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Ready for another crisis? Economic momentum is fading, and the odds of the US falling into a recession in 2023 are now greater than 50%. For businesses, this could mean job losses, a manufacturing slowdown, a decline in customer spending, and cuts to capital spending and marketing and research.
It's not a rosy picture, but recessions don't last forever. So if you want to weather this latest storm, you need to take a more deliberate approach to your digital transformation strategies. This means automating your antiquated business processes and investing in application-agnostic tools that can give you a competitive edge during uncertain times. Put simply, automation and particularly robotic process automation (RPA) could be the key to surviving and even thriving during the upcoming recession. Let’s dive into why.
Why Experts Say You Should Invest in Digital Transformation During a Recession
Recessions cause businesses to make some tough decisions. Where and how can we cut costs? How do we do more with less? As a result of answering these pressing questions, maybe businesses opt to spend less. Of course, this is a logical response - when risks are high, it makes sense to be more conservative. But is this true?
According to economic experts, reducing digital transformation spending during a recession can actually harm your business. It's the ultimate paradox. Increasing investment in new technology while budgets are shrinking seems counterintuitive, but it can actually mean you come out on top. But why?
Research firm Gartner analyzed previous recessions and found that companies willing to take risks and spur innovation outperformed those who focused on cost-cutting conservatism. Or in other words, you can't emerge as a leader in your industry if you stagnate. And more than that, if you cease investment in the technologies that could help you survive, like automation, you might not come out to the other end of the recession at all.
We saw this during the COVID-19 pandemic. COVID-19 sparked massive unemployment, caused widespread disruption to global economies, and plunged the US into a two-month recession. However, companies, in aggregate, didn't decrease spending on digital transformation. In fact, a study by McKinsey found that the adoption of digital technologies accelerated by several years.
Of course, the demands put on businesses during this time were unique. Faced with lockdowns and stay-at-home orders, investing in digital technologies was necessary. But even if most of this digital transformation was by force, it paid off. The companies that invested in automation and digital communication channels came out stronger.
And while the coronavirus recession was the shortest in US history, we have no reason to believe the next recession will be this short. Most recessions last a while. Before 2020, the previous shortest recession was six months long. And the average US recession lasts 17 months. With this in mind, businesses today need to invest in tools that will make them more resilient to the economic pressures on the horizon.
Future-Proofing Your Organization Through Economic Downturn
Okay, so continuing to spend or boosting spending on digital technologies can increase your chance of survival during a recession. But where exactly should you be putting your focus?
- Automation tools that don't depend on any particular worker or machine.
- Minimizing labor-intensive tasks.
- Automating business processes and client services.
- Improving customer experiences.
- Strengthening information security.
Let's look at how you can protect your digital roadmap with automation.
Prioritize Your Digital Transformation Roadmap
Having a clear goal in mind is key to a successful digital transformation roadmap. And this is especially true in times of low-risk tolerance. This means you need to reevaluate your goals going into the downturn and focus on the initiatives that will have the most significant impact.
This typically means changing your workflows, approaches, and processes to make them faster and simpler. It means automating processes with RPA to permanently reduce the cost of doing business and safeguard you from layoffs and an unpredictable labor market. Finally, it means investing in solutions that help conserve cash, reduce uncertainty, and boost resilience in the long term. Simply put, you're far less vulnerable to economic risks when you're not dependent on costly labor and antiquated (and increasingly inefficient) processes.
How RPA Can Help Recession-Proof Your Business
No matter the sector, robotic process automation can help boost productivity and efficiency during a recession. Here's how.
Let Bots Do the Tedious Work
Software bots allow humans to work on the things they excel at, while robots handle the stuff that gets in the way. Put simply, when people have to spend countless hours on mind-numbing repetitive tasks, like data entry and copying and pasting information between systems, they have far less time to spend on work that actually uses their skills. This is bad for business for several reasons.
First, let's consider the impact of time spent on repetitive tasks during times of economic uncertainty. In an economic downturn, job eliminations and hiring freezes are the norms. For example, an estimated 22 million jobs were lost during the 2008-2009 financial crisis. The simple fact is that employees are expensive, so getting rid of them is an easy way to save costs.
For the employees left in the business, this means they often have more work on their plate. Business functions like invoicing, accounts, payroll, customer onboarding, and data entry and validation are critical and must happen regardless of the economic landscape. But as the work piles up, workers are more likely to make errors that result in further delays and harm the bottom line.
Second, we have the impact on innovation. During a recession, the remaining workers spend even more time on repetitive tasks and even less time on creative work that can spur innovation. This means companies are always fire-fighting and risk getting left behind by the competition.
Boosting Efficiency and Productivity
RPA bots excel at handling routine, repeatable, rules-based tasks. And these bots use various technologies to do this. For example, optical Character Recognition (OCR) can scan documents to extract information from almost any format and input the data where it needs to be.
RPA drives productivity because bots can complete the same tasks as humans but up to 20 times faster. They also work 24/7 and don't need breaks. And when work is done more quickly, it creates the capacity for more work to be done.
Humans make mistakes for all sorts of reasons. Maybe they're distracted, tired, stressed, or misunderstood the task at hand. By contrast, RPA bots are 100% accurate and 100% consistent. They're also 100% compliant with policies and procedures, so you don't have to worry about data privacy blunders.
A Scalable and Resilient Workforce
RPA is fully scalable, allowing organizations to respond quickly to spikes or lulls in workloads. This makes organizations far more resilient in uncertain times because it reduces the need to hire new employees or the need to incentivize existing employees to stay put. Bots can also be deployed much more quickly than ushering in a new hire. From interviews to bodies in the office, it can take several weeks to even months to hire a new worker. In contrast, an RPA bot can be up and running in minutes.
Reducing Costs and Boosting Employee Engagement
RPA bots can reduce costs because 10 bots can do the work of 100 people. This can help companies thrive despite layoffs, but it can also make the workplace better for the remaining staff. Freed from tedious tasks, existing employees can focus on value-adding activities that drive higher job satisfaction.
Making Systems Play Well Together
Beyond the specific benefits of RPA, as a technology, it's often a better choice than some other digital initiatives. Robotic process automation doesn't require a considerable upfront investment in new systems that may have complex integration requirements or result in vendor lock-in. Instead, you can think of RPA bots as bots that can interact with any application or system. As a result, it can help companies get the most from legacy systems without an expensive tech stack overhaul.
Wrapping Up - Stay Agile During Uncertain Times
It sounds counterintuitive, but cutting costs doesn't always increase your chances of survival during an economic downturn. Instead, many organizations are increasing their IT budgets and investing more heavily in new automation initiatives. Robotic process automation plays a huge role here due to its numerous benefits.
With RPA, organizations are better prepared to weather fluctuations in demand, worker layoffs, and the increased workload placed on their remaining employees. It helps companies adapt more quickly and be flexible and agile no matter what comes their way.
Moreover, RPA isn't just a tool for survival but can help businesses come out on top. Technology, and particularly automation, is the lifeblood of modern business. Today, you'd struggle to find a company that doesn't leverage automation in some way, and this effect is only increasing as we move further into the 2020s.
Don't leave things up to chance during a recession. Instead, tackle the recession head-on with automation.