.
Phil: Okay. This has been a good conversation, but I’d like to pose one final question about what you would ideally like to see change in this industry. If you had one desire that could change attitudes or focus in this industry, what would it be? What would you change to make your customers, partners, and competitors all think differently about the way we are looking at automation today?
Neil: The key thing for me is where is your ambition? If your ambition is to get marginally and organically better than automating a few arms, legs, fingers and toes in terms of driving out change then that’s fine. But if you really want to check the future of your organization by being truly world class and reinvesting in serving your customer, not through an automated agent, but actually through real people who are passionate about the success of their customer, then focus on that. Focus on the end-to-end, on what you are trying to achieve and how you can achieve that rather than building and just employing bots for the sake of it. I often hear the term ‘Center of Excellence’, which when you drill into it is actually a ‘Center of Expense’. Because people are moving the cost from one area to another and you are actually moving people who are experts in executing the process into experts into how do they deal with a situation when a robot fails.
That doesn’t improve customer intimacy. That doesn’t drive you towards continuous process improvement, and that doesn’t help you serve your customers better. Yes, it drives out some operational cost. But let’s take a step back and look at the end-to-end process. How can you improve the quality? How does that fit with your sourcing strategy and staffing strategy over the next ten years. You know you need to raise the level of ambition and you won’t get that truly by dabbling and saying “yes I’ve done robotics” or “we are looking at robotics .. we must buy some”.
Too many people are approaching this from the point of view “this is something we need to do”, not from the point of view “this is the outcome that we are looking to achieve within.”
Phil: Okay. A very good answer! Many thanks Tijl and Neil. I really appreciate your time today and I look forward to sharing our conversation with the HfS audience.
(Cross-posted @ Horses for Sources)