Automation: The Long-Term Trend for BusinessesBy Sergio Hernández | Thu, 12/23/2021 - 09:57
Automation is one of the objectives companies have for the 21st century. However, its implementation faces technological and digital challenges, even implying a cultural change for employees, which is reflected in their day-to-day activities.
Incorporating artificial intelligence, machine learning, and Software as a Service (SaaS) are some examples of automation. All efforts lead to transitioning from an analog business to a technology-driven business by performing tasks with greater precision and optimizing monetary and human resources.
The key constant in this transition is high-quality data. Without it, automation technologies cannot function properly and will not reach the level of change that organizations require.
Certainly, digital transformation is more than leaving aside obsolete processes and legacy technology. It is about making space for innovation, which is associated with deep changes. Digital innovation, and everything related to it, are unquestionable, even when there are barriers to enabling it.
Human nature tends to be reluctant to change, but with proper information and learning, results can be fruitful in the medium and long term.
On the other hand, staying in a comfort zone will eventually take its toll, like legacy systems. These are outdated programs that lack flexibility and are incapable of handling high volumes of data at the necessary speed, but that maintain an operation — most of the time essential — in companies.
Legacy systems spend up to 80 percent of a company's IT budget, minimizing any opportunity to drive the business forward. Another pressure point is that spending increases as technology ages and becomes more vulnerable, according to Citi Ventures, a Citigroup subsidiary dedicated to funding technology and innovation companies.
Increasing investments in obsolete technology will reduce a company’s competitiveness and could undermine the confidence of customers or prospects by making it look like an out-of-date company. The problem is reflected in key indicators like revenues and profits. The company will become less able to hire and retain human talent and in an adverse scenario, it will disappear.
Today, cloud technology and access to quality information in real-time through different equipment is no longer a fashion but a necessity and a long-term trend.
Uncertainty instills nervousness among decision-makers. It can take many forms, such as lack of cash, credit risk, financial crises, or pandemics.
Studies suggest that in 2022, uncertainty will be accompanied by insolvencies. According to reinsurer companies, such as Atradius and Swiss Re Corporate Solutions, commercial insolvencies are expected to increase by 15 percent in 2022, their highest annual increase since 2009, months after the U.S. mortgage crisis began.
Furthermore, the overall view is set for inflation to continue its upward trajectory. For example, Mexico reached a level of 7.06 percent in the first two weeks of November, its highest point in 20 years. This is not exclusive to the country.
The Organization for Economic Cooperation and Development (OECD) went from a 1.4 percent inflation rate in October 2020 to 5.2 percent in October this year, according to the average figures reported by its members.
With prices rising steadily and the economy trying to leave of recession, central banks started to tighten monetary policy, meaning that interest rates gradually began to rise.
The Bank of Mexico has increased its target rate from 4.25 percent to 5 percent in the last 12 months. However, central banks such as Brazil's — Latin America's main economy — raised their target rate from 2 percent to 7.75 percent in the same period.
Simultaneously, the dollar is beginning to strengthen against the world's main currencies. In the case of the Mexican peso, the US currency has appreciated around 9 percent against the national currency so far this year. If the peso's depreciation continues, it may contribute to inflationary pressures and restrictive monetary policies and will lead to more expensive credit.
Reduce Damage, Find Opportunities
Automation paired with quality data will enable solutions to help mitigate credit risks, facilitate finding investment opportunities, agreements, supply chain research, and regulatory and compliance care. Efficiency and optimization of resources will lead to implementing and using simpler processes.
Efficiency, optimization, and simplicity become tangible by spending less time on management tasks and more time on strategy and vision and adding value to finance department functions.
Automation is where companies are heading. Moving away from handcrafted processes and legacy systems is the current trend and companies must begin to recognize this, not only to survive and avoid risks but to expand their operations and businesses to aspire to be essential competitors in their sectors.