Process and automation transformation risks: PwC

This series explores how taking a portfolio-wide approach can help organizations align transformation efforts, reduce risk, and drive meaningful outcomes across business, tech, and controls.

There’s more to automation than shelling out for the latest and greatest software. Transforming the way work gets done? Making it faster and easier for your people to — sustainably — deliver value? That requires not just automating tasks but carefully plotting out the processes and strategies behind them. Transforming processes and automation can be a major source of risk within your larger transformation initiatives.

As a transformation leader, you might have thought automation would be your tech function’s jurisdiction. But technology can be used to help monetize any of your organization’s operations:

AI models can analyze historical financial data and external factors to generate more precise financial forecasts and budgets, adapting dynamically as new data comes in.
Natural language generation tools can translate raw data into executive-level summaries.
Cloud tools can update inventory levels, trigger restocking, and generate demand forecasts that might indicate inefficiencies, security threats, or misconfigurations.

We often find that when transformations fail to deliver expected value, it’s because the organization didn’t treat process and automation as the large-scale transformation it really is. Plenty of companies are quick to automate functions, but fail to examine their end-to-end cycle and related, underlying processes or business needs. Without clear use cases or requirements in place, this can lead to technology gaps and non-standard or boutique stopgaps. Automating such inefficient business functions just makes you inefficient faster.

Building out a strong transformation plan aligned to your business strategy is the first step in streamlining your operations — in a way that can yield the results you want. That means asking broader fundamental process questions, mapping out future scenarios, and proactively identifying barriers.

Let’s look at some of the biggest risks you can face in process and automation transformation, and what you can do to prevent them from damaging your business value.

“Automating ill-defined or broken processes locks in existing inefficiencies, eroding anticipated cost savings and speed advantages.”

Colleen Dowd,Partner, Digital Assurance & Transparency, PwC US

What are the most pressing process and automation risks today?

When it comes to technology and transformation, you’re likely very familiar with the phrase “tech debt.” But have you considered your organization’s process debt?

The same way that one-off solutions and manual workarounds pile up as tech debt, your operational processes can slowly degrade, becoming less efficient and more complicated. If you’re not strategic in your planning phase, misaligned goals and faulty processes often compound when you introduce automation. Then you have to go back and correct those mistakes before you can realize any actual value.

So, what are the main risks transformation leaders fall into? What barriers are more likely to slow you down and leech value from your process automation plans? Here’s what we see most often:

Far and wide, one of the most common causes of a process and automation transformation going off the rails is poor planning and strategic misalignment at one or more stages in your solution development lifecycle: Lacking holistic use cases or user stories. Missing business leader buy-in. Underestimating the time, resources or effort needed for success. Underestimating the complexity or scope of a program. Without all of these considered up-front, you risk failure and value loss in the later stages of your SDLC and with the sub-optimal implemented solution.

Because this type of automation will often handle financial data, it also needs to be controlled, and for publicly traded companies, stay Sarbanes-Oxley (SOX) compliant. Fail to meet controls guidelines and you risk material weaknesses and costly remediation efforts—even potential regulatory penalties.

Example: Your company wants to automate revenue recognition. To save money, you choose the least expensive tool that covers most of your business requirements. The tool doesn’t handle large volumes well, though, and it can’t perform certain current mainstream selling scenarios. As a result, there’s no full revenue subledger to provide granular reporting. And because there’s no built-in governance, managers still need to manually review revenue recognition details in order to avoid SOX noncompliance. So, really, what did you get for your time and money?

Sometimes, lacking a clear strategy risks “temporary” solutions becoming permanent. Like manual workarounds in a technology transformation, these processes are often functional — but lack the efficiency and scalability of a carefully designed solution. When your business scales, you can hit the limitations of those quick fixes.

Example: To help speed up and improve your financial market forecasts, your team decides to build an Alteryx Workflow that allows people with little or no code experience to create drag-and-drop, AI-enabled prediction models. You process about a million records per prediction cycle, so that’s what you design your solution to handle. What happens in two, three years when you need to process ten or even a hundred million records per cycle? You’ll have to roll out a new solution all over again just to keep pace.

Without standard processes and tools, your people don’t have consistent templates to work from. That can lead to the use of haphazard components or workflows that vary between teams and functions, each with their own cost. Not only does this risk delays, higher licensing fees, and compatibility issues between groups, it also opens you up to the risk of concentrating specific knowledge in individual contributors.

Example: You allow IT teams to build custom software solutions with whichever tools they prefer. One team uses Python and MySQL, another likes Ruby. Over time, turnover results in you having only one person on staff who can code in Ruby. What happens if they suddenly exit the company? How will you maintain existing Ruby-based tools?

What can I do to help reduce process and automation risks right now?

Build for now, plan for the future state. In an ideal transformation, you’ll have already worked out a bold and effective strategy that includes scalable automation solutions and standardized processes. Your plan will have been well thought out and vetted, with plenty of wiggle room for tackling unforeseen hiccups and adequate flexibility to grow with your business. You'll also have considered impending risks like quantum computing, and emerging enablers like artificial intelligence.

But the real world doesn’t always go along with plans. What should you do when things don’t go as you expected?

You obviously want to start risk planning strong. But if you haven’t, you should go back and get your transformation strategy properly aligned before you move forward. Return to your steering committee. Make sure you’ve clearly and reasonably defined what success should look like and how you’ll measure your progress toward those goals. Get your organization aligned, then start again.

If you’re creating a custom solution in-house, make sure you have a knowledgeable team to implement it—and maintain it. You want your solutions to deliver sustained value, not just during implementation. Creating a single center of excellence to orchestrate process automation strategy for your entire organization—like many PwC clients—is a great way to standardize requirements across teams and helps confirm everyone is staying controls-compliant.

When choosing solutions, think about where your business is now and where you want it to be in five, even ten years. Make sure you’re enabling future use cases and functionality with the processes and automations you set up now. If you don’t think you’ll have the bandwidth and support to scale up your current operations in the years to come, consider working with a solution-system integrator to help avoid risky future bottlenecks.

Standardization is imperative. If you haven’t set up unified processes for your workflows and transformation, you should go back and do it. There’s no room for compromise on this. What’s the standard software that your teams will use? How can the processes you create cater to the teams that use them and their abilities — while still generating coordinated results?

Where can I get help?

One of the easiest ways to help prevent and mitigate process and automation risks in your transformations is to involve your auditor. At PwC, we’ll often recommend that our audit clients engage in pre- and post-implementation reviews. These can provide early insight into risks that are likely to erode value as you deploy and scale your automated processes. We leverage proprietary accelerators, like our transformation risk framework, and our deep industry knowledge of your business and culture so you can form powerful perspectives and drive the results that matter to you. This can help you deliver value-adding transformation automation while still balancing risks and controls.

We also assist with end-to-end implementation for our non-audit clients. PwC is well-versed in off-the-shelf system implementations and wholesale “lift-and-shift” migrations to automation platforms, as well as design-and-build solutions and core standalone component implementations. Our custom accelerators, for example, can help you determine your standalone selling price for calculating revenue while maintaining SOX compliance.

So, is your transformation ready to automate more?