According to the UK’s Chancellor of the Exchequer Philip Hammond, the United Kingdom has a serious, debilitating shortfall in productivity when compared to other advanced economies. In his Autumn Statement, he said it was “shocking” that Britain’s productivity is 30% lower than the US and Germany, and lags France by 20%.

The productivity problem

These are big numbers, but where does the weakness come from? Given the mainstay of UK economic output derives from the service industry, it appears British white-collar workers are not as productive as their overseas counterparts. It’s difficult to quantify exactly why but one way to improve UK office workers' productivity could be to follow the manufacturing sector by increasing automation. Productivity in UK manufacturing increased by more than 60% since 1995, largely as a result of automation. Whereas some sectors of the UK services industry actually saw a decline, e.g. financial services productivity declined by nearly 10% from 2009 to 2015*.

A possible answer?

An evolving suite of tools that we collectively call Intelligent Process Automation [IPA] software have emerged in recent years and are beginning to gain traction with service industry leaders. These software applications increase efficiency and have been proven to deliver productivity gains that could go some way to correcting the overall weakness in UK productivity.

So what is Intelligent Process Automation?

Briefly, it describes software tools that can be applied to existing business processes to complete them as well as, or better than human workers, thereby achieving business outcomes more efficiently. The spectrum of IPA software begins with basic automation achieved through software commands following a scripted process and has for years been common in performing tasks within single IT applications. Robotic Process Automation software takes this to a new level by scripting tasks across multiple IT applications and enables the automation of business processes that span multiple IT applications. The next level of complexity sees technology platforms that use algorithms to follow business rules, commonly termed Autonomics. From here Cognitive software has the ability to ‘learn on-the-fly’ through pattern recognition and reasoning, these can perform very complicated tasks and these are commonly associated with ‘Machine Learning’ all the way up to ‘Artificial Intelligence’. It’s worth pointing out that these technologies work in different and specific ways, some simply follow scripts and others are trained by human workers, whilst others at the top end of complexity are able to learn by themselves. It is important, therefore, to describe these technologies as a spectrum rather than a continuum, as described in the diagram below:

What we have here is a new toolset for the service industry that will prove as disruptive as steam engines in the Industrial Revolution. IPA increases the efficiency of business processes and improves business outcomes through:

  • Increased speed
  • Improved accuracy
  • Lights out & peak volume processing
  • Greater orchestration
  • Increased agility
  • Better analytics
  • Improved oversight
  • Encouraging standardisation

If we have the same level of output with less human workers then assuming the cost of the IPA software is less than the cost of human workers, the associated cost of that output would fall and thereby increase productivity. 

Is there a cost to these benefits?

It’s easy to see that if we automate the work of humans to increase productivity then initially at least, we are going to need less human workers. There will likely be redundancies, but it is equally possible that highly skilled workers will be repurposed to higher value added knowledge work. Eventually, as this new modus operandi shakes out, it’s probable that we’ll see humans augmented with intelligent software tools so that the same amount of human workers can do more with less. This in turn will likely drive output and demand in the economy, which could be met by any surplus workers. Not dissimilar to what happened after the Agrarian and Manufacturing revolutions.

Countries that don’t initiate automation of the service industry risk getting left behind

The handy thing about IPA software is that it's quick to implement and the UK and Europe are at the forefront of the automation industry, with many start-ups and established software vendors offering a range of products in this space. The UK could not only benefit from the increased productivity this software brings, but also from the increased revenues and associated taxes generated by the software companies. Increased productivity and increased tax revenues ought to make Philip Hammond’s next Budget a little less ‘Gloomy’?

*ONS – Labour Productivity Analysis July 2015