Is RPA Right for Your Business?
From out of nowhere, the term “Robotic Process Automation” is suddenly one of the must-have technologies for businesses that operate at scale. Despite being one of a set of tools that have been around for years, it has had a serious makeover with the sprinkling of some Artificial Intelligence fairy dust and a new love for the ‘bot’ in business.
There are a few case studies around. In 2015 the London School of Economics produced some research around an implementation in Telefonica O2. This suggested a 650%-800% ROI in three years – who wouldn’t want that result?
It’s undoubtedly true that many back-office tasks are repetitive and costly. Where systems don’t have suitable interfaces for integration, there are many areas where data is double-keyed into various systems. How many times as consumers do we end up giving the same information about ourselves to different parts of the same organisation (especially government!) because of organisational, process and technological silos?
If this re-keying can be accomplished by an automated script, it is pretty obvious that it would be faster than a human operator and once it’s working well can be scaled more or less ‘for free’ to meet peaks in demand. This is a simplistic view, of course. Many of the things that we take for granted of human operators, the ability to notice unusual or erroneous information, translation of spelling or context errors (understanding that New Quay and Newquay could be the same place, if they’re working on data from Cornwall, but not the same place if it also includes Wales) are not present in automated processes unless very explicitly expressed. There are improvements in this area through the introduction of Machine Learning tools but it’s very early days for those.
The LSE study is interesting in many ways. One that stands out is the clear antagonism between IT and Business Operations – reading between the lines there is an evident frustration at what was seen as a condescending and negative approach by the IT team, a “not invented here” mindset.
This is definitely an issue in many IT teams. I lost count of the number of surveys and panels involving IT leaders bemoaning ‘shadow IT’ as the biggest risk/problem they had. The same people would also gripe about the lack of innovation in their company. My take on it now is exactly the same as it was then. Shadow IT is what happens when the IT department is not talking to to business in the right way. This is a structural problem that has to be addressed. In the LSE example they set up a comparison between the IT department’s method of automation and the RPA vendor’s approach. The RPA way won the day, and the cost difference was the need for IT resource for the former. The RPA project didn’t suffer from these costs, as
“The Head of Back Office would just reassign some people from a process improvement team to a process automation team with zero effect on the Back Office budget.”
I love companies that can reallocate people from one task to another with ‘zero effect’. Doesn’t say much for what they were doing beforehand, does it?
So there are often organisational issues that can prevent a sensible adoption of these tools, or looking at it from the other side, can prevent people looking at the bigger picture because they fear their Big Idea will be shot down by an IT team. When IT teams are sidelined in this way, very important issues can be missed. For example, problems occur with RPA when Software-as-a-Service (SaaS) interfaces are changed, These changes should be communicated and tested, but if the RPA technology has been implemented without the knowledge of the IT team that most often run those change processes, they are missed. This can introduce data quality problems, or a complete breakdown of a process which may take days or weeks to resolve. This can be a thorny issue if the company has let go of all of the staff that could have taken up the strain.
If we’re honest with ourselves we know that business process are often poorly documented and this can lead to a false expectation around RPA. If I had a pound for the number of times I’ve found that a field in a system is being used for different reasons by different departments I’d have, well, several pounds. This is not a problem at the time because it’s being managed by people who can recognise it. Introduce an RPA tool (especially through a third party that doesn’t know the process) and it can blow up in your face.
There are some good use cases for RPA. Legacy systems with an existing retirement plan that do not have any API or interoperability capabilities can have their lives extended or the cost of ownership reduced by a tactical introduction of RPA. These systems are unlikely to undergo changes to their UIs and the data sets are usually well understood. But again this is not a simple business case. It is not simply a matter of removing a swathe of manual operators. Governance and quality management must be introduced to ensure the robotic process is achieving its objectives.
The bottom line is that cost savings from RPA are quietly leveraging further technical debt that incurs much greater costs in future. They often assume a removal of a large number of operators in a very short space of time in order to build a business case. The business cases can be manipulated like the O2 example where people are reassigned with ‘zero’ cost. Wider issues such as security and business continuity are rarely considered – each of those RPA considerations could be the subject of a blog on their own.
My conclusion is that RPA is not a replacement for a digital strategy that builds architectures in systems and data that allows interoperation between platforms and understands the value chain in an organisation. It is a useful sticking plaster but care should be taken – temporary structures have an alarming habit of becoming permanent. There are undoubtedly some interesting developments in the machine learning field that will improve this tech, so it remains one to watch.
Google Cloud's Position in the Hyperscalers War — The CEO's Perspective
The Rising Role of Tech Carbon Emissions in Climate Change
The IT industry hasn’t been a major target of climate campaigners, and there are lots of good reasons why — its major players are poster children for carbon neutrality. Most of the big West Coast companies accepted straight off the dangers of climate change, the connection with emissions and their responsibility to reduce their own.
Facebook and Apple score particularly highly in most of the assessments of power sourcing from renewable energy, while Google is the world’s biggest corporate purchaser of green power. Microsoft recently made a pledge to remove all the carbon it has ever been responsible for emitting. The International Energy Agency (IEA) calculates that the overall ICT industry is responsible for half the global purchasing of renewable energy.
It would be misleading to say the issue is under control, however. A number of recent studies show that total emissions from the sector are not only growing fast, but are about to grow even faster. The reason is simple: burgeoning growth.
The Power-Budget Equation
If we start at the beginning and look at total power consumption by IT, including client devices, servers and the networks that connect them, in total they take up about 4% of global energy consumption. The client device side consumes less than the service side of servers and transmission, according to a study by the Paris-based researcher the Shift Project (based on 2017, and quoting researchers Andrae and Edler). In contrast, aviation, the subject of Greta Thunberg’s flight shaming, is commonly estimated to account for around 2.0%–2.5% of emissions.
Streaming Takes More Power Than Watching TV
Greta is not yet shaming us into cutting down on putting videos on YouTube or watching Netflix on account of the carbon footprint they cause, but should she be?
Rapid increases in data traffic and more power-hungry ways of consumption will quickly push up IT electricity consumption.
Central to this growth is video streaming, which has a CAGR of 46%, according to Cisco, with IP video traffic projected to make up 82% of all IP traffic in 2022. Sandvine, another industry source of statistics, says that in 2019 video equated to 60% of the downstream traffic on the internet.
Video streaming interrogates a server individually, so taking more power than television broadcasting, which continues meanwhile in parallel. The Shift Project says the carbon footprint of global video streaming is as big as the total emissions produced by Spain.
More viewing is taking place over mobile networks, whose signal propagation takes more power than relay through fixed-line networks. Again, according to Cisco, mobile data traffic is growing almost twice as fast as fixed, while Ericsson in its latest Mobility Report in November forecast that mobile data traffic would quadruple globally by 2025.
There are a few trends towards the power economy; viewing on small screen mobile devices, for instance, takes much less electricity than on big television screens, but on the other hand the move towards 4K definition will increase both the amount of data used in the signal and the power consumption of the screen. The Natural Resources Defense Council in the US believes that 4K screens typically use 30% more power than HDTV screens.
Trajectory of Growth Difficult to Pin Down
There is a good deal of uncertainty about how fast the upwards trajectory of total power consumption from the IT sector is going to be. One researcher who has looked in depth at the question is Anders Andrae, whose data was used by Shift for the overall industry picture quoted earlier.
In September 2018, in an article based on his research, the science journal Nature quoted his “expected case” scenario of this total rising to an alarming 21% of global total electricity consumption by 2030, with the tempo still accelerating at the end of the forecast. In his “best case” scenario, which involves a lot more implementation of power saving, the percentage was 8%.
These figures are controversial. In recent years datacentre power consumption has not increased substantially, as the new hyperscale datacentres that have come into use are much more efficient; Google has held down total power despite much higher data throughput. Hyperscale centres now make up close to half of all datacentre usage, says the IEA.
What is not clear is how far this rate of efficiency gain can continue.
Andrae’s studies were based on figures dating from 2013. In updating his figures, the Shift Project said in 2019 that he had underestimated the annual rate of power consumption, which it believes was around 9%. It sees a similar rate of increase through to 2025.
Traffic Grows in Places Renewables Do Not Figure
Another reason to believe that the emissions from data traffic growth will rise fast is territoriality. Data flows are getting much bigger in places that rely heavily on fossil fuel electricity generation, notably coal.
China has about 7% of global datacentres. Cisco says that Chinese mobile data traffic grew 180% in 2017 alone. A recent study by Greenpeace and the North China Electric Power University suggested that China’s datacentre power use would grow by two-thirds over the next five years, to a level equal to total power consumption in Australia.
Though the big Chinese internet players such as Tencent, Baidu and Alibaba do comment on their environmental impacts, they are scant on statistics on the level of renewables usage — there just is not as yet the climate concern shown by their big US West Coast counterparts. The Greenpeace report said that three-quarters of current datacentre power in China is derived from coal. China has a lot of renewable power, but most of it is in the Gobi and in the west of the country, whereas most of the datacentres are near the east coast, and are currently often not able to tap into much renewable energy.
The Shift Project calculated from this that while a Chinese person on average consumes about 12% of the average digital usage in the US, the emissions footprint in China for the same data volume would be 2.5 times as high.
I am not focusing here on the network side of the equation, but in brief the same factors play out as with servers — more data traffic will mean more power consumption. Most European telcos are moving towards renewables, but in many other countries they are not, or do not have access to green energy.
Should Consumers Be Made More Aware?
Greta Thunberg has yet to shame us on carbon emissions from our internet use, and indeed is a user of social media herself.
Though it is commonplace in the IT industry that servers take a lot of power, it is not very well known among consumers. The Shift Project calculated that watching Netflix for two hours would be equivalent to 6.4kg of emissions, about the same as driving a car for 24km. A 10-hour-a-week Netflix habit would mean 1.6 tonnes of CO2 a year, about the same as flying one-way from London to, appropriately, Los Angeles.
These remain complex and individual calculations. Netflix, which in 2015 claimed, improbably, that watching its streaming services caused fewer emissions than reading, is not in some ways a good example; Amazon Web Services, which manages Netflix’s playout, “pushes out” a lot of the Netflix catalogue to forward distribution servers installed at local ISPs, so transmission levels are reduced, and the power budget linked to that of the ISP.
However, it is not difficult to conceive of a system emerging where consumers will increasingly be presented with assessments of how much carbon emissions their viewing will produce, just as the relative CO2 emissions levels of different flight options may be shown on comparison sites, and producers of many consumer electronics devices already prominently show their power consumption levels.
In the history of climate change and our reaction to it, 2019 will probably go down as the year a lot more companies, at least in many developed countries, faced with mounting evidence of the speed of climate change, decided to take that message onboard and do their part to measure what emissions they are responsible for, and to mitigate and offset them.
Making clear to consumers the carbon impact of the internet and how it is being mitigated has only just begun.
A couple of hints: It is most efficient, in energy terms, to watch video on a small device on WiFi from a fixed-line connection. Avoid choosing high-definition options, for video or when taking pictures. And perhaps upload a few less.
The Tech for Sustainability and Social Impact Group, set up in IDC EMEA last year, helps IT companies and end users in their attempts to use technology to make their businesses more sustainable. Please contact Marta Muñoz for more information, or head over to https://www.idc.com/eu and drop your details in the form on the top right.
Phone Weakness Threatens Japan 5G
July’s Olympic Games would seem the ideal time for Japan to launch 5G services, even if it would be over a year after the technology went commercial in South Korea.
But if Japan’s most famous electronics name, Sony, does not slow its current downward trend in smartphone sales, it will be out of the business by then under its own brand.
Sony’s domestic share has been falling by around two-fifths year on year for four quarters in a row. Abroad, its demise is even more rapid and it has withdrawn from many markets including the US (see the accompanying chart with data from IDC’s Worldwide Quarterly Mobile Phone Tracker).
Shareholders have been saying for some time that Sony should get out of the business, as it is losing so much money — $879 million in the smartphone division in the financial year to March 2019. That’s over $130 per smartphone sold.
But Sony’s new head, Kenichiro Yoshida, has so far refused, saying the smartphone unit is “indispensable.”
Taking Losses to Stay in 5G
The main reason, he quotes, is 5G. That is the conundrum that Japanese consumer electronics now finds itself in. To stay in the game in 5G, Sony will need to continue to lose money.
Compare that with Japan’s industrial rivals. In South Korea Samsung is using the domestic market as a means to get ahead in 5G smartphones globally by dominating the premium market. It has done just that, and the home market is already 50% 5G.
China is beginning to roll out 5G in a big way, and the Chinese phone brands are moving to meet the challenge to bring 5G smartphone prices down quickly, which will give them an impetus within a year or two in other parts of the world.
It should really be plain sailing for Japan getting 5G going. Japanese buyers like to buy home-made products, and they buy expensive phones, even if there was a drop in top-end Android sales in 2018 following a ban on bundling phones with their use in postpaid arrangements.
Japan covers a small area, with a high population density in its cities, making it well suited to the rollout even of mm wave infrastructure — similar to South Korea on both points.
Local Players Are Splintered and Lack Focus
None of the other Japanese players look well positioned to take a dynamic role in local 5G, however. Sharp, currently the largest local Android brand, is no longer Japanese-controlled — it only sells phones in Japan and since 2016 it has been owned by Hon Hai, the enormous Taiwan-based manufacturing house which makes many iPhones.
Of the other domestic brands, Fujitsu and Kyocera are big industrial groups typically present across a range of products but without a commanding presence in any one — including phones. The only phone player beyond Sony to have a consumer electronics focus was Panasonic, once a force in the global phone market, but now it hangs in there in the local market with just a marginal share.
Sony Makes Money as a Camera Module Supplier
For Sony its decline as a smartphone brand is bittersweet. It lost its place by being undercut by Chinese brands abroad and Sharp at home, but also very arguably through a lot of management failures, with a poorly delineated smartphone portfolio and lack of effective marketing.
It still has technical expertise and top class manufacturing, and is profiting from the current arms race in smartphones towards more high-performance cameras. Bloomberg reported in December that Sony cannot keep up with global demand for its camera modules, in which it has around a 50% global share by value.
Buoyed by its success in components and in its semiconductor division in total, and with the PlayStation, Sony may continue to take the losses on phones if it can fend off its shareholders. As with the other players in the local industry, being part of big industrial groups means businesses can muddle on, even when some radical reorganization and consolidation is called for.
That sort of reorganization is rare in industry in Japan, which is settling into a sort of comfortable middle age, no longer ambitious in many export markets. For the younger generation that may be no bad thing, as they face less of the conformity and the sacrifices of the “salaryman” generation, leaving those to China’s nine-to-nine, six-days-a-week work norms.
But with an ageing society Japan needs to think of how to make ends meet too, and its current economic malaise is held up around Asia as an example of what everyone else should strive to avoid.
Tech moves fast and so does the process of “creative destruction” — Japan cannot afford to rest on its manufacturing laurels, remarkable though those may be. The country has taken a heavy hit from the rise of the smartphone and the corresponding decline in sales of cheaper compact cameras. According to CIPA, a local industry group, digital camera shipments by its members dropped by 84% between 2010 and 2018.
Japanese Industry Needs to Keep Up
For a country as focused on high-tech manufacturing as Japan, 5G may prove to be an important element in its future in industrial technologies. A failure to get going might, for instance, have negative repercussions for Japan’s role in robotics, in which it is currently the global leader in export sales; the low latency of 5G signals will be crucial for many robotics applications. It could also affect the place of the Japanese automotive industry, a major exporter, in connected vehicles.
On the other side of the 5G equation, however, Japanese mobile operators are keen to get on now with deployment, despite the slow start. Last autumn, both DoCoMo and SoftBank’s network Yes! announced they would bring forward their launch of service up to this year. SoftBank said it would accelerate its rollout by two years, targeting 60% population coverage by 2023. DoCoMo, meanwhile, is targeting 10,000 base stations by spring 2021.
Here the interconnections of the big industrial groups can bring some advantage; Fujitsu has links with the operator DoCoMo, and they can be expected to work together on 5G. Kyocera intends to ship midlevel 5G phones for operator KDDI. And soon NEC will enter the 5G infrastructure market, and SoftBank will install its equipment. With the government not keen on letting Huawei have a role, Ericsson, Nokia and Samsung will provide the rest of the network equipment.
Foreign Brands See a Chink in Once-Closed-Off Market
So Japan will get 5G all right before the Olympic Games kick off in Tokyo in July. But will it be to the advantage of foreign smartphone brands? Painfully for a country with top notch consumer technology, the success of 5G may imply letting foreign companies take a bigger part of the phone market. Apple has long been very successful in the country, a rare example of the Japanese preferring foreign products, and holds close to half the smartphone market. The timing of the Japanese 5G launch will be fortuitous as it is just a few months before the expected arrival of the first 5G iPhones this autumn.
Apple to the 5G rescue?
In Android, key foreign brands have some of their lowest shares anywhere. Samsung has less than 8%. Smartphones from Huawei and OPPO are widely available, but their sales are not significant to date.
Xiaomi recently announced it would enter the market, and the Chinese New Wave brands could gain share.
The beleaguered Japanese players are going to have to fight to hold their own.
If you want to learn more about this topic or have any questions, please contact Simon Baker, or Kazuko Ichikawa or head over to https://www.idc.com/eu and drop your details in the form on the top right.