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What is RPA and How Does it Work?

Robotic process automation

Robotic process automation, or RPA, is one of the hottest tech terms right now, and, according to Gartner, is the “fastest-growing segment of the global enterprise software market.” Most companies view it as an efficient way to save time and money spent on their routine operations. But of course, there’s more to it than that.

We have compiled a short guide that includes a detailed answer to the question “what is RPA?”, as well as an explanation of its benefits, popular business applications, and some thoughts about the future of this technology. Read on, and in less than 10 minutes, you’ll feel confident the next time you’re discussing RPA.

Contents:

What is robotic process automation?

Robotic process automation (RPA) means using software robots that can emulate digital desktop work that people do — they are by no means anything like the shiny metal robots you might imagine! You can find a lot of RPA use cases daily in a wide range of routine operations. For instance, many “copy-paste” activities can be automated using robotic process automation, such as scraping data and entering it into Excel spreadsheets or filling out forms.

What is RPA in conventional automation terminology?

The IEEE Guide for Terms and Concepts in Intelligent Process Automation (June 2017) says:

RPA is a preconfigured software instance that uses business logic and predefined activity choreography to complete the autonomous execution of a combination of processes, activities, transactions, and tasks in one or more unrelated software systems to deliver a result or service with human exception management.

Yes, it’s quite complicated. So, let’s explore this automation term and unscramble it. Later on, we’ll give a simpler and more concise definition for informal use.

Let’s break down that definition of RPA by its key phrases.

rpa definition

Preconfigured software comes out of the box with built-in functionality that doesn’t require coding to enable but can be customized to a degree. A typical example is Microsoft Excel, where you don’t write a spreadsheet application every time you build a new worksheet but can build custom macros using existing features or adjust defaults to fit your business needs better.

Business logic serves as a buzzword to refer to all the algorithms and code needed to make a piece of software work with a company’s customers and servers. In other words, the algorithms involved in business logic perform behind-the-scenes data processing that is invisible to the user but critical to keep things running smoothly.

Predefined activity choreography. Sounds quite poetic, doesn’t it? This term includes a sequence of steps taken to complete actions across systems and applications. This activity can cover simple tasks such as updating reports, or more complex ones — for example, balancing taxes on inaccurate invoices. Once the needed execution steps are specified, the activity is predefined.

Autonomous execution means the completion of tasks is done by software bot(s) independently. Once the rules are predefined, the processes are carried out automatically.

One or more unrelated software systems. Robotic process automation tools use front-end applications similar to the way that people do, so they can interact with everything a person would — for instance, SAP, Internet Explorer, Outlook, Oracle, etc.

Human exception management. Sometimes employees are involved in the processes automated with RPA tools and tasked with resolving unpredicted events or performing cognitive actions. This can include a wide range of actions, from a small request for input data to a full stepping-in where a person handles the whole process.

OK, that wasn’t easy, but it’s time well spent. Now you can revisit the official full RPA definition with better clarity. But for simplicity, you can think of RPA as a software robot that autonomously mimics manual, repetitive human tasks in different applications according to pre-defined business rules.

What are the applications of RPA in business?

Studies suggest that 70–80% of responsibilities (not necessarily jobs as a whole) can be described as rule-based and, therefore, can be potentially automated with RPA tools. One can find many opportunities for implementing robotic process automation in various businesses, but there are several major industries and business functions that have a proven track record with applications of RPA technology.

RPA in Banking and Financial Services

Banking was one of the first industries to embrace the adoption of automation. Nowadays, a lot of large banks use RPA to automate such operations as anti-money laundering, customer inquiry processing, and account opening and KYC research (“Know Your Customer”). A large number of tedious rule-based tasks in these processes allow seeing the value from automating them fast.

Other applications of RPA in banking include reconciliations, report generation and various processes in regulatory compliance.

You can find more banking automation use cases here →

RPA in Insurance

Insurance is another industry that has a lot of repetitive processes that are well suited for automation. Although it is lagging behind banking in adopting RPA (or automation in general), several use cases are already successfully automated in insurance. They include various claims processing operations, policy management, underwriting, processes, regulatory compliance, and more.

See examples of automation use cases in insurance here →

RPA in Healthcare

For healthcare companies, the accuracy and compliance of all internal processes are fundamentally important, as customers’ health and well-being depend on them. That’s why the largest hospitals in the world use robotic process automation to streamline information management, insurance claim processing, payment cycles, prescription management, and other processes — which results in fewer errors and better patient experience.

RPA in Retail

Retail companies are investing heavily in automation to enhance both customer and employee experiences. Popular applications of RPA in the retail industry include fraud detection, warehouse and order management, customer feedback processing, and customer relationship management.

Cross-industry RPA Use Cases

Some processes that can be automated with RPA can be found in any industry. Here are just some of them:

  • Human resources. HR processes include a lot of information management and standardization across many systems and applications, which makes them a good fit for automation.
  • Finance and accounting. This area has many automation opportunities, as the processes are mainly rule-based and require a high degree of accuracy and speed. Some common RPA use cases in this area are order management, billing, accounting, and reconciliation.
  • Procurement. Due to the structured nature of documents and data used in the processes, procurement is an excellent choice for automation. Applications of RPA here include invoice processing, purchase order management, and contract management.

What are the benefits of RPA?


“In our banks, we have people behaving like robots doing mechanical things. Tomorrow, we’re going to have robots behaving like people.”
John Cryan, Former CEO, Deutsche Bank


There are several main benefits a company can get from robotic process automation.

First, there is no need to waste human brains on tasks that can be performed much better, faster, and without errors by software robots. That will leave people free to bring higher-value contributions to areas like customer satisfaction, innovations, and scalability.

Second, automation will improve the time and accuracy of the processes by eliminating human errors and the need to correct them. It will also result in better customer experiences, higher NPS (Net Promoter Score), and lower customer churn.

Other benefits of RPA include higher operational agility, better opportunities for auditing the automated processes, and insights into the company’s workforce that will allow to see and analyze existing issues in the processes and proactively improve them. Sounds like a pretty great deal, doesn’t it?

How to navigate the RPA tools landscape?

The landscape of robotic process automation has grown considerably in recent years. There are dozens of RPA tools available, each having different strengths and weaknesses. However, the abundance of tools creates a challenge. The more you dive into various RPA tools and their features, the more difficult it is to decide which one you need. So, our advice is: Don’t start your RPA journey by studying the tool’s features. Instead, focus on the problem you need to solve and see which tool offers a solution to it. However, you should also pay attention to these characteristics:

rpa platform capabilities

Another important step in selecting the correct RPA tools: Explore the latest research. Prestigious industry watchers create regular matrixes and overviews of the RPA market that define those companies that can be considered leaders and provide the best results. Examples of such research are The Zinnov Zones for RPA Platforms report and Top 10 RPA Software Products 2019 report by HFS Research.

What is the future of RPA?

There is no shortage of opinions about how the future of RPA will look. Judging by the current state of robotic process automation and the latest trends in its development, we can predict several ways in which it will be developing. So, what is the future of RPA?

  • Smarter RPA complemented by AI. We already see a surge of interest in the new technology combining RPA and artificial intelligence: Intelligent Automation (IA). This trend will continue in the future as IA offers much wider opportunities by automating judgment-based processes involving unstructured and non-digital data.
  • Widespread adoption of automation. Despite fears of automation and its effects on jobs, the acceptance of RPA technology in business is likely to continue growing as more organizations reap the fruits of successful implementation of RPA and AI technologies.
  • A convergence of digital and human workforces. Software robots will augment the work of people by taking on the most tedious, repetitive tasks. It will lead to the creation of the digital workforce that will operate in conjunction with the human workforce.

The future of RPA will see more extensive use of technologies like artificial intelligence, business process management, optical character recognition (OCR) and others in combination with RPA to provide for more effective automation. Even though the popularity of RPA technology is growing steadily, analysts agree that companies relying only on RPA are playing a short-term game because RPA, though an excellent start for automation, offers limited opportunities for scaling.

The future of the technology lies with convergence of RPA with machine learning, orchestration and advanced analytics that will provide scalable solutions for enterprise-wide digital transformation.