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Compliance

As Robotics Becomes Finance’s Foundation, Governance Becomes Key


A Q&A with PwC’s Ryan Martin, Digital Risk Solutions Intelligent Automation Principal, and Jenna Switchenko, Digital Risk Solutions Intelligent Automation Director on digital labor programs and RPA governance.

©AndreyPopov/ISTOCK/THINKSTOCK
FEI’s Manager of Technical Activities Tom Thompson spoke with PwC’s Ryan Martin, Digital Risk Solutions Intelligent Automation Principal, and Jenna Switchenko, Digital Risk Solutions Intelligent Automation Director about digital labor programs and RPA governance.
Tom Thompson: PwC discussed their RPA Risk and Control framework on a recent conference call with FEI’s Committee on Governance, Risk and Compliance and Committee on Finance and IT’s GRC Subcommittee. Why is the framework an important consideration in a RPA journey?
Ryan Martin: The governance, risk, and control mindset is really one of the top items that we've seen as a lesson learned from our clients when standing up a robotics or digital labor program. We have seen clients that have not had an effective governance, risk and control program in place that they very frequently can't scale. They stay in a pilot or proof of concept mode. They don't feel confidence in that they are identifying the right opportunities, that they're prioritizing the right way, and that they're doing it with an appropriate risk managed process.
Jenna Switchenko: I’ll add on a bit to what Ryan said. I think it's really about building a governance program for a digital labor program of the future. It's critical to embed control points into the design of the program, and get the governance established early on. You will then be able to demonstrate to key stakeholders what the bots are doing and the control that you have; not only over the bots, but over the entire program. Being able to demonstrate a well-governed and controlled program is key to getting buy-in from all of the various business units and stakeholders that may be looking to use the digital workforce.
Martin: What we have said in the past is thinking in terms of strategically automating. If you only automate tactically, you end up with a lot of projects that are one-off and siloed.
The second piece is: what does the program look like longer term? Having that strategy, which is driven by business outcomes and not by trying to find a place to put a new technology.
Thompson: Companies really need to think in terms of where they're going to invest now versus where they might want to delay that investment for future pay-offs. What are some of the areas that you're seeing where companies are deploying RPA now versus where they might be holding off?
Switchenko: Fundamentally, I think robotics is going to be the foundation of any company’s digital workforce. We see this becoming a business imperative. Broadly, there are a lot of areas and capabilities that lend themselves to RPA, given the nature of the data and process. At the task level, processes that are standardized, rules-based, high-volume-type activities, are usually great candidates for RPA. 
Martin: If we think fairly medium term, I'd say three to five years away, a lot of organizations should be thinking about at least robotics, if not a digital labor program as being part of their culture, part of business as usual. I would say in terms of making an investment, many clients are thinking about how to get started. It's not a light switch where I can just wake up and have digital workers be part of the culture.
There has also been a real shift, a very appropriate shift, around where these technologies are being applied, and why. There's been a maturing of the business case and value driver for why organizations are making the investment.
That's where clients think about starting down the digital labor path and making it part of the culture in the future and finding the right opportunities where they can drive value to the business to get uplift to revenue, customer service, job satisfaction, better capacity, faster speed to market and, at the same time, potentially some cost implications to how they drive their business.  
Thompson: For companies that are now moving from processes that for years were owned by one group or maybe even one person, to now having it more democratized, what are some of the key considerations around that?
Martin: When we think about that governance structure, really there's everything on the spectrum from fully centralized to fully decentralized. At the edges there certainly are some companies that fully centralize the governance structure. What that can do is potentially slow down the innovation process, because everything has to come through the center. It also has the potential to disconnect the build and maybe, even the evaluation of automation opportunities from the business, because it's done within the center. However, there's a higher likelihood that everything is done fairly consistently because it's done by the center and could be more tightly controlled.
On the complete opposite side of the spectrum, you could move to a fully decentralized model that has a higher likelihood that innovation is occurring from the ground up, because it's occurring out in the businesses. But, that has a chance of running too high.
We find the vast majority of clients end up somewhere in the middle, which we would call federated or democratized. What we generally find is that the center is driving consistency standards, frameworks, enablement and the distributed piece of that that's out within the businesses is driving ownership, execution, prioritization and they scale, depending upon how much opportunity they have. They have the P&L impact. They understand the processes.
Switchenko:  Ryan, what you just articulated makes it incredibly important to ensure that as those roles and responsibilities change and you're using the federated model, that the processes and the control owners and the responsibilities are all clearly defined. Because you can imagine, with all of that change, there are control points or responsibilities that can be dropped as they're migrating from the center into the business.
Also, I think there's an opportunity for the first, second and third line of defense to understand these risks and how they're going to address those across the firm. I think all of this change presents an opportunity to take advantage of the technology, but it is something new and there are additional risks that are introduced that the first line and the second line and the third line are going to want to really look at and think about the impact on the organization.
Thompson: How do you see RPA impacting audits, both internal and external, in the future?
Switchenko: I think digital labor presents a huge opportunity for internal auditors. I think it's a technology that they can use to really optimize their function and to really drive some value to their business partners. For example, expanding sample testing and going from a point-in-time tests that may have used as part of their audit and going and looking at full populations instead of samples, and really identifying key risk areas and starting to drive value back to their business partners. There's also an opportunity for internal audits to partner with their key stakeholders to make sure that they've developed a well-governed and controlled program.
Martin: From our external audit perspective we have a significant program underway in terms of tech-enabling our external audit at PwC. That is bringing all of our digital capabilities to the external audit and included in that is automation capabilities, as well as artificial intelligence and machine learning.
In internal audit, currently we’re limited by how much value we can really provide. There are typically capacity issues and resource constraints that an internal audit can't be everything to everyone. When automation is available as a tool, they can think differently about how they perform those reviews and how the reviews are done in terms of providing value to the business.
Thompson: How are companies addressing the potential skill gap? Are there any other human capital considerations when implementing RPA?
Martin: Thirty eight percent of jobs are at risk for automation by early 2030. We really mean thirty eight percent of skills are at risk. What skills do we need to build for the future to have our employees satisfied in their jobs and excited about the future? To make the future a reality, we need those skillsets. And in many cases, those skillsets don't exist.
Switchenko: At PwC we’re going through a massive upscaling of our people.  We've implemented a number of programs that are really digital accelerators, to try to get people comfortable with not only RPA, but all the other digital technologies that are out there, so that we can really get ourselves and our firm ready to support our clients through this journey.
Similarly, we have seen a lot of our clients starting to think about upscaling, whether it's training or education sessions, to ensure people are aware of the technologies. And there are a number of different ways that we've seen firms do it. For example, PwC has a digital fitness app and it scores individuals on all things digital, including RPA and AI.  It tailors a training program for each individual to increase their digital IQ.  This is one of the many ways that PwC is tackling the skillset gap because we do think it's not going to be possible to keep pace with hiring for these new technologies, rather we’re identifying current skills of the current workforce’s digital aptitude and boosting their digital fitness through education and training.
Martin: To Jenna's point, you can't just go out and hire. Not only are the skillsets limited, in many cases, they don't exist. And on top of that, I'd also add one more comment about PwC’s approach. We have really strong, impressive talent within our organization. And I would actually argue, if I were to take our PwC staff who are great business advisors, who understand our client organizations, understand what's happening in the market, have broad exposure to the challenges that our clients are facing and upscale them on a lot of the areas that relate to the digital IQ and I can improve the skillsets and tools that they have, I would argue those individuals are much more dangerous. That's the type of workforce that we need. And I think also, to help move the organization towards the future of a digitally enabled business.
Thompson: To your point about these problem solvers, the more time they have to solve those problems, rather than doing the mundane tasks, it presents an opportunity not only for them as staff, but also for the business. So what are some of these opportunities?
Martin: That's the perspective that we have as well: building that skillset, the digitally-enabled athlete, that has that business understanding. And at the same time, has the right blend of digital skillsets and those other technical capabilities. And, frankly, doing it in a way that is also thinking about the learning process in a different way.
And to Jenna's point, is a lot of it becoming more a part of your daily life. But you can't sit down and take a two hour training every single day. How can we constantly be learning and constantly upscaling?
Even with this Digital IQ app, you do an initial assessment, it’s impossible to score a perfect score. Which I think frustrates some people, but there is never a point at which you should stop this learning journey. And I think that's the whole point. You don't just take the assessment and say, ‘I'm in great shape.’ It's ‘I take the assessment, and there are areas that I can continue to work on and adjust and react.’ That constant machine of continual learning, I think is more important than ever.