Questions for 2022 Pt. 4: Automation

Today we offer the final post in a series focusing on questions for 2022. You can read the previous posts on data literacy, price increases, and expense control here, here, and here.

This week, we further explore the opportunity to evaluate (or reevaluate) business cases for increased automation in light of the current business environment, and the likely continued knock-on effects of the pandemic.

What we already know:

As in previous weeks, let’s take what we know about 2022, and then apply it to the question.

The current US labor market is unlike any previously experienced in recent memory:

• A greater than expected death rate has reduced the like-for-like labor pool
• Greater than average retirement rates have also reduced the like-for-like labor pool
• A shortage of affordable childcare has also negatively impacted the labor market

These and other pandemic driven factors have given rise to unprecedented labor shortages, pressure to increase wages, greater than average labor turnover (“The Great Resignation”), and HR nightmares all around.

Great, but so what?

The bottom line is that many businesses cannot find qualified candidates to fill open positions. Even when they are offering above market rates, putting revenue, profit, growth, and even long-term business viability at stake, there remains a shortage of viable candidates.

This is where the question of automation comes in.

In our experience as consultants, we’ve often seen clients consider the investment and business case for increased automation. This is across many industries and business functions, looking at everything from the standard evaluation of more efficient heavy machinery to consideration of exotic solutions involving robots and artificial intelligence, through to more mundane decisions on IT. Many times, even when the return on investment is clear and the business benefits obvious, they hesitate to make these investments due to perceived risks, the availability of labor, and the fact that their businesses could still operate satisfactorily without increasing automation.

In most cases this was probably the right decision at the time. But the question now is, “Can businesses really afford not to consider and implement increased automation solutions?”

If labor is a sizable part of your business expenses, and your labor costs are increasing, now is the time to look at labor saving and automation solutions no matter what the industry or function.

In the past, automation investment cases may have hinged on reducing existing headcount. Now, they might revolve around the mission critical reality that people cannot be found to do the work that needs to be done for the business to operate.

Equally, maximizing productivity and job satisfaction of existing employees in the tight labor market may also provide a compelling case for investment.

Essentially, investment cases for automation may now be about more than just simple margin improvement, or cost takeout opportunities that previously you could afford to ignore or not do. They could relate and be the answer to existential threats to ongoing business sustainability.

Conclusions

If, for whatever reason, you have previously considered automation but decided not to move forward, it may make sense to revisit these potential opportunities.

Now might be the right time to identify and evaluate automation opportunities. It might also be time to implement anything that is either a quick-win or that could be transformational, be that from an operational or financial perspective.

Core Catalysts regularly helps clients identify opportunities for increased automation and build business cases to support investment decisions. We also aid in vendor selection through to project management and implementation of automation initiatives, across all sizes, types, and durations of project. If you believe we could help your organization, why not reach out to us to schedule a call?

We hope you have enjoyed this series of thought-starters for 2022. Thank you once again for reading and please share any thought or comments you have.

– Mark Jacobs, Client Service & Delivery