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How automation can help cut costs while scaling businesses
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e have all heard a lot about the tech winter: unicorn start-ups are going on a hiring freeze and mass layoffs, venture capitals are stopping funds, the investment trend is heading toward more conservative sectors like commodities and equipment.
Silicon Valley kingmaker Y Combinator (YC) shared a letter titled “Economic Downturn” to its founders that it will be entering the peak of the downturn in the next 6-12 months, when all fundraising activities will become challenging.
As the YC letter suggests, companies, and not just start-ups, might need to cut expenses to brace for the economic slowdown. Companies will have to assess their current burn rate, where the money is going and if there is a way to make it more efficient.
Generally, the first to assess would be operating cost. Manpower is expensive and it is not exclusive to highly skilled workers. Companies need to provide benefits, facilities and even compensation on top of wages. Since the recent tech boom, companies that hired most aggressively during the pandemic are now overstaffed and being forced to cut back or impose hiring freezes.
However, since companies still need their businesses to operate smoothly, the most obvious way is to switch from manual processes to automation.
How and what to automate?
Business process automation enables companies to use technology to take care of repetitive work, including processes such as IT support, workflow, transactions and remote infrastructure, and actually improve accuracy, cycle time and productivity. Some examples of automated process are:
- Claims adjudication and auto data management for reporting in the health industry;
- Transaction processing through payment gateways to avoid fraud and eliminate verification process/time;
- Order management and fulfillment processing in the retail industry;
- IT infrastructure management and builds processing in the financial and public sectors; and
- Enterprise resource planning (ERP) software integrating all aspects of business management from stocks, schedules and delivery to sales and aftersales, optimizing synchronization between teams.
In addition, companies are deploying automated processes that leverage data and historical insights for purposes such as eliminating double data entry and to encourage rules-based decision-making, as well as virtual system integration, straight-through processing and automated extraction, as well as reporting of basic queries.
While these processes are usually deployed to reduce costs, they also come with other benefits such as accuracy (eliminating human error), scalability (handling volume surges) and availability (active 24/7).
Some business process systems are subscription-based, while payment gateways like Duitku are based on transaction volume and have a low barrier of entry. This means that companies of all sizes can use these platforms to automate their transaction process, while eliminating loss and reducing inefficiency during a lull in transactions.
Some ERPs, such as Odoo or Drupal, are open source and can be deployed by smaller, bootstrapped companies. They can also be connected via plugins to payment gateways in Indonesia, including Duitku, to help streamline operations.
Automation offers 30-200% ROI in first year
Any company that employs people for general, high-volume or high- transaction processes can boost capacity and save both money and time with business process automation software.
Automating business processes not only impacts the operating cost of a company, but also reduces the load on its other business divisions, such as finance and even recruitment.
Customer support that uses artificial intelligence (AI) for example, eliminates the need to onboard new hires while offering a faster search response for specific queries. While AI-powered customer service (CS) software might still lack analytical capacity in solving customer queries, they can be programmed to analyze query subjects to distribute the query to the dedicated human CS officer, thus helping to reduce response time for improved customer satisfaction.
A small team has smaller room for human error. But scaling a business requires automating some repetitive tasks need to improve efficiency and reduce the errors that come with expansion.
Automation & labor impacts
The most frequently asked question is how automation might impact the current unemployment in Indonesia. While it is true that companies will have less need for humans in administrative roles, businesses will still need people to fill jobs that need strong soft skills, such as logic, judgment and person-to-person interaction, as well as for jobs in nonbusiness sectors such as caregiving, education and entertainment.
Meanwhile, the workforce will have to learn new skills to match industry demand.
Developed countries have been moving toward automation as a solution to declining birth rates, and this approach is also applicable as a solution for companies experiencing declining human capital.
Indonesia’s current population growth rate is 1.1 percent per year, with an average decline of 1.5 percent in the annual birth rate. This will create more competition for entry-level or low-skilled jobs.
However, Indonesia actually needs more talents to manage more advanced technological processes in order to compete globally. Improving the capacity and capabilities of local talents to take the lead in the country’s tech development would help retain both homegrown businesses and talents, as well as foreign revenue.
