The world responds to incredible pressures, either driving it forward or causing nations (and people or businesses) to regress or collapse. These pressures can come in many forms, from wars and famine to climate change and social upheaval. When these pressures mount, businesses can either respond to the changes and calls for action or remain stationary, which often results in long-term failure or hardship.
In 2022, The Conference Board of Canada sought to determine the impact of automation on businesses, both large and small. Automation is a major driving force of change among businesses in the modern age. Taking tasks that had been — traditionally speaking — performed by humans (or animals) and having machines do them instead.
The need for automation varies from one industry to the next, but where one business takes on the reins of automating their operations more than competitors, they gain a decided advantage, perhaps not in the immediate short-term because of financial constraints, but definitely long-term.
Not all businesses embrace automation or technological advances and innovations. Some may not see the value in automating certain aspects of their operations, at least until it’s too late. Some may not see how they can afford to invest in automation technologies.
As businesses shift to more automation, it is certainly a concern and consideration that occupations — positions people have held for generations — could very well be in jeopardy. Employers often take these considerations to heart, not just focusing on their bottom line numbers.
For every job replaced by automation, there is a person — man or woman — who had relied on that profession, that job to support their family, buy food and shelter, and basically survive.
It is true that automation offers an opportunity to increase productivity and transform the business landscape, but the impact on workers cannot be simply overlooked or understated. For a worker of any age, but especially as they get older, having to transition their career to something completely different would involve reeducation, retraining, and a new set of skills.
These are all factors that many businesses take into account when determining how forcefully they are going to respond to those major external pressures to automate more processes and operations within their systems.
The Conference Board of Canada surveyed 192 Canadian IT (information technology) leaders regarding three key factors of automation. These factors were in deployment, barriers to adoption, and the opportunities for investment in them. Researchers stated their primary goal was to determine what information businesses may benefit from to assist in deploying automation for their operations.
Where Are Businesses Investing in Automation?
Overall, a majority of businesses of all sizes have been adopting some level of automation. However, not all businesses are convinced it is right for them, at least not at this stage in their development, growth, or sustainability, at least as far as they view it.
There are many components to automation and, when several business owners hear the terms, they immediately associate it with industrial or manufacturing applications. In reality, artificial intelligence, for example, is a growing aspect of automation that can impact just about any business from retail to manufacturing to the financial sector and much more.
Predictive analytics, regulatory compliance, surveillance, quality assurance, risk management, robotics, driverless vehicles, sensors, AI bots (that are part of a growing number of websites that assist visitors and customers with straightforward questions or direct them to agents), are all examples of automation in our modern society.
To be clear, automating certain operations or processes does not inherently mean replacing factory workers on the floor, delivery drivers, or front-end customer support specialists.
There is always the risk of these things happening, especially as competitors begin embracing more and more automation, but many of these automation practices can streamline operations, improve efficiency, reduce oversights and mistakes, and trim losses.
Approximately one-third of the respondents in this survey admitted they had not even begun implementing automation to any degree within their operations. The most common industries that are lagging regarding automation are healthcare, food service companies, and retail trade.
However, it’s important not to get caught up on the immediate statistic because about a quarter of the respondents admitted they had not prioritized any investment in automation, which means approximately 12 to 13 percent (of those who have not taken actionable steps to automate any processes just yet) have begun investing for it.
In other words, they are in the process of moving forward with automation. About 25 percent of respondents are planning to invest between 2 and 5 percent of their revenue into automation technology. Approximately 17 percent are looking at investing between 5 and 10 percent.
By comparison, in the United States, firms were investing about 13 percent of their revenue into automation technology. In the United Kingdom, it is 8 percent.
What Industries Are Investing the Most?
Manufacturing and construction companies tend to be those that are investing more heavily in automation technologies. Plus, larger companies tend to invest more in automation than smaller companies.
There may very well be numerous factors for why this is the case. First, larger companies tend to have more financial resources available to make a shift to automation more rapidly.
Second, smaller businesses — those with fewer than 99 employees — are often operating on thinner profit margins, meaning there is less available financial room to change the way their processes operate.
Finally, smaller businesses are often focused on more short-term concerns, especially during difficult economic times. They don’t tend to have the financial stability for long-term projections or risks, as they may see automating certain systems.
As with any technological development, the newer the technology, the more cost-prohibitive it is, especially for those smaller businesses trying to compete with larger companies. Yet, as the technology becomes more accessible, it also tends to become more cost-friendly.
How Does Automation-Enabling Technologies Assist Companies?
For most companies, a priority is improving customer support and service. Automation technology in the form of artificial intelligence is helping many companies accomplish precisely this.
In this research study, researchers highlighted the company Avaya. In the past, forecasting reports for customers was a long and difficult task. It meant bringing together multiple reports from numerous locations and then interpreting the data. However, even with those forecasts and summaries, sales teams were not always clear on what the forecasts or recommendations were.
Turning to CRM (Customer Resource Management software), Avaya was able to utilize machine learning algorithms and apply it to data stores to more accurately predict future sales. This meant that sales teams had access to the same data and could more easily understand what they were looking at, even if they didn’t have a technical background.
An Interesting Note
About 16 percent of respondents to the survey believed that their management was unfamiliar with automation enabling technologies, which could result in less willingness to invest.
It is vital that management have at least a solid foundation of understanding when it comes to automation for it to be implemented properly. Researchers determined that for those businesses without familiarity with automation technologies, the best step would be to start implementing a change management strategy.
This essentially refers to reviewing current and prospective trends and management processes and seeking to change direction so that management can become more familiar with automation for the future.
However, most organizations did admit they had the skills and knowledge to begin adopting and utilizing automation enabling technologies, even if they hadn’t begun so yet. This surprised the researchers to some degree because of the lagging effort to incorporate analytics and other artificial intelligence technologies into their processes.
If management is confident in the knowledge and understanding of its staff to implement automation, why, then, have they not begun to do so? If management has the necessary skills to begin adopting these technologies and they understand the benefit it offers the company, why wait?
The key may be in which companies admitted to having these necessary skills. Manufacturing made up the largest number of respondents who admitted to having the skills ready to implement automation technology.
Manufacturing also happens to be one of the earliest adopters of automation technology, mostly to not only streamline processes and ensure accuracy and safety, but also because competition was fierce and for a manufacturer to lag behind when it came to automation usually meant losing market share.
What Are Some Barriers to Adopting Automation?
There are numerous factors that can make it difficult for some small businesses to jump into automation-enabling technology. The most common factors include a lack of familiarity with the technologies or skills to be able to implement them into their current operating procedures.
Price is also a barrier to entry for many smaller companies. If a small business has difficulty seeing the value in investing in certain technologies, it will hold off, at least for a while. Yet, that ‘little while too often tends to transform into months and months, and then years have passed while their competitors jumped on board and consume more and more market share.
A third barrier tends to be attitudes towards technology. It’s no secret that the older an individual is, the more resistant or reluctant he or she tends to be to new technologies. This can be seen playing out among the baby boomer generation and their reticence to embrace smartphones, tablets, or even the newest technology for watching television and other programming.
That doesn’t mean every person over 65 has completely ignored these technologies, but that more of them are slower to adapt or adopt them because of a lack of familiarity.
Even as organizational readiness to incorporate automation is considered high in Canada, the resources to make it happen remain one of the critical obstacles to implementation.
There are positives and negatives to any change in any industry. Respondents to the survey, though, reported high confidence that they had access to the necessary information to determine what the pros and cons were for adopting automation technologies within their operations. That is certainly a good sign, so long as the information they receive is reliable.
Capital May Be the Key Barrier
All in all, businesses that had adopted some automation technologies or are considering doing so in the near future often report having difficulty accessing the capital necessary to implement new technologies.
In fact, 48 percent of respondents admitted this challenge. Nearly half of those respondents were smaller businesses that had one to 99 employees.
There are several programs designed to help these types of businesses access the capital necessary to implement automation-enabling technologies. There is the Business Scale-up and Productivity Program (BSP), the Supply Chain and Logistics Excellence AI (SCALE AI) Program, and the Strategic Innovation Fund (SIF).
The bottom line is simple: automation technologies are critical to future success for businesses of all sizes. In order for smaller or reluctant businesses to invest in them, they need accurate information, the skills and knowledge necessary for management to embrace them, and the capital to invest.